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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 TRUST
(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 Trust 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: March 31, 2010
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| Item 1: | Report to Shareholders. |
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WASATCH
FUNDS
Deeper, Disciplined InvestingTM
Semi-Annual Report &
Quarterly Commentaries
March 31, 2010
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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Thank you for your investment in Wasatch Funds. We hope this report will be helpful to you in exploring and understanding each of the funds within the Wasatch family. We have included the latest quarterly manager’s comments in order to provide you with the most current thoughts from each of our lead portfolio managers. Quarterly manager commentaries can always be found on our website www.WasatchFunds.com approximately three weeks after the end of each calendar quarter.
Who we are...
We are a research driven, employee owned firm managing no-load mutual funds. Located at the foot of the Wasatch Mountains in Salt Lake City, Utah, we are far away from Wall Street and its herd mentality. Our portfolio managers are independent, yet collaborative, thinkers who bring substantial experience to their funds.
Where we came from...
Founded in 1975, by Dr. Sam Stewart, we initially focused on growth investing in small companies. Using a fundamental, bottom up research method we looked for market inefficiencies relative to the long term growth potential of lesser known companies. Investing in small, harder to find companies required a disciplined, rigorous and independent research process. Over time, Wasatch added more research professionals and began applying the same successful process to investing in micro, value, international, and larger companies.
What we believe...
We believe in common sense investing, involving deep due diligence, cross-team collaboration, and commitment to discipline, as we follow our central investment philosophy of:
“Earnings Growth Drives Stock Prices Over the Long Term”
What we do...
We utilize a proven and repeatable process to uncover interesting companies. We look deeper to find and understand each company. We leverage portfolio managers from across the firm to fully vet each investment idea. We stay true to our investment style. We close funds before they get too large in order to protect shareholders. We seek to deliver above-average returns over the long-term, and we strive in every way to earn the trust of our shareholders.
What makes Wasatch different?
Deeper – We use an intensely thorough process to fully understand each investment.
Disciplined – We stick to our process and investment style regardless of market fads.
WASATCH
Collaborative – We work across portfolios to leverage valuable experience and research insights. FUNDS
Independent – We do our own research to avoid getting caught in the herd. Deeper, Disciplined InvestingTM
If your have any questions please visit our website www.WasatchFunds.com or feel free to call us Monday through Friday 7:00 a.m – 7:00 p.m Central Time at 800.551.1700.
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. 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. An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, containing this and other information visit www.wasatchfunds.com or call 800.551.1700 Please read the prospectus carefully before investing. Wasatch Funds are distributed by ALPS Distributors, Inc.
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Wasatch F unds
Salt Lake City, Utah
www.wasatchfunds.com
800.551.1700
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Wasatch Emerging Markets Small Cap Fund™ Management Discussion | 6 | |
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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:
THE ECONOMY
An economic recovery feels more at hand each day as economic indicators show increasingly positive traction. However, as I’ve mentioned before, large structural issues still exist for our economy to overcome in the months and years ahead, including:
Ÿ Weak financial markets — credit markets have yet to return to where there is enough credit being made available to support a growing economy. Ÿ High unemployment — job gains will likely be slow as many firms are reticent to hire with the 2008–2009 experience still fresh in their memory. This may benefit corporate profits over the near-term, but it will slow the economy’s return to growth. Ÿ Expanding role of government — increased government involvement and regulation will have a dampening effect on growth. Not to imply that some of the government actions aren’t appropriate, but there will be economic costs as well. |
In talking with colleagues, I have at times compared re-starting the economy to lighting a barbecue. Over the past year the government used an unprecedented amount of lighter fluid in an attempt to set the wet coals afire. We saw some nice flames as a result, but it wasn’t clear whether the briquettes had actually been lit. I think we can now see that some of the coals are beginning to glow. They still need a lot of nursing (e.g., low interest rates and continued spending) before we will be ready to cook the steak though. Unfortunately, the government has only very blunt instruments with which to influence the recovery, and given the extreme level of intervention that has been required, we are almost certain to experience unintended consequences that will also have to be overcome.
Beyond the United States we are seeing broad signs of global economic improvement as well, yet there are significant challenges being faced. Fundamental financial problems came to a head in Greece and Portugal last month, and in Dubai earlier in the quarter. Meanwhile, uncertainty, or lack of transparency, in China seems to be creating growing unease about a country that has become increasingly important to the global economy. Nevertheless, I remain cautiously optimistic that the global economy has turned the corner.
THE MARKET
Throughout the first quarter, the market simply wanted to go up. Bad economic news would lead to a temporary pause, while good news would drive the market forward. Investors focused on the good news of the day, and at least temporarily ignored the shadow cast by the large structural issues that remain. As a result, the market actually saw its strongest first quarter since 1999.
I expect the soon-to-be reported first quarter corporate profits to be very strong — due to easy year-over-year comparisons, cost reductions that have been implemented by most companies, and the beginning of sales improvements. At current stock valuations I think positive quarterly reports are already priced into the market. The most interesting piece of these reports, and what the market is most likely to react to (beyond negative surprises), will be any forward guidance offered — how quickly companies see the recovery truly reaching their businesses.
Last year there was a lot of discussion about whether we might see a V-shaped or U-shaped economic recovery. The more common expectation was a U-shaped recovery. Instead, the early part of the recovery has appeared V-shaped, as has the stock market rebound. The caution in my voice is that the market, with its aggressive advance, seems to be counting on the continuation of a V-shaped recovery. With the significant structural challenges to be overcome I think we are more likely to see what some are now calling a “square-root” recovery:
a quick initial rebound followed by an extended period of slow growth.
WASATCH PERFORMANCE
The Wasatch Funds enjoyed nice gains this quarter, although many of the portfolios finished the quarter slightly behind their stated benchmark indices, which is historically consistent with typical Wasatch performance in a strong market (our focus on quality companies often leads to lagging in strong markets, outperforming in down markets, and solid returns over full market cycles). I remain confident in our portfolios for the long-term and have been pleased to see our companies continue to generally deliver at or above our expectations.
I talked a lot last year about our focus on high-quality companies. In a rising market we monitor the valuations of our holdings and look to rotate into better opportunities among other high quality companies as valuations become stretched. Staying focused on quality, regardless of market conditions, is critically important to us because we are investing for long-term success, not betting on the next pop. As you’ve heard me say many times, we do not make market calls or try to time the market. Instead, we pay close attention to the prospects and valuations of individual companies as we search for the best investment opportunities currently available.
We remain somewhat cautious in our portfolio composition, being particularly careful about position size, valuation, and quality. This care seems appropriate given the continuing economic challenges ahead. I think we’re behaving as if we should have learned a lesson from 2008 . . . I’m not sure that the market is currently demonstrating the same prudence.
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| MARCH 31, 2010 | ||
A SEPARATE NOTEOF CAUTIONON ASSET ALLOCATION
Human psyche causes many investors to look in the rear-view mirror as they pick their investment path forward. Due to this human tendency, financial advertisements are required to remind investors that “past performance is no guarantee of future results.” Unfortunately, investors in aggregate do not heed this warning and end up making notoriously bad timing decisions. For example:
| Ÿ | Investors held a record high allocation of their portfolio in Stocks (77%) in March of 2000 — just as the equity markets collapsed.* |
| Ÿ | Investors held a record high allocation of Cash (45%) in March of 2009 — when the equity markets began their bull run. |
Over the past year there have been tremendous flows into bonds and bond funds. In July of 2009 investors held a record high allocation of Bonds at 25%. As of January 2010 the bond allocation still remained near historical highs at 24%, and inflows to bond funds continued through the first quarter. Investors typically think of bond funds as “safe” investments. The stock market collapse of 2008 no doubt played a significant role in spurring this recent flight to the perceived “safety” of bonds. However, in an environment of historically low interest rates and record levels of bond investment, I think caution is warranted for investors who are over-allocating to bond funds, particularly for those who are doing so as a perceived low-risk investment. Bond funds carry risk — most notably interest rate risk. When interest rates rise again, bond prices will fall, and I would hate for investors to be surprised by negative short-term returns in bond funds.
We believe there is an important long-term allocation role for bonds, which is why Wasatch offers what we believe to be two high quality sub-advised bond funds in our own product line-up, but I think the broad asset allocation shift toward bonds that has taken place over the past year is worthy of a general note of caution to all bond investors.
I’m not suggesting that investors should rush to stocks. I believe investors are typically best served by simply staying true to their long-term investment strategy and giving it the appropriate time to play out. This is the approach we take in our portfolios as well. We appreciate your interest in Wasatch Funds. Thank you for the opportunity to manage your assets.
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.
CFA® is a trademark owned by CFA Institute.
*Source of portfolio allocation data: American Association of Individual Allocation Survey (1987–2009), January 2010.
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| WASATCH CORE GROWTH FUND (WGROX) — Management Discussion | MARCH 31, 2010 | |
The Wasatch Core Growth Fund is managed by a team of Wasatch portfolio managers led by JB Taylor and Paul Lambert.
JB Taylor Portfolio Manager |
Paul Lambert Portfolio Manager | OVERVIEW
The Wasatch Core Growth Fund gained 5.16% in the first quarter as the U.S. stock market continued to rebound from its March 2009 low. Equities advanced in response to rising |
investor confidence that a broad economic recovery is underway. The economy continues to face significant challenges, including high unemployment and the prospect of higher taxes. Investors were able to look beyond these concerns, and the market maintained its positive momentum. The S&P 500 Index* rose 5.39%, and the Russell 2000 Index gained 8.85%.
Following such strong returns in 2009, we were pleased to see the Fund start 2010 with additional gains. That said, the Fund gave back some of last year’s outperformance relative to the Russell 2000 Index. Our best barometer for gauging the health of the portfolio — earnings growth** — continued to improve throughout the quarter. We think the underperformance over this short period is explained by having a good number of mildly underperforming stocks — stocks that had gains, but whose gains fell short of the 8.85% rise in the Index.
DETAILSOFTHE QUARTER
One market dynamic that worked against our quality-driven style was the outperformance of lower-quality names. As investors anticipated a stronger economic recovery, stocks of economically sensitive companies tended to do especially well, regardless of their long-term fundamentals. For example, some of the market’s biggest winners were the truly discretionary consumer names that were hit hardest over the last 18 months. Mall-based fashion retailers would be an example. We lost some relative ground by not owning some of these beaten-down cyclical stocks, which we consider to have few sustainable competitive advantages.
One of our favorite measures of quality is return on capital,† a statistic we track from quarter to quarter. Our companies generally score well on this metric since they tend to have stable revenue streams and competitive advantages that support high margins. Our studies show that, during the quarter, companies with lower-than-average returns on capital outperformed higher-return businesses, which is not uncommon in a market rally led by lower-quality stocks.
After falling approximately 29% in 2009, the average small cap U.S. bank stock gained more than 13% in the first quarter. This was also a headwind for the Fund. We have steered clear of U.S. banks since well before the financial crisis unfolded. While there are certainly a few great values to be
uncovered in small banks, we think the risks continue to outweigh the potential rewards. We expect asset growth to stay muted and that credit-related charge-offs will remain elevated for some time.
One way we have played these trends is through our ownership of Aaron’s, Inc. With banks tightening their lending standards, many consumers are finding credit harder to come by. Furthermore, the weak job market has made people reluctant to use their savings to purchase big-ticket items. These factors have fueled strong demand for the products and services of Aaron’s, a rent-to-own company. It was one of our best-performing stocks this quarter. A consumer can walk into an Aaron’s store, enter into a rental contract and walk out with any number of items, from a bedroom set to a large-screen TV. Customers typically make payments once a month and can decide to return the merchandise at any time without penalty. Rent-to-own transactions are generally more expensive than outright purchases, but they are a valuable option for consumers lacking other forms of credit.
Allegiant Travel Co., another strong performer, is a low-cost airline that offers non-stop flights from small cities across the United States to major leisure destinations. The company continues to execute well and reported healthy revenue growth for the fourth quarter of 2009. In addition, Allegiant announced that it would begin offering service to Hawaii, which we think could develop into an important market. Current and future holdings are subject to risk.
OUTLOOK
Our thinking has been that 2010 would be a stock picker’s market, and that the market would reward high-quality companies showing good earnings growth in a difficult economy. So far, we have not seen this type of environment. The rising tide of the rebounding economy has lifted most stocks higher, with many lower quality, economically sensitive names doing especially well. The question is: How do these stocks continue to lead the market if the economy does not continue to improve?
We are not economists, but we think our country faces some powerful headwinds. The housing market remains fragile, the federal debt is large and growing, unemployment is high and taxes are on the rise. It is difficult for us to envision the economy returning to a normal rate of long-run growth under these circumstances. As a result, we have not changed our outlook for 2010. We continue to believe that companies generating solid growth, even in a low-growth economy, will outperform. In this light, we think the Fund is well positioned. Importantly, we believe our companies’ earnings growth rates are sustainable — not just as the economy rebounds, but in 2011 and beyond.
Thank you for the opportunity to manage your assets.
| *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. |
| **Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
| †Return | on capital is a measure of how effectively a company uses the money, owned or borrowed, that has been invested in its operations. |
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| WASATCH CORE GROWTH FUND (WGROX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
Core Growth | 11.89% | 66.51% | 0.76% | 8.80% | ||||
Russell 2000 Index | 13.07% | 62.76% | 3.36% | 3.68% | ||||
Russell 2000 Growth Index | 12.07% | 60.32% | 3.82% | -1.53% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Core Growth Fund are 1.38%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| Copart, Inc. | 4.9% | |
| Aaron’s, Inc. | 4.1% | |
| MEDNAX, Inc. | 3.9% | |
| Emeritus Corp. | 3.5% | |
| Life Time Fitness, Inc. | 3.2% |
| Company | % of Net Assets | |
| Dollar Financial Corp. | 2.8% | |
| Pharmaceutical Product Development, Inc. | 2.6% | |
| Herbalife Ltd. | 2.5% | |
| O’Reilly Automotive, Inc. | 2.5% | |
| Waste Connections, Inc. | 2.4% |
| ** | As of March 31, 2010, 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. 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. You cannot invest directly in these or any indices.
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| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Management Discussion | MARCH 31, 2010 | |
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 7.69% in the first quarter, which exceeded the 5.07% gain of the benchmark MSCI Emerging Markets Small Cap Index. With such a |
strong rise in 2009, we expected to see some retracement. However, with more evidence of global recovery and continued global re-allocation into emerging markets, we continue to see strong investment flows into them. As a result of the crisis, there has been a longer-term re-assessment of the case for emerging markets, especially in the context of sovereign debt and government revenues. The Wasatch research team traveled extensively in the first quarter visiting countries including China, India, Taiwan and Egypt. Meetings with management teams indicated a general sense of business returning to normal, with some degree of caution. It was not the freeze of last year, where a lack of confidence translated into a lack of investment and spending.
DETAILSOFTHE QUARTER
The first quarter of 2010 was marked by the performance of “second tier” emerging markets, the smaller markets that are outside the higher profile BRIC markets (Brazil, Russia, India and China). It is worth discussing two of these “second tier” markets in more detail to highlight why they are an important piece of the Fund and the kinds of businesses in which we invest.
One of the largest country contributors in the first quarter was Indonesia, punching well above its weight. Its economy is growing, governance — both political and corporate — has improved in the last 10 years and interest rates are the lowest in decades. Gross domestic product (GDP)* growth was 4.5% in 2009 — making it exceptional globally — and it is expected to grow by 5.6% this year. Consumer spending is robust. This growth is more solid as a result of the restructuring required after the financial crisis in 1997. Capital has been tighter since then and institutions have been strengthened. Stocks that contributed in the Fund were Ramayana Lestari Sentosa, a department store chain, Holcim Indonesia, a cement company, and Bank Tabungan Pensiunan Nasional, a bank with a developing microfinance franchise. The Indonesian index, the Jakarta Composite, was up 19% in U.S. dollar returns for the first quarter.
Another attractive “second tier” investment destination for Wasatch is Egypt. We recently returned from Egypt, seeing Middle Eastern and Egyptian companies there. Egypt is a country with 80 million people, and last year GDP growth
was 5%, outstanding in global terms. This year, it is expected to grow between 4% and 5% and the government is adopting a number of programs to accelerate investment into the country and its growth rate. It has been resilient during the financial crisis, primarily a function of being an under-levered economy. Egypt has been a cash economy, where wages are received in cash and not credited into a bank account, but electronic banking is slowly taking hold. The economy is also better than it looks on paper: like many emerging economies it has a substantial “grey” or unreported economy, typically 20% to 30% of reported GDP. Stocks we own in Egypt include Commercial International Bank, Egyptian Financials Group-Hermes Holding, and two cement companies. Commercial International has a history of prudent growth and is one of the highest return on assets (ROA),** best-capitalized banks in the entire emerging markets (EM) small cap universe. EFG Hermes is the premiere financial services firm in the Middle East.
Like many EM countries, there are close to 100 listed small cap companies in Egypt, giving us plenty of opportunities to find good investments. Moreover, the business models of the companies we own are relatively simple and do not need the bravest of assumptions to work in the long run.
The Fund enjoyed positive performance in every sector where we held a weighting, and performance relative to our benchmark was also strong. A similar story played out when looking at performance by country, with positive performance in most countries. Brazil gave back some earlier gains and was the Fund’s biggest detractor. We also experienced some weakness in one of our largest Chinese holdings, fashion apparel designer and retailer Ports Design Ltd. The company was the Fund’s single biggest detractor after announcing a pullback on plans to increase its store base. In China, Ports is a leading brand that manages business in a steady way. Profitability remains strong and we expect that the company will benefit from strong consumer growth in China for years to come. Current and future holdings are subject to risk.
OUTLOOK
This coming year is looking more positive as time goes on, with more evidence of U.S. and global recovery. There are very real concerns about China’s growth and the solidity of that growth, and we share some of those concerns. While the headlines cover mostly what is happening in China or India, the Fund is structured to take advantage of broader EM growth. We expect to see performance come from a diverse list of countries, driven by strong GDP growth, stable banking systems and developing consumer spending.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by 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. |
| **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. |
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| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 10/1/07 | |||||
Emerging Markets Small Cap | 25.45% | 140.19% | N/A | -0.47% | ||||
MSCI Emerging Markets Small Cap Index | 17.98% | 118.10% | N/A | -3.04% | ||||
MSCI Emerging Markets Index | 11.16% | 81.08% | N/A | -4.81% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Small Cap Fund are 3.03%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| PT Holcim Indonesia Tbk (Indonesia) | 2.0% | |
| Colgate-Palmolive India Ltd. (India) | 1.6% | |
| Bharat Electronics Ltd. (India) | 1.5% | |
| Aramex PJSC (United Arab Emirates) | 1.4% | |
| LIC Housing Finance Ltd. (India) | 1.4% |
Company | % of Net Assets | |
| Ports Design Ltd. (China) | 1.4% | |
| Bolsa Mexicana de Valores, S.A. (Mexico) | 1.4% | |
| CETIP S.A. (Brazil) | 1.4% | |
| AIA Engineering Ltd. (India) | 1.3% | |
| NG2 S.A. (Poland) | 1.3% |
| ** | As of March 31, 2010, there were 142 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 Cap indices are free float-adjusted market capitalization indices that are designed to measure equity market performance in the global emerging markets. You cannot invest directly in these or any indices.
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| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Management Discussion | MARCH 31, 2010 | |
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 Global Opportunities Fund had a solid first quarter, with positive returns across a wide range of geographies and sectors. We continue to be pleased by the breadth of the good perform- |
ance, since the Fund’s mandate gives us the flexibility to invest in companies of any size, in any country, in any type of business.
In general, our portfolio companies are doing well, and their earnings are coming back with a vengeance. Part of the improvement is due to the easy comparisons from a year ago when the global economy was very weak. Even so, it is clear to us that economies around the world are recovering nicely and that business conditions are getting better.
DETAILSOFTHE QUARTER
From a country perspective, the real shining star in the Fund was India. About a dozen of our Indian stocks posted double-digit gains, including Axis Bank Ltd., GlaxoSmithKline Consumer Healthcare Ltd. and Thermax India Ltd., a manufacturer of industrial equipment. We are finding many interesting companies in this fast-growing economy — companies that we think have great business models, seasoned management teams and attractive valuations. As a result, the Fund’s weighting in India is likely to climb.
The semiconductor industry was another key area of strength amid a rebound in global chip sales. Eighteen months ago, the revenues and earnings of semiconductor companies were falling off a cliff. The credit crisis had erupted, fear was spreading around the world and electronics manufacturers were slashing production and inventories. Since then, the outlook for these companies has brightened considerably. Demand is accelerating for cellphones, personal computers and a host of other chip-heavy products. In addition, inventories throughout the supply chain have had to be replenished. When we started the Fund in November 2008, prices of semiconductor stocks were well below any historically low level that we had seen. We bought quite a few of them, and this segment of the portfolio has performed extremely well since the Fund’s inception.
We continued to have some big winners in China, especially in the health care sector. However, we had some big losers, too, and China was a relatively weak market for us. Two of the Fund’s worst-performing stocks were Ports Design Ltd. and PCD Stores Ltd., Chinese consumer names that had dramatic gains last year. Both were down this
quarter on profit taking and worries about a possible slowdown in the red-hot Chinese economy. Ports Design, which is a domestic luxury brand, was also impacted by concerns about increased competition.
Improvement in the U.S. economy benefited U.S. bank stocks, and our relatively low exposure to the group was a headwind for the Fund. We have taken a hard look at the banks, since they outperformed coming out of the 1990– 1991 recession that followed the savings and loan crisis. However, we have decided to remain largely on the sidelines for now. While we think the U.S. economy will be strong this year, as it was in 1992, we are not convinced that it is going to be particularly robust three to five years out. Another troubling issue about the banks is that we are not sure they have appropriately recognized losses on commercial real estate loans.
We traveled to South Korea during the quarter and came back feeling upbeat about the country. South Korea has transformed itself from a supplier of low-cost products to an emerging global powerhouse in technology and a range of industrial industries. We are also seeing strength in other areas of the market, such as education and health care. Daewoong Pharmaceutical Co. Ltd. is an example of a South Korean health care stock that we like, and we added to our position after meeting with the company in Seoul. This drug manufacturer had some margin pressure about a year ago, but is now showing strong earnings momentum and continues to trade at what we believe is a great value. Current and future holdings are subject to risk.
OUTLOOK
Positive economic news has been driving the global equity market higher, and we do not see the current environment changing much in the very near term. However, some of the world’s central banks have started to tighten monetary policy, and investors could react negatively as others follow suit. Further out, we are worried about the end of economic stimulus programs, massive government deficits and ongoing stress in certain segments of the credit markets. Therefore, our outlook is fairly cautious. Stocks have rallied sharply over the past year, valuations are not what they used to be, and the global economy is facing some serious structural problems.
Given our view of the world, our main focus continues to be on quality. In each and every market, including emerging markets, we are trying to invest in what we consider to be the highest-quality names. If the global economy ends up growing faster than we expect, stocks of high-quality companies may not lead the market, but they should do just fine. And if we see the type of subdued growth we envision, we believe high-quality stocks will do better than average.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
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| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 11/17/08 | |||||
Global Opportunities | 13.13% | 73.81% | N/A | 60.50% | ||||
MSCI AC World Small Cap Index | 11.48% | 77.93% | N/A | 49.81% | ||||
S&P Global SmallCap Index | 10.46% | 73.43% | N/A | 45.79% | ||||
MSCI AC World Index | 7.90% | 55.48% | N/A | 31.78% |
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, 2010 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 different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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 entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investments in emerging markets are subject to the same risks as other foreign securities and may be subject to greater risks than investments in foreign countries with more established economies and securities markets.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| EPS Co. Ltd. (Japan) | 1.5% | |
| O2Micro International Ltd. ADR (China) | 1.5% | |
| Dollar Tree, Inc. | 1.5% | |
| Wirecard AG (Germany) | 1.4% | |
| Ted Baker plc (United Kingdom) | 1.3% |
| Company | % of Net Assets | |
| Melexis N.V. (Belgium) | 1.1% | |
| Micrel, Inc. | 1.1% | |
| Richelieu Hardware Ltd. (Canada) | 0.9% | |
| SEI Investments Co. | 0.9% | |
| Abcam plc (United Kingdom) | 0.9% |
| ** | As of March 31, 2010, there were 357 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, that 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 indices.
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| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND (WAGTX) — Management Discussion | MARCH 31, 2010 | |
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
Typically, the first paragraph of our quarterly letter to shareholders includes a statement regarding the Fund’s performance relative to its benchmark. We intend to move away from this approach beginning with this letter, as we think the industry norm of tracking performance versus a broad index on a quarter-by-quarter basis distracts from the Fund’s long-term investment strategy. Our new mantra, forged by the pressure of the 2008–2009 credit |
crunch, is that we must invest “away from the market” as we attempt to deliver exceptional long-term returns.
DETAILSOFTHE QUARTER
The Fund returned 6.47% in the quarter, bringing its 12-month return to 71.88%. We were fortunate enough to have invested all of our cash near the market bottom, which helped the Fund register its gain of over 70% in the past year. While our decision to invest in some higher quality stocks caused us to miss strong gains in some of the higher-risk stocks we sold, we think that the risk tradeoff is now getting long in the tooth. With many risky stocks being priced as though they offer more quality than they actually do, we are building a little cash and further rotating the Fund into attractively priced stocks that we believe are high quality.
This year, we plan to widen our information advantage on the stocks we own by reducing the number of positions in the Fund and plowing that time and effort back into our best ideas. Accordingly, the number of holdings in the Fund decreased during the quarter. While this shift may seem minor, we are executing this change gradually in order to ensure that we make the right decisions. We are particularly focused on reducing the number of developed-market companies the Fund holds. We feel less urgency to reduce the number of holdings in emerging markets, as our experience suggests that a wider net of investments is the best way to capture the exciting growth prospects in those countries.
We believe that while the markets are efficient most of the time, on occasion they drop a few opportunities for astute investors. A prerequisite to spotting these opportunities is to have a deeper understanding of our investments than the person on the other side of the trade. We need expertise in industries, sub-industries, companies and management teams, so that our information advantage gives us the conviction to invest when others are ignoring or selling.
Currently, we believe one such inefficiency exists in Wirecard AG, a German company that provides payment services for online transactions. An Internet rumor dragged down the stock price by 25% on one of the last days of the quarter. While we unfortunately participated in the sell-off, our
subsequent discussion with management gave us the confidence to buy more shares near the bottom. We think the company’s future is even brighter due to the continued rapid growth of online retail. Wirecard is now the Fund’s top holding.
Another smaller inefficiency we’ve acted on is MegaStudy Co. Ltd., a Korean education and test preparation company that sold off on investors’ exaggerated reaction to news of rising competition. We also have added to our holdings in the leading video game developers Activision Blizzard, Inc. and UbiSoft Entertainment S.A., whose stocks have sold off due to fears that the iPhone will damage their business models. We’re finding additional bargains among Japanese small caps with world-class results, such as the value-oriented drug retailer Create SD Holdings Co. Ltd.
In terms of performance, one of our most significant contributors was GuestLogix, Inc., a small Canada-based maker of software to facilitate retail transactions on planes. This service has been in rising demand from airlines, as low-cost carriers seek to boost non-ticket revenues in the environment of slower economic growth. GuestLogix reported stronger-than-expected results, driving its share price substantially higher. Our second largest contributor was Akamai Technologies, Inc., whose stock price surged as investors grew optimistic about the company’s role in helping the Internet handle increasing video traffic.
In the health care sector, our holding in NuVasive, Inc. added value. We held on to the stock as it underperformed in 2009, believing that the company’s fundamental strength would ultimately be reflected in its stock price. Our patience paid off when the stock rose nearly 30% in a single day in late February after the insurer Aetna announced that it would cover one of NuVasive’s spinal procedures.
Aside from Wirecard, other notable detractors included the Chinese stocks Shanda Interactive Entertainment Ltd., China Automation Group Ltd., and Wasion Group Holdings Ltd. We elected to sell all three stocks in favor of more attractive opportunities elsewhere. Current and future holdings are subject to risk.
OUTLOOK
We are gratified the Fund performed well for the quarter and the past year, a time when investors who focus on higher-quality companies have not necessarily been rewarded with strong performance. As always, we continue to focus on individual company research to seek out new opportunities and monitor potential risks for the stocks we hold in the Fund. The information technology and health care sectors contain a wealth of companies with product cycles that rise and fall independently of broader economic trends. We believe our approach — focusing on company-level developments rather than the macroeconomic picture — is well-suited for investing in these diverse and dynamic sectors.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
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| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND (WAGTX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 12/19/00 | |||||
Global Science & Technology | 15.62% | 71.88% | 5.86% | 4.66% | ||||
Russell 2000 Technology Index | 10.56% | 74.46% | 5.44% | -2.64% | ||||
Nasdaq Composite Index | 13.54% | 58.36% | 4.60% | -0.31% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Global Science & Technology Fund are 2.15%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| Wirecard AG (Germany) | 3.2% | |
| Akamai Technologies, Inc. | 2.4% | |
| Abcam plc (United Kingdom) | 2.2% | |
| Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 2.2% | |
| Create SD Holdings Co. Ltd. (Japan) | 2.1% |
| Company | % of Net Assets | |
| 1000mercis (France) | 2.1% | |
| Google, Inc., Class A | 2.0% | |
| Teva Pharmaceutical Industries Ltd. ADR (Israel) | 2.0% | |
| International Business Machines Corp. | 1.9% | |
| Altera Corp. | 1.9% |
| ** | As of March 31, 2010, there were 88 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 indices.
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| WASATCH HERITAGE GROWTH FUND (WAHGX) — Management Discussion | MARCH 31, 2010 | |
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
As the stock market continued its advance for the fourth consecutive quarter off of the March 2009 bottom, the Wasatch Heritage Growth Fund also finished with a nice gain. Led by health care, |
the market rally was broad-based with every sector in the Fund — with the exception of energy — delivering positive performance.
While the Fund produced a solid return, it was disappointing that it did not outperform the Russell Midcap Growth Index. As the legs of the market rally have grown longer, investors have seemingly increased their threshold for risk. Some stocks that, in our opinion, are less stable than those held in the Fund have seen outsized gains. We have remained disciplined to our strategy, which involves a very selective investment process and high hurdle requirements for existing holdings as well as potential candidates. While we would hope to keep up with the market during periods of bullishness, we believe the Fund has the potential to outperform during downturns when a “flight to quality” by investors typically occurs. For example, although the Fund has underperformed during the market’s significant advance over the past year, the Fund’s relative strength during the preceding downturn has led to overall outperformance since the beginning of 2008 when warnings signs of the credit crisis began to emerge in earnest.
We are pleased with the Fund’s current positions and their corresponding weights. Our companies performed well and we are encouraged by the consistency of their business execution and profits.
DETAILSOFTHE QUARTER
We believe that one of the surest ways to inhibit investing success is to hastily react to every piece of market news or rumor. We’re not in the game of trying to time the market. One of our core beliefs in managing the Fund is persistent patience. As long as our analysis is correct and we remain disciplined about the valuation of our holdings, we believe the Fund’s stocks will ultimately be rewarded through price appreciation. Because the market can often stay stubbornly irrational for lengthy periods, the patience to wait for price equilibrium to be restored is critical.
We took a position in Ross Stores, Inc. during late 2009 and continued to build our position in the discount name-brand retailer during the first quarter. The stock responded with a stellar quarter, making it the top contributor in the Fund with a 25% return. Importantly, we believe that
although Ross is a value retailer, it is relatively agnostic to the economic cycle. Not only is it performing well in the current downturn with a growing base of cost-conscious shoppers, but we also think that there is a certain core value-oriented consumer segment that will help it remain competitive in more normal environments. While the company’s earnings growth* has increased recently, it has also delivered over the longer term, recording average profit growth north of 25% over the last five years.
Our energy weight represents less than 6% of the entire Fund. Underperformance in the sector this quarter was primarily attributable to lower natural gas prices. Ultra Petroleum Corp. and Petrohawk Energy Corp. were two of our worst performers. In the commodities space, the lowest-cost producers will typically win out. Should current inventories diminish, causing natural gas prices to rise, Ultra Petroleum and Petrohawk Energy will benefit, but they are also profitable at current levels. We believe that as low-cost leaders in natural gas exploration and production, they will gain market share as higher cost competitors are forced to shut in more and more of their production. We also believe that they are both strategically positioned with access rights to geographically desirable drilling locations, which should enable them to increase low-cost production. Current and future holdings are subject to risk.
OUTLOOK
As mentioned, we are pleased with the positioning of the Fund. Although the earnings of our companies generally didn’t trail off as much as the broader market during the depths of the crisis, they appear to be coming back strongly off of trough levels. Most of our companies are indicating that their businesses are stabilizing and are forecasting growth, albeit cautiously.
Over the next 12 months, we believe that, on average, earnings in the Fund will grow from still depressed levels in excess of 20%. With a forward price-to-earnings (P/E) ratio** of 17, the Fund appears attractively valued.
Despite our optimism for the Fund’s holdings, we also realize there is a reasonable risk that the economy will not return to its normal growth rate anytime in the near future. There are many factors tugging at the economy that can hinder growth. High unemployment and burgeoning government debt are foremost among the impediments. In this type of environment, only top tier companies will flourish. Meanwhile, it appears to us that some stocks are priced in anticipation of a very strong, prolonged economic recovery.
Uncertainty in the macroenvironment is requiring us to be especially selective when deciding which companies deserve a spot in the Fund. We believe that this discretion, combined with the aforementioned patience has the potential to be rewarding for the Fund over the long-term.
Thank you for the opportunity to manage your assets.
| *Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
| **The | price-to-earnings or P/E ratio is the price of a stock divided by its earnings per share. |
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| WASATCH HERITAGE GROWTH FUND (WAHGX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 6/18/04 | |||||
Heritage Growth | 11.61% | 52.09% | 2.31% | 3.33% | ||||
Russell Midcap Growth Index | 14.88% | 63.00% | 4.27% | 5.30% | ||||
S&P 500 Index | 11.74% | 49.76% | 1.92% | 2.64% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Heritage Growth Fund are 1.21%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP TEN EQUITY HOLDINGS**
| Company | % of Net Assets | |
| Altera Corp. | 4.6% | |
| Apollo Group, Inc., Class A | 4.1% | |
| Cognizant Technology Solutions Corp., Class A | 4.0% | |
| Redecard S.A. (Brazil) | 3.9% | |
| Express Scripts, Inc. | 3.6% |
| Company | % of Net Assets | |
| Copart, Inc. | 3.4% | |
| Ross Stores, Inc. | 3.3% | |
| St. Jude Medical, Inc. | 3.2% | |
| New York Community Bancorp, Inc. | 3.0% | |
| Ultra Petroleum Corp. | 2.7% |
| ** | As of March 31, 2010, 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: 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 indices.
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| WASATCH HERITAGE VALUE FUND (WAHVX) — Management Discussion | MARCH 31, 2010 | |
The Wasatch Heritage Value Fund is managed by a team of Wasatch portfolio managers led by Brian Bythrow.
Brian Bythrow, CFA Portfolio Manager | OVERVIEW
The U.S. equity markets continued to move upward in the first quarter of 2010, as investors were generally optimistic even as economic data remained mixed. In this environment, the Wasatch Heritage Value Fund posted a return of 6.22% for the quarter. These results closely tracked those of the Fund’s benchmark, the Russell 1000 Value Index, which returned 6.78% over the same period. |
Our positions in stocks that we felt were reasonably priced and offered moderate levels of growth and healthy dividend yields helped us to keep pace with the benchmark. Our individual stock selections in the financials sector, which we significantly underweighted relative to the Index, played a meaningful role in our positive performance for the quarter. Our strongest single position came from the health care sector, which overall proved resilient despite concerns about the impact of health care reform measures on earnings.
As we sold out of some fairly large positions during the period, our cash level rose significantly. In a positive market, this had negative impact on the Fund’s performance. We did, however, add a number of new positions to the portfolio as opportunities to buy stocks at reasonable prices arose.
DETAILSOFTHE QUARTER
Our top contributor to performance over the three months was Mylan, Inc., a producer of generic drugs. This company has benefited as consumers and insurance providers have focused greater attention on reducing health care costs. Investors have also noted the company’s success thus far in integrating the operations of Merck’s generic drug portfolio that it acquired in 2008, and in paying down the debt from that acquisition. Despite its recent runup, we believe Mylan is still reasonably valued.
On a similar note, another top-five contributor was Perrigo Co., which produces over-the-counter versions of drugs that have recently come off patent. Recent strong earnings pushed Perrigo’s price-to-earnings multiple* higher than we were comfortable with, and we sold out of the position.
Akamai Technologies, Inc., a provider of a global platform of Internet servers, was another top contributor for the period. Not only is more information being moved across the Internet than ever before, but more of that data is also being stored in web-based ‘cloud’ environments. Both of these require greater server capacity, sparking higher demand for Akamai’s products and services.
Our weakest contributor for the period was Petrohawk Energy Corp., a natural-gas exploration and production company. We added this company to the portfolio over the quarter. We believe it is well-positioned for growth as demand for natural gas increases. For now, however, weak
prices for the commodity — the result of current oversupply — are suppressing its earnings.
As we sought to redeploy assets from selling a few of our larger positions, we were able to identify a number of new opportunities — some of them in areas we haven’t invested much in for a while.
Among these were two banks we added to the portfolio. We had been generally avoiding bank stocks in the wake of the credit crisis, but now we are seeing more signs of improvement on the credit front. One of the banks we’ve added is a familiar name to most consumers, Bank of America Corp., while the other, Hudson City Bancorp, Inc., is somewhat less ubiquitous. Both of these banks’ credit profiles are improving, and they appear positioned to capture additional market share from weaker competitors as the recovery continues. We purchased both at attractive valuations. In addition, Hudson City provides a healthy dividend yield.
Another addition during the period was Millicom International Cellular S.A. Millicom is the leading cellular carrier in Africa, which at this point is perhaps the last area of the world whose cellular market remains underpenetrated. We’re excited by the potential we see in this market and in Millicom, and were able to add the company at an attractive price. Current and future holdings are subject to risk.
OUTLOOK
As we continue to work to deploy our cash, we intend to stay true to our investment discipline, particularly our focus on valuations. When dealing with larger-cap stocks, whose prices tend to be less volatile than those of smaller-cap stocks, finding the right entry point can be essential to producing attractive returns. While we don’t want to spend too much time sitting on our cash, we also don’t want to fall into the trap of buying good companies whose valuations leave little room for appreciation — or for that matter, of buying companies that are cheap for a good reason. We have a number of companies we’ve researched thoroughly and would like to add to the portfolio — we’re just waiting for them to be available at the right price.
Our overall outlook is positive, though we wouldn’t be at all surprised to see some short-term corrections in the market. Concerns about the potential for rising interest rates, the state of the U.S. dollar, and the impact of deficit spending all have the potential to trigger short-term declines. We’ll be carefully monitoring the markets and our companies, ready to act when opportunities emerge.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *The | price-to-earnings or P/E multiple is the price of a stock divided by its earnings per share. |
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| WASATCH HERITAGE VALUE FUND (WAHVX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 8/30/07 | |||||
Heritage Value | 12.65% | 43.94% | N/A | -3.02% | ||||
Russell 1000 Value Index | 11.28% | 53.56% | N/A | -8.70% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Heritage Value Fund are 4.09%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| Spectra Energy Corp | 3.4% | |
| Mylan, Inc. | 3.2% | |
| Fifth Third Capital Trust VI, 7.25%, 11/15/67 Pfd. | 3.2% | |
| American Water Works Co., Inc. | 3.2% | |
| RPM International, Inc. | 3.1% |
| Company | % of Net Assets | |
| Akamai Technologies, Inc. | 3.1% | |
| Pfizer, Inc. | 3.0% | |
| ABB Ltd. ADR (Switzerland) | 3.0% | |
| Noble Corp. | 2.8% | |
| Bunge Ltd. | 2.7% |
| ** | As of March 31, 2010, there were 34 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 this or any index.
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| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Management Discussion | MARCH 31, 2010 | |
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 returned 4.32% in the first quarter, underperforming the MSCI AC World Ex-U.S.A. Small Cap Index, which gained 5.32%. The best performing sector was health care, which delivered returns significantly ahead of the benchmark. Our Hong Kong-based Chinese companies had a disappointing first quarter, and Germany was also weak in large part to a single holding |
that was down significantly. We will discuss this in more detail shortly.
After the fierce rebound of the past 12 months — where the Fund returned over 88% — we expect this to be a slower year as valuations sit more in the middle territory of being reasonable.
DETAILSOFTHE QUARTER
There is good evidence that economies are strengthening around the world, with confidence generally returning. There are still the structural concerns — justified in our opinion — about large government spending deficits and increased sovereign debt* levels. At the company level, investors are focusing more on earnings growth,** and a lot less on simple financial viability, which was the focus a year ago.
Our best sector was health care — helped by returns from Abcam plc (+24%) and RaySearch Laboratories AB (+49%). It is worth discussing in detail how we found these names, since we have held them for a number of years and it illuminates well our research process.
Abcam (short for “Antibody + Cambridge”) is based in Cambridge, England, and was founded by a Cambridge University research scientist. In the 12 years of its corporate life, Abcam has become a global provider to research labs in cancer, cell biology, and immunology. We first knew about the company at its initial public offering (IPO)† in late 2005. When we first bought the stock it had a market capitalization of around US$80 million, a minnow really compared to other companies. Today it is valued by the market at US$700 million with revenues and profits compounding at roughly 40% a year since the IPO. Wasatch’s long-term ownership of U.S. life sciences company Techne Corp.†† helped us understand the model originally. Taking U.S. business models we understand and applying them overseas (and vice versa) has and will continue to be an important way that our research process works.
RaySearch is a Swedish medical technology company we also discovered when it was a minnow with a market capitalization under US$100 million. It was founded by Johan Lof, along with some other researchers in 2000, based on research carried out at the Karolinska Institute in Sweden. Johan’s background and the focus of his team’s research is in creating programs (software driven) for radiation therapy in
cancer treatment, allowing for more targeted, effective treatments. The company had no analyst coverage at its IPO and was not understood since there are few comparable companies globally. RaySearch has hit its share of earnings bumps over the years, but today we see it as an exciting medical technology company. It is valued at US$215 million and we still see strong prospects backed by innovation.
Our worst performing country was Germany, mainly because of Wirecard AG, one of our top 10 positions. Wirecard is a payment processor for the online retail market. It is strong throughout Europe where online retail is growing robustly, and is slowly moving into Asia. Sentiment on the stock has been poor, with negative news that appears to have no basis in fact, which we believe has caused overreaction. On fundamentals we think nothing has changed.
We have continued to build our names in financial services. There has been much more focus on financial companies in emerging markets (EM) lately, after exceptional performance last year. EM economies survived the financial crisis in better overall shape than the developed world — a function of simpler, robust financial systems tied into economies where there was less leverage overall. In countries like India and Brazil — where the Fund owns banks like Allahabad Bank Ltd. and Banco Daycoval S.A. — consumer credit penetration is still very low, corporate loans are picking up and policy makers have taken a stimulative stance. Current and future holdings are subject to risk.
OUTLOOK
We believe the large global valuation uplift of 2009 has passed and now for our Fund it is a question more of individual stock picking, where returns are largely determined by earnings growth and returns on capital. In some regions — like Western Europe — companies do not get much help from their domestic economies but aim to grow overseas. For regions like Asia, there is a lot more domestic growth underpinned by government investment and consumer spending growth, where credit systems can help drive this growth. The competitive climate has been altered by the crisis, which has cleared out a lot of underbrush. The more competitive, world-class companies will have less competition in their marketplace and capital will be tighter for start-ups and marginal competitors. In short, we believe it will be a good environment for high quality companies that can self-finance growth by virtue of their higher returns on capital and balance sheets. These are our target companies.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *Sovereign | debt is government debt. Under the doctrine of sovereign immunity, creditors cannot force the repayment of sovereign debt. It is subject to compulsory rescheduling, interest rate reduction, or even repudiation. The only recourse available to creditors is threat of the loss of credibility and lowering of the country’s sovereign debt rating, which may make future borrowing more difficult. |
| **Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
| †An | initial public offering (IPO) is a company’s first sale of stock to the public. |
| ††As | of March 31, 2010, the Wasatch International Growth Fund was not invested in Techne Corp. |
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| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 6/28/02 | |||||
International Growth | 12.80% | 88.81% | 5.71% | 10.60% | ||||
MSCI AC World Ex-U.S.A. Small Cap Index | 8.58% | 83.66% | 7.33% | 13.33% | ||||
MSCI World Ex-U.S.A. Small Cap Index | 5.92% | 74.55% | 4.13% | 11.18% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Growth Fund are 1.94%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
Company | % of Net Assets | |
| Abcam plc (United Kingdom) | 3.6% | |
| Osaka Securities Exchange Co. Ltd. (Japan) | 2.6% | |
| DiaSorin S.p.A. (Italy) | 2.5% | |
| Rotork plc (United Kingdom) | 2.1% | |
| Wirecard AG (Germany) | 2.0% |
| Company | % of Net Assets | |
| SimCorp A/S (Denmark) | 2.0% | |
| Ports Design Ltd. (China) | 1.8% | |
| PT Semen Gresik (Persero) Tbk (Indonesia) | 1.7% | |
| LIC Housing Finance Ltd. (India) | 1.6% | |
| Weg S.A. (Brazil) | 1.5% |
| ** | As of March 31, 2010, there were 101 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. 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. You cannot invest directly in these or any indices.
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| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Management Discussion | MARCH 31, 2010 | |
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
Global stocks enjoyed another positive quarter at the start of 2010, with no single trend driving the markets. Over the quarter, we saw companies responding to signs that the global economy |
would be able to avoid a double-dip recession.
During the first quarter of 2010, the Wasatch International Opportunities Fund returned 6.05%, placing just ahead of its benchmark, the MSCI World Ex-U.S.A. Small Cap Index, which returned 5.41% for the period. As has been the case in recent quarters, no one factor was responsible for our outperformance. Our strong stocks came from a variety of industries and a broad range of countries.
We continued to focus our attention on fundamental research, seeking out companies with the management teams, business models, and competitive advantages that can allow them to produce healthy earnings growth.* As is our usual practice, we visited companies in a number of markets around the globe during the period. This hands-on research is essential to our investment process, and allows us to identify companies that we believe can contribute positively to our results — and that others overlook.
DETAILSOFTHE QUARTER
A look at the companies driving our performance offers a good snapshot of the Fund’s diversity across markets and sectors. At the top of the list was Mexico’s Genomma Lab Internacional S.A., a fast-growing distributor of over-the-counter medicines, generic drugs, and personal-care products to stores throughout Mexico. Good management, excellent marketing, and a nice tailwind for health care have all helped propel this company forward. We still like the company’s outlook, but are mindful that at this point Genomma’s valuation has moved up significantly.
Goodpack Ltd., a Singapore-based logistics company that provides bulk containers used in shipping goods around the world, was our second-strongest holding. Goodpack’s stock has been boosted by anticipated strong demand for exported goods around the world. As the economic recovery continues, Goodpack’s business appears well-positioned to grow further, and its profit margins on incremental business are quite high.
In a related industry, Middle Eastern shipper Aramex PJSC rounds out our top three contributors. Though it was among our weaker performers in the fourth quarter of 2009, so far this year its stock price has moved up along with demand for its services. The company has successfully reduced its
dependence on lower-margin European freight shipping, allowing it to maintain strong profits in a market where revenue per package is very low. Aramex’s strong balance sheet helped it to weather the weaker economic climate, and now that demand appears to be building in anticipation of a recovery, it’s in a position to gain substantial market share. In short, we believe Aramex exemplifies the World’s Best Growth Companies** that we are dedicated to finding.
Our biggest detractor this quarter was Germany’s Wirecard AG, an electronic payment processor that has previously been a strong portfolio holding. In recent months, the company has been hit by a wave of rumor-driven short selling that we believe was unjustified. After examining the issue carefully, at this point we remain confident in Wirecard.
During the quarter, members of the Wasatch research team traveled the globe visiting companies, making stops in South Korea, Egypt, Taiwan, China, and India, to name just a few of our destinations. Intensive screening before these trips helped us identify those companies that warranted a visit.
In many cases, when we visit a company, we find that we’re the only investment team to have done so. We think our willingness to engage directly with companies off the beaten path gives us an advantage in finding candidates for the Fund that may be small in terms of market capitalization, but are leaders in their markets, are able to post high annual growth rates, and have the tools they need to succeed in a competitive global landscape.
From our visits this quarter, we made several new additions to the portfolio. One is South Korea’s Koh Young Technology, Inc., a maker of 3D inspection and measurement systems. We were impressed with the management team’s business acumen, and their grasp of the competitive pressures they face. Like many stocks in Korea, Koh Young was attractively valued. This company’s market cap is just $65 million, keeping it off the radar of most international investors. Current and future holdings are subject to risk.
OUTLOOK
Our overall outlook for 2010 is positive, though we anticipate that there may well be some blips in the markets, particularly during the remainder of the year’s first half. Valuations in many of the world’s markets are quite reasonable, and consumers in emerging markets continue to show a healthy appetite for more and better products and services.
We’re encouraged that we’re still able to identify so many fundamentally strong companies, in a wide range of markets and industries, selling at attractive valuations. We’ll continue to travel throughout the world to find these companies, combining our on-site research with careful scrutiny of the fundamentals once we’re back home.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
| **World’s | Best Growth Companies (WBGCs) are defined by Wasatch as companies outside the United States that we believe possess an identifiable, sustainable competitive advantage, are well managed, undervalued and are producing above average earnings growth relative to their industry and country of origin. |
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| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 1/27/05 | |||||
International Opportunities | 16.84% | 100.16% | 9.17% | 8.52% | ||||
MSCI World Ex-U.S.A. Small Cap Index | 5.92% | 74.55% | 4.13% | 4.57% | ||||
MSCI AC World Ex-U.S.A. Small Cap Index | 8.58% | 83.66% | 7.33% | 7.62% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Opportunities Fund are 2.81%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| Aramex PJSC (United Arab Emirates) | 2.8% | |
| Wirecard AG (Germany) | 2.5% | |
| EPS Co. Ltd. (Japan) | 1.8% | |
| China Automation Group Ltd. (China) | 1.7% | |
| Simplex Technology, Inc. (Japan) | 1.6% |
| Company | % of Net Assets | |
| Home Capital Group, Inc. (Canada) | 1.4% | |
| ASOS plc (United Kingdom) | 1.3% | |
| Ports Design Ltd. (China) | 1.3% | |
| Goodpack Ltd. (Singapore) | 1.2% | |
| DiaSorin S.p.A. (Italy) | 1.2% |
| ** | As of March 31, 2010, 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. |
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 indices.
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| WASATCH MICRO CAP FUND (WMICX) — Management Discussion | MARCH 31, 2010 | |
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 gained 7.32% during the first quarter. The period was characterized by rising confidence in the sustainability of the economic recovery and a rebound in corporate earnings. Against this favorable backdrop, the U.S. stock market posted its fourth straight quarter of gains. The S&P 500* advanced 5.39%, and the Russell 2000 Index rose 8.85%. It was nice to see the Fund start |
2010 with a positive return after such a big gain last year. Results were especially strong in information technology and health care, two sectors where our bottom-up research has uncovered many interesting companies. We did lose some ground relative to the Russell 2000 Index, mainly in the consumer discretionary and financials sectors. Overall, our stocks in these sectors had gains, but they did not keep up with the consumer discretionary and financials stocks in the Index.
DETAILSOFTHE QUARTER
Several of our semiconductor stocks posted double-digit gains this quarter, contributing to strong performance in the information technology sector. As the global economy has rebounded, so has demand for chips, and the operating results of our semiconductor companies have generally been solid. In addition, business spending on computers and machinery is expected to continue to grow in the months ahead. One of the top contributors in the Fund was Power Integrations, Inc., which had an especially good quarter and issued positive guidance. Power Integrations designs semiconductors that regulate power usage for electronic products, including cellphone chargers, DVD players and industrial controls. Because its chips are more energy efficient than competing technologies, the company is benefiting from the trend among regulatory agencies worldwide to raise energy efficiency standards.
In the health care sector, a number of our holdings in the equipment/supplies, life sciences and biotechnology industries gained more than 20%. One example was Abcam plc (United Kingdom), an online supplier of antibodies used by medical researchers to study protein function in cells. The company is growing rapidly and reported strong operating results for the second half of 2009, including a 60% increase in earnings. In our opinion, Abcam is an interesting, innovative business that has plenty of headroom for additional growth. The number of proteins being identified and studied is increasing, and we think the sophistication of the company’s sales portal makes it well-positioned to capitalize on rising demand.
Consumer spending is picking up on signs of stabilization in the job and housing markets, and the improvement was a tailwind for many of our consumer discretionary stocks. That said, weak results from our foreign-listed consumer
names limited gains in the sector. The biggest detractor in the Fund was Ports Design Ltd., a Chinese manufacturer and retailer of luxury apparel that was one of our best performing stocks in 2009. Ports’ operating metrics remained strong, but the fundamentals of the company were overshadowed by macroeconomic concerns. Specifically, the Chinese government is taking steps to rein in the country’s booming economy, such as raising reserve requirements for banks. While Ports is sensitive to economic cycles, we believe it is still a good long-run growth story given rising affluence in China.
After falling approximately 29% last year, the average small cap U.S. bank stock gained more than 13% in the first quarter. This negatively impacted the Fund’s performance versus the Russell 2000 Index since we are underweight in U.S. banks. In addition, most of the bank stocks that we do own underperformed, including Nara Bancorp, Inc. Nara is a Korean-American bank based in Los Angeles that focuses on lending to small and mid-sized businesses. The company raised capital in October with the intent of buying a failed bank from the Federal Deposit Insurance Corp. (FDIC). The potential for an FDIC-assisted deal was a positive for the stock, as these transactions can boost the earnings and capital ratios of the acquiring banks. Recent developments, such as the CEO’s retirement, make it less likely that Nara will pursue an FDIC-assisted purchase in the immediate term. However, we think there is a good chance that a deal could happen later in the year. Current and future holdings are subject to risk.
OUTLOOK
News on the U.S. economy has been more upbeat, corporate earnings are recovering and investor sentiment has improved. However, the United States is facing serious challenges that cloud the outlook for the economy and stock market going forward. The government is starting to unwind fiscal and monetary stimulus, and it is unclear how the economy will perform without this support. Longer term, the huge federal debt and projected growth in entitlement spending threaten to diminish the rate of growth in the United States.
We believe the Fund is well-positioned for the uncertain environment. In our opinion, we have invested in a good selection of companies that are less sensitive than average to overall economic growth. These are companies whose individual characteristics should allow them to sidestep some of the limitations of the economy — companies that can grow because of innovation, strong management or the ability to serve a particular market niche. In light of our reservations about the U.S. economy, we are looking to increase our exposure to high-growth foreign countries. For example, we added to our position in a U.S.-listed Chinese company this quarter following a recent trip to China.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *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. You cannot invest directly in this index. |
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| WASATCH MICRO CAP FUND (WMICX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
Micro Cap | 13.11% | 67.30% | 1.36% | 10.70% | ||||
Russell 2000 Index | 13.07% | 62.76% | 3.36% | 3.68% | ||||
Russell Microcap Index | 9.32% | 65.14% | 0.04% | N/A |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Fund are 2.24%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
Company | % of Net Assets | |
| Power Integrations, Inc. | 2.7% | |
| Dollar Financial Corp. | 2.6% | |
| O2Micro International Ltd. ADR (China) | 2.4% | |
| OPNET Technologies, Inc. | 2.4% | |
| Hibbett Sports, Inc. | 2.1% |
| Company | % of Net Assets | |
| Abcam plc (United Kingdom) | 2.1% | |
| Resources Connection, Inc. | 2.0% | |
| Micrel, Inc. | 2.0% | |
| CorVel Corp. | 2.0% | |
| Big 5 Sporting Goods Corp. | 1.9% |
| ** | As of March 31, 2010, there were 100 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 indices.
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| WASATCH MICRO CAP VALUE FUND (WAMVX) — Management Discussion | MARCH 31, 2010 | |
The Wasatch Micro Cap Value Fund is managed by a team of Wasatch portfolio managers led by Brian Bythrow.
Brian Bythrow, CFA Portfolio Manager
| OVERVIEW
U.S. stocks continued to move upward in the first quarter of 2010, as investors were generally optimistic even as economic data remained mixed. In this environment, the Wasatch Micro Cap Value Fund posted a return of 5.36% for the quarter. This placed the Fund’s performance somewhat behind its benchmark, the Russell 2000 Index, which returned 8.85% over the same period. |
Stock selection in information technology made the strongest contribution to our performance for the quarter. Over the period, the consumer discretionary sector was the strongest in our benchmark, as investors responded to a pickup in consumer spending on smaller-ticket items (such as apparel). This is an area of the U.S. market we have typically underweighted, though we do have significant exposure to consumers in emerging markets.
One of the factors in our underperformance during the quarter was our significant position in foreign stocks. While there were certainly some bright spots among our international holdings, a number of the markets we’ve invested in were weaker than the U.S. over the three months. Another reason for our underperformance was our cash position, which rose as we received significant inflows of new assets to invest, and as we sold out of positions in companies whose market capitalizations had grown beyond the limits of our Fund mandate. Overall, value stocks at the larger end of the small cap spectrum outperformed those at the micro cap end.
DETAILSOFTHE QUARTER
Our top contributor to performance for the quarter was GuestLogix, Inc. This Canadian company provides software and equipment used in making retail sales to passengers on airlines, trains, and ships. The company’s ongoing success in adding major carriers to its customer base has allowed it to deliver strong results. Now that its market capitalization has grown to near the minimum threshold for many investors, it appears likely to turn up on even more radar screens.
Another top performer from the information technology sector was U.S.-based Sanmina-SCI Corp., a contract electronics manufacturer. As Sanmina has benefited from increasing demand for its products, as well as its successful restructuring and cost-cutting efforts, its market cap has grown very rapidly. This ultimately placed it outside our micro cap range, so we sold out of the position.
In somewhat of a turnabout, a number of companies that had recently been among our strongest contributors detracted from our results this past quarter. For example, Spain’s Telvent GIT, S.A., a producer of open-road tolling equipment and other smart technologies, faced concerns that a substantial part of its business comes from its home
market, which is burdened with heavy layers of debt and other financial concerns that could reduce spending on public infrastructure projects. China’s Wasion Group Holdings Ltd. saw its share price knocked down after it failed to win an anticipated contract, sparking fears that it would face serious price competition. Germany’s Wirecard AG, an online payment processor, was hit by negative rumors concerning the activities of some users of Wirecard’s services. We sold out of Telvent and greatly reduced our position in Wasion, but after carefully examining the issues with Wirecard, we retain confidence in the company and have maintained our investment there.
Over the quarter, we began to add positions in several small U.S. banks to the portfolio. This is an area we had long avoided, as banks in this part of the marketplace were often among the most hurt by the credit crisis, and in many cases were not well-positioned to work through the problems it produced. Now, however, we are seeing more signs that there is improvement on the credit front, and small banks are trading at historically low valuations. So we have felt comfortable moving into several small banks that meet our criteria of having both stable to improving credit profiles and excess capital. We have been able to buy these banks at valuations as low as one times tangible book value.*
One of the banks we’ve added is Lakeland Financial Corp., which is headquartered in Indiana. The company’s track record looks solid, and we’ve had the opportunity to meet extensively with management. We believe this bank is in a good position to gain market share. Current and future holdings are subject to risk.
OUTLOOK
As we continue to work to deploy our cash, we intend to stay true to our investment discipline, particularly our focus on investing in undervalued companies. We don’t want to fall into the trap of buying good companies whose valuations leave little room for appreciation — or for that matter, of buying companies that are cheap for a good reason. Our rigorous investment process may mean it will take longer for us to put all of our cash to work, but we believe the end results make the time and effort worthwhile.
Although we’re never happy to lag the Index, we’ve seen before that the short-term behavior of micro cap stocks can be fairly uncorrelated to that of the broader market. In our view, if the companies in our portfolio are posting strong results and their stocks are reasonably valued, then over time we believe we should see attractive results.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *Tangible | book value is the total net asset value of a company minus intangible assets and goodwill. |
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| WASATCH MICRO CAP VALUE FUND (WAMVX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 7/28/03 | |||||
Micro Cap Value | 12.31% | 89.58% | 7.94% | 11.63% | ||||
Russell 2000 Index | 13.07% | 62.76% | 3.36% | 7.06% | ||||
Russell Microcap Index | 9.32% | 65.14% | 0.04% | 4.33% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Value Fund are 2.46%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| LHC Group, Inc. | 1.4% | |
| Haynes International, Inc. | 1.4% | |
| JDA Software Group, Inc. | 1.3% | |
| GuestLogix, Inc. (Canada) | 1.3% | |
| Solar Capital Ltd. | 1.3% |
Company | % of Net Assets | |
| OPNET Technologies, Inc. | 1.2% | |
| United Online, Inc. | 1.2% | |
| BWAY Holding Co. | 1.1% | |
| Boots & Coots, Inc. | 1.1% | |
| Hooker Furniture Corp. | 1.1% |
| ** | As of March 31, 2010, there were 124 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 indices.
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| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Management Discussion | MARCH 31, 2010 | |
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 5.25% during the first quarter of 2010 in what was a positive environment for U.S. equities. All major style and capitalization segments of the market advanced as our economy showed signs of improvement. The S&P 500 Index* was up 5.39%, and the Russell 2000 and Russell 2000 Growth indices rose 8.85% and 7.61%, respectively. It was the |
fourth straight quarter of gains for the market following its March 2009 bottom.
While the Fund did well in absolute terms, it trailed the small cap indices. This shortfall was not unexpected, since our quality-driven style tends to lag off of market bottoms. Historically, a bear market is followed by a full-blown junk rally in which stocks of unprofitable companies and companies with weak balance sheets post very strong returns. There have been times during this yearlong rally when low-quality stocks have dominated the market, but those periods have been more sporadic in nature.
We believe the absence of a traditional, sustained junk rally is related to long-run concerns about the economy. Investors are seeing the economy improve, but they are also worried the recovery might not be particularly dynamic due to huge U.S. debt levels. Instead of plowing full steam ahead into low-quality stocks, investors are keeping some of their assets invested in high-quality companies — companies whose solid balance sheets and business models should allow them to grow even in a low-growth environment. Because of this “nod” to quality, quality growth stocks — the kind we like to own — have held their own. As a result, our relative performance has been better than expected off the market bottom.
DETAILSOFTHE QUARTER
Most of our retail names did extremely well this quarter, which we think is a reflection of the pickup in the economy. Two of our top-contributing stocks were Zumiez, Inc. and Hibbett Sports, Inc., both of which reported solid revenue and earnings growth.** Zumiez is a retail chain that caters to teens and young adults who enjoy action sports like surfing and skateboarding. The company has a relatively small store base, and we believe it can double in size by opening new stores across the country. Hibbett sells athletic apparel and equipment in rural markets where competition from big-box sporting goods chains is limited. This unique positioning, along with efficiencies gained from implementing supply chain technologies, should fuel continued strong growth at the company.
One of the most powerful long-term investment themes we have identified is the need for businesses to be more efficient as they compete in a lower-growth and more competitive global economy. Companies are clearly looking to increase productivity without increasing headcount. One of
the best ways to accomplish this is to invest in technology-related products and services with compelling economic paybacks. A number of our technology stocks are benefiting from this focus on delivering efficiency. They include Riverbed Technology, Inc., a leader in the wide area network (WAN) optimization market, and Cognizant Technology Solutions Corp., a provider of information technology (IT) services. Both were top contributors this quarter.
With respect to efficiency, it is clear to us that there are countless inefficiencies that need to be taken out of the health care system for the cost-control goals of reform to be achieved. Computer Programs and Systems, Inc. and athenahealth, Inc. are examples of names we own that are positioned to do well under the new health care legislation. These companies provide hospitals and doctors’ offices with IT platforms that streamline high-volume administrative functions, such as medical recordkeeping and claims processing. Both stocks were weak this quarter as potential customers sorted out the terms of a government program that incentivizes the use of electronic medical records. However, we still believe athenahealth and Computer Programs and Systems will be good long-term investments.
Tetra Tech, Inc. and Stantec, Inc. were two other names that underperformed this quarter. Both are engineering firms that are beneficiaries of infrastructure build-out and federal stimulus money. Much of the federal stimulus money has not reached the real economy, and state and local governments have seen tax revenues decline during the recession. These two factors have had an impact on the near-term financial results of Tetra Tech and Stantec. Despite their recent weakness, we believe these stocks have the potential to perform well over time as federal contracts materialize this year and as the economy continues to improve. Current and future holdings are subject to risk.
OUTLOOK
The federal government has provided a tremendous amount of fiscal and monetary stimulus, and the economy is clearly beginning to grow again. This positive factor is offset by the “Big Three” long-run concerns: unprecedented levels of U.S. debt, rising taxes needed to pay for growing government spending, and high unemployment. It is hard for us to imagine the economy returning to a normal rate of long-run growth under these conditions. In the no-frills economy we foresee, we believe that owning quality growth stocks — the types of stocks we like to own in the Fund — has the potential to be a winning strategy. However, if the economy picks up steam and grows at or above a normal recovery rate, we would expect the market to go from being guarded with respect to risk to becoming a “risk-taking” market. In this scenario, stocks of lower-quality companies would likely do better than average.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *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. |
| **Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
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| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
Small Cap Growth | 12.80% | 61.49% | 3.00% | 6.76% | ||||
Russell 2000 Growth Index | 12.07% | 60.32% | 3.82% | -1.53% | ||||
Russell 2000 Index | 13.07% | 62.76% | 3.36% | 3.68% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Growth Fund are 1.31%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
Company | % of Net Assets | |
| Hibbett Sports, Inc. | 3.4% | |
| Power Integrations, Inc. | 3.4% | |
| Dril-Quip, Inc. | 2.9% | |
| MSCI, Inc., Class A | 2.8% | |
| Cognizant Technology Solutions Corp., Class A | 2.8% |
Company | % of Net Assets | |
| Knight Transportation, Inc. | 2.8% | |
| MSC Industrial Direct Co., Inc., Class A | 2.7% | |
| Peet’s Coffee & Tea, Inc. | 2.6% | |
| Ultimate Software Group, Inc. | 2.3% | |
| HDFC Bank Ltd. ADR (India) | 2.3% |
| ** | As of March 31, 2010, there were 94 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 indices.
