Table of Contents
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: 811-04920
WASATCH FUNDS TRUST
(Exact name of registrant as specified in charter)
505 Wakara Way, 3rd Floor
Salt Lake City, UT 84108
(Address of principal executive offices)(Zip code)
| (Name and Address of Agent for Service) | Copy to: | |
Eric S. Bergeson Wasatch Advisors, Inc. 505 Wakara Way, 3rd Floor Salt Lake City, UT 84108 | 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, 2018
Table of Contents
Item 1. Report to Shareholders.
Table of Contents
2018 SEMI-ANNUAL REPORT AND QUARTERLY COMMENTARIES
March 31, 2018
EQUITY FUNDS / Wasatch Core Growth Fund Wasatch Emerging India Fund Wasatch Emerging Markets Select Fund Wasatch Emerging Markets Small Cap Fund Wasatch Frontier Emerging Small Countries Fund Wasatch Global Opportunities Fund Wasatch Global Value Fund Wasatch International Growth Fund Wasatch International Opportunities Fund Wasatch Long/Short 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 World Innovators Fund BOND FUNDS / Wasatch-1st Source Income Fund Wasatch-Hoisington U.S. Treasury Fund
Table of Contents
WASATCH FUNDS
Salt Lake City, Utah
www.WasatchFunds.com
800.551.1700
Table of Contents
| TABLEOF CONTENTS | ||
| ||
| ||
| 2 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 8 | ||||
| 9 | ||||
Wasatch Emerging Markets Small Cap Fund® Management Discussion | 10 | |||
| 11 | ||||
Wasatch Frontier Emerging Small Countries Fund® Management Discussion | 12 | |||
| 13 | ||||
| 14 | ||||
| 15 | ||||
| 16 | ||||
| 17 | ||||
| 18 | ||||
| 19 | ||||
Wasatch International Opportunities Fund® Management Discussion | 20 | |||
| 21 | ||||
| 22 | ||||
| 23 | ||||
| 24 | ||||
| 25 | ||||
| 26 | ||||
| 27 | ||||
| 28 | ||||
| 29 | ||||
| 30 | ||||
| 31 | ||||
| 32 | ||||
| 33 | ||||
| 34 | ||||
| 35 | ||||
| 36 | ||||
| 37 | ||||
| 38 | ||||
| 39 | ||||
Wasatch-Hoisington U.S. Treasury Fund® Management Discussion | 40 | |||
| 41 | ||||
| 42 | ||||
| 44 | ||||
| 47 | ||||
| 88 | ||||
| 94 | ||||
| 100 | ||||
| 108 | ||||
| 116 | ||||
| 118 | ||||
| 144 | ||||
| 144 | ||||
| 145 | ||||
| 145 | ||||
| 145 | ||||
Board Considerations for Advisory and Sub-Advisory Agreements of the Wasatch Funds | 146 | |||
| 156 | ||||
| 156 |
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.
1
Table of Contents
| LETTERTO SHAREHOLDERS — DRIP, DRIP, DRIP | ||
| ||
| ||
Samuel S. Stewart, Jr. PhD, CFA President of | DEAR FELLOW SHAREHOLDERS:
Some bear markets can best be described as being like the maddening drip, drip, drip of water — often referred to as Chinese water torture. Inexplicably, stocks decline almost every day and they do so without regard to any significant relevant news. Our last bear market, now a decade in the past, was not like that. Yes, stocks went down on a near daily basis but bad news also arrived on an almost daily basis. It was easy for investors to understand why stocks were going down. During much of the past year, we were in — and perhaps still are in — what I call a “reverse Chinese water torture market.” That is, until the increased volatility of the first quarter, stocks had been going up on an almost daily basis but generally not based on any significant positive news. This led investors to suffer FOMO (fear of missing out). One-way markets, whether they’re moving down or up, provide investors with a quandary. The weakness of a one-way bear market leads investors to ask, “Is it too late to sell?” The strength of a one-way bull market leads investors to ask, “Is it too late to buy?” In both cases, the correct answer is initially “no,” but it’s important to remember that one-way markets demand that investors change their strategy at some point and so at some point the correct answer changes. Determining that point is difficult, but critical, |
since most one-way markets end in capitulation. Bears end in a final surge of selling until “everyone” has thrown in the towel. Bulls end in a final surge of buying until “everyone” is all in.
The notion of a one-way market suggests a market that’s somehow come loose from its more stable economic moorings. To be sure, the economy rises and falls but it almost always does so in a series of ebbs and flows, working its way higher or lower rather than moving “high” or “low” in a straight line. A useful way to determine how close a market is to the capitulation stage is to try to understand where the market is relative to the economy.
ECONOMY
In our one-way up market, the economy has generally been growing stronger with the cherry on top being the recent tax cuts. Now, however, there are signs of a shift.
| • | While stronger-than-expected economic indicators were the norm in the second half of 2017, this year economic indicators are coming in a bit softer. A recently revised estimate showed real gross domestic product (GDP) for the fourth quarter of 2017 increased at an annual rate of 2.9%, slower than the 3.2% reported for the third quarter. |
| • | Employment data was particularly strong for January and February, sparking fears of inflation. In contrast, March data was unexpectedly weak, showing only 103,000 jobs versus the expected 193,000 jobs. |
| • | The Federal Reserve raised interest rates in March and seems intent on doing so twice more this year, and three times instead of two times in 2019. That’s throwing sand into the gears of the economy and a reason to be more cautious on the market. |
While none of this suggests that an economic peak is imminent, it does suggest that the economy is transitioning from “accelerating” to “stabilizing.” If this is happening to the economy, it seems a distinct possibility that a shift in the market might also be forthcoming. Certainly the sharp selloffs in stocks we endured in recent months reminded us of what capitulation can look like. However, to the extent these corrections fade into the background and the market resumes “melt-up” behavior, I’d see it as a significant disconnect between the economy and the market.
That’s when investors can’t afford to lose their bearings — because the time of capitulation is likely approaching. At such a time, I believe the appropriate response is to emphasize quality in an investment portfolio. It’s no good to just step to the sidelines. How does one determine the right time to get back in? And the risk of missing out on long-term gains is too great. But one can make adjustments to one’s investment portfolio to emphasize characteristics that generally have been favorable through and after historical points of inflection. To me, that means a focus on quality first and foremost.
MARKETS
Taking the first quarter of 2018 as a whole, markets were flattish. Fading confidence in the near-term economic outlook dashed expectations of a surge in late-cycle value stocks. Instead, growth stocks outperformed value stocks across the market-capitalization spectrum. The uncertain environment favored Wasatch’s bottom-up investment approach, which seeks quality companies as evidenced by strong earnings growth, sustainable competitive advantages and experienced management teams.
In the U.S., newly announced tariffs on aluminum and steel — as well as separate measures directed specifically at China — hung over the market during March. Because smaller U.S. companies typically have less direct exposure to international trade, small-company stocks and micro caps outperformed large-cap issues during the quarter. Additionally, smaller U.S. companies currently tend to be valued more attractively than their larger peers, and smaller companies’ domestic focus leaves them well-positioned to benefit from a lower corporate tax rate.
In the U.S., the large-cap S&P 500® Index logged a three-month loss of -0.76%. The technology-heavy Nasdaq Composite Index fared better, up 2.59% for the quarter. The Russell 2000® Index of small caps was down -0.08% for the quarter.
International stock markets were mixed. The MSCI World ex USA Index was down -2.04% for the quarter, while the MSCI Emerging Markets Index rose 1.42%.
2
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
Here I’ll circle back to my view that none of this means a significant market correction, or even just tepid performance, is close at hand. The U.S. economy is strong. Synchronous growth is still underway around the globe. U.S. tax-cut benefits have the potential to prompt companies to make meaningful capital investments. This is a time of growth.
It’s also a time to keep your wits about you because one-way markets, whether bear or bull, don’t stay one-way indefinitely. My suggestion, once again, is to remain focused on the quality of your investments.
WASATCH
It’s been 43 years since I founded Wasatch in 1975. Building this firm and serving you, our investors, has been the focus of my professional life and my great privilege. Later this year, I will depart Wasatch to join my sons Josh and Spence at Seven Canyons Advisors, an SEC-registered investment advisor recently founded by our family.
When I started Wasatch, one of my first tasks was to select an appropriate name. I wanted a name that would symbolize a firm built to outlast me — hence, Wasatch Advisors and not Stewart Advisors. I wanted to build not just a firm but also a culture that would endure irrespective of me. Together with the rest of the team at Wasatch, I’m proud that we’ve done just that.
As you may know, I stepped down from the role of CEO at Wasatch almost 10 years ago. Under the continuing leadership of CEO JB Taylor and my other colleagues, Wasatch will continue to serve you with the same commitment to excellence.
Like me, my son Josh is a portfolio manager here at Wasatch. The Wasatch Funds Board of Trustees approved a plan to merge the two funds he and I manage for Wasatch — the World Innovators Fund and the Strategic Income Fund — into two new funds with similar objectives and strategies that we’ll continue to manage at Seven Canyons. The timing of that potential transition is not yet clear, but we anticipate the merger will occur during the third quarter of 2018.
Apart from Josh and me, Wasatch’s global team of portfolio managers and analysts stands at 34 investment professionals. As always, the firm is still 100% employee-owned. To be part of this outstanding place — this outstanding group of people — has been the honor of a lifetime.
With sincere thanks for your continued investment and for your trust,
Sam Stewart
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.
The Wasatch Strategic Income Fund’s primary investment objective is to capture current income. A secondary objective is long-term growth of capital. The Wasatch World Innovators Fund’s investment objective is long-term growth of capital.
Wasatch Advisors is the investment advisor to Wasatch Funds.
Wasatch Funds are distributed by ALPS Distributors, Inc. (ADI). ADI is not affiliated with Wasatch Advisors, Inc. or Seven Canyons Advisors, LLC.
Wasatch Advisors, Inc. is not affiliated with Seven Canyons Advisors, LLC.
A bear market is generally defined as a drop of 20% or more in stock prices over at least a two-month period.
A bull market is defined as a prolonged period in which investment prices rise faster than their historical average. Bull markets can happen as the result of an economic recovery, an economic boom, or investor psychology.
Earnings growth is a measure of growth in a company’s net income over a specific period, often one year.
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 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 is widely used in the industry to measure the performance of small-company stocks.
The Nasdaq Composite is a market-capitalization weighted index of the more than 3,000 common equities listed on the Nasdaq stock exchange.
The S&P 500 Index includes 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged and is a commonly used measure of common stock total return performance.
The MSCI Emerging Markets Index captures large and mid cap representation across 24 emerging market countries. With 839 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 developed market countries — excluding the United States. With 1,020 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
You cannot invest directly in these or any indexes.
3
Table of Contents
| WASATCH CORE GROWTH FUND (WGROX / WIGRX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Core Growth Fund is managed by a team of Wasatch portfolio managers led by JB Taylor, Paul Lambert and Mike Valentine.
JB Taylor Lead Portfolio Manager |
Paul Lambert Portfolio Manager |
Mike Valentine Portfolio Manager |
OVERVIEW
For the three-month period ended March 31, 2018, the Wasatch Core Growth Fund — Investor Class gained 4.13% compared to a -0.08% loss for its primary benchmark, the Russell 2000 Index. The Russell 2000 Growth Index advanced 2.30%.
In 2018’s first quarter, market volatility reemerged in rather dramatic fashion. After a relatively uneventful January, U.S. stocks sold off sharply in February. Robust employment and wage growth, rising bond yields and recently enacted tax cuts caused investors to worry about higher inflation and whether Federal Reserve (Fed) officials would act more aggressively to slow economic growth. Nevertheless, the Fed has been sticking to its plan for gradual increases with one interest-rate hike in March and two more scheduled this year. After February’s swoon, stocks partially recovered, only to fall again in the second half of March on somewhat softer economic indicators, turmoil in the tech world and fears of a trade war with China after the U.S. government proposed tariffs on steel and aluminum and specific Chinese products.
DETAILSOFTHE QUARTER
The Fund’s outperformance of the Russell 2000 Index during the first quarter of 2018 was primarily due to stock selection, which was especially beneficial in the health-care, industrials, consumer-discretionary and information-technology sectors.
In our view, the Fund’s outperformance in choppier markets underscores its bias toward high-quality companies, as evidenced by strong earnings growth, sustainable competitive advantages and experienced management teams. These characteristics are best measured on a company-specific basis — thus our intensive, bottom-up research process. In times of market stress, we generally expect investors to prefer sounder companies, and we see the Fund’s year-to-date performance relative to its benchmark as bearing that out.
Historically, the Fund has had a bias toward more-profitable companies, on average, than those that make up the Russell 2000 Index. For such highly profitable companies, tax reform may free up additional cash that could be
used for growing the business, providing higher compensation for employees, buying back shares or increasing shareholder dividends. As a result, we see the Fund as well-positioned with regard to tax reform.
Two of the Fund’s top contributors for the first quarter were repeats from 2017’s fourth quarter. First was Cimpress N.V., a U.S.-listed firm domiciled in the Netherlands. The company’s suite of “mass customization” brands includes Vistaprint. Cimpress operates three business segments, all of which are experiencing accelerating organic growth. Investors rewarded this growth — and the progress management has made in paying down debt and furthering restructuring initiatives — with over 25% share-price appreciation during the first quarter.
Second was Copart, Inc. This U.S. auto salvager has continued to impress us with both its growth and quality metrics. We held Copart for many months before its share price really took off. It’s a prime example of how we’re happy to be patient with companies we see as being high-quality with significant growth opportunities even though it may take some time to reap the potential rewards.
Healthcare Services Group, Inc., which provides housekeeping, food and other services to the health-care facilities industry, was the Fund’s largest detractor. The company’s quarterly reporting in February included notice of a one-time effect on net income as a result of tax reform. In addition, the process of bringing customers onboard has been more costly than previously anticipated. More broadly, though, the company has experienced growth in both the number of customers and the average number of services provided to customers. Here too, we’re willing to be patient given the company’s growth potential.
Another large detractor for the quarter was Altra Industrial Motion Corp. Revenue growth has been strong for this maker of mechanical power transmission components, but its margins have been negatively affected by transitory supply-chain issues and commodity price inflation. While many manufacturing companies are facing similar inflationary pressures, we are confident that Altra’s leading market position will allow it to pass on higher costs. We expect the company’s margins to improve going forward.
OUTLOOK
Although some economic indicators have been softening and the financial markets have been expressing investors’ nervousness, the environment is still positive overall. Having said that, we’re keeping an eye on the Fed’s action with regard to interest rates. While we haven’t positioned the Fund with any particular view on interest-rate policy, we’re cognizant of interest-rate risks — best seen as a tug of war between positive economic news and the Fed’s efforts to keep the economy from overheating.
As always, our focus remains on identifying companies with strong growth prospects. We believe the Fund is positioned with the potential to do well whether the economy keeps humming along or the Fed puts on the brakes.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
4
Table of Contents
| WASATCH CORE GROWTH FUND (WGROX / WIGRX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Core Growth (WGROX) — Investor | 12.11% | 24.19% | 13.80% | 11.77% | ||||||||||||||||
Core Growth (WIGRX) — Institutional | 12.19% | 24.37% | 13.92% | 11.84% | ||||||||||||||||
Russell 2000® Index | 3.25% | 11.79% | 11.47% | 9.84% | ||||||||||||||||
Russell 2000® Growth Index | 6.99% | 18.63% | 12.90% | 10.95% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Core Growth Fund are Investor Class: 1.21% / Institutional Class — Gross: 1.10%, Net: 1.05%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
Copart, Inc. | 3.4% | |||
ICON plc (Ireland) | 3.1% | |||
Cimpress N.V. | 2.9% | |||
Monro, Inc. | 2.9% | |||
Old Dominion Freight Line, Inc. | 2.8% | |||
| Company | % of Net Assets | |||
Pool Corp. | 2.7% | |||
Cantel Medical Corp. | 2.6% | |||
Tyler Technologies, Inc. | 2.6% | |||
Eagle Bancorp, Inc. | 2.6% | |||
Trex Co., Inc. | 2.5% | |||
| ** | As of March 31, 2018, there were 52 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. 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 indexes.
5
Table of Contents
| WASATCH EMERGING INDIA FUND (WAINX / WIINX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Emerging India Fund is managed by a team of Wasatch portfolio managers led by Ajay Krishnan and Matthew Dreith.
Ajay Krishnan, CFA Lead Portfolio Manager |
Matthew Dreith, CFA Associate Portfolio Manager | OVERVIEW
The benchmark MSCI India Investable Market Index (IMI) fell -8.02% during what was an up-and-down first quarter of the year for Indian equities. Outperforming its benchmark, the Wasatch Emerging |
India Fund — Investor Class declined -4.70%.
India’s stock market began the quarter in rally mode, as last year’s advance continued unabated during the first four weeks of 2018. In late January, however, global stock-market jitters and concerns about an international trade war sent Indian stocks lower. Worries that lower-than-expected tax revenues might lead India’s government to impose a capital-gains tax contributed to early skittishness. Later, news of a $2 billion fraud centered at one of the country’s state-owned banks rocked investor confidence.
Rising interest rates also weighed on sentiment. Rates had been on the rise in India since mid-2017, as bond investors mulled a likely surge in government spending ahead of next year’s elections. The Modi government’s funding requirements created an excess supply of government debt that continued to push bond yields higher during the first quarter.
DETAILSOFTHE QUARTER
The consumer-discretionary sector was the Fund’s greatest source of outperformance relative to the benchmark. Although the benchmark’s consumer-discretionary positions posted a double-digit percentage loss as a group, the Fund’s holdings in the sector ended the quarter with a modest gain. Amid the broad weakness in Indian equities, the information-technology sector was the only sector of the Index to generate a positive first-quarter return. Our significantly underweight allocation to this top-performing sector was a headwind to performance and the Fund’s largest source of weakness against the benchmark.
The strongest contributor to Fund performance for the quarter was V-Mart Retail Ltd. The company operates department stores specializing in apparel. V-Mart also sells a wide range of general merchandise and fast-moving consumer goods. Because V-Mart operates primarily in rural areas of India, the company stands to benefit as the Modi government seeks to create jobs and appeal to voters ahead of national elections in 2019.
MakeMyTrip Ltd. was the second-largest contributor. The company operates the leading online travel agency (OTA) in India. Shares of MakeMyTrip had languished over the previous three quarters on concerns that increased competition might impact the company’s profitability. Those worries
eased in February after MakeMyTrip announced a partnership with OYO, the largest hospitality company in India.
Third-largest contributor Godrej Consumer Products Ltd. is a consumer-goods company. Godrej sells soaps, hair colors, toiletries and household goods in India and internationally. Consolidated net profit rose 22.1% year-over-year in the company’s most-recent quarter on an 8.5% increase in comparable sales. Management cited strong volume growth in India, especially in rural areas of the country.
Industrial companies accounted for four of the Fund’s five largest detractors from performance during the quarter. Among them, the greatest detractor was Elgi Equipments Ltd. Elgi manufactures and sells air compressors in India and internationally. The company currently receives about half its revenue from outside India and approximately 60% of its international revenue from the U.S. and Europe. Elgi’s shares declined on concerns that U.S. protectionist trade policies might derail plans for further inroads into the U.S. market.
Other weak industrials in the Fund included Somany Ceramics Ltd. and Kajaria Ceramics Ltd. — two large producers of ceramic tiles for walls and floors. A reduction in India’s goods-and-services tax (GST) last November caused customers to delay purchases until the new, lower tax rate had taken effect. An uptick in gas prices also hurt profitability, resulting in lower-than-expected quarterly earnings at the companies compared to the same period a year ago.
OUTLOOK
Although a rising supply of government debt has driven Indian bond yields higher since July of last year, there are signs that interest-rate pressures in India may be easing. In late March, the Indian government announced a borrowing plan for the first half of its fiscal year that is lower than in previous years. In an attempt to further encourage bond investors, India will issue inflation-indexed bonds and shorter-maturity debt. The Modi government also is seeking to increase purchase limits for foreign investors in government securities.
Another factor that contributed to general first-quarter malaise in Indian stocks was fading optimism about the prospects of Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) in upcoming state polls this year and general elections in 2019. While a strong showing from the BJP would help further Mr. Modi’s pro-business agenda, we seek to invest in companies whose business prospects do not depend on a particular political outcome.
Despite the slight deterioration we saw in the first quarter, we believe India’s macro situation still looks solid. As for our portfolio companies, we have been seeing accelerating earnings growth that we have been capturing in the Fund. For the most-recent quarter, we calculated that the Fund’s holdings, on average, turned in 27% earnings growth. We continue to have confidence in India as an attractive place to invest and in the long-term growth potential of our portfolio companies.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
6
Table of Contents
| WASATCH EMERGING INDIA FUND (WAINX / WIINX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 4/26/11 | |||||||||||||||||
Emerging India (WAINX) — Investor | 7.50% | 19.18% | 18.07% | 12.55% | ||||||||||||||||
Emerging India (WIINX) — Institutional | 7.45% | 19.07% | 18.18% | 12.62% | ||||||||||||||||
MSCI India IMI | 4.31% | 11.22% | 9.44% | 3.08% | ||||||||||||||||
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging India Fund are Investor Class: 1.73% / Institutional Class — Gross: 1.67%, Net: 1.50%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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 unstable currencies, highly volatile securities markets and political and social instability, which are described in more detail in the prospectus.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
| V-Mart Retail Ltd. (India) | 5.0% | |||
| Bajaj Finance Ltd. (India) | 5.0% | |||
| Housing Development Finance Corp. Ltd. (India) | 4.7% | |||
| Endurance Technologies Ltd. (India) | 4.6% | |||
| Amara Raja Batteries Ltd. (India) | 4.6% | |||
| Company | % of Net Assets | |||
| MakeMyTrip Ltd. (India) | 4.5% | |||
| Divi’s Laboratories Ltd. (India) | 4.4% | |||
| Quess Corp. Ltd. (India) | 4.2% | |||
| Page Industries Ltd. (India) | 4.1% | |||
| Pidilite Industries Ltd. (India) | 3.9% | |||
| ** | As of March 31, 2018, there were 42 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: April 26, 2011. The MSCI India IMI (Investable Market Index) is designed to measure the performance of the large-, mid- and small-cap segments of the Indian market. The Index covers approximately 99% of the free-float adjusted market capitalization of the Indian equity universe. You cannot invest directly in this or any index.
7
Table of Contents
| WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Emerging Markets Select Fund is managed by a team of Wasatch portfolio managers led by Ajay Krishnan, Roger Edgley, Scott Thomas and Matthew Dreith.
Ajay Krishnan, CFA Lead Portfolio Manager
Scott Thomas, CFA Associate Portfolio |
Roger Edgley, CFA Portfolio Manager
Matthew Dreith, CFA Associate Portfolio Manager | OVERVIEW
A global selloff triggered by prospects of a trade war rocked emerging-market equities during the first quarter. The benchmark MSCI Emerging Markets Index surrendered most of an early double-digit percentage gain to finish up 1.42% for the quarter. The Wasatch Emerging Markets Select Fund — World equity markets kicked off 2018 with a strong January rally, before |
rising U.S. interest rates disrupted the advance during the final sessions of the month. Later, concerns about global trade moved to the forefront when the White House announced tariffs on imported aluminum and steel.
DETAILSOFTHE QUARTER
Korea was the Fund’s greatest source of outperformance relative to the benchmark. Though Korean stocks were weak during the quarter, an outsized gain in a single stock enabled the Fund’s Korean holdings to generate a positive return as a group.
The Fund’s largest source of weakness against the benchmark was Brazil, where investors appeared to rotate away from the higher-quality companies we seek to own in the Fund. With investor sentiment on the upswing in Brazil, the most defensive of our Brazilian holdings became less appealing to investors.
India, the most-heavily weighted country in the Fund, was among many poorly performing countries in the Index. However, the Fund’s Indian stocks declined significantly less than those in the Index, helping performance relative to the benchmark.
The strongest contributor to Fund performance for the quarter was Medytox, Inc. Based in Korea, the company manufactures injectable neurotoxins for cosmetic applications and the treatment of muscular disorders. Shares of Medytox surged as investors factored positive future developments into the company’s stock price.
Second-best contributor NMC Health plc provides health-care services in the United Arab Emirates and other countries in the Middle East. NMC saw its stock price rise on news that the company had landed a contract to manage two hospitals in Egypt.
Positive underlying fundamentals and healthy earnings growth helped our Chinese holdings outgain their benchmark counterparts during the first quarter. Top contributors included 51job, Inc., the leading online job search and recruitment site in China.
The greatest detractor from Fund performance for the quarter was BGF Retail Co. Ltd. The company operates convenience stores in Korea. Shares of BGF declined on concerns about the impact of the recent increase in Korea’s minimum wage.
Raia Drogasil S.A., the second-largest detractor, operates a leading drug-store chain in Brazil. The upturn in Brazil’s economy has made defensive issues such as Raia Drogasil less appealing to investors and has increased access to capital for the company’s competitors.
Another weak stock in the Fund was Page Industries Ltd. The company makes and sells undergarments under the Jockey brand in India. We have no fundamental news to relate concerning Page and attribute the stock’s weakness to general first-quarter malaise in Indian equities.
OUTLOOK
To the extent that global factors continue to create volatility for emerging-market equities, we expect the Fund’s relative performance to benefit from our greater emphasis on long-term growth stories tied to secular increases in domestic demand. By focusing on companies and countries with their own unique growth drivers, we seek to make the Fund less subject to whims of the global economy and more reflective of the long-term potential of emerging markets.
While rising U.S. Treasury yields appear to have spooked world stock markets during the first quarter, the dynamics underlying the current interest-rate cycle are likely very different from those of the so-called “Taper Tantrum” of 2013. Of particular note is the U.S. dollar’s depreciation against a basket of rival currencies over the past six months — even as the yield on the 10-year Treasury note increased. With interest rates stabilizing in Europe and already on the rise in China, a scenario in which rising rates in the U.S. significantly underpin the dollar seems much less likely this time around.
Several other factors also appear to be at play. We suspect the worsening U.S. fiscal situation has given international investors less reason to fear a surge in the greenback. Additionally, the recent pickup in global growth has made it much more difficult for the U.S. to outgrow the rest of the world. Compared to developed markets, we believe the faster growth rates and more-attractive valuations of emerging markets should continue to merit favorable attention from investors.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
8
Table of Contents
| WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 12/13/12 | |||||||||||||||||
Emerging Markets Select (WAESX) — Investor | 7.46% | 22.17% | 1.67% | 2.31% | ||||||||||||||||
Emerging Markets Select (WIESX) — Institutional | 7.55% | 22.58% | 1.99% | 2.64% | ||||||||||||||||
MSCI Emerging Markets Index | 8.96% | 24.93% | 4.99% | 4.65% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Select Fund are Investor Class — Gross: 1.90%, Net: 1.51% / Institutional Class — Gross: 1.52%, Net: 1.21%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. 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 | |||
Alibaba Group Holding Ltd. ADR (China) | 5.4% | |||
Bajaj Finance Ltd. (India) | 5.4% | |||
Medytox, Inc. (Korea) | 5.2% | |||
Tencent Holdings Ltd. (China) | 5.1% | |||
NMC Health plc (United Arab Emirates) | 4.5% | |||
| Company | % of Net Assets | |||
Ctrip.com International Ltd. ADR (China) | 4.0% | |||
Raia Drogasil S.A. (Brazil) | 3.8% | |||
HDFC Bank Ltd. (India) | 3.6% | |||
Silergy Corp. (Taiwan) | 3.5% | |||
MakeMyTrip Ltd. (India) | 3.4% | |||
| ** | As of March 31, 2018, there were 36 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: December 13, 2012. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index designed to measure the equity market performance of emerging markets. You cannot invest directly in this or any index.
9
Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Emerging Markets Small Cap Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley, Andrey Kutuzov, Scott Thomas and Kevin Unger.
Roger Edgley, CFA Lead Portfolio Manager
Scott Thomas, CFA Associate Portfolio Manager |
Andrey Kutuzov, CFA Associate Portfolio Manager
Kevin Unger, CFA Associate Portfolio Manager | OVERVIEW
For the three months ended March 31, 2018, the Wasatch Emerging Markets Small Cap Fund — Investor Class gained 0.31% and slightly outperformed its benchmark, the MSCI Emerging Markets Small Cap Index, which returned 0.17%. Following an extremely strong year in 2017, world equity markets kicked off 2018 with a strong January rally, before rising U.S. interest rates disrupted the advance during the final sessions of |
the month. Later, concerns about global trade moved to the forefront when the White House announced tariffs on imported aluminum and steel and separate measures directed specifically at China. While markets have been volatile and some uncertainty has surfaced, our outlook is still upbeat given the investment opportunities we have been seeing.
We believe the Fund’s focus on companies tied to secular demand growth in their home countries served our investors well during the first quarter.
DETAILSOFTHE QUARTER
South Korea added the most to the Fund’s return and outperformance of the benchmark for the first quarter. The Fund’s top individual contributor was Medytox, Inc. Based in Korea, the company manufactures neurotoxins for cosmetic applications and the treatment of muscular disorders. Shares of Medytox surged on the potential approval of Medytox products in China in 2019, as well as a previously announced licensing deal.
The common thread with several of our Korean holdings is that they have made new technological advances and have strong returns on capital to help drive their research and the growth of their businesses. In our view, Korea’s strong base of an educated population and manufacturing know-how drives a world-class ecosystem for small Korean companies.
The Fund remains structurally underweight in China. While we are conscious of the many risks, our assessment of
China’s investment backdrop has moved from negative to more neutral. We’ve been increasing our weight as we’ve been finding more interesting companies that meet our quality standards and have long-duration growth potential.
51job, Inc., the leading online job search and recruitment site in China, was the Fund’s second-best contributor for the quarter. The company has been leveraging its relationships with employers to sell additional adjacent services that human resource (HR) departments need. In online recruitment and other HR business segments 51job has posted robust results.
One of the Fund’s largest sources of weakness was Brazil. Brazilian stocks soared to record highs after an appeals court upheld a corruption conviction against former President Luiz Inacio Lula da Silva. With investor sentiment on the upswing in Brazil, our most defensive Brazilian holdings became less appealing to investors.
An example is EcoRodovias Infraestrutura e Logistica S.A., the second-largest toll-road operator in Brazil. Although EcoRodovias was the Fund’s largest first-quarter detractor, we like the company’s prospects. The toll-road industry in Brazil appears solid, with rational competition, more projects coming up for bid and a recovering economy.
Indian equities fell amid concerns about interest rates and inflation. Investors also became more concerned with policy continuity after Prime Minister Narendra Modi’s Bharatiya Janata Party’s weaker-than-expected showing in recent state elections. During the quarter, the decline in the Fund’s Indian stocks subtracted just over a point from its return, but our holdings outperformed the Indian positions in the benchmark.
Kajaria Ceramics Ltd., a leading manufacturer of ceramic tiles in India, was a notable detractor. Indian tile manufacturers had a difficult January due to one-off factors including a second round of goods-and-services tax (GST) reforms and rising input costs. However, we believe growth may soon return. The GST rate on tiles was lowered as of November 2017 and there has been an uptick in housing construction, a strong market for tiles.
OUTLOOK
The backdrop for international small-cap equities remains constructive. However, financial volatility in developed countries spread to emerging markets in the first quarter as concerns about accelerating fiscal deficits and inflation in the U.S. fanned fears of higher global interest rates.