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| WASATCH SMALL CAP VALUE FUND (WMCVX) — Management Discussion | MARCH 31, 2010 | |
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 posted a solid return of 5.86% in the first quarter, but lagged the Russell 2000 Value Index, which gained 10.02%. Markets in general seem to be pricing in a strong economic recovery, which is good news. To us, however, the bigger question is not if the economy is truly recovering, but how fast and sustainable the current recovery is. |
Rather than trying to guess the timing and magnitude of recovery, we continue to stick to our time-tested investment process of using deep due diligence to identify attractive companies that are currently undervalued.
DETAILSOFTHE QUARTER
Not surprisingly given the double-digit returns of the broader market, the Fund sported its share of strong performers in the quarter. Among our notable winners was the action-sports retailer Zumiez, Inc., for which robust improvement in fundamentals led to strong earnings growth* compared to the same period last year.
The information technology sector was also home to some strong performers, including OPNET Technologies, Inc. The company, which makes network management software, has embarked on a product cycle that should allow it to leapfrog its competition over the next year or so. This important development was recognized in the market during the first quarter, leading to a robust gain in OPNET’s stock price. Polycom, Inc., a maker of video-conferencing products, saw its shares rise as corporate information technology (IT) managers continued to gear their spending toward technologies that can provide an immediate return on investment. Additionally, Micrel, Inc. — a newer holding in the Fund — gained ground as improving fundamentals prompted investors to re-price its shares off of a valuation level that was near a five-year low.
Aside from our positioning in the financials and consumer discretionary sectors, the Fund’s main detractors came from a few individual holdings that experienced stock-specific difficulties. Our largest detractor was Nara Bancorp, Inc., whose stock price lost ground after investors became worried about management turnover at the bank. In the telecommunication services sector, a notable underperformer was Cbeyond, Inc., whose business of providing integrated telecom solutions to small businesses is seeing increased competition from larger operators (such as cable companies). We have eliminated both stocks from the Fund.
A new holding in General Cable Corp., an electricity infrastructure firm, lost ground after its most recent earnings report came in below expectations. We think the company is attractively valued, and — despite its initial price weakness — we see it as a compelling way to capitalize on the need to
modernize the U.S. power grid as well as capture opportunities in emerging economies. Historically, it has paid to hold stocks through weakness providing that valuations are attractive and the fundamental story remains intact. We see this as being the case with General Cable.
OUTLOOK
We are encouraged to see signs that the economy is finally beginning to undergo what looks to be a meaningful recovery. Stronger economic growth naturally translates into higher corporate earnings, which in turn helps stock prices move higher even if valuations don’t expand any further. The question, of course, is how long will this process of recovery take to play out? Since the answer is largely unknowable, we are opting for a conservative approach by taking advantage of opportunities as they present themselves but not being overly aggressive in adding new investments to the Fund.
An example of this process at work can be found in our approach to the financials sector. We added a number of new financial stocks to the Fund during the past three months, including Trustmark Corp. and Washington Federal, Inc., among others. At the same time, however, we took care to add only small positions until the broader credit issues in the sector play themselves out.
Although the market has come a long way in the past year, there are still plenty of opportunities for small cap investors who do their research. We found many such opportunities in stocks that the Fund has owned in the past and that we have continued to follow. One such stock is EnergySolutions, Inc., which specializes in the disposal of nuclear waste. Another is the oil and gas services company Willbros Group, Inc., which could benefit from energy infrastructure investments. These new holdings, together with the other additions we have made to the Fund, are part of our ongoing effort to replace stocks that have become fully valued with new, more compelling, investments.
We continue to find the industrials sector to be fertile ground for such investments. The Fund is overweight in this group as a result of two factors: first, the higher proportion of attractive values available in the sector; and two, the compelling opportunities in the trucking and logistics industry. The trucking business experienced substantial upheaval during the recession, with the end result being reduced capacity and improved pricing power for the remaining companies. This helps form the thesis for our holdings in Old Dominion Freight Line, Inc., Marten Transport, Ltd., and Vitran Corp., Inc. We also hold substantially overweight positions in the information technology and health care sectors, where bottom-up research has been particularly effective in finding undervalued companies with rapidly growing niche markets. Current and future holdings are subject to risk.
Overall, we believe the Fund is well positioned for an environment of gradual economic expansion.
Thank you for the opportunity to manage your assets.
| *Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
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| WASATCH SMALL CAP VALUE FUND (WMCVX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
Small Cap Value | 11.64% | 76.44% | 1.29% | 9.07% | ||||
Russell 2000 Value Index | 14.01% | 65.07% | 2.75% | 8.90% | ||||
Russell 2000 Index | 13.07% | 62.76% | 3.36% | 3.68% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Value Fund are 1.97%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| Herbalife Ltd. | 2.3% | |
| CorVel Corp. | 2.3% | |
| HEICO Corp., Class A | 2.2% | |
| Redwood Trust, Inc. | 2.2% | |
| Pericom Semiconductor Corp. | 2.1% |
| Company | % of Net Assets | |
| Old Dominion Freight Line, Inc. | 2.1% | |
| Emeritus Corp. | 2.0% | |
| Dollar Financial Corp. | 2.0% | |
| MFA Financial, Inc. | 2.0% | |
| Standard Microsystems Corp. | 1.9% |
| ** | As of March 31, 2010, 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. 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 indices.
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| WASATCH STRATEGIC INCOME FUND (WASIX) — Management Discussion | MARCH 31, 2010 | |
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
From Wasatch’s founding in 1975 to the market peak of 2007, the Dow Jones Industrial Average* advanced from the 800 level to more than 14,000, a 17-fold increase. In hindsight (and notwithstanding interim gyrations), the correct investment strategy over these 32-years was to be aggressively bullish. However, the 2008–2009 market meltdown served as a reminder that, no matter how bullish one might be, a good investor should never forget the |
cardinal rule of money management: Always Be Cautious. Capital takes a great deal of time and effort to accumulate, so a prudent investor should always work to avoid investing such that capital is exposed to unnecessary risk. I disregarded this rule in 2008, as my excitement for the opportunity provided by seeming bargains early in the year overshadowed my fear of the deteriorating economic environment.
During the latter half of 2008 and the early months of 2009, the market continued to ride the down elevator until fear overwhelmed any remnants of greed for most investors. Fortunately, I did not succumb to this panic, but instead looked for signs of capitulation as a signal that the market had reached bottom.
While the market and the Fund enjoyed strong performance for the balance of 2009 — the Fund’s return over the last 12 months was almost 50% — I’ve vowed that, no matter the apparent opportunity, I will Always Be Cautious managing the Strategic Income Fund.
The prospect for an economic recovery continues to gain traction and the stock market responded during the first quarter with the S&P 500 Index delivering a surprisingly strong 5.39% return. I was pleased that the Fund returned 4.54% while assuming less risk than the market as a whole.
Even though indications are that economic improvement is afoot, it is worth remembering that we are in uncharted waters given the extreme level of stimulus efforts undertaken by governments around the world. There are also large structural issues still facing the U.S. economy: high and stagnant unemployment, limited availability of credit, and the expanding role of government. These challenges will impact our economic growth for months and years to come.
Although it is virtually impossible to eliminate exposure to these underlying issues, we attempt to dampen the amplitude of their impact on the Fund. This is accomplished by striving to purchase high quality companies that are attractively valued and paying solid and/or growing dividends. I believe this approach creates a growth opportunity in the form of capital appreciation and growing dividends as well as providing some potential downside protection due to the quality and valuation of the companies.
During the quarter, I rotated toward more favorably valued stocks and increased the Fund’s cash position to around 10%.
This creates a measure of caution while also providing dry powder to use when better opportunities present themselves.
DETAILSOFTHE QUARTER
Overall, the Fund’s first quarter performance was driven by gains across our spectrum of holdings. Every sector, except our small weight in materials, realized a positive return. I was pleased that the Fund again successfully avoided large negative surprises. I believe this helps validate our disciplined investment process focused on company quality and valuation sensitivity.
The Fund’s financial holdings were the primary drivers of performance. Legacy holdings such as real estate investment trusts (REITs) Redwood Trust, Inc. and CapLease, Inc. performed well, as did Ares Capital Corp., a business development company. In addition to appreciating nicely, these companies also continued to pay a generous dividend, as management has been adept at exploiting the current steep yield curve.
The Fund made some new investments this quarter, including purchases of Solar Capital Ltd., Xilinx, Inc. and Intel Corp. Solar Capital is a business development company that the Fund has owned for some time as a private placement. The company went public during the quarter and I increased the Fund’s position through the initial public offering (IPO).** Xilinx and Intel are semiconductor companies that I believe are positioned to remain market leaders as the demand for microchips expands exponentially. Unlike many technology companies, each also pays an attractive dividend. Current and future holdings are subject to risk.
OUTLOOK
Six months ago in this commentary I made a comparison between the economy and a traveler struggling to traverse a white-water river, who upon reaching the other side found a steep embankment still to be scaled. Certainly there was some relief in making it through the most perilous aspect of the journey, but another difficult and patience-testing battle still lay ahead.
To continue this analogy, the traveler has made good progress climbing the bank. This has given the market much confidence and hope. Perhaps more than is warranted given the climb that remains, and more importantly the long road that awaits the traveler once he makes it to the top of the bank.
I expect patience and discipline will be the driver of investment success in the coming years. Economic growth is likely to come more slowly and investment returns may well be lower than they have been historically. However, I continue to believe that equities are one of the best investment opportunities for the decade ahead.
I am committed to doing a better job of providing downside protection in the Fund, while still capturing reasonable upside returns and providing a consistent stream of dividend income. My long-term goal of achieving returns that fall between stocks and bonds remains unchanged.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *The | Dow Jones Industrial Average is the most widely used indicator of stock market conditions. It contains 30 significant blue chip stocks traded on the New York Stock Exchange. |
| **An | initial public offering (IPO) is a company’s first sale of stock to the public. |
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| WASATCH STRATEGIC INCOME FUND (WASIX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 2/1/06 | |||||
Strategic Income | 10.76% | 49.90% | N/A | 0.02% | ||||
S&P 500 Index | 11.74% | 49.76% | N/A | -0.02% | ||||
Barclays Capital U.S. Aggregate Bond Index | 1.99% | 7.69% | N/A | 5.84% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Strategic Income Fund are 1.94%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |
| Redwood Trust, Inc. | 7.7% | |
| Capstead Mortgage Corp. | 5.2% | |
| Ares Capital Corp. | 4.2% | |
| Herbalife Ltd. | 3.3% | |
| MFA Financial, Inc. | 3.3% | |
| Solar Capital Ltd. | 3.2% |
| Company | % of Net Assets | |
| ProShares UltraShort 20+ Year Treasury | 3.0% | |
| Xilinx, Inc. | 2.7% | |
| International Business Machines Corp. | 2.7% | |
| Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 2.5% |
| ** | As of March 31, 2010, 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: 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 indices.
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| WASATCH ULTRA GROWTH FUND (WAMCX) — Management Discussion | MARCH 31, 2010 | |
The Wasatch Ultra Growth Fund is managed by a team of Wasatch portfolio managers led by Ajay Krishnan.
Ajay Krishnan, CFA Portfolio Manager | OVERVIEW
The Wasatch Ultra Growth Fund had a healthy return of 7.30% in the year’s first quarter, as U.S. stocks continued in a positive direction. Our performance closely tracked that of the Russell 2000 Growth Index, which posted a 7.61% gain in the first quarter. As we saw in the second half of last year, the market’s surge was driven largely by investors’ attraction to lower-quality stocks. Given our preference for higher-quality, faster-growing stocks, this |
created a headwind for the Fund during the quarter. We were nonetheless able to keep close to the market thanks to earnings growth* among our companies that was not only stronger than the benchmark, but also better than we anticipated. This captured earnings growth reflects our careful focus on companies with solid fundamentals and distinctive business themes that we believe can help buoy the portfolio during a recession, and has the potential to help it move ahead of the pack as the economy rebounds.
DETAILSOFTHE QUARTER
Once again, information technology was our strongest sector for the quarter. Longtime top holding Cognizant Technology Solutions Corp. was a leading contributor. Many had feared that this IT outsourcing company would be hurt by weakness in the financials sector, which provides about half of its business. Instead it seems that pressure on financial companies to cut costs and improve earnings has led them to continue to make use of outsourcing’s cost efficiencies.
Our holdings in the health care sector, an area of weakness last quarter, were also positive contributors over the past three months. Our strongest stock in this area was NuVasive, Inc., whose products are used in minimally invasive spinal surgeries. We were somewhat surprised at the positive returns posted by many health care stocks over the past three months. The passage of health care reform in the U.S. makes it seem likely that price-to-earnings multiples** for health care companies will stay under pressure, even as demand for medical services appears set to rise.
Market observers have noted that historically when the economy is in the first couple of years coming out of a recession some of the strongest equity sectors have been energy, financials and health care, with consumer discretionary and consumer staples being among the weakest. This historic pattern did not hold true over the past quarter, as the consumer discretionary area proved to be the best-performing sector in the Russell 2000 Growth Index for the period. This sector was lifted in large part by solid same-store sales figures from retailers, especially in apparel.
This development hurt our relative results for the quarter because we continued to underweight consumer stocks, as they generally fell short of our stringent, fundamental investment criteria. That said, the stocks we did hold in this
sector actually outperformed their counterparts in the Index; it was only our under-allocation here that hurt returns relative to the Index.
Notably, fitness club operator Life Time Fitness, Inc. landed among our best contributors for the period. The company has beaten earnings estimates, and appears to be benefiting from consumers’ concern for health and fitness and willingness to pay for convenient, upscale facilities. Two retailers also made solid contributions to our results for the quarter. Zumiez, Inc. sells active wear targeted to the influential and style-conscious teenage skater/snowboarder demographic. Its stores are designed to build its customers’ sense of connection with the brand. Zumiez was also positioned to benefit from the heavy media attention snowboarding received during the recent Winter Olympics. Discount retailer Dollar Tree, Inc., in contrast, offers an array of everyday household goods priced at just $1. While earlier there was some concern that these stores may have difficulty maintaining customer loyalty once the economic recovery hits full swing, sales trends suggest that shopping and saving at dollar stores has become a habit that many consumers aren’t eager to give up.
Although the Fund’s holdings are diverse, one characteristic our companies generally share is a distinctive theme, or approach to their business, that sets them apart from the run of the mill. We have found that this attribute, along with a sustainable competitive advantage, can play a large role in determining whether a company can maintain a healthy pace of earnings growth.
One weak note in the portfolio was CBeyond, Inc., a provider of telecommunication services to small businesses. The company has suffered from competitive pressure, as cable companies seeking to expand beyond the consumer sphere have increasingly targeted this segment as well. Current and future holdings are subject to risk.
OUTLOOK
We anticipate that in the coming months, earnings growth will be more difficult to come by. In this environment, investors are likely to become more selective, and we believe their focus will increasingly turn to high-quality growth stocks. This environment is likely to be positive for the kinds of stocks we emphasize.
Demand for equities appears poised to remain strong. There is about $3 trillion in cash still sitting on the investment sidelines. We’re also somewhat encouraged by the outlook for earnings growth. After an extended period of cautious spending and hoarding cash, corporate balance sheets appear strong, and ready to support business spending.
As companies that offer the kind of earnings growth we seek become more expensive, we recognize that we will need to pay particular attention to valuations, and trim or even eliminate positions that have become too richly valued.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
| **The | price-to-earnings or P/E multiple is the price of a stock divided by its earnings per share. |
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| WASATCH ULTRA GROWTH FUND (WAMCX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
Ultra Growth | 14.50% | 69.79% | 0.06% | 4.85% | ||||
Russell 2000 Growth Index | 12.07% | 60.32% | 3.82% | -1.53% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Ultra Growth Fund are 1.82%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
Company | % of Net Assets | |
| Cognizant Technology Solutions Corp., Class A | 4.2% | |
| MSCI, Inc., Class A | 4.1% | |
| Power Integrations, Inc. | 3.2% | |
| F5 Networks, Inc. | 3.0% | |
| Montagu Newhall Global Partners II-B, L.P. | 2.7% |
Company | % of Net Assets | |
| Silicon Laboratories, Inc. | 2.2% | |
| O2Micro International Ltd. ADR (China) | 2.1% | |
| OPNET Technologies, Inc. | 2.1% | |
| Dollar Financial Corp. | 2.0% | |
| Capella Education Co. | 1.9% |
| ** | As of March 31, 2010, 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. |
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 indices.
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| WASATCH-1ST SOURCE INCOME EQUITY FUND (FMIEX) — Management Discussion | MARCH 31, 2010 | |
The Wasatch-1st Source Income Equity Fund is managed by a team of Wasatch portfolio managers led by Ralph Shive and Michael Shinnick.
Ralph C. Shive, CFA Portfolio Manager |
Michael L. Shinnick Portfolio Manager | OVERVIEW
The Wasatch-1st Source Income Equity Fund returned 4.34% in the first quarter of 2010 and lagged the Russell 1000 Value Index, which returned 6.78%. The quarter saw two important |
developments: the tightening by China of bank reserve requirements in response to inflation concerns and real estate speculation, and the deteriorating financial condition of Greece with concomitant complications for its European partners.
One issue during the quarter was lackluster stock selection in most sectors, with the exception of energy where we were quite strong. A headwind was provided by the China and Greece situations, which stirred a dollar rally that hurt two of our favorite sectors, information technology and materials. We are not concerned about the dollar rally on a long-term basis, and both sectors were performing well in the latter part of the quarter. In addition, our underweight in banks, especially commercial banks, which had a huge first quarter rally, hurt performance relative to the Index. This is of greater concern as the Fed policy of zero cost funding is giving banks and investment banks great opportunities for profits to cover last cycle’s write offs. This condition may persist into 2011, which would be longer than our original expectation. As we speak, Congress is reviewing the 2008 financial crisis and potential legislation is being considered to alleviate future wealth destruction and taxpayer liability. It appears the trend is in the direction of modest remediation. We would vote for Transparency, Transparency, Transparency.
DETAILSOFTHE QUARTER
Stocks that helped returns in the first quarter included MetLife in the financials sector as the company’s balance sheet strengthened and confidence was regained with respect to future profitability. Johnson Controls in the automotive sector saw volumes rebound dramatically from the severe conditions of last year. Although Nokia has been under the cloud of Apple taking headlines on creative product innovation, it still garners large market share in smart phones in emerging markets, and investors recognized this over the first quarter. In the industrials space, which was quite strong, Parker Hannifin, a diversified industrial producer in a variety of industries, saw strong price appreciation.
The only real disappointment was H&R Block, which pre-announced that tax-return activity would be well below expectations. High unemployment and online software seem to be nibbling at their customer base.
The only strategic move in the quarter was to increase our energy exposure through the addition of three new holdings. Exxon Mobil is a large integrated firm that we feel has strong cash flow generation and the potential for growing earnings and dividend increases over the next several years. Transocean Ltd. is a stock formerly held in the Fund that we sold some quarters ago. When the company recently announced it was reinstating a dividend we purchased the stock again. We like the offshore drilling space and believe the company has strong cash flow looking out several years and good industry supply/demand dynamics. A more aggressive name in this space is Ultra Petroleum, which does not pay a dividend and sports a relatively high valuation. The company has growing reserves of natural gas, and we expect that over time the benefits of a domestic source of clean energy will be a compelling driver of value creation. Current and future holdings are subject to risk.
In keeping with our investment style, we were pleased to see many companies in the Fund return to raising their dividends after a 2009 that saw the most decreases in dividends since the 1930s.
OUTLOOK
There is growing evidence that the economic recovery is in motion, however frustratingly slow it may be. We acknowledge that stock prices have anticipated much of the recovery and are concerned that we may see a consumer spending double dip, as employment growth remains extremely sluggish. One data point we are following closely is disposable personal income growth. We expect it will be slow relative to past cycles, partly hurt by rising taxes across many sectors of the economy. We expect that the “federal governmentalization” of America will most likely portend slower growth. We would like to see a shift from the current bailout policies toward policies benefiting savings and investment. It’s possible that the upcoming election cycle will spur a healthy debate about these contrasting trends. One of the more positive conditions is that publicly traded corporations appear to be in strong financial condition. We think that creates an environment where we can make money in stocks, and we would expect earnings and dividend growth in most of the stock positions we hold.
The Fund is nearly fully invested under strategies emphasizing strong dividend yields,* attractive valuations and earnings growth** potential. Our goal remains to provide investors with significant participation in market rallies, along with returns that hold up relatively well during market corrections. We take the responsibility of managing the Fund very seriously.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
| *Dividend | yield is a company’s annual dividend payments divided by its market capitalization, or the dividend per share divided by the price per share. For example, a company whose stock sells for $30 per share that pays an annual dividend of $3 per share has a dividend yield of 10%. |
| **Earnings | growth is a measure of growth in a company’s net income over a specific period, often one year. |
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| WASATCH-1ST SOURCE INCOME EQUITY FUND (FMIEX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
Income Equity | 10.87% | 44.68% | 5.48% | 7.85% | ||||
Russell 1000 Value Index | 11.28% | 53.56% | 1.05% | 3.10% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Income Equity Fund are 1.18%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
Company | % of Net Assets | |
| Harris Corp. | 1.9% | |
| McKesson Corp. | 1.8% | |
| Johnson Controls, Inc. | 1.7% | |
| Marathon Oil Corp. | 1.6% | |
| The Williams Cos., Inc. | 1.6% |
Company | % of Net Assets | |
| Ensco plc ADR (United Kingdom) | 1.6% | |
| Hewlett-Packard Co. | 1.5% | |
| Avon Products, Inc. | 1.5% | |
| Archer Daniels Midland Co. | 1.5% | |
| Sysco Corp. | 1.5% |
| ** | As of March 31, 2010, there were 80 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 indices.
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| WASATCH-1ST SOURCE LONG/SHORT FUND (FMLSX) — Management Discussion | MARCH 31, 2010 | |
The Wasatch-1st Source Long/Short Fund is managed by a team of Wasatch portfolio managers led by Michael Shinnick and Ralph Shive.
Michael L. Shinnick Portfolio Manager |
Ralph C. Shive, CFA Portfolio Manager | OVERVIEW
While the Fund lagged the S&P 500 for the quarter, we are pleased that it continues to offer a very strong risk-adjusted return profile and that performance has significantly exceeded the |
benchmark over the trailing three- and five-year periods.
Markets were choppy early on, yet stocks continued their advance over the three months, as investors focused on signs of improvement in economic conditions as well as in corporate earnings. Our discipline helped moderate the impact of volatility in January and February, while allowing the Fund to participate modestly as the market turned strongly upward in March. Long holdings within information technology, energy and health care added to performance. The Fund’s short positions constrained performance in absolute terms, given a rising market, and due to the stocks we selected.
DETAILSOFTHE QUARTER
We generally start by 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 have good fundamentals. In choosing which companies to sell short, we look for industries where trends are moving against them and companies within those industries that are particularly vulnerable.
Among long positions, several technology companies related to the theme of “cloud computing” added significantly to performance. Cloud computing is an evolving information delivery paradigm for enabling timely, global and scalable access to a shared pool of flexibly configured computing resources. Fund holdings involved in this theme include TIBCO Software, Inc., Silicon Graphics International Corp., Akamai Technologies, Inc. and Novell, Inc.
We also had a significant contribution from Symmetry Medical, Inc., a strategic supplier of implants, tools and kits used in orthopedic procedures. Symmetry has been a portfolio laggard in recent quarters, though our investment thesis is playing out as the company maintained profitability on declining volumes and is poised to participate strongly in a rebound of the sector.
Finally, stock selection within energy was another source of positive performance. The offshore drilling theme received positive attention from investors late in the quarter.
On the downside, one of our largest energy holdings, Devon Energy Corp., suffered from investors’ reaction to its
announced sale of offshore properties. Devon should receive a premium price for the properties, and we added to our position in the belief that the sale will have a positive impact on shareholder value over the next couple of years. We remain confident in the company’s strategic direction and are comfortable with our increased position size.
Another detractor was a new position, Brocade Communications Systems, Inc. Brocade has a longstanding storage area network business that represents a tremendous core asset, and we view the company as attractively priced in relation to its balance sheet and earnings potential. However, the company provided guidance during the quarter that a recently acquired networking business was underperforming. Our view is that if Brocade is not successful in integrating the two businesses, a larger acquiring company will find a way to realize value in excess of the current market valuation. Current and future holdings are subject to risk.
We continue to hedge the portfolio through the use of both short positions and writing calls against long positions. The Fund’s short positions as a group did not help performance as the market rose in March. However, losses due to this strategy were limited by our disciplined covering of short positions. In addition, we increased the writing of covered calls in the Fund and this provided a source of incremental return. While market volatility in recent months has been low overall, it has been possible to earn attractive premium income in the more volatile information technology, energy and materials sectors, and we will continue to use covered call writing to generate income and provide the potential for additional downside protection.
OUTLOOK
We intend to remain flexible while protecting shareholder capital. We believe the economic recovery will become more widespread in 2010, but also that the major risks have largely been deferred rather than eliminated. We will continue to invest in companies with strong business models, balance sheets and free cash flow. We will remain selective in shorting stocks and not allow short positions to become too extended. Our watch list for shorting continues to grow, as we see a leveraged financials sector with unresolved challenges and consumers battling unemployment, declining wages and large household debt service obligations.
Our largest holdings represent companies we believe have defensive characteristics such as low-cost retailer Wal-Mart Stores, Inc. and business technology firm Oracle Corp. We are looking for companies that have the potential to grow and make money in a variety of economic conditions.
The Fund continues to be net long, with more than 60% net market exposure. We would not expect to shift this ratio unless we see signs that the recovery is faltering or failing.
Protecting capital and delivering positive returns in a variety of market conditions remain important elements of the Fund’s strategy. We appreciate your support and look forward to helping you protect, grow and compound your assets for many years to come.
Thank you for the opportunity to manage your assets.
CFA® is a trademark owned by CFA Institute.
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| WASATCH-1ST SOURCE LONG/SHORT FUND (FMLSX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 8/1/03 | |||||
Long/Short | 6.92% | 36.00% | 5.94% | 5.99% | ||||
S&P 500 Index | 11.74% | 49.76% | 1.92% | 4.61% | ||||
Citigroup U.S. Domestic 3-Month Treasury Bills Index | 0.04% | 0.14% | 2.76% | 2.40% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Long/Short Fund are 1.91%. The expense ratio shown elsewhere in this report may be different. The Total Annual Fund Operating Expenses include direct expenses paid to the Advisor, and may include indirect expenses from 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.
| *Not | annualized |
TOP 10 EQUITY HOLDINGS**
Company | % of Net Assets | |
| Loews Corp. | 4.7% | |
| Wal-Mart Stores, Inc. | 4.6% | |
| Devon Energy Corp. | 3.8% | |
| The Allstate Corp. | 3.3% | |
| Oracle Corp. | 3.0% |
Company | % of Net Assets | |
| General Cable Corp. | 2.1% | |
| Unum Group | 1.9% | |
| Waste Management, Inc. | 1.9% | |
| Archer Daniels Midland Co. | 1.8% | |
| Johnson & Johnson | 1.8% |
| ** | As of March 31, 2010, there were 55 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 | 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 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 Three-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 indices.
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| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) — Management Discussion | MARCH 31, 2010 | |
Van R. Hoisington Portfolio Manager | DETAILSOFTHE QUARTER
Long-term Treasury bond yields were essentially unchanged over the first quarter of 2010, resulting in flat performance for the Wasatch-Hoisington U.S. Treasury Fund. The Barclays Aggregate Bond Index, with a shorter duration than the Fund, had a positive return for the quarter and the past 12 months due to the continuing contraction in yield spreads in lower quality issues. This near record low in |
credit spreads, however, has not affected the long-term results of the Fund. The Fund’s average annual return over the past 10 years beat the Index by 0.49 percentage points.
OUTLOOK
The normal reaction to a massive increase in government spending is to assume that it will bring inflation, particularly in the U.S. where amounts have been so large over the past 10 years. Spending has shifted from 18.4% of gross domestic product (GDP)* in 2000 to 24.7% today and the results are unequivocal. Inflation today is 1.3% versus 1.7% 10 years ago as measured by the core PCE deflator.** The percent of the population working today is 58.6% while prior to the large budget deficit spending of the last 10 years it was 64.6%. GDP in the U.S. was growing at 4.8% a decade ago, and today the country is staggering out of recession.
Thus, contrary to conventional wisdom, monumental government spending produced less growth, and lowered standards of living and inflation. We can understand this through the application of mathematics to economic theory.
David Ricardo (1772–1823) initially spelled out the role of fiscal policy influences on economic activity in what is termed “Ricardian equivalence.” He was a seminal thinker who also originated the concepts of “comparative advantage” and “diminishing returns.” The point of Ricardian equivalence is that it doesn’t matter whether governments fund expenditures by taxing or borrowing. Either way resources are shifted from the private sector to the government sector. Thus, an increase in government spending does not increase the economic pie (real GDP); it merely shifts the distribution of the pie, with the government taking more and the private sector having less.
In 1936, John Maynard Keynes (1883–1946) rejected Ricardo, arguing that deficit spending could increase economic activity. Keynes views have been taught to economics students for most of the past five decades. Importantly, neither Ricardo nor Keynes could know whether their views were right or wrong given the mathematical and statistical technology and data availability of the day.
Now there is credible research employing sophisticated econometric techniques that confirms that Ricardo, not Keynes, is correct. The Harvard economist Robert Barro, from whom the term “Barro Ricardian Equivalence” has risen, as well as the Italian econometrician Roberto Perotti found that the government expenditure multiplier is very close to zero. A zero government expenditure multiplier means that deficit spending only provides a transitory boost
to the economy. Deficit spending initially raises GDP, but then the effect dissipates and later is reversed as the financial resources available to the private sector are reduced. The econometric calculations indicate that each $1 increase in government expenditures will, over time, reduce private expenditures by $1. The distribution of the pie is impacted (i.e., government is larger and the private sector is smaller) but its overall size is not affected, just as stated in Ricardo’s equivalence theorem.
Valerie A. Ramey, Professor of Economics at the University of California at Berkeley has found that the expenditure multiplier is in a range of 0.6 to 1.1, or an average of 0.85. Once again this suggests some boost to overall economic activity from government spending at the expense of the private sector. The estimates of the multipliers vary due to different sample periods and other technical considerations. The objective is to identify the effects of government spending on economic activity while over time a host of other influences are also at work. The center of the estimates of the spending multiplier, however, is less than one, while the center of estimates for the tax multiplier,† our next topic, is greater than one. Consequently, we believe economic conditions will ultimately deteriorate in response to the current fiscal policy mix.
Beginning January 1, 2011, the sizeable tax reductions enacted in 2001 and 2002 will expire. The administration projects that household taxes will rise by a cumulative $1.1 trillion over the ensuing 10-year period, while business taxes will rise by $400 billion. This calculation was prior to any taxes enacted in the health care bill, and does not account for other taxes such as the recently mentioned value added tax suggested by administration policy advisors. Dr. Barro estimates that the tax multiplier is minus 1.1, meaning that a $1 increase in taxes will reduce GDP by $1.10. However, Christina Romer, Chair of the Council of Economic Advisors and her husband David in an exhaustive study published in March 2007 found the tax multiplier to be minus 3.0. Bottom line, if the spending multiplier is 0.6 and the tax multiplier is minus 1.1 or more, then mathematically this country cannot spend its way to prosperity.
With excessive levels of debt and what we believe is the wrong fiscal policy mix, inflation will continue to moderate, thereby driving long-term treasury yields lower. The path to lower rates will not be smooth, as volatility will arise from heavy sales of U.S. government debt and occasional transitory improvements in economic activity. However, patient investors in long-term U.S. Treasury bonds such as those held by the Fund have the potential to be rewarded.
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 | Personal Consumption Expenditures (PCE) Deflator is part of the National Income and Products Accounts developed by the Bureau of Economic Analysis of the U.S. Commerce Department. The PCE Deflator is a variable weighted index and is widely considered to be the most reliable of all the price indices. |
| † | The tax multiplier is the ratio of change in aggregate output (or gross domestic product) to an autonomous change in taxes. |
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| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
U.S. Treasury | -9.32% | -14.53% | 4.93% | 6.78% | ||||
Barclays Capital U.S. Aggregate Bond Index | 1.99% | 7.69% | 5.44% | 6.29% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-Hoisington U.S. Treasury Fund are 0.79%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 HOLDINGS**
Holding | Maturity Date | % of Net Assets | ||
| U.S. Treasury Strip, principal only | 11/15/27 | 29.2% | ||
| U.S. Treasury Bond, 4.75% | 2/15/37 | 16.8% | ||
| U.S. Treasury Strip, principal only | 2/15/37 | 12.9% | ||
| U.S. Treasury Bond, 4.50% | 2/15/36 | 11.2% | ||
| U.S. Treasury Strip, principal only | 5/15/39 | 7.4% |
Holding | Maturity Date | % of Net Assets | ||
| U.S. Treasury Bond, 4.50% | 5/15/38 | 7.3% | ||
| U.S. Treasury Bond, 4.25% | 5/15/39 | 4.4% | ||
| U.S. Treasury Bond, 4.50% | 8/15/39 | 3.3% | ||
| U.S. Treasury Bond, 5.375% | 2/15/31 | 2.5% | ||
| U.S. Treasury Bond, 5.25% | 2/15/29 | 2.5% |
| ** | As of March 31, 2010, 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 | MARCH 31, 2010 | |
Paul W. Gifford, CFA Portfolio Manager | OVERVIEW
The Wasatch-1st Source Income Fund returned 1.36% during the first quarter of 2010. Over the same time period the Barclays Capital U.S. Intermediate Government/Credit Bond Index returned 1.54%. Spreads versus Treasuries on almost all corporate, agency and asset- or mortgage-backed securities came in (tightened). As a result, the Fund’s holdings performed better than Treasuries. |
Yields on Treasury bonds traded between 3.6% and 3.8%. By quarter-end the yield punched through 3.8% to 3.87%, its highest point since mid 2009. Most of the increase occurred during the final few weeks of the period as the U.S. Treasury continued to issue billions of dollars worth of bonds each week.
The Federal Reserve’s program of buying government bonds, which has helped to keep interest rates low, ceased in March, but may resume sometime down the road if economic conditions deteriorate.
The Fed completed its treasury purchases in October and has decreased agency purchases this year. The Fed indicated it intends to hold the securities for sometime which will allow the normal principal repayment mechanism inherent in agency mortgage-backed securities to essentially liquidate these positions over time.
DETAILSOFTHE QUARTER
The economy has been producing some very agreeable statistics that have been bolstering asset prices. The news is dramatically better than it was a mere 12 months ago. At that time, the world’s stock and bond markets reached the bottom after the credit crunch drove the global economy off a cliff. In the U.S., gross domestic product (GDP)* growth officially started to rise in the third quarter of 2009, aided by “cash for clunkers”** activity. While we have seen improvement in the economy, we still have a way to go to regain what was lost during the “Great Recession.”
The strength of economic data has generally surprised economists and, to a certain extent, us as well. The Blue Chip Financial Forecast as late as January 2010 predicted only 3.0% growth and no single forecast was above 4.5%. Yet preliminary data came in at nearly twice the average forecast at 5.6%. One of the largest factors was inventory rebuilding. Many firms had slashed inventories to levels well below the already reduced rate of sales they were experiencing.
Many of our clients and associates tell us that they haven’t really seen or felt the recovery. Due to implosion in certain parts of the domestic economy, some have not seen any improvement and continue to feel like they are treading water. The auto industry is an example. Data from J.D. Power and Associates showed that in 2009 U.S. auto sales, which had been above 15 million cars per year over the last decade, dropped below 11 million cars.
Over the coming years, sectors that declined the most may be solid contributors to economic growth and corporate earnings. A return to annualized auto sales of 15 million (a number that would be required to merely maintain the
current car-to-driver ratio) over the next five years would equate to an annual growth rate of 6.4%. This would powerfully propel corporate earnings in the auto industry.
Earnings reports, which have been relatively positive, should continue to be on the upswing for several more quarters. Cost cutting measures would allow even modest revenue growth to magnify profit margins. Strong earnings will eventually lead to increased hiring and slowly but surely lower unemployment. Lower unemployment would help us all “see” the economic recovery firsthand.
OUTLOOK
The first quarter of 2010 could be considered relatively quiet on the fixed income front. The largest issue for the market to digest was the credit issues in Greece. The market handled it well, but there is growing concern surrounding sovereign indebtedness. Greece will only be the first country we read about and the U.S will be included given our large deficits and existing debt.
During the quarter, the Fund continued to add modest amounts of credit exposure. We purchased several preferred stocks with yields in excess of 6.5% (Morgan Stanley and JPMorgan Chase & Co.). Increased stability and profitability of financial companies and banks led us to add to our corporate bond investments including JPMorgan, GE and PACCAR Financial Corp.
The other major strategy was to take advantage of the yield curve. We find the pickup in yield due to a modest lengthening of maturities rather compelling. We sold government agency bonds† maturing in three years and replaced them with issues maturing in five years and increased the yield by 1.6%. In another trade, we sold credit card asset backed bonds maturing in one year and bought a three-year maturity bond increasing the yield by 1.90%. We extended maturities in JPMorgan corporate bonds†† by two years and increased the yield by 2.4%. There are more opportunities like this but given our view that rates will be rising, we want to do this over time.
A modest increase in interest rates seems likely in the coming months as economic activity picks up. In light of this belief, we have maintained a shorter duration in the portfolio than the benchmark, even with the trades listed above.
Thank you for allowing us the opportunity to be a trusted advisor for you.
CFA® is a trademark owned by 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. |
| **The | Car Allowance Rebate System, also known as “Cash for Clunkers,” was a U.S. government stimulus program initiated in 2009 intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle. The program officially ended August 24, 2009. |
| †Government | agency bonds are debt securities issued by a U.S. government-sponsored agency. |
| ††Corporate | bonds are debt securities issued by a corporation for the purpose of raising money to expand its business. |
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Portfolio Summary | MARCH 31, 2010 | |
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||
Income Fund | 1.82% | 6.59% | 4.39% | 4.97% | ||||
Barclays Capital U.S. Intermediate Government/Credit Bond Index | 1.86% | 6.92% | 5.16% | 5.93% |
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, 2010 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Income Fund are 0.85%. The expense ratio shown elsewhere in this report may be different. 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.
| *Not | annualized |
TOP 10 HOLDINGS**
| Holding | Maturity Date | % of Net Assets | ||
| U.S. Treasury Note, 3.75% | 11/15/18 | 5.7% | ||
| U.S. Treasury Note, 4.25% | 8/15/15 | 4.3% | ||
| U.S. Treasury Note, 1.625% | 1/15/18 | 3.1% | ||
| Government National Mortgage Assoc., 4.50%, Series 2009-62, Class DT | 8/16/35 | 1.6% | ||
| Federal Home Loan Mortgage Corp., 0.75% | 2/24/12 | 1.6% | ||
| Federal Home Loan Mortgage Corp., 5.50%, Series R010, Class AB | 12/15/19 | 1.5% |
| Holding | Maturity Date | % of Net Assets | ||
| Federal Home Loan Mortgage Corp., 4.75% | 11/17/15 | 1.4% | ||
| Federal Home Loan Bank, 5.00% | 9/14/12 | 1.3% | ||
| Government National Mortgage Assoc., 5.00%, Series 2009-38, Class A | 9/16/31 | 1.3% | ||
| Citibank Credit Card Issuance Trust, 4.90%, Series 2009-A4, Class A4 | 6/23/16 | 1.3% |
| ** | As of March 31, 2010, there were 171 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. 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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| WASATCH FUNDS — OPERATING EXPENSES | ||
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 March 31, 2010.
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 March 31. 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.
A Fund’s annualized expense ratio may vary as a result of various factors including expenses that are not reimbursable under the contractual agreement between the Fund and the Advisor such as interest, taxes, brokerage commissions, other investment related costs, dividend expense on short sales, and extraordinary expenses. The Wasatch-1st Source Long/Short and Wasatch-1st Source Income funds have no contractual limitation on expenses.
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Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Account Value | Expenses Paid | Annualized Expense | ||||||
| Fund/Class and Return | Beginning of Period October 1, 2009 | End of Period March 31, 2010 | ||||||
Core Growth Fund | ||||||||
Actual | $1,000.00 | $1,118.90 | $7.24 | 1.37% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.10 | $6.89 | 1.37% | ||||
Emerging Markets Small Cap Fund | ||||||||
Actual | $1,000.00 | $1,254.50 | $11.69 | 2.08% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,014.61 | $10.45 | 2.08% | ||||
Global Opportunities Fund | ||||||||
Actual | $1,000.00 | $1,131.30 | $12.01 | 2.26% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.66 | $11.35 | 2.26% | ||||
Global Science & Technology Fund | ||||||||
Actual | $1,000.00 | $1,156.20 | $10.54 | 1.96% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.16 | $9.85 | 1.96% | ||||
Heritage Growth Fund | ||||||||
Actual | $1,000.00 | $1,116.10 | $5.06 | 0.96% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.14 | $4.84 | 0.96% | ||||
Heritage Value Fund | ||||||||
Actual | $1,000.00 | $1,126.50 | $5.09 | 0.96% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.14 | $4.84 | 0.96% | ||||
International Growth Fund | ||||||||
Actual | $1,000.00 | $1,128.00 | $9.92 | 1.87% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.61 | $9.40 | 1.87% | ||||
International Opportunities Fund | ||||||||
Actual | $1,000.00 | $1,168.40 | $12.27 | 2.27% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.61 | $11.40 | 2.27% | ||||
Micro Cap Fund | ||||||||
Actual | $1,000.00 | $1,131.10 | $11.64 | 2.19% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,028.10 | $22.21 | 2.19% | ||||
Micro Cap Value Fund | ||||||||
Actual | $1,000.00 | $1,123.10 | $11.96 | 2.26% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.66 | $11.35 | 2.26% | ||||
Small Growth Fund | ||||||||
Actual | $1,000.00 | $1,128.00 | $6.84 | 1.29% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.50 | $6.49 | 1.29% | ||||
Small Cap Value Fund | ||||||||
Actual | $1,000.00 | $1,116.40 | $10.03 | 1.90% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.46 | $9.55 | 1.90% | ||||
Strategic Income Fund | ||||||||
Actual | $1,000.00 | $1,107.60 | $5.36 | 1.02% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.85 | $5.14 | 1.02% | ||||
Ultra Growth Fund | ||||||||
Actual | $1,000.00 | $1,145.00 | $9.09 | 1.70% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.45 | $8.55 | 1.70% | ||||
Wasatch-1st Source Income Equity Fund | ||||||||
Actual | $1,000.00 | $1,108.70 | $5.84 | 1.11% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.40 | $5.59 | 1.11% | ||||
Wasatch-1st Source Long/Short Fund | ||||||||
Actual | $1,000.00 | $1,069.20 | $8.92 | 1.73% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.31 | $8.70 | 1.73% | ||||
U.S. Treasury Fund | ||||||||
Actual | $1,000.00 | $906.80 | $3.61 | 0.76% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,021.14 | $3.83 | 0.76% | ||||
Wasatch-1st Source Income Fund | ||||||||
Actual | $1,000.00 | $1,018.20 | $3.77 | 0.75% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,021.19 | $3.78 | 0.75% | ||||
*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 (182/365).
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| WASATCH CORE GROWTH FUND (WGROX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 92.4% | |||||
| Agricultural Products 2.3% | |||||
| 3,676,146 | Chaoda Modern Agriculture Holdings Ltd. (China) | $ | 3,915,654 | ||
| 4,183,990 | China Green Holdings Ltd. (China) | 5,275,692 | |||
| 9,191,346 | |||||
| Airlines 2.3% | |||||
| 164,349 | Allegiant Travel Co.* | 9,509,233 | |||
| Apparel, Accessories & Luxury Goods 1.5% | |||||
| 2,440,007 | Ports Design Ltd. (China) | 6,159,610 | |||
| Application Software 1.4% | |||||
| 299,300 | Tyler Technologies, Inc.* | 5,608,882 | |||
| Asset Management & Custody Banks 4.8% | |||||
| 56,774 | Affiliated Managers Group, Inc.* | 4,485,146 | |||
| 364,279 | SEI Investments Co. | 8,003,210 | |||
| 353,955 | Solar Capital Ltd.** *** † | 6,772,065 | |||
| 19,260,421 | |||||
| Automotive Retail 3.9% | |||||
| 154,141 | Monro Muffler Brake, Inc. | 5,512,082 | |||
| 244,674 | O’Reilly Automotive, Inc.* | 10,205,353 | |||
| 15,717,435 | |||||
| Construction & Engineering 1.1% | |||||
| 87,693 | URS Corp.* | 4,350,450 | |||
| Consumer Finance 3.8% | |||||
| 472,004 | Dollar Financial Corp.* | 11,356,416 | |||
| 187,235 | First Cash Financial Services, Inc.* | 4,038,659 | |||
| 15,395,075 | |||||
| Data Processing & Outsourced Services 4.1% | |||||
| 144,199 | Alliance Data Systems Corp.* | 9,227,294 | |||
| 306,865 | Fidelity National Information Services, Inc. | 7,192,916 | |||
| 16,420,210 | |||||
| Distributors 1.9% | |||||
| 373,595 | LKQ Corp.* | 7,583,978 | |||
| Diversified Banks 1.5% | |||||
| 235,526 | Axis Bank Ltd. (India) | 6,145,867 | |||
| Diversified Support Services 5.8% | |||||
| 554,517 | Copart, Inc.* | 19,740,805 | |||
| 158,871 | LPS Brasil - Consultoria de Imoveis S.A.* (Brazil) | 2,294,456 | |||
| 71,225 | Ritchie Bros. Auctioneers, Inc. (Canada) | 1,533,474 | |||
| 23,568,735 | |||||
| Environmental & Facilities Services 2.4% | |||||
| 285,940 | Waste Connections, Inc.* | 9,710,522 | |||
| Footwear 0.3% | |||||
| 13,098,480 | China Hongxing Sports Ltd. (China) | 1,358,083 | |||
| Health Care Distributors 2.2% | |||||
| 385,892 | PSS World Medical, Inc.* | 9,072,321 | |||
| Health Care Facilities 4.9% | |||||
| 700,782 | Emeritus Corp.* | 14,260,914 | |||
| 204,740 | VCA Antech, Inc.* | 5,738,862 | |||
| 19,999,776 | |||||
| Health Care Services 3.9% | |||||
| 270,044 | MEDNAX, Inc.* | 15,713,860 | |||
| Shares | Value | ||||
| Homefurnishing Retail 4.1% | |||||
| 498,035 | Aaron’s, Inc. | $ | 16,604,487 | ||
| Industrial Machinery 2.2% | |||||
| 112,705 | Graco, Inc. | 3,606,560 | |||
| 163,700 | IDEX Corp. | 5,418,470 | |||
| 9,025,030 | |||||
| Insurance Brokers 1.6% | |||||
| 358,065 | Brown & Brown, Inc. | 6,416,525 | |||
| Internet Software & Services 0.9% | |||||
| 117,346 | DealerTrack Holdings, Inc.* | 2,004,270 | |||
| 179,210 | ValueClick, Inc.* | 1,817,189 | |||
| 3,821,459 | |||||
| IT Consulting & Other Services 1.3% | |||||
| 105,880 | Cognizant Technology Solutions Corp., Class A* | 5,397,762 | |||
| Leisure Facilities 3.2% | |||||
| 463,313 | Life Time Fitness, Inc.* | 13,019,095 | |||
| Leisure Products 1.4% | |||||
| 251,314 | Pool Corp. | 5,689,749 | |||
| Life Sciences Tools & Services 2.6% | |||||
| 451,515 | Pharmaceutical Product Development, Inc. | 10,723,481 | |||
| Mortgage REITs 1.3% | |||||
| 349,406 | Redwood Trust, Inc. | 5,387,841 | |||
| Oil & Gas Equipment & Services 2.7% | |||||
| 116,215 | Dril-Quip, Inc.* | 7,070,521 | |||
| 319,715 | TETRA Technologies, Inc.* | 3,906,917 | |||
| 10,977,438 | |||||
| Oil & Gas Exploration & Production 1.4% | |||||
| 273,370 | Petrohawk Energy Corp.* | 5,543,944 | |||
| Personal Products 2.5% | |||||
| 222,830 | Herbalife Ltd. | 10,276,920 | |||
| Research & Consulting Services 3.7% | |||||
| 262,493 | CRA International, Inc.* | 6,016,340 | |||
| 462,567 | Resources Connection, Inc.* | 8,867,409 | |||
| 14,883,749 | |||||
| Semiconductors 4.6% | |||||
| 133,940 | Hittite Microwave Corp.* | 5,889,342 | |||
| 387,065 | Melexis N.V.* (Belgium) | 4,033,526 | |||
| 378,644 | Micrel, Inc. | 4,036,345 | |||
| 101,203 | Silicon Laboratories, Inc.* | 4,824,347 | |||
| 18,783,560 | |||||
| Specialized Finance 3.8% | |||||
| 21,979 | Crisil Ltd. (India) | 2,546,470 | |||
| 253,215 | MSCI, Inc., Class A* | 9,141,061 | |||
| 64,585 | Portfolio Recovery Associates, Inc.* | 3,543,779 | |||
| 15,231,310 | |||||
| Specialty Stores 1.7% | |||||
| 271,425 | Hibbett Sports, Inc.* | 6,943,052 | |||
| Thrifts & Mortgage Finance 1.3% | |||||
| 90,280 | Housing Development Finance Corp. Ltd. (India) | 5,460,638 | |||
| Trading Companies & Distributors 2.5% | |||||
| 132,177 | MSC Industrial Direct Co., Inc., Class A | 6,704,017 | |||
| 283,633 | Rush Enterprises, Inc., Class B* | 3,488,686 | |||
| 10,192,703 | |||||
42
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
Shares | Value | ||||
| Trucking 1.5% | |||||
| 179,335 | Old Dominion Freight Line, Inc.* | $ | 5,987,996 | ||
| Total Common Stocks (cost $303,156,098) | 375,132,543 | ||||
| PREFERRED STOCKS 1.3% | |||||
| Regional Banks 1.3% | |||||
| 938,675 | Banco Daycoval S.A. Pfd. (Brazil) | 5,338,236 | |||
| Total Preferred Stocks (cost $6,577,985) | 5,338,236 | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 6.3% | |||||
| Repurchase Agreement 6.3% | |||||
| $25,319,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $25,665,000 of United States Treasury Notes 0.875% due 5/31/11; value: $25,825,406; repurchase proceeds: $25,319,000 (cost $25,319,000) | $ | 25,319,000 | ||
| Total Short-Term Investments (cost $25,319,000) | 25,319,000 | ||||
| Total Investments (cost $335,053,083) 100.0% | 405,789,779 | ||||
| Other Assets less Liabilities <0.1% | 188,493 | ||||
| NET ASSETS 100.0% | $ | 405,978,272 | |||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At March 31, 2010, Wasatch Core Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Belgium | 1.1 | ||
Brazil | 2.0 | ||
Canada | 0.4 | ||
China | 4.4 | ||
India | 3.7 | ||
United States | 88.4 | ||
TOTAL | 100.0 | % | |
43
Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 93.8% | |||||
| Aerospace & Defense 1.5% | |||||
| 33,250 | Bharat Electronics Ltd. (India) | $ | 1,629,357 | ||
| Agricultural Products 1.8% | |||||
| 725,819 | Chaoda Modern Agriculture Holdings Ltd. (China) | 773,108 | |||
| 4,043,960 | PT Sampoerna Agro (Indonesia) | 1,166,591 | |||
| 1,939,699 | |||||
| Air Freight & Logistics 1.4% | |||||
| 3,029,389 | Aramex PJSC* (United Arab Emirates) | 1,567,068 | |||
| Aluminum 0.9% | |||||
| 1,297,000 | Midas Holdings Ltd. (Singapore) | 955,245 | |||
| Apparel Retail 1.4% | |||||
| 382,600 | Padini Holdings Berhad (Malaysia) | 445,702 | |||
| 145,110 | Truworths International Ltd. (South Africa) | 1,042,015 | |||
| 1,487,717 | |||||
| Apparel, Accessories & Luxury Goods 4.0% | |||||
| 831,610 | 361 Degrees International Ltd. (China) | 652,293 | |||
| 70,230 | Cia. Hering (Brazil) | 1,381,315 | |||
| 9,545 | LG Fashion Corp. (Korea) | 234,523 | |||
| 595,775 | Ports Design Ltd. (China) | 1,503,988 | |||
| 732,390 | Xtep International Holdings Ltd. (China) | 580,128 | |||
| 4,352,247 | |||||
| Application Software 0.9% | |||||
| 111,000 | ICSA India Ltd. (India) | 313,752 | |||
| 1,694,255 | Kingdee International Software Group Co. Ltd. (China) | 656,828 | |||
| 970,580 | |||||
| Asset Management & Custody Banks 1.4% | |||||
| 184,600 | CETIP S.A. (Brazil) | 1,474,103 | |||
| Brewers 1.9% | |||||
| 192,120 | Guinness Anchor Berhad (Malaysia) | 408,152 | |||
| 16,900 | PT Multi Bintang Indonesia Tbk (Indonesia) | 302,731 | |||
| 30,950 | United Spirits Ltd. (India) | 909,301 | |||
| 4,995 | Zwack Unicum Nyrt. (Hungary) | 439,166 | |||
| 2,059,350 | |||||
| Broadcasting 0.4% | |||||
| 575,000 | BEC World Public Co. Ltd. (Thailand) | 441,008 | |||
| Building Products 1.3% | |||||
| 682,415 | Dynasty Ceramic Public Co. Ltd. (Thailand) | 775,591 | |||
| 3,761,960 | Home Product Center Public Co. Ltd. (Thailand) | 668,974 | |||
| 1,444,565 | |||||
| Coal & Consumable Fuels 1.7% | |||||
| 275,780 | PT Indo Tambangraya Megah (Indonesia) | 1,153,187 | |||
| 341,400 | PT Tambang Batubara Bukit Asam Tbk (Indonesia) | 652,823 | |||
| 1,806,010 | |||||
| Commodity Chemicals 1.2% | |||||
| 45,965 | Castrol India Ltd. (India) | 706,445 | |||
| 63,523 | Paints & Chemical Industries Co. S.A.E. (Egypt) | 581,467 | |||
| 1,287,912 | |||||
| Communications Equipment 0.2% | |||||
| 231,960 | D-Link Corp. (Taiwan) | 239,571 | |||
| Shares | Value | ||||
| Computer Hardware 0.9% | |||||
| 93,600 | Positivo Informatica S.A. (Brazil) | $ | 935,737 | ||
| Construction & Engineering 0.6% | |||||
| 82,913 | Heerim Architects & Planners* (Korea) | 688,102 | |||
| Construction Materials 7.5% | |||||
| 349,866 | Adana Cimento Sanayii Turk Anonim Sirketi, Class A (Turkey) | 1,256,024 | |||
| 218,700 | Corp Moctezuma S.A.B de C.V. (Mexico) | 592,659 | |||
| 2,830 | HOLCIM Maroc S.A. (Morocco) | 724,760 | |||
| 23,840 | Misr Beni Suef Cement Co. (Egypt) | 766,379 | |||
| 183,465 | Pretoria Portland Cement Co. Ltd. (South Africa) | 861,498 | |||
| 9,382,400 | PT Holcim Indonesia Tbk* (Indonesia) | 2,139,511 | |||
| 1,049,280 | PT Semen Gresik (Persero) Tbk (Indonesia) | 841,776 | |||
| 7,900 | Shree Cement Ltd. (India) | 416,864 | |||
| 23,400 | Ultra Tech Cement Ltd. (India) | 601,405 | |||
| 8,200,876 | |||||
| Consumer Finance 1.1% | |||||
| 202,605 | Banco Compartamos S.A. de C.V. (Mexico) | 1,142,501 | |||
| Department Stores 2.4% | |||||
| 49,395 | Lojas Renner S.A. (Brazil) | 1,132,518 | |||
| 10,964,886 | PT Ramayana Lestari Sentosa Tbk (Indonesia) | 1,060,399 | |||
| 1,082,500 | Robinson Department Store Public Co. Ltd. (Thailand) | 455,296 | |||
| 2,648,213 | |||||
| Distillers & Vintners 0.5% | |||||
| 61,805 | Distell Group Ltd. (South Africa) | 577,042 | |||
| Diversified Banks 4.9% | |||||
| 377,810 | Allahabad Bank Ltd. (India) | 1,206,770 | |||
| 311,380 | Asya Katilim Bankasi AS* (Turkey) | 832,753 | |||
| 40,145 | Capitec Bank Holdings Ltd. (South Africa) | 521,156 | |||
| 39,815 | Commercial International Bank S.A.E GDR (Egypt) | 465,835 | |||
| 176,275 | National Societe Generale Bank (Egypt) | 1,056,818 | |||
| 1,400,735 | PT Bank Tabungan Pensiunan Nasional Tbk* (Indonesia) | 1,216,090 | |||
| 5,299,422 | |||||
| Diversified Metals & Mining 1.7% | |||||
| 4,130 | Assore Ltd. (South Africa) | 436,632 | |||
| 3,459,405 | Merafe Resources Ltd. (South Africa) | 778,969 | |||
| 2,193,965 | PT Timah Tbk (Indonesia) | 572,632 | |||
| 1,788,233 | |||||
| Drug Retail 0.2% | |||||
| 27,000 | Corporativo Fragua S.A.B., Class B (Mexico) | 220,595 | |||
| Education Services 0.8% | |||||
| 551,746 | Advtech Ltd. (South Africa) | 458,320 | |||
| 2,525 | MegaStudy Co. Ltd. (Korea) | 416,203 | |||
| 874,523 | |||||
| Electrical Components & Equipment 2.0% | |||||
| 49,410 | Voltamp Transformers Ltd. (India) | 939,775 | |||
| 631,240 | Zhuzhou CSR Times Electric Co. Ltd., Series H (China) | 1,193,512 | |||
| 2,133,287 | |||||
| Electronic Equipment & Instruments 0.9% | |||||
| 450,075 | Chroma ATE, Inc. (Taiwan) | 977,869 | |||
44
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Environmental & Facilities Services 0.4% | |||||
| 10,375 | Korea Plant Service & Engineering Co. Ltd.* (Korea) | $ | 469,486 | ||
| Food Distributors 0.2% | |||||
| 3,595 | Shinsegae Food Co. Ltd. (Korea) | 254,187 | |||
| Food Retail 3.6% | |||||
| 17,125 | BIM Birlesik Magazalar AS (Turkey) | 891,163 | |||
| 1,450,930 | CP ALL PCL (Thailand) | 1,233,974 | |||
| 126,425 | Eurocash S.A. (Poland) | 842,361 | |||
| 30,515 | Magnit OJSC GDR (Russia) | 565,138 | |||
| 37,135 | Shoprite Holdings Ltd. (South Africa) | 370,675 | |||
| 3,903,311 | |||||
| Footwear 3.6% | |||||
| 161,310 | Bata India Ltd.* (India) | 819,216 | |||
| 448,165 | Daphne International Holdings Ltd. (China) | 436,381 | |||
| 73,800 | Grendene S.A. (Brazil) | 377,398 | |||
| 73,075 | NG2 S.A. (Poland) | 1,422,241 | |||
| 1,042,450 | Peak Sport Products Ltd.* (China) | 825,727 | |||
| 3,880,963 | |||||
| Gas Utilities 0.7% | |||||
| 153,980 | Indraprastha Gas Ltd.* (India) | 745,977 | |||
| Gold 0.4% | |||||
| 55,585 | Kingsgate Consolidated Ltd. (Australia) | 434,051 | |||
| Health Care Facilities 1.0% | |||||
| 1,260,775 | KPJ Healthcare Berhad (Malaysia) | 1,128,591 | |||
| Health Care Services 0.4% | |||||
| 44,000 | Fleury S.A.* (Brazil) | 469,795 | |||
| Health Care Supplies 0.6% | |||||
| 154,960 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 646,652 | |||
| Heavy Electrical Equipment 0.3% | |||||
| 156,830 | China High Speed Transmission Equipment Group Co. Ltd. (China) | 346,619 | |||
| Highways & Railtracks 0.9% | |||||
| 4,850,545 | PT Jasa Marga (Indonesia) | 954,171 | |||
| Home Entertainment Software 0.5% | |||||
| 4,545 | NCsoft Corp. (Korea) | 576,435 | |||
| Home Improvement Retail 1.6% | |||||
| 3,893,750 | Ace Hardware Indonesia (Indonesia) | 701,769 | |||
| 102,295 | Cashbuild Ltd. (South Africa) | 1,046,230 | |||
| 1,747,999 | |||||
| Hotels, Resorts & Cruise Lines 1.3% | |||||
| 129,533 | City Lodge Hotels Ltd. (South Africa) | 1,387,234 | |||
| Hypermarkets & Super Centers 0.5% | |||||
| 176,900 | Siam Makro Public Co. Ltd. (Thailand) | 530,673 | |||
| Industrial Gases 0.5% | |||||
| 198,205 | African Oxygen Ltd. (South Africa) | 588,635 | |||
| Industrial Machinery 4.1% | |||||
| 162,857 | AIA Engineering Ltd. (India) | 1,461,886 | |||
| 1,730,870 | China Automation Group Ltd. (China) | 1,335,357 | |||
| 55,910 | Cummins India Ltd. (India) | 635,751 | |||
| 87,575 | King Slide Works Co. Ltd. (Taiwan) | 525,318 | |||
| 32,515 | Thermax India Ltd. (India) | 493,935 | |||
| 4,452,247 | |||||
| Internet Software & Services 0.7% | |||||
| 12,900 | Daum Communications Corp.* (Korea) | 768,448 | |||
| Shares | Value | ||||
| Investment Banking & Brokerage 0.5% | |||||
| 43,610 | Egyptian Financial Group-Hermes Holding GDR (Egypt) | $ | 502,387 | ||
| Life & Health Insurance 0.5% | |||||
| 63,800 | Amil Participacoes S.A. (Brazil) | 496,561 | |||
| Managed Health Care 0.7% | |||||
| 22,435 | OdontoPrev S.A. (Brazil) | 778,512 | |||
| Marine Ports & Services 1.5% | |||||
| 962,714 | International Container Terminal Services, Inc. (Philippines) | 495,311 | |||
| 118,590 | Santos Brasil Participacoes S.A.** (Brazil) | 1,166,240 | |||
| 1,661,551 | |||||
| Oil & Gas Equipment & Services 0.5% | |||||
| 252,075 | Renaissance Services S.A.O.G. (Oman) | 514,626 | |||
| Oil & Gas Exploration & Production 2.6% | |||||
| 417,550 | Afren plc* (United Kingdom) | 648,696 | |||
| 48,055 | Gran Tierra Energy, Inc.* | 283,525 | |||
| 94,285 | JKX Oil and Gas plc (United Kingdom) | 403,784 | |||
| 76,510 | Pan Orient Energy Corp.* (Canada) | 474,749 | |||
| 56,730 | Selan Exploration Technology Ltd. (India) | 540,827 | |||
| 1,145 | Total Gabon (Gabon) | 461,157 | |||
| 2,812,738 | |||||
| Oil & Gas Storage & Transportation 0.5% | |||||
| 76,655 | Great Eastern Shipping Co. Ltd. (The)* (India) | 500,447 | |||
| Other Diversified Financial Services 0.6% | |||||
| 29,640 | Intergroup Financial Services Corp. (Peru) | 658,304 | |||
| Packaged Foods & Meats 2.4% | |||||
| 1,857,000 | Agthia Group PJSC* (United Arab Emirates) | 960,605 | |||
| 243,525 | Hsu Fu Chi International Ltd. (China) | 365,679 | |||
| 35,400 | Nestle Malaysia Berhad (Malaysia) | 370,495 | |||
| 2,054,890 | PT Mayora Indah Tbk (Indonesia) | 903,298 | |||
| 2,600,077 | |||||
| Personal Products 2.5% | |||||
| 115,735 | Colgate-Palmolive India Ltd. (India) | 1,752,975 | |||
| 18,079 | Colgate-Palmolive Pakistan Ltd. (Pakistan) | 92,076 | |||
| 200,980 | Dabur India Ltd. (India) | 711,119 | |||
| 211,565 | PT Mandom Indonesia Tbk (Indonesia) | 183,676 | |||
| 2,739,846 | |||||
| Pharmaceuticals 2.9% | |||||
| 5,659 | Daewoong Pharmaceutical Co. Ltd. (Korea) | 250,077 | |||
| 84,200 | Egyptian International Pharmaceutical Industries Co. (Egypt) | 565,819 | |||
| 197,800 | Genomma Lab Internacional S.A., Class B* (Mexico) | 687,228 | |||
| 28,035 | Merck Ltd. (India) | 390,286 | |||
| 50,660 | Pharmstandard GDR* (Russia) | 1,261,434 | |||
| 3,154,844 | |||||
| Precious Metals & Minerals 0.8% | |||||
| 123,900 | Northam Platinum Ltd. (South Africa) | 816,559 | |||
| Railroads 0.5% | |||||
| 20,005 | Container Corp. of India (India) | 580,165 | |||
45
Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Restaurants 1.5% | |||||
| 281,570 | Ajisen China Holdings Ltd. (China) | $ | 276,705 | ||
| 670,755 | Alsea de Mexico S.A.B. de C.V. (Mexico) | 729,789 | |||
| 231,600 | FU JI Food & Catering Services Holdings Ltd.* *** (China) | 298 | |||
| 275,885 | KFC Holdings Malaysia Berhad (Malaysia) | 672,375 | |||
| 1,679,167 | |||||
| Semiconductors 0.9% | |||||
| 57,335 | RichTek Technology Corp. (Taiwan) | 613,826 | |||
| 166,000 | Sporton International, Inc. (Taiwan) | 341,848 | |||
| 955,674 | |||||
| Soft Drinks 1.1% | |||||
| 142,755 | Coca-Cola Icecek AS (Turkey) | 1,213,056 | |||
| Specialized Finance 3.0% | |||||
| 944,990 | Bolsa Mexicana de Valores S.A.* (Mexico) | 1,498,285 | |||
| 5,281 | Crisil Ltd. (India) | 611,853 | |||
| 129,860 | JSE Ltd. (South Africa) | 1,155,381 | |||
| 3,265,519 | |||||
| Specialty Chemicals 0.6% | |||||
| 8,320 | Asian Paints Ltd. (India) | 378,982 | |||
| 108,390 | China Steel Chemical Corp. (Taiwan) | 305,463 | |||
| 684,445 | |||||
| Specialty Stores 0.8% | |||||
| 45,205 | Dufry South America Ltd. (Brazil) | 874,886 | |||
| Steel 0.2% | |||||
| 118,000 | Ratnamani Metals & Tubes Ltd. (India) | 264,281 | |||
| Thrifts & Mortgage Finance 2.5% | |||||
| 253,865 | Dewan Housing Finance Corp. Ltd. (India) | 1,175,034 | |||
| 78,140 | LIC Housing Finance Ltd. (India) | 1,521,985 | |||
| 2,697,019 | |||||
| Tobacco 1.5% | |||||
| 22,410 | Eastern Tobacco (Egypt) | 508,763 | |||
| 2,220 | Philip Morris CR a.s. (Czech Republic) | 1,171,067 | |||
| 1,679,830 | |||||
| Water Utilities 0.4% | |||||
| 1,337,000 | Manila Water Co., Inc. (Philippines) | 465,983 | |||
| Total Common Stocks (cost $81,709,221) | 102,022,783 | ||||
| PREFERRED STOCKS 1.8% | |||||
| Diversified Banks 0.7% | |||||
| 105,900 | Banco Industrial e Comercial S.A. (Bic Banco) Pfd. (Brazil) | 800,424 | |||
| Office Services & Supplies 0.4% | |||||
| 34,900 | Contax Participacoes S.A. Pfd (Brazil) | 482,461 | |||
| Regional Banks 0.7% | |||||
| 125,145 | Banco Daycoval S.A. Pfd. (Brazil) | 711,699 | |||
| Total Preferred Stocks (cost $1,896,998) | 1,994,584 | ||||
| LIMITED PARTNERSHIP INTEREST 0.5% | |||||
| Oil & Gas Exploration & Production 0.5% | |||||
| 66,220 | Zhaikmunai L.P. GDR* (Kazakhstan) | 579,425 | |||
| Total Limited Partnership Interest (cost $435,592) | 579,425 | ||||
| Shares | Value | |||||
| WARRANTS 0.1% | ||||||
| Health Care Facilities 0.1% | ||||||
| 315,193 | KPJ Healthcare Berhad, expiring 1/15/10* (Malaysia) | $ | 147,837 | |||
| Total Warrants (cost $85,228) | 147,837 | |||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 5.3% | ||||||
| Repurchase Agreement 5.3% | ||||||
| $5,721,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $5,800,000 of United States Treasury Notes 0.875% due 5/31/11; value: $5,836,250; repurchase proceeds: $5,721,000 (cost $5,721,000) | $ | 5,721,000 | |||
| Total Short-Term Investments (cost $5,721,000) | 5,721,000 | |||||
| Total Investments (cost $89,848,039) 101.5% | 110,465,629 | |||||
| Liabilities less Other Assets (1.5)% | (1,698,622 | ) | ||||
| NET ASSETS 100.0% | $ | 108,767,007 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
GDR Global Depositary Receipt.