To the extent that global factors continue to create volatility, we expect the Fund’s relative performance to benefit from our greater emphasis on companies with long-term growth stories tied to secular increases in domestic demand. By focusing on companies and countries with their own unique growth drivers, we seek to make the Fund less subject to whims of the global economy and more reflective of long-term potential. Despite this increased volatility, our overall positive outlook remains unchanged.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
10
Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Emerging Markets Small Cap (WAEMX) — Investor | 8.03% | 25.68% | 2.38% | 7.13% | ||||||||||||||||
Emerging Markets Small Cap (WIEMX) — Institutional | 8.00% | 26.07% | 2.44% | 7.16% | ||||||||||||||||
MSCI Emerging Markets Small Cap Index | 9.41% | 18.62% | 4.58% | 4.36% | ||||||||||||||||
MSCI Emerging Markets Index | 8.96% | 24.93% | 4.99% | 3.02% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Small Cap Fund are Investor Class — Gross: 2.02%, Net: 1.96% / Institutional Class: 1.88%, Net: 1.81%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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 | |||
51job, Inc. ADR (China) | 3.5% | |||
Medytox, Inc. (Korea) | 3.3% | |||
Magazine Luiza S.A. (Brazil) | 2.5% | |||
ASPEED Technology, Inc. (Taiwan) | 2.2% | |||
Clicks Group Ltd. (South Africa) | 2.2% | |||
| Company | % of Net Assets | |||
Koh Young Technology, Inc. (Korea) | 2.0% | |||
Win Semiconductors Corp. (Taiwan) | 2.0% | |||
Silergy Corp. (Taiwan) | 2.0% | |||
TCS Group Holding plc GDR (Russia) | 2.0% | |||
Ennoconn Corp. (Taiwan) | 1.9% | |||
| ** | As of March 31, 2018, there were 83 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The MSCI Emerging Markets and Emerging Markets Small Cap indexes are free float-adjusted market capitalization indexes designed to measure the equity market performance of emerging markets. You cannot invest directly in these or any indexes.
11
Table of Contents
| WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Frontier Emerging Small Countries Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley, Jared Whatcott and Scott Thomas.
Roger Edgley, CFA Lead Portfolio Manager |
Jared Whatcott, CFA Portfolio Manager |
Scott Thomas, CFA Portfolio Manager |
OVERVIEW
The Wasatch Frontier Emerging Small Countries Fund — Investor Class returned 1.71% and slightly outperformed the 1.60% return of its benchmark, the MSCI Frontier Emerging Markets Index.
Over the past year, we have become increasingly optimistic regarding the prospects of frontier markets and emerging small countries. For the first quarter of 2018, frontier equity markets benefited from strong performance compared to their larger, more developed counterparts around the globe.
DETAILSOFTHE QUARTER
Vietnam, one of our largest country exposures, was the top contributor to the Fund’s return for the quarter. However, we underperformed the benchmark in Vietnam as our overweight position was offset by the lagging performance of our holdings in a strong market.
We recently spent a considerable amount of time on the ground in Vietnam and, despite seemingly rich valuations in some parts of the market, we came away with incrementally higher conviction in the country and in the prospects of its companies.
An example is Phu Nhuan Jewelry JSC, a top contributor for the quarter. The company has been increasing the number of its jewelry stores at an annual rate of 15%, while still achieving double-digit same-store-sales growth. At the same time, management has been investing in technology and inventory-management software, allowing Phu Nhuan to stay ahead of its competitors.
NMC Health plc, a United Arab Emirates (UAE)- based hospital operator, ended the quarter as the Fund’s top-contributing holding. The company recently reported revenue growth of over 31% for 2017, and the number of patients served grew 34%. NMC Health also recently entered Saudi Arabia — a much larger market of 30 million people that has been chronically underserved in specialized health-care services. Within the UAE, NMC Health has spent the past few years building out its hospital network, and we’re now beginning to see those efforts bear fruit.
Second-largest contributor Safaricom plc has been a long-time core holding of the Fund. Despite macro challenges in
Kenya, the company has continued to grow at a double-digit rate, leveraging its wide telecom-infrastructure network and its M-Pesa mobile-payment system, which now contributes 26% of Safaricom’s total revenues.
We took a trip to Egypt at the start of the year to assess opportunities and more closely examine the underlying economic environment. Although we have visited Egypt multiple times over the past several years, on this trip we came away the most optimistic yet on the country’s outlook and have been increasing our exposure.
We saw Ibnsina Pharma, a pharmaceutical-distribution firm managed by two brothers who are deeply passionate about the business. They have grown it to be the number-two player in the market over a short period of time. Supported by the double-digit growth of the pharmaceutical industry in Egypt, we believe Ibnsina Pharma can grow even faster. The company was recently listed and has raised equity to continue building out its distribution facilities. We added a position in Ibnsina Pharma.
Cleopatra Hospital, another holding based in Egypt, saw its share price wobble following a potentially delayed acquisition of a target hospital, but we aren’t too concerned. The company is developing Egypt’s first private-hospital network. In addition to strong organic growth, Cleopatra’s management team has been successfully acquiring hospitals and turning them around to increased profitability. Given the need for hospital services in Egypt, we believe Cleopatra has a long runway for growth.
Ayala Corp., one of the strongest conglomerates in the Philippines, was also among the Fund’s detractors in the quarter. The company has been increasing its recurring revenue stream with good results from energy investments. Despite Ayala’s fundamental strength, however, the stock fell due to selling by foreign institutional investors, led largely by Mitsubishi Corp. of Japan reducing its stake in Ayala as part of its portfolio rebalancing and not on business concerns.
OUTLOOK
Wasatch is increasingly optimistic regarding the outlook for frontier and emerging small countries where we see improving macro conditions after a multi-year period of difficult adjustments. The major externalities that had been overwhelming many of these markets such as the strong U.S. dollar, weakening commodity prices and external imbalances have largely turned neutral to positive. Many frontier and emerging small countries have been addressing structural issues, which has created a more stable and positive growth outlook. What’s more, domestic demand seems to have troughed and many economies appear poised for a continued cyclical recovery. Most importantly, we have seen significant improvement in the outlook for our portfolio companies and we are starting to see a rebound in earnings growth. Accelerating growth, reasonable valuations and low correlations with more developed global markets continue to give us confidence in the Fund’s holdings.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
12
Table of Contents
| WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 1/31/12 | |||||||||||||||||
Frontier Emerging Small Countries (WAFMX) — Investor | 8.00% | 18.80% | 1.23% | 7.05% | ||||||||||||||||
Frontier Emerging Small Countries (WIFMX) — Institutional | 8.33% | 19.12% | 1.37% | 7.17% | ||||||||||||||||
MSCI Frontier Emerging Markets Index | 6.72% | 19.93% | 3.42% | 5.92% | ||||||||||||||||
MSCI Frontier Markets Index | 10.99% | 27.26% | 8.64% | 9.80% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Frontier Emerging Small Countries Fund are Investor Class — Gross: 2.36%, Net: 2.18% / Institutional Class —Gross: 2.07%, Net: 1.98%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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 frontier and 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 | |||
| FPT Corp. (Vietnam) | 4.3% | |||
| NMC Health plc (United Arab Emirates) | 4.3% | |||
| Aramex PJSC (United Arab Emirates) | 4.3% | |||
| Grupo Financiero Galicia S.A. ADR (Argentina) | 4.1% | |||
| Philippine Seven Corp. (Philippines) | 3.7% | |||
| Company | % of Net Assets | |||
| Grupo Supervielle S.A. ADR (Argentina) | 3.7% | |||
| Vietnam Dairy Products JSC (Vietnam) | 3.5% | |||
| Naspers Ltd., Class N (South Africa) | 3.4% | |||
| Bolsas y Mercados Argentinos S.A. (Argentina) | 3.2% | |||
| Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 3.0% | |||
| **As | of March 31, 2018, there were 48 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ‡Inception: January 31, 2012. The MSCI Frontier Emerging Markets and MSCI Frontier Markets indexes are free float-adjusted market capitalization indexes designed to measure the equity market performance of the global frontier and emerging markets. You cannot invest directly in these or any indexes.
13
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Global Opportunities Fund is managed by a team of Wasatch portfolio managers led by JB Taylor and Ajay Krishnan.
JB Taylor Lead Portfolio Manager
|
Ajay Krishnan, CFA Lead Portfolio Manager
| OVERVIEW
Buoyed by continued synchronous global economic expansion, the Wasatch Global Opportunities Fund — Investor Class returned 5.99% for the quarter ended March 31, 2018, | ||
| outperforming the benchmark MSCI ACWI (All Country World Index) Small Cap Index, which declined -0.47%. | ||||
Passage by Congress of the tax-reform bill in December was a plus for U.S. stocks, as it was widely perceived that the significant reduction in the U.S. corporate tax rate would free up capital that companies could deploy to reinvest in their businesses, buy back stock, increase employee wages or pay higher dividends. Given our investments in profitable companies, we believe the Fund is well-positioned relative to tax reform.
Despite continued good economic news, volatility returned to the financial markets in the first three months of 2018. While January was relatively uneventful, investors grew concerned with the length of the current bull market in stocks and the prospect of rising inflation. February saw the U.S. market shed more than 10% of its peak January value before partially recovering. In March, a rate hike by the Federal Reserve and worries that tariffs proposed by the U.S. government would result in a trade war triggered a steep selloff in the equity markets.
DETAILSOFTHE QUARTER
Health care and information technology were the Fund’s top-contributing sectors for the first quarter, driven mainly by stock selection but also helped by being significantly overweight versus the benchmark. Among the sectors in which the Fund was invested, financials ceded the most ground to the benchmark.
The Fund benefited from investments in developed countries, led by outstanding contributions from the United States and Japan. Korea was the top-contributing emerging market, primarily due to the outsized return of one holding. India and Brazil were the countries that detracted the most from Fund’s performance. Following a particularly strong run in 2017, our investments in India produced mixed results over the past few months. Although India’s market was weak in the quarter, we believe the country’s economy is strong, and that given time, the reforms introduced by the Modi government will prove to be positive. We also see our holdings in India as having strong growth prospects, and we remain confident in their potential to benefit the Fund over the long term.
Medytox, Inc., a Korean manufacturer of injectable neurotoxins for cosmetic applications and the treatment of muscular disorders, was the leading contributor to the Fund’s first-quarter performance. Medytox shares rose during the quarter following reports that a competitor had encountered regulatory difficulties with the U.S. Food and Drug Administration. Already a leader in its industry, Medytox appears well-positioned in our view for further gains to the extent that stringent enforcement of quality standards weeds out weaker competitors.
Second-best contributor Nihon M&A Center, Inc. specializes in facilitating the purchase and sale of businesses. This Japanese company has been benefiting from a wave of consolidations affecting several industries throughout Japan, including the pharmaceutical industry, where the Fund also has investments. Nihon M&A has been successful matching small companies with potential buyers, which are usually larger companies seeking to expand.
India’s Somany Ceramics Ltd. manufactures ceramic and vitrified tiles used on walls and floors. We believe the company stands to benefit from the growth of India’s middle class, but Somany Ceramics was the Fund’s largest detractor during the quarter as India’s equity markets gave back some of the gains achieved last year.
Another significant detractor was EcoRodovias Infraestrutura e Logistica S.A., the second-largest toll-road operator in Brazil. The road network in Brazil is over-crowded and under-developed as is typical for emerging markets. The toll-road industry in Brazil appears solid, with rational competition, more projects coming up for bid and a recovering economy. In February, EcoRodovias agreed to buy Concessionaria de Rodovias Minas Gerais Goias (MGO), which manages a 271-mile highway in the Brazilian states of Goias and Minas Gerais, pending approval of regulators.
OUTLOOK
Five members of our investment team recently returned from a two-week trip to Japan, where they met with management teams from about 80 different companies. They came away with a lot of new ideas that the team will continue to research for possible inclusion in the Fund. Both their discussions with the companies they visited, and our observations of Japan generally, confirmed our view that wage growth, the tight employment market, economic improvement, corporate-governance reforms, and increased reinvestment in businesses are all continuing to add to the health of Japan’s economy. In addition, we see a wealth of high-quality companies and believe it’s still possible to find and exploit inefficiencies in the Japanese market.
While it wouldn’t surprise us if 2018 continues to be a volatile year for the U.S. markets, our long-term outlook hasn’t changed given that both company and economic fundamentals continue to be positive. As always, we’ll stay focused on pursuing our investment discipline to find growing companies that we believe have the potential to contribute to the long-term success of the Fund.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
14
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | SINCE INCEPTION 11/17/08 | |||||||||||||||||
Global Opportunities (WAGOX) — Investor | 14.84% | 30.46% | 10.66% | 17.87% | ||||||||||||||||
Global Opportunities (WIGOX) — Institutional | 14.84% | 30.85% | 10.72% | 17.91% | ||||||||||||||||
MSCI ACWI Small Cap Index | 5.17% | 16.21% | 10.20% | 15.39% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Global Opportunities Fund are Investor Class: 1.59% / Institutional Class — Gross: 1.93%, Net: 1.36%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
Investing in small and micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
Medytox, Inc. (Korea) | 3.4% | |||
Copart, Inc. | 2.5% | |||
HealthEquity, Inc. | 2.5% | |||
Metro Bank plc (United Kingdom) | 2.4% | |||
MakeMyTrip Ltd. (India) | 2.2% | |||
Ollie’s Bargain Outlet Holdings, Inc. | 2.2% | |||
| Company | % of Net Assets | |||
Knight-Swift Transportation Holdings, Inc. | 2.1% | |||
Trex Co., Inc. | 2.1% | |||
Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 2.0% | |||
HubSpot, Inc. | 1.9% | |||
| ** | As of March 31, 2018, there were 79 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ‡Inception: November 17, 2008. The MSCI ACWI (All Country World Index) Small Cap Index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities in developed and emerging markets. You cannot invest directly in this or any index.
15
Table of Contents
| WASATCH GLOBAL VALUE FUND (FMIEX / WILCX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion —On October 31, 2017, the Fund changed its name from the Wasatch Large Cap Value Fund and its primary benchmark from the Russell 1000 Value Index.
The Wasatch Global Value Fund is managed by a team of Wasatch portfolio managers led by David Powers.
David Powers, CFA Lead Portfolio Manager | OVERVIEW
The Wasatch Global Value Fund —Investor Class declined -1.64%, lagging its benchmark, the MSCI ACWI (All Country World Index), which fell -0.96% in the first quarter of 2018. U.S. equities declined -0.76% in the first quarter of 2018 as measured by the S&P 500® Index, while international equities as gauged by the MSCI EAFE Index declined -1.53%. February saw stock prices dive on concerns over the | |
prospect of higher inflation and worries that central banks across the globe would accelerate the withdrawal of monetary support. After regaining much of the lost ground, stocks wavered again in March on speculation that the U.S. government’s proposed tariffs on Chinese imports would lead to a global trade war. | ||
Continuing the trend that was in place throughout 2017, stocks that typically do well in times of economic growth, including information technology and financial stocks, led the benchmark’s performance in the quarter. Conversely, more defensive, value-oriented stocks generally lagged. To illustrate the growth versus value split, consider that the MSCI ACWI Growth Index gained 0.67% while the MSCI ACWI Value Index lost -2.62%.
DETAILSOFTHE QUARTER
Our efforts to position the Fund more defensively, given what we see as an economy in the latter stages of the business cycle, hindered performance in the first quarter. The Fund’s performance relative to its benchmark was constrained by our investments in the consumer-staples, consumer-discretionary, energy and financials sectors. Conversely, stock selection within the materials, utilities and industrials sectors aided relative performance. The Fund’s U.S. holdings, about half of the portfolio, were down for the quarter, while our international holdings finished slightly positive. We continue to believe that our defensive-minded, globally diversified approach will be beneficial when late-cycle dynamics begin to take hold.
The Fund’s top contributor for the quarter was Ireland-based Smurfit Kappa Group plc, Europe’s largest corrugated-box manufacturer. The company’s share price moved higher on a buyout offer from U.S. rival International Paper.* We took advantage of the stock’s upward movement and sold our position.
Technology company Cisco Systems, Inc. was the second-best contributor to performance. In 2017, Cisco’s revenues decreased as the company underwent an investment cycle. During the first quarter, management reported strong results that showed an increase in revenues and raised guidance for the upcoming quarter. Notably, Cisco has seen an increase in recurring revenue as it moves from selling hardware and networking services to a subscription-based business model. In addition, the company expects to benefit
from tax reform, and plans to deploy a significant portion of its $67 billion in cash holdings in the form of a share-buyback program.
The largest detractor from first-quarter performance was Wells Fargo & Co., as the bank’s revenue and net interest margin results disappointed investors. In addition, Wells Fargo received a consent order in February from the Federal Reserve capping the growth of its balance sheet until certain issues around corporate governance and risk management have been addressed. We view Wells Fargo’s regulatory issues as fully reflected in the stock price at current levels, and believe the bank is well-positioned to return to a growth trajectory once the dust settles a few quarters out. We trimmed the position modestly during the quarter, principally as part of a larger effort to reduce the Fund’s overweight position in financials.
Second-largest detractor drugstore giant CVS Health Corp. reported strong results for the fourth quarter of 2017, but management lowered 2018 guidance citing plans to increase investment. Investors have also become concerned regarding the pricing environment for the company’s pharmacy benefit management business. In addition, CVS announced its intention to acquire insurer Aetna.* Uncertainty around the approval, timing and terms of the deal weighed on the stock. We maintained the position. We view CVS stock as trading at a significantly discounted valuation given the company’s cash flow, stability of earnings and balance sheet.
OUTLOOK
In the United States, the current bull market has already spanned nine years. We have been saying for some time that the market cycle is considerably closer to its end than to its beginning. While sentiment in the first half of 2018 may continue to reflect the benefit of tax reform to corporate earnings, at some point we expect investors to begin to look ahead and discount the difficulty companies face of maintaining present levels of earnings growth. This is especially the case given the ongoing withdrawal of stimulus by central banks globally. Moreover, uncertainty around the potential ripple effects of U.S. tariffs directed at China may act as an additional headwind to confidence in global equities.
One thing is clear from the quarter just ended — the era of low volatility is likely over. Investors have been focusing their purchases on an increasingly narrow list of stocks, indicative of waning conviction regarding the market’s remaining upside. We continue to believe global large-cap value stocks are better positioned to weather late-cycle dynamics than their growth and momentum counterparts. The Fund remains tilted toward higher-quality companies within the large-cap value universe, as gauged by lower market sensitivity, lower valuations, higher cash flows, higher dividends and stronger balance sheets.
Thank you for the opportunity to manage your assets.
| * | As of March 31, 2018, the Wasatch Global Value Fund was not invested in International Paper Co. or Aetna, Inc. |
| Current and future holdings are subject to risk. |
16
Table of Contents
| WASATCH GLOBAL VALUE FUND (FMIEX / WILCX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Global Value (FMIEX) — Investor | 1.38% | 6.09% | 8.20% | 5.81% | ||||||||||||||||
Global Value (WILCX) — Institutional | 1.46% | 6.36% | 8.35% | 5.89% | ||||||||||||||||
MSCI ACWI | 4.71% | 14.85% | 9.20% | 5.57% | ||||||||||||||||
Russell 1000® Value Index | 2.34% | 6.95% | 10.78% | 7.78% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Global Value Fund are Investor Class — Gross: 1.19%, Net: 1.10% / Institutional Class — Gross: 2.31%, Net: 0.95%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
Investments in value stocks can perform differently from the market as a whole and from other types of stocks and can continue to be undervalued by the market for long periods of time. Investing in foreign securities entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Loss of principal is a risk of investing.
| *Not | annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
| Pfizer, Inc. | 4.8% | |||
| Exelon Corp. | 4.7% | |||
| Cisco Systems, Inc. | 4.2% | |||
| Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Germany) | 4.1% | |||
| China Mobile Ltd. (China) | 4.0% | |||
| Company | % of Net Assets | |||
| Novartis AG (Switzerland) | 3.9% | |||
| Oracle Corp. | 3.9% | |||
| CVS Health Corp. | 3.9% | |||
| Nordea Bank AB (Sweden) | 3.6% | |||
| Wells Fargo & Co. | 3.5% | |||
| ** | As of March 31, 2018, there were 33 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The MSCI ACWI (All Country World Index) captures large and mid cap representation across 23 developed-market and 24 emerging-market countries. With 2,499 constituents, the Index covers approximately 85% of the global investable equity opportunity set. The Russell 1000 Value Index measures the performance of Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in these or any indexes.
17
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch International Growth Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley, Ken Applegate and Linda Lasater.
Roger Edgley, CFA Lead Portfolio Manager |
Ken Applegate, CFA Portfolio Manager |
Linda Lasater, CFA Associate Portfolio Manager |
OVERVIEW
The Wasatch International Growth Fund — Investor Class gained 4.76% in the first quarter of 2018, outperforming the -0.35% loss of the MSCI ACWI (All Country World Index) ex USA Small Cap Index.
Volatility returned following an extremely strong year for global equity markets in 2017. While markets have been choppy and some uncertainty has surfaced, our outlook is still upbeat given the investment opportunities we have been seeing.
From an international developed markets perspective we are especially positive on Japan. In continental Europe we are encouraged by the stabilization, and in many cases, expansion in business activity. In the United Kingdom, Brexit negotiations cloud the future and the outlook for the domestic economy remains uncertain.
DETAILSOFTHE QUARTER
Japan is the largest country weighting in the Fund at approximately 24.7%, and we are overweight versus the benchmark. In the first quarter, our Japanese holdings gained over 16%, significantly outperforming their benchmark counterparts, which returned just 2.1%.
During the quarter, five members of our investment team spent two weeks visiting more than 80 companies throughout Japan. When preparing for this trip, the pool of potential investments that passed our preliminary hurdle was double the number we have seen in the past. Factors like improved corporate governance and an increase in investing activity has been leading to higher returns on equity and increased earnings growth for Japanese companies. We also have seen a wave of younger and more dynamic CEOs stepping up to lead Japan’s companies of the future. We look for CEOs who understand Japan’s economic landscape but bring a different perspective, perhaps having worked or been educated abroad.
One of the headwinds Japan faces is that of an aging population. Nihon M&A Center, Inc., the Fund’s top contributor for the first quarter, addresses the problem of baby boomers retiring and looking to sell their small businesses by connecting them with potential buyers. Nihon’s management has also enhanced the company���s market position by
hosting informational seminars for sellers, and by building relationships with banks, accounting firms and other lead-generating sources.
The labor shortage in Japan came up in conversation at nearly every meeting we had there. The most recent jobs-to-applicant ratio rose to 1.59 and unemployment is at a 25-year low. We have invested in companies that help employers find qualified job applicants. For example, the Fund’s second-best contributor, SMS Co. Ltd., provides recruitment services and software for the health-care market.
Among the Fund’s largest detractors during the quarter was Seria Co. Ltd., operator of a chain of 100-yen stores (essentially dollar stores) in Japan. The company had some issues with its computerized inventory system, which partially contributed to a decrease in sales and an increase in costs in order to remedy the situation. We spent time with Seria’s president who was disappointed and embarrassed that this issue had occurred. We believe Seria is a high-quality company with strong fundamentals and we continue to hold the stock.
Canadian Western Bank, a regional bank in Western Canada with loans focused on the mid-market commercial segment, was a significant detractor from Fund performance. We have no fundamental issues to report. We believe the stock was dragged down by weakness in Canadian energy stocks.
We remain upbeat about the investment opportunities in emerging markets. Emerging markets have continued to produce strong results based on optimism over growth and returning investment. We like the strength we have been seeing as companies have been producing the earnings growth we expect. India was an underperforming market during the quarter, but the fundamentals of the companies we own remain positive and we used this as an opportunity to increase positions in select holdings.
OUTLOOK
The backdrop for international small-cap equities remains constructive. We have seen an increase in valuations but also a recovery in European corporate earnings. Europe is in the early stages of an economic expansion with companies beginning to invest in their businesses again following a long period of underinvestment. While there are factors that could derail this expansion, we currently see strong corporate activity and expect earnings growth to drive stock prices going forward.
Japan’s small-cap market, one of the most vibrant to be found anywhere in the world, continues to provide a deep pool of interesting small-cap companies that fit our high-quality, long-duration growth profile. Despite being one of the largest developed economies in the world, Japan’s market is still inefficient and misunderstood by many investors, which provides opportunities for us to use our expertise and on-the-ground research to find companies with outstanding investment potential.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
18
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
International Growth (WAIGX) — Investor | 9.46% | 27.11% | 8.92% | 8.98% | ||||||||||||||||
International Growth (WIIGX) — Institutional | 9.51% | 27.23% | 8.97% | 9.00% | ||||||||||||||||
MSCI ACWI ex USA Small Cap Index | 6.19% | 20.60% | 8.57% | 5.51% | ||||||||||||||||
MSCI World ex USA Small Cap Index | 5.29% | 21.16% | 9.71% | 5.81% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Growth Fund are Investor Class: 1.46% / Institutional Class — Gross: 1.37%, Net: 1.35%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
Investing in foreign securities, especially in frontier and 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) | 2.6% | |||
| Vitasoy International Holdings Ltd. (China) | 2.5% | |||
| Cochlear Ltd. (Australia) | 2.1% | |||
| SMS Co. Ltd. (Japan) | 2.0% | |||
| Ipsen S.A. (France) | 1.9% | |||
| Company | % of Net Assets | |||
| Rotork plc (United Kingdom) | 1.8% | |||
| Metro Bank plc (United Kingdom) | 1.7% | |||
| Nihon M&A Center, Inc. (Japan) | 1.7% | |||
| Asahi Intecc Co. Ltd. (Japan) | 1.7% | |||
| MISUMI Group, Inc. (Japan) | 1.6% | |||
| ** | As of March 31, 2018, there were 94 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The MSCI ACWI (All Country World Index) ex USA Small Cap Index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities in developed markets, excluding the United States, and in emerging markets. The MSCI World ex USA Small Cap Index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities in developed markets, excluding the United States. You cannot invest directly in these or any indexes.
19
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch International Opportunities Fund is managed by a team of Wasatch portfolio managers led by Jared Whatcott, Linda Lasater and Allison He.
Jared Whatcott, CFA Portfolio Manager |
Linda Lasater, CFA Portfolio Manager |
Allison He, CFA Associate Portfolio Manager |
OVERVIEW
The Wasatch International Opportunities Fund — Investor Class gained 1.72% for the first calendar quarter of 2018, outperforming the benchmark MSCI ACWI (All Country World Index) ex USA Small Cap Index, which was down -0.35%.
Global equity markets largely continued their upward trend as 2018 kicked off, but at the beginning of February volatility abruptly returned. Stocks fell sharply then promptly recovered with the support of strong macroeconomic data and optimism around the effects of corporate tax cuts in the U.S. Toward the end of the quarter, global financial markets reacted negatively to tariffs proposed by the White House. But as fears of a resulting trade war subsided, markets once again rebounded on hopes of a negotiated resolution.
DETAILSOFTHE QUARTER
Like it was for all of 2017, Japan was the Fund’s top contributor to performance versus the Index for the first quarter of 2018. Japan is the largest country weighting in the Fund because we have been finding exciting companies that meet our criteria for quality and growth. The Fund’s performance in Japan was led by internet software star SMS Co. Ltd., a provider of recruitment services and software for the health-care market.
Given the amount of ongoing structural change in the country, our team thought it worth our time to travel to Japan again during the quarter to meet with management teams and get an on-the-ground feel for the macro environment in which our companies operate. In two weeks, our team met with the executives of dozens of micro-cap companies, including some new ones we had not met before. While our visit led to a few adjustments within the Fund, we are generally pretty optimistic about our current Japanese holdings and the opportunities they represent.
Thanks to Qualitas Controladora S.A.B. de C.V., the leading auto insurer in the country, Mexico was a strong contributor to the Fund’s results versus the Index. The Fund also outperformed the Index in Taiwan aided by an outsized return from TCI Co. Ltd., which sells high-end consumer goods wholesale to direct marketing firms in China.
The United Kingdom detracted from the Fund’s performance versus the Index for the three-month period primarily due to Horizon Discovery Group plc, a supplier of products to the research, biopharma and diagnostics segments of the life sciences tools and services industry. Horizon’s CEO announced his departure during the quarter, catching investors by surprise. Despite this unexpected announcement, we believe the company has significant headroom for growth given the trend toward personalized medicine.
The second-largest detractor was BWX Ltd., an Australia-based skin care products company that is a fairly recent addition to the Fund. The company reported disappointing results in the quarter leading some analysts to question its acquisition strategy. In our view, BWX is still seeing strong global demand for its natural products and should benefit from global consumption trends if the company can successfully execute its increasingly global strategy.
In Germany, the stock of industrial automation system manufacturer Isra Vision AG was weak over the three-month period, despite the company’s track record of steady growth across a number of industrial end markets. We remain confident in the company’s growth potential.
OUTLOOK
We believe the Fund is well-positioned across global markets. While returns of our Japanese stocks drove a good portion of the Fund’s return over the last year, we are also optimistic about opportunities we see in other countries.
We recently increased our exposure to South Korea, for example, after members of our team traveled to the country for research. Not only have we been seeing a growing number of interesting Korean micro-cap companies appearing in our discovery process, but we see a steady economic backdrop driven by healthy global demand and a domestic market buoyed by continuing fiscal and monetary support.
India is another country that we believe offers significant long-term potential for us as micro-cap investors. India remains a substantial weight in the Fund, and we are content with that exposure given the opportunities we have been seeing at the company level and initiatives, like the goods-and-services tax, that are being undertaken by the government.
While a number of political or economic events (such as tighter global monetary policy) could increase volatility in the world’s equity markets, we believe current conditions, including healthy global growth and accommodative monetary policy, generally seem supportive. In managing the Fund, we do our best to mitigate unforeseen risks through broad country diversification and by using in-depth research to find what we believe are the highest-quality micro-cap companies wherever they may be in the world.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
20
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
International Opportunities (WAIOX) — Investor | 9.22% | 21.08% | 10.36% | 9.14% | ||||||||||||||||
International Opportunities (WIIOX) — Institutional | 9.14% | 21.26% | 10.54% | 9.23% | ||||||||||||||||
MSCI ACWI ex USA Small Cap Index | 6.19% | 20.60% | 8.57% | 5.51% | ||||||||||||||||
MSCI World ex USA Small Cap Index | 5.29% | 21.16% | 9.71% | 5.81% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Opportunities Fund are Investor Class: 2.24% / Institutional Class — Gross: 2.04%, Net: 1.96%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
Investing in foreign securities, especially in frontier and emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. 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.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
Philippine Seven Corp. (Philippines) | 2.3% | |||
SMS Co. Ltd. (Japan) | 2.2% | |||
M&A Capital Partners Co. Ltd. (Japan) | 2.0% | |||
Open Door, Inc. (Japan) | 1.8% | |||
Webjet Ltd. (Australia) | 1.8% | |||
Hypoport AG (Germany) | 1.7% | |||
| Company | % of Net Assets | |||
7-Eleven Malaysia Holdings Berhad, Class B (Malaysia) | 1.7% | |||
Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 1.6% | |||
Pro Medicus Ltd. (Australia) | 1.6% | |||
Qualitas Controladora S.A.B. de C.V. (Mexico) | 1.6% | |||
| ** | As of March 31, 2018, there were 112 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The MSCI ACWI (All Country World Index) ex USA Small Cap Index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities in developed markets, excluding the United States, and in emerging markets. The MSCI World ex USA Small Cap Index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities in developed markets, excluding the United States. You cannot invest directly in these or any indexes.
21
Table of Contents
| WASATCH LONG/SHORT FUND (FMLSX / WILSX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Long/Short Fund is managed by a team of Wasatch portfolio managers led by David Powers.
David Powers, CFA Lead Portfolio Manager | OVERVIEW
The Wasatch Long/Short Fund —Investor Class declined -4.61%, lagging its benchmark, the S&P 500 Index, which fell -0.76% in the first quarter of 2018. In 2018’s first quarter, market volatility reemerged in rather dramatic fashion. After a relatively uneventful January, U.S. stocks sold off sharply in February. Robust employment and wage growth, rising bond yields and |
recently enacted tax cuts caused investors to worry about higher inflation and whether Federal Reserve (Fed) officials would act more aggressively to slow economic growth. After February’s swoon, stocks partially recovered, only to fall again in the second half of March on somewhat softer economic indicators, turmoil in the tech world and fears of a trade war with China after the U.S. government proposed tariffs on steel and aluminum and specific Chinese products.