See Notes to Financial Statements. |
| |||||
46
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
At March 31, 2010, Wasatch Emerging Markets Small Cap Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 0.4 | ||
Brazil | 10.6 | ||
Canada | 0.5 | ||
China | 9.2 | ||
Czech Republic | 1.1 | ||
Egypt | 4.2 | ||
Gabon | 0.4 | ||
Hungary | 0.4 | ||
India | 18.4 | ||
Indonesia | 11.3 | ||
Kazakhstan | 0.6 | ||
Korea | 3.5 | ||
Malaysia | 3.0 | ||
Mexico | 4.7 | ||
Morocco | 0.7 | ||
Oman | 0.5 | ||
Pakistan | 0.1 | ||
Peru | 0.6 | ||
Philippines | 0.9 | ||
Poland | 2.2 | ||
Russia | 1.7 | ||
Singapore | 0.9 | ||
South Africa | 9.6 | ||
Taiwan | 2.9 | ||
Thailand | 3.9 | ||
Turkey | 4.0 | ||
United Arab Emirates | 2.4 | ||
United Kingdom | 1.0 | ||
United States | 0.3 | ||
TOTAL | 100.0 | % | |
47
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 93.8% | |||||
| Advertising 0.3% | |||||
| 10,900 | 1000mercis* (France) | $ | 472,049 | ||
| Aerospace & Defense 0.3% | |||||
| 9,500 | Bharat Electronics Ltd. (India) | 465,531 | |||
| Agricultural Products 0.4% | |||||
| 583,920 | Chaoda Modern Agriculture Holdings Ltd. (China) | 621,964 | |||
| 117,000 | China Green Holdings Ltd. (China) | 147,528 | |||
| 769,492 | |||||
| Air Freight & Logistics 0.8% | |||||
| 2,304,400 | Aramex PJSC* (United Arab Emirates) | 1,192,039 | |||
| 3,200 | Forward Air Corp. | 84,160 | |||
| 83,000 | Goodpack Ltd. (Singapore) | 103,861 | |||
| 1,380,060 | |||||
| Airlines 0.2% | |||||
| 5,200 | Allegiant Travel Co.* | 300,872 | |||
| Aluminum 0.4% | |||||
| 350,000 | China Zhongwang Holdings Ltd.* (China) | 306,537 | |||
| 404,000 | Midas Holdings Ltd. (Singapore) | 297,547 | |||
| 604,084 | |||||
| Apparel Retail 1.3% | |||||
| 1,220 | Camaieu (France) | 257,768 | |||
| 42,767 | Esprit Holdings Ltd. (Hong Kong) | 337,657 | |||
| 9,500 | JOS. A. Bank Clothiers, Inc.* | 519,175 | |||
| 19,800 | Ross Stores, Inc. | 1,058,706 | |||
| 2,173,306 | |||||
| Apparel, Accessories & Luxury Goods 5.8% | |||||
| 491,000 | Anta Sports Products Ltd. (China) | 809,464 | |||
| 4,950 | Bijou Brigitte AG (Germany) | 902,701 | |||
| 34,121 | Billabong International Ltd. (Australia) | 353,797 | |||
| 1,040,000 | China Dongxiang Group Co. (China) | 746,096 | |||
| 6,700 | Fossil, Inc.* | 252,858 | |||
| 20,700 | Gerry Weber International AG (Germany) | 719,969 | |||
| 41,600 | Gildan Activewear, Inc.* (Canada) | 1,093,664 | |||
| 53,000 | Li Ning Co. Ltd. (China) | 192,159 | |||
| 375,000 | Lilang China Co. Ltd.* (Hong Kong) | 363,691 | |||
| 18,953 | Odd Molly International AB (Sweden) | 366,007 | |||
| 546,500 | Ports Design Ltd. (China) | 1,379,597 | |||
| 288,400 | Ted Baker plc (United Kingdom) | 2,268,728 | |||
| 10,000 | Volcom, Inc.* | 195,200 | |||
| 470,000 | Xtep International Holdings Ltd. (China) | 372,288 | |||
| 10,016,219 | |||||
| Application Software 2.1% | |||||
| 4,500 | Aveva Group plc (United Kingdom) | 80,982 | |||
| 10,900 | Ebix, Inc.* | 174,073 | |||
| 4,200 | FactSet Research Systems, Inc. | 308,154 | |||
| 1,556,000 | Kingdee International Software Group Co. Ltd. (China) | 603,229 | |||
| 13,004 | Longtop Financial Technologies Ltd. ADR* (China) | 418,859 | |||
| 3,900 | SimCorp A/S (Denmark) | 721,762 | |||
| 48,700 | Sonic Solutions* | 456,319 | |||
| 13,635 | Tyler Technologies, Inc.* | 255,520 | |||
| 15,500 | Ultimate Software Group, Inc.* | 510,725 | |||
| 3,529,623 | |||||
| Shares | Value | ||||
| Asset Management & Custody Banks 2.3% | |||||
| 6,500 | Bank of New York Mellon Corp. | $ | 200,720 | ||
| 51,900 | CETIP S.A. (Brazil) | 414,442 | |||
| 5,900 | Diamond Hill Investment Group, Inc. | 404,740 | |||
| 9,800 | Eaton Vance Corp. | 328,692 | |||
| 67,700 | SEI Investments Co. | 1,487,369 | |||
| 5,992 | T. Rowe Price Group, Inc. | 329,140 | |||
| 58,036 | Treasury Group Ltd. (Australia) | 313,133 | |||
| 5,145 | Waddell & Reed Financial, Inc., Class A | 185,426 | |||
| 5,900 | Westwood Holdings Group, Inc. | 217,120 | |||
| 3,880,782 | |||||
| Auto Parts & Equipment 0.2% | |||||
| 1,235,000 | Norstar Founders Group Ltd.* *** (Hong Kong) | 29,029 | |||
| 31,100 | Wonder Auto Technology, Inc.* | 329,038 | |||
| 358,067 | |||||
| Automotive Retail 0.6% | |||||
| 64,000 | Halfords Group plc (United Kingdom) | 459,240 | |||
| 13,100 | O’Reilly Automotive, Inc.* | 546,401 | |||
| 1,005,641 | |||||
| Biotechnology 2.0% | |||||
| 77,625 | Abcam plc (United Kingdom) | 1,484,174 | |||
| 17,500 | China Nuokang Bio-Pharmaceutical, Inc. ADR* (China) | 108,500 | |||
| 38,500 | Myriad Genetics, Inc.* | 925,925 | |||
| 45,115 | Orexigen Therapeutics, Inc.* | 265,727 | |||
| 1,720,471 | Sino Biopharmaceutical Ltd. (China) | 682,502 | |||
| 3,466,828 | |||||
| Commodity Chemicals 0.2% | |||||
| 27,500 | Tokai Carbon Korea Co. Ltd. (Korea) | 262,495 | |||
| Communications Equipment 0.2% | |||||
| 3,240 | Calix, Inc.* | 43,578 | |||
| 12,250 | Riverbed Technology, Inc.* | 347,900 | |||
| 391,478 | |||||
| Computer Hardware 0.5% | |||||
| 123,000 | Advantech Co., Ltd. (Taiwan) | 262,592 | |||
| 4,600 | International Business Machines Corp. | 589,950 | |||
| 852,542 | |||||
| Computer Storage & Peripherals 0.8% | |||||
| 62,000 | Intevac, Inc.* | 856,840 | |||
| 10,700 | QLogic Corp.* | 217,210 | |||
| 205 | Wacom Co. Ltd. (Japan) | 312,801 | |||
| 1,386,851 | |||||
| Construction & Engineering 0.8% | |||||
| 23,500 | Aecon Group, Inc. (Canada) | 314,090 | |||
| 43,200 | Heerim Architects & Planners (Korea) | 358,521 | |||
| 52,000 | Lycopodium Ltd. (Australia) | 186,089 | |||
| 4,200 | Outotec Oyj (Finland) | 151,480 | |||
| 195,000 | Rotary Engineering Ltd. (Singapore) | 147,801 | |||
| 27,500 | SWECO AB, Class B (Sweden) | 230,190 | |||
| 1,388,171 | |||||
| Construction & Farm Machinery & Heavy Trucks 0.4% | |||||
| 4,400 | Faiveley Transport (France) | 359,726 | |||
| 28,500 | Takeuchi Manufacturing Co. Ltd.* (Japan) | 398,554 | |||
| 758,280 | |||||
48
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Construction Materials 0.5% | |||||
| 95,500 | Corp Moctezuma S.A.B de C.V. (Mexico) | $ | 258,797 | ||
| 52,000 | Pretoria Portland Cement Co. | ||||
| Ltd. (South Africa) | 244,177 | ||||
| 410,000 | PT Semen Gresik (Persero) Tbk (Indonesia) | 328,919 | |||
| 831,893 | |||||
| Consumer Finance 1.1% | |||||
| 76,000 | Banco Compartamos S.A. de C.V. (Mexico) | 428,568 | |||
| 24,616 | Dollar Financial Corp.* | 592,261 | |||
| 36,000 | First Cash Financial Services, Inc.* | 776,520 | |||
| 4,700 | World Acceptance Corp.* | 169,576 | |||
| 1,966,925 | |||||
| Data Processing & Outsourced Services 3.0% | |||||
| 59,200 | Cielo S.A. (Brazil) | 557,235 | |||
| 27,200 | DIBS Payment Services AB (Sweden) | 255,076 | |||
| 13,000 | Fidelity National Information Services, Inc. | 304,720 | |||
| 5,300 | NeuStar, Inc., Class A* | 133,560 | |||
| 56,300 | Redecard S.A. (Brazil) | 1,040,893 | |||
| 550 | SBI VeriTrans Co. Ltd. (Japan) | 293,286 | |||
| 4,850 | Syntel, Inc. | 186,580 | |||
| 245,450 | Wirecard AG (Germany) | 2,325,259 | |||
| 5,096,609 | |||||
| Department Stores 0.3% | |||||
| 1,711,100 | PCD Stores Ltd.* (China) | 566,389 | |||
| Distributors 0.2% | |||||
| 20,900 | LKQ Corp.* | 424,270 | |||
| Diversified Banks 1.1% | |||||
| 156,039 | Allahabad Bank Ltd. (India) | 498,407 | |||
| 22,100 | Axis Bank Ltd. (India) | 576,682 | |||
| 15,000 | Bank of Baroda (India) | 214,417 | |||
| 1,030 | HDFC Bank Ltd. ADR (India) | 143,572 | |||
| 81,800 | Union Bank of India Ltd. (India) | 533,855 | |||
| 1,966,933 | |||||
| Diversified Support Services 1.2% | |||||
| 18,000 | Copart, Inc.* | 640,800 | |||
| 240 | Prestige International, Inc. (Japan) | 375,201 | |||
| 7,500 | Ritchie Bros. Auctioneers, Inc. (Canada) | 161,475 | |||
| 41,040 | STR Holdings, Inc.* | 964,440 | |||
| 2,141,916 | |||||
| Drug Retail 0.7% | |||||
| 68,635 | Create SD Holdings Co. Ltd. (Japan) | 1,287,595 | |||
| Education Services 0.9% | |||||
| 8,000 | Apollo Group, Inc., Class A* | 490,320 | |||
| 6,275 | Capella Education Co.* | 582,571 | |||
| 3,250 | MegaStudy Co. Ltd. (Korea) | 535,706 | |||
| 1,608,597 | |||||
| Electrical Components & Equipment 0.6% | |||||
| 6,400 | Emerson Electric Co. | 322,176 | |||
| 12,200 | Harbin Electric, Inc.* | 263,398 | |||
| 11,000 | Voltamp Transformers Ltd. (India) | 209,219 | |||
| 157,000 | Zhuzhou CSR Times Electric Co. Ltd., Series H (China) | 296,847 | |||
| 1,091,640 | |||||
| Electronic Components 0.3% | |||||
| 13,284 | Amphenol Corp., Class A | 560,452 | |||
| Shares | Value | ||||
| Electronic Equipment & Instruments 0.8% | |||||
| 23,675 | CNB Technology, Inc. (Korea) | $ | 125,547 | ||
| 600 | KEYENCE Corp. (Japan) | 143,527 | |||
| 10,200 | National Instruments Corp. | 340,170 | |||
| 28,400 | Rotork plc (United Kingdom) | 605,109 | |||
| 16,675 | Viscom AG* (Germany) | 88,689 | |||
| 1,303,042 | |||||
| Electronic Manufacturing Services 1.0% | |||||
| 11,000 | IPG Photonics Corp.* | 162,800 | |||
| 173,000 | Ju Teng International Holdings Ltd. (China) | 167,114 | |||
| 94,200 | TTM Technologies, Inc.* | 836,496 | |||
| 77,700 | Venture Corp. Ltd. (Singapore) | 484,479 | |||
| 1,650,889 | |||||
| Environmental & Facilities Services 0.5% | |||||
| 10,300 | Daiseki Co. Ltd. (Japan) | 214,735 | |||
| 52,429 | RPS Group plc (United Kingdom) | 162,587 | |||
| 20,000 | Tetra Tech, Inc.* | 460,800 | |||
| 838,122 | |||||
| Food Distributors 0.2% | |||||
| 5,200 | Shinsegae Food Co. Ltd. (Korea) | 367,670 | |||
| Food Retail 1.1% | |||||
| 948,000 | BreadTalk Group Ltd. (Singapore) | 467,730 | |||
| 189,600 | BreadTalk Group Ltd., Class A (Singapore) | 93,546 | |||
| 20,200 | Daikokutenbussan Co. Ltd. (Japan) | 604,983 | |||
| 50,595 | QKL Stores, Inc.* | 326,338 | |||
| 32,700 | Shoprite Holdings Ltd. (South Africa) | 326,405 | |||
| 1,819,002 | |||||
| General Merchandise Stores 1.5% | |||||
| 42,600 | Dollar Tree, Inc.* | 2,522,772 | |||
| Gold 0.2% | |||||
| 15,000 | Petropavlovsk plc (United Kingdom) | 271,079 | |||
| Health Care Distributors 0.2% | |||||
| 9,600 | MWI Veterinary Supply, Inc.* | 387,840 | |||
| Health Care Equipment 5.2% | |||||
| 24,000 | Abaxis, Inc.* | 652,560 | |||
| 55,000 | AtriCure, Inc.* | 323,950 | |||
| 40,250 | Audika S.A. (France) | 1,435,346 | |||
| 211,800 | Cardica, Inc.* | 406,656 | |||
| 80,000 | Cardica, Inc. PIPE* † | 153,600 | |||
| 62,100 | Cyberonics, Inc.* | 1,189,836 | |||
| 20,000 | DexCom, Inc.* | 194,600 | |||
| 28,400 | DiaSorin S.p.A. (Italy) | 1,071,188 | |||
| 5,300 | Edwards Lifesciences Corp.* | 524,064 | |||
| 3,400 | IDEXX Laboratories, Inc.* | 195,670 | |||
| 6,465,900 | LMA International N.V.* (Singapore) | 1,086,512 | |||
| 1,650 | Nakanishi, Inc. (Japan) | 172,261 | |||
| 3,800 | NuVasive, Inc.* | 171,760 | |||
| 23,700 | Somanetics Corp.* | 453,618 | |||
| 5,500 | St. Jude Medical, Inc.* | 225,775 | |||
| 14,100 | STRATEC Biomedical Systems AG (Germany) | 501,004 | |||
| 13,000 | Synovis Life Technologies, Inc.* | 201,890 | |||
| 8,960,290 | |||||
49
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Health Care Facilities 1.8% | |||||
| 58,261 | AmSurg Corp.* | $ | 1,257,855 | ||
| 97,000 | CVS Group plc* (United Kingdom) | 297,196 | |||
| 72,750 | NovaMed, Inc.* | 247,350 | |||
| 479,000 | Raffles Medical Group Ltd. (Singapore) | 548,016 | |||
| 10,000 | U.S. Physical Therapy, Inc.* | 174,000 | |||
| 18,000 | VCA Antech, Inc.* | 504,540 | |||
| 3,028,957 | |||||
| Health Care Services 1.6% | |||||
| 11,500 | Bio-Reference Laboratories, Inc.* | 505,655 | |||
| 68,000 | Clarient, Inc.* | 178,160 | |||
| 9,112 | CorVel Corp.* | 325,754 | |||
| 15,000 | Fleury S.A.* (Brazil) | 160,157 | |||
| 11,800 | Genoptix, Inc.* | 418,782 | |||
| 19,142 | Healthways, Inc.* | 307,612 | |||
| 12,700 | LHC Group, Inc.* | 425,831 | |||
| 7,400 | MEDNAX, Inc.* | 430,606 | |||
| 2,752,557 | |||||
| Health Care Supplies 0.4% | |||||
| 5,300 | ICU Medical, Inc.* | 182,585 | |||
| 111,500 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 465,292 | |||
| 647,877 | |||||
| Health Care Technology 0.2% | |||||
| 32,917 | RaySearch Laboratories AB* (Sweden) | 203,963 | |||
| 6,535 | Vital Images, Inc.* | 105,671 | |||
| 309,634 | |||||
| Home Entertainment Software 0.3% | |||||
| 176 | GameOn Co. Ltd. (Japan) | 171,496 | |||
| 5,000 | Perfect World Co. Ltd. ADR* (China) | 187,250 | |||
| 12,840 | Shanda Games Ltd. ADR* (China) | 92,448 | |||
| 2,800 | Shanda Interactive Entertainment Ltd. ADR* (China) | 122,052 | |||
| 573,246 | |||||
| Home Improvement Retail 1.3% | |||||
| 2,850,000 | Ace Hardware Indonesia (Indonesia) | 513,654 | |||
| 22,000 | Cashbuild Ltd. (South Africa) | 225,007 | |||
| 27,500 | Clas Ohlson AB (Sweden) | 502,407 | |||
| 16,800 | Lumber Liquidators Holdings, Inc.* | 448,056 | |||
| 73,100 | Swedol AB, Class B (Sweden) | 487,479 | |||
| 2,176,603 | |||||
| Homefurnishing Retail 0.4% | |||||
| 20,200 | Aaron’s, Inc. | 673,468 | |||
| Hotels, Resorts & Cruise Lines 0.1% | |||||
| 17,000 | City Lodge Hotels Ltd. (South Africa) | 182,062 | |||
| Household Appliances 0.3% | |||||
| 2,800 | Rational AG (Germany) | 491,862 | |||
| Household Products 0.1% | |||||
| 27,000 | Kimberly-Clark de Mexico S.A.B. de C.V. (Mexico) | 152,670 | |||
| Human Resource & Employment Services 1.7% | |||||
| 380 | Benefit One, Inc. (Japan) | 291,337 | |||
| 172,800 | Michael Page International plc (United Kingdom) | 1,049,690 | |||
| 39,800 | Robert Half International, Inc. | 1,211,114 | |||
| 55,700 | Sthree plc (United Kingdom) | 287,602 | |||
| 2,839,743 | |||||
| Shares | Value | ||||
| Industrial Machinery 2.9% | |||||
| 101,000 | AIA Engineering Ltd. (India) | $ | 906,627 | ||
| 3,700 | Burckhardt Compression Holding AG (Switzerland) | 731,907 | |||
| 671,000 | China Automation Group Ltd. (China) | 517,673 | |||
| 36,700 | China Valves Technology, Inc.* | 477,467 | |||
| 4,500 | Danaher Corp. | 359,595 | |||
| 6,700 | Graco, Inc. | 214,400 | |||
| 42,000 | Hy-Lok Corp. (Korea) | 501,127 | |||
| 6,400 | Illinois Tool Works, Inc. | 303,104 | |||
| 7,500 | Konecranes Oyj (Finland) | 221,983 | |||
| 22,000 | Thermax India Ltd. (India) | 334,202 | |||
| 41,100 | Weg S.A. (Brazil) | 438,831 | |||
| 5,006,916 | |||||
| Insurance Brokers 0.6% | |||||
| 28,900 | Brown & Brown, Inc. | 517,888 | |||
| 37,700 | eHealth, Inc.* | 593,775 | |||
| 1,111,663 | |||||
| Internet Retail 0.9% | |||||
| 154,655 | ASOS plc* (United Kingdom) | 1,215,435 | |||
| 215 | START TODAY Co. Ltd. (Japan) | 391,370 | |||
| 1,606,805 | |||||
| Internet Software & Services 1.4% | |||||
| 15,000 | Akamai Technologies, Inc.* | 471,150 | |||
| 14,100 | Daum Communications Corp.* (Korea) | 839,931 | |||
| 135 | Macromill, Inc. (Japan) | 195,438 | |||
| 4,800 | NetEase.com, Inc. ADR* (China) | 170,256 | |||
| 33,600 | Neurones (France) | 324,674 | |||
| 6,115 | VistaPrint N.V.* | 350,084 | |||
| 2,351,533 | |||||
| Investment Banking & Brokerage 0.4% | |||||
| 8,500 | Charles Schwab Corp. (The) | 158,865 | |||
| 180 | GCA Savvian Group Corp.* (Japan) | 171,346 | |||
| 20,400 | optionsXpress Holdings, Inc.* | 332,316 | |||
| 662,527 | |||||
| IT Consulting & Other Services 1.7% | |||||
| 19,375 | Alten Ltd.* (France) | 547,104 | |||
| 9,600 | Cognizant Technology Solutions Corp., Class A* | 489,408 | |||
| 20,000 | Connecta AB (Sweden) | 236,182 | |||
| 880,000 | CSE Global Ltd. (Singapore) | 622,953 | |||
| 320 | Future Architect, Inc. (Japan) | 121,983 | |||
| 78,200 | HiQ International AB* (Sweden) | 400,895 | |||
| 8,200 | Infosys Technologies Ltd. ADR (India) | 482,570 | |||
| 2,901,095 | |||||
| Leisure Products 0.1% | |||||
| 10,200 | Pool Corp. | 230,928 | |||
| Life Sciences Tools & Services 3.9% | |||||
| 1,870 | CMIC Co. Ltd. (Japan) | 434,912 | |||
| 12,900 | Covance, Inc.* | 791,931 | |||
| 1,070 | EPS Co. Ltd. (Japan) | 2,599,668 | |||
| 31,600 | ICON plc ADR* (Ireland) | 834,240 | |||
| 60,200 | LINICAL Co. Ltd. (Japan) | 422,218 | |||
| 49,700 | Pharmaceutical Product Development, Inc. | 1,180,375 | |||
| 3,200 | Techne Corp. | 203,808 | |||
| 4,000 | Waters Corp.* | 270,160 | |||
| 6,737,312 | |||||
| �� | |||||
| Managed Health Care 0.5% | |||||
| 10,300 | AMERIGROUP Corp.* | 342,372 | |||
| 13,300 | OdontoPrev S.A. (Brazil) | 461,520 | |||
| 803,892 | |||||
50
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Mortgage REITs 0.3% | |||||
| 9,500 | Annaly Capital Management, Inc. | $ | 163,210 | ||
| 20,000 | Anworth Mortgage Asset Corp. | 134,800 | |||
| 18,300 | MFA Financial, Inc. | 134,688 | |||
| 10,000 | Redwood Trust, Inc. | 154,200 | |||
| 586,898 | |||||
| Multi-Line Insurance 0.3% | |||||
| 18,600 | HCC Insurance Holdings, Inc. | 513,360 | |||
| Oil & Gas Drilling 0.4% | |||||
| 27,000 | Cathedral Energy Services Ltd. (Canada) | 142,273 | |||
| 18,000 | Ensign Energy Services, Inc. (Canada) | 260,613 | |||
| 36,900 | Phoenix Technology Income Fund** (Canada) | 344,904 | |||
| 747,790 | |||||
| Oil & Gas Equipment & Services 1.2% | |||||
| 311,000 | Anhui Tianda Oil Pipe Co. Ltd., Class H (China) | 149,809 | |||
| 1,200 | Core Laboratories N.V. | 156,960 | |||
| 15,800 | Gulf Island Fabrication, Inc. | 343,650 | |||
| 47,800 | Lamprell plc (United Arab Emirates) | 175,671 | |||
| 26,900 | Pason Systems, Inc. (Canada) | 302,834 | |||
| 16,000 | Petrofac Ltd. (United Kingdom) | 292,066 | |||
| 6,100 | Schoeller-Bleckmann Oilfield Equipment AG (Austria) | 322,045 | |||
| 14,100 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 299,636 | |||
| 2,042,671 | |||||
| Oil & Gas Exploration & Production 1.4% | |||||
| 201,000 | Afren plc* (United Kingdom) | 312,269 | |||
| 48,000 | Dragon Oil plc* (Ireland) | 352,813 | |||
| 41,600 | Gran Tierra Energy, Inc.* | 245,440 | |||
| 27,500 | JKX Oil and Gas plc (United Kingdom) | 117,771 | |||
| 75,000 | Pan Orient Energy Corp.* (Canada) | 465,380 | |||
| 26,175 | Premier Oil plc* (United Kingdom) | 490,920 | |||
| 37,000 | Selan Exploration Technology Ltd. (India) | 352,734 | |||
| 326 | Total Gabon (Gabon) | 131,299 | |||
| 2,468,626 | |||||
| Other Diversified Financial Services 0.1% | |||||
| 104,000 | Count Financial Ltd. (Australia) | 129,785 | |||
| Packaged Foods & Meats 0.3% | |||||
| 5,500 | Glaxo SmithKline Consumer Healthcare Ltd. (India) | 183,762 | |||
| 21,500 | Zhongpin, Inc.* | 273,050 | |||
| 456,812 | |||||
| Personal Products 0.5% | |||||
| 21,000 | Atrium Innovations, Inc.* (Canada) | 344,795 | |||
| 706,000 | Beauty China Holdings Ltd.* *** (Singapore) | 5,048 | |||
| 11,105 | Natura Cosmeticos S.A. (Brazil) | 225,283 | |||
| 5,000 | Procter & Gamble Hygiene and Healthcare Ltd. (India) | 222,296 | |||
| 797,422 | |||||
| Shares | Value | ||||
| Pharmaceuticals 1.6% | |||||
| 173,000 | China Shineway Pharmaceutical Group Ltd. (China) | $ | 479,061 | ||
| 20,497 | Daewoong Pharmaceutical Co. Ltd. (Korea) | 905,785 | |||
| 80,400 | Dechra Pharmaceuticals plc (United Kingdom) | 506,712 | |||
| 41,000 | Egyptian International Pharmaceutical Industries Co. (Egypt) | 275,518 | |||
| 14,000 | Medy-Tox, Inc.* (Korea) | 325,423 | |||
| 26,100 | Whanin Pharmaceutical Co. Ltd. (Korea) | 336,789 | |||
| 2,829,288 | |||||
| Property & Casualty Insurance 0.3% | |||||
| 293,725 | Beazley plc (United Kingdom) | 483,535 | |||
| Publishing 0.1% | |||||
| 3,300 | Morningstar, Inc.* | 158,697 | |||
| Regional Banks 1.1% | |||||
| 35,800 | Boston Private Financial Holdings, Inc. | 263,846 | |||
| 8,500 | Canadian Western Bank (Canada) | 202,600 | |||
| 6,000 | City National Corp. | 323,820 | |||
| 70,590 | First California Financial Group, Inc.* | 186,358 | |||
| 20,100 | First of Long Island Corp. (The) | 484,410 | |||
| 180 | Seven Bank Ltd. (Japan) | 362,351 | |||
| 1,823,385 | |||||
| Research & Consulting Services 3.1% | |||||
| 14,375 | Bureau Veritas S.A. (France) | 764,558 | |||
| 5,318 | Campbell Brothers Ltd. (Australia) | 144,198 | |||
| 42,500 | CRA International, Inc.* | 974,100 | |||
| 5,000 | Exponent, Inc.* | 142,600 | |||
| 17,000 | Intertek Group plc (United Kingdom) | 376,412 | |||
| 150 | Nihon M&A Center, Inc. (Japan) | 514,777 | |||
| 69,635 | Resources Connection, Inc.* | 1,334,903 | |||
| 130 | SGS S.A. (Switzerland) | 179,762 | |||
| 32,000 | Stantec, Inc.* (Canada) | 832,385 | |||
| 5,030 | Verisk Analytics, Inc., Class A* | 141,846 | |||
| 5,405,541 | |||||
| Restaurants 1.0% | |||||
| 452,000 | Ajisen China Holdings Ltd. (China) | 444,190 | |||
| 26,800 | Tim Hortons, Inc. | 873,412 | |||
| 185 | Toridoll.corporation (Japan) | 334,383 | |||
| 1,651,985 | |||||
| Semiconductor Equipment 1.3% | |||||
| 25,600 | Cabot Microelectronics Corp.* | 968,448 | |||
| 3,600 | Disco Corp. (Japan) | 221,651 | |||
| 20,000 | Eugene Technology Co. Ltd. (Korea) | 201,512 | |||
| 32,000 | Hanmi Semiconductor Co. Ltd. (Korea) | 205,612 | |||
| 5,700 | KLA-Tencor Corp. | 176,244 | |||
| 33,100 | Koh Young Technology, Inc.* (Korea) | 372,995 | |||
| 5,200 | Tessera Technologies, Inc.* | 105,456 | |||
| 2,251,918 | |||||
51
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Semiconductors 7.8% | |||||
| 44,300 | Advanced Analogic Technologies, Inc.* | $ | 154,607 | ||
| 16,000 | Altera Corp. | 388,960 | |||
| 14,000 | CSR plc* (United Kingdom) | 97,376 | |||
| 30,500 | ELMOS Semiconductor AG* (Germany) | 285,267 | |||
| 18,950 | Hittite Microwave Corp.* | 833,231 | |||
| 18,000 | Linear Technology Corp. | 509,040 | |||
| 11,700 | Maxim Integrated Products, Inc. | 226,863 | |||
| 10,000 | MaxLinear, Inc., Class A* | 177,500 | |||
| 175,500 | Melexis N.V.* (Belgium) | 1,828,850 | |||
| 168,500 | Micrel, Inc. | 1,796,210 | |||
| 34,700 | Microchip Technology, Inc. | 977,152 | |||
| 131,500 | Microtune, Inc.* | 358,995 | |||
| 372,599 | O2Micro International Ltd. ADR* (China) | 2,552,303 | |||
| 123,500 | PLX Technology, Inc.* | 650,845 | |||
| 10,300 | Power Integrations, Inc. | 424,360 | |||
| 16,000 | RichTek Technology Corp. (Taiwan) | 171,295 | |||
| 9,000 | Semtech Corp.* | 156,870 | |||
| 1,800 | Silicon Laboratories, Inc.* | 85,806 | |||
| 175,000 | Sporton International, Inc. (Taiwan) | 360,382 | |||
| 16,200 | Standard Microsystems Corp.* | 377,136 | |||
| 9,300 | Supertex, Inc.* | 237,987 | |||
| 33,000 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 346,170 | |||
| 14,400 | Volterra Semiconductor Corp.* | 361,440 | |||
| 13,358,645 | |||||
| Soft Drinks 0.1% | |||||
| 21,700 | Coca-Cola Icecek AS (Turkey) | 184,395 | |||
| Specialized Consumer Services 0.2% | |||||
| 55 | Best Bridal, Inc. (Japan) | 144,346 | |||
| 230 | NOVARESE, Inc. (Japan) | 169,933 | |||
| 314,279 | |||||
| Specialized Finance 1.8% | |||||
| 187,000 | Bolsa Mexicana de Valores S.A.* (Mexico) | 296,489 | |||
| 1,800 | Crisil Ltd. (India) | 208,547 | |||
| 9,600 | IMAREX ASA* (Norway) | 82,104 | |||
| 1,600 | IntercontinentalExchange, Inc.* | 179,488 | |||
| 19,600 | MSCI, Inc., Class A* | 707,560 | |||
| 16,500 | NASDAQ OMX Group, Inc. (The)* | 348,480 | |||
| 5,400 | NYSE Euronext | 159,894 | |||
| 45 | Osaka Securities Exchange Co. Ltd. (Japan) | 235,625 | |||
| 13,043 | Oslo Bors VPS Holding ASA (Norway) | 142,873 | |||
| 9,800 | Portfolio Recovery Associates, Inc.* | 537,726 | |||
| 6,000 | TMX Group, Inc. (Canada) | 176,815 | |||
| 3,075,601 | |||||
| Specialty Chemicals 1.1% | |||||
| 20,870 | C. Uyemura & Co. Ltd. (Japan) | 846,957 | |||
| 1,299,000 | EcoGreen Fine Chemical Group Ltd. (Hong Kong) | 332,942 | |||
| 80 | Japan Pure Chemical Co. Ltd. (Japan) | 260,413 | |||
| 42,600 | MEC Co. Ltd. (Japan) | 237,199 | |||
| 15,700 | TechnoSemiChem Co. Ltd. (Korea) | 278,907 | |||
| 1,956,418 | |||||
| Specialty Stores 1.4% | |||||
| 83,800 | Big 5 Sporting Goods Corp. | 1,275,436 | |||
| 48,200 | easyhome Ltd. (Canada) | 348,931 | |||
| 27,618 | Hibbett Sports, Inc.* | 706,469 | |||
| 2,330,836 | |||||
| Steel 0.1% | |||||
| 32,500 | Ferrexpo plc (United Kingdom) | 185,332 | |||
| Shares | Value | ||||
| Systems Software 1.8% | |||||
| 46,700 | Integrated Device Technology, Inc.* | $ | 286,271 | ||
| 89,700 | OPNET Technologies, Inc. | 1,445,964 | |||
| 2,210 | Simplex Technology, Inc. (Japan) | 1,145,348 | |||
| 4,315 | Trend Micro, Inc. (Japan) | 150,625 | |||
| 3,028,208 | |||||
| Textiles 0.2% | |||||
| 295,000 | S. Kumars Nationwide Ltd.* (India) | 391,953 | |||
| Thrifts & Mortgage Finance 1.0% | |||||
| 18,475 | Home Capital Group, Inc. (Canada) | 786,639 | |||
| 4,600 | Housing Development Finance Corp. Ltd. (India) | 278,233 | |||
| 20,700 | LIC Housing Finance Ltd. (India) | 403,188 | |||
| 8,300 | Washington Federal, Inc. | 168,656 | |||
| 1,636,716 | |||||
| Trading Companies & Distributors 3.7% | |||||
| 9,600 | Fastenal Co. | 460,704 | |||
| 50,380 | Houston Wire & Cable Co. | 583,401 | |||
| 54,279 | Indutrade AB (Sweden) | 1,244,265 | |||
| 21,500 | MISUMI Group, Inc. (Japan) | 441,557 | |||
| 18,500 | MSC Industrial Direct Co., Inc., Class A | 938,320 | |||
| 70,300 | Richelieu Hardware Ltd. (Canada) | 1,595,304 | |||
| 4,780 | Thermador Groupe (France) | 747,171 | |||
| 2,700 | W.W. Grainger, Inc. | 291,924 | |||
| 6,302,646 | |||||
| Trucking 0.7% | |||||
| 33,000 | Knight Transportation, Inc. | 695,970 | |||
| 1,300 | Landstar System, Inc. | 54,574 | |||
| 10,500 | Old Dominion Freight Line, Inc.* | 350,595 | |||
| 9,600 | Universal Truckload Services, Inc.* | 168,768 | |||
| 1,269,907 | |||||
| Wireless Telecommunication Services 0.1% | |||||
| 4,300 | NII Holdings, Inc.* | 179,138 | |||
| Total Common Stocks (cost $120,523,650) | 160,929,433 | ||||
| PREFERRED STOCKS 0.3% | |||||
| Regional Banks 0.3% | |||||
| 88,000 | Banco Daycoval S.A. Pfd. (Brazil) | 500,455 | |||
| Total Preferred Stocks (cost $234,775) | 500,455 | ||||
| LIMITED PARTNERSHIP INTEREST 0.2% | |||||
| Oil & Gas Exploration & Production 0.2% | |||||
| 30,000 | Zhaikmunai L.P. GDR* (Kazakhstan) | 262,500 | |||
| Total Limited Partnership Interest (cost $150,300) | 262,500 | ||||
| WARRANTS 0.0% | |||||
| Air Freight & Logistics 0.0% | |||||
| 16,600 | Goodpack Ltd., expiring 11/30/12* (Singapore) | 12,463 | |||
| Health Care Equipment 0.0% | |||||
| 40,000 | Cardica, Inc., expiring 9/29/14* *** † | 18,800 | |||
| Total Warrants (cost $7,629) | 31,263 | ||||
52
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 5.1% | |||||
| Repurchase Agreement 5.1% | |||||
| $8,758,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $8,880,000 of United States Treasury Notes 0.875% due 5/31/11; value: $8,935,500; repurchase proceeds: $8,758,000 (cost $8,758,000) | $ | 8,758,000 | ||
| Total Short-Term Investments (cost $8,758,000) | 8,758,000 | ||||
| Total Investments (cost $129,674,354) 99.4% | 170,481,651 | ||||
| Other Assets less Liabilities 0.6% | 1,004,840 | ||||
| NET ASSETS 100.0% | $ | 171,486,491 | |||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At March 31, 2010, Wasatch Global Opportunities Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 0.7 | ||
Austria | 0.2 | ||
Belgium | 1.1 | ||
Brazil | 2.3 | ||
Canada | 4.6 | ||
China | 7.8 | ||
Denmark | 0.4 | ||
Egypt | 0.2 | ||
Finland | 0.2 | ||
France | 3.0 | ||
Gabon | 0.1 | ||
Germany | 3.3 | ||
Hong Kong | 0.7 | ||
India | 4.0 | ||
Indonesia | 0.5 | ||
Ireland | 0.7 | ||
Italy | 0.7 | ||
Japan | 8.5 | ||
Kazakhstan | 0.2 | ||
Korea | 3.5 | ||
Mexico | 0.7 | ||
Norway | 0.3 | ||
Singapore | 2.4 | ||
South Africa | 0.6 | ||
Sweden | 2.4 | ||
Switzerland | 0.6 | ||
Taiwan | 0.7 | ||
Turkey | 0.1 | ||
United Arab Emirates | 0.8 | ||
United Kingdom | 6.8 | ||
United States | 41.9 | ||
TOTAL | 100.0 | % | |
53
Table of Contents
| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND (WAGTX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 90.3% | |||||
| Advertising 2.1% | |||||
| 31,365 | 1000mercis* (France) | $ | 1,358,331 | ||
| Application Software 2.7% | |||||
| 8,795 | FactSet Research Systems, Inc. | 645,289 | |||
| 29,550 | Interactive Intelligence, Inc.* | 552,289 | |||
| 3,100 | SimCorp A/S (Denmark) | 573,709 | |||
| 1,771,287 | |||||
| Asset Management & Custody Banks 0.9% | |||||
| 74,600 | CETIP S.A. (Brazil) | 595,710 | |||
| Biotechnology 4.0% | |||||
| 74,158 | Abcam plc (United Kingdom) | 1,417,886 | |||
| 25,000 | Myriad Genetics, Inc.* | 601,250 | |||
| 1,499,828 | Sino Biopharmaceutical Ltd. (China) | 594,974 | |||
| 2,614,110 | |||||
| Communications Equipment 2.5% | |||||
| 24,705 | Cisco Systems, Inc.* | 643,071 | |||
| 15,445 | F5 Networks, Inc.* | 950,022 | |||
| 1,593,093 | |||||
| Computer Hardware 3.0% | |||||
| 3,000 | Apple, Inc.* | 704,790 | |||
| 9,600 | International Business Machines Corp. | 1,231,200 | |||
| 1,935,990 | |||||
| Computer Storage & Peripherals 1.0% | |||||
| 46,405 | Intevac, Inc.* | 641,317 | |||
| Data Processing & Outsourced Services 7.9% | |||||
| 8,270 | Alliance Data Systems Corp.* | 529,197 | |||
| 63,600 | Cielo S.A. (Brazil) | 598,651 | |||
| 25,600 | Fidelity National Information Services, Inc. | 600,064 | |||
| 24,500 | NeuStar, Inc., Class A* | 617,400 | |||
| 38,200 | Redecard S.A. (Brazil) | 706,255 | |||
| 218,195 | Wirecard AG (Germany) | 2,067,060 | |||
| 5,118,627 | |||||
| Drug Retail 2.1% | |||||
| 74,035 | Create SD Holdings Co. Ltd. (Japan) | 1,388,899 | |||
| Education Services 2.5% | |||||
| 10,000 | Apollo Group, Inc., Class A* | 612,900 | |||
| 6,265 | MegaStudy Co. Ltd. (Korea) | 1,032,677 | |||
| 1,645,577 | |||||
| Electronic Equipment & Instruments 1.0% | |||||
| 29,900 | Rotork plc (United Kingdom) | 637,069 | |||
| Health Care Distributors 1.0% | |||||
| 26,300 | PSS World Medical, Inc.* | 618,313 | |||
| Health Care Equipment 5.7% | |||||
| 130,414 | Cardica, Inc.* | 250,395 | |||
| 143,000 | Cardica, Inc. PIPE* † | 274,560 | |||
| 30,000 | Cyberonics, Inc.* | 574,800 | |||
| 18,505 | DiaSorin S.p.A (Italy) | 697,969 | |||
| 9,985 | Invacare Corp. | 265,002 | |||
| 3,955,440 | LMA International N.V.* (Singapore) | 664,661 | |||
| 7,035 | NuVasive, Inc.* | 317,982 | |||
| 15,750 | St. Jude Medical, Inc.* | 646,538 | |||
| 3,691,907 | |||||
| Shares | Value | ||||
| Health Care Facilities 2.3% | |||||
| 619,000 | Raffles Medical Group Ltd. (Singapore) | $ | 708,187 | ||
| 28,000 | VCA Antech, Inc.* | 784,840 | |||
| 1,493,027 | |||||
| Health Care Services 5.0% | |||||
| 14,725 | Bio-Reference Laboratories, Inc.* | 647,458 | |||
| 20,987 | CorVel Corp.* | 750,285 | |||
| 6,300 | Express Scripts, Inc.* | 641,088 | |||
| 59,300 | Fleury S.A.* (Brazil) | 633,156 | |||
| 9,865 | MEDNAX, Inc.* | 574,044 | |||
| 3,246,031 | |||||
| Health Care Technology 1.2% | |||||
| 129,350 | RaySearch Laboratories AB* (Sweden) | 801,491 | |||
| Home Entertainment Software 2.1% | |||||
| 59,000 | Activision Blizzard, Inc. | 711,540 | |||
| 45,700 | UbiSoft Entertainment S.A.* (France) | 629,614 | |||
| 1,341,154 | |||||
| Industrial Machinery 1.0% | |||||
| 62,500 | Weg S.A. (Brazil) | 667,322 | |||
| Internet Software & Services 5.4% | |||||
| 50,000 | Akamai Technologies, Inc.* | 1,570,500 | |||
| 2,330 | Google, Inc., Class A* | 1,321,133 | |||
| 300 | Gourmet Navigator, Inc. (Japan) | 579,827 | |||
| 6,528 | Xtera* *** † | 2,415 | |||
| 3,473,875 | |||||
| IT Consulting & Other Services 2.4% | |||||
| 18,700 | Cognizant Technology Solutions Corp., Class A* | 953,326 | |||
| 10,610 | Infosys Technologies Ltd. (India) | 618,001 | |||
| 1,571,327 | |||||
| Life Sciences Tools & Services 5.4% | |||||
| 10,590 | Covance, Inc.* | 650,120 | |||
| 302 | EPS Co. Ltd. (Japan) | 733,738 | |||
| 8,800 | Eurofins Scientific (France) | 382,235 | |||
| 23,330 | ICON plc ADR* (Ireland) | 615,912 | |||
| 27,000 | Pharmaceutical Product Development, Inc. | 641,250 | |||
| 7,730 | Techne Corp. | 492,324 | |||
| 3,515,579 | |||||
| Managed Health Care 1.1% | |||||
| 20,495 | OdontoPrev S.A. (Brazil) | 711,192 | |||
| Oil & Gas Equipment & Services 1.0% | |||||
| 29,750 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 632,211 | |||
| Packaged Foods & Meats 0.9% | |||||
| 18,000 | Unicharm PetCare Corp. (Japan) | 571,860 | |||
| Pharmaceuticals 3.9% | |||||
| 89,500 | Dechra Pharmaceuticals plc (United Kingdom) | 564,064 | |||
| 63,000 | Meda AB, Class A (Sweden) | 693,645 | |||
| 20,250 | Teva Pharmaceutical Industries Ltd. ADR (Israel) | 1,277,370 | |||
| 2,535,079 | |||||
| Semiconductor Equipment 1.0% | |||||
| 32,203 | Tessera Technologies, Inc.* | 653,077 | |||
54
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Semiconductors 15.4% | |||||
| 49,300 | Altera Corp. | $ | 1,198,483 | ||
| 13,880 | Hittite Microwave Corp.* | 610,304 | |||
| 29,000 | Intel Corp. | 645,540 | |||
| 18,140 | Linear Technology Corp. | 512,999 | |||
| 60,134 | Melexis N.V.* (Belgium) | 626,644 | |||
| 57,815 | Micrel, Inc. | 616,308 | |||
| 22,525 | Microchip Technology, Inc. | 634,304 | |||
| 21,362 | Netlogic Microsystems, Inc.* | 628,684 | |||
| 94,079 | O2Micro International Ltd. ADR* (China) | 644,441 | |||
| 15,968 | Power Integrations, Inc. | 657,881 | |||
| 13,105 | Silicon Laboratories, Inc.* | 624,715 | |||
| 133,420 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 1,399,576 | |||
| 46,500 | Xilinx, Inc. | 1,185,750 | |||
| 9,985,629 | |||||
| Systems Software 5.8% | |||||
| 15,170 | BMC Software, Inc.* | 576,460 | |||
| 349,000 | GuestLogix, Inc.* (Canada) | 584,359 | |||
| 40,900 | NetSuite, Inc.* | 594,686 | |||
| 54,735 | OPNET Technologies, Inc. | 882,328 | |||
| 19,675 | Oracle Corp. | 505,451 | |||
| 1,200 | Simplex Technology, Inc. (Japan) | 621,908 | |||
| 3,765,192 | |||||
| Total Common Stocks (cost $48,276,786) | 58,574,276 | ||||
| PREFERRED STOCKS 1.3% | |||||
| Computer Storage & Peripherals 1.3% | |||||
| 78,502 | BlueArc Corp., Series DD Pfd.* *** † | 287,318 | |||
| 138,725 | BlueArc Corp., Series FF Pfd.* *** † | 534,091 | |||
| 821,409 | |||||
| Total Preferred Stocks (cost $953,064) | 821,409 | ||||
| LIMITED PARTNERSHIP INTEREST 0.6% | |||||
| Other 0.6% | |||||
| Montagu Newhall Global Partners II-B, L.P.*** † | 364,475 | ||||
| Total Limited Partnership Interest (cost $414,387) | 364,475 | ||||
| Principal Amount | Value | ||||
| CORPORATE BONDS 0.0% | |||||
| Computer Storage & Peripherals 0.0% | |||||
| $27,323 | BlueArc Corp., 8.00%, 02/19/11*** † | $ | 27,323 | ||
| Total Corporate Bonds (cost $27,323) | 27,323 | ||||
| Shares | Value | ||||
| WARRANTS 0.0% | |||||
| Computer Storage & Peripherals 0.0% | |||||
| 619 | BlueArc Corp., expiring 4/2/18* *** † | $ | — | ||
| Health Care Equipment 0.0% | |||||
| 71,500 | Cardica, Inc., expiring 9/29/14* *** † | 33,605 | |||
| Total Warrants (cost $8,938) | 33,605 | ||||
| Number of Contracts | Value | ||||
| PUT OPTIONS PURCHASED 0.0% | |||||
| Computer Hardware 0.0% | |||||
| 250 | Apple, Inc., expiring 05/22/10, exercise price $195 | $ | 25,500 | ||
| Total Put Options Purchased (premium $24,000) | 25,500 | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 5.7% | |||||
| Repurchase Agreement 5.7% | |||||
| $3,676,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $3,730,000 of United States Treasury Notes 0.875% due 5/31/11; value: $3,753,312; repurchase proceeds: $3,676,000††† (cost $3,676,000) | $ | 3,676,000 | ||
| Total Short-Term Investments (cost $3,676,000) | 3,676,000 | ||||
| Total Investments (cost $53,380,498) 97.9% | 63,522,588 | ||||
| Other Assets less Liabilities 2.1% | 1,353,807 | ||||
| NET ASSETS 100.0% | $ | 64,876,395 | |||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
†††All or a portion of this security has been designated as collateral for purchase commitments (see Note 9).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
See Notes to Financial Statements. | |||||
55
Table of Contents
| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND (WAGTX) — Schedule of Investments (continued) | ||
At March 31, 2010, Wasatch Global Science & Technology Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Belgium | 1.0 | ||
Brazil | 6.5 | ||
Canada | 1.0 | ||
China | 2.1 | ||
Denmark | 1.0 | ||
France | 4.0 | ||
Germany | 3.5 | ||
India | 1.0 | ||
Ireland | 1.0 | ||
Israel | 2.1 | ||
Italy | 1.2 | ||
Japan | 6.5 | ||
Korea | 1.7 | ||
Norway | 1.1 | ||
Singapore | 2.3 | ||
Sweden | 2.5 | ||
Taiwan | 2.3 | ||
United Kingdom | 4.4 | ||
United States | 54.8 | ||
TOTAL | 100.0 | % | |
56
Table of Contents
| WASATCH HERITAGE GROWTH FUND (WAHGX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 96.8% | |||||
| Aerospace & Defense 2.7% | |||||
| 12,085 | L-3 Communications Holdings, Inc. | $ | 1,107,348 | ||
| 20,245 | TransDigm Group, Inc. | 1,073,795 | |||
| 2,181,143 | |||||
| Air Freight & Logistics 3.0% | |||||
| 20,760 | C.H. Robinson Worldwide, Inc. | 1,159,446 | |||
| 33,665 | Expeditors International of Washington, Inc. | 1,242,912 | |||
| 2,402,358 | |||||
| Apparel Retail 4.5% | |||||
| 121,283 | Esprit Holdings Ltd. (Hong Kong) | 957,561 | |||
| 50,375 | Ross Stores, Inc. | 2,693,551 | |||
| 3,651,112 | |||||
| Asset Management & Custody Banks 3.4% | |||||
| 59,395 | SEI Investments Co. | 1,304,908 | |||
| 26,900 | T. Rowe Price Group, Inc. | 1,477,617 | |||
| 2,782,525 | |||||
| Automotive Retail 1.0% | |||||
| 19,958 | O’Reilly Automotive, Inc.* | 832,448 | |||
| Communications Equipment 1.9% | |||||
| 25,660 | F5 Networks, Inc.* | 1,578,347 | |||
| Data Processing & Outsourced Services 10.8% | |||||
| 23,505 | Alliance Data Systems Corp.* | 1,504,085 | |||
| 47,135 | Fidelity National Information Services, Inc. | 1,104,844 | |||
| 7,325 | Mastercard, Inc., Class A | 1,860,550 | |||
| 36,525 | Paychex, Inc. | 1,121,318 | |||
| 171,830 | Redecard S.A. (Brazil) | 3,176,851 | |||
| 8,767,648 | |||||
| Diversified Metals & Mining 1.4% | |||||
| 16,580 | BHP Billiton plc ADR (United Kingdom) | 1,134,569 | |||
| Diversified Support Services 3.4% | |||||
| 76,780 | Copart, Inc.* | 2,733,368 | |||
| Education Services 4.1% | |||||
| 53,735 | Apollo Group, Inc., Class A* | 3,293,418 | |||
| Electronic Components 2.6% | |||||
| 49,045 | Amphenol Corp., Class A | 2,069,209 | |||
| Health Care Equipment 3.2% | |||||
| 62,780 | St. Jude Medical, Inc.* | 2,577,119 | |||
| Health Care Services 3.6% | |||||
| 28,960 | Express Scripts, Inc.* | 2,946,970 | |||
| Investment Banking & Brokerage 1.3% | |||||
| 57,050 | TD Ameritrade Holding Corp.* | 1,087,373 | |||
| IT Consulting & Other Services 4.0% | |||||
| 63,210 | Cognizant Technology Solutions Corp., Class A* | 3,222,446 | |||
| Life Sciences Tools & Services 2.6% | |||||
| 34,475 | Covance, Inc.* | 2,116,420 | |||
| Mortgage REITs 1.0% | |||||
| 45,419 | Annaly Capital Management, Inc. | 780,298 | |||
| Multi-Line Insurance 1.4% | |||||
| 39,970 | HCC Insurance Holdings, Inc. | 1,103,172 | |||
| Oil & Gas Equipment & Services 1.4% | |||||
| 25,975 | Cameron International Corp.* | 1,113,289 | |||
| Shares | Value | ||||
| Oil & Gas Exploration & Production 3.9% | |||||
| 49,745 | Petrohawk Energy Corp.* | $ | 1,008,828 | ||
| 46,625 | Ultra Petroleum Corp.* | 2,174,124 | |||
| 3,182,952 | |||||
| Personal Products 1.8% | |||||
| 32,235 | Herbalife Ltd. | 1,486,678 | |||
| Pharmaceuticals 1.7% | |||||
| 22,185 | Teva Pharmaceutical Industries Ltd. ADR (Israel) | 1,399,430 | |||
| Restaurants 2.3% | |||||
| 56,315 | Tim Hortons, Inc. | 1,835,306 | |||
| Semiconductors 11.4% | |||||
| 151,890 | Altera Corp. | 3,692,446 | |||
| 64,985 | Linear Technology Corp. | 1,837,776 | |||
| 46,510 | Maxim Integrated Products, Inc. | 901,829 | |||
| 38,600 | Microchip Technology, Inc. | 1,086,976 | |||
| 19,770 | Silicon Laboratories, Inc.* | 942,436 | |||
| 75,327 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 790,180 | |||
| 9,251,643 | |||||
| Specialized Finance 4.2% | |||||
| 112,300 | BM&F BOVESPA S.A. (Brazil) | 759,816 | |||
| 11,163 | IntercontinentalExchange, Inc.* | 1,252,265 | |||
| 37,545 | MSCI, Inc., Class A* | 1,355,375 | |||
| 3,367,456 | |||||
| Specialty Chemicals 1.2% | |||||
| 22,893 | Ecolab, Inc. | 1,006,147 | |||
| Systems Software 2.4% | |||||
| 52,215 | BMC Software, Inc.* | 1,984,170 | |||
| Thrifts & Mortgage Finance 4.0% | |||||
| 13,025 | Housing Development Finance Corp. Ltd. (India) | 787,825 | |||
| 148,395 | New York Community Bancorp, Inc. | 2,454,453 | |||
| 3,242,278 | |||||
| Trading Companies & Distributors 3.3% | |||||
| 29,670 | Fastenal Co. | 1,423,864 | |||
| 23,960 | MSC Industrial Direct Co., Inc., Class A | 1,215,251 | |||
| 2,639,115 | |||||
| Trucking 1.2% | |||||
| 26,605 | J.B. Hunt Transport Services, Inc. | 954,587 | |||
| Wireless Telecommunication Services 2.1% | |||||
| 40,305 | NII Holdings, Inc.* | 1,679,106 | |||
| Total Common Stocks (cost $63,782,931) | 78,402,100 | ||||
57
Table of Contents
| WASATCH HERITAGE GROWTH FUND (WAHGX) — Schedule of Investments (continued) | ||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 3.2% | ||||||
| Repurchase Agreement 3.2% | ||||||
| $2,616,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $2,660,000 of United States Treasury Notes 1.00% due 8/31/11; value: $2,673,300; repurchase proceeds: $2,616,000 (cost $2,616,000) | $ | 2,616,000 | |||
| Total Short-Term Investments (cost $2,616,000) | 2,616,000 | |||||
| Total Investments (cost $66,398,931) 100.0% | 81,018,100 | |||||
| Liabilities less Other Assets (<0.1)% | (33,522 | ) | ||||
| NET ASSETS 100.0% | $ | 80,984,578 | ||||
*Non-income producing.
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||
At March 31, 2010, Wasatch Heritage Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Brazil | 5.0 | ||
Hong Kong | 1.2 | ||
India | 1.0 | ||
Israel | 1.8 | ||
Taiwan | 1.0 | ||
United Kingdom | 1.5 | ||
United States | 88.5 | ||
TOTAL | 100.0 | % | |
58
Table of Contents
| WASATCH HERITAGE VALUE FUND (WAHVX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 79.6% | |||||
| Aerospace & Defense 1.9% | |||||
| 1,300 | ITT Corp. | $ | 69,693 | ||
| Agricultural Products 4.7% | |||||
| 1,600 | Bunge Ltd. | 98,608 | |||
| 70,000 | Chaoda Modern Agriculture Holdings Ltd. (China) | 74,560 | |||
| 173,168 | |||||
| Biotechnology 2.2% | |||||
| 3,400 | Myriad Genetics, Inc.* | 81,770 | |||
| Construction & Engineering 2.2% | |||||
| 2,300 | Shaw Group, Inc. (The)* | 79,166 | |||
| Data Processing & Outsourced Services 5.0% | |||||
| 9,800 | Cielo S.A. (Brazil) | 92,245 | |||
| 3,900 | Fidelity National Information Services, Inc. | 91,416 | |||
| 183,661 | |||||
| Diversified Support Services 2.0% | |||||
| 2,000 | Copart, Inc.* | 71,200 | |||
| Health Care Equipment 2.1% | |||||
| 1,500 | Covidien plc | 75,420 | |||
| Heavy Electrical Equipment 3.0% | |||||
| 5,000 | ABB Ltd. ADR* ††† (Switzerland) | 109,200 | |||
| Home Improvement Retail 2.0% | |||||
| 1,100 | Sherwin-Williams Co. (The) | 74,448 | |||
| Industrial Conglomerates 2.4% | |||||
| 2,300 | Tyco International Ltd. | 87,975 | |||
| Industrial Machinery 2.4% | |||||
| 8,200 | Weg S.A. (Brazil) | 87,553 | |||
| Internet Software & Services 3.1% | |||||
| 3,600 | Akamai Technologies, Inc.* | 113,076 | |||
| Life Sciences Tools & Services 2.6% | |||||
| 4,000 | Pharmaceutical Product Development, Inc. | 95,000 | |||
| Oil & Gas Drilling 2.7% | |||||
| 2,400 | Noble Corp.* | 100,368 | |||
| Oil & Gas Exploration & Production 2.1% | |||||
| 3,700 | Petrohawk Energy Corp.* ††† | 75,036 | |||
| Oil & Gas Storage & Transportation 3.4% | |||||
| 5,500 | Spectra Energy Corp††† | 123,915 | |||
| Other Diversified Financial Services 2.5% | |||||
| 5,000 | Bank of America Corp. | 89,250 | |||
| Paper Packaging 2.6% | |||||
| 3,100 | Sonoco Products Co. | 95,449 | |||
| Pharmaceuticals 6.2% | |||||
| 5,200 | Mylan, Inc.* | 118,092 | |||
| 6,400 | Pfizer, Inc. | 109,760 | |||
| 227,852 | |||||
| Property & Casualty Insurance 4.6% | |||||
| 2,300 | Allstate Corp. (The) | 74,313 | |||
| 7,400 | Old Republic International Corp. | 93,832 | |||
| 168,145 | |||||
| Publishing 2.3% | |||||
| 2,300 | McGraw-Hill Cos., Inc. (The) | 81,995 | |||
| Shares | Value | |||||
| Restaurants 2.0% | ||||||
| 1,100 | McDonald’s Corp. | $ | 73,392 | |||
| Specialized Finance 2.3% | ||||||
| 3,900 | NASDAQ OMX Group, Inc. (The)* | 82,368 | ||||
| Specialty Chemicals 3.1% | ||||||
| 5,300 | RPM International, Inc. | 113,102 | ||||
| Steel 2.6% | ||||||
| 5,500 | Steel Dynamics, Inc. | 96,085 | ||||
| Thrifts & Mortgage Finance 2.0% | ||||||
| 5,200 | Hudson City Bancorp, Inc. | 73,632 | ||||
| Water Utilities 3.2% | ||||||
| 5,300 | American Water Works Co., Inc. | 115,328 | ||||
| Wireless Telecommunication Services 2.4% | ||||||
| 1,000 | Millicom International Cellular S.A. (Luxembourg) | 89,150 | ||||
| Total Common Stocks (cost $2,493,059) | 2,906,397 | |||||
| PREFERRED STOCKS 3.2% | ||||||
| Regional Banks 3.2% | ||||||
| 5,000 | Fifth Third Capital Trust VI, 7.25%, 11/15/67 Pfd.^^^ | 117,500 | ||||
| Total Preferred Stocks (cost $71,300) | 117,500 | |||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 21.2% | ||||||
| Repurchase Agreement 21.2% | ||||||
| $775,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $790,000 of United States Treasury Notes 1.00% due 8/31/11; value: $793,950; repurchase proceeds: $775,000††† (cost $775,000) | $ | 775,000 | |||
| Total Short-Term Investments (cost $775,000) | 775,000 | |||||
| Total Investments (cost $3,339,359) 104.0% | 3,798,897 | |||||
| Liabilities less Other Assets (4.0)% | (145,417 | ) | ||||
| NET ASSETS 100.0% | $ | 3,653,480 | ||||
59
Table of Contents
| WASATCH HERITAGE VALUE FUND (WAHVX) — Schedule of Investments (continued) | ||
| Number of Contracts | Value | ||||
| CALL OPTIONS WRITTEN 0.1% | |||||
| Oil & Gas Exploration & Production 0.1% | |||||
| 32 | Petrohawk Energy Corp., expiring 4/17/10, exercise price $20 | $ | 2,912 | ||
| Total Call Options Written (premium $2,000) | 2,912 | ||||
*Non-income producing.
†††All or a portion of this security has been designated as collateral for call options written (see Note 9).
^^^ Variable Rate Securities
ADR American Depositary Receipt.
See Notes to Financial Statements. | |||||
At March 31, 2010, Wasatch Heritage Value Fund’s investments, excluding short-term investments and options written, were in the following countries:
| Country | % | ||
Brazil | 5.9 | ||
China | 2.5 | ||
Luxembourg | 3.0 | ||
Switzerland | 3.6 | ||
United States | 85.0 | ||
TOTAL | 100.0 | % | |
60
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 96.8% | |||||
| Aerospace & Defense 3.5% | |||||
| 41,850 | Chemring Group plc (United Kingdom) | $ | 2,104,321 | ||
| 141,230 | Kongsberg Gruppen ASA (Norway) | 2,594,259 | |||
| 81,700 | Ultra Electronics Holdings plc (United Kingdom) | 1,862,345 | |||
| 6,560,925 | |||||
| Agricultural Products 0.7% | |||||
| 1,291,560 | Chaoda Modern Agriculture Holdings Ltd. (China) | 1,375,708 | |||
| Air Freight & Logistics 0.6% | |||||
| 2,038,000 | Aramex PJSC* (United Arab Emirates) | 1,054,234 | |||
| Aluminum 1.6% | |||||
| 1,143,000 | China Zhongwang Holdings Ltd.* (China) | 1,001,063 | |||
| 2,766,675 | Midas Holdings Ltd. (Singapore) | 2,037,665 | |||
| 3,038,728 | |||||
| Apparel Retail 1.6% | |||||
| 25,054 | Point, Inc. (Japan) | 1,502,328 | |||
| 212,370 | Truworths International Ltd. (South Africa) | 1,524,999 | |||
| 3,027,327 | |||||
| Apparel, Accessories & Luxury Goods 6.9% | |||||
| 1,378,199 | Anta Sports Products Ltd. (China) | 2,272,103 | |||
| 2,648,515 | China Dongxiang Group Co. (China) | 1,900,044 | |||
| 98,300 | Cia. Hering (Brazil) | 1,933,408 | |||
| 543,655 | Li Ning Co. Ltd. (China) | 1,971,096 | |||
| 1,359,735 | Ports Design Ltd. (China) | 3,432,547 | |||
| 197,495 | Ted Baker plc (United Kingdom) | 1,553,615 | |||
| 13,062,813 | |||||
| Application Software 2.0% | |||||
| 20,152 | SimCorp A/S (Denmark) | 3,729,477 | |||
| Asset Management & Custody Banks 2.2% | |||||
| 345,900 | CETIP S.A. (Brazil) | 2,762,146 | |||
| 10,430 | Partners Group Holding AG (Switzerland) | 1,480,931 | |||
| 4,243,077 | |||||
| Biotechnology 3.6% | |||||
| 353,280 | Abcam plc (United Kingdom) | 6,754,640 | |||
| Brewers 0.7% | |||||
| 124,400 | Anadolu Efes Biracilik ve Malt Sanayii AS (Turkey) | 1,311,113 | |||
| Coal & Consumable Fuels 1.4% | |||||
| 266,045 | PT Indo Tambangraya Megah (Indonesia) | 1,112,480 | |||
| 855,385 | PT Tambang Batubara Bukit Asam Tbk (Indonesia) | 1,635,661 | |||
| 2,748,141 | |||||
| Construction & Farm Machinery & Heavy Trucks 0.8% | |||||
| 25,904 | Demag Cranes AG* (Germany) | 909,910 | |||
| 41,500 | Takeuchi Manufacturing Co. Ltd.* (Japan) | 580,351 | |||
| 1,490,261 | |||||
| Construction Materials 4.2% | |||||
| 719,900 | Corp Moctezuma S.A.B de C.V. (Mexico) | 1,950,870 | |||
| 1,687,000 | PT Indocement Tunggal Prakarsa Tbk (Indonesia) | 2,641,876 | |||
| 4,086,435 | PT Semen Gresik (Persero) Tbk (Indonesia) | 3,278,309 | |||
| 7,871,055 | |||||
| Shares | Value | ||||
| Consumer Finance 0.7% | |||||
| 243,300 | Banco Compartamos S.A. de C.V. (Mexico) | $ | 1,371,982 | ||
| Data Processing & Outsourced Services 2.0% | |||||
| 407,798 | Wirecard AG (Germany) | 3,863,255 | |||
| Diversified Banks 3.4% | |||||
| 587,220 | Allahabad Bank Ltd. (India) | 1,875,651 | |||
| 117,875 | Bank of Baroda (India) | 1,684,960 | |||
| 154,179 | Bank of N.T. Butterfield & Son Ltd. (Bermuda) | 223,559 | |||
| 158,500 | Commercial International Bank S.A.E. (Egypt) | 1,871,141 | |||
| 869,041 | PT Bank Tabungan Pensiunan Nasional Tbk* (Indonesia) | 754,484 | |||
| 6,409,795 | |||||
| Diversified Metals & Mining 0.7% | |||||
| 23,320 | Inmet Mining Corp. (Canada) | 1,355,376 | |||
| Electrical Components & Equipment 1.6% | |||||
| 347,138 | Crompton Greaves Ltd. (India) | 2,014,243 | |||
| 1,390,925 | Wasion Group Holdings Ltd. (China) | 988,892 | |||
| 3,003,135 | |||||
| Electronic Equipment & Instruments 2.1% | |||||
| 190,214 | Rotork plc (United Kingdom) | 4,052,822 | |||
| Environmental & Facilities Services 1.1% | |||||
| 268,245 | Connaught plc (United Kingdom) | 1,006,204 | |||
| 55,045 | Daiseki Co. Ltd. (Japan) | 1,147,581 | |||
| 2,153,785 | |||||
| Food Retail 3.7% | |||||
| 42,845 | BIM Birlesik Magazalar AS (Turkey) | 2,229,600 | |||
| 31,530 | Magnit*** (Russia) | 2,755,110 | |||
| 210,450 | Shoprite Holdings Ltd. (South Africa) | 2,100,671 | |||
| 7,085,381 | |||||
| Gold 1.4% | |||||
| 119,500 | Kingsgate Consolidated Ltd. (Australia) | 933,149 | |||
| 92,170 | Petropavlovsk plc (United Kingdom) | 1,665,689 | |||
| 2,598,838 | |||||
| Health Care Equipment 3.9% | |||||
| 123,888 | DiaSorin S.p.A. (Italy) | 4,672,792 | |||
| 47,750 | Mindray Medical International Ltd. ADR (China) | 1,739,055 | |||
| 28,320 | STRATEC Biomedical Systems AG (Germany) | 1,006,272 | |||
| 7,418,119 | |||||
| Health Care Services 0.2% | |||||
| 35,300 | Fleury S.A.* (Brazil) | 376,904 | |||
| Health Care Supplies 0.6% | |||||
| 258,815 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 1,080,042 | |||
| Health Care Technology 1.5% | |||||
| 458,244 | RaySearch Laboratories AB* (Sweden) | 2,839,415 | |||
| Home Entertainment Software 1.0% | |||||
| 15,530 | NCsoft Corp. (Korea) | 1,969,645 | |||
61
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Industrial Machinery 6.4% | |||||
| 233,045 | AIA Engineering Ltd. (India) | $ | 2,091,929 | ||
| 31,490 | Andritz AG (Austria) | 1,868,755 | |||
| 9,963 | Burckhardt Compression Holding AG (Switzerland) | 1,970,807 | |||
| 35,325 | Konecranes Oyj (Finland) | 1,045,541 | |||
| 146,015 | Thermax India Ltd. (India) | 2,218,114 | |||
| 272,700 | Weg S.A. (Brazil) | 2,911,661 | |||
| 12,106,807 | |||||
| Internet Retail 1.7% | |||||
| 257,440 | ASOS plc* (United Kingdom) | 2,023,223 | |||
| 610 | START TODAY Co. Ltd. (Japan) | 1,110,397 | |||
| 3,133,620 | |||||
| Internet Software & Services 1.7% | |||||
| 460 | Gourmet Navigator, Inc. (Japan) | 889,067 | |||
| 193,000 | Net Entertainment NE AB* (Sweden) | 2,292,560 | |||
| 3,181,627 | |||||
| Life Sciences Tools & Services 1.0% | |||||
| 810 | EPS Co. Ltd. (Japan) | 1,967,973 | |||
| Oil & Gas Equipment & Services 3.8% | |||||
| 105,195 | Pason Systems, Inc. (Canada) | 1,184,260 | |||
| 138,125 | Petrofac Ltd. (United Kingdom) | 2,521,356 | |||
| 27,505 | Schoeller-Bleckmann Oilfield Equipment AG (Austria) | 1,452,104 | |||
| 93,270 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 1,982,060 | |||
| 7,139,780 | |||||
| Oil & Gas Exploration & Production 4.7% | |||||
| 1,070,075 | Afren plc* (United Kingdom) | 1,662,445 | |||
| 214,045 | Dragon Oil plc* (Ireland) | 1,573,287 | |||
| 171,555 | Gran Tierra Energy, Inc.* | 1,012,174 | |||
| 250,442 | JKX Oil and Gas plc (United Kingdom) | 1,072,540 | |||
| 246,960 | Pan Orient Energy Corp.* (Canada) | 1,532,402 | |||
| 107,274 | Premier Oil plc* (United Kingdom) | 2,011,958 | |||
| 8,864,806 | |||||
| Packaged Foods & Meats 0.7% | |||||
| 27,477 | Glaxo SmithKline Consumer Healthcare Ltd. (India) | 918,042 | |||
| 237,905 | Hsu Fu Chi International Ltd. (China) | 357,240 | |||
| 1,275,282 | |||||
| Personal Products 2.6% | |||||
| 143,270 | Natura Cosmeticos S.A. (Brazil) | 2,906,461 | |||
| 31,655 | Oriflame Cosmetics S.A. (Sweden) | 1,979,028 | |||
| 4,885,489 | |||||
| Pharmaceuticals 0.6% | |||||
| 97,235 | Meda AB, Class A (Sweden) | 1,070,580 | |||
| Precious Metals & Minerals 0.7% | |||||
| 206,030 | Northam Platinum Ltd. (South Africa) | 1,357,833 | |||
| Regional Banks 0.6% | |||||
| 595 | Seven Bank Ltd. (Japan) | 1,197,773 | |||
| Research & Consulting Services 2.9% | |||||
| 46,075 | AF AB, Class B (Sweden) | 1,443,475 | |||
| 98,540 | Campbell Brothers Ltd. (Australia) | 2,671,921 | |||
| 386 | Nihon M&A Center, Inc. (Japan) | 1,324,692 | |||
| 5,440,088 | |||||
| Semiconductors 0.7% | |||||
| 122,224 | Melexis N.V.* (Belgium) | 1,273,672 | |||
| Shares | Value | ||||
| Specialized Finance 7.7% | |||||
| 403,740 | BM&F BOVESPA S.A. (Brazil) | $ | 2,731,683 | ||
| 82,950 | IMAREX ASA* (Norway) | 709,434 | |||
| 490,550 | Infrastructure Development Finance Co. Ltd. (India) | 1,759,184 | |||
| 128,845 | JSE Ltd. (South Africa) | 1,146,350 | |||
| 945 | Osaka Securities Exchange Co. Ltd. (Japan) | 4,948,121 | |||
| 302,035 | Rural Electrification Corp. Ltd. (India) | 1,695,352 | |||
| 296,000 | Singapore Exchange Ltd. (Singapore) | 1,619,163 | |||
| 14,609,287 | |||||
| Specialty Chemicals 1.1% | |||||
| 45,635 | Asian Paints Ltd. (India) | 2,078,708 | |||
| Steel 0.6% | |||||
| 203,950 | Ferrexpo plc (United Kingdom) | 1,163,030 | |||
| Systems Software 1.9% | |||||
| 204,440 | F-Secure Oyj (Finland) | 694,464 | |||
| 5,597 | Simplex Technology, Inc. (Japan) | 2,900,683 | |||
| 3,595,147 | |||||
| Thrifts & Mortgage Finance 3.7% | |||||
| 378,755 | Dewan Housing Finance Corp. Ltd. (India) | 1,753,097 | |||
| 50,555 | Home Capital Group, Inc. (Canada) | 2,152,559 | |||
| 157,000 | LIC Housing Finance Ltd. (India) | 3,057,994 | |||
| 6,963,650 | |||||
| Total Common Stocks (cost $140,968,264) | 183,151,145 | ||||
| PREFERRED STOCKS 1.3% | |||||
| Diversified Banks 0.6% | |||||
| 132,100 | Banco do Estado do Rio Grande do Sul S.A., Series B Pfd. (Brazil) | 1,106,092 | |||
| Regional Banks 0.7% | |||||
| 251,125 | Banco Daycoval S.A. Pfd. (Brazil) | 1,428,145 | |||
| Total Preferred Stocks (cost $2,900,058) | 2,534,237 | ||||
| LIMITED PARTNERSHIP INTEREST 0.5% | |||||
| Oil & Gas Exploration & Production 0.5% | |||||
| 113,985 | Zhaikmunai L.P. GDR* (Kazakhstan) | 997,369 | |||
| Total Limited Partnership Interest (cost $845,890) | 997,369 | ||||
62
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 1.0% | |||||
| Repurchase Agreement 1.0% | |||||
| $1,820,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $1,845,000 of United States Treasury Notes 0.875% due 5/31/11; value: $1,856,531; repurchase proceeds: $1,820,000 (cost $1,820,000) | $ | 1,820,000 | ||
| Total Short-Term Investments (cost $1,820,000) | 1,820,000 | ||||
| Total Investments (cost $146,534,212) 99.6% | 188,502,751 | ||||
| Other Assets less Liabilities 0.4% | 706,058 | ||||
| NET ASSETS 100.0% | $ | 189,208,809 | |||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
See Notes to Financial Statements. | |||||
At March 31, 2010, Wasatch International Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 1.9 | ||
Austria | 1.8 | ||
Belgium | 0.7 | ||
Bermuda | 0.1 | ||
Brazil | 8.7 | ||
Canada | 3.3 | ||
China | 8.6 | ||
Denmark | 2.0 | ||
Egypt | 1.0 | ||
Finland | 0.9 | ||
Germany | 3.1 | ||
India | 11.3 | ||
Indonesia | 5.0 | ||
Ireland | 0.8 | ||
Italy | 2.5 | ||
Japan | 9.4 | ||
Kazakhstan | 0.5 | ||
Korea | 1.1 | ||
Mexico | 1.8 | ||
Norway | 2.8 | ||
Russia | 1.5 | ||
Singapore | 2.0 | ||
South Africa | 3.3 | ||
Sweden | 5.2 | ||
Switzerland | 1.9 | ||
Turkey | 1.9 | ||
United Arab Emirates | 0.6 | ||
United Kingdom | 15.8 | ||
United States | 0.5 | ||
TOTAL | 100.0 | % | |
63
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 90.1% | |||||
| Advertising 0.9% | |||||
| 18,580 | 1000mercis* (France) | $ | 804,648 | ||
| 15,390 | Tri-Stage, Inc.* (Japan) | 410,664 | |||
| 1,215,312 | |||||
| Aerospace & Defense 0.6% | |||||
| 16,165 | Chemring Group plc (United Kingdom) | 812,816 | |||
| Agricultural Products 1.1% | |||||
| 845,000 | Chaoda Modern Agriculture Holdings Ltd. (China) | 900,053 | |||
| 474,430 | China Green Holdings Ltd. (China) | 598,220 | |||
| 1,498,273 | |||||
| Air Freight & Logistics 4.5% | |||||
| 7,215,848 | Aramex PJSC* (United Arab Emirates) | 3,732,674 | |||
| 1,305,183 | Goodpack Ltd. (Singapore) | 1,633,229 | |||
| 45,000 | Transat A.T., Inc.* (Canada) | 592,140 | |||
| 5,958,043 | |||||
| Aluminum 1.4% | |||||
| 353,000 | China Zhongwang Holdings Ltd.* (China) | 309,165 | |||
| 2,031,960 | Midas Holdings Ltd. (Singapore) | 1,496,545 | |||
| 1,805,710 | |||||
| Apparel, Accessories & Luxury Goods 6.4% | |||||
| 748,836 | Anta Sports Products Ltd. (China) | 1,234,533 | |||
| 4,150 | Bijou Brigitte AG (Germany) | 756,810 | |||
| 20,000 | Cia. Hering (Brazil) | 393,369 | |||
| 18,454 | Gerry Weber International AG (Germany) | 641,851 | |||
| 33,272 | LG Fashion Corp. (Korea) | 817,501 | |||
| 1,098,145 | Lilang China Co. Ltd.* (Hong Kong) | 1,065,027 | |||
| 12,704 | Odd Molly International AB (Sweden) | 245,331 | |||
| 662,763 | Ports Design Ltd. (China) | 1,673,094 | |||
| 169,901 | Ted Baker plc (United Kingdom) | 1,336,544 | |||
| 469,882 | Xtep International Holdings Ltd. (China) | 372,195 | |||
| 8,536,255 | |||||
| Application Software 1.7% | |||||
| 10,540 | Computer Modelling Group Ltd. (Canada) | 179,075 | |||
| 105,425 | ICSA India Ltd. (India) | 297,994 | |||
| 10,570 | Longtop Financial Technologies Ltd. ADR* (China) | 340,460 | |||
| 175 | MTI Ltd. (Japan) | 300,942 | |||
| 5,985 | SimCorp A/S (Denmark) | 1,107,628 | |||
| 2,226,099 | |||||
| Asset Management & Custody Banks 0.8% | |||||
| 56,900 | CETIP S.A. (Brazil) | 454,369 | |||
| 28,680 | Tata Investment Corp. Ltd. (India) | 313,663 | |||
| 51,919 | Treasury Group Ltd. (Australia) | 280,128 | |||
| 1,048,160 | |||||
| Auto Parts & Equipment 0.6% | |||||
| 2,500,000 | Norstar Founders Group Ltd.* *** (Hong Kong) | 58,763 | |||
| 70,060 | Wonder Auto Technology, Inc.* | 741,235 | |||
| 799,998 | |||||
| Automobile Manufacturers 0.6% | |||||
| 111,769 | Ghabbour Auto* (Egypt) | 730,579 | |||
| Shares | Value | ||||
| Biotechnology 1.8% | |||||
| 79,620 | Abcam plc (United Kingdom) | $ | 1,522,318 | ||
| 34,245 | China Nuokang Bio-Pharmaceutical, Inc. ADR* (China) | 212,319 | |||
| 1,795,247 | Sino Biopharmaceutical Ltd. (China) | 712,165 | |||
| 2,446,802 | |||||
| Commodity Chemicals 0.4% | |||||
| 48,810 | Tokai Carbon Korea Co. Ltd.* (Korea) | 465,905 | |||
| Communications Equipment 0.2% | |||||
| 387,000 | Sepura Ltd. (United Kingdom) | 249,780 | |||
| Construction & Engineering 3.4% | |||||
| 57,100 | Aecon Group, Inc. (Canada) | 763,170 | |||
| 2,991,977 | Drake & Scull International* (United Arab Emirates) | 790,149 | |||
| 117,029 | Heerim Architects & Planners* (Korea) | 971,234 | |||
| 163,818 | Lycopodium Ltd. (Australia) | 586,246 | |||
| 20,820 | Outotec Oyj (Finland) | 750,910 | |||
| 848,000 | Rotary Engineering Ltd. (Singapore) | 642,746 | |||
| 4,504,455 | |||||
| Construction & Farm Machinery & Heavy Trucks 1.0% | |||||
| 9,552 | Faiveley Transport (France) | 780,932 | |||
| 41,300 | Takeuchi Manufacturing Co. Ltd.* (Japan) | 577,554 | |||
| 1,358,486 | |||||
| Construction Materials 0.1% | |||||
| 6,086 | Ceramic Industries Ltd. (South Africa) | 99,104 | |||
| Consumer Finance 1.0% | |||||
| 225,235 | Banco Compartamos S.A. de C.V. (Mexico) | 1,270,113 | |||
| Data Processing & Outsourced Services 3.1% | |||||
| 251 | GMO Payment Gateway, Inc. (Japan) | 313,918 | |||
| 1,032 | SBI VeriTrans Co. Ltd. (Japan) | 550,312 | |||
| 344,735 | Wirecard AG (Germany) | 3,265,830 | |||
| 4,130,060 | |||||
| Diversified Banks 1.4% | |||||
| 370,294 | Allahabad Bank Ltd. (India) | 1,182,763 | |||
| 69,865 | Corporation Bank (India) | 739,578 | |||
| 1,922,341 | |||||
| Diversified Metals & Mining 0.3% | |||||
| 1,521,540 | Merafe Resources Ltd. (South Africa) | 342,612 | |||
| Diversified Support Services 0.3% | |||||
| 213 | Prestige International, Inc. (Japan) | 332,991 | |||
| Drug Retail 1.0% | |||||
| 70,655 | Create SD Holdings Co. Ltd. (Japan) | 1,325,490 | |||
| Education Services 1.0% | |||||
| 98,040 | China Education Alliance, Inc.* | 523,533 | |||
| 4,765 | MegaStudy Co. Ltd. (Korea) | 785,428 | |||
| 1,040,150 | Oriental Century Ltd.* *** (China) | 7,438 | |||
| 1,316,399 | |||||
| Electrical Components & Equipment 2.6% | |||||
| 71,370 | Harbin Electric, Inc.* | 1,540,878 | |||
| 38,000 | Voltamp Transformers Ltd. (India) | 722,758 | |||
| 627,000 | Zhuzhou CSR Times Electric Co. Ltd., Series H (China) | 1,185,495 | |||
| 3,449,131 | |||||
64
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Electronic Equipment & Instruments 0.4% | |||||
| 25,365 | CNB Technology, Inc. (Korea) | $ | 134,509 | ||
| 17,857 | Smartrac N.V.* (Netherlands) | 389,085 | |||
| 523,594 | |||||
| Electronic Manufacturing Services 0.3% | |||||
| 346,000 | Ju Teng International Holdings Ltd. (China) | 334,228 | |||
| Environmental & Facilities Services 0.6% | |||||
| 28,200 | Daiseki Co. Ltd. (Japan) | 587,915 | |||
| 45,973 | RPS Group plc (United Kingdom) | 142,566 | |||
| 730,481 | |||||
| Food Distributors 0.4% | |||||
| 7,952 | Shinsegae Food Co. Ltd. (Korea) | 562,252 | |||
| Food Retail 1.8% | |||||
| 1,496,397 | BreadTalk Group Ltd. (Singapore) | 738,301 | |||
| 299,279 | BreadTalk Group Ltd., Class A (Singapore) | 147,660 | |||
| 33,095 | Daikokutenbussan Co. Ltd. (Japan) | 991,184 | |||
| 89,120 | QKL Stores, Inc.* | 574,824 | |||
| 2,451,969 | |||||
| Footwear 1.1% | |||||
| 1,440,275 | Daphne International Holdings Ltd. (China) | 1,402,404 | |||
| Health Care Equipment 2.5% | |||||
| 12,674 | Audika S.A. (France) | 451,965 | |||
| 43,264 | DiaSorin S.p.A. (Italy) | 1,631,826 | |||
| 8,762 | Infopia Co. Ltd.* (Korea) | 126,615 | |||
| 1,546,660 | LMA International N.V.* (Singapore) | 259,896 | |||
| 13,280 | Mindray Medical International Ltd. ADR (China) | 483,658 | |||
| 11,850 | STRATEC Biomedical Systems AG (Germany) | 421,057 | |||
| 3,375,017 | |||||
| Health Care Facilities 1.4% | |||||
| 74,207 | CVS Group plc* (United Kingdom) | 227,361 | |||
| 1,373,670 | Raffles Medical Group Ltd. (Singapore) | 1,571,592 | |||
| 1,798,953 | |||||
| Health Care Services 0.8% | |||||
| 97,700 | Fleury S.A.* (Brazil) | 1,043,158 | |||
| Health Care Technology 1.1% | |||||
| 226,805 | RaySearch Laboratories AB* (Sweden) | 1,405,351 | |||
| Home Entertainment Software 0.3% | |||||
| 12,101 | Perfect World Co. Ltd. ADR* (China) | 453,182 | |||
| Home Improvement Retail 0.4% | |||||
| 56,895 | Cashbuild Ltd. (South Africa) | 581,898 | |||
| Hotels, Resorts & Cruise Lines 0.2% | |||||
| 28,310 | City Lodge Hotels Ltd. (South Africa) | 303,186 | |||
| Human Resource & Employment Services 0.3% | |||||
| 443 | Benefit One, Inc. (Japan) | 339,638 | |||
| Shares | Value | ||||
| Industrial Machinery 3.6% | |||||
| 48,385 | AIA Engineering Ltd. (India) | $ | 434,328 | ||
| 5,955 | Burckhardt Compression Holding AG (Switzerland) | 1,177,974 | |||
| 2,891,395 | China Automation Group Ltd. (China) | 2,230,696 | |||
| 77,520 | China Valves Technology, Inc.* | 1,008,535 | |||
| 4,851,533 | |||||
| Internet Retail 2.0% | |||||
| 215,865 | ASOS plc* (United Kingdom) | 1,696,485 | |||
| 540 | START TODAY Co. Ltd. (Japan) | 982,975 | |||
| 2,679,460 | |||||
| Internet Software & Services 1.3% | |||||
| 26,980 | Daum Communications Corp.* (Korea) | 1,607,187 | |||
| 290,500 | Vendtek Systems, Inc.* *** (Canada) | 165,236 | |||
| 1,772,423 | |||||
| IT Consulting & Other Services 1.5% | |||||
| 19,932 | Alten Ltd.* (France) | 562,833 | |||
| 433,647 | CSE Global Ltd. (Singapore) | 306,979 | |||
| 565 | Future Architect, Inc. (Japan) | 215,376 | |||
| 43,085 | MindTree Ltd. (India) | 579,649 | |||
| 96,996 | Rolta India Ltd. (India) | 386,731 | |||
| 2,051,568 | |||||
| Life Sciences Tools & Services 3.5% | |||||
| 2,734 | CMIC Co. Ltd. (Japan) | 635,855 | |||
| 992 | EPS Co. Ltd. (Japan) | 2,410,159 | |||
| 18,965 | ICON plc ADR* (Ireland) | 500,676 | |||
| 63,720 | LINICAL Co. Ltd. (Japan) | 446,907 | |||
| 30,720 | MorphoSys AG* (Germany) | 698,043 | |||
| 4,691,640 | |||||
| Managed Health Care 0.6% | |||||
| 21,200 | OdontoPrev S.A. (Brazil) | 735,656 | |||
| Oil & Gas Drilling 0.4% | |||||
| 60,577 | Phoenix Technology Income Fund** (Canada) | 566,213 | |||
| Oil & Gas Equipment & Services 1.6% | |||||
| 116,425 | Lamprell plc (United Arab Emirates) | 427,877 | |||
| 75,000 | Maridive & Oil Services S.A.E. (Egypt) | 348,750 | |||
| 78,710 | Pason Systems, Inc. (Canada) | 886,098 | |||
| 55,000 | Total Energy Services, Inc. (Canada) | 455,038 | |||
| 2,117,763 | |||||
| Oil & Gas Exploration & Production 4.4% | |||||
| 587,967 | Afren plc* (United Kingdom) | 913,452 | |||
| 129,170 | Dragon Oil plc* (Ireland) | 949,433 | |||
| 119,984 | Gran Tierra Energy, Inc.* | 707,906 | |||
| 42,000 | Ithaca Energy, Inc.* (Canada) | 86,043 | |||
| 97,125 | JKX Oil and Gas plc (United Kingdom) | 415,947 | |||
| 134,170 | Pan Orient Energy Corp.* (Canada) | 832,533 | |||
| 57,116 | Premier Oil plc* (United Kingdom) | 1,071,229 | |||
| 58,000 | Selan Exploration Technology Ltd. (India) | 552,935 | |||
| 35,000 | Westfire Energy Ltd.* (Canada) | 299,222 | |||
| 5,828,700 | |||||
| Packaged Foods & Meats 1.5% | |||||
| 2,035,870 | Agthia Group PJSC* (United Arab Emirates) | 1,053,132 | |||
| 72,500 | Zhongpin, Inc.* | 920,750 | |||
| 1,973,882 | |||||
65
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Personal Products 1.1% | |||||
| 45,467 | Atrium Innovations, Inc.* (Canada) | $ | 746,513 | ||
| 1,200,000 | Beauty China Holdings Ltd.* *** (Singapore) | 8,581 | |||
| 17,205 | Procter & Gamble Hygiene and Healthcare Ltd. (India) | 764,922 | |||
| 1,520,016 | |||||
| Pharmaceuticals 3.3% | |||||
| 339,610 | China Shineway Pharmaceutical Group Ltd. (China) | 940,427 | |||
| 21,000 | CKD Bio Corp. (Korea) | 279,332 | |||
| 24,262 | Daewoong Pharmaceutical Co. Ltd. (Korea) | 1,072,164 | |||
| 64,619 | Dechra Pharmaceuticals plc (United Kingdom) | 407,254 | |||
| 461,500 | Genomma Lab Internacional S.A., Class B* (Mexico) | 1,603,416 | |||
| 5,500 | Medy-Tox, Inc.* (Korea) | 127,845 | |||
| 4,430,438 | |||||
| Property & Casualty Insurance 0.8% | |||||
| 657,927 | Beazley plc (United Kingdom) | 1,083,090 | |||
| Regional Banks 0.6% | |||||
| 33,000 | Canadian Western Bank (Canada) | 786,566 | |||
| Research & Consulting Services 0.9% | |||||
| 363 | Nihon M&A Center, Inc. (Japan) | 1,245,760 | |||
| Restaurants 1.6% | |||||
| 753,950 | Ajisen China Holdings Ltd. (China) | 740,923 | |||
| 581,950 | FU JI Food & Catering Services Holdings Ltd.* *** (China) | 750 | |||
| 225,746 | KFC Holdings (Malaysia) Berhad (Malaysia) | 550,178 | |||
| 12,200 | Saint Marc Holdings Co. Ltd. (Japan) | 414,113 | |||
| 213 | Toridoll.corporation (Japan) | 384,992 | |||
| 2,090,956 | |||||
| Semiconductor Equipment 0.4% | |||||
| 26,500 | Koh Young Technology, Inc.* (Korea) | 298,621 | |||
| 27,915 | SKC Solmics Co., Ltd. (Korea) | 193,181 | |||
| 491,802 | |||||
| Semiconductors 1.5% | |||||
| 20,790 | Hana Micron, Inc.* (Korea) | 129,358 | |||
| 75,145 | Melexis N.V.* (Belgium) | 783,071 | |||
| 128,497 | O2Micro International Ltd. ADR* (China) | 880,204 | |||
| 66,175 | Sporton International, Inc. (Taiwan) | 136,276 | |||
| 10,000 | Telechips, Inc. (Korea) | 102,965 | |||
| 2,031,874 | |||||
| Specialized Consumer Services 0.1% | |||||
| 185 | NOVARESE, Inc. (Japan) | 136,685 | |||
| Specialized Finance 2.7% | |||||
| 418,600 | Bolsa Mexicana de Valores S.A.* (Mexico) | 663,692 | |||
| 62,880 | IMAREX ASA* (Norway) | 537,785 | |||
| 70,387 | JSE Ltd. (South Africa) | 626,242 | |||
| 277 | Osaka Securities Exchange Co. Ltd. (Japan) | 1,450,401 | |||
| 32,625 | Oslo Bors VPS Holding ASA (Norway) | 357,375 | |||
| 3,635,495 | |||||
| Specialty Chemicals 1.2% | |||||
| 16,358 | C. Uyemura & Co. Ltd. (Japan) | 663,848 | |||
| 1,704,460 | EcoGreen Fine Chemical Group Ltd. (Hong Kong) | 436,864 | |||
| 29,011 | TechnoSemiChem Co. Ltd. (Korea) | 515,375 | |||
| 1,616,087 | |||||
| Shares | Value | ||||
| Specialty Stores 0.8% | |||||
| 14,500 | Dufry South America Ltd. (Brazil) | $ | 280,629 | ||
| 78,820 | easyhome Ltd. (Canada) | 570,597 | |||
| 1,078,782 | Water Oasis Group Ltd. (Hong Kong) | 237,594 | |||
| 1,088,820 | |||||
| Steel 0.2% | |||||
| 50,000 | Ferrexpo plc (United Kingdom) | 285,126 | |||
| Systems Software 2.1% | |||||
| 422,839 | GuestLogix, Inc.* (Canada) | 707,994 | |||
| 4,074 | Simplex Technology, Inc. (Japan) | 2,111,378 | |||
| 2,819,372 | |||||
| Textiles 0.8% | |||||
| 829,400 | S. Kumars Nationwide Ltd.* (India) | 1,101,987 | |||
| Thrifts & Mortgage Finance 2.4% | |||||
| 295,961 | Dewan Housing Finance Corp. Ltd. (India) | 1,369,878 | |||
| 43,130 | Home Capital Group, Inc. (Canada) | 1,836,413 | |||
| 3,206,291 | |||||
| Trading Companies & Distributors 1.1% | |||||
| 28,505 | Indutrade AB (Sweden) | 653,435 | |||
| 18,535 | Richelieu Hardware Ltd. (Canada) | 420,611 | |||
| 2,519 | Thermador Groupe (France) | 393,750 | |||
| 1,467,796 | |||||
| Water Utilities 0.3% | |||||
| 543,130 | Sound Global Ltd.* (Singapore) | 367,006 | |||
| Total Common Stocks (cost $91,620,562) | 119,824,230 | ||||
| PREFERRED STOCKS 0.9% | |||||
| Diversified Banks 0.2% | |||||
| 48,300 | Parana Banco S.A. Pfd. (Brazil) | 285,810 | |||
| Regional Banks 0.7% | |||||
| 166,410 | Banco Daycoval S.A. Pfd. (Brazil) | 946,372 | |||
| Total Preferred Stocks (cost $731,678) | 1,232,182 | ||||
| LIMITED PARTNERSHIP INTEREST 0.6% | |||||
| Oil & Gas Exploration & Production 0.6% | |||||
| 98,490 | Zhaikmunai L.P. GDR* (Kazakhstan) | 861,787 | |||
| Total Limited Partnership Interest (cost $531,663) | 861,787 | ||||
66
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 8.0% | |||||
| Repurchase Agreement 8.0% | |||||
| $10,699,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $10,850,000 of United States Treasury Notes 0.875% due 5/31/11; value: $10,917,812; repurchase proceeds: $10,699,000††† (cost $10,699,000) | $ | 10,699,000 | ||
| Total Short-Term Investments (cost $10,699,000) | 10,699,000 | ||||
| Total Investments (cost $103,582,903) 99.6% | 132,617,199 | ||||
| Other Assets less Liabilities 0.4% | 456,377 | ||||
| NET ASSETS 100.0% | $ | 133,073,576 | |||
| Contracts | Net Unrealized Appreciation | ||||
| FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS SHORT 0.1% | |||||
| 186,436,000 JPY | USD, settlement date 4/12/10, (cost $2,000,000 value $1,996,394) | $ | 3,606 | ||
| 318,752,000 JPY | USD, settlement date 6/28/10, (cost $3,500,000 value $3,414,749) | 85,251 | |||
| Total Forward Foreign Currency Exchange Contracts Short (cost $5,500,000 value $5,411,143) | 88,857 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
†††All or a portion of this security has been designated as collateral for forward foreign currency contracts (see Note 2).
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
See Notes to Financial Statements.
| |||||
At March 31, 2010, Wasatch International Opportunities Fund’s investments, excluding short-term investments and forward foreign currency exchange contracts, were in the following countries:
| Country | % | ||
Australia | 0.7 | ||
Belgium | 0.7 | ||
Brazil | 3.4 | ||
Canada | 8.1 | ||
China | 12.3 | ||
Denmark | 0.9 | ||
Egypt | 0.9 | ||
Finland | 0.6 | ||
France | 2.5 | ||
Germany | 4.8 | ||
Hong Kong | 1.5 | ||
India | 6.9 | ||
Ireland | 1.2 | ||
Italy | 1.3 | ||
Japan | 13.8 | ||
Kazakhstan | 0.7 | ||
Korea | 6.7 | ||
Malaysia | 0.5 | ||
Mexico | 2.9 | ||
Netherlands | 0.3 | ||
Norway | 0.7 | ||
Singapore | 5.9 | ||
South Africa | 1.6 | ||
Sweden | 1.9 | ||
Switzerland | 1.0 | ||
Taiwan | 0.1 | ||
United Arab Emirates | 4.9 | ||
United Kingdom | 8.3 | ||
United States | 4.9 | ||
TOTAL | 100.0 | % | |
67
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 96.6% | |||||
| Air Freight & Logistics 1.5% | |||||
| 3,501,725 | Goodpack Ltd. (Singapore) | $ | 4,381,851 | ||
| Apparel Retail 1.4% | |||||
| 195,703 | Zumiez, Inc.* | 4,009,954 | |||
| Apparel, Accessories & Luxury Goods 2.7% | |||||
| 1,773,285 | Ports Design Ltd. (China) | 4,476,522 | |||
| 188,192 | Volcom, Inc.* | 3,673,508 | |||
| 8,150,030 | |||||
| Application Software 3.5% | |||||
| 219,273 | Interactive Intelligence, Inc.* | 4,098,212 | |||
| 217,970 | Tyler Technologies, Inc.* | 4,084,758 | |||
| 64,745 | Ultimate Software Group, Inc.* | 2,133,348 | |||
| 10,316,318 | |||||
| Asset Management & Custody Banks 5.2% | |||||
| 63,587 | Diamond Hill Investment Group, Inc. | 4,362,068 | |||
| 92,635 | Solar Capital Ltd.* | 1,958,304 | |||
| 794,580 | Treasury Group Ltd. (Australia) | 4,287,149 | |||
| 128,961 | Westwood Holdings Group, Inc. | 4,745,765 | |||
| 15,353,286 | |||||
| Automotive Retail 1.2% | |||||
| 97,725 | Monro Muffler Brake, Inc. | 3,494,646 | |||
| Biotechnology 2.2% | |||||
| 322,922 | Abcam plc (United Kingdom) | 6,174,201 | |||
| 64,330 | Orexigen Therapeutics, Inc.* | 378,904 | |||
| 6,553,105 | |||||
| Computer Storage & Peripherals 1.0% | |||||
| 206,525 | Intevac, Inc.* | 2,854,176 | |||
| Construction & Engineering 0.6% | |||||
| 100,360 | Orion Marine Group, Inc.* | 1,811,498 | |||
| Consumer Finance 3.9% | |||||
| 318,341 | Dollar Financial Corp.* | 7,659,284 | |||
| 542,750 | United PanAm Financial Corp.* | 1,617,395 | |||
| 65,960 | World Acceptance Corp.* | 2,379,837 | |||
| 11,656,516 | |||||
| Data Processing & Outsourced Services 0.5% | |||||
| 166,330 | Wirecard AG (Germany) | 1,580,446 | |||
| Diversified Support Services 1.1% | |||||
| 140,515 | STR Holdings, Inc.* | 3,302,102 | |||
| Education Services 1.1% | |||||
| 33,600 | Capella Education Co.* | 3,119,424 | |||
| Electronic Manufacturing Services 0.6% | |||||
| 119,445 | IPG Photonics Corp.* | 1,767,786 | |||
| Environmental & Facilities Services 1.3% | |||||
| 140,205 | Team, Inc.* | 2,326,001 | |||
| 91,485 | US Ecology, Inc. | 1,472,908 | |||
| 3,798,909 | |||||
| Food Retail 0.7% | |||||
| 331,695 | QKL Stores, Inc.* | 2,139,433 | |||
| Footwear 0.5% | |||||
| 13,000,900 | China Hongxing Sports Ltd. (China) | 1,347,966 | |||
| Shares | Value | ||||
| Health Care Distributors 1.0% | |||||
| 71,426 | MWI Veterinary Supply, Inc.* | $ | 2,885,610 | ||
| Health Care Equipment 6.4% | |||||
| 141,400 | Abaxis, Inc.* | 3,844,666 | |||
| 292,148 | AtriCure, Inc.* | 1,720,752 | |||
| 476,001 | Cardica, Inc.* | 913,922 | |||
| 341,000 | Cardica, Inc. PIPE* † | 654,720 | |||
| 273,165 | Cardiovascular Systems, Inc.* | 1,450,506 | |||
| 23,597,360 | LMA International N.V.* (Singapore) | 3,965,234 | |||
| 70,270 | NuVasive, Inc.* | 3,176,204 | |||
| 129,130 | Somanetics Corp.* | 2,471,548 | |||
| 43,460 | Synovis Life Technologies, Inc.* | 674,934 | |||
| 18,872,486 | |||||
| Health Care Facilities 2.0% | |||||
| 155,086 | AmSurg Corp.* | 3,348,307 | |||
| 745,875 | NovaMed, Inc.* | 2,535,975 | |||
| 5,884,282 | |||||
| Health Care Services 5.8% | |||||
| 75,101 | Bio-Reference Laboratories, Inc.* | 3,302,191 | |||
| 669,825 | Clarient, Inc.* | 1,754,942 | |||
| 163,182 | CorVel Corp.* | 5,833,756 | |||
| 129,790 | Healthways, Inc.* | 2,085,725 | |||
| 36,890 | IPC The Hospitalist Co., Inc.* | 1,295,208 | |||
| 87,585 | LHC Group, Inc.* | 2,936,725 | |||
| 17,208,547 | |||||
| Health Care Supplies 0.5% | |||||
| 63,744 | Neogen Corp.* | 1,599,974 | |||
| Health Care Technology 2.0% | |||||
| 76,385 | Computer Programs and Systems, Inc. | 2,985,126 | |||
| 471,045 | RaySearch Laboratories AB* (Sweden) | 2,918,733 | |||
| 5,903,859 | |||||
| Industrial Machinery 1.6% | |||||
| 250,000 | AIA Engineering Ltd. (India) | 2,244,125 | |||
| 187,160 | China Valves Technology, Inc.* | 2,434,952 | |||
| 4,679,077 | |||||
| Insurance Brokers 0.4% | |||||
| 82,505 | eHealth, Inc.* | 1,299,454 | |||
| Internet Software & Services 2.6% | |||||
| 120,790 | Constant Contact, Inc.* | 2,804,744 | |||
| 288,490 | DealerTrack Holdings, Inc.* | 4,927,409 | |||
| 7,732,153 | |||||
| IT Consulting & Other Services 1.5% | |||||
| 151,655 | NCI, Inc., Class A* | 4,584,531 | |||
| Life Sciences Tools & Services 3.7% | |||||
| 1,348 | EPS Co. Ltd. (Japan) | 3,275,096 | |||
| 197,444 | ICON plc ADR* (Ireland) | 5,212,522 | |||
| 256,141 | MEDTOX Scientific, Inc.* | 2,625,445 | |||
| 11,113,063 | |||||
| Marine Ports & Services 1.2% | |||||
| 299,622 | CAI International, Inc.* | 3,691,343 | |||
| Mortgage REITs 1.6% | |||||
| 343,540 | MFA Financial, Inc. | 2,528,454 | |||
| 136,782 | Redwood Trust, Inc. | 2,109,179 | |||
| 4,637,633 | |||||
| Oil & Gas Equipment & Services 1.0% | |||||
| 252,800 | Pason Systems, Inc. (Canada) | 2,845,961 | |||
68
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Oil & Gas Exploration & Production 1.2% | |||||
| 170,785 | GMX Resources, Inc.* | $ | 1,403,853 | ||
| 1,030,430 | Ithaca Energy, Inc.* † (Canada) | 2,110,996 | |||
| 26,150 | Ithaca Energy, Inc.* (Canada) | 53,572 | |||
| 3,568,421 | |||||
| Pharmaceuticals 0.3% | |||||
| 326,809 | Alexza Pharmaceuticals, Inc. PIPE* † | 877,482 | |||
| Property & Casualty Insurance 0.9% | |||||
| 246,765 | Seabright Insurance Holdings, Inc. | 2,716,883 | |||
| Regional Banks 1.4% | |||||
| 133,114 | Commonwealth Bankshares, Inc. | 419,309 | |||
| 294,285 | First California Financial Group, Inc.* | 776,912 | |||
| 159,005 | Nara Bancorp, Inc.* | 1,392,884 | |||
| 163,266 | Pacific Continental Corp. | 1,714,293 | |||
| 4,303,398 | |||||
| Research & Consulting Services 3.8% | |||||
| 114,006 | CRA International, Inc.* | 2,613,018 | |||
| 316,350 | Resources Connection, Inc.* | 6,064,429 | |||
| 99,395 | Stantec, Inc.* (Canada) | 2,594,210 | |||
| 11,271,657 | |||||
| Restaurants 1.6% | |||||
| 122,865 | Peet’s Coffee & Tea, Inc.* | 4,871,597 | |||
| Semiconductors 11.2% | |||||
| 265,807 | Melexis N.V.* (Belgium) | 2,769,921 | |||
| 566,885 | Micrel, Inc. | 6,042,994 | |||
| 79,482 | Netlogic Microsystems, Inc.* | 2,339,155 | |||
| 1,029,642 | O2Micro International Ltd. ADR* (China) | 7,053,048 | |||
| 428,578 | Pericom Semiconductor Corp.* | 4,590,070 | |||
| 197,428 | Power Integrations, Inc. | 8,134,034 | |||
| 87,470 | Supertex, Inc.* | 2,238,357 | |||
| 33,167,579 | |||||
| Specialized Finance 1.2% | |||||
| 154,000 | Goldwater Bank, N.A.* *** † | 617,540 | |||
| 545 | Osaka Securities Exchange Co. Ltd. (Japan) | 2,853,678 | |||
| 3,471,218 | |||||
| Specialty Chemicals 0.6% | |||||
| 461,662 | Neo Material Technologies, Inc.* (Canada) | 1,805,179 | |||
| Specialty Stores 4.5% | |||||
| 377,420 | Big 5 Sporting Goods Corp. | 5,744,332 | |||
| 197,015 | easyhome Ltd. (Canada) | 1,426,239 | |||
| 247,377 | Hibbett Sports, Inc.* | 6,327,904 | |||
| 13,498,475 | |||||
| Systems Software 3.2% | |||||
| 90,430 | ArcSight, Inc.* | 2,545,604 | |||
| 432,200 | OPNET Technologies, Inc. | 6,967,064 | |||
| 9,512,668 | |||||
| Thrifts & Mortgage Finance 2.4% | |||||
| 578,300 | Dewan Housing Finance Corp. Ltd. (India) | 2,676,707 | |||
| 167,403 | Encore Bancshares, Inc.* | 1,585,306 | |||
| 70,140 | Home Capital Group, Inc. (Canada) | 2,986,459 | |||
| 7,248,472 | |||||
| Trading Companies & Distributors 0.9% | |||||
| 220,363 | Rush Enterprises, Inc., Class B* | 2,710,465 | |||
| Shares | Value | |||||
| Trucking 3.1% | ||||||
| 114,765 | Marten Transport, Ltd.* | $ | 2,262,018 | |||
| 103,970 | Old Dominion Freight Line, Inc.* | 3,471,558 | ||||
| 292,453 | Vitran Corp., Inc.* | 3,538,682 | ||||
| 9,272,258 | ||||||
| Total Common Stocks (cost $255,253,695) | 286,871,171 | |||||
| PREFERRED STOCKS 1.0% | ||||||
| Regional Banks 1.0% | ||||||
| 504,600 | Banco Daycoval S.A. Pfd. (Brazil) | 2,869,656 | ||||
| Total Preferred Stocks (cost $1,912,499) | 2,869,656 | |||||
| WARRANTS 0.1% | ||||||
| Health Care Equipment 0.1% | ||||||
| 121,124 | Cardica, Inc., expiring 6/7/12* *** † | — | ||||
| 322,500 | Cardica, Inc., expiring 9/29/14* *** † | 151,575 | ||||
| 151,575 | ||||||
| Pharmaceuticals 0.0% | ||||||
| 294,128 | Alexza Pharmaceuticals, Inc., expiring 10/5/16* *** † | 36,766 | ||||
| Total Warrants (cost $96,458) | 188,341 | |||||
Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 2.7% | ||||||
| Repurchase Agreement 2.7% | ||||||
| $8,104,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $8,225,000 of United States Treasury Notes 1.00% due 8/31/11; value: $8,266,125; repurchase proceeds: $8,104,000 (cost $8,104,000) | $ | 8,104,000 | |||
| Total Short-Term Investments (cost $8,104,000) | 8,104,000 | |||||
| Total Investments (cost $265,366,652) 100.4% | 298,033,168 | |||||
| Liabilities less Other Assets (0.4)% | (1,052,896 | ) | ||||
| NET ASSETS 100.0% | $ | 296,980,272 | ||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||
69
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) — Schedule of Investments (continued) | MARCH 31, 2010 (UNAUDITED) | |
At March 31, 2010, Wasatch Micro Cap Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 1.5 | ||
Belgium | 1.0 | ||
Brazil | 1.0 | ||
Canada | 4.8 | ||
China | 4.4 | ||
Germany | 0.5 | ||
India | 1.7 | ||
Ireland | 1.8 | ||
Japan | 2.1 | ||
Singapore | 2.9 | ||
Sweden | 1.0 | ||
United Kingdom | 2.1 | ||
United States | 75.2 | ||
TOTAL | 100.0 | % | |
70
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 88.2% | |||||
| Air Freight & Logistics 0.8% | |||||
| 105,000 | Transat A.T., Inc.* (Canada) | $ | 1,381,661 | ||
| Apparel, Accessories & Luxury Goods 1.5% | |||||
| 57,000 | LG Fashion Corp. (Korea) | 1,400,504 | |||
| 170,000 | Ted Baker plc (United Kingdom) | 1,337,322 | |||
| 2,737,826 | |||||
| Application Software 3.3% | |||||
| 100,000 | Ebix, Inc.* | 1,597,000 | |||
| 380,000 | ICSA India Ltd. (India) | 1,074,106 | |||
| 85,000 | JDA Software Group, Inc.* | 2,364,700 | |||
| 600,000 | Redknee Solutions, Inc.* (Canada) | 957,353 | |||
| 5,993,159 | |||||
| Asset Management & Custody Banks 3.2% | |||||
| 150,000 | Fifth Street Finance Corp. | 1,741,500 | |||
| 110,000 | Solar Capital Ltd.* | 2,325,400 | |||
| 330,000 | Treasury Group Ltd. (Australia) | 1,780,512 | |||
| 5,847,412 | |||||
| Auto Parts & Equipment 0.9% | |||||
| 180,000 | Martinrea International, Inc.* (Canada) | 1,560,130 | |||
| Automotive Retail 0.8% | |||||
| 40,000 | Monro Muffler Brake, Inc. | 1,430,400 | |||
| Biotechnology 1.6% | |||||
| 600,000 | Dyadic International, Inc.* | 1,260,000 | |||
| 380,372 | Luna Innovations, Inc.* | 886,267 | |||
| 85,000 | NeurogesX, Inc. PIPE* † | 799,000 | |||
| 2,945,267 | |||||
| Building Products 0.7% | |||||
| 120,000 | NCI Building Systems, Inc.* | 1,324,800 | |||
| Communications Equipment 0.9% | |||||
| 200,000 | COM DEV International Ltd.* (Canada) | 590,958 | |||
| 7,240 | Meru Networks, Inc.* | 138,791 | |||
| 341,275 | UTStarcom, Inc.* | 952,157 | |||
| 1,681,906 | |||||
| Computer Storage & Peripherals 1.3% | |||||
| 93,787 | Datalink Corp.* | 427,669 | |||
| 136,000 | Intevac, Inc.* | 1,879,520 | |||
| 2,307,189 | |||||
| Construction & Engineering 0.8% | |||||
| 43,000 | Michael Baker Corp.* | 1,482,640 | |||
| Construction & Farm Machinery & Heavy Trucks 0.8% | |||||
| 110,000 | Titan Machinery, Inc.* | 1,505,900 | |||
| Construction Materials 0.7% | |||||
| 290,000 | Headwaters, Inc.* | 1,331,100 | |||
| Consumer Finance 1.4% | |||||
| 180,000 | Advance America Cash Advance Centers, Inc. | 1,047,600 | |||
| 73,000 | First Cash Financial Services, Inc.* | 1,574,610 | |||
| 2,622,210 | |||||
| Data Processing & Outsourced Services 1.2% | |||||
| 330,000 | Online Resources Corp.* | 1,329,900 | |||
| 100,000 | Wirecard AG (Germany) | 947,345 | |||
| 2,277,245 | |||||
| Shares | Value | ||||
| Department Stores 0.9% | |||||
| 17,000,000 | PT Ramayana Lestari Sentosa Tbk (Indonesia) | $ | 1,644,046 | ||
| Distributors 0.9% | |||||
| 37,000 | Delticom AG (Germany) | 1,585,842 | |||
| Diversified Banks 1.3% | |||||
| 55,556 | Idaho Trust Bancorp* *** † | 229,446 | |||
| 600,000 | Karnataka Bank Ltd. (India) | 1,603,742 | |||
| 40,000 | Northwest Bancshares, Inc. | 469,600 | |||
| 2,302,788 | |||||
| Diversified Metals & Mining 1.0% | |||||
| 75,000 | Globe Specialty Metals, Inc.* | 839,250 | |||
| 90,000 | Globe Specialty Metals, Inc.* *** † | 966,816 | |||
| 1,806,066 | |||||
| Diversified Support Services 0.8% | |||||
| 62,000 | Healthcare Services Group, Inc. | 1,388,180 | |||
| Education Services 1.6% | |||||
| 87,000 | AcadeMedia AB* (Sweden) | 1,776,781 | |||
| 230,000 | China Education Alliance, Inc.* | 1,228,200 | |||
| 3,004,981 | |||||
| Electrical Components & Equipment 1.1% | |||||
| 220,000 | Orion Energy Systems, Inc.* | 1,078,000 | |||
| 1,300,000 | Wasion Group Holdings Ltd. (China) | 924,248 | |||
| 2,002,248 | |||||
| Electronic Manufacturing Services 0.6% | |||||
| 130,000 | TTM Technologies, Inc.* | 1,154,400 | |||
| Environmental & Facilities Services 2.1% | |||||
| 226,000 | EnergySolutions, Inc. | 1,453,180 | |||
| 105,000 | Heritage-Crystal Clean, Inc.* | 1,186,500 | |||
| 80,000 | US Ecology, Inc. | 1,288,000 | |||
| 3,927,680 | |||||
| Food Retail 0.6% | |||||
| 178,000 | QKL Stores, Inc.* | 1,148,100 | |||
| Gas Utilities 0.8% | |||||
| 300,000 | Indraprastha Gas Ltd. (India) | 1,453,391 | |||
| Health Care Distributors 0.3% | |||||
| 300,000 | Animal Health International, Inc.* | 567,000 | |||
| Health Care Equipment 3.6% | |||||
| 256,000 | AtriCure, Inc.* | 1,507,840 | |||
| 221,000 | Cardica, Inc. PIPE* † | 424,320 | |||
| 146,000 | Cardiovascular Systems, Inc.* | 775,260 | |||
| 45,000 | Invacare Corp. | 1,194,300 | |||
| 650,000 | Solta Medical, Inc.* | 1,397,500 | |||
| 50,000 | Zoll Medical Corp.* | 1,318,000 | |||
| 6,617,220 | |||||
| Health Care Services 2.1% | |||||
| 30,000 | Bio-Reference Laboratories, Inc.* | 1,319,100 | |||
| 75,000 | LHC Group, Inc.* | 2,514,750 | |||
| 3,833,850 | |||||
| Health Care Technology 0.8% | |||||
| 950,000 | iCAD, Inc.* | 1,444,000 | |||
| Home Furnishings 1.1% | |||||
| 120,000 | Hooker Furniture Corp. | 1,929,600 | |||
| Home Improvement Retail 1.0% | |||||
| 10,000,000 | Ace Hardware Indonesia (Indonesia) | 1,802,297 | |||
71
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Human Resource & Employment Services 0.4% | |||||
| 55,000 | Barrett Business Services, Inc. | $ | 745,800 | ||
| Industrial Machinery 2.1% | |||||
| 113,280 | China Valves Technology, Inc.* | 1,473,773 | |||
| 95,000 | Gencor Industries, Inc.* | 714,400 | |||
| 95,000 | Hurco Cos., Inc.* | 1,598,850 | |||
| 3,787,023 | |||||
| Internet Software & Services 1.8% | |||||
| 100,000 | InfoSpace, Inc.* | 1,105,000 | |||
| 285,000 | United Online, Inc. | 2,131,800 | |||
| 3,236,800 | |||||
| Investment Banking & Brokerage 1.7% | |||||
| 70,000 | Duff & Phelps Corp., Class A | 1,171,800 | |||
| 320,000 | GFI Group, Inc. | 1,849,600 | |||
| 3,021,400 | |||||
| IT Consulting & Other Services 0.7% | |||||
| 350,000 | Matrikon, Inc. (Canada) | 1,223,776 | |||
| Life Sciences Tools & Services 0.5% | |||||
| 140,000 | LINICAL Co. Ltd. (Japan) | 981,904 | |||
| Marine 0.2% | |||||
| 83,900 | Euroseas Ltd. (Greece) | 322,176 | |||
| Metal & Glass Containers 1.1% | |||||
| 100,000 | BWAY Holding Co.* | 2,010,000 | |||
| Oil & Gas Equipment & Services 2.5% | |||||
| 800,000 | Boots & Coots, Inc.* | 1,944,000 | |||
| 140,000 | TETRA Technologies, Inc.* | 1,710,800 | |||
| 75,000 | Willbros Group, Inc.* | 900,750 | |||
| 4,555,550 | |||||
| Oil & Gas Exploration & Production 2.0% | |||||
| 400,000 | Abraxas Petroleum Corp.* | 768,000 | |||
| 230,000 | Pan Orient Energy Corp.* (Canada) | 1,427,164 | |||
| 160,000 | Selan Exploration Technology Ltd. (India) | 1,525,337 | |||
| 3,720,501 | |||||
| Oil & Gas Storage & Transportation 0.6% | |||||
| 294,600 | DHT Holdings, Inc. | 1,154,832 | |||
| Packaged Foods & Meats 0.8% | |||||
| 120,000 | Zhongpin, Inc.* | 1,524,000 | |||
| Paper Products 0.8% | |||||
| 500,000 | Verso Paper Corp.* | 1,520,000 | |||
| Personal Products 1.9% | |||||
| 101,000 | Atrium Innovations, Inc.* (Canada) | 1,658,298 | |||
| 200,000 | Prestige Brands Holdings, Inc.* | 1,800,000 | |||
| 3,458,298 | |||||
| Pharmaceuticals 0.8% | |||||
| 33,990 | Daewoong Pharmaceutical Co. Ltd. (Korea) | 1,502,055 | |||
| Property & Casualty Insurance 1.0% | |||||
| 160,000 | Seabright Insurance Holdings, Inc. | 1,761,600 | |||
| Shares | Value | ||||
| Regional Banks 5.0% | |||||
| 2,000,000 | City Union Bank Ltd. (India) | $ | 1,276,311 | ||
| 300,000 | First California Financial Group, Inc.* | 792,000 | |||
| 55,000 | First of Long Island Corp. (The) | 1,325,500 | |||
| 50,205 | Lakeland Financial Corp. | 956,405 | |||
| 110,000 | Metro Bancorp, Inc.* | 1,514,700 | |||
| 125,000 | Nara Bancorp, Inc.* | 1,095,000 | |||
| 57,935 | OBA Financial Services, Inc.* | 623,381 | |||
| 60,000 | Tower Bancorp, Inc. | 1,606,200 | |||
| 9,189,497 | |||||
| Research & Consulting Services 0.7% | |||||
| 52,000 | CRA International, Inc.* | 1,191,840 | |||
| Residential REITs 0.6% | |||||
| 190,000 | Education Realty Trust, Inc. | 1,090,600 | |||
| Restaurants 0.7% | |||||
| 1,300,000 | Ajisen China Holdings Ltd. (China) | 1,277,538 | |||
| Semiconductor Equipment 0.6% | |||||
| 100,000 | Koh Young Technology, Inc.* (Korea) | 1,126,873 | |||
| Semiconductors 2.5% | |||||
| 450,000 | Microtune, Inc.* | 1,228,500 | |||
| 300,000 | PLX Technology, Inc.* | 1,581,000 | |||
| 75,000 | Standard Microsystems Corp.* | 1,746,000 | |||
| 4,555,500 | |||||
| Specialized Finance 2.1% | |||||
| 1,000,000 | Bolsa Mexicana de Valores S.A.* (Mexico) | 1,585,504 | |||
| 41,900 | Goldwater Bank, N.A.* *** † | 168,019 | |||
| 104,000 | IMAREX ASA* (Norway) | 889,466 | |||
| 22,000 | Portfolio Recovery Associates, Inc.* | 1,207,140 | |||
| 3,850,129 | |||||
| Specialty Chemicals 0.4% | |||||
| 200,000 | Neo Material Technologies, Inc.* (Canada) | 782,035 | |||
| Specialty Stores 1.7% | |||||
| 115,000 | Big 5 Sporting Goods Corp. | 1,750,300 | |||
| 200,000 | easyhome Ltd. (Canada) | 1,447,848 | |||
| 3,198,148 | |||||
| Steel 1.4% | |||||
| 70,000 | Haynes International, Inc. | 2,487,100 | |||
| Systems Software 3.3% | |||||
| 1,400,000 | GuestLogix, Inc.* (Canada) | 2,344,135 | |||
| 140,000 | OPNET Technologies, Inc. | 2,256,800 | |||
| 2,600 | Simplex Technology, Inc. (Japan) | 1,347,467 | |||
| 5,948,402 | |||||
| Textiles 0.9% | |||||
| 1,300,000 | S. Kumars Nationwide Ltd.* (India) | 1,727,253 | |||
| Thrifts & Mortgage Finance 3.7% | |||||
| 100,000 | BankFinancial Corp. | 917,000 | |||
| 350,000 | Dewan Housing Finance Corp. Ltd. (India) | 1,620,002 | |||
| 80,000 | Home Federal Bancorp, Inc. | 1,160,800 | |||
| 140,000 | Ocean Shore Holding Co. | 1,498,000 | |||
| 175,000 | Westfield Financial, Inc. | 1,608,250 | |||
| 6,804,052 | |||||
| Trading Companies & Distributors 0.9% | |||||
| 90,000 | Interline Brands, Inc.* | 1,722,600 | |||
72
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
Shares | Value | |||||
| Trucking 3.4% | ||||||
| 132,000 | Celadon Group, Inc.* | $ | 1,840,080 | |||
| 85,000 | Marten Transport, Ltd.* | 1,675,350 | ||||
| 55,000 | USA Truck, Inc.* | 888,800 | ||||
| 155,000 | Vitran Corp., Inc.* | 1,875,500 | ||||
| 6,279,730 | ||||||
| Water Utilities 0.9% | ||||||
| 2,300,000 | Sound Global Ltd.* (Singapore) | 1,554,165 | ||||
| Total Common Stocks (cost $135,399,517) | 161,351,711 | |||||
| WARRANTS 0.0% | ||||||
| Biotechnology 0.0% | ||||||
| 30,399 | NeurogesX, Inc., expiring 12/28/12* *** † | 41,525 | ||||
| Health Care Equipment 0.0% | ||||||
| 58,140 | Cardica, Inc., expiring 6/7/12* *** † | — | ||||
| 110,500 | Cardica, Inc., expiring 9/29/14* *** † | 51,935 | ||||
| 51,935 | ||||||
| Total Warrants (cost $26,914) | 93,460 | |||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 13.3% | ||||||
| Repurchase Agreement 13.3% | ||||||
| $24,263,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $24,630,000 of United States Treasury Notes 1.00% due 8/31/11; value: $24,753,150; repurchase proceeds: $24,263,000††† (cost $24,263,000) | $ | 24,263,000 | |||
| Total Short-Term Investments (cost $24,263,000) | 24,263,000 | |||||
| Total Investments (cost $159,689,431) 101.5% | 185,708,171 | |||||
| Liabilities less Other Assets (1.5)% | (2,807,706 | ) | ||||
| NET ASSETS 100.0% | $ | 182,900,465 | ||||
| Contracts | Net Unrealized (Depreciation) | |||||
| FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS SHORT 0.1% | ||||||
| 11,500,000 CAD | USD, settlement date 6/10/10, (cost $11,192,192 value $11,325,978) | $ | (133,786 | ) | ||
| 194,000,000 INR | USD, settlement date 4/22/10, (cost $4,182,838 value $4,315,235) | (132,397 | ) | |||
| Total Forward Foreign Currency Exchange Contracts Short (cost $15,375,030 value $15,641,213) | (266,183 | ) | ||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
†††All or a portion of this security has been designated as collateral for forward foreign currency contracts (see Note 2).