DETAILSOFTHE QUARTER
Over the course of the past 12 months, we have reduced the Fund’s short positions by about half. Nevertheless, the Fund’s shorts detracted significantly from results versus the benchmark in the first quarter of 2018. On the long side of the Fund’s portfolio, the financials, information-technology and consumer-staples sectors detracted the most from the Fund’s performance relative to the Index. The Fund’s holdings in the energy sector contributed the most to relative performance led by Anadarko Petroleum Corp.
A position in information-technology company Cisco Systems, Inc. was also a top contributor. In 2017, Cisco’s revenues decreased as the company underwent an investment cycle. During the first quarter, management reported strong results that showed an increase in revenues and raised guidance for the upcoming quarter. Notably, Cisco has seen an increase in recurring revenue as it moves from selling hardware and networking services to a subscription-based business model. In addition, the company expects to be a prime beneficiary of tax reform, and plans to deploy a significant portion of its $67 billion in cash holdings in the form of a share-buyback program.
On the downside, shares of Wells Fargo & Co. suffered in the quarter as the bank reported revenue and net interest margin results that disappointed investors. In addition, Wells Fargo received a consent order in February from the Federal Reserve capping the growth of its balance sheet until certain issues around corporate governance and risk management have been addressed. We view Wells Fargo’s regulatory issues as fully reflected in the stock price at current levels, and believe the bank is well-positioned to return to a growth trajectory once the dust settles a few quarters out.
Within the consumer-staples sector, a notable laggard was drugstore giant CVS Health Corp., which reported strong results for the fourth quarter of 2017 but lowered its 2018
guidance, citing plans to increase investment. More broadly, sentiment with respect to CVS has been dampened in recent quarters by concerns over the pricing environment for its pharmacy benefit management business. In addition, CVS announced its intention to acquire insurer Aetna,* and uncertainty around the approval, timing and terms of the deal weighed on the stock.
PROPOSED REORGANIZATIONOFTHELONG/SHORT FUND
At a meeting held on November 7 - 8, 2017, the Board of Trustees of Wasatch Funds Trust approved the merger of the Wasatch Long/Short Fund with and into the Wasatch Global Value Fund. The merger is subject to the approval of shareholders of the Long/Short Fund. The Board of Trustees of the Trust also called for a special meeting of the shareholders of the Long/Short Fund to vote on the reorganization. The meeting will be held later this year, and, if approved, it is anticipated that the reorganization will be consummated approximately one month after the meeting.
As part of its ongoing review of the products it offers, Wasatch Advisors, Inc. (the “Advisor”), the investment advisor to the Long/Short Fund and the Global Value Fund, proposed the reorganization given the limited future growth prospects of the Long/Short Fund, its relative poor performance and the economic infeasibility of the Long/Short Fund over the long term in light of the costs associated with its continued operation and its likely inability to attract assets in the foreseeable future. Although the investment objectives and strategies are very different between the Long/Short Fund and the Global Value Fund, the Advisor proposed the reorganization with the Global Value Fund due, in part, to the similar valuation process used by the Advisor to evaluate potential investments for the Funds despite the differing investment strategies; the overlap of portfolio holdings between the Funds; the relative performance of the Global Value Fund compared to the Long/Short Fund; the lower contractual management fee and estimated lower gross and net expense ratio (before and after fee waivers) of the combined fund for both share classes; the lower contractual expense cap of the Global Value Fund; and the anticipated federal income tax-free nature of the reorganization compared to a taxable event for shareholders if the Long/Short Fund was liquidated.
Additional summary information regarding the reorganization is available on the Wasatch Funds website at www.WasatchFunds.com. Detailed information about the proposed reorganization will be provided in the proxy solicitation materials that will be mailed to record shareholders at a later date.
| * | As of March 31, 2018, the Wasatch Long/Short Fund was not invested in Aetna, Inc. |
| Current and future holdings are subject to risk. |
22
Table of Contents
| WASATCH LONG/SHORT FUND (FMLSX / WILSX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Long/Short (FMLSX) — Investor | -1.27% | -4.46% | -0.31% | 3.20% | ||||||||||||||||
Long/Short (WILSX) — Institutional | -1.03% | -4.06% | -0.07% | 3.32% | ||||||||||||||||
S&P 500® Index | 5.84% | 13.99% | 13.31% | 9.49% | ||||||||||||||||
Citigroup U.S. Domestic 3-Month Treasury Bills Index | 0.63% | 1.07% | 0.31% | 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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Long/Short Fund are — Investor Class: 2.31% / Institutional Class — Gross: 2.15%, Net: 2.03%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. Expenses include dividend expense on short sales and interest expense. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 12/13/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 12/13/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
| Exelon Corp. | 6.1% | |||
| Pfizer, Inc. | 5.7% | |||
| Cisco Systems, Inc. | 5.5% | |||
| Johnson & Johnson | 4.7% | |||
| Citigroup, Inc. | 4.7% | |||
| Company | % of Net Assets | |||
| Novartis AG ADR (Switzerland) | 4.5% | |||
| Wells Fargo & Co. | 4.0% | |||
| Oracle Corp. | 3.9% | |||
| Blackstone Group L.P. (The) | 3.7% | |||
| Suncor Energy, Inc. (Canada) | 3.6% | |||
| ** | As of March 31, 2018, there were 30 long and 10 short holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The S&P 500 Index includes 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged and is a commonly used measure of common stock total return performance. The Citigroup U.S. Domestic 3-Month Treasury Bills Index tracks the performance of U.S. Treasury bills with a remaining maturity of three months. U.S. Treasury bills, which are short-term loans to the U.S. government, are full-faith-and-credit obligations of the U.S. Treasury and are generally regarded as being free of any risk of default. You cannot invest directly in these or any indexes.
23
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Micro Cap Fund is managed by a team of Wasatch portfolio managers led by Ken Korngiebel and Dan Chace.
Ken Korngiebel, CFA Lead Portfolio Manager |
Dan Chace, CFA Portfolio Manager | OVERVIEW
The Wasatch Micro Cap Fund gained 5.37% in what was a volatile first quarter for U.S. equities. The Fund surpassed its benchmark, the Russell Microcap Index, during the first three months |
of 2018. The Index finished the quarter up 0.68%, as it gave back most of its earlier gains.
Following a strong start to the year for both the economy and the stock market, inflation concerns and rising interest rates derailed the early advance in equities. Later, political uncertainty and fears of a trade war between the U.S. and China also impacted the financial markets. Economic data, which had initially been coming in stronger than expected, began to weaken as the quarter continued. As of March 29th, the Federal Reserve Bank of Atlanta’s GDPNow model forecasted U.S. gross domestic product (GDP) growth for the first-quarter of 2018 of just 2.4% — down from an earlier estimate of 5.4% on February 1st.
Fading confidence in the near-term economic outlook dashed expectations of a surge in late-cycle value stocks. Instead, growth outperformed value across the market-cap spectrum. The uncertain environment favored our bottom-up investment approach, which seeks quality companies as evidenced by strong earnings growth, sustainable competitive advantages and experienced management teams.
DETAILSOFTHE QUARTER
Information technology (IT), health care and consumer discretionary were our greatest sources of outperformance relative to the benchmark. Mainstays of traditional growth portfolios, these areas have been abundant sources of the types of companies in which we seek to invest. In IT and health care especially, we believe the Fund’s outperformance of its benchmark during the quarter reflected our extensive research, deep due diligence and expertise in navigating these more analytically complex sectors of the market. The Fund’s holdings in the consumer staples and financials sectors weighed on performance relative to the benchmark.
Top contributors to the Fund’s performance for the quarter included a number of recently added holdings. Among these were Cambium Learning Group, Inc., Tabula Rasa HealthCare, Inc. and Rapid7, Inc. Cambium’s entry into the Fund during the first quarter of 2018 came as a result of our quantitative screening process. A little-known company with no Wall Street following, Cambium in our view is a classic Wasatch micro cap. The company provides educational products that include textbooks and digital solutions for schools. As Cambium’s online and other digital offerings
perform at higher rates of profitability than its legacy print solutions, the top-line growth and mix change has evolved the company’s business model and expanded its margins and cash flow.
Tabula Rasa, a developer of health-care software, was first purchased in the Fund during the third quarter of 2017. The company’s product offerings include its Medication Risk MitigationTM platform, which directly addresses the rising epidemic of accidental opioid overdoses. Tabula Rasa’s stock price has climbed amid growing awareness of the risks associated with adverse drug events and the benefits that can be achieved through targeted, personalized and effective treatment regimens.
Rapid7, a cybersecurity firm, develops analytics software for security and IT operations. Revenues in Rapid7’s most-recent quarter came in slightly ahead of expectations, driven by the company’s shift to a subscription-based business model and increased demand for its products.
With interest rates on the rise during the first quarter, rate-sensitive issues performed poorly. Significant detractors in the Fund included a pair of stocks tied to residential construction — Installed Building Products, Inc. (IBP) and LGI Homes, Inc. Investors’ worries that higher mortgage rates would make houses less affordable for potential buyers weighed on the shares of both companies. We significantly reduced the Fund’s position in IBP on concerns about the stock’s valuation. We also had taken profits in LGI, which reduced the impact on the Fund of the stock’s subsequent pullback.
Rising interest rates also hurt industrial stocks, even as softer-than-expected economic numbers reduced the appeal of cyclicals in general. Kornit Digital Ltd., an Israeli producer of textile-printing machinery, saw its stock price decline amid start-up delays at a new facility of its largest customer. We think those holdups have been resolved and expect the affected Kornit units to ship over the next several months.
OUTLOOK
As the effects of the Tax Cuts and Jobs Act of 2017 began rippling through the U.S. economy, the first quarter of 2018 provided an early glimpse of what we might expect going forward. A common starting point in most a priori analyses was the assumption that lower corporate income-tax expenditures and higher repatriation rates of overseas earnings would increase the amount of cash available to large U.S. companies. The first quarter gave us reason to believe that a good chunk of those excess funds will be directed toward acquisitions of smaller competitors.
Balanced against the positive aspects of tax reform is the risk that a policy mistake by the Federal Reserve may require interest rates to rise faster than expected. In that scenario, we would anticipate interest-rate-sensitive sectors such as industrials and materials to underperform.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
24
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Micro Cap | 12.70% | 33.65% | 14.79% | 10.19% | ||||||||||||||||
Russell Microcap® Index | 2.49% | 13.50% | 11.76% | 9.19% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Fund are 1.67%. The expense ratio shown elsewhere in this report may be different. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. 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 | |||
| V-Mart Retail Ltd. (India) | 2.5% | |||
| Superior Uniform Group, Inc. | 2.3% | |||
| Tabula Rasa HealthCare, Inc. | 1.9% | |||
| Cambium Learning Group, Inc. | 1.9% | |||
| Freshpet, Inc. | 1.8% | |||
| Company | % of Net Assets | |||
| Ollie’s Bargain Outlet Holdings, Inc. | 1.6% | |||
| People’s Utah Bancorp | 1.6% | |||
| UT Group Co. Ltd. (Japan) | 1.6% | |||
| USA Technologies, Inc. | 1.5% | |||
| Altra Industrial Motion Corp. | 1.5% | |||
| ** | As of March 31, 2018, there were 90 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. 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. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. You cannot invest directly in these or any indexes.
25
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Micro Cap Value Fund is managed by a team of Wasatch portfolio managers led by Brian Bythrow.
Brian Bythrow, CFA Lead Portfolio Manager
| OVERVIEW
The Wasatch Micro Cap Value Fund lost -1.75% in what was a mixed first quarter of the year for micro-cap stocks. The Fund underperformed its benchmark, the Russell Microcap Index, which rose 0.68%. Initial expectations for a pickup in U.S. gross domestic product (GDP) faded during the first quarter, as a string of softer-than-anticipated economic data forced economists to revise |
forecasts downward. Official advance estimates to be released in April are expected to show that real first-quarter growth in U.S. GDP fell short of the 2.9% pace observed during the fourth quarter of 2017.
The somewhat weaker economic environment confounded expectations for stocks of value companies to shine in 2018 after having lagged growth stocks during the previous year. Instead, growth stocks continued to outperform value across the full range of market capitalizations. The Fund’s value mandate did not mesh well with the strongly growth-oriented environment — especially during January, when investors displayed a remarkable appetite for risk.
DETAILSOFTHE QUARTER
Biotechnology stocks — considered among the riskiest of all — posted healthy gains for the first quarter. While the strong biotechnology group helped the benchmark, biotech companies often fail to meet our investment criteria, and the Fund’s biotechnology holdings typically have been minimal. Our underweight position in biotechnology was the primary reason the Fund underperformed its benchmark, as underexposure to this top-performing industry group was a headwind to performance.
Although the Fund’s international component lagged our U.S. micro caps overall, the top contributor to performance for the quarter is based in China. Yihai International Holding Ltd. manufactures and sells hot-pot soup flavorings, hot-pot dipping sauces and Chinese-style condiments under the Haidilao brand name. The company offers its products domestically and exports them to 14 countries in North America, Europe and Asia. Yihai has been benefiting from the growing popularity of hot-pot cooking and dining out. Because consumer trends can be fickle, however, we trimmed the size of this position to maintain our desired weighting in the Fund.
Second-best contributor BofI Holding, Inc., the holding company for BofI Federal Bank, operates under the name “Bank of Internet USA.” The company’s online-only business model provides a significant cost advantage over brick-and-mortar competitors. BofI’s share price surged in late January after a major personal-finance website listed the bank at the top of its “Best Checking Accounts in 2018” list. BofI also has gained visibility as the exclusive provider of H&R Block’s no-fee, interest-free refund-anticipation loans.
The greatest detractor from first-quarter performance was Atlas Financial Holdings, Inc. The company underwrites insurance policies for commercial automobiles in the U.S. Shares of Atlas tumbled in March after the company announced it had been forced to take an accounting charge because reserves had been inadequate to cover remaining claims from 2015 and prior years. Though disappointing, these developments at Atlas represent a temporary setback in our view. Management said the company had revamped its claims models and indicated that results for more-recent years were coming in as expected.
ZAGG, Inc. was the second-largest detractor. The company makes screen protectors, portable power chargers, battery cases and other accessories for mobile devices. ZAGG saw its stock price decline sharply after earnings fell short of expectations in the company’s most-recently reported quarter. Management said ZAGG had been required to record a $12.4 million non-cash charge stemming from the remeasurement of deferred tax assets and the tax on mandatory deemed repatriation of foreign earnings. The surprise retirement of the company’s CEO also appeared to weigh on the stock. We believe ZAGG’s business fundamentals remain positive and increased the Fund’s position.
OUTLOOK
Home to over 5,000 energy-related companies generating about 40% of U.S. petrochemical capacity, Houston, Texas is known as the “Energy Capital of the World.” We traveled there recently and found that the energy business is doing pretty well.
Strong global growth and rising demand have kept oil prices on firm footing so far in 2018. After plummeting below $30 per barrel in 2016 and having languished below $60 since 2015, crude oil prices have held above the key $60 level for most of the first quarter. According to recent estimates from the International Energy Agency, global demand for crude in 2018 is expected to rise by 1.5 million barrels per day.
Investors haven’t seemed to notice. Energy was one of the worst-performing sectors of the Russell Microcap Index during the first quarter. On our metrics, stock valuations for energy companies have currently fallen to what we consider attractive levels.
Our research indicates that continued negativity may be unwarranted. For the first time in years, energy companies appear to be gaining the upper hand in terms of pricing power. Margins are improving, and in our view brighter days for the energy sector — if they have not already arrived — may be right around the corner. In terms of downside risk, we think most of the companies we visited in Houston can remain profitable with oil as low as $50 per barrel.