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements.
|
| |||||
At March 31, 2010, Wasatch Micro Cap Value Fund’s investments, excluding short-term investments and forward foreign currency exchange contracts, were in the following countries:
| Country | % | ||
Australia | 1.1 | ||
Canada | 8.3 | ||
China | 1.4 | ||
Germany | 1.6 | ||
Greece | 0.2 | ||
India | 6.4 | ||
Indonesia | 2.1 | ||
Japan | 1.4 | ||
Korea | 2.5 | ||
Mexico | 1.0 | ||
Norway | 0.5 | ||
Singapore | 1.0 | ||
Sweden | 1.1 | ||
United Kingdom | 0.8 | ||
United States | 70.6 | ||
TOTAL | 100.0 | % | |
73
Table of Contents
| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 92.2% | |||||
| Aerospace & Defense 1.8% | |||||
| 194,850 | HEICO Corp. | $ | 10,046,466 | ||
| 194,451 | HEICO Corp., Class A | 7,715,816 | |||
| 17,762,282 | |||||
| Air Freight & Logistics 1.4% | |||||
| 26,989,692 | Aramex PJSC* (United Arab Emirates) | 13,961,452 | |||
| Alternative Carriers 0.6% | |||||
| 366,034 | Neutral Tandem, Inc.* | 5,849,223 | |||
| Aluminum 0.8% | |||||
| 11,305,282 | Midas Holdings Ltd. (Singapore) | 8,326,379 | |||
| Apparel Retail 1.3% | |||||
| 632,029 | Zumiez, Inc.* | 12,950,274 | |||
| Apparel, Accessories & Luxury Goods 2.1% | |||||
| 5,454,635 | Ports Design Ltd. (China) | 13,769,807 | |||
| 384,108 | Volcom, Inc.* | 7,497,788 | |||
| 21,267,595 | |||||
| Application Software 3.5% | |||||
| 161,820 | Concur Technologies, Inc.* | 6,636,238 | |||
| 76,162 | FactSet Research Systems, Inc. | 5,588,006 | |||
| 697,760 | Ultimate Software Group, Inc.* | 22,991,192 | |||
| 35,215,436 | |||||
| Asset Management & Custody Banks 1.0% | |||||
| 284,740 | Waddell & Reed Financial, Inc., Class A | 10,262,030 | |||
| Automotive Retail 1.4% | |||||
| 349,275 | O’Reilly Automotive, Inc.* ††† | 14,568,260 | |||
| Biotechnology 2.3% | |||||
| 541,521 | Myriad Genetics, Inc.* | 13,023,580 | |||
| 225,795 | Orexigen Therapeutics, Inc.* | 1,329,933 | |||
| 146,199 | Orexigen Therapeutics, Inc., Series C PIPE* † | 861,112 | |||
| 259,725 | Sangamo BioSciences, Inc.* | 1,407,710 | |||
| 469,510 | Seattle Genetics, Inc.* | 5,605,949 | |||
| 205,700 | ZymoGenetics, Inc.* | 1,178,661 | |||
| 23,406,945 | |||||
| Communications Equipment 2.7% | |||||
| 20,515 | Calix, Inc.* | 275,927 | |||
| 240,145 | F5 Networks, Inc.* | 14,771,319 | |||
| 444,010 | Riverbed Technology, Inc.* | 12,609,884 | |||
| 27,657,130 | |||||
| Computer & Electronics Retail 0.6% | |||||
| 250,578 | hhgregg, Inc.* | 6,324,589 | |||
| Construction & Farm Machinery & Heavy Trucks 1.2% | |||||
| 186,231 | Bucyrus International, Inc. | 12,289,384 | |||
| Data Processing & Outsourced Services 2.2% | |||||
| 396,025 | NeuStar, Inc., Class A* | 9,979,830 | |||
| 1,295,495 | Wirecard AG (Germany) | 12,272,810 | |||
| 22,252,640 | |||||
| Distributors 0.9% | |||||
| 425,555 | LKQ Corp.* | 8,638,766 | |||
| Diversified Banks 2.3% | |||||
| 163,626 | HDFC Bank Ltd. ADR (India) | 22,807,828 | |||
| Shares | Value | ||||
| Diversified Support Services 2.4% | |||||
| 543,576 | Copart, Inc.* | $ | 19,351,305 | ||
| 215,690 | Ritchie Bros. Auctioneers, Inc. (Canada) | 4,643,806 | |||
| 23,995,111 | |||||
| Education Services 1.5% | |||||
| 157,851 | Capella Education Co.* | 14,654,887 | |||
| Environmental & Facilities Services 1.4% | |||||
| 612,880 | RPS Group plc (United Kingdom) | 1,900,590 | |||
| 528,645 | Tetra Tech, Inc.* | 12,179,981 | |||
| 14,080,571 | |||||
| Health Care Distributors 1.1% | |||||
| 284,581 | MWI Veterinary Supply, Inc.* | 11,497,072 | |||
| Health Care Equipment 1.8% | |||||
| 479,552 | Abaxis, Inc.* | 13,039,019 | |||
| 466,111 | DexCom, Inc.* | 4,535,260 | |||
| 1,620,220 | Zonare Medical Systems, Inc.* *** † | 210,629 | |||
| 17,784,908 | |||||
| Health Care Services 1.6% | |||||
| 186,860 | Bio-Reference Laboratories, Inc.* | 8,216,234 | |||
| 139,085 | MEDNAX, Inc.* | 8,093,356 | |||
| 362,782 | TargetRX, Inc.* *** † | 3,628 | |||
| 16,313,218 | |||||
| Health Care Technology 2.0% | |||||
| 161,960 | athenahealth, Inc.* | 5,921,258 | |||
| 364,915 | Computer Programs and Systems, Inc. | 14,260,878 | |||
| 20,182,136 | |||||
| Human Resource & Employment Services 1.1% | |||||
| 1,728,523 | Michael Page International plc (United Kingdom) | 10,500,079 | |||
| Industrial Machinery 0.4% | |||||
| 424,000 | AIA Engineering Ltd. (India) | 3,786,676 | |||
| Integrated Telecommunication Services 0.3% | |||||
| 187,040 | Cbeyond, Inc.* | 2,558,707 | |||
| Internet Retail 1.0% | |||||
| 416,006 | Shutterfly, Inc.* | 10,021,585 | |||
| Internet Software & Services 2.9% | |||||
| 458,170 | DealerTrack Holdings, Inc.* | 7,825,544 | |||
| 1,145,360 | LoopNet, Inc.* | 12,873,846 | |||
| 149,585 | VistaPrint N.V.* | 8,563,741 | |||
| 29,263,131 | |||||
| Investment Banking & Brokerage 1.0% | |||||
| 602,795 | optionsXpress Holdings, Inc.* | 9,819,531 | |||
| IT Consulting & Other Services 2.8% | |||||
| 558,518 | Cognizant Technology Solutions Corp., Class A* | 28,473,248 | |||
| Leisure Facilities 1.4% | |||||
| 518,740 | Life Time Fitness, Inc.* | 14,576,594 | |||
| Life Sciences Tools & Services 3.6% | |||||
| 98,370 | Divis Laboratories Ltd. (India) | 1,486,232 | |||
| 674,935 | ICON plc ADR* (Ireland) | 17,818,284 | |||
| 261,919 | Techne Corp. | 16,681,621 | |||
| 35,986,137 | |||||
| Mortgage REITs 1.0% | |||||
| 665,608 | Redwood Trust, Inc. | 10,263,675 | |||
74
Table of Contents
| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Oil & Gas Equipment & Services 4.9% | |||||
| 485,090 | Dril-Quip, Inc.* | $ | 29,512,876 | ||
| 903,720 | Pason Systems, Inc. (Canada) | 10,173,860 | |||
| 455,035 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 9,669,848 | |||
| 49,356,584 | |||||
| Oil & Gas Exploration & Production 1.1% | |||||
| 413,670 | GMX Resources, Inc.* | 3,400,367 | |||
| 384,090 | Premier Oil plc* (United Kingdom) | 7,203,729 | |||
| 10,604,096 | |||||
| Other Diversified Financial Services 0.3% | |||||
| 2,661,038 | Count Financial Ltd. (Australia) | 3,320,807 | |||
| Packaged Foods & Meats 1.2% | |||||
| 349,703 | Glaxo SmithKline Consumer Healthcare Ltd. (India) | 11,684,029 | |||
| Pharmaceuticals 0.7% | |||||
| 656,923 | Alexza Pharmaceuticals, Inc.* | 1,763,838 | |||
| 409,401 | Alexza Pharmaceuticals, Inc. PIPE* † | 1,099,242 | |||
| 680,112 | Dechra Pharmaceuticals plc (United Kingdom) | 4,286,333 | |||
| 7,149,413 | |||||
| Research & Consulting Services 4.3% | |||||
| 364,396 | CRA International, Inc.* | 8,351,956 | |||
| 1,399 | Exponent, Inc.* | 39,900 | |||
| 885,369 | Resources Connection, Inc.* ††† | 16,972,524 | |||
| 672,474 | Stantec, Inc.* (Canada) | 17,551,571 | |||
| 42,915,951 | |||||
| Restaurants 2.6% | |||||
| 653,676 | Peet’s Coffee & Tea, Inc.* | 25,918,253 | |||
| Semiconductors 8.2% | |||||
| 356,550 | Hittite Microwave Corp.* | 15,677,504 | |||
| 379,458 | Netlogic Microsystems, Inc.* | 11,167,449 | |||
| 1,413,505 | O2Micro International Ltd. ADR* (China) | 9,682,509 | |||
| 819,686 | Power Integrations, Inc. | 33,771,063 | |||
| 261,285 | Silicon Laboratories, Inc.* | 12,455,456 | |||
| 82,753,981 | |||||
| Specialized Finance 2.8% | |||||
| 789,810 | MSCI, Inc., Class A* | 28,512,141 | |||
| Specialty Stores 4.1% | |||||
| 501,055 | Big 5 Sporting Goods Corp. | 7,626,057 | |||
| 1,331,896 | Hibbett Sports, Inc.* | 34,069,900 | |||
| 41,695,957 | |||||
| Systems Software 2.7% | |||||
| 451,570 | ArcSight, Inc.* | 12,711,695 | |||
| 686,137 | NetSuite, Inc.* | 9,976,432 | |||
| 217,160 | Sourcefire, Inc.* | 4,983,822 | |||
| 27,671,949 | |||||
| Trading Companies & Distributors 2.7% | |||||
| 534,700 | MSC Industrial Direct Co., Inc., Class A | 27,119,984 | |||
| Trucking 3.2% | |||||
| 115,170 | J.B. Hunt Transport Services, Inc. | 4,132,300 | |||
| 1,349,737 | Knight Transportation, Inc.††† | 28,465,953 | |||
| 32,598,253 | |||||
| Total Common Stocks (cost $679,330,435) | 928,598,877 | ||||
| Shares | Value | ||||
| PREFERRED STOCKS 0.3% | |||||
| Biotechnology 0.1% | |||||
| 677,966 | Nanosys, Inc., Series D Pfd.* *** † | $ | 691,525 | ||
| Life Sciences Tools & Services 0.2% | |||||
| 186,947 | Fluidigm Corp., Series E Pfd.* *** † | 2,617,258 | |||
| Total Preferred Stocks (cost $4,617,257) | 3,308,783 | ||||
| LIMITED PARTNERSHIP INTEREST 0.5% | |||||
| Other 0.5% | |||||
| Montagu Newhall Global Partners II-B, L.P.*** † | 3,644,746 | ||||
| Montagu Newhall Global Partners III-B, L.P.* *** † | 890,217 | ||||
| 4,534,963 | |||||
| Total Limited Partnership Interest (cost $5,118,853) | 4,534,963 | ||||
| WARRANTS 0.0% | |||||
| Health Care Equipment 0.0% | |||||
| 243,033 | Zonare Medical Systems, Inc., expiring 6/30/11* *** † | — | |||
| Life Sciences Tools & Services 0.0% | |||||
| 4,049 | 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* *** † | 210,610 | |||
| Total Rights (cost $406,537) | 210,610 | ||||
75
Table of Contents
| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 7.7% | ||||||
| Repurchase Agreement 7.7% | ||||||
| $77,034,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $78,155,000 of United States Treasury Notes 1.00% due 8/31/11; value: $47,812,875; United States Treasury Notes 1.375% due 3/15/12; value: $11,586,250; United States Treasury Notes 3.25% due 12/31/16 and 3/31/17; value: $19,178,212; repurchase proceeds: $77,034,000††† (cost $77,034,000) | $ | 77,034,000 | |||
| Total Short-Term Investments (cost $77,034,000) | 77,034,000 | |||||
| Total Investments (cost $766,553,151) 100.7% | 1,013,733,302 | |||||
| Liabilities less Other Assets (0.7)% | (6,839,771 | ) | ||||
| NET ASSETS 100.0% | $ | 1,006,893,531 | ||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
†††All or a portion of this security has been designated as collateral for purchase commitments (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 March 31, 2010, Wasatch Small Cap Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 0.4 | ||
Canada | 3.5 | ||
China | 2.5 | ||
Germany | 1.3 | ||
India | 4.2 | ||
Ireland | 1.9 | ||
Norway | 1.0 | ||
Singapore | 0.9 | ||
United Arab Emirates | 1.5 | ||
United Kingdom | 2.5 | ||
United States | 80.3 | ||
TOTAL | 100.0 | % | |
76
Table of Contents
| WASATCH SMALL CAP VALUE FUND (WMCVX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 95.4% | |||||
| Aerospace & Defense 2.2% | |||||
| 124,070 | HEICO Corp., Class A | $ | 4,923,098 | ||
| Air Freight & Logistics 1.3% | |||||
| 2,379,466 | Goodpack Ltd. (Singapore) | 2,977,523 | |||
| Apparel Retail 1.0% | |||||
| 112,955 | Zumiez, Inc.* | 2,314,448 | |||
| Apparel, Accessories & Luxury Goods 1.0% | |||||
| 121,335 | Volcom, Inc.* | 2,368,459 | |||
| Application Software 1.4% | |||||
| 176,421 | Ebix, Inc.* | 2,817,443 | |||
| 49,120 | Sonic Solutions* | 460,255 | |||
| 3,277,698 | |||||
| Asset Management & Custody Banks 2.8% | |||||
| 118,885 | SEI Investments Co. | 2,611,903 | |||
| 5,000 | Solar Capital Ltd. | 105,700 | |||
| 189,811 | Solar Capital Ltd.** *** † | 3,631,571 | |||
| 6,349,174 | |||||
| Automotive Retail 2.3% | |||||
| 100,200 | Monro Muffler Brake, Inc. | 3,583,152 | |||
| 37,590 | O’Reilly Automotive, Inc.* | 1,567,879 | |||
| 5,151,031 | |||||
| Building Products 0.5% | |||||
| 97,055 | NCI Building Systems, Inc.* | 1,071,487 | |||
| Communications Equipment 2.1% | |||||
| 118,935 | Polycom, Inc.* | 3,637,032 | |||
| 370,935 | UTStarcom, Inc.* | 1,034,909 | |||
| 4,671,941 | |||||
| Construction & Engineering 2.2% | |||||
| 500,781 | Great Lakes Dredge & Dock Co. | 2,629,100 | |||
| 139,080 | MYR Group, Inc.* | 2,268,395 | |||
| 4,897,495 | |||||
| Construction & Farm Machinery & Heavy Trucks 0.3% | |||||
| 100,930 | Wabash National Corp.* | 707,519 | |||
| Consumer Finance 3.6% | |||||
| 375,695 | Advance America Cash Advance Centers, Inc. | 2,186,545 | |||
| 185,813 | Dollar Financial Corp.* | 4,470,661 | |||
| 532,416 | United PanAm Financial Corp.* | 1,586,599 | |||
| 8,243,805 | |||||
| Data Processing & Outsourced Services 1.5% | |||||
| 130,900 | NeuStar, Inc., Class A* | 3,298,680 | |||
| Diversified Banks 0.9% | |||||
| 255,486 | Bank of N.T. Butterfield & Son Ltd. (Bermuda) | 370,455 | |||
| 587,000 | Karnataka Bank Ltd. (India) | 1,568,994 | |||
| 1,939,449 | |||||
| Diversified Metals & Mining 0.9% | |||||
| 115,300 | Globe Specialty Metals, Inc.* | 1,290,207 | |||
| 67,800 | Globe Specialty Metals, Inc.* *** † | 728,335 | |||
| 2,018,542 | |||||
| Diversified REITs 0.0% | |||||
| 60,000 | Star Asia Finance Ltd.* *** † | 18,000 | |||
| Shares | Value | ||||
| Diversified Support Services 1.7% | |||||
| 105,460 | Copart, Inc.* | $ | 3,754,376 | ||
| Electrical Components & Equipment 1.8% | |||||
| 88,508 | Harbin Electric, Inc.* | 1,910,888 | |||
| 116,255 | Voltamp Transformers Ltd. (India) | 2,211,162 | |||
| 4,122,050 | |||||
| Electronic Manufacturing Services 0.7% | |||||
| 174,760 | TTM Technologies, Inc.* | 1,551,869 | |||
| Environmental & Facilities Services 0.5% | |||||
| 194,045 | EnergySolutions, Inc. | 1,247,709 | |||
| Food Retail 0.5% | |||||
| 172,525 | QKL Stores, Inc.* | 1,112,786 | |||
| Footwear 0.5% | |||||
| 11,420,900 | China Hongxing Sports Ltd. (China) | 1,184,148 | |||
| Health Care Facilities 4.1% | |||||
| 100,056 | AmSurg Corp.* | 2,160,209 | |||
| 222,807 | Emeritus Corp.* | 4,534,122 | |||
| 94,795 | VCA Antech, Inc.* | 2,657,104 | |||
| 9,351,435 | |||||
| Health Care Services 5.7% | |||||
| 146,298 | CorVel Corp.* | 5,230,154 | |||
| 137,430 | Healthways, Inc.* | 2,208,500 | |||
| 70,490 | LHC Group, Inc.* | 2,363,530 | |||
| 35,875 | MEDNAX, Inc.* | 2,087,566 | |||
| 98,931 | Virtual Radiologic Corp.* | 1,088,241 | |||
| 12,977,991 | |||||
| Health Care Technology 0.8% | |||||
| 114,745 | Vital Images, Inc.* | 1,855,427 | |||
| Heavy Electrical Equipment 1.2% | |||||
| 99,520 | General Cable Corp.* | 2,687,040 | |||
| Industrial Machinery 0.7% | |||||
| 124,133 | China Valves Technology, Inc.* | 1,614,970 | |||
| Insurance Brokers 0.9% | |||||
| 108,965 | Brown & Brown, Inc. | 1,952,653 | |||
| Internet Software & Services 2.5% | |||||
| 111,469 | DealerTrack Holdings, Inc.* | 1,903,891 | |||
| 321,053 | RADVision Ltd.* (Israel) | 2,199,213 | |||
| 212,165 | United Online, Inc. | 1,586,994 | |||
| 5,690,098 | |||||
| Investment Banking & Brokerage 1.7% | |||||
| 235,660 | optionsXpress Holdings, Inc.* | 3,838,901 | |||
| IT Consulting & Other Services 0.8% | |||||
| 35,045 | Cognizant Technology Solutions Corp., Class A* | 1,786,594 | |||
| Life Sciences Tools & Services 1.6% | |||||
| 154,350 | Pharmaceutical Product Development, Inc. | 3,665,812 | |||
| Mortgage REITs 4.1% | |||||
| 602,345 | MFA Financial, Inc. | 4,433,259 | |||
| 318,640 | Redwood Trust, Inc. | 4,913,429 | |||
| 9,346,688 | |||||
| Office Services & Supplies 1.4% | |||||
| 350,500 | American Reprographics Co.* | 3,143,985 | |||
77
Table of Contents
| WASATCH SMALL CAP VALUE FUND (WMCVX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Oil & Gas Equipment & Services 1.9% | |||||
| 254,706 | TETRA Technologies, Inc.* | $ | 3,112,507 | ||
| 94,185 | Willbros Group, Inc.* | 1,131,162 | |||
| 4,243,669 | |||||
| Oil & Gas Exploration & Production 2.4% | |||||
| 265,745 | Abraxas Petroleum Corp.* | 510,230 | |||
| 122,075 | Northern Oil and Gas, Inc.* | 1,934,889 | |||
| 95,050 | Petrohawk Energy Corp.* | 1,927,614 | |||
| 22,895 | Ultra Petroleum Corp.* | 1,067,594 | |||
| 5,440,327 | |||||
| Packaged Foods & Meats 1.1% | |||||
| 190,995 | Zhongpin, Inc.* | 2,425,636 | |||
| Personal Products 4.0% | |||||
| 114,580 | Herbalife Ltd. | 5,284,429 | |||
| 79,420 | NBTY, Inc.* | 3,810,572 | |||
| 9,095,001 | |||||
| Property & Casualty Insurance 2.5% | |||||
| 238,410 | Seabright Insurance Holdings, Inc. | 2,624,894 | |||
| 132,815 | Tower Group, Inc. | 2,944,509 | |||
| 5,569,403 | |||||
| Regional Banks 3.9% | |||||
| 43,130 | City National Corp. | 2,327,726 | |||
| 2,233,000 | City Union Bank Ltd. (India) | 1,425,002 | |||
| 103,285 | Columbia Banking System, Inc. | 2,097,718 | |||
| 216,425 | Commonwealth Bankshares, Inc. | 681,739 | |||
| 3,400 | Lakeland Financial Corp. | 64,770 | |||
| 91,195 | Trustmark Corp. | 2,227,894 | |||
| 8,824,849 | |||||
| Research & Consulting Services 3.2% | |||||
| 96,172 | Corporate Executive Board Co. | 2,557,213 | |||
| 92,925 | CRA International, Inc.* | 2,129,841 | |||
| 123,890 | Huron Consulting Group, Inc.* | 2,514,967 | |||
| 7,202,021 | |||||
| Semiconductors 6.0% | |||||
| 192,583 | Micrel, Inc. | 2,052,935 | |||
| 446,751 | Pericom Semiconductor Corp.* | 4,784,703 | |||
| 188,060 | Standard Microsystems Corp.* | 4,378,037 | |||
| 93,737 | Supertex, Inc.* | 2,398,730 | |||
| 13,614,405 | |||||
| Specialty Stores 1.0% | |||||
| 157,270 | Big 5 Sporting Goods Corp. | 2,393,649 | |||
| Steel 1.6% | |||||
| 100,828 | Haynes International, Inc. | 3,582,419 | |||
| Systems Software 1.6% | |||||
| 226,580 | OPNET Technologies, Inc. | 3,652,470 | |||
| Thrifts & Mortgage Finance 1.5% | |||||
| 115,530 | LIC Housing Finance Ltd. (India) | 2,250,255 | |||
| 56,550 | Washington Federal, Inc. | 1,149,096 | |||
| 3,399,351 | |||||
| Trading Companies & Distributors 4.1% | |||||
| 142,985 | Beacon Roofing Supply, Inc.* | 2,735,303 | |||
| 165,625 | Interline Brands, Inc.* | 3,170,063 | |||
| 66,085 | MSC Industrial Direct Co., Inc., Class A | 3,351,831 | |||
| 9,257,197 | |||||
| Shares | Value | |||||
| Trucking 5.4% | ||||||
| 198,470 | Marten Transport, Ltd.* | $ | 3,911,844 | |||
| 141,021 | Old Dominion Freight Line, Inc.* | 4,708,691 | ||||
| 308,152 | Vitran Corp., Inc.* | 3,728,639 | ||||
| 12,349,174 | ||||||
| Total Common Stocks (cost $194,648,571) | 216,162,452 | |||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 5.6% | ||||||
| Repurchase Agreement 5.6% | ||||||
| $12,683,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $12,860,000 of United States Treasury Notes 0.875% due 5/31/11; value: $12,940,375; repurchase proceeds: $12,683,000 (cost $12,683,000) | $ | 12,683,000 | |||
| Total Short-Term Investments (cost $12,683,000) | 12,683,000 | |||||
| Total Investments (cost $207,331,571) 101.0% | 228,845,452 | |||||
| Liabilities less Other Assets (1.0)% | (2,288,790 | ) | ||||
| NET ASSETS 100.0% | $ | 226,556,662 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||
At March 31, 2010, Wasatch Small Cap Value Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Bermuda | 0.2 | ||
China | 0.5 | ||
India | 3.5 | ||
Israel | 1.0 | ||
Singapore | 1.4 | ||
United States | 93.4 | ||
TOTAL | 100.0 | % | |
78
Table of Contents
| WASATCH STRATEGIC INCOME FUND (WASIX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 77.8% | |||||
| Asset Management & Custody Banks 11.5% | |||||
| 52,767 | Ares Capital Corp. | $ | 783,062 | ||
| 6,915 | Federated Investors, Inc., Class B | 182,418 | |||
| 26,000 | Pzena Investment Management, Inc., Class A* | 198,380 | |||
| 17,715 | SEI Investments Co. | 389,199 | |||
| 21,485 | Solar Capital Ltd. | 454,193 | |||
| 7,883 | Solar Capital Ltd.** *** † | 150,822 | |||
| 2,158,074 | |||||
| Computer Hardware 2.7% | |||||
| 3,875 | International Business Machines Corp. | 496,969 | |||
| Data Processing & Outsourced Services 3.5% | |||||
| 25,800 | Cielo S.A. (Brazil) | 242,849 | |||
| 5,160 | Paychex, Inc. | 158,412 | |||
| 14,100 | Redecard S.A. (Brazil) | 260,686 | |||
| 661,947 | |||||
| Diversified Banks 2.1% | |||||
| 44,420 | Bank of N.T. Butterfield & Son | ||||
| Ltd. (Bermuda) | 64,409 | ||||
| 14,564 | Itau Unibanco Holding S.A. ADR (Brazil) | 320,262 | |||
| 384,671 | |||||
| Diversified REITs 2.2% | |||||
| 66,600 | CapLease, Inc. | 369,630 | |||
| 171,837 | Star Asia Finance Ltd.* *** † | 51,551 | |||
| 421,181 | |||||
| Diversified Support Services 0.9% | |||||
| 7,585 | Ritchie Bros. Auctioneers, Inc. (Canada) | 163,305 | |||
| Electronic Equipment & Instruments 0.6% | |||||
| 3,150 | National Instruments Corp. | 105,052 | |||
| Fertilizers & Agricultural Chemicals 1.9% | |||||
| 4,900 | Monsanto Co. | 349,958 | |||
| Gold 0.0% | |||||
| 95,680 | Redcorp Ventures Ltd. PIPE* *** † (Canada) | — | |||
| Health Care Services 1.6% | |||||
| 5,500 | Chemed Corp. | 299,090 | |||
| Hypermarkets & Super Centers 2.0% | |||||
| 6,755 | Wal-Mart Stores, Inc. | 375,578 | |||
| Industrial Machinery 1.5% | |||||
| 26,900 | Weg S.A. (Brazil) | 287,216 | |||
| Leisure Products 0.9% | |||||
| 7,800 | Pool Corp. | 176,592 | |||
| Life Sciences Tools & Services 3.1% | |||||
| 6,400 | Eurofins Scientific (France) | 277,989 | |||
| 12,395 | Pharmaceutical Product Development, Inc. | 294,381 | |||
| 572,370 | |||||
| Mortgage REITs 18.4% | |||||
| 39,600 | Anworth Mortgage Asset Corp. | 266,904 | |||
| 80,990 | Capstead Mortgage Corp. | 968,640 | |||
| 82,700 | MFA Financial, Inc. | 608,672 | |||
| 93,050 | Redwood Trust, Inc. | 1,434,831 | |||
| 10,000 | Walter Investment Management Corp. | 160,000 | |||
| 3,439,047 | |||||
| Shares | Value | ||||
| Multi-Line Insurance 1.5% | |||||
| 7,555 | Loews Corp. | $ | 281,650 | ||
| Oil & Gas Exploration & Production 1.7% | |||||
| 6,800 | Ultra Petroleum Corp.* | 317,084 | |||
| Personal Products 3.3% | |||||
| 13,250 | Herbalife Ltd. | 611,090 | |||
| Pharmaceuticals 4.8% | |||||
| 9,930 | Forest Laboratories, Inc.* | 311,405 | |||
| 5,935 | Teva Pharmaceutical Industries Ltd. ADR (Israel) | 374,380 | |||
| 5,000 | Valeant Pharmaceuticals International* | 214,550 | |||
| 900,335 | |||||
| Railroads 1.0% | |||||
| 2,530 | Union Pacific Corp. | 185,449 | |||
| Restaurants 2.0% | |||||
| 5,600 | McDonald’s Corp. | 373,632 | |||
| Semiconductors 7.9% | |||||
| 8,800 | Intel Corp. | 195,888 | |||
| 5,370 | Linear Technology Corp. | 151,864 | |||
| 5,715 | Microchip Technology, Inc. | 160,934 | |||
| 44,065 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 462,242 | |||
| 20,100 | Xilinx, Inc. | 512,550 | |||
| 1,483,478 | |||||
| Trading Companies & Distributors 0.9% | |||||
| 1,630 | W.W. Grainger, Inc. | 176,236 | |||
| Wireless Telecommunication Services 1.8% | |||||
| 6,545 | America Movil S.A.B. de C.V., Series L ADR (Mexico) | 329,475 | |||
| Total Common Stocks (cost $13,114,499) | 14,549,479 | ||||
| EXCHANGE TRADED FUNDS 4.9% | |||||
| Asset Management & Custody Banks 4.9% | |||||
| 3,300 | Energy Select Sector SPDR Fund | 189,816 | |||
| 11,310 | ProShares UltraShort 20+ Year Treasury* | 550,684 | |||
| 5,675 | Utilities Select Sector SPDR Fund | 168,150 | |||
| 908,650 | |||||
| Total Exchange Traded Funds (cost $890,532) | 908,650 | ||||
| LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST 2.0% | |||||
| Asset Management & Custody Banks 2.0% | |||||
| 77,279 | Star Asia SPV, LLC* *** † | 365,530 | |||
| Total Limited Liability Company Membership Interest (cost $722,962) | 365,530 | ||||
| LIMITED PARTNERSHIP INTEREST 2.6% | |||||
| Asset Management & Custody Banks 1.1% | |||||
| 17,700 | KKR & Co Guernsey L.P.** (Netherlands) | 203,550 | |||
79
Table of Contents
| WASATCH STRATEGIC INCOME FUND (WASIX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Oil & Gas Storage & Transportation 1.5% | |||||
| 5,947 | Magellan Midstream Partners L.P.** | $ | 282,661 | ||
| Total Limited Partnership Interest (cost $309,409) | 486,211 | ||||
| ROYALTY INTEREST 0.0% | |||||
| Gold 0.0% | |||||
| 299 | Redcorp Ventures Ltd. - NSR Interest* *** † (Canada) | — | |||
| Total Royalty Interest (cost $0) | — | ||||
| Principal Amount | Value | ||||
| CORPORATE BONDS 1.9% | |||||
| Gold 0.1% | |||||
| $244,116 | Redcorp Ventures Ltd., 13.00%, 7/11/12*** † ^ (Canada) | $ | 24,044 | ||
| Integrated Telecommunication Services 1.8% | |||||
| 347,000 | Broadview Networks Holdings, Inc., 11.375%, 9/1/12 | 337,457 | |||
| Total Corporate Bonds (cost $581,784) | 361,501 | ||||
| Shares | Value | ||||
| WARRANTS 0.0% | |||||
| Gold 0.0% | |||||
| 209,599 | Redcorp Ventures Ltd., expiring 11/11/21* *** † (Canada) | $ | — | ||
| Total Warrants (cost $0) | — | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 6.9% | |||||
| Repurchase Agreement 6.9% | |||||
| $1,290,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $1,310,000 of United States Treasury Notes 1.00% due 8/31/11; value: $1,316,550; repurchase proceeds: $1,290,000††† (cost $1,290,000) | $ | 1,290,000 | ||
| Total Short-Term Investments (cost $1,290,000) | 1,290,000 | ||||
| Total Investments (cost $16,909,186) 96.1% | 17,961,371 | ||||
| Other Assets less Liabilities 3.9% | 732,306 | ||||
| NET ASSETS 100.0% | $ | 18,693,677 | |||
| Shares | Value | ||||
| SECURITIES SOLD SHORT 0.3% | |||||
| Regional Banks 0.3% | |||||
| 3,310 | Heartland Financial USA, Inc. | $ | 52,861 | ||
| Total Securities Sold Short (proceeds $69,494) | 52,861 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
†††All or a portion of this security has been designated as collateral for short sales (see Note 2).
^ In Default
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At March 31, 2010, Wasatch Strategic Income Fund’s investments, excluding short-term investments and securities sold short, were in the following countries:
| Country | % | ||
Bermuda | 0.4 | ||
Brazil | 6.7 | ||
Canada | 1.1 | ||
France | 1.7 | ||
Israel | 2.2 | ||
Mexico | 2.0 | ||
Netherlands | 1.2 | ||
Taiwan | 2.8 | ||
United States | 81.9 | ||
TOTAL | 100.0 | % | |
80
Table of Contents
| WASATCH ULTRA GROWTH FUND (WAMCX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 95.6% | |||||
| Air Freight & Logistics 1.1% | |||||
| 2,585,000 | Aramex PJSC* (United Arab Emirates) | $ | 1,337,190 | ||
| Aluminum 0.7% | |||||
| 1,164,000 | Midas Holdings Ltd. (Singapore) | 857,290 | |||
| Apparel Retail 1.2% | |||||
| 69,935 | Zumiez, Inc.* | 1,432,968 | |||
| Apparel, Accessories & Luxury Goods 1.6% | |||||
| 784,000 | Ports Design Ltd. (China) | 1,979,148 | |||
| Application Software 4.5% | |||||
| 14,455 | Concur Technologies, Inc.* | 592,800 | |||
| 8,875 | FactSet Research Systems, Inc. | 651,159 | |||
| 44,126 | Interactive Intelligence, Inc.* | 824,715 | |||
| 83,625 | Tyler Technologies, Inc.* | 1,567,132 | |||
| 58,110 | Ultimate Software Group, Inc.* | 1,914,724 | |||
| 5,550,530 | |||||
| Asset Management & Custody Banks 2.3% | |||||
| 86,500 | CETIP S.A. (Brazil) | 690,736 | |||
| 58,253 | Westwood Holdings Group, Inc. | 2,143,711 | |||
| 2,834,447 | |||||
| Automotive Retail 1.7% | |||||
| 50,895 | O’Reilly Automotive, Inc.* | 2,122,831 | |||
| Biotechnology 1.7% | |||||
| 77,800 | Abcam plc (United Kingdom) | 1,487,520 | |||
| 46,960 | Orexigen Therapeutics, Inc.* | 276,594 | |||
| 49,695 | Sangamo BioSciences, Inc.* | 269,347 | |||
| 2,033,461 | |||||
| Communications Equipment 4.5% | |||||
| 59,810 | F5 Networks, Inc.* | 3,678,913 | |||
| 64,450 | Riverbed Technology, Inc.* | 1,830,380 | |||
| 5,509,293 | |||||
| Construction & Engineering 1.3% | |||||
| 63,000 | MYR Group, Inc.* | 1,027,530 | |||
| 31,895 | Orion Marine Group, Inc.* | 575,705 | |||
| 1,603,235 | |||||
| Construction & Farm Machinery & Heavy Trucks 1.0% | |||||
| 18,822 | Bucyrus International, Inc.††† | 1,242,064 | |||
| Consumer Finance 3.3% | |||||
| 103,920 | Dollar Financial Corp.* | 2,500,315 | |||
| 70,300 | First Cash Financial Services, Inc.* | 1,516,371 | |||
| 4,016,686 | |||||
| Data Processing & Outsourced Services 1.3% | |||||
| 167,175 | Wirecard AG (Germany) | 1,583,724 | |||
| Distributors 1.0% | |||||
| 60,195 | LKQ Corp.* | 1,221,958 | |||
| Diversified Banks 4.8% | |||||
| 63,000 | Axis Bank Ltd. (India) | 1,643,936 | |||
| 53,000 | Bank of Baroda (India) | 757,606 | |||
| 45,210 | HDFC Bank Ltd. (India) | 1,947,570 | |||
| 10,951 | HDFC Bank Ltd. ADR (India) | 1,526,460 | |||
| 5,875,572 | |||||
| Shares | Value | ||||
| Diversified Support Services 2.3% | |||||
| 45,480 | Copart, Inc.* | $ | 1,619,088 | ||
| 50,500 | STR Holdings, Inc.* | 1,186,750 | |||
| 2,805,838 | |||||
| Education Services 1.9% | |||||
| 24,925 | Capella Education Co.* | 2,314,037 | |||
| Environmental & Facilities Services 1.0% | |||||
| 35,684 | Heritage-Crystal Clean, Inc.* | 403,229 | |||
| 36,600 | Tetra Tech, Inc.* | 843,264 | |||
| 1,246,493 | |||||
| Food Retail 0.4% | |||||
| 72,170 | QKL Stores, Inc.* | 465,496 | |||
| General Merchandise Stores 1.8% | |||||
| 38,015 | Dollar Tree, Inc.* | 2,251,248 | |||
| Health Care Equipment 7.5% | |||||
| 48,630 | Abaxis, Inc.* | 1,322,250 | |||
| 171,761 | AtriCure, Inc.* | 1,011,672 | |||
| 258,600 | Cardica, Inc.* ††† | 496,512 | |||
| 330,000 | Cardica, Inc. PIPE* † | 633,600 | |||
| 161,474 | Cardiovascular Systems, Inc.* | 857,427 | |||
| 56,445 | DexCom, Inc.* | 549,210 | |||
| 38,250 | DiaSorin S.p.A. (Italy) | 1,442,709 | |||
| 35,146 | NuVasive, Inc.* | 1,588,599 | |||
| 63,500 | Somanetics Corp.* | 1,215,390 | |||
| 1,080,146 | Zonare Medical Systems, Inc.* *** † | 140,419 | |||
| 9,257,788 | |||||
| Health Care Facilities 2.5% | |||||
| 43,905 | Emeritus Corp.* | 893,467 | |||
| 77,215 | VCA Antech, Inc.* | 2,164,336 | |||
| 3,057,803 | |||||
| Health Care Services 2.0% | |||||
| 31,920 | Bio-Reference Laboratories, Inc.* | 1,403,522 | |||
| 422,629 | Clarient, Inc.* | 1,107,288 | |||
| 108,917 | TargetRX, Inc.* *** † | 1,089 | |||
| 2,511,899 | |||||
| Health Care Technology 1.6% | |||||
| 15,130 | athenahealth, Inc.* | 553,153 | |||
| 35,795 | Computer Programs and Systems, Inc. | 1,398,868 | |||
| 1,952,021 | |||||
| Industrial Machinery 1.2% | |||||
| 159,500 | AIA Engineering Ltd. (India) | 1,431,752 | |||
| Internet Software & Services 1.3% | |||||
| 27,020 | Constant Contact, Inc.* | 627,404 | |||
| 56,225 | DealerTrack Holdings, Inc.* | 960,323 | |||
| 91,388 | Xtera* *** † | 33,814 | |||
| 1,621,541 | |||||
| IT Consulting & Other Services 5.2% | |||||
| 101,496 | Cognizant Technology Solutions Corp., Class A* | 5,174,266 | |||
| 46,000 | MindTree Ltd. (India) | 618,866 | |||
| 138,110 | Rolta India Ltd. (India) | 550,656 | |||
| 6,343,788 | |||||
| Leisure Facilities 1.6% | |||||
| 69,800 | Life Time Fitness, Inc.* | 1,961,380 | |||
| Life Sciences Tools & Services 2.1% | |||||
| 61,353 | ICON plc ADR* (Ireland) | 1,619,719 | |||
| 15,825 | Techne Corp. | 1,007,894 | |||
| 2,627,613 | |||||
81
Table of Contents
| WASATCH ULTRA GROWTH FUND (WAMCX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Oil & Gas Equipment & Services 1.8% | |||||
| 35,735 | Dril-Quip, Inc.* | $ | 2,174,117 | ||
| Oil & Gas Exploration & Production 1.0% | |||||
| 61,820 | Petrohawk Energy Corp.* | 1,253,710 | |||
| Packaged Foods & Meats 1.0% | |||||
| 36,890 | Glaxo SmithKline Consumer Healthcare Ltd. (India) | 1,232,543 | |||
| Personal Products 0.0% | |||||
| 50,403 | Ophthonix, Inc.* *** † | 504 | |||
| Pharmaceuticals 0.3% | |||||
| 57,562 | Alexza Pharmaceuticals, Inc.* | 154,554 | |||
| 75,769 | Alexza Pharmaceuticals, Inc. PIPE* † | 203,440 | |||
| 357,994 | |||||
| Research & Consulting Services 2.9% | |||||
| 99,280 | Resources Connection, Inc.* | 1,903,198 | |||
| 63,000 | Stantec, Inc.* (Canada) | 1,644,300 | |||
| 3,547,498 | |||||
| Restaurants 1.2% | |||||
| 37,580 | Peet’s Coffee & Tea, Inc.* | 1,490,047 | |||
| Semiconductors 10.2% | |||||
| 41,170 | Hittite Microwave Corp.* | 1,810,245 | |||
| 51,650 | Netlogic Microsystems, Inc.* | 1,520,060 | |||
| 380,395 | O2Micro International Ltd. ADR* (China) | 2,605,706 | |||
| 94,315 | Power Integrations, Inc. | 3,885,778 | |||
| 57,650 | Silicon Laboratories, Inc.* | 2,748,175 | |||
| 12,569,964 | |||||
| Specialized Finance 4.1% | |||||
| 138,055 | MSCI, Inc., Class A* | 4,983,786 | |||
| Specialty Stores 1.7% | |||||
| 79,390 | Hibbett Sports, Inc.* | 2,030,796 | |||
| Systems Software 3.6% | |||||
| 24,595 | ArcSight, Inc.* | 692,349 | |||
| 80,742 | NetSuite, Inc.* | 1,173,989 | |||
| 156,660 | OPNET Technologies, Inc. | 2,525,359 | |||
| 4,391,697 | |||||
| Thrifts & Mortgage Finance 1.3% | |||||
| 82,510 | LIC Housing Finance Ltd. (India) | 1,607,103 | |||
| Trucking 2.1% | |||||
| 61,915 | Knight Transportation, Inc. | 1,305,787 | |||
| 39,965 | Old Dominion Freight Line, Inc.* | 1,334,432 | |||
| 2,640,219 | |||||
| Total Common Stocks (cost $82,630,167) | 117,329,072 | ||||
| PREFERRED STOCKS 1.1% | |||||
| Biotechnology 0.1% | |||||
| 169,492 | Nanosys, Inc., Series D Pfd.* *** † | 172,882 | |||
| Health Care Technology 1.0% | |||||
| 253,064 | Data Sciences International, Inc. Series B Pfd.* *** † | 807,502 | |||
| 243,902 | TherOx, Inc., Series I Pfd.* *** † | 429,267 | |||
| 1,236,769 | |||||
| Total Preferred Stocks (cost $1,975,002) | 1,409,651 | ||||
| Shares | Value | |||||
| LIMITED PARTNERSHIP INTEREST 3.4% | ||||||
| Other 3.4% | ||||||
| Montagu Newhall Global Partners II-B, L.P.*** † | $ | 3,280,272 | ||||
| Montagu Newhall Global Partners III-B, L.P.* *** † | 890,217 | |||||
| Total Limited Partnership Interest (cost $4,704,467) | 4,170,489 | |||||
| WARRANTS 0.1% | ||||||
| Health Care Equipment 0.1% | ||||||
| 165,000 | Cardica, Inc., expiring 9/29/14*** † | 77,550 | ||||
| 162,021 | Zonare Medical Systems, Inc., expiring 6/30/11*** † | — | ||||
| 77,550 | ||||||
| Pharmaceuticals 0.0% | ||||||
| 68,192 | Alexza Pharmaceuticals, Inc., expiring 10/5/16*** † | 8,524 | ||||
| Total Warrants (cost $29,149) | 86,074 | |||||
| Total Investments (cost $89,338,785) 100.2% | 122,995,286 | |||||
| Liabilities less Other Assets (0.2)% | (231,009 | ) | ||||
| NET ASSETS 100.0% | $ | 122,764,277 | ||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 8).
†††All or a portion of this security has been designated as collateral for purchase commitments (see Note 9).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
See Notes to Financial Statements. |
| |||||
At March 31, 2010, Wasatch Ultra Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Brazil | 0.6 | ||
Canada | 1.3 | ||
China | 3.7 | ||
Germany | 1.3 | ||
India | 9.2 | ||
Ireland | 1.3 | ||
Italy | 1.2 | ||
Singapore | 0.7 | ||
United Arab Emirates | 1.1 | ||
United Kingdom | 1.2 | ||
United States | 78.4 | ||
TOTAL | 100.0 | % | |
82
Table of Contents
| WASATCH-1ST SOURCE INCOME EQUITY FUND (FMIEX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 96.4% | |||||
| Advertising 1.3% | |||||
| 552,840 | Omnicom Group, Inc. | $ | 21,455,720 | ||
| Aerospace & Defense 3.5% | |||||
| 416,000 | Raytheon Co. | 23,761,920 | |||
| 310,000 | Rockwell Collins, Inc. | 19,402,900 | |||
| 195,000 | United Technologies Corp. | 14,353,950 | |||
| 57,518,770 | |||||
| Agricultural Products 1.5% | |||||
| 865,000 | Archer Daniels Midland Co. | 24,998,500 | |||
| Aluminum 1.2% | |||||
| 1,361,130 | Alcoa, Inc. | 19,382,491 | |||
| Asset Management & Custody Banks 2.8% | |||||
| 450,000 | Federated Investors, Inc., Class B | 11,871,000 | |||
| 354,225 | Northern Trust Corp. | 19,574,474 | |||
| 410,000 | Waddell & Reed Financial, Inc., Class A | 14,776,400 | |||
| 46,221,874 | |||||
| Auto Parts & Equipment 1.7% | |||||
| 840,000 | Johnson Controls, Inc. | 27,711,600 | |||
| Coal & Consumable Fuels 0.7% | |||||
| 430,000 | Cameco Corp. (Canada) | 11,786,300 | |||
| Communications Equipment 2.7% | |||||
| 650,000 | Harris Corp. | 30,868,500 | |||
| 901,000 | Nokia OYJ ADR (Finland) | 14,001,540 | |||
| 44,870,040 | |||||
| Computer Hardware 1.5% | |||||
| 480,000 | Hewlett-Packard Co. | 25,512,000 | |||
| Construction & Engineering 1.4% | |||||
| 502,000 | Fluor Corp. | 23,348,020 | |||
| Construction & Farm Machinery & Heavy Trucks 0.6% | |||||
| 178,000 | Deere & Co. | 10,583,880 | |||
| Data Processing & Outsourced Services 1.5% | |||||
| 440,000 | Computer Sciences Corp.* | 23,975,600 | |||
| Diversified Chemicals 1.3% | |||||
| 556,555 | El Du Pont de Nemours and Co. | 20,726,108 | |||
| Diversified Metals & Mining 1.0% | |||||
| 783,750 | Anglo American plc ADR* (United Kingdom) | 16,960,350 | |||
| Electric Utilities 2.0% | |||||
| 973,000 | Duke Energy Corp. | 15,879,360 | |||
| 350,000 | FPL Group, Inc. | 16,915,500 | |||
| 32,794,860 | |||||
| Electrical Components & Equipment 1.3% | |||||
| 440,000 | Emerson Electric Co. | 22,149,600 | |||
| Electronic Components 1.1% | |||||
| 857,300 | Corning, Inc. | 17,326,033 | |||
| Environmental & Facilities Services 2.6% | |||||
| 660,000 | Republic Services, Inc. | 19,153,200 | |||
| 679,000 | Waste Management, Inc. | 23,377,970 | |||
| 42,531,170 | |||||
| Shares | Value | ||||
| Fertilizers & Agricultural Chemicals 2.0% | |||||
| 150,000 | Potash Corp. of Saskatchewan, Inc. (Canada) | $ | 17,902,500 | ||
| 277,000 | Syngenta AG ADR (Switzerland) | 15,376,270 | |||
| 33,278,770 | |||||
| Food Distributors 1.5% | |||||
| 841,440 | Sysco Corp. | 24,822,480 | |||
| Food Retail 1.4% | |||||
| 1,353,200 | SUPERVALU, Inc. | 22,571,376 | |||
| Gold 0.6% | |||||
| 266,570 | Barrick Gold Corp. (Canada) | 10,220,294 | |||
| Health Care Distributors 1.8% | |||||
| 460,000 | McKesson Corp. | 30,231,200 | |||
| Health Care Equipment 3.1% | |||||
| 196,000 | C. R. Bard, Inc. | 16,977,520 | |||
| 292,000 | Covidien plc | 14,681,760 | |||
| 325,000 | Zimmer Holdings, Inc.* | 19,240,000 | |||
| 50,899,280 | |||||
| Home Improvement Retail 1.2% | |||||
| 620,000 | Home Depot, Inc. | 20,057,000 | |||
| Household Products 1.3% | |||||
| 330,000 | Kimberly-Clark Corp. | 20,750,400 | |||
| Hypermarkets & Super Centers 1.4% | |||||
| 423,050 | Wal-Mart Stores, Inc. | 23,521,580 | |||
| Industrial Machinery 1.3% | |||||
| 340,000 | Parker Hannifin Corp. | 22,011,600 | |||
| Insurance Brokers 1.2% | |||||
| 811,290 | Marsh & McLennan Cos., Inc. | 19,811,702 | |||
| Integrated Oil & Gas 5.7% | |||||
| 320,815 | Chevron Corp. | 24,327,401 | |||
| 446,000 | ConocoPhillips | 22,821,820 | |||
| 313,000 | Exxon Mobil Corp. | 20,964,740 | |||
| 835,895 | Marathon Oil Corp. | 26,447,718 | |||
| 94,561,679 | |||||
| Integrated Telecommunication Services 3.1% | |||||
| 768,430 | AT&T, Inc. | 19,856,231 | |||
| 880,000 | Deutsche Telekom AG ADR (Germany) | 11,880,000 | |||
| 653,070 | Verizon Communications, Inc. | 20,258,231 | |||
| 51,994,462 | |||||
| Life & Health Insurance 1.1% | |||||
| 428,400 | MetLife, Inc. | 18,566,856 | |||
| Multi-Line Insurance 1.4% | |||||
| 610,000 | Loews Corp. | 22,740,800 | |||
| Oil & Gas Drilling 2.9% | |||||
| 572,400 | Ensco plc ADR (United Kingdom) | 25,632,072 | |||
| 247,855 | Transocean Ltd.* | 21,409,715 | |||
| 47,041,787 | |||||
| Oil & Gas Equipment & Services 1.4% | |||||
| 355,000 | Schlumberger Ltd. | 22,528,300 | |||
| Oil & Gas Exploration & Production 1.9% | |||||
| 270,000 | Anadarko Petroleum Corp. | 19,664,100 | |||
| 244,400 | Ultra Petroleum Corp.* | 11,396,372 | |||
| 31,060,472 | |||||
83
Table of Contents
| WASATCH-1ST SOURCE INCOME EQUITY FUND (FMIEX) — Schedule of Investments (continued) | ||
Shares | Value | ||||
| Oil & Gas Storage & Transportation 2.8% | |||||
| 900,000 | Spectra Energy Corp | $ | 20,277,000 | ||
| 1,130,000 | Williams Cos., Inc. (The) | 26,103,000 | |||
| 46,380,000 | |||||
| Other Diversified Financial Services 2.8% | |||||
| 1,344,000 | Bank of America Corp. | 23,990,400 | |||
| 518,000 | JPMorgan Chase & Co. | 23,180,500 | |||
| 47,170,900 | |||||
| Packaged Foods & Meats 2.4% | |||||
| 840,000 | ConAgra Foods, Inc. | 21,058,800 | |||
| 423,575 | HJ Heinz Co. | 19,319,256 | |||
| 40,378,056 | |||||
| Personal Products 1.5% | |||||
| 750,000 | Avon Products, Inc. | 25,402,500 | |||
| Pharmaceuticals 5.7% | |||||
| 385,000 | Abbott Laboratories | 20,281,800 | |||
| 440,000 | Eli Lilly and Co. | 15,936,800 | |||
| 334,000 | Johnson & Johnson | 21,776,800 | |||
| 589,000 | Merck & Co., Inc. | 21,999,150 | |||
| 830,000 | Pfizer, Inc. | 14,234,500 | |||
| 94,229,050 | |||||
| Property & Casualty Insurance 3.9% | |||||
| 737,860 | Allstate Corp. (The) | 23,840,257 | |||
| 1,375,000 | Old Republic International Corp. | 17,435,000 | |||
| 438,000 | Travelers Cos., Inc. (The) | 23,625,720 | |||
| 64,900,977 | |||||
| Railroads 0.7% | |||||
| 196,000 | Norfolk Southern Corp. | 10,954,440 | |||
| Semiconductors 2.7% | |||||
| 1,110,000 | Intel Corp. | 24,708,600 | |||
| 818,000 | Texas Instruments, Inc. | 20,016,460 | |||
| 44,725,060 | |||||
| Soft Drinks 1.2% | |||||
| 300,000 | PepsiCo, Inc. | 19,848,000 | |||
| Specialized Consumer Services 0.5% | |||||
| 500,000 | H&R Block, Inc. | 8,900,000 | |||
| Specialized Finance 1.3% | |||||
| 731,425 | NYSE Euronext | 21,657,494 | |||
| Steel 2.2% | |||||
| 472,090 | Nucor Corp. | 21,423,444 | |||
| 240,125 | United States Steel Corp. | 15,252,740 | |||
| 36,676,184 | |||||
| Systems Software 2.4% | |||||
| 800,000 | Microsoft Corp. | 23,416,000 | |||
| 916,390 | Symantec Corp.* | 15,505,319 | |||
| 38,921,319 | |||||
| Technology Distributors 1.4% | |||||
| 780,000 | Avnet, Inc.* | 23,400,000 | |||
| Water Utilities 0.9% | |||||
| 708,085 | American Water Works Co., Inc. | 15,407,930 | |||
| Total Common Stocks (cost $1,358,623,480) | 1,595,474,864 | ||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 3.8% | ||||||
| Repurchase Agreement 3.8% | ||||||
| $62,558,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $63,495,000 of United States Treasury Notes 0.875% due 2/28/11; value: $63,812,475; repurchase proceeds: $62,558,000 (cost $62,558,000) | $ | 62,558,000 | |||
| Total Short-Term Investments (cost $62,558,000) | 62,558,000 | |||||
| Total Investments (cost $1,421,181,480) 100.2% | 1,658,032,864 | |||||
| Liabilities less Other Assets (0.2)% | (2,813,756 | ) | ||||
| NET ASSETS 100.0% | $ | 1,655,219,108 | ||||
*Non-income producing.
ADR American Depositary Receipt.
See Notes to Financial Statements. |
| |||||
At March 31, 2010, Wasatch-1st Source Income Equity Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Canada | 2.5 | ||
Finland | 0.9 | ||
Germany | 0.7 | ||
Switzerland | 1.0 | ||
United Kingdom | 2.7 | ||
United States | 92.2 | ||
TOTAL | 100.0 | % | |
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| WASATCH-1ST SOURCE LONG/SHORT FUND (FMLSX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Shares | Value | ||||
| COMMON STOCKS 78.1% | |||||
| Agricultural Products 1.8% | |||||
| 160,000 | Archer Daniels Midland Co.††† | $ | 4,624,000 | ||
| Airlines 0.9% | |||||
| 40,000 | Allegiant Travel Co.* ††† | 2,314,400 | |||
| Application Software 1.4% | |||||
| 350,000 | TIBCO Software, Inc.* ††† | 3,776,500 | |||
| Coal & Consumable Fuels 1.2% | |||||
| 60,000 | Alpha Natural Resources, Inc.* ††† | 2,993,400 | |||
| Communications Equipment 2.6% | |||||
| 540,000 | Brocade Communications Systems, Inc.* ††† | 3,083,400 | |||
| 75,000 | Harris Corp.††† | 3,561,750 | |||
| 6,645,150 | |||||
| Computer Hardware 1.0% | |||||
| 240,000 | Silicon Graphics International Corp.* ††† | 2,565,600 | |||
| Construction & Engineering 1.6% | |||||
| 60,000 | Chicago Bridge & Iron Co. N.V.* ††† (Netherlands) | 1,395,600 | |||
| 60,000 | Fluor Corp.††† | 2,790,600 | |||
| 4,186,200 | |||||
| Diversified Real Estate Activities 1.5% | |||||
| 120,000 | St. Joe Co. (The)* | 3,882,000 | |||
| Electrical Components & Equipment 0.8% | |||||
| 50,000 | Thomas & Betts Corp.* | 1,962,000 | |||
| Environmental & Facilities Services 3.4% | |||||
| 130,000 | Republic Services, Inc.††† | 3,772,600 | |||
| 140,000 | Waste Management, Inc.††† | 4,820,200 | |||
| 8,592,800 | |||||
| Food Distributors 1.2% | |||||
| 100,000 | Sysco Corp.††† | 2,950,000 | |||
| Health Care Equipment 5.8% | |||||
| 450,000 | Boston Scientific Corp.* | 3,249,000 | |||
| 75,000 | Medtronic, Inc.††† | 3,377,250 | |||
| 50,000 | St. Jude Medical, Inc.* ††† | 2,052,500 | |||
| 450,000 | Symmetry Medical, Inc.* ††† | 4,518,000 | |||
| 65,000 | Zoll Medical Corp.* | 1,713,400 | |||
| 14,910,150 | |||||
| Health Care Services 1.4% | |||||
| 210,000 | Emdeon, Inc., Class A* ††† | 3,469,200 | |||
| Heavy Electrical Equipment 2.1% | |||||
| 200,000 | General Cable Corp.* | 5,400,000 | |||
| Home Entertainment Software 1.4% | |||||
| 200,000 | Electronic Arts, Inc.* ††† | 3,732,000 | |||
| Household Products 1.3% | |||||
| 50,000 | Clorox Co.††† | 3,207,000 | |||
| Hypermarkets & Super Centers 4.6% | |||||
| 210,000 | Wal-Mart Stores, Inc.††† | 11,676,000 | |||
| Insurance Brokers 1.3% | |||||
| 140,000 | Marsh & McLennan Cos., Inc.††† | 3,418,800 | |||
| Shares | Value | ||||
| Integrated Oil & Gas 0.9% | |||||
| 75,000 | Marathon Oil Corp.††† | $ | 2,373,000 | ||
| Integrated Telecommunication Services 2.5% | |||||
| 107,000 | AT&T, Inc. | 2,764,880 | |||
| 117,000 | Verizon Communications, Inc.††† | 3,629,340 | |||
| 6,394,220 | |||||
| Internet Software & Services 3.3% | |||||
| 100,000 | Akamai Technologies, Inc.* ††† | 3,141,000 | |||
| 100,000 | eBay, Inc.* ††† | 2,695,000 | |||
| 350,000 | United Online, Inc. | 2,618,000 | |||
| 8,454,000 | |||||
| Leisure Products 1.0% | |||||
| 65,000 | Hasbro, Inc.††† | 2,488,200 | |||
| Life & Health Insurance 1.9% | |||||
| 200,000 | Unum Group††† | 4,954,000 | |||
| Managed Health Care 1.0% | |||||
| 55,000 | Humana, Inc.* | 2,572,350 | |||
| Multi-Line Insurance 4.7% | |||||
| 325,000 | Loews Corp.††† | 12,116,000 | |||
| Oil & Gas Drilling 4.9% | |||||
| 100,000 | Ensco plc ADR††† (United Kingdom) | 4,478,000 | |||
| 90,000 | Noble Corp.* | 3,763,800 | |||
| 50,000 | Transocean Ltd.* | 4,319,000 | |||
| 12,560,800 | |||||
| Oil & Gas Equipment & Services 1.0% | |||||
| 1,100,000 | Boots & Coots, Inc.* | 2,673,000 | |||
| Oil & Gas Exploration & Production 3.8% | |||||
| 150,000 | Devon Energy Corp.††† | 9,664,500 | |||
| Oil & Gas Storage & Transportation 1.1% | |||||
| 120,000 | Spectra Energy Corp††† | 2,703,600 | |||
| Pharmaceuticals 1.8% | |||||
| 70,000 | Johnson & Johnson††† | 4,564,000 | |||
| Property & Casualty Insurance 4.8% | |||||
| 260,000 | Allstate Corp. (The)††† | 8,400,600 | |||
| 150,000 | CNA Financial Corp.* ††† | 4,008,000 | |||
| 12,408,600 | |||||
| Restaurants 0.9% | |||||
| 35,000 | McDonald’s Corp.††† | 2,335,200 | |||
| Semiconductors 1.6% | |||||
| 180,000 | Intel Corp. | 4,006,800 | |||
| Steel 3.1% | |||||
| 100,000 | Nucor Corp.††† | 4,538,000 | |||
| 200,000 | Steel Dynamics, Inc.††† | 3,494,000 | |||
| 8,032,000 | |||||
| Systems Software 3.7% | |||||
| 300,000 | Novell, Inc.* | 1,797,000 | |||
| 300,000 | Oracle Corp.††† | 7,707,000 | |||
| 9,504,000 | |||||
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| WASATCH-1ST SOURCE LONG/SHORT FUND (FMLSX) — Schedule of Investments (continued) | ||
Shares | Value | |||||
| Water Utilities 0.8% | ||||||
| 54,520 | Companhia de Saneamento Basico do Estado de Sao Paulo ADR (Brazil) | $ | 2,006,336 | |||
| Total Common Stocks (cost $174,355,279) | 200,115,806 | |||||
| PREFERRED STOCKS 2.2% | ||||||
| Cable & Satellite 0.7% | ||||||
| 75,000 | Comcast Corp., 7.00%, Series B Pfd. | 1,905,000 | ||||
| Specialized REITs 1.5% | ||||||
| 75,000 | Public Storage, 6.625%, Series M Pfd.~ | 1,827,750 | ||||
| 75,000 | Public Storage, 7.25%, Series K Pfd.~ | 1,890,000 | ||||
| 3,717,750 | ||||||
Total Preferred Stocks (cost $4,672,590) | 5,622,750 | |||||
| LIMITED PARTNERSHIP INTEREST 1.0% | ||||||
| Oil & Gas Storage & Transportation 1.0% | ||||||
| 44,549 | Plains All American Pipeline L.P.** ††† | 2,534,838 | ||||
| Total Limited Partnership Interest (cost $2,013,208) | 2,534,838 | |||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 20.7% | ||||||
| Repurchase Agreement 20.7% | ||||||
| $52,912,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $55,145,000 of United States Treasury Notes 2.75% due 11/30/16; value: $53,973,169; repurchase proceeds: $52,912,000††† (cost $52,912,000) | $ | 52,912,000 | |||
| Total Short-Term Investments (cost $52,912,000) | 52,912,000 | |||||
| Total Investments (cost $233,953,077) 102.0% | 261,185,394 | |||||
| Liabilities less Other Assets (2.0)% | (5,214,688 | ) | ||||
| NET ASSETS 100.0% | $ | 255,970,706 | ||||
| Number of Contracts | Value | |||||
| CALL OPTIONS WRITTEN 0.7% | ||||||
| Airlines 0.0% | ||||||
| 400 | Allegiant Travel Co., expiring 4/17/10, exercise price $55 | $ | 124,000 | |||
| Coal & Consumable Fuels 0.1% | ||||||
| 600 | Alpha Natural Resources, Inc., expiring 6/19/10, exercise price $50 | 264,000 | ||||
| Communications Equipment 0.0% | ||||||
| 2,000 | Brocade Communications Systems, Inc., expiring 7/17/10, exercise price $7 | 24,000 | ||||
| Number of Contracts | Value | ||||
| Computer Hardware 0.1% | |||||
| 1,000 | Silicon Graphics International Corp., expiring 6/19/10, exercise price $10 | $ | 150,000 | ||
| 1,400 | Silicon Graphics International Corp., expiring 6/19/10, exercise price $12.50 | 49,000 | |||
| 199,000 | |||||
| Construction & Engineering 0.1% | |||||
| 600 | Chicago Bridge & Iron Co. N.V., expiring 4/17/10, exercise price $20 | 204,000 | |||
| Health Care Equipment 0.1% | |||||
| 750 | Medtronic, Inc., expiring 5/22/10, exercise price $44 | 157,500 | |||
| 500 | St. Jude Medical, Inc., expiring 7/17/10, exercise price $40 | 150,000 | |||
| 307,500 | |||||
| Internet Software & Services 0.1% | |||||
| 500 | Akamai Technologies, Inc., expiring 5/22/10, exercise price $25 | 335,000 | |||
| Oil & Gas Drilling 0.1% | |||||
| 1,000 | Ensco plc ADR, expiring 6/19/10, exercise price $45 | 285,000 | |||
| Steel 0.1% | |||||
| 800 | Steel Dynamics, Inc., expiring 5/22/10, exercise price $18 | 64,000 | |||
| 1,000 | Steel Dynamics, Inc., expiring 8/21/10, exercise price $19 | 110,000 | |||
| 174,000 | |||||
| Total Call Options Written (premium $2,011,705) | 1,916,500 | ||||
| Shares | Value | ||||
| SECURITIES SOLD SHORT 17.0% | |||||
| Apparel, Accessories & Luxury Goods 0.4% | |||||
| 40,000 | Under Armour, Inc., Class A* | $ | 1,176,400 | ||
| Application Software 2.4% | |||||
| 30,000 | Salesforce.com, Inc.* | 2,233,500 | |||
| 80,000 | SAP AG ADR (Germany) | 3,853,600 | |||
| 6,087,100 | |||||
| Casinos & Gaming 0.7% | |||||
| 100,000 | International Game Technology | 1,845,000 | |||
| Diversified Chemicals 0.5% | |||||
| 40,000 | Dow Chemical Co. | 1,182,800 | |||
| Homebuilding 0.6% | |||||
| 75,000 | Toll Brothers, Inc.* | 1,560,000 | |||
| Integrated Oil & Gas 1.8% | |||||
| 80,000 | BP plc ADR (United Kingdom) | 4,565,600 | |||
| Metal & Glass Containers 0.3% | |||||
| 30,000 | Pactiv Corp.* | 755,400 | |||
| Office REITs 0.5% | |||||
| 100,000 | Duke Realty Corp. | 1,240,000 | |||
| Oil & Gas Drilling 1.4% | |||||
| 40,000 | Diamond Offshore Drilling, Inc. | 3,552,400 | |||
86
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| MARCH 31, 2010 (UNAUDITED) | ||
| Shares | Value | ||||
| Retail REITs 4.5% | |||||
| 40,000 | Federal Realty Investment Trust | $ | 2,912,400 | ||
| 100,000 | Regency Centers Corp. | 3,747,000 | |||
| 33,227 | Simon Property Group, Inc. | 2,787,745 | |||
| 50,000 | Tanger Factory Outlet Centers, Inc. | 2,158,000 | |||
| 11,605,145 | |||||
| Specialized REITs 1.7% | |||||
| 75,000 | Plum Creek Timber Co., Inc. | 2,918,250 | |||
| 30,000 | Rayonier, Inc. | 1,362,900 | |||
| 4,281,150 | |||||
| Systems Software 1.0% | |||||
| 84,932 | Red Hat, Inc.* | 2,485,960 | |||
| Wireless Telecommunication Services 1.2% | |||||
| 75,000 | American Tower Corp., Class A* | 3,195,750 | |||
| Total Securities Sold Short (proceeds $39,331,403) | 43,532,705 | ||||
*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).
~ Perpetual Maturity. Callable any time after first call date. Maturity date is next call date.
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At March 31, 2010, Wasatch-1st Source Long/Short Fund’s investments, excluding short-term investments, options written and securities sold short, were in the following countries:
| Country | % | ||
Brazil | 1.0 | ||
Netherlands | 0.7 | ||
United Kingdom | 2.1 | ||
United States | 96.2 | ||
TOTAL | 100.0 | % | |
87
Table of Contents
| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) — Schedule of Investments | ||
| Principal Amount | Value | ||||
| U.S. GOVERNMENT OBLIGATIONS 98.5% | |||||
| $ 6,335,000 | U.S. Treasury Bond, 4.25%, 5/15/39 | $ | 5,869,770 | ||
| 1,400,000 | U.S. Treasury Bond, 4.375%, 2/15/38 | 1,331,313 | |||
| 15,200,000 | U.S. Treasury Bond, 4.50%, 2/15/36 | 14,846,129 | |||
| 10,000,000 | U.S. Treasury Bond, 4.50%, 5/15/38 | 9,701,560 | |||
| 4,500,000 | U.S. Treasury Bond, 4.50%, 8/15/39 | 4,345,312 | |||
| 22,000,000 | U.S. Treasury Bond, 4.75%, 2/15/37 | 22,302,500 | |||
| 3,020,000 | U.S. Treasury Bond, 5.25%, 2/15/29 | 3,286,138 | |||
| 3,000,000 | U.S. Treasury Bond, 5.375%, 2/15/31 | 3,318,750 | |||
| 90,000,000 | U.S. Treasury Strip, principal only, 11/15/27 | 38,673,630 | |||
| 62,837,000 | U.S. Treasury Strip, principal only, 2/15/37 | 17,078,845 | |||
| 40,851,000 | U.S. Treasury Strip, principal only, 5/15/39 | 9,808,162 | |||
| Total U.S. Government Obligations (cost $137,494,188) | 130,562,109 | ||||
| SHORT-TERM INVESTMENTS 1.4% | |||||
| Repurchase Agreement 1.4% | |||||
| 1,814,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $1,840,000 of United States Treasury Notes 0.875% due 5/31/11; value: $1,851,500; repurchase proceeds: $1,814,000 (cost $1,814,000) | $ | 1,814,000 | ||
| Total Short-Term Investments (cost $1,814,000) | 1,814,000 | ||||
| Total Investments (cost $139,308,188) 99.9% | 132,376,109 | ||||
| Other Assets less Liabilities 0.1% | 194,027 | ||||
| NET ASSETS 100.0% | $ | 132,570,136 | |||
| See Notes to Financial Statements. | |||||
88
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments | MARCH 31, 2010 (UNAUDITED) | |
| Principal Amount | Value | ||||
| ASSET BACKED SECURITIES 3.0% | |||||
| $ 600,000 | Capital One Multi-Asset Execution Trust, 4.70%, 6/15/15, Series 2005-A7, Class A7 | $ | 639,227 | ||
| 1,500,000 | Citibank Credit Card Issuance Trust, 4.90%, 6/23/16, Series 2009-A4, Class A4 | 1,628,346 | |||
| 650,000 | MBNA Credit Card Master Note Trust, 4.10%, 10/15/12, Series 2005-A3, Class A3 | 652,919 | |||
| 850,000 | World Financial Network Credit Card Master Note Trust, 4.60%, 9/15/15, Series 2009-A, Class A | 880,832 | |||
| Total Asset Backed Securities (cost $3,736,710) | 3,801,324 | ||||
| COLLATERALIZED MORTGAGE OBLIGATIONS 24.1% | |||||
| 390,220 | ABN Amro Mortgage Corp., 5.50%, 2/25/18, Series 2003-13, Class A2 | 394,406 | |||
| 40,104 | Banc of America Mortgage Securities, Inc., 3.493091%, 2/25/33, Series 2003-A, Class 3A1^^^ | 35,078 | |||
| 250,000 | Bank of America Commercial Mortgage, Inc., 5.038808%, 11/10/42, Series 2005-1, Class A4^^^ | 259,050 | |||
| 390,000 | Bear Stearns Commercial Mortgage Securities, 4.735%, 9/11/42, Series 2005-PWR9, Class A2 | 392,387 | |||
| 420,672 | Countrywide Home Loans, 4.50%, 8/25/19, Series 2004-J7, Class 2A1 | 403,566 | |||
| 94,629 | Credit Suisse First Boston Mortgage Securities Corp., 4.302%, 7/15/36, Series 2004-C3, Class A3 | 94,636 | |||
| 119,307 | Federal Home Loan Mortgage Corp., 2.735%, 12/1/32, Series 847527^^^ | 124,216 | |||
| 158,113 | Federal Home Loan Mortgage Corp., 2.871%, 5/1/31, Series 847292^^^ | 162,710 | |||
| 46,367 | Federal Home Loan Mortgage Corp., 3.497%, 8/1/33, Series 847281^^^ | 48,415 | |||
| 104,863 | Federal Home Loan Mortgage Corp., 4.00%, 12/15/11, Series 2892, Class UJ | 105,279 | |||
| 173,359 | Federal Home Loan Mortgage Corp., 4.00%, 12/15/13, Series 2584, Class LE | 176,320 | |||
| 420,998 | Federal Home Loan Mortgage Corp., 4.50%, 12/15/13, Series 2717, Class HP | 439,473 | |||
| 75,455 | Federal Home Loan Mortgage Corp., 4.50%, 6/15/15, Series 2622, Class PC | 76,079 | |||
| 418,586 | Federal Home Loan Mortgage Corp., 4.50%, 7/15/15, Series 2864, Class CV | 432,797 | |||
| 812,574 | Federal Home Loan Mortgage Corp., 4.50%, 12/1/18, Series G11657 | 855,368 | |||
| 104,001 | Federal Home Loan Mortgage Corp., 5.00%, 2/15/16, Series 2541, Class JB | 104,537 | |||
| 205,813 | Federal Home Loan Mortgage Corp., 5.00%, 5/15/16, Series R007, Class AL | 210,164 | |||
| 371,171 | Federal Home Loan Mortgage Corp., 5.00%, 2/15/23, Series 2960, Class KP | 386,107 | |||
| 258,696 | Federal Home Loan Mortgage Corp., 5.125%, 6/15/18, Series R016, Class AM | 268,676 | |||
| 209,406 | Federal Home Loan Mortgage Corp., 5.50%, 10/15/14, Series R014, Class AL | 212,691 | |||
| 546,866 | Federal Home Loan Mortgage Corp., 5.50%, 5/15/15, Series 2808, Class VA | 591,171 | |||
| 1,821,308 | Federal Home Loan Mortgage Corp., 5.50%, 12/15/19, Series R010, Class AB | 1,904,713 | |||
| 244,987 | Federal Home Loan Mortgage Corp., 5.50%, 10/1/25, Series C90925 | 260,283 | |||
| 564,307 | Federal Home Loan Mortgage Corp., 5.50%, 8/1/29, Series C46102 | 599,724 | |||
| Principal Amount | Value | ||||
| $ 182,535 | Federal Home Loan Mortgage Corp., 5.703%, 11/1/35, Series 1M0010^^^ | $ | 193,428 | ||
| 329,301 | Federal Home Loan Mortgage Corp., 5.875%, 5/15/16, Series R007, Class AC | 337,474 | |||
| 506,851 | Federal Home Loan Mortgage Corp., 6.00%, 2/15/27, Series 3164, Class NA | 511,785 | |||
| 379,363 | Federal National Mortgage Assoc., 2.305%, 1/1/35, Series 825245^^^ | 387,656 | |||
| 265,647 | Federal National Mortgage Assoc., 2.568%, 11/1/34, Series 782320^^^ | 273,339 | |||
| 277,198 | Federal National Mortgage Assoc., 3.267%, 2/1/21, Series 313380^^^ | 282,452 | |||
| 262,488 | Federal National Mortgage Assoc., 3.274%, 1/1/18, Series 57735^^^ | 267,708 | |||
| 17,961 | Federal National Mortgage Assoc., 3.35%, 10/1/32, Series 659657^^^ | 18,568 | |||
| 827,647 | Federal National Mortgage Assoc., 3.875%, 1/25/39, Series 2009-2, Class WJ | 851,313 | |||
| 646,065 | Federal National Mortgage Assoc., 4.00%, 10/25/32, Series 2003-28, Class GA | 670,741 | |||
| 338,204 | Federal National Mortgage Assoc., 4.25%, 9/25/22, Series 2003-17, Class ED | 351,506 | |||
| 711,868 | Federal National Mortgage Assoc., 4.50%, 3/25/17, Series 2003-17, Class HD | 732,713 | |||
| 758,076 | Federal National Mortgage Assoc., 4.50%, 5/1/19, Series 725445 | 796,934 | |||
| 756,498 | Federal National Mortgage Assoc., 4.50%, 7/1/19, Series 725609 | 795,276 | |||
| 620,722 | Federal National Mortgage Assoc., 4.50%, 6/25/29, Series 2005-121 Class V | 634,166 | |||
| 678,431 | Federal National Mortgage Assoc., 4.50%, 1/25/30, Series 2004-67, Class AC | 706,122 | |||
| 1,301,800 | Federal National Mortgage Assoc., 5.00%, 7/25/23, Series 2005-4, Class VG | 1,381,089 | |||
| 250,000 | Federal National Mortgage Assoc., 5.50%, 5/25/23, Series 2003-42, Class EK | 267,265 | |||
| 121,342 | Federal National Mortgage Assoc., 5.50%, 11/25/26, Series 2007-63, Class PA | 123,249 | |||
| 194,901 | Federal National Mortgage Assoc., 6.30%, 9/25/15, Series 2001-M2, Class C^^^ | 198,434 | |||
| 233,484 | First Horizon Mortgage, Inc., 5.75%, 2/25/33, Series 2002-9, Class 1A3 | 231,253 | |||
| 966,553 | Government National Mortgage Assoc., 3.387%, 6/16/30, Series 2006-19, Class A | 982,340 | |||
| 1,123,088 | Government National Mortgage Assoc., 4.50%, 8/15/24, Series 717874 | 1,177,498 | |||
| 419,246 | Government National Mortgage Assoc., 4.50%, 1/20/31, Series 2005-38, Class A | 430,511 | |||
| 1,440,418 | Government National Mortgage Assoc., 4.50%, 8/20/34, Series 2009-36, Class G | 1,511,486 | |||
| 1,934,063 | Government National Mortgage Assoc., 4.50%, 8/16/35, Series 2009-62, Class DT | 2,023,007 | |||
| 650,000 | Government National Mortgage Assoc., 4.658%, 12/16/30, Series 2005-12, Class C | 686,492 | |||
| 68,757 | Government National Mortgage Assoc., 5.00%, 11/20/28, Series 2004-1, Class TB | 68,972 | |||
| 460,288 | Government National Mortgage Assoc., 5.00%, 12/20/29, Series 2004-101, Class MA | 473,573 | |||
| 900,000 | Government National Mortgage Assoc., 5.00%, 5/20/31, Series 2004-19, Class PD | 943,425 | |||
| 1,541,936 | Government National Mortgage Assoc., 5.00%, 9/16/31, Series 2009-38, Class A | 1,642,297 | |||
| 866,224 | Government National Mortgage Assoc., 5.00%, 4/20/33, Series 2009-8, Class LA | 892,649 | |||
| 500,000 | Government National Mortgage Assoc., 5.00%, 7/20/34, Series 2004-105, Class MC | 526,771 | |||
| 467,782 | Government National Mortgage Assoc., 5.00%, 8/20/39, Series 004513 | 482,773 | |||
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments (continued) | ||
| Principal Amount | Value | ||||
| $ 95,312 | LB-UBS Commercial Mortgage Trust, 4.187%, 8/15/29, Series 2004-C6, Class A2 | $ | 95,342 | ||
| Total Collateralized Mortgage Obligations (cost $29,721,824) | 30,487,453 | ||||
| CORPORATE BONDS 28.2% | |||||
| Aerospace & Defense 0.4% | |||||
| 200,000 | General Dynamics Corp., 4.25%, 5/15/13 | 213,622 | |||
| 250,000 | Martin Marietta Corp., 7.375%, 4/15/13 | 282,335 | |||
| 495,957 | |||||
| Air Freight & Logistics 0.4% | |||||
| 500,000 | United Parcel Service, Inc., 3.875%, 4/1/14 | 523,796 | |||
| Automotive Retail 0.2% | |||||
| 300,000 | AutoZone, Inc., 5.50%, 11/15/15 | 318,555 | |||
| Biotechnology 0.2% | |||||
| 300,000 | Amgen, Inc., 4.85%, 11/18/14 | 325,639 | |||
| Cable & Satellite 0.5% | |||||
| 550,000 | Comcast Corp., 5.30%, 1/15/14 | 591,344 | |||
| Computer Hardware 0.3% | |||||
| 300,000 | Hewlett-Packard Co., 6.50%, 7/1/12 | 331,969 | |||
| Construction & Farm Machinery & Heavy Trucks 1.0% | |||||
| 425,000 | Caterpillar Financial Services Corp., 5.125%, 10/12/11 MTN | 450,116 | |||
| 250,000 | John Deere Capital Corp., 4.90%, 9/9/13 MTN | 270,162 | |||
| 500,000 | PACCAR Financial Corp., 1.95%, 12/17/2012 MTN | 498,934 | |||
| 1,219,212 | |||||
| Consumer Finance 0.7% | |||||
| 100,000 | American Express Co., 4.875%, 7/15/13 | 105,476 | |||
| 700,000 | American Express Credit Corp., 5.875%, 5/2/13 MTN | 758,261 | |||
| 863,737 | |||||
| Distillers & Vintners 0.5% | |||||
| 504,000 | Diageo Capital plc, 7.375%, 1/15/14 (United Kingdom) | 586,117 | |||
| Diversified Banks 3.5% | |||||
| 500,000 | HSBC Capital Funding L.P., 4.61%, 6/27/13 (Jersey, C.I.)^^^ | 460,133 | |||
| 325,000 | HSBC Finance Corp., 6.375%, 10/15/11 | 345,794 | |||
| 950,000 | Royal Bank of Canada New York, 2.25%, 3/15/13 | 958,109 | |||
| 500,000 | SouthTrust Corp., 5.80%, 6/15/14 | 530,216 | |||
| 650,000 | U.S. Bancorp, 4.20%, 5/15/14 | 681,975 | |||
| 700,000 | Wells Fargo & Co., 0.33888%, 1/24/12^^^ | 694,945 | |||
| 725,000 | Wells Fargo & Co., 6.375%, 8/1/11 | 767,001 | |||
| 4,438,173 | |||||
| Diversified Metals & Mining 0.4% | |||||
| 450,000 | Rio Tinto Alcan, Inc., 4.50%, 5/15/13 (Canada) | 473,305 | |||
| Drug Retail 0.8% | |||||
| 550,000 | CVS Caremark Corp., 5.75%, 8/15/11 | 581,434 | |||
| 400,000 | Walgreen Co., 4.875%, 8/1/13 | 435,464 | |||
| 1,016,898 | |||||
| Principal Amount | Value | ||||
| Electric Utilities 1.1% | |||||
| $ 350,000 | Energy East Corp., 6.75%, 6/15/12 | $ | 385,272 | ||
| 300,000 | Florida Power & Light Co., 4.85%, 2/1/13 | 322,385 | |||
| 600,000 | Georgia Power Co., 5.125%, 11/15/12, Series K | 651,016 | |||
| 1,358,673 | |||||
| Footwear 0.5% | |||||
| 600,000 | Nike, Inc., 5.15%, 10/15/15 MTN | 656,725 | |||
| Health Care Distributors 0.3% | |||||
| 400,000 | Cardinal Health, Inc., 6.75%, 2/15/11 | 418,066 | |||
| Health Care Equipment 0.2% | |||||
| 250,000 | Baxter International, Inc., 4.625%, 3/15/15 | 267,221 | |||
| Household Appliances 0.3% | |||||
| 350,000 | Whirlpool Corp., 8.00%, 5/1/12 | 384,671 | |||
| Industrial Conglomerates 3.1% | |||||
| 500,000 | 3M Co., 4.375%, 8/15/13 MTN | 536,344 | |||
| 1,000,000 | General Electric Capital Corp., 5.40%, 2/15/17 MTN | 1,046,127 | |||
| 1,025,000 | General Electric Capital Corp., 5.72%, 8/22/11 MTN | 1,038,269 | |||
| 1,000,000 | General Electric Capital Corp., 5.90%, 5/13/14 | 1,100,246 | |||
| 240,000 | Tyco International Finance Ltd. S.A., 6.00%, 11/15/13 | 265,228 | |||
| 3,986,214 | |||||
| Industrial Gases 0.5% | |||||
| 600,000 | Praxair, Inc., 2.125%, 6/14/13 | 601,465 | |||
| Industrial Machinery 0.5% | |||||
| 600,000 | Parker Hannifin Corp., 4.875%, 2/15/13 | 630,345 | |||
| Integrated Oil & Gas 1.4% | |||||
| 360,000 | BP Capital Markets plc, 5.25%, 11/7/13 (United Kingdom) | 396,153 | |||
| 500,000 | ConocoPhillips, 4.60%, 1/15/15 | 536,244 | |||
| 750,000 | Marathon Oil Canada Corp., 8.375%, 5/1/12 (Canada) | 842,593 | |||
| 1,774,990 | |||||
| Integrated Telecommunication Services 1.1% | |||||
| 191,619 | Ameritech Capital Funding, 9.10%, 6/1/16 | 221,815 | |||
| 800,000 | AT&T Corp., 7.30%, 11/15/11 | 874,466 | |||
| 300,000 | Verizon Communications, 4.375%, 6/1/13 | 318,546 | |||
| 1,414,827 | |||||
| Investment Banking & Brokerage 0.8% | |||||
| 500,000 | Goldman Sachs Group, Inc. (The), 0.38781%, 6/28/10 MTN^^^ | 500,114 | |||
| 500,000 | Goldman Sachs Group, Inc. (The), 5.35%, 1/15/16 | 526,711 | |||
| 1,026,825 | |||||
| Life & Health Insurance 1.3% | |||||
| 500,000 | Principal Life Income Funding Trusts, 5.30%, 4/24/13 MTN | 536,729 | |||
| 600,000 | Prudential Financial, Inc., 6.20%, 1/15/15 | 654,974 | |||
| 480,000 | Prudential Holdings, LLC, 7.245%, 12/18/23, Series FSA | 514,627 | |||
| 1,706,330 | |||||
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| MARCH 31, 2010 (UNAUDITED) | ||
| Principal Amount | Value | ||||
| Movies & Entertainment 0.2% | |||||
| $ 250,000 | Walt Disney Co. (The), 4.50%, 12/15/13 | $ | 269,232 | ||
| Oil & Gas Exploration & Production 0.3% | |||||
| 300,000 | Apache Corp., 6.25%, 4/15/12 | 327,573 | |||
| Other Diversified Financial Services 1.4% | |||||
| 1,350,000 | Bear Stearns Co., LLC (The), 5.70%, 11/15/14 | 1,470,162 | |||
| 260,000 | Source One Mortgage Services, 9.00%, 6/1/12, Series B | 286,640 | |||
| 1,756,802 | |||||
| Personal Products 0.6% | |||||
| 655,000 | Avon Products, Inc., 5.625%, 3/1/14 | 718,193 | |||
| Pharmaceuticals 1.1% | |||||
| 600,000 | AstraZeneca plc, 5.40%, 9/15/12 (United Kingdom) | 655,224 | |||
| 625,000 | Pfizer, Inc., 5.35%, 3/15/15 | 688,659 | |||
| 1,343,883 | |||||
| Property & Casualty Insurance 1.2% | |||||
| 435,000 | Allstate Corp. (The), 7.50%, 6/15/13 | 495,490 | |||
| 650,000 | Berkshire Hathaway Finance Corp., 4.625%, 10/15/13 | 701,326 | |||
| 325,000 | Progressive Corp. (The), 6.375%, 1/15/12 | 351,341 | |||
| 1,548,157 | |||||
| Railroads 0.7% | |||||
| 300,000 | Burlington Northern Santa Fe, LLC, | 315,326 | |||
| 4.30%, 7/1/13 | 540,549 | ||||
| 500,000 | Union Pacific Corp., 6.125%, 1/15/12 | 855,875 | |||
| Regional Banks 1.0% | |||||
| 800,000 | BB&T Corp., 4.75%, 10/1/12 | 843,616 | |||
| 200,000 | Fifth Third Bancorp, 5.45%, 1/15/17 | 197,769 | |||
| 250,000 | Old National Bancorp, 5.00%, 5/20/10 MTN | 250,426 | |||
| 1,291,811 | |||||
| Soft Drinks 0.5% | |||||
| 600,000 | Bottling Group, LLC, 4.625%, 11/15/12 | 644,151 | |||
| Special Purpose Entity 0.2% | |||||
| 206,000 | Targeted Return Index Fund, 6.814%, 1/15/12, Series 2002-10*** ^^^ | 221,887 | |||
| Specialized Finance 0.5% | |||||
| 600,000 | CME Group, Inc., 5.40%, 8/1/13 | 654,649 | |||
| Systems Software 0.5% | |||||
| 650,000 | Oracle Corp., 4.95%, 4/15/13 | 706,142 | |||
| Total Corporate Bonds (cost $34,080,381) | 35,749,409 | ||||
| MUNICIPAL BONDS 1.8% | |||||
| 650,000 | Arizona State Transportation Board Highway Revenue, 5.00%, 7/1/23 | 700,011 | |||
| 500,000 | Iowa Student Loan Liquidity Corp., 0.00%, 12/1/37 *** ^^^ | 490,850 | |||
| 600,000 | Kentucky Higher Education Student Loan Corp., 0.00%, 6/1/36, Series A-2*** ^^^ | 589,020 | |||
| Principal Amount | Value | ||||
| $ 500,000 | Richmond, CA Joint Powers Financing Authority Revenue, 8.25%, 7/1/19 | $ | 502,775 | ||
| Total Municipal Bonds (cost $2,253,167) | 2,282,656 | ||||
| Shares | Value | ||||
| MUTUAL FUNDS 0.7% | |||||
| 49,765 | Eaton Vance Short Duration Diversified Income Fund | $ | 843,517 | ||
| Total Mutual Funds (cost $751,526) | 843,517 | ||||
| EXCHANGE TRADED FUNDS 1.0% | |||||
| 12,000 | iShares iBoxx Investment Grade Corporate Bond Fund | 1,268,760 | |||
| Total Exchange Traded Funds (cost $1,069,330) | 1,268,760 | ||||
| Principal Amount | Value | ||||
| U.S. GOVERNMENT AGENCY SECURITIES 21.7% | |||||
| $1,000,000 | Federal Farm Credit Bank, 3.85%, 2/11/15 | $ | 1,051,359 | ||
| 1,000,000 | Federal Farm Credit Bank, 3.875%, 10/7/13 | 1,060,229 | |||
| 650,000 | Federal Farm Credit Bank, 4.875%, 4/1/14 | 712,280 | |||
| 500,000 | Federal Farm Credit Bank, 4.875%, 1/17/17 | 541,784 | |||
| 650,000 | Federal Farm Credit Bank, 5.20%, 12/27/12 | 671,635 | |||
| 1,000,000 | Federal Home Loan Bank, 1.25%, 4/15/14 W/I | 999,080 | |||
| 1,000,000 | Federal Home Loan Bank, 2.00%, 7/27/12 | 1,004,141 | |||
| 1,000,000 | Federal Home Loan Bank, 2.00%, 7/17/14 | 1,017,661 | |||
| 1,000,000 | Federal Home Loan Bank, 4.875%, 11/15/11, Series RY11 | 1,063,054 | |||
| 400,000 | Federal Home Loan Bank, 5.00%, 12/16/11, Series WE11 | 427,092 | |||
| 1,550,000 | Federal Home Loan Bank, 5.00%, 9/14/12 | 1,677,315 | |||
| 2,000,000 | Federal Home Loan Mortgage Corp., 0.75%, 2/24/12 | 2,002,348 | |||
| 1,000,000 | Federal Home Loan Mortgage Corp., 3.50%, 5/29/13 | 1,049,967 | |||
| 1,600,000 | Federal Home Loan Mortgage Corp., 4.75%, 11/17/15 | 1,740,578 | |||
| 1,400,000 | Federal Home Loan Mortgage Corp., 5.50%, 3/28/16 | 1,461,977 | |||
| 700,000 | Federal Home Loan Mortgage Corp., 5.55%, 10/4/16 | 741,737 | |||
| 1,000,000 | Federal National Mortgage Assoc., 1.00%, 2/25/13 | 999,445 | |||
| 1,000,000 | Federal National Mortgage Assoc., 1.45%, 5/12/11 | 1,000,971 | |||
| 1,000,000 | Federal National Mortgage Assoc., 2.05%, 5/21/14 | 1,009,453 | |||
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments (continued) | ||
| Principal Amount | Value | ||||
| $ 700,000 | Federal National Mortgage Assoc., 2.20%, 12/3/12 | $ | 705,072 | ||
| 900,000 | Federal National Mortgage Assoc., 2.375%, 3/23/12 | 909,994 | |||
| 600,000 | Federal National Mortgage Assoc., 4.00%, 1/18/13 | 614,160 | |||
| 1,500,000 | Federal National Mortgage Assoc., 4.375%, 7/17/13 | 1,615,980 | |||
| 700,000 | Federal National Mortgage Assoc., 5.00%, 4/26/17 | 702,155 | |||
| 600,000 | Federal National Mortgage Assoc., 5.24%, 8/7/18 | 632,911 | |||
| 800,000 | Tennessee Valley Authority, 6.00%, 3/15/13, Series C | 897,576 | |||
| 1,000,000 | Tennessee Valley Authority, 6.25%, 12/15/17, Series E | 1,153,867 | |||
| Total U.S. Government Agency Securities (cost $26,872,823) | 27,463,821 | ||||
| U.S. TREASURY NOTES 10.0% | |||||
| 7,200,000 | U.S. Treasury Note, 3.75%, 11/15/18 | 7,254,562 | |||
| 5,000,000 | U.S. Treasury Note, 4.25%, 8/15/15 | 5,398,440 | |||
| Total U.S. Treasury Notes (cost $12,579,508) | 12,653,002 | ||||
| U.S. TREASURY INFLATION PROTECTED BONDS 3.1% | |||||
| 3,826,577 | U.S. Treasury Note, 1.625%, 1/15/18 | 3,914,768 | |||
| Total U.S. Treasury Inflation Protected Bonds (cost $3,791,279) | 3,914,768 | ||||
| Shares | Value | ||||
| PREFERRED STOCKS 0.9% | |||||
| Diversified Banks 0.3% | |||||
| 19,700 | CABCO TST For GS CAP 1, 3.25%, 2/15/34, Series GS Pfd.^^^ | $ | 377,846 | ||
| Investment Banking & Brokerage 0.2% | |||||
| 10,000 | Morgan Stanley Cap Tr VI , 6.60%, 2/1/46 Pfd. | 234,700 | |||
| Other Diversified Financial Services 0.4% | |||||
| 5,000 | Bank of America Corp., 8.20%, 5/1/13, Series H Pfd.~ | 128,700 | |||
| 10,000 | Bank One Capital TR VI , 7.2% Pfd. | 254,700 | |||
| 8,000 | ING Groep N.V., 7.375% | ||||
| Pfd. (Netherlands)~ | 175,680 | ||||
| 559,080 | |||||
| Total Preferred Stocks (cost $1,273,969) | 1,171,626 | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 5.3% | |||||
| Repurchase Agreement 5.3% | |||||
| $6,788,000 | Repurchase Agreement dated 3/31/10, 0.00% due 4/1/10 with Fixed Income Clearing Corporation collateralized by $6,960,000 of United States Treasury Notes 3.25% due 3/31/17; value: $6,925,200; repurchase proceeds: $6,788,000 (cost $6,788,000) | $ | 6,788,000 | ||
| Total Short-Term Investments (cost $6,788,000) | 6,788,000 | ||||
| Total Investments (cost $122,918,517) 99.8% | 126,424,336 | ||||
| Other Assets less Liabilities 0.2% | 276,204 | ||||
| NET ASSETS 100.0% | $ | 126,700,540 | |||
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 2).
^^^ Variable Rate Securities.
~ Perpetual Maturity. Callable any time after first call date. Maturity date is next call date.
MTN Medium Term Note.
W/I When Issued.
See Notes to Financial Statements. | |||||
At March 31, 2010, Wasatch-1st Source Income Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Canada | 1.1 | ||
Jersey, C.I. | 0.4 | ||
Netherlands | 0.1 | ||
United Kingdom | 1.4 | ||
United States | 97.0 | ||
TOTAL | 100.0 | % | |
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| WASATCH FUNDS — Statements of Assets and Liabilities | ||
| CORE GROWTH FUND | EMERGING MARKETS SMALL CAP FUND | GLOBAL OPPORTUNITIES FUND | ||||||||||
Assets: | ||||||||||||
Investments, at cost | ||||||||||||
Unaffiliated issuers | $ | 309,734,083 | $ | 84,127,039 | $ | 120,916,354 | ||||||
Repurchase agreements | 25,319,000 | 5,721,000 | 8,758,000 | |||||||||
| $ | 335,053,083 | $ | 89,848,039 | $ | 129,674,354 | |||||||
Investments, at market value | ||||||||||||
Unaffiliated issuers | $ | 380,470,779 | $ | 104,744,629 | $ | 161,723,651 | ||||||
Repurchase agreements | 25,319,000 | 5,721,000 | 8,758,000 | |||||||||
| 405,789,779 | 110,465,629 | 170,481,651 | ||||||||||
Cash | 681 | 152 | 443 | |||||||||
Foreign currency on deposit (cost of $27, $337,699, $68,760, $32,003, $4, $2,904, $39,735, $179,621, and $11, respectively) | 30 | 338,617 | 68,720 | |||||||||
Receivable for investment securities sold | — | — | 1,378,392 | |||||||||
Capital shares receivable | 785,205 | 207,974 | 450,257 | |||||||||
Interest and dividends receivable | 280,113 | 395,513 | 256,048 | |||||||||
Receivable from Advisor | — | 21,661 | 8,268 | |||||||||
Prepaid expenses and other assets | 23,116 | 16,451 | 21,385 | |||||||||
Unrealized appreciation on foreign currency contracts | — | 3,060 | 2,459 | |||||||||
Total Assets | 406,878,924 | 111,449,057 | 172,667,623 | |||||||||
Liabilities: | ||||||||||||
Call options written at value (premiums of $0, $0, $0, $0, $0, $2,000, $0, $0, and $0, respectively) | — | — | — | |||||||||
Bank overdraft | — | — | — | |||||||||
Payable for securities purchased | — | �� | 1,827,816 | 677,277 | ||||||||
Capital shares payable | 205,733 | 1,002 | 18,962 | |||||||||
Accrued investment advisory fees | 336,337 | 148,914 | 272,998 | |||||||||
Accrued fund administration fees | 15,488 | 3,822 | 6,380 | |||||||||
Accrued expenses and other liabilities | 343,094 | 32,072 | 91,211 | |||||||||
Other payables | — | 668,424 | 114,304 | |||||||||
Unrealized depreciation on foreign currency contracts | — | — | — | |||||||||
Total Liabilities | 900,652 | 2,682,050 | 1,181,132 | |||||||||
Net Assets | $ | 405,978,272 | $ | 108,767,007 | $ | 171,486,491 | ||||||
Net Assets Consist of: | ||||||||||||
Capital stock | $ | 140,229 | $ | 554,647 | $ | 459,907 | ||||||
Paid-in capital in excess of par | 459,797,596 | 107,296,671 | 126,494,645 | |||||||||
Undistributed net investment income (loss) | 2,719,136 | (165,934 | ) | (1,357,495 | ) | |||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | (127,415,607 | ) | (18,815,550 | ) | 5,241,202 | |||||||
Net unrealized appreciation (depreciation) on investments and foreign currency translations | 70,736,918 | 19,897,173 | 40,648,232 | |||||||||
Net Assets | $ | 405,978,272 | $ | 108,767,007 | $ | 171,486,491 | ||||||
Capital Stock, $.01 par value: | ||||||||||||
Authorized | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | |||||||||
Issued and outstanding | 14,022,938 | 55,464,658 | 45,990,717 | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING | $ | 28.95 | $ | 1.96 | $ | 3.73 | ||||||
See Notes to Financial Statements.
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| MARCH 31, 2010 (UNAUDITED) | ||
GLOBAL SCIENCE & TECHNOLOGY | HERITAGE GROWTH FUND | HERITAGE VALUE FUND | INTERNATIONAL GROWTH FUND | INTERNATIONAL OPPORTUNITIES FUND | MICRO CAP | |||||||||||||||||
| $ | 49,704,498 | $ | 63,782,931 | $ | 2,564,359 | $ | 144,714,212 | $ | 92,883,903 | $ | 257,262,652 | |||||||||||
| 3,676,000 | 2,616,000 | 775,000 | 1,820,000 | 10,699,000 | 8,104,000 | |||||||||||||||||
| $ | 53,380,498 | $ | 66,398,931 | $ | 3,339,359 | $ | 146,534,212 | $ | 103,582,903 | $ | 265,366,652 | |||||||||||
| $ | 59,846,588 | $ | 78,402,100 | $ | 3,023,897 | $ | 186,682,751 | $ | 121,918,199 | $ | 289,929,168 | |||||||||||
| 3,676,000 | 2,616,000 | 775,000 | 1,820,000 | 10,699,000 | 8,104,000 | |||||||||||||||||
| 63,522,588 | 81,018,100 | 3,798,897 | 188,502,751 | 132,617,199 | 298,033,168 | |||||||||||||||||
| 1,024 |
| 787 | 167 | 582 | 956 | — | |||||||||||||||
| 32,312 |
| 4 | 2,904 | 41,037 | 181,849 | 11 | |||||||||||||||
| 2,267,393 | — | 21,685 | 1,157,878 | 1,594,560 | 1,223,958 | |||||||||||||||||
| 9,654 | 21,251 | — | 17,628 | 69,013 | 39,587 | |||||||||||||||||
| 99,968 | 62,926 | 631 | 565,237 | 380,117 | 239,268 | |||||||||||||||||
| 3,115 | 7,595 | 6,072 | — | 31,966 | — | |||||||||||||||||
| 12,311 | 7,719 | 9,685 | 11,289 | 19,034 | 16,803 | |||||||||||||||||
| 3,381 | — | — | — | 90,416 | — | |||||||||||||||||
| 65,951,746 | 81,118,382 | 3,840,041 | 190,296,402 | 134,985,110 | 299,552,795 | |||||||||||||||||
| — |
| — | 2,912 | — | — | — | |||||||||||||||
| — | — | — | — | — | 51,810 | |||||||||||||||||
| 875,316 | — | 153,259 | 342,353 | 1,310,042 | 1,854,195 | |||||||||||||||||
| 63,328 | 21,848 | — | 75,199 | 92,533 | 47,357 | |||||||||||||||||
| 81,138 | 47,853 | 2,154 | 237,046 | 213,498 | 485,991 | |||||||||||||||||
| 2,517 | 3,190 | 149 | 7,443 | 5,052 | 11,505 | |||||||||||||||||
| 53,052 | 60,913 | 28,085 | 94,814 | 138,477 | 83,534 | |||||||||||||||||
| — | — | — | 327,590 | 145,904 | 36,822 | |||||||||||||||||
| — | — | 2 | 3,148 | 6,028 | 1,309 | |||||||||||||||||
| 1,075,351 | 133,804 | 186,561 | 1,087,593 | 1,911,534 | 2,572,523 | |||||||||||||||||
| $ | 64,876,395 | $ | 80,984,578 | $ | 3,653,480 | $ | 189,208,809 | $ | 133,073,576 | $ | 296,980,272 | |||||||||||
| $ | 50,504 | $ | 78,709 | $ | 4,113 | $ | 120,567 | $ | 584,586 | $ | 674,285 | |||||||||||
| 88,441,572 | 75,960,195 | 4,231,212 | 218,755,933 | 111,857,877 | 356,991,340 | |||||||||||||||||
| (748,671 | ) | 350,658 | 5,316 | (1,272,722 | ) | (2,308,939 | ) | (1,139,365 | ) | |||||||||||||
| (32,971,703 | ) | (10,024,154 | ) | (1,045,787 | ) | (69,977,268 | ) | (5,960,382 | ) | (92,187,031 | ) | ||||||||||
| 10,104,693 |
| 14,619,170 | 458,626 | 41,582,299 | 28,900,434 | 32,641,043 | |||||||||||||||
| $ | 64,876,395 | $ | 80,984,578 | $ | 3,653,480 | $ | 189,208,809 | $ | 133,073,576 | $ | 296,980,272 | |||||||||||
| 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | |||||||||||||||||
| 5,050,367 | 7,870,906 | 411,268 | 12,056,736 | 58,458,594 | 67,428,474 | |||||||||||||||||
$ | 12.85 |
| $ | 10.29 | $ | 8.88 | $ | 15.69 | $ | 2.28 | $ | 4.40 | ||||||||||
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| WASATCH FUNDS — Statements of Assets and Liabilities (continued) | ||
| MICRO CAP VALUE FUND | SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | ||||||||||
Assets: | ||||||||||||
Investments, at cost | ||||||||||||
Unaffiliated issuers | $ | 135,426,431 | $ | 689,519,151 | $ | 194,648,571 | ||||||
Repurchase agreements | 24,263,000 | 77,034,000 | 12,683,000 | |||||||||
| $ | 159,689,431 | $ | 766,553,151 | $ | 207,331,571 | |||||||
Investments, at market value | ||||||||||||
Unaffiliated issuers | $ | 161,445,171 | $ | 936,699,302 | $ | 216,162,452 | ||||||
Repurchase agreements | 24,263,000 | 77,034,000 | 12,683,000 | |||||||||
| 185,708,171 | 1,013,733,302 | 228,845,452 | ||||||||||
Cash | 506 | 702 | 311 | |||||||||
Foreign currency on deposit (cost of $0, $0, $0, $5,069, $0, $0, $0, $0, and $0, respectively) | — | — | — | |||||||||
Receivable for investment securities sold | 250,694 | — | 691,463 | |||||||||
Receivable from broker for securities sold short | — | — | — | |||||||||
Capital shares receivable | 250,285 | 2,345,911 | 69,318 | |||||||||
Interest and dividends receivable | 103,924 | 303,422 | 267,363 | |||||||||
Receivable from Advisor | 6,207 | — | — | |||||||||
Prepaid expenses and other assets | 13,258 | 50,778 | 17,754 | |||||||||
Unrealized appreciation on foreign currency contracts | 178 | 13,745 | — | |||||||||
Total Assets | 186,333,223 | 1,016,447,860 | 229,891,661 | |||||||||
Liabilities: | ||||||||||||
Call options written at value (premiums of $0, $0, $0, $0, $0, $0, $2,011,705, $0, and $0, respectively) | — | — | — | |||||||||
Securities sold short, at value (proceeds of $0, $0, $0, $69,494, $0, $0, $39,331,403, $0, and $0, respectively) | — | — | — | |||||||||
Bank overdraft | — | — | — | |||||||||
Payable for securities purchased | 2,744,434 | 6,811,945 | 2,751,649 | |||||||||
Capital shares payable | 76,535 | 1,170,391 | 108,994 | |||||||||
Dividends payable to shareholders | — | — | — | |||||||||
Accrued investment advisory fees | 296,383 | 844,722 | 285,094 | |||||||||
Accrued fund administration fees | 6,986 | 38,680 | 8,809 | |||||||||
Accrued expenses and other liabilities | 30,936 | 385,507 | 180,286 | |||||||||
Other payables | 11,301 | 303,084 | — | |||||||||
Unrealized depreciation on foreign currency contracts | 266,183 | — | 167 | |||||||||
Total Liabilities | 3,432,758 | 9,554,329 | 3,334,999 | |||||||||
Net Assets | $ | 182,900,465 | $ | 1,006,893,531 | $ | 226,556,662 | ||||||
Net Assets Consist of: | ||||||||||||
Capital stock | $ | 776,753 | $ | 312,200 | $ | 737,085 | ||||||
Paid-in capital in excess of par | 180,419,673 | 834,922,698 | 348,875,087 | |||||||||
Undistributed net investment income (loss) | (1,949,554 | ) | (3,954,827 | ) | 767,354 | |||||||
Undistributed net realized loss on investments and foreign currency translations | (22,035,703 | ) | (71,263,399 | ) | (145,336,577 | ) | ||||||
Net unrealized appreciation (depreciation) on investments and foreign currency translations | 25,689,296 | 246,876,859 | 21,513,713 | |||||||||
Net Assets | $ | 182,900,465 | $ | 1,006,893,531 | $ | 226,556,662 | ||||||
Capital Stock, $.01 par value: | ||||||||||||
Authorized | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | |||||||||
Issued and outstanding | 77,675,299 | 31,219,950 | 73,708,460 | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING | $ | 2.35 | $ | 32.25 | $ | 3.07 | ||||||
See Notes to Financial Statements.
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| MARCH 31, 2010 (UNAUDITED) | ||
| STRATEGIC INCOME FUND | ULTRA GROWTH FUND | INCOME EQUITY FUND | LONG/SHORT FUND | U.S. TREASURY FUND | INCOME FUND | |||||||||||||||||
| $ | 15,619,186 | $ | 89,338,785 | $ | 1,358,623,480 | $ | 181,041,077 | $ | 137,494,188 | $ | 116,130,517 | |||||||||||
| 1,290,000 | — | 62,558,000 | 52,912,000 | 1,814,000 | 6,788,000 | |||||||||||||||||
| $ | 16,909,186 | $ | 89,338,785 | $ | 1,421,181,480 | $ | 233,953,077 | $ | 139,308,188 | $ | 122,918,517 | |||||||||||
| $ | 16,671,371 | $ | 122,995,286 | $ | 1,595,474,864 | $ | 208,273,394 | $ | 130,562,109 | $ | 119,636,336 | |||||||||||
| 1,290,000 | — | 62,558,000 | 52,912,000 | 1,814,000 | 6,788,000 | |||||||||||||||||
| 17,961,371 | 122,995,286 | 1,658,032,864 | 261,185,394 | 132,376,109 | 126,424,336 | |||||||||||||||||
| 625 | — | 958 | 708 | 262 | 149 | |||||||||||||||||
| 5,069 | — | — | — | — | — | |||||||||||||||||
| 926,725 | 553,205 | — | 11,134,274 | — | — | |||||||||||||||||
| 156,992 | — | — | 30,411,267 | — | — | |||||||||||||||||
| 54 | 2,550 | 2,896,013 | 636,336 | 104,085 | 406,974 | |||||||||||||||||
| 107,425 | 25,627 | 2,368,360 | 214,980 | 559,669 | 1,044,407 | |||||||||||||||||
| 4,790 | — | 42,719 | — | 6,574 | — | |||||||||||||||||
| 14,733 | 13,275 | 121,569 | 26,849 | 34,325 | 20,609 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 19,177,784 | 123,589,943 | 1,663,462,483 | 303,609,808 | 133,081,024 | 127,896,475 | |||||||||||||||||
| — | — | — | 1,916,500 | — | — | |||||||||||||||||
| 52,861 | — | — | 43,532,705 | — | — | |||||||||||||||||
| — | 21,546 | — | — | — | — | |||||||||||||||||
| 377,126 | 21,987 | 4,605,844 | 1,789,568 | — | 1,000,000 | |||||||||||||||||
| 5,632 | 559,484 | 1,390,812 | 80,582 | 256,534 | 27,203 | |||||||||||||||||
| 2,253 | — | 458,304 | — | 135,809 | 58,618 | |||||||||||||||||
| 10,816 | 129,668 | 1,238,060 | 225,170 | 57,352 | 58,891 | |||||||||||||||||
| 728 | 4,809 | 64,056 | 9,162 | 5,572 | 5,106 | |||||||||||||||||
| 34,691 | 88,172 | 486,299 | 60,215 | 55,621 | 46,117 | |||||||||||||||||
| — | — | — | 25,200 | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 484,107 | 825,666 | 8,243,375 | 47,639,102 | 510,888 | 1,195,935 | |||||||||||||||||
| $ | 18,693,677 | $ | 122,764,277 | $ | 1,655,219,108 | $ | 255,970,706 | $ | 132,570,136 | $ | 126,700,540 | |||||||||||
| $ | 25,446 | $ | 68,481 | $ | 1,255,102 | $ | 215,097 | $ | 94,513 | $ | 125,799 | |||||||||||
| 26,922,641 | 135,758,314 | 1,505,202,152 | 244,619,183 | 140,241,930 | 126,801,143 | |||||||||||||||||
| 206,483 | (1,186,588 | ) | (377,857 | ) | 102,179 | (4,430 | ) | (11,909 | ) | |||||||||||||
| (9,530,027 | ) | (45,532,385 | ) | (87,711,794 | ) | (12,091,973 | ) | (829,798 | ) | (3,720,311 | ) | |||||||||||
| 1,069,134 | 33,656,455 | 236,851,505 | 23,126,220 | (6,932,079 | ) | 3,505,818 | ||||||||||||||||
| $ | 18,693,677 | $ | 122,764,277 | $ | 1,655,219,108 | $ | 255,970,706 | $ | 132,570,136 | $ | 126,700,540 | |||||||||||
| 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | |||||||||||||||||
| 2,544,616 | 6,848,052 | 125,510,187 | 21,509,658 | 9,451,265 | 12,579,934 | |||||||||||||||||
| $ | 7.35 | $ | 17.93 | $ | 13.19 | $ | 11.90 | $ | 14.03 | $ | 10.07 | |||||||||||
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| WASATCH FUNDS — Statements of Operations | ||
| CORE GROWTH FUND | EMERGING MARKETS FUND | GLOBAL OPPORTUNITIES FUND | ||||||||||
Investment Income: | ||||||||||||
Interest | $ | 783 | $ | 362 | $ | 456 | ||||||
Dividends1 | ||||||||||||
Unaffiliated issuers | 2,941,423 | 833,060 | 869,287 | |||||||||
Total investment income | 2,942,206 | 833,422 | 869,743 | |||||||||
Expenses: | ||||||||||||
Investment advisory fees | 1,911,222 | 696,340 | 1,391,485 | |||||||||
Shareholder servicing fees | 435,782 | 77,655 | 131,277 | |||||||||
Fund administration fees | 52,709 | 11,586 | 20,774 | |||||||||
Fund accounting fees | 36,640 | 22,290 | 35,617 | |||||||||
Reports to shareholders | 70,493 | 12,183 | 27,658 | |||||||||
Custody fees | 28,931 | 62,799 | 51,023 | |||||||||
Federal and state registration fees | 13,351 | 10,562 | 21,196 | |||||||||
Legal fees | 14,247 | 2,763 | 5,946 | |||||||||
Trustees’ fees | 11,536 | 1,588 | 3,392 | |||||||||
Audit fees | 11,310 | 11,047 | 11,009 | |||||||||
Interest | 5,481 | 684 | 1,366 | |||||||||
Other | 25,598 | 4,383 | 5,583 | |||||||||
Total expenses before reimbursement | 2,617,300 | 913,880 | 1,706,326 | |||||||||
Reimbursement of expenses by Advisor | — | (85,226 | ) | (93,427 | ) | |||||||
Net Expenses | 2,617,300 | 828,654 | 1,612,899 | |||||||||
Net Investment Income (Loss) | 324,906 | 4,768 | (743,156 | ) | ||||||||
Realized and Unrealized Gain (Loss): | ||||||||||||
Net realized gain (loss) on investments and foreign | ||||||||||||
Unaffiliated issuers | (1,712,717 | ) | 5,189,624 | 5,274,635 | ||||||||
Net realized gain on options written | — | — | — | |||||||||
Realized foreign capital gains taxes | — | (93,832 | ) | (27,477 | ) | |||||||
Change in unrealized appreciation (depreciation) on | 43,677,972 | 12,429,358 | 13,993,767 | |||||||||
Deferred foreign capital gains taxes | — | (720,658 | ) | (114,304 | ) | |||||||
Net gain on investments | 41,965,255 | 16,804,492 | 19,126,621 | |||||||||
Net Increase in Net Assets Resulting from Operations | $ | 42,290,161 | $ | 16,809,260 | $ | 18,383,465 | ||||||
| 1 | Net of $29,458, $30,255, $35,739, $6,268, $4,345, $471, $69,502, $41,941 and $33,993 in foreign withholding taxes, respectively. |
See Notes to Financial Statements.
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Table of Contents
| FORTHESIXMONTHSENDED MARCH 31, 2010 (UNAUDITED) | ||
| GLOBAL SCIENCE & TECHNOLOGY FUND | HERITAGE GROWTH FUND | HERITAGE FUND | INTERNATIONAL FUND | INTERNATIONAL OPPORTUNITIES FUND | MICRO CAP | |||||||||||||||||
| $ | 407 | $ | 129 | $ | 22 | $ | 277 | $ | 583 | $ | 443 | |||||||||||
| 297,467 | 722,532 | 32,945 | 1,249,206 | 758,150 | 1,890,598 | |||||||||||||||||
| 297,874 | 722,661 | 32,967 | 1,249,483 | 758,733 | 1,891,041 | |||||||||||||||||
| 457,592 | 270,105 | 12,967 | 1,366,000 | 1,107,290 | 2,686,507 | |||||||||||||||||
| 80,014 | 92,054 | 12,140 | 154,701 | 245,863 | 140,796 | |||||||||||||||||
| 8,554 | 10,739 | 514 | 25,687 | 16,250 | 38,492 | |||||||||||||||||
| 15,225 | 12,810 | 6,369 | 28,325 | 26,158 | 30,704 | |||||||||||||||||
| 18,254 | 13,902 | 4,229 | 26,723 | 42,345 | 29,583 | |||||||||||||||||
| 10,818 | 6,470 | 1,091 | 57,842 | 40,034 | 28,652 | |||||||||||||||||
| 8,533 | 8,347 | 8,943 | 10,673 | 11,156 | 12,561 | |||||||||||||||||
| 2,341 | 2,978 | 70 | 7,228 | 4,427 | 10,620 | |||||||||||||||||
| 1,737 | 2,195 | 100 | 4,999 | 2,780 | 7,752 | |||||||||||||||||
| 11,262 | 11,262 | 11,264 | 11,262 | 11,262 | 11,262 | |||||||||||||||||
| 786 | 1,004 | 36 | 2,267 | 1,400 | 3,523 | |||||||||||||||||
| 5,156 | 5,803 | 1,913 | 10,816 | 5,718 | 14,129 | |||||||||||||||||
| 620,272 | 437,669 | 59,636 | 1,706,523 | 1,514,683 | 3,014,581 | |||||||||||||||||
| (20,447 | ) | (65,671 | ) | (41,782 | ) | — | (222,896 | ) | — | |||||||||||||
| 599,825 | 371,998 | 17,854 | 1,706,523 | 1,291,787 | 3,014,581 | |||||||||||||||||
| (301,951 | ) | 350,663 | 15,113 | (457,040 | ) | (533,054 | ) | (1,123,540 | ) | |||||||||||||
| 5,325,503 | 514,301 | 278,267 | 10,268,417 | 9,372,579 | (5,342,239 | ) | ||||||||||||||||
| — | 630 | 91,584 | — | — | — | |||||||||||||||||
| — | — | — | (291,277 | ) | — | (14,159 | ) | |||||||||||||||
| 3,918,311 | 7,738,248 | 46,340 | 12,661,830 | 8,149,486 | 41,205,345 | |||||||||||||||||
| — | — | — | (327,591 | ) | (145,904 | ) | (22,663 | ) | ||||||||||||||
| 9,243,814 | 8,253,179 | 416,191 | 22,311,379 | 17,376,161 | 35,826,284 | |||||||||||||||||
| $ | 8,941,863 | $ | 8,603,842 | $ | 431,304 | $ | 21,854,339 | $ | 16,843,107 | $ | 34,702,744 | |||||||||||
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| WASATCH FUNDS — Statements of Operations (continued) | ||
MICRO CAP FUND | SMALL CAP GROWTH FUND | SMALL CAP FUND | |||||||||
Investment Income: | |||||||||||
Interest | $ | 1,308 | $ | 4,828 | $ | 442 | |||||
Dividends1 | |||||||||||
Unaffiliated issuers | 507,270 | 1,850,357 | 2,072,534 | ||||||||
Other | — | — | — | ||||||||
Total investment income | 508,578 | 1,855,185 | 2,072,976 | ||||||||
Expenses: | |||||||||||
Investment advisory fees | 1,439,396 | 4,454,632 | 1,614,756 | ||||||||
Shareholder servicing fees | 132,001 | 732,779 | 269,257 | ||||||||
Fund administration fees | 21,401 | 126,124 | 29,908 | ||||||||
Fund accounting fees | 22,338 | 78,704 | 24,327 | ||||||||
Reports to shareholders | 24,068 | 132,182 | 46,581 | ||||||||
Custody fees | 18,818 | 69,304 | 10,799 | ||||||||
Federal and state registration fees | 9,913 | 35,163 | 10,649 | ||||||||
Legal fees | 5,384 | 34,291 | 8,272 | ||||||||
Trustees’ fees | 3,339 | 23,047 | 6,198 | ||||||||
Audit fees | 11,263 | 11,263 | 11,262 | ||||||||
Dividends on securities sold short | — | — | — | ||||||||
Interest | 1,429 | 10,202 | 2,835 | ||||||||
Other | 5,665 | 32,041 | 12,341 | ||||||||
Total expenses before reimbursement | 1,695,015 | 5,739,732 | 2,047,185 | ||||||||
Reimbursement of expenses by Advisor | (24,836 | ) | — | — | |||||||
Net Expenses | 1,670,179 | 5,739,732 | 2,047,185 | ||||||||
Net Investment Income (Loss) | (1,161,601 | ) | (3,884,547 | ) | 25,791 | ||||||
Realized and Unrealized Gain (Loss): | |||||||||||
Net realized gain (loss) on investments and foreign currency translations | |||||||||||
Unaffiliated issuers | 10,549,234 | 954,198 | 11,669,654 | ||||||||
Net realized gain on options written | 569,363 | — | — | ||||||||
Net realized gain (loss) on short positions | — | — | — | ||||||||
Realized foreign capital gains taxes | 52,263 | — | — | ||||||||
Change in unrealized appreciation (depreciation) on | 6,507,780 | 113,132,954 | 12,602,068 | ||||||||
Deferred foreign capital gains taxes | (63,564 | ) | (303,084 | ) | — | ||||||
Net gain (loss) on investments | 17,615,076 | 113,784,068 | 24,271,722 | ||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 16,453,475 | $ | 109,899,521 | $ | 24,297,513 | |||||
| 1 | Net of $11,967, $18,927, $0, $1,618, $291, $0, $814, $0 and $0 in foreign withholding taxes, respectively. |
See Notes to Financial Statements.
100
Table of Contents
| FORTHESIXMONTHSENDED MARCH 31, 2010 (UNAUDITED) | ||
| STRATEGIC INCOME FUND | ULTRA GROWTH FUND | INCOME FUND | LONG/SHORT FUND | U.S. TREASURY FUND | INCOME FUND | ||||||||||||||||
| $ | 19,576 | $ | 46 | $ | 3,308 | $ | 1,814 | $ | 3,182,989 | $ | 2,185,109 | ||||||||||
| 454,457 | 239,266 | 17,460,686 | 1,625,508 | — | 86,894 | ||||||||||||||||
| — | — | — | — | 820 | — | ||||||||||||||||
| 474,033 | 239,312 | 17,463,994 | 1,627,322 | 3,183,809 | 2,272,003 | ||||||||||||||||
| 61,836 | 754,024 | 6,772,005 | 1,034,227 | 351,189 | 330,187 | ||||||||||||||||
| 20,810 | 148,508 | 905,858 | 90,253 | 105,678 | 28,198 | ||||||||||||||||
| 2,443 | 16,833 | 211,288 | 26,868 | 19,183 | 16,836 | ||||||||||||||||
| 8,505 | 19,203 | 122,657 | 20,394 | 13,298 | 25,693 | ||||||||||||||||
| 2,824 | 31,416 | 204,204 | 23,786 | 17,430 | 3,657 | ||||||||||||||||
| 2,580 | 18,727 | 17,117 | 7,620 | 1,847 | 7,088 | ||||||||||||||||
| 8,147 | 8,935 | 61,936 | 17,928 | 24,100 | 11,235 | ||||||||||||||||
| 718 | 4,768 | 60,004 | 6,427 | 5,280 | 4,504 | ||||||||||||||||
| 512 | 3,434 | 39,928 | 4,325 | 4,265 | 3,303 | ||||||||||||||||
| 11,310 | 11,262 | 11,047 | 10,995 | 11,262 | 10,994 | ||||||||||||||||
| 662 | — | — | 310,997 | — | — | ||||||||||||||||
| 4,779 | 2,868 | 17,469 | 61,749 | — | — | ||||||||||||||||
| 6,467 | 7,345 | 51,483 | 6,661 | 10,399 | 6,185 | ||||||||||||||||
| 131,593 | 1,027,323 | 8,474,996 | 1,622,230 | 563,931 | 447,880 | ||||||||||||||||
| (41,473 | ) | — | (107,330 | ) | — | (31,654 | ) | — | |||||||||||||
| 90,120 | 1,027,323 | 8,367,666 | 1,622,230 | 532,277 | 447,880 | ||||||||||||||||
| 383,913 | (788,011 | ) | 9,096,328 | 5,092 | 2,651,532 | 1,824,123 | |||||||||||||||
| (286,245 | ) | 6,212,173 | 10,564,134 | 6,148,790 | (829,894 | ) | 261,200 | ||||||||||||||
| 18,481 | — | — | 1,745,273 | — | — | ||||||||||||||||
| 358,419 | — | — | (2,304,726 | ) | — | — | |||||||||||||||
| — | — | — | — | — | — | ||||||||||||||||
| 1,337,976 | 10,671,126 | 136,028,444 | 7,402,230 | (16,276,331 | ) | 126,425 | |||||||||||||||
| — | — | — | — | — | — | ||||||||||||||||
| 1,428,631 | 16,883,299 | 146,592,578 | 12,991,567 | (17,106,225 | ) | 387,625 | |||||||||||||||
| $ | 1,812,544 | $ | 16,095,288 | $ | 155,688,906 | $ | 12,996,659 | $ | (14,454,693 | ) | $ | 2,211,748 | |||||||||
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| WASATCH FUNDS — Statements of Changes in Net Assets | ||
| CORE GROWTH FUND | EMERGING MARKETS SMALL CAP FUND | |||||||||||||||
| Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | 324,906 | $ | 948,569 | $ | 4,768 | $ | 31,806 | ||||||||
Net realized gain (loss) on investments and foreign | (1,712,717 | ) | (113,256,495 | ) | 5,095,792 | (19,252,248 | ) | |||||||||
Net realized gain on options written | — | — | — | — | ||||||||||||
Change in unrealized appreciation (depreciation) on | 43,677,972 | 63,460,370 | 11,708,700 | 25,172,055 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 42,290,161 | (48,847,556 | ) | 16,809,260 | 5,951,613 | |||||||||||
Dividends paid from: | ||||||||||||||||
Net investment income | (87,230 | ) | (5,739,872 | ) | (379,097 | ) | (29,720 | ) | ||||||||
Net realized gains | — | — | — | — | ||||||||||||
| (87,230 | ) | (5,739,872 | ) | (379,097 | ) | (29,720 | ) | |||||||||
Capital share transactions: | ||||||||||||||||
Shares sold | 30,586,518 | 42,144,413 | 61,503,764 | 28,161,403 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 84,322 | 5,588,262 | 369,142 | 28,998 | ||||||||||||
Shares redeemed | (76,850,817 | ) | (229,016,912 | ) | (20,143,930 | ) | (19,915,682 | ) | ||||||||
Redemption fees | 6,288 | 51,587 | 118,496 | 116,524 | ||||||||||||
Net increase (decrease) | (46,173,689 | ) | (181,232,650 | ) | 41,847,472 | 8,391,243 | ||||||||||
Total increase (decrease) in net assets | (3,970,758 | ) | (235,820,078 | ) | 58,277,635 | 14,313,136 | ||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 409,949,030 | 645,769,108 | 50,489,372 | 36,176,236 | ||||||||||||
End of period | $ | 405,978,272 | $ | 409,949,030 | $ | 108,767,007 | $ | 50,489,372 | ||||||||
Undistributed net investment income (loss) included in | $ | 2,719,136 | $ | 2,481,460 | $ | (165,934 | ) | $ | 208,395 | |||||||
Capital share transactions — shares: | ||||||||||||||||
Shares sold | 1,114,757 | 2,140,091 | 34,487,295 | 23,140,526 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 3,122 | 301,417 | 210,938 | 34,937 | ||||||||||||
Shares redeemed | (2,936,712 | ) | (11,075,467 | ) | (11,433,220 | ) | (20,231,688 | ) | ||||||||
Net increase (decrease) in shares outstanding | (1,818,833 | ) | (8,633,959 | ) | 23,265,013 | 2,943,775 | ||||||||||
| 1 | Fund inception date was November 17, 2008. |
See Notes to Financial Statements.
102
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| MARCH 31, 2010 | ||
| GLOBAL OPPORTUNITIES FUND | GLOBAL SCIENCE & TECHNOLOGY FUND | HERITAGE GROWTH FUND | ||||||||||||||||||||
| Six Months Ended March 31, 2010 (Unaudited) | Period Ended September 30, 20091 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||||||
| $ | (743,156 | ) | $ | (317,456 | ) | $ | (301,951 | ) | $ | (450,042 | ) | $ | 350,663 | $ | 487,670 | |||||||
| 5,247,158 | 3,153,157 | 5,325,503 | (31,796,292 | ) | 514,301 | (10,184,195 | ) | |||||||||||||||
| — | — | — | — | 630 | 100,213 | |||||||||||||||||
| 13,879,463 | 26,768,769 | 3,918,311 | 29,182,459 | 7,738,248 | 7,714,994 | |||||||||||||||||
| 18,383,465 | 29,604,470 | 8,941,863 | (3,063,875 | ) | 8,603,842 | (1,881,318 | ) | |||||||||||||||
| (261,705 | ) | — | (79,109 | ) | — | (499,403 | ) | (167,143 | ) | |||||||||||||
| (3,194,663 | ) | — | — | — | — | (220,964 | ) | |||||||||||||||
| (3,456,368 | ) | — | (79,109 | ) | — | (499,403 | ) | (388,107 | ) | |||||||||||||
| 46,237,087 | 90,898,578 | 3,855,308 | 5,166,479 | 4,889,768 | 7,087,524 | |||||||||||||||||
| 3,250,108 | — | 77,071 | — | 482,444 | 374,358 | |||||||||||||||||
| (10,318,435 | ) | (3,124,823 | ) | (7,460,370 | ) | (24,729,028 | ) | (9,686,808 | ) | (23,413,598 | ) | |||||||||||
| 5,585 | 6,824 | 1,739 | 2,298 | 924 | 915 | |||||||||||||||||
| 39,174,345 | 87,780,579 | (3,526,252 | ) | (19,560,251 | ) | (4,313,672 | ) | (15,950,801 | ) | |||||||||||||
| 54,101,442 | 117,385,049 | 5,336,502 | (22,624,126 | ) | 3,790,767 | (18,220,226 | ) | |||||||||||||||
| 117,385,049 | — | 59,539,893 | 82,164,019 | 77,193,811 | 95,414,037 | |||||||||||||||||
| $ | 171,486,491 | $ | 117,385,049 | $ | 64,876,395 | $ | 59,539,893 | $ | 80,984,578 | $ | 77,193,811 | |||||||||||
| $ | (1,357,495 | ) | $ | (352,634 | ) | $ | (748,671 | ) | $ | (367,611 | ) | $ | 350,658 | $ | 499,398 | |||||||
| 13,278,194 | 35,880,124 | 318,155 | 593,548 | 516,290 | 933,157 | |||||||||||||||||
| 947,553 | — | 6,565 | — | 50,677 | 55,297 | |||||||||||||||||
| (2,986,079 | ) | (1,129,075 | ) | (629,982 | ) | (3,209,651 | ) | (1,018,054 | ) | (3,266,118 | ) | |||||||||||
| 11,239,668 | 34,751,049 | (305,262 | ) | (2,616,103 | ) | (451,087 | ) | (2,277,664 | ) | |||||||||||||
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| WASATCH FUNDS — Statements of Changes in Net Assets (continued) | ||
HERITAGE VALUE FUND | INTERNATIONAL GROWTH FUND | |||||||||||||||
| Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | 15,113 | $ | 37,638 | $ | (457,040 | ) | $ | 36,890 | |||||||
Net realized gain (loss) on investments and foreign | 278,267 | (1,301,734 | ) | 9,977,140 | (54,621,834 | ) | ||||||||||
Net realized gain on options written | 91,584 | 358,188 | — | — | ||||||||||||
Net realized loss on short positions | — | — | — | — | ||||||||||||
Change in unrealized appreciation (depreciation) on | 46,340 | 831,023 | 12,334,239 | 66,274,043 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 431,304 | (74,885 | ) | 21,854,339 | 11,689,099 | |||||||||||
Dividends paid from: | ||||||||||||||||
Net investment income | (36,687 | ) | (47,255 | ) | — | (466,090 | ) | |||||||||
Net realized gains | — | — | — | — | ||||||||||||
| (36,687 | ) | (47,255 | ) | — | (466,090 | ) | ||||||||||
Capital share transactions: | ||||||||||||||||
Shares sold | 349,374 | 894,306 | 12,256,112 | 23,024,110 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 34,199 | 43,764 | — | 447,546 | ||||||||||||
Shares redeemed | (681,782 | ) | (1,051,758 | ) | (18,130,476 | ) | (56,255,429 | ) | ||||||||
Redemption fees | 238 | 496 | 3,105 | 6,574 | ||||||||||||
Net increase (decrease) | (297,971 | ) | (113,192 | ) | (5,871,259 | ) | (32,777,199 | ) | ||||||||
Total increase (decrease) in net assets | 96,646 | (235,332 | ) | 15,983,080 | (21,554,190 | ) | ||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 3,556,834 | 3,792,166 | 173,225,729 | 194,779,919 | ||||||||||||
End of period | $ | 3,653,480 | $ | 3,556,834 | $ | 189,208,809 | $ | 173,225,729 | ||||||||
Undistributed net investment income (loss) included in | $ | 5,316 | $ | 26,890 | $ | (1,272,722 | ) | $ | (815,682 | ) | ||||||
Capital share transactions — shares: | ||||||||||||||||
Shares sold | 41,610 | 132,854 | 827,637 | 2,074,040 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 4,155 | 6,723 | — | 50,513 | ||||||||||||
Shares redeemed | (81,399 | ) | (156,260 | ) | (1,226,812 | ) | (6,128,701 | ) | ||||||||
Net increase (decrease) in shares outstanding | (35,634 | ) | (16,683 | ) | (399,175 | ) | (4,004,148 | ) | ||||||||
See Notes to Financial Statements.