As far as equities as a whole are concerned, we count possible inflationary surprises and the potential for a full-blown trade war among the greatest risks to the market. Historically, either of these developments has posed a significant headwind for even the best-managed, highest-quality companies.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
26
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Micro Cap Value | 4.57% | 18.92% | 13.53% | 11.33% | ||||||||||||||||
Russell Microcap® Index | 2.49% | 13.50% | 11.76% | 9.19% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Value Fund are 1.84%. 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. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. 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. Investments in value stocks can perform differently from the market as a whole and from other types of stocks and can continue to be undervalued by the market for long periods of time. 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 | |||
Esquire Financial Holdings, Inc. | 1.6% | |||
Patrick Industries, Inc. | 1.6% | |||
Select Interior Concepts, Inc. | 1.6% | |||
BofI Holding, Inc. | 1.6% | |||
USA Technologies, Inc. | 1.5% | |||
| Company | % of Net Assets | |||
Hackett Group, Inc. (The) | 1.4% | |||
Wabash National Corp. | 1.4% | |||
SmartFinancial, Inc. | 1.4% | |||
Napco Security Technologies, Inc. | 1.3% | |||
Nexus AG (Germany) | 1.3% | |||
| ** | As of March 31, 2018, there were 106 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. 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. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. You cannot invest directly in these or any indexes.
27
Table of Contents
| WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Small Cap Growth Fund is managed by a team of Wasatch portfolio managers led by JB Taylor, Ken Korngiebel and Ryan Snow.
JB Taylor Lead Portfolio Manager |
Ken Korngiebel, CFA Portfolio Manager |
Ryan Snow Portfolio Manager |
OVERVIEW
During a quarter in which U.S. stock markets turned volatile for the first time in many months, the Wasatch Small Cap Growth Fund — Investor Class gained 7.86% compared to a 2.30% return for its primary benchmark, the Russell 2000 Growth Index.
U.S. stocks sold off sharply in February. Robust employment and wage growth combined with rising bond yields and recently enacted tax cuts caused investors to become concerned over the threat of higher inflation and additional interest-rate hikes. After February’s swoon, stocks partially recovered, only to fall again in the second half of March on somewhat softer economic indicators, turmoil in the tech world and fears that the U.S. government’s proposed tariffs would spark a trade war.
In our view, the Fund’s outperformance in these choppier markets underscores its bias toward high-quality companies, as evidenced by strong earnings growth, sustainable competitive advantages and experienced management teams. In times of market stress, we generally expect investors to prefer sounder companies.
DETAILSOFTHE QUARTER
The primary adjustment we’ve made to the Fund over recent months has been to put an even finer point on quality. One way we’ve done that is by trimming positions where we’ve become less confident in management’s ability to deliver growth, either because an industry’s competitive dynamics have shifted or because of one or more factors specific to the individual companies.
The Fund’s outperformance of the Index was driven by stock selection, which was especially beneficial in the health-care, information-technology and industrials sectors. Consumer stocks declined in the quarter, but, our stocks in the consumer-discretionary and consumer-staples sectors were down less than those in the benchmark.
Business-software specialist Zendesk, Inc. was the Fund’s top first-quarter contributor. The company benefited from the increasing number of large organizations using Zendesk’s platform. In February, the company reported year-over-year quarterly sales growth of 39%, better-than-expected earnings
results and forecast continued strong growth for the remainder of 2018.
Second-best contributor, Callidus Software, Inc., recently announced its acquisition by enterprise-software giant SAP SE.* Callidus’ sales performance management software helps companies prepare “configure, price and quote” (CPQ) proposals for their products and track sales activity. SAP was willing to pay a premium for Callidus because the acquisition should provide immediate and ongoing benefits.
Healthcare Services Group, Inc. was the first quarter’s largest detractor. The company provides housekeeping, food and other services to the health-care facilities industry. Healthcare Services’ quarterly reporting in February included notice of a one-time effect on net income as a result of tax reform. In addition, the process of bringing customers onboard has been more costly than previously anticipated. More broadly, though, the company has experienced growth in both the number of customers and the average number of services provided to customers.
Second-largest detractor Exact Sciences Corp. is a molecular-diagnostics company with an innovative test for colon cancer. The test avoids the high cost and invasiveness of a colonoscopy by screening a stool sample. Shares of Exact Sciences tumbled in March after the company’s selection of celebrity endorsers disappointed investors who had been expecting a higher-profile figure. Concerns about future competition from a new blood test also appear to have tempered the enthusiasm of some investors.
OUTLOOK
Tax reform may prove to be a tailwind, given the Fund’s historical bias toward more-profitable companies, on average, than those that make up the Russell 2000 Growth Index. Since more-profitable companies will disproportionately benefit from lower taxes, we see the Fund’s holdings as in good position relative to tax reform.
Although some economic indicators have been softening and the financial markets have been expressing investors’ nervousness, the environment is still positive overall. Having said that, the current situation does require increasing care to maneuver — as we noted, for example, in our comments above about focusing on quality first and foremost.
We’re also watching the Fed’s action with regard to interest rates. Rising rates are likely to be business-model strains on companies without a defensible strategy and adequate pricing power in the face of higher input prices. Another important factor we see in the rising-rates equation is the quality of a company’s management team because it’s simply harder to succeed when the cost of capital is higher.
Given our belief that earnings growth drives stock prices over the long-term, our focus remains on identifying companies with strong growth prospects. We expect well-managed businesses with sustainable competitive advantages to be able to grow through times of rising interest rates and softening economic indicators.
Thank you for the opportunity to manage your assets.
| * | As of March 31, 2018, the Wasatch Small Cap Growth Fund was not invested in SAP SE. |
| Current and future holdings are subject to risk. |
28
Table of Contents
| WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Small Cap Growth (WAAEX) — Investor | 14.25% | 24.63% | 11.04% | 11.13% | ||||||||||||||||
Small Cap Growth (WIAEX) — Institutional | 14.35% | 24.85% | 11.14% | 11.18% | ||||||||||||||||
Russell 2000® Growth Index | 6.99% | 18.63% | 12.90% | 10.95% | ||||||||||||||||
Russell 2000® Index | 3.25% | 11.79% | 11.47% | 9.84% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Growth Fund — Investor Class: 1.27% / Institutional Class — Gross: 1.11%, Net: 1.05%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
| Copart, Inc. | 3.4% | |||
| ICON plc (Ireland) | 3.3% | |||
| HEICO Corp., Class A | 3.3% | |||
| Five Below, Inc. | 3.2% | |||
| Knight-Swift Transportation Holdings, Inc. | 2.9% | |||
| Company | % of Net Assets | |||
| Ollie’s Bargain Outlet Holdings, Inc. | 2.8% | |||
| Paylocity Holding Corp. | 2.7% | |||
| Metro Bank plc (United Kingdom) | 2.5% | |||
| Cantel Medical Corp. | 2.5% | |||
| RBC Bearings, Inc. | 2.5% | |||
| ** | As of March 31, 2018, there were 67 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell 2000 Growth Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Russell 2000 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. You cannot invest directly in these or any indexes.
29
Table of Contents
| WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Small Cap Value Fund is managed by a team of Wasatch portfolio managers led by Jim Larkins.
Jim Larkins Lead Portfolio Manager
| OVERVIEW
After an extended period of robust, positive performance, small-cap value stocks lost ground in the challenging environment of the first quarter. The Russell 2000 Value Index, the Fund’s benchmark, lost -2.64% due in part to investor concerns about rising interest rates and potentially unfavorable shifts in U.S. trade policy. Although the Wasatch Small Cap Value Fund — Investor Class fell -2.26%, it did not |
decline as much as the benchmark.
We are pleased that our strategy, after helping the Fund to generate a return that was comfortably ahead of the Index when the market was rising in 2017, also helped mitigate the downside when conditions became less supportive. Since the middle of last year, we have been gradually positioning the Fund to cushion the effects of higher market volatility. We have been seeking to achieve this by focusing the Fund on our highest conviction holdings, such as those with stronger earnings potential and/or better balance sheets, and by investing in new companies with similar quality characteristics. At the same time, we have been eliminating investments where business uncertainty has been increasing. We also have reduced the Fund’s positions in lower-conviction holdings with smaller weightings. These moves contributed to our outperformance relative to the benchmark in the first quarter, and we believe they can continue to add value if stocks remain unstable in the months ahead.
DETAILSOFTHE QUARTER
Despite the downturn in the broader market, the Fund had a number of individual holdings that produced positive returns and contributed to performance. Many of these were Fallen Angels — growth stocks that have slid into value territory for what we think are temporary reasons. Although these stocks are typically depressed when we first establish positions, our research indicates that the underlying companies have outstanding business models and robust growth prospects. Our belief is that over time these traits will be appreciated by Wall Street and the stocks will rebound to premium valuations. In many cases, we hold positions for a number of years to let the fundamental story fully play out. This approach worked to the Fund’s benefit in the first quarter, as many of our leading contributors were long-time positions in Fallen Angel stocks that saw their healthy fundamental trends translate into market-beating performance. Among these were Ensign Group, Inc., Copart, Inc. and HEICO Corp., as well as trucking companies Old Dominion Freight Line, Inc. and Knight-Swift Transportation Holdings, Inc.
The financials sector remains the largest allocation in the Fund, but we are underweight versus the Index. Our below-benchmark exposure to a sector with positive performance was a headwind to the Fund’s first-quarter results.
Nevertheless, BofI Holding, Inc. was the Fund’s top overall contributor. BofI is an internet-based bank with a low cost structure. We think Wall Street has largely misunderstood the company despite its favorable credit profile and healthy fundamentals.
The Fund’s largest detractor for the quarter was commercial auto insurer Atlas Financial Holdings, Inc., which reported weaker-than-expected underwriting results. We retained the position, as we trust the management team and the company already had some changes in place to address the issues. Nevertheless, we are maintaining a smaller weighting until we are assured that the outlook for Atlas is indeed improving.
The Fund’s consumer-discretionary holdings declined and the sector as a whole underperformed its benchmark counterpart. Our second-largest overall detractor was J.Jill, Inc., an apparel retailer that had shown signs of turning around toward the end of last year. More recently, the company disappointed investors with unexpected weakness stemming from fashion misses and execution problems with a new website. We chose to limit our exposure as we monitor the company’s progress on these challenges.
OUTLOOKAND POSITIONING
Our ongoing effort to concentrate the Fund in our best ideas is reflected in the low number of holdings relative to historical levels. We finished March with 50 individual positions. Although we think this is appropriate for the current environment, we would also caution investors that having a smaller number of positions could translate into higher day-to-day volatility than the Fund has typically experienced in the past. Still, we believe this approach will help us achieve our goal of outperforming the benchmark over the long term.
Our shift toward a more focused Fund doesn’t mean we have abandoned our longstanding strategy of seeking to use market volatility to our advantage. We have long referred to the small-cap space as a “perpetual motion machine” in which good companies continually stumble and fall into value territory.
We see reasons for optimism based on what we’ve been hearing as we talk with company management teams. Generally speaking, domestic businesses are experiencing positive momentum and improving fundamentals. For instance, trucking companies are reporting better pricing trends, and industrial firms are citing strengthening demand. What’s more, management teams are discussing the use of the proceeds from the December tax cut for increased investments in their businesses. We think these developments point to accelerated economic activity, which is supportive for the market generally, and for smaller companies in particular. We believe this favorable backdrop will provide opportunities to identify the higher-quality, fundamentally sound and financially strong companies in which we seek to invest.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
30
Table of Contents
| WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Small Cap Value (WMCVX) — Investor | 4.34% | 14.11% | 13.47% | 9.84% | ||||||||||||||||
Small Cap Value (WICVX) — Institutional | 4.48% | 14.37% | 13.61% | 9.93% | ||||||||||||||||
Russell 2000® Value Index | -0.65% | 5.13% | 9.96% | 8.61% | ||||||||||||||||
Russell 2000® Index | 3.25% | 11.79% | 11.47% | 9.84% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Value Fund are Investor Class: 1.41% / Institutional Class — Gross: 1.36%, Net: 1.25%. 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. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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. Investments in value stocks can perform differently from the market as a whole and from other types of stocks and can continue to be undervalued by the market for long periods of time. 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 | |||
Monro, Inc. | 3.8% | |||
Euronet Worldwide, Inc. | 3.6% | |||
Altra Industrial Motion Corp. | 3.2% | |||
State Bank Financial Corp. | 3.1% | |||
Knight-Swift Transportation Holdings, Inc. | 3.0% | |||
| Company | % of Net Assets | |||
Prosperity Bancshares, Inc. | 2.8% | |||
Ensign Group, Inc. (The) | 2.8% | |||
Arbor Realty Trust, Inc. | 2.7% | |||
WESCO International, Inc. | 2.6% | |||
Webster Financial Corp. | 2.6% | |||
| ** | As of March 31, 2018, there were 50 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell 2000 Value Index measures the performance of those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Russell 2000 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. You cannot invest directly in these or any indexes.
31
Table of Contents
| WASATCH STRATEGIC INCOME FUND (WASIX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Strategic Income Fund is managed by a team of Wasatch portfolio managers led by Sam Stewart.
Samuel S. Stewart, Jr. PhD, CFA Lead Portfolio Manager | OVERVIEW
Unlike most recent quarters, the quarter ended March 31, 2018 was “full of sound and fury,” but possibly, as Macbeth noted, “signifying nothing.” Or, perhaps the shift in the market environment from tranquility to volatility does reflect a shift from a one-way market to a two-way market. The one-way up market we enjoyed for over a year was driven by improving business conditions and prospects for a tax cut. Since the tax cut has been realized, its |
anticipation can no longer drive the market. Further improvement in the economy is somewhat problematic as it is running so close to capacity. The fluctuations of February and March may signify that we are now in a more normal two-way market.
DETAILSOFTHE QUARTER
The volatility of February and March took the market down from its January peak. For the three months ended March 31, 2018, our S&P 500 Index benchmark lost -0.76%. The Wasatch Strategic Income Fund didn’t do quite as well, ending with a decline of -1.67%, which was also slightly worse than the -1.46% decline of our Bloomberg Barclays US Aggregate Bond Index benchmark.
Over the past year, I worked our precautionary cash balance down in order to participate in a market that was moving virtually straight up. However, when the market changed from a one-way market to a two-way market at the beginning of February, I raised cash back to the 20% level, which helped to make the Fund’s performance less volatile than that of the S&P 500 for the rest of the quarter. Reflective of this lower volatility is the Fund’s beta of 0.71.
Herbalife Ltd. and Mastercard, Inc. each contributed over half a percentage point to the Fund’s return during the quarter. Herbalife’s earnings were better than expected as it demonstrated that business would not be adversely affected by the Federal Trade Commission’s tightened rules regarding direct-marketing companies. Mastercard’s strong performance was likely due to an increasingly digitized economy moving away from cash toward electronic payments.
Unfortunately, during the quarter, Comcast Corp. and Magellan Midstream Partners L.P. each subtracted more than half a percentage point from performance. Comcast spooked investors by announcing a bid for Sky plc, a United Kingdom-based satellite television company. Investors feared this was a backward-looking, empire-building move as the number of video subscribers continues to decline. Comcast argued that Sky is not significantly comparable to United States-based satellite companies as it produces a substantial amount of original content. In addition, Sky would provide Comcast’s NBC unit with improved access to foreign markets. I decided to trim our position, but the Fund still maintains a substantial holding in Comcast.
Magellan’s decline was in part due to fears of being adversely affected by a Federal Energy Regulatory Commission (FERC) ruling that Master Limited Partnerships (MLPs), such as Magellan, would no longer be permitted to recover an income-tax allowance in their cost of service. However, as Magellan expects minimal to no impact from the FERC policy change, we continue to hold our full position.
For the 12 months ended March 31, 2018, the Fund produced a return of 7.45%, which is on target between the 13.99% return of its S&P 500 stock benchmark and the 1.20% return of its bond benchmark. Further, it is spot on our high single-digit return goal. As noted above, for 10 of the past 12 months the market went virtually straight up. Our large cash position proved to be unneeded ballast, which in hindsight served as a drag on performance. However, during the final two months of the 12-month period, the ballast demonstrated that it could be very useful as the Fund was not only less volatile than the S&P 500, but it also outperformed.
OUTLOOK
Looking forward, I will continue to search for companies with both the ability and willingness to pay a growing stream of dividends. I believe that holding such companies over long time periods will allow for the compounding effects that such a growing stream of dividends provides. As I noted at the outset, we may have shifted into a tougher market environment. I will continue to navigate cautiously as I believe that preservation of capital is important to the Fund’s shareholders.
As I mentioned in the Letter to Shareholders, later this year I will leave Wasatch to join Seven Canyons Advisors, an SEC-registered investment advisor recently founded by the Stewart family. In anticipation of my departure, the Wasatch Funds Board of Trustees approved a plan to reorganize and merge the Strategic Income Fund into a new fund with similar investment objectives and strategies that I’ll continue to manage at Seven Canyons. In order for the reorganization to occur, it must be approved by shareholders of the Wasatch Strategic Income Fund. The Wasatch Funds Board of Trustees has called for a special meeting for Wasatch Strategic Income Fund shareholders to vote on the reorganization. We expect the meeting to be held in July 2018, and, if approved, it is anticipated that the reorganization will be consummated approximately one month later. If shareholders do not approve the reorganization, the Board of Trustees will determine what additional steps may be appropriate and in the best interests of the Wasatch Strategic Income Fund and its shareholders, including, but not limited to, liquidation of the Fund. More information about the proposed reorganization and meeting will be provided in the proxy solicitation materials.
| Current and future holdings are subject to risk. |
32
Table of Contents
| WASATCH STRATEGIC INCOME FUND (WASIX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Strategic Income | 1.60% | 7.45% | 7.48% | 7.10% | ||||||||||||||||
S&P 500® Index | 5.84% | 13.99% | 13.31% | 9.49% | ||||||||||||||||
Bloomberg Barclays US Aggregate Bond Index | -1.08% | 1.20% | 1.82% | 3.63% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Strategic Income Fund are Gross: 1.58%, Net: 1.43%. 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. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
The Fund has a concentration in the financials sector. Investing in concentrated funds can be more volatile and loss of principal could be greater than investing in more diversified funds. The financials sector can be significantly affected by various market factors, which are described in more detail in the prospectus.
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. 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.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
| iShares 1-3 Year Treasury Bond ETF | 5.8% | |||
| Comcast Corp., Class A | 4.1% | |||
| MasterCard, Inc., Class A | 4.1% | |||
| Visa, Inc., Class A | 3.5% | |||
| Suncor Energy, Inc. (Canada) | 3.2% | |||
| Company | % of Net Assets | |||
| Microchip Technology, Inc. | 3.2% | |||
| Magellan Midstream Partners L.P. | 2.8% | |||
| Walgreens Boots Alliance, Inc. | 2.7% | |||
| Canadian National Railway Co. (Canada) | 2.6% | |||
| Home Depot, Inc. (The) | 2.5% | |||
| ** | As of March 31, 2018, there were 56 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The S&P 500 Index represents 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged and is a commonly used measure of common stock total return performance. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency). You cannot invest directly in these or any indexes.
33
Table of Contents
| WASATCH ULTRA GROWTH FUND (WAMCX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch Ultra Growth Fund is managed by a team of Wasatch portfolio managers led by John Malooly.
John Malooly, CFA Lead Portfolio Manager | OVERVIEW
U.S. equities got off to a rocky start in 2018, as several of the major averages finished lower during the first quarter. Growth stocks outperformed value stocks in a pattern that has held for most of the past five years. Small-company growth stocks did even better, with the benchmark Russell 2000 Growth Index rising 2.30% in the first three months of the year. The Wasatch Ultra Growth Fund gained 6.73% and |
surpassed its benchmark.
Rising interest rates and worries about a global trade war brought severe volatility to the financial markets during February and March. While storms were raging on Wall Street, however, our portfolio companies were quietly generating solid earnings growth for the most part. Over the past year or so, we’ve been making subtle shifts to tilt the Fund toward higher-quality companies whose earnings are more predictable, while trimming companies whose prospects are especially difficult to evaluate. Those moves appear to have helped the Fund outgain its benchmark during the first quarter even as general uncertainty increased.
During periods of extreme turbulence in the market, stocks of companies that report disappointing news are often severely punished — sometimes unfairly so. We attempted to use that tendency to the Fund’s advantage in the first quarter. By establishing new positions in a small number of such “beaten down” stocks, we were able to purchase what we believe are attractive growth companies at significant discounts to their recent valuations.
DETAILSOFTHE QUARTER
Health care was by far the Fund’s largest source of outperformance relative to the benchmark in the quarter. The sector accounted for our two strongest contributors, Tandem Diabetes Care, Inc. and ChemoCentryx, Inc., respectively.
Tandem offers insulin-delivery systems for people with diabetes. The company’s flagship product is the t:slim X2 insulin pump, which integrates with Dexcom’s fifth-generation continuous glucose monitor (CGM). Sales in Tandem’s most-recently reported quarter were the strongest in the company’s history, as pump shipments increased 80% over the previous sequential quarter. In addition, Tandem’s recently completed equity raise has strengthened its balance sheet and appears to have removed a major source of investor uncertainty.
ChemoCentryx is a biopharmaceutical company developing orally administered therapeutics for autoimmune diseases, inflammatory disorders and cancer. Its lead drug candidate is avacopan, an orally-administered small molecule currently in late-stage clinical trials for the treatment of orphan and rare renal diseases. Shares of ChemoCentryx surged in January on news that its application for Conditional Marketing Authorization for avacopan had been
accepted for regulatory review by the European Medicines Agency (EMA). ChemoCentryx also announced that the EMA’s validation of the application had triggered a milestone payment from the company’s partner in the drug’s development.
The Fund’s greatest detractor from performance for the quarter was PDF Solutions, Inc. The company provides technologies for optimizing the design and manufacture of integrated-circuit chips. Although PDF reported revenues and earnings in February that surpassed expectations, the stock fell sharply after management lowered guidance in response to a product delay and more-difficult competitive conditions for PDF’s customers. On the plus side, PDF’s design-for-inspection initiative appears to be gaining momentum. This new technology seeks to change the current paradigm of visual chip inspection by incorporating proprietary electrical characterization directly into the chip’s design, which enables customers to detect previously unknown defects and to do so in a non-destructive manner.
Second-largest detractor Exact Sciences Corp. is a molecular-diagnostics company with an innovative test for colon cancer. Named Cologuard,® the test avoids the high cost and invasiveness of a colonoscopy by screening a stool sample for cancerous and precancerous cells. Shares of Exact Sciences tumbled in March after the company’s selection of celebrity endorsers disappointed investors who had been expecting a higher-profile figure. Concerns about a new blood test that might provide future competition for Cologuard also appear to have tempered the enthusiasm of some investors. We used the weakness to add to our position after having sold shares at higher prices in October and November.
OUTLOOK
Aside from a recently launched investigation into Facebook’s privacy practices and a handful of other high-profile stories, the first-quarter corporate-news flow tended to be more positive than negative. Rather than company-specific developments or macroeconomic problems, financial markets themselves seemed responsible for the difficulties they encountered during the quarter.
In particular, specialized exchange-traded funds (ETFs) that had bet against an increase in volatility faced mounting losses as volatility returned to the stock market. The forced liquidation of these funds increased volatility further. The proliferation of index ETFs also did not help, as the frequently one-sided trading in index funds dragged the indexes and their component stocks along for the ride.
We think companies taking market share and growing revenue will continue to be dear assets in the market and we like where the Fund is positioned, however, we also expect value stocks to come back into favor at some point. While we are sticking with our growth mandate, we expect to continue our defensive shift toward companies we view as being among the highest quality in our universe. We think those types of companies may help to reduce risk in the Fund during future periods of market volatility.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
34
Table of Contents
| WASATCH ULTRA GROWTH FUND (WAMCX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Ultra Growth | 12.28% | 30.39% | 15.05% | 10.65% | ||||||||||||||||
Russell 2000® Growth Index | 6.99% | 18.63% | 12.90% | 10.95% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Ultra Growth Fund are 1.35%. 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. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. 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. 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 | |||
Ultimate Software Group, Inc. (The) | 3.0% | |||
Freshpet, Inc. | 2.8% | |||
Paylocity Holding Corp. | 2.8% | |||
Oxford Immunotec Global plc | 2.5% | |||
Metro Bank plc (United Kingdom) | 2.4% | |||
| Company | % of Net Assets | |||
Waste Connections, Inc. | 2.2% | |||
LGI Homes, Inc. | 2.1% | |||
Exact Sciences Corp. | 2.0% | |||
HubSpot, Inc. | 1.9% | |||
Eagle Bancorp, Inc. | 1.9% | |||
| ** | As of March 31, 2018, there were 80 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell 2000 Growth Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. You cannot invest directly in these or any indexes.
35
Table of Contents
| WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
The Wasatch World Innovators Fund is managed by a team of Wasatch portfolio managers led by Josh Stewart and Sam Stewart.
Josh Stewart Lead Portfolio Manager |
Samuel S. Stewart, Jr. PhD, CFA Portfolio Manager | OVERVIEW
The Wasatch World Innovators Fund — Investor Class gained 1.87% in the first quarter of 2018, while its benchmark, the MSCI ACWI (All Country World Index) IMI (Investable Markets Index), lost -0.89%. |
Japan and the United States were the largest contributors to the Fund’s performance. The Fund is substantially overweight relative to the benchmark in Japan. Although the Fund has benefited from Japanese information-technology companies, we have been reducing our exposure in favor of consumer companies that we think will provide steadier returns going forward. Among the holdings we recently trimmed were Nintendo Co. Ltd. and Sony Corp.
The Fund is significantly underweight in the U.S., reflecting our view that many stocks are overvalued and our decision to put assets to work in overseas markets that we see as having better upside. Given the strong gains the Fund achieved in tech stocks in 2017, we have been trimming our exposure to high-priced U.S.-based tech companies. Notably, we exited Amazon.com, Inc. and PayPal Holdings, Inc.
DETAILSOFTHE QUARTER
The New York Times Co. was the Fund’s top first-quarter contributor. While its print business has been declining, both in terms of subscriptions and advertising, the company has been making good progress in transitioning to a digital business. Little more than a year ago, the company’s digital subscriber base had been growing at an annual rate in the mid-teens. Since the new administration took the White House, that has climbed to more than 40%.
Second-best contributor V-Technology Co. Ltd., based in Japan, manufactures equipment used to produce flat-panel displays for televisions, computer monitors and other applications. V-Technology has established a joint venture in China, which is eager to take market share from Samsung-dominated Korea.
Roku, Inc. was the leading detractor from the Fund’s first-quarter performance. While Roku has continued to report good results, we — like other investors — had been expecting even better results. Nevertheless, we remain positive on the company’s growth potential based on its development of a solid platform for digital streaming.
Vilmorin & Cie S.A. was the second-largest detractor. This French company produces and markets vegetable and crop seeds. Vilmorin’s share price declined during the quarter as
the vegetable business slowed down. We continue to believe in the company’s potential to do well over the long run.
OUTLOOK
We just returned from a trip to Indonesia and Malaysia. With stock valuations high throughout developed countries and many emerging-market countries as well, we were hoping to find some attractive opportunities in a part of the world where, so far, valuations remain reasonable.
Indonesia seems to be vibrant and thriving. With about 260 million people and a rising middle class, we sense solid long-term growth opportunities for the country as a whole. Based on our visit, we added Media Nusantara Citra, Indonesia’s largest television-content producer. We also added Sarana Menara Nusantara, which owns, operates and leases telecommunication towers for wireless operators in Indonesia.
In contrast, Malaysia appears to be stagnating. The country is in the throes of a political scandal concerning Prime Minister Najib Razak. Despite being accused of skimming nearly a billion dollars from a government fund he oversaw, Razak will likely win reelection next year, the beneficiary of an electorate segmented along religious and ethnic lines.
We’ve maintained our overweight position in the United Kingdom, largely on the belief that negotiators for the U.K. and the European Union will come up with a deal that’s fair for both sides. We believe the companies we own in the U.K. are good businesses that are priced fairly.
As mentioned in the Letter to Shareholders, later this year portfolio managers Josh Stewart and Sam Stewart will leave Wasatch to join Seven Canyons Advisors, an SEC-registered investment advisor recently founded by the Stewart family. In anticipation of their departure, the Wasatch Funds Board of Trustees approved a plan to merge the World Innovators Fund into a new fund with similar investment objectives and strategies that they’ll continue to manage at Seven Canyons. In order for the reorganization to occur, it must be approved by shareholders of both classes of the Wasatch World Innovators Fund. The Wasatch Funds Board of Trustees has called for a special meeting for Wasatch World Innovators Fund shareholders to vote on the reorganization. We expect the meeting to be held in July 2018, and, if approved, it is anticipated that the reorganization will be consummated approximately one month later. If shareholders do not approve the reorganization, the Board of Trustees will determine what additional steps may be appropriate and in the best interests of the Wasatch World Innovators Fund and its shareholders, including, but not limited to, liquidation of the Fund. More information about the proposed reorganization and meeting will be provided in the proxy solicitation materials.
Thank you for the opportunity to manage your assets.
| Current and future holdings are subject to risk. |
36
Table of Contents
| WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
World Innovators (WAGTX) — Investor | 10.50% | 27.35% | 11.82% | 11.54% | ||||||||||||||||
World Innovators (WIGTX) — Institutional | 10.63% | 27.67% | 11.95% | 11.61% | ||||||||||||||||
MSCI ACWI IMI | 4.78% | 15.03% | 9.34% | 5.90% | ||||||||||||||||
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch World Innovators Fund are Investor Class: 1.83% / Institutional Class — Gross: 2.22%, Net: 1.55%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.
Performance for the Institutional Class prior to 2/1/2016 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 2/1/2016 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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.
| * | Not annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Net Assets | |||
| Gamma Communications plc (United Kingdom) | 3.9% | |||
| Guerbet (France) | 3.7% | |||
| Sony Corp. (Japan) | 3.4% | |||
| Miraca Holdings, Inc. (Japan) | 3.3% | |||
| Photo-Me International plc (United Kingdom) | 2.7% | |||
| Company | % of Net Assets | |||
| Costco Wholesale Corp. | 2.6% | |||
| Sartorius Stedim Biotech (France) | 2.5% | |||
| Vilmorin & Cie S.A. (France) | 2.4% | |||
| Eroad Ltd. (New Zealand) | 2.4% | |||
| Bandai Namco Holdings, Inc. (Japan) | 2.3% | |||
| ** | As of March 31, 2018, there were 69 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. 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 options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The MSCI ACWI (All Country World Index) IMI (Investable Market Index) is designed to measure the equity market performance of large, mid, and small cap securities across developed and emerging markets throughout the world. You cannot invest directly in this or any index.
37
Table of Contents
| WASATCH-1ST SOURCE INCOME FUND (FMEQX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
Paul Gifford, CFA Lead Portfolio Manager |
Erik Clapsaddle, CFA Associate Portfolio Manager | OVERVIEW
The Wasatch-1st Source Income Fund declined -0.38% for the first quarter of 2018 and outperformed its benchmark, the Bloomberg Barclays US Intermediate Government/Credit Bond Index, which |
declined -0.98%. In March, Federal Reserve (Fed) officials increased the federal-funds target rate to a range of 1.50% to 1.75%. During the first quarter, the Fed continued to reduce its balance sheet as scheduled by shedding securities it had acquired during and after the financial crisis.
ECONOMIC ACTIVITY
The U.S. economy continued to trudge along in a generally positive direction during the quarter. The labor market also improved with job gains averaging about 202,000 over the past three months. The larger issue in the labor markets has become a shortage of quality labor, as job openings reached 6.1 million in February. The unemployment rate has remained steady at 4.1% for six consecutive months, while the underemployment rate, a much broader measure of employment in the U.S., rose to 8.2% for the first two months of the quarter from its bottom of 7.9% in October 2017 before falling slightly to 8% in March.
Inflation data generally has been benign and unsurprising to fixed-income investors over the past few years, until early February when average hourly earnings came in at 2.9% versus the forecasted 2.5%. This surprising increase moved Treasury yields higher and was certainly a catalyst for the stock market correction in early February. Beyond that one-time data release, inflation has remained lukewarm. The change in the core inflation rate that the Fed watches closely most recently read 1.6%, which is well below the 2% target inflation rate.