104
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| MARCH 31, 2010 | ||
| INTERNATIONAL OPPORTUNITIES FUND | MICRO CAP FUND | MICRO CAP VALUE FUND | ||||||||||||||||||||
| Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||||||
| $ | (533,054 | ) | $ | (166,658 | ) | $ | (1,123,540 | ) | $ | (2,204,100 | ) | $ | (1,161,601 | ) | $ | (946,261 | ) | |||||
| 9,372,579 | (11,970,363 | ) | (5,356,398 | ) | (70,477,941 | ) | 10,601,497 | (22,748,259 | )�� | |||||||||||||
| — | — | — | — | 569,363 | 1,864,290 | |||||||||||||||||
| — | — | — | — | — | (106,661 | ) | ||||||||||||||||
| 8,003,582 | 33,744,742 | 41,182,682 | 35,754,956 | 6,444,216 | 30,662,023 | |||||||||||||||||
| 16,843,107 | 21,607,721 | 34,702,744 | (36,927,085 | ) | 16,453,475 | 8,725,132 | ||||||||||||||||
| (1,049,066 | ) | (168,034 | ) | — | (777,904 | ) | (569,692 | ) | — | |||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (1,049,066 | ) | (168,034 | ) | — | (777,904 | ) | (569,692 | ) | — | |||||||||||||
| 32,737,611 | 31,749,891 | 13,626,057 | 20,400,999 | 65,936,740 | 37,751,896 | |||||||||||||||||
| 1,032,263 | 163,313 | — | 743,955 | 551,440 | — | |||||||||||||||||
| (10,351,402 | ) | (15,224,838 | ) | (23,891,520 | ) | (70,303,414 | ) | (14,700,683 | ) | (29,184,165 | ) | |||||||||||
| 5,109 | 37,390 | 5,613 | 7,314 | 12,792 | 11,986 | |||||||||||||||||
| 23,423,581 | 16,725,756 | (10,259,850 | ) | (49,151,146 | ) | 51,800,289 | 8,579,717 | |||||||||||||||
| 39,217,622 | 38,165,443 | 24,442,894 | (86,856,135 | ) | 67,684,072 | 17,304,849 | ||||||||||||||||
| 93,855,954 | 55,690,511 | 272,537,378 | 359,393,513 | 115,216,393 | 97,911,544 | |||||||||||||||||
| $ | 133,073,576 | $ | 93,855,954 | $ | 296,980,272 | $ | 272,537,378 | $ | 182,900,465 | $ | 115,216,393 | |||||||||||
| $ | (2,308,939 | ) | $ | (726,819 | ) | $ | (1,139,365 | ) | $ | (15,825 | ) | $ | (1,949,554 | ) | $ | (218,261 | ) | |||||
| 15,214,539 | 24,187,957 | 3,369,984 | 6,736,914 | 29,447,802 | 21,422,418 | |||||||||||||||||
| 491,554 | 133,863 | — | 265,698 | 252,954 | — | |||||||||||||||||
| (4,851,118 | ) | (11,518,529 | ) | (5,961,150 | ) | (23,747,004 | ) | (6,609,336 | ) | (21,193,792 | ) | |||||||||||
| 10,854,975 | 12,803,291 | (2,591,166 | ) | (16,744,392 | ) | 23,091,420 | 228,626 | |||||||||||||||
105
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| WASATCH FUNDS — Statements of Changes in Net Assets (continued) | ||
SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | |||||||||||||||
Six Months Ended | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (3,884,547 | ) | $ | (3,485,220 | ) | $ | 25,791 | $ | (624,791 | ) | |||||
Net realized gain (loss) on investments and foreign | 954,198 | (66,580,850 | ) | 11,669,654 | (116,514,917 | ) | ||||||||||
Net realized gain on options written | — | — | — | 908,649 | ||||||||||||
Net realized gain (loss) on short positions | — | — | — | — | ||||||||||||
Change in unrealized appreciation (depreciation) on | 112,829,870 | 108,446,873 | 12,602,068 | 73,490,647 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 109,899,521 | 38,380,803 | 24,297,513 | (42,740,412 | ) | |||||||||||
Dividends paid from: | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gains | — | (1,539,215 | ) | — | — | |||||||||||
| — | (1,539,215 | ) | — | — | ||||||||||||
Capital share transactions: | ||||||||||||||||
Shares sold | 168,038,017 | 230,991,699 | 10,310,918 | 32,790,353 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | 1,498,523 | — | — | ||||||||||||
Shares redeemed | (80,407,904 | ) | (195,651,102 | ) | (26,412,613 | ) | (108,614,115 | ) | ||||||||
Redemption fees | 45,962 | 91,021 | 3,173 | 7,697 | ||||||||||||
Net increase (decrease) | 87,676,075 | 36,930,141 | (16,098,522 | ) | (75,816,065 | ) | ||||||||||
Total increase (decrease) in net assets | 197,575,596 | 73,771,729 | 8,198,991 | (118,556,477 | ) | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 809,317,935 | 735,546,206 | 218,357,671 | 336,914,148 | ||||||||||||
End of period | $ | 1,006,893,531 | $ | 809,317,935 | $ | 226,556,662 | $ | 218,357,671 | ||||||||
Undistributed net investment income (loss) included in | $ | (3,954,827 | ) | $ | (70,280 | ) | $ | 767,354 | $ | 741,563 | ||||||
Capital share transactions — shares: | ||||||||||||||||
Shares sold | 5,601,467 | 9,654,965 | 3,643,085 | 15,948,161 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | 73,746 | — | — | ||||||||||||
Shares redeemed | (2,691,292 | ) | (9,177,145 | ) | (9,369,319 | ) | (56,145,733 | ) | ||||||||
Net increase (decrease) in shares outstanding | 2,910,175 | 551,566 | (5,726,234 | ) | (40,197,572 | ) | ||||||||||
See Notes to Financial Statements
106
Table of Contents
| MARCH 31, 2010 | ||
STRATEGIC INCOME FUND | ULTRA GROWTH FUND | INCOME EQUITY FUND | ||||||||||||||||||||
| Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||||||
| $ | 383,913 | $ | 775,469 | $ | (788,011 | ) | $ | (1,104,391 | ) | $ | 9,096,328 | $ | 19,219,640 | |||||||||
| (286,245 | ) | (7,385,813 | ) | 6,212,173 | (48,814,746 | ) | 10,564,134 | (96,935,144 | ) | |||||||||||||
| 18,481 | 126,196 | — | — | — | — | |||||||||||||||||
| 358,419 | (86,106 | ) | — | 497,763 | — | — | ||||||||||||||||
| 1,337,976 | 4,615,332 | 10,671,126 | 41,929,072 | 136,028,444 | 140,074,504 | |||||||||||||||||
| 1,812,544 | (1,954,922 | ) | 16,095,288 | (7,492,302 | ) | 155,688,906 | 62,359,000 | |||||||||||||||
| (356,524 | ) | (784,968 | ) | — | — | (9,597,803 | ) | (19,218,020 | ) | |||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (356,524 | ) | (784,968 | ) | — | — | (9,597,803 | ) | (19,218,020 | ) | |||||||||||||
| 1,200,850 | 1,068,106 | 5,042,348 | 12,125,756 | 294,748,337 | 874,385,368 | |||||||||||||||||
| 346,288 | 767,924 | — | — | 8,724,500 | 17,197,096 | |||||||||||||||||
| (2,019,796 | ) | (3,276,167 | ) | (19,658,634 | ) | (27,365,051 | ) | (179,872,515 | ) | (329,662,507 | ) | |||||||||||
| 268 | 894 | 1,039 | 12,255 | 19,967 | 62,658 | |||||||||||||||||
| (472,390 | ) | (1,439,243 | ) | (14,615,247 | ) | (15,227,040 | ) | 123,620,289 | 561,982,615 | |||||||||||||
| 983,630 | (4,179,133 | ) | 1,480,041 | (22,719,342 | ) | 269,711,392 | 605,123,595 | |||||||||||||||
| 17,710,047 | 21,889,180 | 121,284,236 | 144,003,578 | 1,385,507,716 | 780,384,121 | |||||||||||||||||
| $ | 18,693,677 | $ | 17,710,047 | $ | 122,764,277 | $ | 121,284,236 | $ | 1,655,219,108 | $ | 1,385,507,716 | |||||||||||
| $ | 206,483 | $ | 179,094 | $ | (1,186,588 | ) | $ | (398,577 | ) | $ | (377,857 | ) | $ | 123,618 | ||||||||
| 170,537 | 174,614 | 304,798 | 995,533 | 23,402,917 | 85,935,790 | |||||||||||||||||
| 49,190 | 136,331 | — | — | 679,335 | 1,663,444 | |||||||||||||||||
| (290,363 | ) | (567,847 | ) | (1,203,919 | ) | (2,387,038 | ) | (14,290,454 | ) | (32,224,101 | ) | |||||||||||
| (70,636 | ) | (256,902 | ) | (899,121 | ) | (1,391,505 | ) | 9,791,798 | 55,375,133 | |||||||||||||
107
Table of Contents
| WASATCH FUNDS — Statements of Changes in Net Assets (continued) | ||
| LONG/SHORT FUND | U.S. TREASURY FUND | |||||||||||||||
| Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 5,092 | $ | 254,370 | $ | 2,651,532 | $ | 5,036,394 | ||||||||
Net realized gain (loss) on investments and foreign | 6,148,790 | (21,773,280 | ) | (829,894 | ) | 9,178,548 | ||||||||||
Net realized gain on options written | 1,745,273 | 1,315,878 | — | — | ||||||||||||
Net realized gain (loss) on short positions | (2,304,726 | ) | 4,989,019 | — | — | |||||||||||
Change in unrealized appreciation (depreciation) on | 7,402,230 | 21,481,141 | (16,276,331 | ) | 2,499,959 | |||||||||||
Net increase (decrease) in net assets resulting from operations | 12,996,659 | 6,267,128 | (14,454,693 | ) | 16,714,901 | |||||||||||
Dividends paid from: | ||||||||||||||||
Net investment income | — | (556,325 | ) | (2,670,100 | ) | (5,022,309 | ) | |||||||||
Net realized gains | — | (1,579,189 | ) | (4,576,837 | ) | — | ||||||||||
| — | (2,135,514 | ) | (7,246,937 | ) | (5,022,309 | ) | ||||||||||
Capital share transactions: | ||||||||||||||||
Shares sold | 119,027,992 | 76,153,872 | 24,795,759 | 148,148,779 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | 1,826,247 | 6,733,786 | 4,584,510 | ||||||||||||
Shares redeemed | (22,197,229 | ) | (58,109,974 | ) | (31,408,655 | ) | (132,178,263 | ) | ||||||||
Redemption fees | 16,300 | 11,260 | 52,331 | 431,042 | ||||||||||||
Net increase | 96,847,063 | 19,881,405 | 173,221 | 20,986,068 | ||||||||||||
Total increase (decrease) in net assets | 109,843,722 | 24,013,019 | (21,528,409 | ) | 32,678,660 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 146,126,984 | 122,113,965 | 154,098,545 | 121,419,885 | ||||||||||||
End of period | $ | 255,970,706 | $ | 146,126,984 | $ | 132,570,136 | $ | 154,098,545 | ||||||||
Undistributed net investment income (loss) included in | $ | 102,179 | $ | 97,087 | $ | (4,430 | ) | $ | 14,138 | |||||||
Capital share transactions — shares: | ||||||||||||||||
Shares sold | 10,316,572 | 7,924,340 | 1,639,113 | 8,980,714 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | 209,877 | 464,458 | 266,951 | ||||||||||||
Shares redeemed | (1,941,304 | ) | (6,298,177 | ) | (2,112,274 | ) | (7,910,125 | ) | ||||||||
Net increase (decrease) in shares outstanding | 8,375,268 | 1,836,040 | (8,703 | ) | 1,337,540 | |||||||||||
See Notes to Financial Statements.
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Table of Contents
| MARCH 31, 2010 | ||
| INCOME FUND | ||||||||||||||
| Six Months Ended March 31, 2010 (Unaudited) | Year Ended September 30, 2009 | |||||||||||||
| $ | 1,824,123 | $ | 3,368,363 | |||||||||||
| 261,200 | (263,209 | ) | ||||||||||||
| — | — | |||||||||||||
| — | — | |||||||||||||
| 126,425 | 4,892,799 | |||||||||||||
| 2,211,748 | 7,997,953 | |||||||||||||
| (1,822,977 | ) | (3,433,282 | ) | |||||||||||
| — | — | |||||||||||||
| (1,822,977 | ) | (3,433,282 | ) | |||||||||||
| 21,318,272 | 50,831,732 | |||||||||||||
| 1,520,950 | 2,876,487 | |||||||||||||
| (11,026,451 | ) | (32,859,256 | ) | |||||||||||
| 2,609 | 1,844 | |||||||||||||
| 11,815,380 | 20,850,807 | |||||||||||||
| 12,204,151 | 25,415,478 | |||||||||||||
| 114,496,389 | 89,080,911 | |||||||||||||
| $ | 126,700,540 | $ | 114,496,389 | |||||||||||
| $ | (11,909 | ) | $ | (13,055 | ) | |||||||||
| 2,113,127 | 5,205,427 | |||||||||||||
| 150,653 | 294,467 | |||||||||||||
| (1,092,517 | ) | (3,381,592 | ) | |||||||||||
| 1,171,263 | 2,118,302 | |||||||||||||
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Table of Contents
| WASATCH FUNDS — Financial Highlights | ||
| CORE GROWTH FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 25.88 | $ | 26.38 | $ | 42.98 | $ | 41.08 | $ | 43.92 | $ | 38.49 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.05 | — | 1 | 0.19 | (0.05 | ) | 0.17 | 0.56 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | 3.03 | (0.23 | ) | (8.98 | ) | 5.65 | 0.90 | 6.41 | ||||||||||||||||
Total from investment operations | 3.08 | (0.23 | ) | (8.79 | ) | 5.60 | 1.07 | 6.97 | ||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.01 | ) | (0.27 | ) | — | (0.14 | ) | (0.63 | ) | (0.22 | ) | |||||||||||||
Distributions from net realized gains | — | — | (7.81 | ) | (3.56 | ) | (3.28 | ) | (1.32 | ) | ||||||||||||||
Total distributions | (0.01 | ) | (0.27 | ) | (7.81 | ) | (3.70 | ) | (3.91 | ) | (1.54 | ) | ||||||||||||
Net asset value, end of period | $ | 28.95 | $ | 25.88 | $ | 26.38 | $ | 42.98 | �� | $ | 41.08 | $ | 43.92 | |||||||||||
Total return2 | 11.89% | (0.45)% | (24.82)% | 14.28% | 2.46% | 18.58% | 3 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 405,978 | $ | 409,949 | $ | 645,769 | $ | 1,250,618 | $ | 1,381,027 | $ | 1,704,690 | ||||||||||||
Ratio of expenses to average net assets4 | 1.37% | 1.34% | 1.21% | 1.18% | 1.17% | 1.20% | ||||||||||||||||||
Ratio of net investment income (loss) to average net assets4 | 0.17% | 0.24% | 0.52% | (0.09)% | 0.38% | 1.30% | ||||||||||||||||||
Portfolio turnover rate2 | 2% | 30% | 44% | 54% | 42% | 42% | ||||||||||||||||||
| EMERGING MARKETS SMALL CAP FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | Period Ended September 30 | |||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 20085 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 1.57 | $ | 1.24 | $ | 2.00 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | — | 1 | — | 1 | — | 1 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.40 | 0.33 | (0.76 | ) | ||||||||||||||||||||
Total from investment operations | 0.40 | 0.33 | (0.76 | ) | ||||||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | ||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.01 | ) | — | 1 | — | 1 | ||||||||||||||||||
Total distributions | (0.01 | ) | — | 1 | — | 1 | ||||||||||||||||||
Net asset value, end of period | $ | 1.96 | $ | 1.57 | $ | 1.24 | ||||||||||||||||||
Total return2 | 25.45% | 26.80% | (37.88)% | |||||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 108,767 | $ | 50,489 | $ | 36,176 | ||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 2.08% | 6 7 | 2.10% | 2.10% | ||||||||||||||||||||
Before waivers and reimbursements4 | 2.29% | 3.03% | 2.67% | |||||||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 0.01% | 0.12% | 0.27% | |||||||||||||||||||||
Before waivers and reimbursements4 | (0.20)% | (0.81)% | (0.29)% | |||||||||||||||||||||
Portfolio turnover rate2 | 19% | 78% | 38% | |||||||||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | Not annualized for periods less than one year. |
| 3 | 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 Fund’s cross-trading policies. Excluding this item, the total return would have been 18.55%. |
| 4 | Annualized. |
| 5 | Fund inception date was October 1, 2007. |
| 6 | Includes extraordinary expenses of 0.01%. |
| 7 | Expense cap was reduced from 2.10% to 2.05% when net assets reached $50 million (see Note 7). |
See Notes to Financial Statements.
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| MARCH 31, 2010 | ||
| GLOBAL OPPORTUNITIES FUND | Six Months Ended March 31 (Unaudited) | Period Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 20091 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 3.38 | $ | 2.00 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss | (0.02 | ) | (0.01 | ) | ||||||||||||||||||||
Net realized and unrealized gains on investments | 0.46 | 1.39 | ||||||||||||||||||||||
Total from investment operations | 0.44 | 1.38 | ||||||||||||||||||||||
Redemption fees (see Note 2) | — | 2 | — | 2 | ||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.01 | ) | — | |||||||||||||||||||||
Distributions from net realized gains | (0.08 | ) | — | |||||||||||||||||||||
Total distributions | (0.09 | ) | — | |||||||||||||||||||||
Net asset value, end of period | $ | 3.73 | $ | 3.38 | ||||||||||||||||||||
Total return3 | 13.13% | 69.00% | ||||||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 171,486 | $ | 117,385 | ||||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 2.26% | 5 | 2.25% | |||||||||||||||||||||
Before waivers and reimbursements4 | 2.39% | 2.61% | ||||||||||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | (1.04)% | (0.67)% | ||||||||||||||||||||||
Before waivers and reimbursements4 | (1.17)% | (1.03)% | ||||||||||||||||||||||
Portfolio turnover rate3 | 13% | 22% | ||||||||||||||||||||||
| GLOBAL SCIENCE & TECHNOLOGY FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 11.12 | $ | 10.31 | $ | 17.69 | $ | 13.97 | $ | 12.98 | $ | 10.15 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss | (0.06 | ) | (0.12 | ) | (0.25 | ) | (0.12 | ) | (0.14 | ) | (0.16 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | 1.81 | 0.93 | (5.65 | ) | 4.43 | 1.40 | 2.99 | |||||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | — | 2 | |||||||||||||||||
Total from investment operations | 1.75 | 0.81 | (5.90 | ) | 4.31 | 1.26 | 2.83 | |||||||||||||||||
Redemption fees (see Note 2) | — | 2 | — | 2 | — | 2 | — | 2 | — | 2 | — | 2 | ||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | — | — | — | — | — | |||||||||||||||||
Distributions from net realized gains | — | — | (1.48 | ) | (0.59 | ) | (0.27 | ) | — | |||||||||||||||
Total distributions | (0.02 | ) | — | (1.48 | ) | (0.59 | ) | (0.27 | ) | — | ||||||||||||||
Net asset value, end of period | $ | 12.85 | $ | 11.12 | $ | 10.31 | $ | 17.69 | $ | 13.97 | $ | 12.98 | ||||||||||||
Total return3 | 15.62% | 7.86% | (36.07)% | 31.63% | 9.81% | 27.88% | 6 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 64,876 | $ | 59,540 | $ | 82,164 | $ | 204,142 | $ | 126,359 | $ | 89,353 | ||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 1.96% | 5 | 1.95% | 1.92% | 1.85% | 1.94% | 1.95% | |||||||||||||||||
Before waivers and reimbursements4 | 2.03% | 2.14% | 1.92% | 1.85% | 1.94% | 1.97% | ||||||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | (0.99)% | (0.88)% | (1.24)% | (0.97)% | (1.15)% | (1.52)% | ||||||||||||||||||
Before waivers and reimbursements4 | (1.06)% | (1.07)% | (1.24)% | (0.97)% | (1.15)% | (1.54)% | ||||||||||||||||||
Portfolio turnover rate3 | 36% | 41% | 89% | 78% | 58% | 80% | ||||||||||||||||||
| 1 | Fund inception date was November 7, 2008. |
| 2 | Represents amounts less than $.005 per share. |
| 3 | Not annualized for periods less than one year. |
| 4 | Annualized. |
| 5 | Includes extraordinary expenses of 0.01%. |
| 6 | 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.
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| WASATCH FUNDS — Financial Highlights (continued) | ||
| HERITAGE GROWTH FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 9.28 | $ | 9.00 | $ | 12.57 | $ | 11.40 | $ | 11.43 | $ | 9.86 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.04 | 0.06 | 0.06 | (0.01 | ) | — | 1 | 0.02 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.03 | 0.26 | (2.57 | ) | 1.53 | 0.28 | 1.55 | |||||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | — | 1 | |||||||||||||||||
Total from investment operations | 1.07 | 0.32 | (2.51 | ) | 1.52 | 0.28 | 1.57 | |||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.02 | ) | — | — | 1 | (0.01 | ) | — | ||||||||||||||
Distributions from net realized gains | — | (0.02 | ) | (1.06 | ) | (0.35 | ) | (0.30 | ) | — | 1 | |||||||||||||
Total distributions | (0.06 | ) | (0.04 | ) | (1.06 | ) | (0.35 | ) | (0.31 | ) | — | |||||||||||||
Net asset value, end of period | $ | 10.29 | $ | 9.28 | $ | 9.00 | $ | 12.57 | $ | 11.40 | $ | 11.43 | ||||||||||||
Total return2 | 11.61% | 3.74% | (21.54)% | 13.59% | 2.46% | 15.95% | 3 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 80,985 | $ | 77,194 | $ | 95,414 | $ | 208,918 | $ | 244,380 | $ | 304,670 | ||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 0.96% | 5 | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | |||||||||||||||||
Before waivers and reimbursements4 | 1.13% | 1.21% | 1.01% | 0.95% | 0.95% | 0.99% | ||||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 0.91% | 0.74% | 0.44% | (0.06)% | 0.01% | 0.17% | ||||||||||||||||||
Before waivers and reimbursements4 | 0.74% | 0.48% | 0.38% | (0.06)% | 0.01% | 0.13% | ||||||||||||||||||
Portfolio turnover rate2 | 22% | 33% | 48% | 56% | 54% | 36% | ||||||||||||||||||
| HERITAGE VALUE FUND | Six Months Ended March 31 (Unaudited) | Year or Period Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 20076 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 7.96 | $ | 8.18 | $ | 10.23 | $ | 10.00 | ||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.03 | 0.08 | 0.08 | 0.01 | ||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.97 | (0.20 | ) | (1.99 | ) | 0.22 | ||||||||||||||||||
Total from investment operations | 1.00 | (0.12 | ) | (1.91 | ) | 0.23 | ||||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.08 | ) | (0.10 | ) | (0.10 | ) | — | |||||||||||||||||
Distributions from net realized gains | — | — | (0.04 | ) | — | |||||||||||||||||||
Total distributions | (0.08 | ) | (0.10 | ) | (0.14 | ) | — | |||||||||||||||||
Net asset value, end of period | $ | 8.88 | $ | 7.96 | $ | 8.18 | $ | 10.23 | ||||||||||||||||
Total return2 | 12.65% | (1.13)% | (19.42)% | 2.40% | ||||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,653 | $ | 3,557 | $ | 3,792 | $ | 2,432 | ||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 0.96% | 5 | 0.95% | 0.95% | 0.95% | |||||||||||||||||||
Before waivers and reimbursements4 | 3.22% | 4.09% | 3.89% | 24.78% | ||||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 0.82% | 1.19% | 1.31% | 1.49% | ||||||||||||||||||||
Before waivers and reimbursements4 | (1.44)% | (1.95)% | (1.63)% | (22.34)% | ||||||||||||||||||||
Portfolio turnover rate2 | 56% | 246% | 246% | 0% | ||||||||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | Not annualized for periods less than one year. |
| 3 | 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. |
| 4 | Annualized. |
| 5 | Includes extraordinary expenses of 0.01%. |
| 6 | Fund inception date was August 30, 2007. |
See Notes to Financial Statements.
112
Table of Contents
| MARCH 31, 2010 | ||
| INTERNATIONAL GROWTH FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 13.91 | $ | 11.83 | $ | 24.42 | $ | 21.83 | $ | 18.50 | $ | 14.71 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (0.04 | ) | (0.13 | ) | (0.28 | ) | 0.03 | (0.09 | ) | (0.10 | ) | |||||||||||||
Net realized and unrealized gains (losses) on investments | 1.82 | 2.24 | (9.19 | ) | 6.61 | 3.42 | 3.91 | |||||||||||||||||
Net increase (decrease) from payment by affiliate | — | — | — | — | — | 0.01 | ||||||||||||||||||
Total from investment operations | 1.78 | 2.11 | (9.47 | ) | 6.64 | 3.33 | 3.82 | |||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 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 | $ | 15.69 | $ | 13.91 | $ | 11.83 | $ | 24.42 | $ | 21.83 | $ | 18.50 | ||||||||||||
Total return2 | 12.80% | 18.03% | (44.01)% | 34.02% | 18.00% | 3 | 26.02% | 4 | ||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 189,209 | $ | 173,226 | $ | 194,780 | $ | 534,903 | $ | 383,135 | $ | 338,792 | ||||||||||||
Ratio of expenses to average net assets5 | 1.87% | 1.94% | 1.83% | 1.76% | 1.78% | 1.84% | ||||||||||||||||||
Ratio of net investment income (loss) to average net assets5 | (0.50)% | 0.03% | (0.15)% | 0.11% | (0.42)% | (0.64)% | ||||||||||||||||||
Portfolio turnover rate2 | 28% | 56% | 44% | 60% | 64% | 32% | ||||||||||||||||||
| INTERNATIONAL OPPORTUNITIES FUND | Six Months Ended March 31 (Unaudited) | Year or Period Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 20056 | ||||||||||||||||||
Net asset value, beginning of period | $ | 1.97 | $ | 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 | 0.33 | 0.36 | (1.45 | ) | 1.13 | 0.53 | 0.19 | |||||||||||||||||
Total from investment operations | 0.33 | 0.37 | (1.38 | ) | 1.12 | 0.52 | 0.19 | |||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | — | 1 | (0.14 | ) | — | 1 | — | — | ||||||||||||||
Distributions from net realized gains | — | — | (0.53 | ) | (0.18 | ) | — | — | ||||||||||||||||
Total distributions | (0.02 | ) | — | (0.67 | ) | (0.18 | ) | — | — | |||||||||||||||
Net asset value, end of period | $ | 2.28 | $ | 1.97 | $ | 1.60 | $ | 3.65 | $ | 2.71 | $ | 2.19 | �� | |||||||||||
Total return2 | 16.84% | 23.60% | (45.33)% | 42.73% | 23.74% | 9.50% | ||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 133,074 | $ | 93,856 | $ | 55,691 | $ | 56,433 | $ | 36,839 | $ | 29,440 | ||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements5 | 2.27% | 7 | 2.26% | 8 | 2.25% | 2.25% | 2.25% | 2.25% | ||||||||||||||||
Before waivers and reimbursements5 | 2.67% | 2.79% | 8 | 2.59% | 2.51% | 2.62% | 3.09% | |||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements5 | (0.94)% | (0.28)% | (0.09)% | (0.18)% | (0.29)% | (0.21)% | ||||||||||||||||||
Before waivers and reimbursements5 | (1.34)% | (0.81)% | (0.43)% | (0.44)% | (0.66)% | (1.05)% | ||||||||||||||||||
Portfolio turnover rate2 | 28% | 69% | 63% | 54% | 43% | 12% | ||||||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | Not annualized for periods less than one year. |
| 3 | 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. |
| 4 | 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 Funds’ cross-trading policies that had no impact on the total return. |
| 5 | Annualized. |
| 6 | Fund inception date was January 27, 2005. |
| 7 | Includes extraordinary expense of 0.02%. |
| 8 | Includes interest expense of 0.01%. |
See Notes to Financial Statements.
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Table of Contents
| WASATCH FUNDS — Financial Highlights (continued) | ||
| MICRO CAP FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 3.89 | $ | 4.14 | $ | 7.19 | $ | 6.79 | $ | 7.58 | $ | 7.05 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss | (0.02 | ) | (0.03 | ) | (0.07 | ) | (0.09 | ) | (0.10 | ) | (0.11 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | 0.53 | (0.21 | ) | (1.81 | ) | 1.29 | 0.65 | 1.70 | ||||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | — | 1 | |||||||||||||||||
Total from investment operations | 0.51 | (0.24 | ) | (1.88 | ) | 1.20 | 0.55 | 1.59 | ||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 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 | $ | 4.40 | $ | 3.89 | $ | 4.14 | $ | 7.19 | $ | 6.79 | $ | 7.58 | ||||||||||||
Total return2 | 13.11% | (5.70)% | (30.46)% | 18.72% | 8.51% | 26.42% | 3 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 296,980 | $ | 272,537 | $ | 359,394 | $ | 631,417 | $ | 583,901 | $ | 579,244 | ||||||||||||
Ratio of expenses to average net assets4 | 2.19% | 2.24% | 2.16% | 2.14% | 2.14% | 2.18% | ||||||||||||||||||
Ratio of net investment loss to average net assets4 | (0.82)% | (0.96)% | (1.26)% | (1.25)% | (1.39)% | (1.58)% | ||||||||||||||||||
Portfolio turnover rate2 | 18% | 46% | 54% | 48% | 46% | 50% | ||||||||||||||||||
| MICRO CAP VALUE FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 2.11 | $ | 1.80 | $ | 2.98 | $ | 2.93 | $ | 2.72 | $ | 2.57 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss | (0.01 | ) | (0.02 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | (0.04 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | 0.26 | 0.33 | (0.75 | ) | 0.64 | 0.50 | 0.49 | |||||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | — | 1 | |||||||||||||||||
Total from investment operations | 0.25 | 0.31 | (0.77 | ) | 0.61 | 0.47 | 0.45 | |||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.01 | ) | — | — | — | — | — | |||||||||||||||||
Distributions from net realized gains | — | — | (0.41 | ) | (0.56 | ) | (0.26 | ) | (0.30 | ) | ||||||||||||||
Total distributions | (0.01 | ) | — | (0.41 | ) | (0.56 | ) | (0.26 | ) | (0.30 | ) | |||||||||||||
Net asset value, end of period | $ | 2.35 | $ | 2.11 | $ | 1.80 | $ | 2.98 | $ | 2.93 | $ | 2.72 | ||||||||||||
Total return2 | 12.31% | 17.22% | (29.67)% | 22.84% | 18.89% | 19.87% | 5 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 182,900 | $ | 115,216 | $ | 97,912 | $ | 120,039 | $ | 95,508 | $ | 86,903 | ||||||||||||
Ratio of expenses to average net assets (including dividend payments for securities sold short): | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 2.26% | 6 | 2.26% | 2.25% | 2.25% | 2.25% | 2.25% | |||||||||||||||||
Before waivers and reimbursements4 | 2.30% | 2.46% | 2.35% | 2.30% | 2.33% | 2.36% | �� | |||||||||||||||||
Ratio of expenses to average net assets (excluding dividend payments for securities sold short): | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 2.26% | 6 | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% | |||||||||||||||||
Before waivers and reimbursements4 | 2.30% | 2.45% | 2.35% | 2.30% | 2.33% | 2.36% | ||||||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | (1.57)% | (1.36)% | (1.21)% | (1.06)% | (0.99)% | (1.41)% | ||||||||||||||||||
Before waivers and reimbursements4 | (1.61)% | (1.56)% | (1.31)% | (1.11)% | (1.07)% | (1.52)% | ||||||||||||||||||
Portfolio turnover rate2 | 46% | 145% | 144% | 105% | 95% | 85% | ||||||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | Not annualized for periods less than one year. |
| 3 | 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. |
| 4 | Annualized. |
| 5 | 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. |
| 6 | Includes extraordinary expenses of 0.01%. |
See Notes to Financial Statements.
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Table of Contents
| MARCH 31, 2010 | ||
SMALL CAP GROWTH FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 28.59 | $ | 26.50 | $ | 40.10 | $ | 36.99 | $ | 41.23 | $ | 34.94 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss | (0.12 | ) | (0.12 | ) | (0.16 | ) | (0.25 | ) | (0.26 | ) | (0.25 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | 3.78 | 2.27 | (8.85 | ) | 6.28 | 0.84 | 7.32 | |||||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | — | 1 | |||||||||||||||||
Total from investment operations | 3.66 | 2.15 | (9.01 | ) | 6.03 | 0.58 | 7.07 | |||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 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 | $ | 32.25 | $ | 28.59 | $ | 26.50 | $ | 40.10 | $ | 36.99 | $ | 41.23 | ||||||||||||
Total return2 | 12.80% | 8.20% | (25.42)% | 16.94% | 1.40% | 20.73% | 3 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,006,894 | $ | 809,318 | $ | 735,546 | $ | 1,075,433 | $ | 1,234,978 | $ | 1,357,862 | ||||||||||||
Ratio of expenses to average net assets4 | 1.29% | 1.29% | 1.21% | 1.19% | 1.18% | 5 | 1.18% | |||||||||||||||||
Ratio of net investment loss to average net assets:4 | (0.87)% | (0.60)% | (0.47)% | (0.52)% | (0.64)% | (0.62)% | ||||||||||||||||||
Portfolio turnover rate2 | 6% | 52% | 51% | 43% | 41% | 36% | ||||||||||||||||||
| SMALL CAP VALUE FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 2.75 | $ | 2.82 | $ | 5.22 | $ | 5.29 | $ | 5.67 | $ | 5.54 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | — | 1 | (0.01 | ) | 0.01 | 0.01 | 0.05 | 0.05 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.32 | (0.06 | ) | (1.11 | ) | 0.67 | 0.36 | 0.86 | ||||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | — | 1 | |||||||||||||||||
Total from investment operations | 0.32 | (0.07 | ) | (1.10 | ) | 0.68 | 0.41 | 0.91 | ||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 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 | $ | 3.07 | $ | 2.75 | $ | 2.82 | $ | 5.22 | $ | 5.29 | $ | 5.67 | ||||||||||||
Total return2 | 11.64% | (2.48)% | (26.26)% | 13.32% | 7.88% | 19.47% | 6 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 226,557 | $ | 218,358 | $ | 336,914 | $ | 660,637 | $ | 664,625 | $ | 734,842 | ||||||||||||
Ratio of expenses to average net assets4 | 1.90% | 1.92% | 1.76% | 1.69% | 1.68% | 1.72% | ||||||||||||||||||
Ratio of net investment income (loss) to average net assets4 | 0.02% | (0.33)% | 0.15% | 0.18% | 0.81% | 0.94% | ||||||||||||||||||
Portfolio turnover rate2 | 38% | 89% | 78% | 84% | 40% | 43% | ||||||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | Not annualized for periods less than one year. |
| 3 | 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%. |
| 4 | Annualized. |
| 5 | 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%. |
| 6 | 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.
115
Table of Contents
| WASATCH FUNDS — Financial Highlights (continued) | ||
| STRATEGIC INCOME FUND | Six Months Ended March 31 (Unaudited) | Year or Period Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 20061 | |||||||||||||||||||
Net asset value, beginning of period | $ | 6.77 | $ | 7.62 | $ | 11.00 | $ | 10.48 | $ | 10.00 | ||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.15 | 0.29 | 0.55 | 0.48 | 0.31 | |||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.57 | (0.85 | ) | (2.29 | ) | 0.54 | 0.44 | |||||||||||||||||
Total from investment operations | 0.72 | (0.56 | ) | (1.74 | ) | 1.02 | 0.75 | |||||||||||||||||
Redemption fees (see Note 2) | — | 2 | — | 2 | — | 2 | 0.01 | — | 2 | |||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.14 | ) | (0.29 | ) | (0.50 | ) | (0.47 | ) | (0.27 | ) | ||||||||||||||
Distributions from net realized gains | — | — | (1.14 | ) | (0.04 | ) | — | |||||||||||||||||
Total distributions | (0.14 | ) | (0.29 | ) | (1.64 | ) | (0.51 | ) | (0.27 | ) | ||||||||||||||
Net asset value, end of period | $ | 7.35 | $ | 6.77 | $ | 7.62 | $ | 11.00 | $ | 10.48 | ||||||||||||||
Total return3 | 10.76% | (6.49)% | (18.17)% | 9.77% | 7.58% | |||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 18,694 | $ | 17,710 | $ | 21,889 | $ | 23,621 | $ | 12,732 | ||||||||||||||
Ratio of expenses to average net assets (including interest expense and dividend payments for securities sold short): | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 1.02% | 5 | 1.05% | 0.97% | 1.05% | 0.95% | ||||||||||||||||||
Before waivers and reimbursements4 | 1.49% | 1.71% | 1.46% | 1.57% | 2.66% | |||||||||||||||||||
Ratio of expenses to average net assets (excluding interest expense and dividend payments for securities sold short): | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 0.96% | 5 | 0.95% | 0.95% | 0.95% | 0.95% | ||||||||||||||||||
Before waivers and reimbursements4 | 1.43% | 1.61% | 1.44% | 1.47% | 2.66% | |||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 4.35% | 4.93% | 5.96% | 4.14% | 5.40% | |||||||||||||||||||
Before waivers and reimbursements4 | 3.88% | 4.27% | 5.47% | 3.62% | 3.69% | |||||||||||||||||||
Portfolio turnover rate3 | 43% | 84% | 81% | 86% | 14% | |||||||||||||||||||
| ULTRA GROWTH FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 15.66 | $ | 15.76 | $ | 27.78 | $ | 24.09 | $ | 27.98 | $ | 24.07 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss | (0.12 | ) | (0.14 | ) | (0.22 | ) | (0.33 | ) | (0.34 | ) | (0.38 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | 2.39 | 0.04 | (8.28 | ) | 5.80 | 0.23 | 5.26 | |||||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | 2 | — | 2 | ||||||||||||||||
Total from investment operations | 2.27 | (0.10 | ) | (8.50 | ) | 5.47 | (0.11 | ) | 4.88 | |||||||||||||||
Redemption fees (see Note 2) | — | 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 | $ | 17.93 | $ | 15.66 | $ | 15.76 | $ | 27.78 | $ | 24.09 | $ | 27.98 | ||||||||||||
Total return3 | 14.50% | (0.63)% | (35.09)% | 23.80% | (0.48)% | 21.00% | 6 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 122,764 | $ | 121,284 | $ | 144,004 | $ | 268,633 | $ | 306,406 | $ | 389,894 | ||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | 1.70% | 1.75% | 1.53% | 1.49% | 1.48% | 1.50% | ||||||||||||||||||
Before waivers and reimbursements4 | 1.70% | 1.77% | 1.53% | 1.49% | 1.48% | 1.50% | ||||||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements4 | (1.31)% | (1.12)% | (0.93)% | (1.12)% | (1.19)% | (1.30)% | ||||||||||||||||||
Before waivers and reimbursements4 | (1.31)% | (1.14)% | (0.93)% | (1.12)% | (1.19)% | (1.30)% | ||||||||||||||||||
Portfolio turnover rate3 | 13% | 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. |
| 4Annualized. |
| 5 | Includes extraordinary expenses of 0.01%. |
| 6 | 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.
116
Table of Contents
| MARCH 31, 2010 | ||
| WASATCH-1ST SOURCE INCOME EQUITY FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | Period Ended September 30 | Year Ended March 31 | ||||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 20081 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 11.97 | $ | 12.93 | $ | 14.44 | $ | 14.80 | $ | 14.14 | $ | 13.61 | $ | 12.16 | ||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | 0.08 | 0.20 | 0.14 | 2 | 0.21 | 0.22 | 0.17 | 0.14 | ||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.22 | (0.96 | ) | (1.52 | ) | 0.31 | 1.66 | 2.10 | 1.91 | |||||||||||||||||||
Total from investment operations | 1.30 | (0.76 | ) | (1.38 | ) | 0.52 | 1.88 | 2.27 | 2.05 | |||||||||||||||||||
Redemption fees (see Note 2) | — | 3 | — | 3 | — | — | — | — | — | |||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.08 | ) | (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 | (0.08 | ) | (0.20 | ) | (0.13 | ) | (0.88 | ) | (1.22 | ) | (1.74 | ) | (0.60 | ) | ||||||||||||||
Net asset value, end of period | $ | 13.19 | $ | 11.97 | $ | 12.93 | $ | 14.44 | $ | 14.80 | $ | 14.14 | $ | 13.61 | ||||||||||||||
Total return4 | 10.87% | (5.63)% | (9.65)% | 3.22% | 13.69% | 17.72% | 17.17% | |||||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,655,219 | $ | 1,385,508 | $ | 780,384 | $ | 447,674 | $ | 167,133 | $ | 129,508 | $ | 103,127 | ||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||
Net of waivers and reimbursements5 | 1.11% | 6 | 1.10% | 1.04% | 1.13% | 1.15% | 1.19% | 1.19% | ||||||||||||||||||||
Before waivers and reimbursements5 | 1.13% | 1.22% | 1.29% | 1.38% | 1.40% | 1.45% | 1.44% | |||||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||||||
Net of waivers and reimbursements5 | 1.21% | 1.93% | 1.99% | 1.43% | 1.52% | 1.25% | 1.10% | |||||||||||||||||||||
Before waivers and reimbursements5 | 1.19% | 1.81% | 1.74% | 1.18% | 1.27% | 0.99% | 0.85% | |||||||||||||||||||||
Portfolio turnover rate4 | 9% | 16% | 5% | 36% | 26% | 37% | 44% | |||||||||||||||||||||
| WASATCH-1ST SOURCE LONG/SHORT FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | Period Ended September 30 | Year Ended March 31 | ||||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2010 | 2009 | 20081 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 11.13 | $ | 10.81 | $ | 11.27 | $ | 11.59 | $ | 11.21 | $ | 10.69 | $ | 10.59 | ||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | — | 3 | 0.02 | 0.05 | 2 | 0.27 | 0.26 | 0.21 | 0.08 | |||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.77 | 0.50 | (0.46 | ) | 0.02 | 0.90 | 0.71 | 0.35 | ||||||||||||||||||||
Total from investment operations | 0.77 | 0.52 | (0.41 | ) | 0.29 | 1.16 | 0.92 | 0.43 | ||||||||||||||||||||
Redemption fees (see Note 2) | — | 3 | — | 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 | $ | 11.90 | $ | 11.13 | $ | 10.81 | $ | 11.27 | $ | 11.59 | $ | 11.21 | $ | 10.69 | ||||||||||||||
Total return4 | 6.92% | 5.35% | (3.66)% | 2.34% | 10.44% | 8.80% | 4.07% | |||||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 255,971 | $ | 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 reimbursements5 | 1.73% | 1.91% | 1.77% | 1.75% | 1.84% | 1.72% | 1.71% | |||||||||||||||||||||
Before waivers and reimbursements5 | 1.73% | 1.96% | 2.02% | 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 reimbursements5 | 1.33% | 1.47% | 1.46% | 1.57% | 1.56% | 1.63% | 1.64% | |||||||||||||||||||||
Before waivers and reimbursements5 | 1.33% | 1.52% | 1.71% | 1.82% | 1.81% | 1.89% | 1.90% | |||||||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||||||
Net of waivers and reimbursements5 | 0.01% | 0.24% | 0.95% | 2.25% | 2.40% | 1.98% | 0.76% | |||||||||||||||||||||
Before waivers and reimbursements5 | 0.01% | 0.19% | 0.70% | 2.00% | 2.15% | 1.72% | 0.50% | |||||||||||||||||||||
Portfolio turnover rate4 | 31% | 167% | 71% | 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. |
| 6 | Includes extraordinary expenses of 0.01%. |
See Notes to Financial Statements.
117
Table of Contents
| WASATCH FUNDS — Financial Highlights (continued) | MARCH 31, 2010 | |
| U.S. TREASURY FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | ||||||||||||||||||||||||||
(for a share outstanding throughout each period) | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.29 | $ | 14.95 | $ | 13.84 | $ | 14.12 | $ | 14.68 | $ | 13.77 | ||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | 0.28 | 0.55 | 0.58 | 0.64 | 0.39 | 0.45 | ||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (1.79 | ) | 1.29 | 1.10 | (0.29 | ) | (0.24 | ) | 1.05 | |||||||||||||||||||
Total from investment operations | (1.51 | ) | 1.84 | 1.68 | 0.35 | 0.15 | 1.50 | |||||||||||||||||||||
Redemption fees (see Note 2) | 0.01 | 0.05 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.28 | ) | (0.55 | ) | (0.58 | ) | (0.64 | ) | (0.72 | ) | (0.60 | ) | ||||||||||||||||
Distributions from net realized gains | (0.48 | ) | — | — | — | — | — | |||||||||||||||||||||
Total distributions | (0.76 | ) | (0.55 | ) | (0.58 | ) | (0.64 | ) | (0.72 | ) | (0.60 | ) | ||||||||||||||||
Net asset value, end of period | $ | 14.03 | $ | 16.29 | $ | 14.95 | $ | 13.84 | $ | 14.12 | $ | 14.68 | ||||||||||||||||
Total return1 | (9.32)% | 12.49% | 12.33% | 2.68% | 1.21% | 11.41% | ||||||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 132,570 | $ | 154,099 | $ | 121,240 | $ | 115,788 | $ | 204,994 | $ | 82,599 | ||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||
Net of waivers and reimbursements2 | 0.76% | 3 | 0.75% | 0.74% | 0.71% | 0.72% | 0.75% | |||||||||||||||||||||
Before waivers and reimbursements2 | 0.81% | 0.79% | 0.74% | 0.71% | 0.72% | 0.86% | ||||||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||||||
Net of waivers and reimbursements2 | 3.78% | 3.34% | 3.85% | 4.23% | 4.21% | 4.01% | ||||||||||||||||||||||
Before waivers and reimbursements2 | 3.73% | 3.30% | 3.85% | 4.23% | 4.21% | 3.90% | ||||||||||||||||||||||
Portfolio turnover rate1 | 5% | 62% | 31% | 19% | 2% | 19% | ||||||||||||||||||||||
| WASATCH-1ST SOURCE INCOME FUND | Six Months Ended March 31 (Unaudited) | Year Ended September 30 | Period Ended September 30 | Year Ended March 31 | ||||||||||||||||||||||||
(for a share outstanding throughout each period) | 2010 | 2009 | 20084 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 10.04 | $ | 9.59 | $ | 9.95 | $ | 9.73 | $ | 9.63 | $ | 9.88 | $ | 10.34 | ||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.15 | 0.33 | 0.18 | 5 | 0.40 | 0.38 | 0.33 | 0.29 | ||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.03 | 0.46 | (0.35 | ) | 0.24 | 0.13 | (0.18 | ) | (0.37 | ) | ||||||||||||||||||
Total from investment operations | 0.18 | 0.79 | (0.17 | ) | 0.64 | 0.51 | 0.15 | (0.08 | ) | |||||||||||||||||||
Redemption fees (see Note 2) | — | 6 | — | 6 | — | — | — | — | — | |||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.15 | ) | (0.34 | ) | (0.19 | ) | (0.42 | ) | (0.41 | ) | (0.40 | ) | (0.38 | ) | ||||||||||||||
Total distributions | (0.15 | ) | (0.34 | ) | (0.19 | ) | (0.42 | ) | (0.41 | ) | (0.40 | ) | (0.38 | ) | ||||||||||||||
Net asset value, end of period | $ | 10.07 | $ | 10.04 | $ | 9.59 | $ | 9.95 | $ | 9.73 | $ | 9.63 | $ | 9.88 | ||||||||||||||
Total return1 | 1.82% | 8.42% | (1.69)% | 6.74% | 5.43% | 1.52% | (0.76)% | |||||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 126,701 | $ | 114,496 | $ | 89,081 | $ | 86,981 | $ | 78,921 | $ | 72,874 | $ | 75,445 | ||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||
Net of waivers and reimbursements2 | 0.75% | 0.84% | 0.87% | 0.95% | 0.92% | 0.95% | 0.93% | |||||||||||||||||||||
Before waivers and reimbursements2 | 0.75% | 0.88% | 1.12% | 1.20% | 1.17% | 1.21% | 1.19% | |||||||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||||||
Net of waivers and reimbursements2 | 3.04% | 3.44% | 3.66% | 4.05% | 3.95% | 3.36% | 2.84% | |||||||||||||||||||||
Before waivers and reimbursements2 | 3.04% | 3.40% | 3.41% | 3.80% | 3.70% | 3.10% | 2.58% | |||||||||||||||||||||
Portfolio turnover rate1 | 22% | 28% | 15% | 56% | 59% | 70% | 79% | |||||||||||||||||||||
| 1 | Not annualized for periods less than one year. |
| 2 | Annualized. |
| 3 | Includes extraordinary expenses of 0.01%. |
| 4 | Effective September 19, 2008, the Fund changed its fiscal year end to September 30. |
| 5 | Average shares method used in calculation. |
| 6 | Represents amounts less than $.005 per share. |
See Notes to Financial Statements.
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1. ORGANIZATION
Wasatch Funds Trust is a Massachusetts Business Trust (formerly Wasatch Funds, Inc., 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, 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, 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, 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 March 31, 2010.
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 Joint Pricing Committee of the Advisor and the Funds (“Pricing Committee”) with oversight by the Board of Trustees. 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 current 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,
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comparable companies in the public market, the nature and duration of the restrictions for holding the securities, and other relevant factors.
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 Depositary 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 March 31, 2010, 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 | 1.67 | % | |
Emerging Markets Small Cap Fund | <0.01 | % | |
Global Opportunities Fund | 0.03 | % | |
Global Science & Technology Fund | 1.93 | % | |
Heritage Growth Fund | — | ||
Heritage Value Fund | — | ||
International Growth Fund | 1.46 | % | |
International Opportunities Fund | 0.18 | % | |
Micro Cap Fund | 0.27 | % | |
Micro Cap Value Fund | 0.80 | % | |
Small Cap Growth Fund | 0.83 | % | |
Small Cap Value Fund | 1.93 | % | |
Strategic Income Fund | 3.18 | % | |
Ultra Growth Fund | 4.76 | % | |
Wasatch-1st Source Income Equity Fund | — | ||
Wasatch-1st Source Long/Short Fund | — | ||
U.S. Treasury Fund | — | ||
Wasatch-1st Source Income Fund | 1.03 | % |
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 in the Statement of Operations. Transactions in foreign denominated assets may involve greater risks than domestic transactions.
At March 31, 2010, 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 | $ | 30 | ||||
Emerging Markets Small Cap Fund | ||||||||
Brazilian Real | $ | 10,952 | $ | 11,083 | ||||
Egyptian Pound | 17 | 18 | ||||||
Kenyan Shilling | (1 | ) | (1 | ) | ||||
Moroccan Dirham | 35 | 35 | ||||||
New Taiwan Dollar | 311,318 | 311,744 | ||||||
South African Rand | 15,377 | 15,737 | ||||||
South Korean Won | 1 | 1 | ||||||
| $ | 337,699 | $ | 338,617 | |||||
Global Opportunities Fund | ||||||||
Brazilian Real | $ | 17,543 | $ | 17,545 | ||||
British Pound | 29,319 | 29,327 | ||||||
Japanese Yen | 14,957 | 14,839 | ||||||
New Taiwan Dollar | 2,186 | 2,185 | ||||||
South Korean Won | 2 | 2 | ||||||
Swiss Franc | 4,753 | 4,822 | ||||||
| $ | 68,760 | $ | 68,720 | |||||
Global Science & Technology Fund | ||||||||
Brazilian Real | $ | 32,003 | $ | 32,312 | ||||
Heritage Growth Fund | ||||||||
Hong Kong Dollar | $ | 4 | $ | 4 | ||||
Heritage Value Fund | ||||||||
Brazilian Real | $ | 2,904 | $ | 2,904 | ||||
International Growth Fund | ||||||||
Brazilian Real | $ | 7,675 | $ | 7,744 | ||||
British Pound | 9,796 | 9,798 | ||||||
New Taiwan Dollar | 16,718 | 17,819 | ||||||
South African Rand | 5,528 | 5,658 | ||||||
South Korean Won | 18 | 18 | ||||||
| $ | 39,735 | $ | 41,037 | |||||
International Opportunities Fund | ||||||||
Brazilian Real | $ | 117,887 | $ | 119,809 | ||||
British Pound | 44,070 | 44,255 | ||||||
Hong Kong Dollar | 6,947 | 6,947 | ||||||
Japanese Yen | 1,852 | 1,842 | ||||||
New Taiwan Dollar | 3,746 | 3,778 | ||||||
South African Rand | 4,083 | 4,178 | ||||||
South Korean Won | 1,036 | 1,040 | ||||||
| $ | 179,621 | $ | 181,849 | |||||
Micro Cap Fund | ||||||||
South Korean Won | $ | 11 | $ | 11 | ||||
Strategic Income Fund | ||||||||
Brazilian Real | $ | 5,067 | $ | 5,067 | ||||
Hong Kong Dollar | 2 | 2 | ||||||
| $ | 5,069 | $ | 5,069 | |||||
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
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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 a credit risk if a counterparty is unable or unwilling 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 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 Wasatch-1st Source 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 Generally Accepted Accounting Principles (“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
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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 Wasatch-1st Source Income Fund declares and pays dividends monthly. The Strategic Income,
Wasatch-1st Source Income Equity, Wasatch-1st Source Long/Short, and U.S. Treasury 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 gains (losses) on investments and foreign currency translations.
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 period ended March 31, 2010 are summarized below:
| Core Growth Fund | Emerging Markets Small Cap Fund | Global Opportunities Fund | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | International Growth Fund | |||||||||||||||
Purchases | $ | 7,758,927 | $ | 52,739,786 | $ | 58,445,394 | $ | 20,322,191 | $ | 16,066,736 | $ | 1,831,166 | $ | 49,564,577 | |||||||
Sales | 60,032,599 | 14,525,583 | 17,745,148 | 22,306,812 | 19,507,507 | 2,324,719 | 53,421,138 | ||||||||||||||
| 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 | $ | 50,924,939 | $ | 48,997,836 | $ | 99,402,202 | $ | 137,000,436 | $ | 78,660,259 | $ | 8,061,546 | $ | 15,086,186 | |||||||
Sales | 28,674,022 | 54,598,536 | 56,131,837 | 49,616,272 | 96,367,787 | 6,928,288 | 27,544,239 | ||||||||||||||
| Wasatch-1st Source Income Equity Fund | Wasatch-1st Source Long/Short Fund | Wasatch-1st Source Income Fund | |||||||||||||||||||
Purchases | $ | 265,013,244 | $ | 120,442,529 | $ | 10,480,687 | |||||||||||||||
Sales | 131,337,807 | 47,523,440 | 11,701,019 | ||||||||||||||||||
Purchases and sales of U.S. government securities in the U.S. Treasury Fund were $7,027,050 and $13,695,367, respectively. Purchases and sales of U.S. government securities in the Wasatch-1st Source Income Fund were $23,916,762 and $13,807,834, respectively.
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5. OPTIONS CONTRACTS WRITTEN
Options written activity during the period ended March 31, 2010 was as follows:
| Options Outstanding at Beginning of Period | Written | Closed | Exercised | Expired | Options Outstanding at End of Period | ||||||||||||||||
Heritage Growth Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 6,265 | $ | (6,265 | ) | $ | — | $ | — | $ | — | ||||||||
Number of contracts | — | 35 | (35 | ) | — | — | — | ||||||||||||||
Heritage Value Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 96,487 | $ | (14,907 | ) | $ | (61,835 | ) | $ | (17,745 | ) | $ | 2,000 | ||||||
Number of contracts | — | 691 | (109 | ) | (412 | ) | (138 | ) | 32 | ||||||||||||
Micro Cap Value Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 569,363 | $ | — | $ | (422,166 | ) | $ | (147,197 | ) | $ | — | |||||||
Number of contracts | — | 3,790 | — | (2,970 | ) | (820 | ) | — | |||||||||||||
Strategic Income Fund | |||||||||||||||||||||
Premium amount | $ | 20,877 | $ | 792 | $ | (11,373 | ) | $ | (6,413 | ) | $ | (3,883 | ) | $ | — | ||||||
Number of contracts | 273 | 33 | (158 | ) | (63 | ) | (85 | ) | — | ||||||||||||
Wasatch-1st Source Long/Short Fund | |||||||||||||||||||||
Premium amount | $ | 1,604,392 | $ | 2,745,761 | $ | (1,133,595 | ) | $ | (979,609 | ) | $ | (225,244 | ) | $ | 2,011,705 | ||||||
Number of contracts | 5,262 | 13,960 | (3,150 | ) | (4,222 | ) | (1,300 | ) | 10,550 | ||||||||||||
6. FEDERAL INCOME TAX INFORMATION
As of March 31, 2010, 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 Fund | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | |||||||||||||||||||
Cost | $ | 336,838,762 | $ | 90,305,170 | $ | 129,683,728 | $ | 53,384,629 | $ | 66,629,080 | $ | 3,378,048 | ||||||||||||
Gross appreciation | $ | 97,583,695 | $ | 21,933,610 | $ | 41,838,812 | $ | 12,289,785 | $ | 15,599,852 | $ | 433,858 | ||||||||||||
Gross (depreciation) | (28,632,678 | ) | (1,773,151 | ) | (1,040,889 | ) | (2,151,826 | ) | (1,210,832 | ) | (13,009 | ) | ||||||||||||
Net appreciation (depreciation) | $ | 68,951,017 | $ | 20,160,459 | $ | 40,797,923 | $ | 10,137,959 | $ | 14,389,020 | $ | 420,849 | ||||||||||||
| International Growth Fund | International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | |||||||||||||||||||
Cost | $ | 147,443,029 | $ | 103,828,455 | $ | 266,870,580 | $ | 161,051,898 | $ | 774,240,848 | $ | 212,004,777 | ||||||||||||
Gross appreciation | $ | 49,914,565 | $ | 32,918,947 | $ | 69,678,452 | $ | 28,656,258 | $ | 279,760,261 | $ | 40,625,170 | ||||||||||||
Gross (depreciation) | (8,854,843 | ) | (4,130,203 | ) | (38,515,864 | ) | (3,999,985 | ) | (40,267,807 | ) | (23,784,495 | ) | ||||||||||||
Net appreciation (depreciation) | $ | 41,059,722 | $ | 28,788,744 | $ | 31,162,588 | $ | 24,656,273 | $ | 239,492,454 | $ | 16,840,675 | ||||||||||||
| 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 | $ | 17,077,589 | $ | 89,749,096 | $ | 1,421,181,480 | $ | 233,953,599 | $ | 139,308,188 | $ | 122,932,659 | ||||||||||||
Gross appreciation | $ | 2,277,521 | $ | 39,918,121 | $ | 262,356,767 | $ | 30,549,330 | $ | 1,632,888 | $ | 3,931,438 | ||||||||||||
Gross (depreciation) | (1,393,739 | ) | (6,671,931 | ) | (25,505,383 | ) | (3,317,535 | ) | (8,564,967 | ) | (439,761 | ) | ||||||||||||
Net appreciation | $ | 883,782 | $ | 33,246,190 | $ | 236,851,384 | $ | 27,231,795 | $ | (6,932,079 | ) | $ | 3,491,677 | |||||||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
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 | — | 4,682,530 | — | ||||||||||||||||||
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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| MARCH 31, 2010 | ||
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, post October currency losses and post October passive foreign investment company 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 Fund | Small Cap Growth Fund | Small Cap 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 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 Fund1 | 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. |
The tax character of distributions paid during the year ended March 31, 2008 was as follows:
| 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 | |||||||||
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.
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, 2011. Investment advisory fees and fees waived, if any, for the year or period ended March 31, 2010 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 | % | 2.05 | %1 | 2.25 | % | 1.95 | % | 0.95 | % | 0.95 | % |
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| MARCH 31, 2010 | ||
| 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 | % | �� | ||||||||
| 1The | expense limitation for the Emerging Markets Small Cap Fund decreased from 2.10% to 2.05% when average net assets reached $50 million; and will decrease to 2.00% when average net assets reach $100 million; and to 1.95% when average net assets reach $150 million. |
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 Trustees. 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 Trustees 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 period ended March 31, 2010, the Funds below engaged in purchases and sales of securities pursuant to Rule 17a-7 of the 1940 Act:
| Purchases | Sales | |||
Small Cap Value Fund | — | 36,000 | ||
Strategic Income Fund | 36,000 | — |
Affiliated Interests — An officer of the Funds owns approximately 40% of the shares outstanding of the Strategic Income Fund, as of March 31, 2010. An affiliated person of the Funds owns approximately 12% of the shares outstanding of the Heritage Value Fund as of March 31, 2010.
8. 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 Trustees 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 March 31, 2010, 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 Ltd. | Common Stock | 3/7/07 | $ | 13,200,873 | $ | 6,772,065 | 1.67 | % | |||||
Global Opportunities Fund | |||||||||||||
Cardica, Inc. | PIPE | 9/25/09 | $ | 95,200 | $ | 153,600 | 0.09 | % | |||||
Cardica, Inc. | Warrants | 9/25/09 | 5,000 | 18,800 | 0.01 | % | |||||||
| $ | 100,200 | $ | 172,400 | 0.10 | % | ||||||||
Global Science & Technology Fund | |||||||||||||
BlueArc Corp. | Corporate Bonds | 3/1/10 | $ | 27,324 | $ | 27,323 | 0.04 | % | |||||
BlueArc Corp. | Warrants | 5/30/08 | — | — | — | ||||||||
BlueArc Corp., Series DD | Preferred Stock | 6/6/06 | 324,998 | 287,318 | 0.44 | % | |||||||
BlueArc Corp., Series FF | Preferred Stock | 5/30/08 | 628,067 | 534,091 | 0.83 | % | |||||||
Cardica, Inc. | PIPE | 9/25/09 | 170,170 | 274,560 | 0.43 | % | |||||||
Cardica, Inc. | Warrants | 9/25/09 | 8,937 | 33,605 | 0.05 | % | |||||||
Montagu Newhall Global Partners II-B, L.P. | LP Interest | 10/10/03 - 11/04/09 | 414,387 | 364,475 | 0.56 | % | |||||||
Xtera | Common Stock | 9/3/03 | 7,076 | 2,415 | — | ||||||||
| $ | 1,580,959 | $ | 1,523,787 | 2.35 | % | ||||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
| Security Type | Acquisition Date | Acquisition Cost | Fair Value | Value as % of Net Assets | |||||||||
Micro Cap Fund | |||||||||||||
Alexza Pharmaceuticals, Inc. | PIPE | 9/29/09 | $ | 758,197 | $ | 877,482 | 0.30 | % | |||||
Alexza Pharmaceuticals, Inc. | Warrants | 9/29/09 | 36,766 | 36,766 | 0.01 | % | |||||||
Cardica, Inc. | PIPE | 9/25/09 | 405,790 | 654,720 | 0.22 | % | |||||||
Cardica, Inc. | Warrants | 6/7/07 | 19,380 | — | — | ||||||||
Cardica, Inc. | Warrants | 9/25/09 | 40,312 | 151,575 | 0.05 | % | |||||||
Goldwater Bank, N.A. | Common Stock | 2/28/07 | 1,540,000 | 617,540 | 0.21 | % | |||||||
Ithaca Energy, Inc. | Common Stock | 6/5/06 | 1,965,845 | 2,110,996 | 0.71 | % | |||||||
| $ | 4,766,290 | $ | 4,449,079 | 1.50 | % | ||||||||
Micro Cap Value Fund | |||||||||||||
Cardica, Inc. | PIPE | 9/25/09 | $ | 262,990 | $ | 424,320 | 0.23 | % | |||||
Cardica, Inc. | Warrants | 6/7/07 | 9,302 | — | — | ||||||||
Cardica, Inc. | Warrants | 9/25/09 | 13,813 | 51,935 | 0.03 | % | |||||||
Globe Specialty Metals, Inc. | Common Stock | 12/5/08 - 4/14/09 | 273,475 | 966,816 | 0.53 | % | |||||||
Goldwater Bank, N.A. | Common Stock | 2/28/07 | 419,000 | 168,019 | 0.09 | % | |||||||
Idaho Trust Bancorp | Common Stock | 8/30/06 | 500,004 | 229,446 | 0.13 | % | |||||||
NeurogesX, Inc. | PIPE | 12/28/07 | 525,300 | 799,000 | 0.44 | % | |||||||
NeurogesX, Inc. | Warrants | 12/28/07 | 3,800 | 41,525 | 0.02 | % | |||||||
| $ | 2,007,684 | $ | 2,681,061 | 1.47 | % | ||||||||
Small Cap Growth Fund | |||||||||||||
Alexza Pharmaceuticals, Inc. | PIPE | 9/29/09 | $ | 949,810 | $ | 1,099,242 | 0.11 | % | |||||
Alexza Pharmaceuticals, Inc. | Warrants | 9/29/09 | 46,058 | 46,058 | — | ||||||||
Fluidigm Corp., Series E | Preferred Stock | 12/22/06 - 11/18/09 | 2,617,258 | 2,617,258 | 0.26 | % | |||||||
Fluidigm Corp. | Warrants | 8/18/09 | 11 | 11 | — | ||||||||
Montagu Newhall Global Partners II-B, L.P. | LP Interest | 10/10/03 - 11/04/09 | 4,143,853 | 3,644,746 | 0.36 | % | |||||||
Montagu Newhall Global Partners III-B, L.P. | LP Interest | 3/16/06 - 11/18/09 | 975,000 | 890,217 | 0.09 | % | |||||||
Nanosys, Inc., Series D | Preferred Stock | 11/8/05 | 2,000,000 | 691,525 | 0.07 | % | |||||||
Orexigen Therapeutics, Inc., Series C | PIPE | 11/21/06 | 1,000,001 | 861,112 | 0.09 | % | |||||||
TargetRX, Inc. | Common 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 | 210,610 | 0.02 | % | |||||||
Zonare Medical Systems, Inc. | Common Stock | 6/30/04 | 1,500,000 | 210,629 | 0.02 | % | |||||||
Zonare Medical Systems, Inc. | Warrants | 6/30/04 | — | — | — | ||||||||
| $ | 14,407,626 | $ | 10,275,036 | 1.02 | % | ||||||||
Small Cap Value Fund | |||||||||||||
Globe Specialty Metals, Inc. | Common Stock | 11/8/06 - 12/16/08 | $ | 222,863 | $ | 728,335 | 0.32 | % | |||||
Solar Capital Ltd. | Common Stock | 3/7/07 | 7,079,066 | 3,631,571 | 1.60 | % | |||||||
Star Asia Finance Ltd. | Common Stock | 2/22/07 | 2,000,000 | 18,000 | 0.01 | % | |||||||
| $ | 9,301,929 | $ | 4,377,906 | 1.93 | % | ||||||||
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 | 231,017 | 24,044 | 0.13 | % | |||||||
Redcorp Ventures Ltd. — NSR Interest | Royalty Interest | 12/18/08 | — | — | — | ||||||||
Solar Capital Ltd. | Common Stock | 3/7/07 | 293,999 | 150,822 | 0.81 | % | |||||||
Star Asia Finance Ltd. | Common Stock | 2/22/07 - 3/19/10 | 298,277 | 51,551 | 0.28 | % | |||||||
Star Asia SPV, LLC | LLC Membership Interest | 3/19/10 | 722,962 | 365,530 | 1.96 | % | |||||||
| $ | 1,546,255 | $ | 591,947 | 3.18 | % | ||||||||
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| MARCH 31, 2010 | ||
| Security Type | Acquisition Date | Acquisition Cost | Fair Value | Value as % of Net Assets | |||||||||
Ultra Growth Fund | |||||||||||||
Alexza Pharmaceuticals, Inc. | PIPE | 9/29/09 | $ | 175,784 | $ | 203,440 | 0.17 | % | |||||
Alexza Pharmaceuticals, Inc. | Warrants | 9/29/09 | 8,524 | 8,524 | 0.01 | % | |||||||
Cardica, Inc. | PIPE | 9/25/09 | 392,700 | 633,600 | 0.52 | % | |||||||
Cardica, Inc. | Warrants | 9/25/09 | 20,625 | 77,550 | 0.06 | % | |||||||
Data Sciences International, Inc., Series B | Preferred Stock | 1/20/06 | 475,001 | 807,502 | 0.66 | % | |||||||
Montagu Newhall Global Partners II-B, L.P. | LP Interest | 10/10/03 - 11/04/09 | 3,729,467 | 3,280,272 | 2.67 | % | |||||||
Montagu Newhall Global Partners III-B, L.P. | LP Interest | 3/16/06 - 11/18/09 | 975,000 | 890,217 | 0.72 | % | |||||||
Nanosys, Inc., Series D | Preferred Stock | 11/8/05 | 500,001 | 172,882 | 0.14 | % | |||||||
Ophthonix, Inc. | Common Stock | 9/23/05 | 500,000 | 504 | — | ||||||||
TargetRX, Inc. | Common Stock | 4/8/05 | 230,904 | 1,089 | — | ||||||||
TherOx, Inc., Series I | Preferred Stock | 7/7/05 | 1,000,000 | 429,267 | 0.35 | % | |||||||
Xtera | Common Stock | 9/3/03 | 99,065 | 33,814 | 0.03 | % | |||||||
Zonare Medical Systems, Inc. | Common Stock | 6/30/04 | 1,000,000 | 140,419 | 0.11 | % | |||||||
Zonare Medical Systems, Inc. | Warrants | 6/30/04 | — | — | — | ||||||||
| $ | 9,107,071 | $ | 6,679,080 | 5.44 | % | ||||||||
LP Interest — Limited Partnership Interest
PIPE — Private Investment in a Public Equity
9. 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 March 31, 2010 were $80,000, $800,000 and $720,000, 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 March 31, 2010 were $525,000 per Fund. Securities held by the Funds have been designated to meet these purchase commitments.
10. 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.
For the six months ended March 31, 2010, the following Funds had borrowings:
| Average Daily Borrowings | Number of Days Outstanding | Interest Expense | Weighted Average Annualized Interest Rate | Balance at March 31, 2010 | |||||||
International Growth | 262,286 | 7 | 60 | 1.17 | % | — | |||||
Ultra Growth | 1,186,118 | 34 | 1,315 | 1.17 | % | — |
11. 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.
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
Inflation Risk — Inflation risk is the possibility that inflation will reduce the purchasing power of a currency, and subsequently reduce the value of a security or asset, and may result in rising interest rates. Inflation is the overall upward price movement of goods and services in an economy that causes the value of a dollar to decline.
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. The interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
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.
Region Risk — The 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 advisor. If this group of shareholders simultaneously redeems on the advice of their investment advisor, Fund expenses may increase and performance may be materially affected.
12. 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 valuation techniques used by the Funds to measure fair value for the period ended March 31, 2010 maximized the use of observable inputs and minimized the use of unobservable inputs. The Funds utilized the following fair value techniques:
multi-dimensional relational pricing model and option adjusted spread pricing; the Funds estimated the price that would
have prevailed in a liquid market for an international equity security given information available at the time of evaluation.
The following is a summary of the fair valuations according to the inputs used as of March 31, 2010 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 3/31/2010 | |||||||||
Core Growth Fund | ||||||||||||||
Common Stocks | Asset Management & Custody Banks | $ | 12,488,356 | $ | — | $ | 6,772,065 | $ | 19,260,421 | |||||
| Other | 355,872,122 | — | — | 355,872,122 | ||||||||||
Preferred Stocks | 5,338,236 | — | — | 5,338,236 | ||||||||||
Short-Term Investments | — | 25,319,000 | — | 25,319,000 | ||||||||||
| $ | 373,698,714 | $ | 25,319,000 | $ | 6,772,065 | $ | 405,789,779 | |||||||
Emerging Markets Small Cap Fund | ||||||||||||||
Common Stocks | Restaurants | $ | 1,678,869 | $ | — | $ | 298 | $ | 1,679,167 | |||||
| Other | 100,343,616 | — | — | 100,343,616 | ||||||||||
Preferred Stocks | 1,994,584 | — | — | 1,994,584 | ||||||||||
Limited Partnership Interest | 579,425 | — | — | 579,425 | ||||||||||
Warrants | 147,837 | — | — | 147,837 | ||||||||||
Short-Term Investments | — | 5,721,000 | — | 5,721,000 | ||||||||||
Other Financial Instruments | 3,060 | — | — | 3,060 | ||||||||||
| $ | 104,747,391 | $ | 5,721,000 | $ | 298 | $ | 110,468,689 | |||||||
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| MARCH 31, 2010 | ||
| 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 3/31/2010 | |||||||||||
Global Opportunities Fund | ||||||||||||||||
Common Stocks | Auto Parts & Equipment | $ | 329,038 | $ | — | $ | 29,029 | $ | 358,067 | |||||||
| Personal Products | 792,374 | — | 5,048 | 797,422 | ||||||||||||
| Other | 159,773,944 | — | — | 159,773,944 | ||||||||||||
Preferred Stocks | 500,455 | — | — | 500,455 | ||||||||||||
Limited Partnership Interest | 262,500 | — | — | 262,500 | ||||||||||||
Warrants | 12,463 | 18,800 | — | 31,263 | ||||||||||||
Short-Term Investments | — | 8,758,000 | — | 8,758,000 | ||||||||||||
Other Financial Instruments | 2,459 | — | — | 2,459 | ||||||||||||
| $ | 161,673,233 | $ | 8,776,800 | $ | 34,077 | $ | 170,484,110 | |||||||||
Global Science & Technology Fund | ||||||||||||||||
Common Stocks | Internet Software & Services | $ | 3,471,460 | $ | — | $ | 2,415 | $ | 3,473,875 | |||||||
| Other | 55,100,401 | — | — | 55,100,401 | ||||||||||||
Preferred Stocks | — | — | 821,409 | 821,409 | ||||||||||||
Limited Partnership Interest | — | — | 364,475 | 364,475 | ||||||||||||
Corporate Bonds | — | — | 27,323 | 27,323 | ||||||||||||
Warrants | — | 33,605 | — | 33,605 | ||||||||||||
Put Options Purchased | 25,500 | — | — | 25,500 | ||||||||||||
Short-Term Investments | — | 3,676,000 | — | 3,676,000 | ||||||||||||
Other Financial Instruments | 3,381 | — | — | 3,381 | ||||||||||||
| $ | 58,600,742 | $ | 3,709,605 | $ | 1,215,622 | $ | 63,525,969 | |||||||||
Heritage Growth Fund | ||||||||||||||||
Common Stocks | $ | 78,402,100 | $ | — | $ | — | $ | 78,402,100 | ||||||||
Short-Term Investments | — | 2,616,000 | — | 2,616,000 | ||||||||||||
| $ | 78,402,100 | $ | 2,616,000 | $ | — | $ | 81,018,100 | |||||||||
Heritage Value Fund | ||||||||||||||||
Common Stocks | $ | 2,906,397 | $ | — | $ | — | $ | 2,906,397 | ||||||||
Preferred Stocks | 117,500 | — | — | 117,500 | ||||||||||||
Short-Term Investments | — | 775,000 | — | 775,000 | ||||||||||||
Call Options Written | (2,912 | ) | — | — | (2,912 | ) | ||||||||||
Other Financial Instruments | (2 | ) | — | — | (2 | ) | ||||||||||
| $ | 3,020,983 | $ | 775,000 | $ | — | $ | 3,795,983 | |||||||||
International Growth Fund | ||||||||||||||||
Common Stocks | $ | 183,151,145 | $ | — | $ | — | $ | 183,151,145 | ||||||||
Preferred Stocks | 2,534,237 | — | — | 2,534,237 | ||||||||||||
Limited Partnership Interest | 997,369 | — | — | 997,369 | ||||||||||||
Short-Term Investments | — | 1,820,000 | — | 1,820,000 | ||||||||||||
Other Financial Instruments | (3,148 | ) | — | — | (3,148 | ) | ||||||||||
| $ | 186,679,603 | $ | 1,820,000 | $ | — | $ | 188,499,603 | |||||||||
International Opportunities Fund | ||||||||||||||||
Common Stocks | Auto Parts & Equipment | $ | 741,235 | $ | — | $ | 58,763 | $ | 799,998 | |||||||
| Education Services | 1,308,961 | — | 7,438 | 1,316,399 | ||||||||||||
| Internet Software & Services | 1,607,187 | — | 165,236 | 1,772,423 | ||||||||||||
| Personal Products | 1,511,435 | — | 8,581 | 1,520,016 | ||||||||||||
| Restaurants | 2,090,206 | — | 750 | 2,090,956 | ||||||||||||
| Other | 112,324,438 | — | — | 112,324,438 | ||||||||||||
Preferred Stocks | 1,232,182 | — | — | 1,232,182 | ||||||||||||
Limited Partnership Interest | 861,787 | — | — | 861,787 | ||||||||||||
Short-Term Investments | — | 10,699,000 | — | 10,699,000 | ||||||||||||
Other Financial Instruments | (4,469 | ) | 88,857 | — | 84,388 | |||||||||||
| $ | 121,672,962 | $ | 10,787,857 | $ | 240,768 | $ | 132,701,587 | |||||||||
Micro Cap Fund | ||||||||||||||||
Common Stocks | Specialized Finance | $ | 2,853,678 | $ | — | $ | 617,540 | $ | 3,471,218 | |||||||
| Other | 283,399,953 | — | — | 283,399,953 | ||||||||||||
Preferred Stocks | 2,869,656 | — | — | 2,869,656 | ||||||||||||
Warrants | — | 188,341 | — | 188,341 | ||||||||||||
Short-Term Investments | — | 8,104,000 | — | 8,104,000 | ||||||||||||
Other Financial Instruments | (1,309 | ) | — | — | (1,309 | ) | ||||||||||
| $ | 289,121,978 | $ | 8,292,341 | $ | 617,540 | $ | 298,031,859 | |||||||||
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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 3/31/2010 | ||||||||||||
Micro Cap Value Fund | |||||||||||||||||
Common Stocks | Diversified Banks | $ | 2,073,342 | $ | — | $ | 229,446 | $ | 2,302,788 | ||||||||
| Diversified Metals & Mining | 839,250 | — | 966,816 | 1,806,066 | |||||||||||||
| Specialized Finance | 3,682,110 | — | 168,019 | 3,850,129 | |||||||||||||
| Other | 153,392,728 | — | — | 153,392,728 | |||||||||||||
Warrants | — | 93,460 | — | 93,460 | |||||||||||||
Short-Term Investments | — | 24,263,000 | — | 24,263,000 | |||||||||||||
Other Financial Instruments | 178 | (266,183 | ) | — | (266,005 | ) | |||||||||||
| $ | 159,987,608 | $ | 24,090,277 | $ | 1,364,281 | $ | 185,442,166 | ||||||||||
Small Cap Growth | |||||||||||||||||
Common Stocks | Health Care Equipment | $ | 17,574,279 | $ | — | $ | 210,629 | $ | 17,784,908 | ||||||||
| Health Care Services | 16,309,590 | — | 3,628 | 16,313,218 | |||||||||||||
| Other | 894,500,751 | — | — | 894,500,751 | |||||||||||||
Preferred Stocks | — | — | 3,308,783 | 3,308,783 | |||||||||||||
Limited Partnership Interest | — | — | 4,534,963 | 4,534,963 | |||||||||||||
Warrants | — | 46,058 | 11 | 46,069 | |||||||||||||
Rights | — | — | 210,610 | 210,610 | |||||||||||||
Short-Term Investments | — | 77,034,000 | — | 77,034,000 | |||||||||||||
Other Financial Instruments | 13,745 | — | — | 13,745 | |||||||||||||
| $ | 928,398,365 | $ | 77,080,058 | $ | 8,268,624 | $ | 1,013,747,047 | ||||||||||
Small Cap Value Fund | |||||||||||||||||
Common Stocks | Asset Management & Custody Banks | $ | 2,717,603 | $ | — | $ | 3,631,571 | $ | 6,349,174 | ||||||||
| Diversified Metals & Mining | 1,290,207 | — | 728,335 | 2,018,542 | |||||||||||||
| Diversified REITs | — | — | 18,000 | 18,000 | |||||||||||||
| Other | 207,776,736 | — | — | 207,776,736 | |||||||||||||
Short-Term Investments | — | 12,683,000 | — | 12,683,000 | |||||||||||||
Other Financial Instruments | (167 | ) | — | — | (167 | ) | |||||||||||
| $ | 211,784,379 | $ | 12,683,000 | $ | 4,377,906 | $ | 228,845,285 | ||||||||||
Strategic Income Fund | |||||||||||||||||
Common Stocks | Asset Management & Custody Banks | $ | 2,007,252 | $ | — | $ | 150,822 | 2,158,074 | |||||||||
| Diversified REITs | 369,630 | — | 51,551 | 421,181 | |||||||||||||
| Other | 11,970,224 | — | — | 11,970,224 | |||||||||||||
Exchange Traded Funds | 908,650 | — | — | 908,650 | |||||||||||||
Limited Liability Company Membership Interest | — | — | 365,530 | 365,530 | |||||||||||||
Limited Partnership Interest | 486,211 | — | — | 486,211 | |||||||||||||
Royalty Interest | — | — | — | — | |||||||||||||
Corporate Bonds | Gold | — | — | 24,044 | 24,044 | ||||||||||||
| Integrated Telecommunication Services | — | 337,457 | — | 337,457 | |||||||||||||
Warrants | — | — | — | — | |||||||||||||
Short-Term Investments | — | 1,290,000 | — | 1,290,000 | |||||||||||||
Securities Sold Short | (52,861 | ) | — | — | (52,861 | ) | |||||||||||
| $ | 15,689,106 | $ | 1,627,457 | $ | 591,947 | $ | 17,908,510 | ||||||||||
Ultra Growth Fund | |||||||||||||||||
Common Stocks | Health Care Equipment | $ | 9,117,369 | $ | — | $ | 140,419 | $ | 9,257,788 | ||||||||
| Health Care Services | 2,510,810 | — | 1,089 | 2,511,899 | |||||||||||||
| Internet Software & Services | 1,587,727 | — | 33,814 | 1,621,541 | |||||||||||||
| Personal Products | — | — | 504 | 504 | |||||||||||||
| Other | 103,937,340 | — | — | 103,937,340 | |||||||||||||
Preferred Stocks | — | — | 1,409,651 | 1,409,651 | |||||||||||||
Limited Partnership Interest | — | — | 4,170,489 | 4,170,489 | |||||||||||||
Warrants | — | 86,074 | — | 86,074 | |||||||||||||
| $ | 117,153,246 | $ | 86,074 | $ | 5,755,966 | $ | 122,995,286 | ||||||||||
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| MARCH 31, 2010 | ||
| 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 3/31/2010 | |||||||||||
Wasatch-1st Source Income Equity Fund | ||||||||||||||||
Common Stocks | $ | 1,595,474,864 | $ | — | $ | — | $ | 1,595,474,864 | ||||||||
Short-Term Investments | — | 62,558,000 | ��� | 62,558,000 | ||||||||||||
| $ | 1,595,474,864 | $ | 62,558,000 | $ | — | $ | 1,658,032,864 | |||||||||
Wasatch-1st Source Long/Short Fund | ||||||||||||||||
Common Stocks | $ | 200,115,806 | $ | — | $ | — | $ | 200,115,806 | ||||||||
Preferred Stocks | 5,622,750 | — | — | 5,622,750 | ||||||||||||
Limited Partnership Interest | 2,534,838 | — | — | 2,534,838 | ||||||||||||
Short-Term Investments | — | 52,912,000 | — | 52,912,000 | ||||||||||||
Call Options Written | (1,916,500 | ) | — | — | (1,916,500 | ) | ||||||||||
Securities Sold Short | (43,532,705 | ) | — | — | (43,532,705 | ) | ||||||||||
| $ | 162,824,189 | $ | 52,912,000 | $ | — | $ | 215,736,189 | |||||||||
U.S. Treasury Fund | ||||||||||||||||
U.S. Government Obligations | $ | — | $ | 130,562,109 | $ | — | $ | 130,562,109 | ||||||||
Short-Term Investments | — | 1,814,000 | — | 1,814,000 | ||||||||||||
| $ | — | $ | 132,376,109 | $ | — | $ | 132,376,109 | |||||||||
Wasatch-1st Source Income Fund | ||||||||||||||||
Asset Backed Securities | $ | — | $ | 3,801,324 | $ | — | $ | 3,801,324 | ||||||||
Collateralized Mortgage Obligations | — | 30,487,453 | — | 30,487,453 | ||||||||||||
Corporate Bonds | — | 35,749,409 | — | 35,749,409 | ||||||||||||
Municipal Bonds | — | 1,202,786 | 1,079,870 | 2,282,656 | ||||||||||||
Mutual Funds | 843,517 | — | — | 843,517 | ||||||||||||
Exchange Traded Funds | 1,268,760 | — | — | 1,268,760 | ||||||||||||
U.S. Government Agency Securities | — | 27,463,821 | — | 27,463,821 | ||||||||||||
U.S. Treasury Notes | — | 12,653,002 | — | 12,653,002 | ||||||||||||
U.S. Treasury Inflation Protected Securities | — | 3,914,768 | — | 3,914,768 | ||||||||||||
Preferred Stocks | 1,171,626 | — | — | 1,171,626 | ||||||||||||
Short-Term Investments | — | 6,788,000 | — | 6,788,000 | ||||||||||||
| $ | 3,283,903 | $ | 122,060,563 | $ | 1,079,870 | $ | 126,424,336 | |||||||||
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Funds’ during the period ended March 31, 2010:
| Fund | Market Value Beginning Balance 10/1/2009 | 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 3/31/2010 | ||||||||||||||||||
Core Growth Fund | Investments in Securities | $ | 7,304,498 | $ | (10 | ) | $ | (17 | ) | $ | (532,406 | ) | $ | — | $ | 6,772,065 | ||||||||
Emerging Markets Small Cap Fund | Investments in Securities | 114,864 | — | — | (114,566 | ) | — | 298 | ||||||||||||||||
Global Opportunities Fund | Investments in Securities | 140,400 | — | — | 47,277 | (153,600 | ) | 34,077 | ||||||||||||||||
Global Science & Technology Fund | Investments in Securities | 1,484,833 | 42,323 | (139,219 | ) | 102,245 | (274,560 | ) | 1,215,622 | |||||||||||||||
International Opportunities Fund | Investments in Securities | 363,405 | — | — | (331,767 | ) | 209,130 | 240,768 | ||||||||||||||||
Micro Cap Fund | Investments in Securities | 2,645,451 | (558,103 | ) | 196,343 | (133,949 | ) | (1,532,202 | ) | 617,540 | ||||||||||||||
Micro Cap Value Fund | Investments in Securities | 2,403,636 | (576,423 | ) | 27,048 | (65,660 | ) | (424,320 | ) | 1,364,281 | ||||||||||||||
Small Cap Growth Fund | Investments in Securities | 8,401,468 | 183,889 | (3,060,778 | ) | 3,843,287 | (1,099,242 | ) | 8,268,624 | |||||||||||||||
Small Cap Value Fund | Investments in Securities | 6,894,351 | (5,844,166 | ) | 276,309 | 2,997,412 | 54,000 | 4,377,906 | ||||||||||||||||
Strategic Income Fund | Investments in Securities | 162,680 | 390,488 | 80 | (758 | ) | 39,457 | 591,947 | ||||||||||||||||
Ultra Growth Fund | Investments in Securities | 6,148,113 | 165,000 | (2,531 | ) | 282,424 | (837,040 | ) | 5,755,966 | |||||||||||||||
Wasatch-1st Source Income Fund | Investments in Securities | 1,578,555 | (550,000 | ) | — | 51,315 | — | 1,079,870 | ||||||||||||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
13. 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 |
Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of March 31, 2010:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||
Asset Derivatives | ||||||||||||||||||
Put options purchased at value | $ | — | $ | — | $ | — | $ | 25,500 | $ | — | $ | 25,500 | ||||||
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended March 31, 2010:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | 1,500 | $ | — | $ | 1,500 | ||||||
| WASATCH | HERITAGE GROWTH FUND |
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended March 31, 2010:
| 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 | $ | — | $ | — | $ | — | $ | 630 | $ | — | $ | 630 | ||||||
| WASATCH | HERITAGE VALUE FUND |
Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of March 31, 2010:
| 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 | $ | — | $ | — | $ | — | $ | 2,912 | $ | — | $ | 2,912 | ||||||
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended March 31, 2010:
| 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 | $ | — | $ | (5,816 | ) | $ | — | $ | — | $ | — | $ | (5,816 | ) | |||||||
Net realized gain on options written | — | — | — | 91,584 | — | 91,584 | |||||||||||||||
| $ | — | $ | (5,816 | ) | $ | — | $ | 91,584 | $ | — | $ | 85,768 | |||||||||
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | |||||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | (912 | ) | $ | — | $ | (912 | ) | |||||||
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| MARCH 31, 2010 | ||
| WASATCH | INTERNATIONAL OPPORTUNITIES FUND |
Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of March 31, 2010:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||
Asset Derivatives | ||||||||||||||||||
Unrealized appreciation on foreign currency contracts | $ | — | $ | 88,857 | $ | — | $ | — | $ | — | $ | 88,857 | ||||||
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended March 31, 2010:
| 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 | $ | — | $ | 51,378 | $ | — | $ | — | $ | — | $ | 51,378 | ||||||
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | 88,857 | $ | — | $ | — | $ | — | $ | 88,857 | ||||||
| WASATCH | MICRO CAP VALUE FUND |
Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of March 31, 2010:
| 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 | ||||||||||||||||||
Unrealized depreciation on foreign currency contracts | $ | — | $ | 266,183 | $ | — | $ | — | $ | — | $ | 266,183 | ||||||
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended March 31, 2010:
| 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 | $ | — | $ | (399,117 | ) | $ | — | $ | — | $ | — | $ | (399,117 | ) | ||||||
Net realized gain on options written | — | — | — | 569,363 | — | 569,363 | ||||||||||||||
| $ | — | $ | (399,117 | ) | $ | — | $ | 569,363 | $ | — | $ | 170,246 | ||||||||
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | (266,183 | ) | $ | — | $ | — | $ | — | $ | (266,183 | ) | ||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
| WASATCH | STRATEGIC INCOME FUND |
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended March 31, 2010:
| 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 | $ | — | $ | — | $ | — | $ | — | $ | (182,401 | ) | $ | (182,401 | ) | |||||||
Net realized gain on options written | — | — | — | 18,481 | — | 18,481 | |||||||||||||||
| $ | — | $ | — | $ | — | $ | 18,481 | $ | (182,401 | ) | $ | (163,920 | ) | ||||||||
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 March 31, 2010:
| 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 | $ | — | $ | — | $ | — | $ | 1,916,500 | $ | — | $ | 1,916,500 | ||||||
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended March 31, 2010:
| 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 | $ | — | $ | — | $ | — | $ | 1,745,273 | $ | — | $ | 1,745,273 | ||||||
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | 32,933 | $ | — | $ | 32,933 | ||||||
| * | See Note 2 — Significant Accounting Policies for additional information. |
The derivative instruments outstanding as of March 31, 2010 as disclosed in 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.
14. SUBSEQUENT EVENTS
Liquidation of Wasatch Heritage Value Fund — On May 12, 2010, the Board of Trustees of the Wasatch Funds Trust (the “Board”) approved the termination of the Wasatch Heritage Value Fund (the “Fund”). Due to its small size and limited growth potential given market conditions, the Board has determined that it was in the best interests of the Fund and its shareholders that the Fund cease operations. Accordingly, on May 12, 2010, the Board approved a plan of liquidation for the Fund to close the Fund and redeem all of its outstanding shares on July 15, 2010.
Effective May 13, 2010, the Fund will no longer pursue its stated investment objectives. The Fund will begin liquidating its portfolio and may invest in repurchase agreements or other comparable high quality money market instruments or money market funds until all shares have been redeemed. Shares of the Fund will not be available for purchase as of May 13, 2010.
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| WASATCH FUNDS — Supplemental Information | MARCH 31, 2010 (UNAUDITED) | |
Management Information. The business affairs of Wasatch Funds are supervised by its Board of Trustees. The Board consists of four trustees who are elected and serve until their successors are elected and qualified.
The trustees 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 Trustee | Other Directorships Held by Trustee2 | |||||
Independent Trustees | ||||||||||
James U. Jensen, J.D., MBA c/o Wasatch Funds 150 Social Hall Ave. 4th Floor Salt Lake City, Utah 84111 Age 65 | Trustee and Chairman of the Board | Indefinite Served as Chairman of the Board since 2004 and Trustee 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 | Trustee and Chairman of the Audit Committee | Indefinite Served as Chairman of the Audit Committee since 2004 and Trustee 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 68 | Trustee | Indefinite Served as Trustee since 2005 | Consultant since 2004 and Founder & Executive Director, Mortgage Asset Research Institute from 1990 to 2004. | 18 | None | |||||
Miriam M. Allison3 150 Social Hall Ave. 4th Floor Salt Lake City, UT 84111 Age 62 | Trustee | Indefinite Served as Trustee since 2010 | Rancher since 2004. From 2001 to 2005, Chairman of UMB Fund Services, Inc. | 18 | Director, Northwestern Mutual Series Fund, Inc. (27 portfolios) Since 2006. | |||||
Interested Trustee | ||||||||||
Samuel S. Stewart, Jr., Ph.D. CFA4 150 Social Hall Ave. 4th Floor Salt Lake City, UT 84111 Age 67 | President and Trustee | Indefinite Served as President and Trustee 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 Trustee may serve until his/her death, resignation, removal or retirement. Each Independent Trustee shall retire as Trustee at the end of the calendar year in which (s)he attains the age of 72 years. |
| 2 | Directorships are those held by a Trustee 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 | Ms. Allison previously owned shares of UMB Financial Corp., the parent company of UMB Fund Services, Inc., the Funds’ transfer agent. As of the date of this statement, Ms. Allison no longer owns such shares. |
| 4 | Mr. Stewart is an Interested Trustee 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 42 | 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 52 | 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’ trustees is provided in the Statement of Additional Information and is available without charge, upon request, by calling 800.551.1700.
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A Special Meeting of the Shareholders of the Funds (the “Shareholder Meeting”) was held on February 11, 2010. The purpose of the Shareholder Meeting was to ask shareholders:
| 1. | To approve the election of Directors; |
| 2. | To approve a new Advisory and Service Contract between the Company and Wasatch Advisors, Inc. (the “Advisor”); |
| 3. | To approve a new Sub-Advisory Agreement between the Advisor and Hoisington Investment Management Company (“HIMCO”) with respect to the Wasatch-Hoisington U.S. Treasury Fund (the “U.S. Treasury Fund”); |
| 4. | To approve a new Sub-Advisory Agreement between the Advisor and 1st Source Corporation Investment Advisors, Inc. (“1st Source”) with respect to the Wasatch-1st Source Income Fund (the “Income Fund”); |
| 5. | To approve a proposed Agreement and Plan of Reorganization (the “Reorganization Agreement”), pursuant to which each series of the Company—Wasatch Core Growth Fund (the “Core Growth Fund”), Wasatch Emerging Markets Small Cap Fund (the “Emerging Markets Small Cap Fund”), Wasatch Global Opportunities Fund (the “Global Opportunities Fund”), Wasatch Global Science & Technology Fund (the “Global Science & Technology Fund”), Wasatch Heritage Growth Fund (the “Heritage Growth Fund”), Wasatch Heritage Value Fund (the “Heritage Value Fund”), Wasatch International Growth Fund (the “International Growth Fund”), Wasatch International Opportunities Fund, (the “International Opportunities Fund”), Wasatch Micro Cap Fund (the “Micro Cap Fund”), Wasatch Micro Cap Value Fund (the “Micro Cap Value Fund”), Wasatch Small Cap Growth Fund (the “Small Cap Growth Fund”), Wasatch Small Cap Value Fund (the “Small Cap Value Fund”), Wasatch Strategic Income Fund (the “Strategic Income Fund”), Wasatch Ultra Growth Fund (the “Ultra Growth Fund”), the U.S. Treasury Fund, the Income Fund, Wasatch-1st Source Income Equity Fund (the “Income Equity Fund”) and Wasatch-1st Source Long/Short Fund (the “Long/Short Fund”) (each a “Fund” and collectively, the “Funds”) would be reorganized as separate series of Wasatch Funds Trust, a newly-created Massachusetts business trust (the “Trust”) and the liquidation and dissolution of the Funds and the Company. |
At the February 11, 2010 Shareholder Meeting, the shareholders of each Fund approved the election of Directors. At that time, the Shareholder Meeting was adjourned and scheduled to reconvene on March 11, 2010 to allow further time to gather shareholder votes on the other proposals.
On March 11, 2010, the Shareholder Meeting reconvened. The shareholders of each Fund approved the new Advisory
and Service Contract with the Advisor. The shareholders of the U.S. Treasury Fund approved the new Sub-Advisory Agreement with HIMCO. The shareholders of the Income Fund approved the new Sub-Advisory Agreement with 1st Source. In addition, the shareholders of the Funds of the Company approved the reorganization of the Company from a Minnesota corporation to a Massachusetts business trust pursuant to the Reorganization Agreement. The Reorganization was effective as of the close of business on March 31, 2010.
The results of the votes are as set forth below.
Proposal 1
| Affirmative | Against | Abstain | Total | |||||
James U. Jensen | 405,954,645 | — | 13,471,464 | 419,426,109 | ||||
William R. Swinyard | 405,846,801 | — | 13,579,307 | 419,426,108 | ||||
D. James Croft | 405,787,730 | — | 13,638,379 | 419,426,109 | ||||
Miriam M. Allison | 405,658,392 | — | 13,767,717 | 419,426,109 | ||||
Samuel S. Stewart, Jr. | 405,750,124 | — | 13,674,985 | 419,425,109 |
Proposal 2
| Fund | Affirmative | Against | Abstain | Total | ||||
Core Growth Fund | 7,597,501 | 233,923 | 233,190 | 8,064,614 | ||||
Emerging Markets Small Cap Fund | 26,503,689 | 683,168 | 469,451 | 27,656,308 | ||||
Global Opportunities Fund | 26,488,762 | 202,710 | 312,725 | 27,004,197 | ||||
Global Science & Technology Fund | 2,959,174 | 94,016 | 70,829 | 3,124,019 | ||||
Heritage Growth Fund | 4,692,125 | 141,053 | 115,114 | 4,948,292 | ||||
Heritage Value Fund | 321,365 | 5,968 | 1,345 | 328,678 | ||||
International Growth Fund | 6,642,811 | 260,051 | 193,567 | 7,096,429 | ||||
International Opportunities Fund | 28,529,922 | 551,033 | 500,212 | 29,581,167 | ||||
Micro Cap Fund | 42,326,200 | 1,307,373 | 1,068,337 | 44,701,910 | ||||
Micro Cap Value Fund | 32,965,456 | 880,158 | 654,856 | 34,500,470 | ||||
Small Cap Growth Fund | 17,993,079 | 552,341 | 362,421 | 18,907,841 | ||||
Small Cap Value Fund | 48,983,138 | 1,241,926 | 1,019,041 | 51,244,105 | ||||
Strategic Income Fund | 1,866,208 | 33,408 | 10,907 | 1,910,523 | ||||
Ultra Growth Fund | 4,168,438 | 113,461 | 86,601 | 4,368,500 | ||||
U.S. Treasury Fund | 4,910,255 | 150,319 | 206,607 | 5,267,181 | ||||
Income Fund | 6,820,833 | 150,887 | 240,888 | 7,212,608 | ||||
Income Equity Fund | 61,184,309 | 1,319,897 | 1,510,578 | 64,014,784 | ||||
Long/Short Fund | 8,799,059 | 72,161 | 154,150 | 9,025,370 |
Proposal 3
| Affirmative | Against | Abstain | Total | |||
4,915,956 | 151,079 | 200,149 | 5,267,184 |
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Proposal 4
| Affirmative | Against | Abstain | Total | |||
6,660,700 | 323,929 | 227,980 | 7,212,609 |
Proposal 5
| Fund | Affirmative | Against | Abstain | Total | ||||
Core Growth Fund | 7,063,840 | 722,738 | 278,037 | 8,064,615 | ||||
Emerging Markets Small Cap Fund | 25,587,148 | 1,480,308 | 588,854 | 27,656,310 | ||||
Global Opportunities Fund | 23,555,840 | 3,072,618 | 375,738 | 27,004,196 | ||||
Global Science & Technology Fund | 2,855,553 | 140,258 | 128,207 | 3,124,018 | ||||
Heritage Growth Fund | 4,586,209 | 234,316 | 127,769 | 4,948,294 | ||||
Heritage Value Fund | 320,183 | 6,929 | 1,566 | 328,678 | ||||
International Growth Fund | 6,361,878 | 481,386 | 253,163 | 7,096,427 | ||||
International Opportunities Fund | 28,107,602 | 893,785 | 579,780 | 29,581,167 | ||||
Micro Cap Fund | 41,451,562 | 1,968,519 | 1,281,827 | 44,701,908 | ||||
Micro Cap Value Fund | 32,035,784 | 1,497,087 | 967,598 | 34,500,469 | ||||
Small Cap Growth Fund | 14,903,920 | 3,561,587 | 442,330 | 18,907,837 | ||||
Small Cap Value Fund | 44,883,530 | 5,042,428 | 1,318,147 | 51,244,105 | ||||
Strategic Income Fund | 1,849,099 | 50,251 | 11,174 | 1,910,524 | ||||
Ultra Growth Fund | 4,082,744 | 165,542 | 120,213 | 4,368,499 | ||||
U.S. Treasury Fund | 4,857,861 | 193,776 | 215,547 | 5,267,184 | ||||
Income Fund | 6,661,070 | 306,322 | 245,217 | 7,212,609 | ||||
Income Equity Fund | 60,212,662 | 1,877,566 | 1,924,554 | 64,014,782 | ||||
Long/Short Fund | 8,752,576 | 101,638 | 171,155 | 9,025,369 |
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’ website at www.wasatchfunds.com or by calling 800.551.1700 and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov.
Wasatch Funds’ proxy voting record is available on the Funds’ website at www.wasatchfunds.com and the SEC’s website 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 website 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).
BOARD APPROVALFOR ADVISORY CONTRACTS
At a meeting held on November 19, 2009 (the “Meeting”), the Board of Directors of Wasatch Funds, Inc. (the “Company”), including the Independent Directors, unanimously approved the advisory and service contract (the “New Advisory Agreement”) between the Company and Wasatch Advisors, Inc. (the “Advisor”) on behalf of each of its series (collectively, the “Funds”); the sub-advisory agreement between the Advisor and Hoisington Investment Management Company (“HIMCO”) on behalf of the Wasatch-Hoisington U.S. Treasury Fund (the “U.S. Treasury Fund”); and the sub-advisory agreement between the Advisor and 1st Source Corporation Investment Advisors, Inc. (“1st Source”) on behalf of the Wasatch-1st Source Income Fund (the “Income Fund”). HIMCO and 1st Source hereafter are each a “Sub-Advisor” and their respective sub-advisory agreement with the Advisor are each a “New Sub-Advisory Agreement.” At the Meeting, the Board of Directors also approved the reorganization (the “Reorganization”) of the Company pursuant to which the Company would be reorganized from a Minnesota corporation to a newly created Massachusetts business trust named the Wasatch Funds Trust (the “Trust”), subject to shareholder approval. Each series of the Company would then be reorganized into a corresponding new series of the Trust. Accordingly, the Meeting was held in conjunction with the organization meeting of the Trust. The members of the Board of the Company are the same as the members on the Board of the Trust. At the organization meeting, the Board of Trustees, including the Independent Trustees, unanimously approved the advisory and service contract between the Advisor and the Trust (the “Trust Advisory Agreement”); the sub-advisory agreement between HIMCO and the Advisor on behalf of U.S. Treasury Fund; and the sub-advisory agreement between 1st Source and the Advisor on behalf of the Income Fund (the foregoing sub-advisory agreements are collectively, the “Trust Sub-Advisory Agreements”). On March 11, 2010, shareholders approved the Reorganization and on March 31, 2010, the Company was reorganized into a Massachusetts business trust. As the Trust Advisory Agreement between the Advisor and Trust and the Trust Sub-Advisory Agreements between the Advisor and Sub-Advisors on behalf of the applicable series of the Trust are substantially similar to the corresponding New Advisory Agreement and New Sub-Advisory Agreements approved at the Meeting with respect to the Company, the considerations of the members of the Board for the approvals of the New Advisory Agreement and New Sub-Advisory Agreements with respect to the Company and its series are equally applicable to the approvals of the Trust Advisory Agreement and Trust Sub-Advisory Agreements with respect to the Trust and its series.
Prior to the Meeting, the Independent Directors had been advised that WA Holdings, Inc. (“Wasatch”) intended to
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acquire Dr. Sam Stewart’s shares in Wasatch, the parent company of the Advisor (the “Transaction”). Dr. Stewart owned over 25% of the outstanding voting securities of Wasatch and therefore was presumably a controlling person of Wasatch. The Advisor provided the Funds (other than the Income Fund, Wasatch-1st Source Income Equity Fund and the Wasatch-1st Source Long/Short Fund (collectively, the “1st Source Funds”)) with investment advisory services under an Advisory and Service Agreement dated January 27, 1998 and provided the 1st Source Funds with investment advisory services under an Advisory and Service Agreement dated December 15, 2008 (each a “Prior Advisory Agreement” and collectively, the “Prior Advisory Agreements”). In addition, HIMCO provided sub-advisory services to the U.S. Treasury Fund pursuant to a Sub-Advisory Agreement dated June 21, 1996 (the “Prior HIMCO Sub-Advisory Agreement”). Similarly, 1st Source provided sub-advisory services to the Income Fund pursuant to a sub-advisory agreement dated December 15, 2008 (the “Prior 1st Source Sub-Advisory Agreement”). The foregoing sub-advisory agreements are each a “Prior Sub-Advisory Agreement” and collectively, the “Prior Sub-Advisory Agreements.”
Each of the foregoing advisory and sub-advisory agreements, as required by Section 15 of the Investment Company Act of 1940 (the “1940 Act”), provided for its automatic termination in the event of its assignment (as defined in the 1940 Act). A change in control of the Advisor is deemed to be an assignment. The consummation of the Transaction may result in a change of control of the Advisor and, therefore, cause the automatic termination of each of the foregoing agreements. Accordingly, in anticipation of the Transaction, the Board considered whether it was in the best interests of each Fund and its shareholders to approve the New Advisory Agreement between the Advisor and the Company on behalf of the Funds; whether it was in the best interests of the U.S. Treasury Fund and its shareholders to approve a New Sub-Advisory Agreement between HIMCO and the Advisor on behalf of the U.S. Treasury Fund and whether it was in the best interests of the Income Fund and its shareholders to approve a New Sub-Advisory Agreement between 1st Source and the Advisor on behalf of the Income Fund to take effect immediately after shareholder approval of the New Advisory Agreement and New Sub-Advisory Agreements. The 1940 Act also requires that the New Advisory Agreement and New Sub-Advisory Agreements be approved by the respective Fund’s shareholders in order to become effective. To assure the continuity of investment advisory services to the Funds after the closing of the Transaction and before shareholder approval of the New Advisory Agreement and New Sub-Advisory Agreements, the Board also considered interim advisory agreements between the Advisor and Company on behalf of the respective Funds (the “Interim Advisory Agreements”), an interim sub-advisory agreement between the Advisor and HIMCO on behalf of the U.S. Treasury Fund and an interim sub-advisory agreement between the Advisor and 1st Source on behalf of the Income Fund (collectively, the “Interim Sub-Advisory Agreements”) to take effect upon the closing of the Transaction.
The Board of Directors had considered the New Advisory Agreement and New Sub-Advisory Agreements at its meeting held on November 11, 2009 and continued its considerations at the Meeting (collectively, the “Board Meetings”). In preparation for their role in the evaluation of the New Advisory Agreement and New Sub-Advisory Agreements, the Independent Directors also met in Executive Sessions on November 2, 2009, November 10, 2009, November 11, 2009 and November 19, 2009. At these Board Meetings and Executive Sessions, they were joined by independent legal counsel. In advance of these Board Meetings, the Board and independent legal counsel received materials and other information which outlined, among other things:
| • | the terms and conditions of the New Advisory Agreement and New Sub-Advisory Agreements, including the nature, extent and quality of services provided by the Advisor and each Sub-Advisor; |
| • | the organization and business operations of the Advisor and Sub-Advisors, including the experience of persons who have managed and who will manage the respective Fund; |
| • | the profitability of the Advisor from serving as advisor to the respective Fund (plus profitability analysis for advisors to unaffiliated investment companies); |
| • | 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 fees for other clients; |
| • | the sub-advisory fees of each Sub-Advisor with respect to the U.S. Treasury Fund and Income Fund (including the respective Sub-Advisor’s fee schedule for other clients); |
| • | the expenses of each Fund, including comparisons with the expense ratios of comparable, unaffiliated funds compiled by an independent third party; and |
| • | the respective Fund’s past performance plus such Fund’s performance compared to funds of similar investment objectives compiled by independent third parties and with recognized benchmarks. |
In connection with their review of the New Advisory Agreement and New Sub-Advisory Agreements, the Independent Board Members, through their independent legal counsel, also requested in writing and received information regarding the proposed Transaction and its impact on the provision of services by the Advisor. The materials described, among other things:
| • | the structure of the Transaction; |
| • | the strategic plan for the Advisor following the Transaction, including succession plans for personnel; |
| • | the governance structure for the Advisor following the Transaction; |
| • | any anticipated changes in the operations of the Funds following the Transaction, including discussing the day-to-day management, infrastructure and advisory or other applicable services provided to the Funds; and |
| • | any changes to senior management or key personnel who work on Fund related matters (including portfolio management and investment oversight); the continuing role of Dr. Stewart with the Advisor following the Transaction; and any retention or incentive arrangements for such persons. |
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The Independent Directors also received 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, including with respect to a change of control; the requirements of the 1940 Act in such matters; an advisor’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.
During the Executive Sessions noted above, the Independent Directors had several meetings and deliberations with and without Advisor personnel present, and with the advice of legal counsel, regarding the proposed Transaction and the terms of the New Advisory Agreement and New Sub-Advisory Agreements. During the Board Meetings and Executive Sessions, the Independent Directors considered, among other things, the terms of the proposed Transaction; the impact of the purchase of the shares of Wasatch from Dr. Stewart and other personnel on the Advisor’s cash flow; the impact, if any, of the Transaction on the services provided to the Funds; the compensation arrangements of Advisor personnel (including the distribution of equity ownership in Wasatch among various employees in conjunction with the Transaction); the general plans and intentions with respect to the Advisor (including with respect to management, employees, future growth prospects and succession planning); the costs associated with obtaining the necessary shareholder approvals; the services provided by the Advisor, including its research capabilities; Fund performance; the Advisor’s fees and profitability; economies of scale and breakpoints; the approach of closing Funds to investors; the expense limitation agreements; and soft dollars. The Independent Directors, in consultation with independent counsel, also reviewed the factors set out in judicial decisions and SEC directives relating to the approval of advisory contracts. The information provided for the Board Meetings supplements the information the Board receives throughout the year regarding a Fund’s performance, expense ratios, portfolio composition, trade execution and sales activity. In this regard, the Independent Directors have considered and recognized the challenging market conditions that have existed during recent times and have therefore considered the Funds’ performance in light of these market conditions.
As outlined in more detail below, the Independent Directors considered all factors they believed relevant with respect to the Funds, including the following: (a) the nature, extent and quality of the services to be provided by the Advisor and Sub-Advisors; (b) the investment performance of the respective Fund (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 a Fund grows; and (e) whether fee levels reflect these economies of scale for the benefit of Fund investors. The Independent Directors also considered such factors in light of the pending Transaction and its impact, if any.
| A. | NATURE, EXTENTAND QUALITYOF SERVICES |
In evaluating the nature, extent and quality of the Advisor’s and Sub-Advisors’ services, the Independent Directors reviewed information concerning the types of services (advisory and non-advisory or administrative services) that the Advisor and Sub-Advisors provide to the respective Fund; the performance record of the applicable Fund; and information describing the Advisor’s and Sub-Advisors’ organization and business, including the impact of the Transaction on the Advisor and its ability to perform its services following the Transaction. In connection with their service as Independent Directors of the Company, the Independent Directors also periodically have met with the Advisor’s and Sub-Advisors’ 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 Funds, Advisor and Sub-Advisors, the Independent Directors were familiar with and have a good understanding of the organization, operations, investment philosophy and personnel of the Advisor and Sub-Advisors.
In connection with their review of the advisory services being provided, the Independent Directors considered the investment philosophy and investment mandates of each Fund and whether the Advisor and Sub-Advisors (as applicable) have performed consistently with such philosophy and mandates. While the Directors believe that the Advisor and Sub-Advisors have consistently applied their traditional investment philosophy and processes in managing the applicable Funds, the Directors also 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 recognized that the Advisor’s investment process and philosophy were not expected to change following the Transaction.
The Independent Directors also considered the expected impacted, if any, of the Transaction on the operations, organization and personnel of the Advisor. In this regard, the Independent Directors recognized the continuing role of Dr. Stewart with the Advisor who has contractually agreed to remain with the Advisor for at least three additional years. The Independent Directors also considered the recent changes in the capacities of certain Advisor personnel, including a new chief executive officer. The Independent Directors noted that the Transaction was not expected to modify the advisory services provided to the Funds. In this regard, the advisory services to be provided under the New Advisory Agreement are the same as provided by the Advisor under its Prior Advisory Agreement. The portfolio manager(s) of the respective Funds were expected to be the same following the Transaction. The Independent Directors recognized that the Transaction was, in part, the result of the Advisor’s succession planning providing other Advisor personnel with an equity ownership interest in the Advisor. Accordingly, in its review of the succession planning of the Advisor, the Independent Directors considered the compensation arrangements of the Advisor’s personnel (including the new distribution of equity shares in Wasatch), to
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evaluate the Advisor’s ability to attract and retain key employees (including portfolio managers), preserve stability over the long term and reward performance without providing an incentive for taking undue risks.
In addition to the foregoing, in light of the regulatory emphasis on compliance, in reviewing the services that have been provided to a Fund, the Independent Directors also considered the Advisor’s and Sub-Advisors’ compliance 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 New Advisory Agreement provide that the Advisor shall administer the Company’s affairs 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 Funds, 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 Funds’ service providers (e.g., administrator, fund accountant, transfer agent and custodian). The Advisor also pays for office space and facilities for each Fund. In reviewing the services provided, the Independent Directors noted that the Transaction was not expected to adversely affect the nature, quality or extent of these services provided by the Advisor.
With respect to the Sub-Advisors, it was noted that the Sub-Advisory Agreements are essentially agreements for portfolio management services only and the Sub-Advisors were not expected to supply other significant administrative services. In addition, the Transaction was not expected to modify the allocation of services between the Advisor and Sub-Advisors nor the services provided by the respective Sub-Advisor.
Based on their review, the Independent Directors found that, overall, the nature, extent and quality of services provided under the New Advisory Agreement and the New Sub-Advisory Agreements were satisfactory on behalf of each applicable Fund.
| B. | THE INVESTMENT PERFORMANCEOFTHE FUNDS |
In evaluating each Fund’s performance, the Directors reviewed both short-term and long-term performance of each Fund relative to its peer group and relevant benchmarks. More specifically, the Independent Directors reviewed, among other things, materials reflecting the respective Fund’s historic performance for the quarter, one-, three-, five-, and 10-year periods ending September 30, 2009 (as applicable and the average annual return since inception for Funds with a shorter duration) compared to its respective benchmarks and unaffiliated funds in its investment category. Additionally, the Independent Directors reviewed a report prepared by an unaffiliated third party comparing the respective Fund’s total return for the one-, two-, three-, four-, five-, and 10-year periods ending
September 30, 2009 (as applicable) compared to the performance of unaffiliated funds with similar investment objectives or classifications (a “Peer Group”) and a benchmark (the “Benchmark”) for the prescribed periods. In addition, the Independent Directors received reports prepared by a second unaffiliated party, which generally included an analyst report on the respective Fund for the following Funds: Core Growth, Heritage Growth, Income Equity, International Growth, Micro Cap, Micro Cap Value, Small Cap Growth, Small Cap Value, and Ultra Growth. 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 during the year. Further, the Independent Directors also recognized the limitations on some of the usefulness of the performance comparison information as the closest Peer Group for a Fund may not adequately reflect the Wasatch Fund’s investment strategies and may be invested in sectors or industries in which the respective Fund has limited or no exposure. The Independent Directors further considered the performance of the Funds in the context of the volatile market conditions during recent times. As noted above, the Independent Directors also considered that the portfolio management personnel responsible for the management of the Funds’ portfolios were expected to continue to manage the portfolios following the completion of the Transaction. Based on their review and factoring in the severity of market turmoil in recent periods, the Independent Directors determined that each Fund’s investment performance over time had been satisfactory. In reaching this assessment, the Independent Directors considered that the Emerging Markets Small Cap Fund, Global Opportunities Fund and Heritage Value Fund are each relatively new funds with a performance history of two years or less available. Although short performance periods limit the ability to assess performance, such Funds outperformed their Benchmarks for the one-, two-year or since inception periods (as available). Similarly, the Micro Cap Value and Small Cap Growth Funds outperformed their Benchmarks during their performance history. With the exception of the four- and five-year periods for the Heritage Growth Fund and the two-year period for the International Opportunities Fund, such Funds outperformed their Benchmarks. The 1st Source Funds are new to the Wasatch family and with the exception of the one-year period ended September 30, 2009 for the Income Fund, such Funds outperformed their Benchmarks. Although the Ultra Growth and Core Growth Funds outperformed their Benchmarks over the 10-year period, the Independent Directors have recognized that these Funds had underperformed their Benchmarks during more recent periods. However, these Funds have now outperformed their Benchmarks for the one-year period ended September 30, 2009. Similarly, the International Growth Fund had been underperforming its Benchmark but outperformed it in the one-year ended September 30, 2009. Although the Micro Cap Fund outperformed its Benchmark over the 10-year period, the Fund has underperformed its Benchmark in more recent periods. In addition, the Strategic Income and Global Science & Technology Funds have
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underperformed their Benchmarks. However, during this period, the Board has met with management to review the performance of the Funds, including the foregoing Funds, the factors affecting performance, the investment process and philosophy, and investment strategies. As noted above, the Independent Directors recognized that the Advisor consistently reviews its investment process to refine and improve its process, including focusing more on larger positions and enhancing its shared research and collaborative culture among its more experienced investment personnel, and were satisfied with the initiatives taken.
| C. | FEES, EXPENSESAND PROFITABILITY |
1. Fees and Expenses
The Independent Directors considered the fees of the Advisor and Sub-Advisors. In their evaluation of fees and expenses, the Independent Directors reviewed the Advisor’s management fees and expense ratios for each Fund in absolute terms as well as with comparisons of fees and expenses of funds with similar objectives. In this regard, the Independent Directors reviewed and considered, among other things, comparisons of the respective 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 this regard, the Independent Directors noted that the following Funds had advisory fees and/or total expense ratios below or near the median for its respective Peer Group (the Heritage Growth Fund, Heritage Value Fund, Small Cap Growth Fund (an advisory fee above the median but the actual total expenses were the same as or slightly above the median), the Strategic Income Fund and the Long/Short Fund (an advisory fee above the median but total expense ratio below or the same as the median). The remaining Funds have advisory and total expenses that were higher than the median of their Peer Group. In reviewing these fees, the Independent Directors considered that the following Funds also have generally good performance (the 1st Source Funds, U.S. Treasury Fund, Micro Cap Value Fund, International Opportunities Fund, Global Opportunities Fund and Emerging Markets Small Cap Fund) or generally good long-term ten-year performance (the Core Growth Fund, Micro Cap Fund, Small Cap Value Fund and Ultra Growth Fund). In addition, the Independent Directors recognized that the advisory fees and expense caps of the International Opportunities Fund, Micro Cap Fund, and Micro Cap Value Fund were reduced last year. With respect to the Global Opportunities Fund, the Independent Directors recognized the considerable experience of the portfolio manager.
In reviewing fees, the Independent Directors also considered the expense limitation agreement provided by the Advisor for the applicable Funds and the amounts the Advisor has reimbursed to the Funds for the last three fiscal years (if any) which effectively reduces the amount of advisory fees paid to the Advisor. As a result of the market declines in 2008 and 2009, the Independent Directors recognized that
the Advisor has been reimbursing various Funds for expenses pursuant to its expense limitation agreement. In this regard, the Advisor reimbursed certain expenses for the following Funds: Emerging Markets Small Cap, Global Opportunities, Global Science & Technology, Heritage Growth, Heritage Value, International Opportunities, Micro Cap Value, Strategic Income, Ultra Growth, U.S. Treasury, and Income Equity.
The Independent Directors noted that the fees under the New Advisory Agreement and New Sub-Advisory Agreements were the same as the corresponding Prior Advisory Agreement and Prior Sub-Advisory Agreement, except for the sub-advisory fee of the Income Fund. With respect to the Income Fund, the Independent Directors noted that while the advisory fee remained the same under the New Advisory Agreement, the sub-advisory fee under the New Sub-Advisory Agreement was reduced, as described below. Accordingly, because the Advisor pays 1st Source the sub-advisory fee, the Advisor would retain a greater portion of the overall management fee of the Income Fund.
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 as well as its global research process to cover an international landscape (such as for Funds including the Emerging Markets Small Cap, Global Opportunities, Global Science & Technology, International Growth, and International Opportunities Funds). The Independent Directors also noted the Advisor’s continued investment philosophy to close a Fund to new and/or existing investors when necessary to preserve the integrity of a Fund’s investment strategy, particularly for Funds that primarily invest in smaller companies. Although all the Funds are currently open to investors, the Funds that have been closed to investors in the past include: Core Growth, Global Science & Technology, International Growth, International Opportunities, Micro Cap, Micro Cap Value, Small Cap Growth, Small Cap Value and Ultra Growth Funds. The Independent Directors recognized that this practice may result in the Advisor foregoing additional fees on a larger asset base and exposing the Advisor to reduced revenues from asset outflows. The Independent Directors seek to encourage the Advisor’s practice of closing Funds when necessary or appropriate to maintain or enhance performance. Given the foregoing factors, the Independent Directors determined that the current advisory fee levels were acceptable.
2. Fees Charged to Other Advisor and Sub-Advisor Clients
In reviewing fees, the Independent Directors also compared 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 manages separate account client assets in styles similar to those used for certain Funds, including Core Growth, Emerging Markets Small Cap, Heritage Growth, International Growth, Micro Cap, Small Cap Growth, Small Cap Value, Ultra Growth and Income Equity Funds. With
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respect to separate accounts, the fees for these accounts are generally lower than the comparable Fund (except the fees are the same in the case of the Heritage Growth Fund). The Independent Directors considered the differences in the product types, including the services provided. In this regard, the Independent Directors have noted that the range of services provided to a Fund in managing and operating a registered investment company is more extensive than those provided to a separately managed account. The Advisor provides services to each Fund that extends beyond the portfolio management services provided to its separate account clients. As described in more detail above, these services include business, administrative, compliance, marketing and other services required to operate a Fund. Further, the Independent Directors recognized that each Fund operates in a highly regulated industry requiring extensive compliance. Such responsibilities generally are not required to the same extent for separate accounts. Accordingly, the Independent Directors determined that the nature and number of services provided to operate a Fund merit higher fees than those of separate accounts. Similarly, with respect to the private investment company, such company is not subject to the extensive regulatory scheme required of operating registered investment companies such as the Funds, and therefore the services required differ. In addition, the Independent Directors 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 Funds.
In considering the fees of the Sub-Advisors for the Income Fund and U.S. Treasury Fund, the Independent Directors also considered the pricing schedule the respective Sub-Advisor charges for similar investment management services for other clients. In this regard, the sub-advisory fee for the U.S. Treasury Fund was at the lower end of the Sub-Advisor’s fee schedule. Similarly, the sub-advisory fee for the Income Fund was at the low end of fees 1st Source assesses for institutional accounts. In addition, as noted above, the Independent Directors recognized that although the overall advisory fee paid by the Income Fund remained the same, the sub-advisory fee to 1st Source was proposed to be reduced from 0.52% of average daily net assets to 0.28% of average daily net assets. Accordingly, the Advisor would retain a greater portion of the advisory fee paid by the Income Fund. The Independent Directors also noted that the sub-advisory fees were established through arm’s length negotiations between the Advisor and the Sub-Advisors which are unaffiliated with the Advisor.
3. Profitability of Advisor
The Independent Directors reviewed pro forma profitability information for the Advisor derived from its relationship with each Fund for the fiscal year ended September 30, 2009. In reviewing profitability, the Independent Directors reviewed the methodology utilized to allocate revenue and expenses of the Advisor among the Funds. In considering profitability, the Independent Directors 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. In addition, the Independent Directors noted that it is difficult to predict with any degree of certainty the impact of the Transaction on the Advisor’s profitability. Notwithstanding the foregoing, the Independent Directors considered the obligations of Wasatch to purchase the shares in Wasatch of Dr. Stewart and other personnel and the impact of this obligation on the Advisor’s cash flow.
In addition to reviewing the Advisor’s profitability, the Directors also reviewed the Advisor’s relative profitability compared to publicly available information concerning unaffiliated advisors. However, the Independent Directors recognized the difficulties in comparing the profitability of various advisors given that individual fund or product line profitability of other advisors generally is not publicly available and the profitability information that is available for certain advisors or management firms may not be representative of the industry and may be affected by numerous factors including the structure of the particular advisor, the types of funds managed, its business mix, expense allocations, and the advisor’s capital structure and cost of capital. The Independent Directors noted that the Advisor’s profitability is within a reasonable range compared to the peer group of unaffiliated advisors. Based on their review, the Independent Directors were satisfied that the Advisor’s level of profitability from its relationship with each Fund was not unreasonable in light of the services provided.
The Directors also noted that during the past year the Advisor’s revenues have shrunk significantly due to reductions in assets under management caused by the generally poor market for equities and shareholder withdrawal. The Directors also discussed the Advisor’s response to this reduction in revenue which included, among other things, reductions in administrative staff (but not reductions in research personnel) and significant salary freezes and reductions for Advisor employees. The Directors carefully considered the impact, if any, of these reductions on the Advisor’s profitability and on the respective Funds.
With respect to the Sub-Advisors, although a profitability analysis was not available, the Independent Directors received certain financial statements of the Sub-Advisors. Given that the Sub-Advisors’ fees are at the low end of their respective fee schedules, the fact that the sub-advisory fee is established through arm’s length negotiations, and the range of fees the Sub-Advisor assesses to other clients, the Independent Directors concluded that HIMCO’s and 1st Source’s profitability from its relationship with the U.S. Treasury Fund and Income Fund, respectively, is not unreasonable.
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 a Fund’s purchases and sales of securities, as described in further detail below.
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| D. | ECONOMIESOF SCALEAND WHETHER FEE LEVELS REFLECT THESE ECONOMIESOF SCALE |
In reviewing advisory fees, the Independent Directors recognized that the advisory fee schedules for the Funds do not contain breakpoints that reduce the fee rate on assets above certain levels. With respect to funds investing in small and micro cap companies (including the Emerging Markets Small Cap, International Opportunities, Micro Cap, Micro Cap Value, Small Cap Growth, Small Cap Value, Core Growth, Global Opportunities, International Growth and Ultra Growth Funds), the Independent Directors recognized that the economies of scale and profit potential that may be achieved may be limited. In this regard, the Independent Directors were aware that it is more difficult to replicate performance in the small and micro cap funds at larger asset sizes and therefore, as noted above, a Fund may be closed to new and/or existing shareholders from time to time. This practice enhances the Advisor’s focus on achieving performance by maintaining assets at levels it can effectively manage but may limit economies of scale derived from a larger asset base. The Independent Directors, as noted, also recognized that this practice may limit the Advisor’s profit potential from earning additional fees on a larger asset base and expose the Advisor to reduced revenues caused by asset outflows when Funds are closed to investors. The Independent Directors also noted the costs associated with the Advisor’s research intensive investment approach. With respect to the larger-cap Funds, the Independent Directors further recognized the Advisor’s position that to the extent economies of scale exist, the proposed level of advisory fee reflects such economies of scale. In addition, the Independent Directors recognized the reduction in assets under management of the Funds during the past year and the corresponding impact on the Advisor to reimburse fees pursuant to its expense limitation agreement discussed above. Considering the factors above, the Independent Directors concluded the absence of breakpoints was acceptable and that such economies as exist are adequately reflected in the Advisor’s fee structure.
| 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 Funds. 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 applicable Fund’s brokerage transactions. The Advisor may receive soft dollar benefits from each Fund, subject to the exceptions noted below for the sub-advised Funds. 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 a Fund’s transactions 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. With respect to the Sub-Advisors, the Independent Directors recognized that HIMCO currently does not have soft dollar arrangements although 1st Source may benefit from soft dollar arrangements. The Independent Directors took these “fall out” benefits, if any, into account when reviewing the level of advisory or sub-advisory fees.
| F. | APPROVALOF NEW ADVISORYAND SUB-ADVISORY AGREEMENTS |
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 New Advisory Agreement for each Fund, the New HIMCO Sub-Advisory Agreement for the U.S. Treasury Fund, and the New 1st Source Sub-Advisory Agreement for the Income Fund were fair and reasonable, that the Advisor’s and Sub-Advisors’ fees are reasonable in light of the services provided to the respective Fund, and that the New Advisory Agreement should be approved on behalf of each Fund and the New Sub-Advisory Agreements should be approved on behalf of the U.S. Treasury Fund and the Income Fund, respectively. With respect to the Trust, as noted above, because the Trust Advisory Agreement between the Trust and Advisor and the Trust Sub-Advisory Agreements between the Advisor and HIMCO and 1st Source on behalf of the applicable series of the Trust corresponding to the U.S. Treasury Fund and Income Fund were substantially similar to the New Advisory Agreement and applicable New Sub-Advisory Agreement approved with respect to the Company and its series, the considerations and findings of the Board with respect to the New Advisory Agreement and New Sub-Advisory Agreements are equally applicable to the approval of the Trust Advisory Agreement with the Advisor and the Trust Sub-Advisory Agreements with 1st Source and HIMCO on behalf of the applicable series of the Trust.
APPROVALOF INTERIM AGREEMENTS
If necessary to ensure continuity of advisory services, the Interim Advisory Agreement and Interim Sub-Advisory Agreements will take effect upon the closing of the Transaction. The terms of the Interim Advisory Agreement and Interim Sub-Advisory Agreements are substantially identical to those of the corresponding Prior Advisory Agreement and Prior Sub-Advisory Agreements, respectively, except for the effective date, termination and escrow provisions required under applicable law. In light of the foregoing, the Board, including the Independent Directors, unanimously determined that the scope and quality of services to be provided to the Funds under the respective Interim Advisory Agreement and Interim Sub-Advisory Agreement are at least equivalent to the scope and quality of services provided under the applicable Prior Advisory Agreement and Prior Sub-Advisory Agreements.
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| WASATCH FUNDS — Service Providers | MARCH 31, 2010 | |
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.
6836 Bee Caves Rd.
Building 2, Suite 100
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 | ||
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 140. 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 149.
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 trustees’ 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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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 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 148. 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 date 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
149
Table of Contents
Semi-Annual Report &
Quarterly Commentaries
WASATCH
FUNDS
Deeper, Disciplined InvestingTM
800.551.1700 • www.wasatchfunds.com
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| Item 2: | Code of Ethics. |
Not required.
| Item 3: | Audit Committee Financial Expert. |
Not required.
| Item 4. | Principal Accountant Fees and Services. |
Not required.
| 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 Trustees 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 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)). |
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| (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) | Not required. | |
(a)(2) | The certifications required by Rule 30a-2 of the 1940 Act are attached hereto. | |
(a)(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 TRUST | ||
| By: | /s/ SAMUEL S. STEWART, JR. | |
| Samuel S. Stewart, Jr. | ||
| President (principal executive officer) of Wasatch Funds Trust | ||
Date: June 4, 2010
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 Trust |
Date: June 4, 2010
| By: | /s/ CINDY B. FIRESTONE | |
| Cindy B. Firestone | ||
| Treasurer (principal financial officer) of Wasatch Funds Trust | ||
Date: June 4, 2010