INTEREST RATES
Fed officials continued on their path of gradually tightening monetary policy by increasing the target range for the federal-funds rate one-quarter of a percentage point to 1.50% to 1.75% at the March meeting of the Federal Open Market Committee. This was the sixth interest rate increase since December 2015.
As the Fed has increased the target rate, the gap between the yield on short-term rates and that of long-term rates has continued to narrow. The Fed cannot raise the target rate beyond the ceiling created by longer-term bond yields. Bond prices move in the opposite direction of yields.
The value of traditional fixed-income investments declined as interest rates rose throughout the first three months of 2018. During the first quarter, short-term interest rates reached their highest level since the great recession of
2008. The three-month London Interbank Offered Rate (LIBOR), the interest rate some of the world’s leading banks charge each other for short-term loans, increased from 0.85% at the start of the fourth quarter of 2016 to 2.31% on March 29, 2018.
Periods of rising interest rates have greater impact on the prices of fixed-income investments with longer maturities, such as the 30-year Treasury bond, than those of fixed-income securities with shorter maturities, such as the two-year Treasury note. To illustrate the effect of rising interest rates on fixed-income investments consider that the price of a 30-year Treasury bond purchased on the last business day of December 2017 declined approximately -4.9% over the first quarter as the yield on the 30-year bond increased from 2.74% to 2.98%. For comparison, the yield on a two-year Treasury note purchased on the same day increased from 1.89% to 2.26% at quarter-end, but the price of the two-year note only fell -0.21%.
STRATEGY
The Fund’s effective duration is much shorter than that of its benchmark. As of March 31, 2018, the Fund had an effective duration of 2.52 years compared to the benchmark’s duration of 3.97 years. We reduced the Fund’s duration during the quarter by raising our allocation to floating-rate debt. We continue to highlight the following: We don’t attempt to lower the Fund’s duration by investing in securities with shorter maturities; and we try to catch the upside to rising short-term rates by investing in floating-rate securities. These are primarily securities with approximate durations of 0.05 to 0.25, fixed-to-floating rate securities that are currently floating or are within three-years of floating, and government agency mortgage-backed securities with adjustable-rate mortgages.
In the first quarter, we reduced the Fund’s holdings of fixed-rate mortgage-backed securities and increased the Fund’s allocation to asset-backed securities and mortgage-backed securities with adjustable-rate mortgages. We believe that by investing in asset-backed securities we can find value and more yield for the Fund while still maintaining or improving credit quality and owning securitized cash flows.
The core of the Fund is currently invested in securities with effective durations of less than five years. For the Fund overall, 99.2% of its holdings have effective durations of less than six years. To offset the interest rate risk of bonds with longer maturities, the Fund is overweight relative to its benchmark in bonds with durations of less than three years. Our efforts have been directed toward maintaining the Fund in a favorable position based on our expectation that the Fed will continue to gradually raise the target rate to slightly below 3% by the end of 2019.
Thank you for the opportunity to manage a portion of your assets.
38
Table of Contents
| WASATCH-1ST SOURCE INCOME FUND (FMEQX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
Income | -0.36% | 1.09% | 1.00% | 2.30% | ||||||||||||||||
Bloomberg Barclays US Intermediate Government/Credit Bond Index | -1.18% | 0.35% | 1.25% | 2.92% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Income Fund are 0.75%. The expense ratio shown elsewhere in this report may be different. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. 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 FIXED INCOME HOLDINGS**
| Holding | Maturity Date | % of Net Assets | ||||||
| U.S. Treasury Note, 3.625% | 8/15/19 | 2.7% | ||||||
| Citibank Credit Card Issuance Trust, Series 2017-A6, Class A6, 2.535% | 5/14/29 | 2.1% | ||||||
| Cronos Containers Program I Ltd., Series 2014-2A, Class A, 3.270% | 11/18/29 | 2.0% | ||||||
| Goldman Sachs Group, Inc. (The), MTN, 3.510% | 10/28/27 | 2.0% | ||||||
| General Electric Co., MTN, 4.650% | 10/17/21 | 1.8% | ||||||
| Holding | Maturity Date | % of Net Assets | ||||||
| Dell International, LLC / EMC Corp., 4.420% | 6/15/21 | 1.7% | ||||||
| Citigroup Commercial Mortgage Trust 2012-GC8, Series 2012-GC8, Class B, 4.285% | 9/10/45 | 1.7% | ||||||
| Federal National Mortgage Assoc., Series AL4936, 3.000% | 3/1/29 | 1.7% | ||||||
| U.S. Treasury Note, 3.625% | 2/15/20 | 1.6% | ||||||
| BP Capital Markets plc, 3.245% | 5/6/22 | 1.6% | ||||||
| ** | As of March 31, 2018, there were 79 holdings in the Fund. Repurchase agreements, if any, are not included in the number of holdings. 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†
| † | Excludes options written, if any. |
| †† | Also includes Other Assets & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Bloomberg Barclays US Intermediate Government/Credit Bond Index is a broad-based flagship benchmark that measures the non-securitized component of the US Aggregate Index. It includes investment grade, U.S. dollar-denominated, fixed-rate Treasuries, government-related and corporate securities. You cannot invest directly in this or any index.
39
Table of Contents
| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Management Discussion
Van Hoisington Lead Portfolio Manager |
Van R. Hoisington, Jr. Portfolio Manager |
David Hoisington Portfolio Manager |
OVERVIEW
U.S. Treasury bond yields increased in the first calendar quarter of 2018 after declining sharply throughout 2017. The 30-year Treasury bond yield rose to 2.98% on March 31, 2018, up from 2.74% at the end of December 2017. In March, the Federal Reserve (Fed) increased the federal-funds rate for the sixth time since December 2015. With the passage of the tax reform bill in late December, many investors assumed that the $1.5 trillion reduction in personal and corporate income taxes over the next 10 years would boost economic activity, overcoming earlier concern that the economy would weaken in 2018. As the new year unfolded, however, employment slowed, vehicle sales and numerous housing barometers dropped sharply and consumer spending turned weak despite the tax cut. Yet, even with yields rising in the first quarter of 2018, the yield of the 30-year bond finished the period lower than it had been the year before.
DETAILSOFTHE PERIOD
For the six months ended March 31, 2018 the Fund declined -0.95%, while the benchmark Bloomberg Barclays US Aggregate Bond Index declined -1.08%. For the 12-months ended March 31st, the Fund returned 4.48% and outperformed the Index, which returned 1.20%.
OUTLOOKFORTHE YEAR
Interest rates are not predictable over the short run but are controlled by fundamental forces on a long-term basis. Economist Milton Friedman (1912–2006) developed the most complete and internally consistent interest-rate model to date. The model reaches two conclusions: First, although monetary decelerations may lead to transitory increases in interest rates over the short run, they ultimately lead to lower rates; and second, monetary accelerations result in higher rates. This reasoning is based on what Friedman termed “liquidity, income and price effects.” When the Fed reduces the reserve, monetary and credit aggregates (or what Friedman called monetary deceleration), short-term rates initially are forced upward through the “liquidity (or initial) effect.” As the Fed further tightens monetary conditions, an offsetting “income effect” follows. These restraining actions moderate growth in the economy, and the rise in interest rates continues, but at a slower pace. Thus, in Friedman’s terms, the income effect begins to offset the liquidity effect. When the Fed sustains the tightening process long enough,
the inflation rate will decrease as incomes fall, ultimately resulting in lower rates. This is the “price” or “Fisher effect” from the Fisher equation. Observationally, highly inflation-sensitive long-term bond yields reflect the changing economic landscape faster than short-term rates, thus the yield curve flattens, serving to strengthen the Fed’s restraint on the reserve, monetary and credit aggregates.
The process predicted by Friedman’s model appears to be well underway. Three important concepts arise from these patterns. First, when the Fed moves in one direction, it ultimately lays the groundwork for reversing direction. Second, considerable time (generally two or more years) passes before the liquidity effect has any economic impact. Third, these lags grow longer when the Fed tries to overcome a recession, especially in highly leveraged economies like those of 1929 and 2008.
Federal debt continues to rise at an accelerating pace, a trend reinforced by the bipartisan budget enacted March 23rd of this year, and the tax cut and reform legislation that went into effect on January 1, 2018. These changes occur at a time when many expenditure items have been moved off budget, causing a wider gap between the issuance of debt and the reported deficit. (Note: in the last 10 fiscal years, the cumulative budget deficit has been $8.5 trillion while government debt has increased by $11.3 trillion.) Additionally, an aging population is set to greatly boost federal debt over the next 15 years. Gross federal debt was 105.4% of gross domestic product (GDP) at year-end 2017, but could reach 120% before the end of the next decade.
While many believe that surging debt will boost economic growth, the law of diminishing returns indicates that extreme indebtedness will impede economic growth and ultimately result in economic decline. A disproportionate growth in debt will produce similar results for all countries in extreme debt, regardless of their idiosyncratic conditions. Thus, no matter how U.S., Japanese, Chinese, European or emerging-market debt is financed or owned, and regardless of the economic system, the path is stagnation and then decline.
Overindebtedness will slow economic growth, and the resulting poor economic conditions will lead to lower inflation and lower long-term interest rates. This suggests that high-quality yields may be difficult to obtain within the next decade. In the shorter run, in accordance with Friedman’s established theory, the current monetary deceleration, or restrictive monetary policy, will bring about lower long-term interest rates.
As a result of these considerations, we conclude that the Fund’s investments in long-term U.S. Treasury securities are appropriate.
Thank you for the opportunity to manage your assets.
40
Table of Contents
| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Portfolio Summary
AVERAGE ANNUAL TOTAL RETURNS
| SIX MONTHS* | 1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||||||
U.S. Treasury | -0.95% | 4.48% | 3.46% | 6.53% | ||||||||||||||||
Bloomberg Barclays US Aggregate Bond Index | -1.08% | 1.20% | 1.82% | 3.63% | ||||||||||||||||
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, 2018 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-Hoisington U.S. Treasury Fund are 0.72%. The expense ratio shown elsewhere in this report may be different. 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, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. 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 U.S. TREASURY HOLDINGS**
| Holding | Maturity Date | % of Net Assets | ||||||
| U.S. Treasury Bond, 2.250% | 8/15/2046 | 33.9% | ||||||
| U.S. Treasury Strip, principal only | 8/15/2045 | 23.5% | ||||||
| U.S. Treasury Bond, 2.500% | 2/15/2045 | 16.1% | ||||||
| U.S. Treasury Strip, principal only | 5/15/2044 | 11.3% | ||||||
| Holding | Maturity Date | % of Net Assets | ||||||
| U.S. Treasury Strip, principal only | 8/15/2040 | 6.2% | ||||||
| U.S. Treasury Bond, 3.750% | 11/15/2043 | 4.9% | ||||||
| U.S. Treasury Bond, 3.125% | 8/15/2044 | 2.5% | ||||||
| ** | As of March 31, 2018, there were 7 holdings in the Fund. Repurchase agreements, if any, are not included in the number of holdings. 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 & Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency). You cannot invest directly in this or any index.
41
Table of Contents
| WASATCH FUNDS MANAGEMENT DISCUSSIONS | ||
| ||
| ||
Definitions of Financial Terms
Asset-backed securities are securities backed by loans, leases or receivables against assets other than real estate and mortgage-backed securities.
Beta is a measurement of a fund’s trailing return in relation to the overall market (or appropriate market index). A beta of 1 indicates the share price will typically move with the market. A beta of more than 1 indicates the share price will typically be more volatile than the market. A beta of less than 1 indicates the share price will typically be less volatile than the market.
Brexit is an abbreviation for “British exit,” which refers to the June 23, 2016 referendum whereby British citizens voted to exit the European Union. The referendum roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades.
A bull market is defined as a prolonged period in which investment prices rise faster than their historical average. Bull markets can happen as the result of an economic recovery, an economic boom, or investor psychology.
Correlation, in the financial world, is a statistical measure of how asset classes, securities, markets, or countries move in relation to each other.
Cost of capital is the return required to make a company’s expenditures on a project, such as building a new manufacturing facility, worthwhile. Cost of capital includes the cost of debt and the cost of equity. Another description of cost of capital is the cost of funds used for financing a business. From an investment perspective, it is the return expected by those who provide capital for the business such as stock or bondholders or entities that issue loans to the company.
A credit aggregate measures the stock of bank loans outstanding at a point in time.
Earnings growth is a measure of growth in a company’s net income over a specific period, often one year.
Effective duration is a measure of the responsiveness of a bond’s price to market interest rate changes. For example, if the interest rate increased 1%, a bond with an effective duration of five years would experience a decline in price of 5%.
An Exchange-Traded Fund (ETF) is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on a securities exchange. ETFs experience price changes throughout the day as they are bought and sold.
The federal-funds rate is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight. It is the interest rate banks charge each other for loans.
The federal-funds target rate (also known as the fed-funds target rate) is set by a committee within the Federal Reserve System called the Federal Open Market Committee (FOMC). The FOMC usually meets every six weeks, and it is at these meetings that the FOMC votes on whether or not to make changes to the federal-funds target rate.
The Federal Open Market Committee (FOMC), a component of the Federal Reserve System, is charged under United States law with overseeing the nation’s open market operations. Open market operations are the means of implementing monetary policy by which a central bank controls the
short term interest rate and the supply of base money in an economy, and thus indirectly the total money supply.
The global financial crisis, also known as the financial crisis of 2007-09 and 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.
The Fisher equation in economics estimates the relationship between nominal and real interest rates under inflation. It is named after Irving Fisher, who was renown for his work on the theory of interest. In economics, this equation is used to predict nominal and real interest rate behavior.
Fixed-to-floating preferred shares and bonds offer a steady yield for several years, then switch to a floating rate that keeps pace with market interest rates.
Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or the federal-funds rate, plus a quoted spread (also known as a quoted margin). The spread is a rate that remains constant.
Government agency bonds are debt securities issued by a U.S. government-sponsored agency.
The great recession was an economic downturn experienced by the United States beginning in December 2007. The downturn is not described as a depression since the severity did not encompass the levels of the Great Depression of the 1930s.
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.
LIBOR or ICE LIBOR stands for Intercontinental Exchange London Interbank Offered Rate. It is a benchmark interest rate that some of the world’s leading banks charge each other for short-term loans. LIBOR serves as the first step to calculating interest rates on various loans throughout the world.
The monetary aggregate measures the stock of money outstanding within an economy at a point in time.
Mortgage-backed securities are debt issues backed by a pool of mortgages. Investors receive payments from the interest and principal payments made on the underlying mortgages. Agency mortgage-backed securities are issued by government-sponsored enterprises such as Ginnie Mae, Fannie Mae or Freddie Mac.
The MSCI ACWI Growth Index captures large and mid cap securities exhibiting overall growth style characteristics across 23 developed-market countries and 24 emerging-market countries. You cannot invest directly in this or any index.
The MSCI ACWI Value Index captures large and mid cap securities exhibiting overall value style characteristics across 23 developed-market countries and 24 emerging-market countries. You cannot invest directly in this or any index.
The MSCI EAFE Index captures large and mid cap representation across developed market countries around the world, excluding the United States and Canada. With 928 constituents, the Index covers approximately 85% of the free float-adjusted market capitalization in each country. You cannot invest directly in this or any index.
42
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
Return on equity (ROE) measures a company’s efficiency at generating profits from shareholders’ equity.
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.
Valuation is the process of determining the current worth of an asset or company.
The yield curve is a line on a graph that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares three-month, two-year, five-year and 30-year U.S. Treasury securities. This yield curve is used as a benchmark for other interest rates, such as mortgage rates or bank lending rates. The curve is also used to predict changes in economic output and growth.
Pertaining to the use of MSCI information. Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance
analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties or originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)
Pertaining to the use of Russell information. Frank Russell Company is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto. This is a presentation of Wasatch Advisors, Inc. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. Frank Russell Company is not responsible for the formatting or configuration of this material or for any inaccuracy in Wasatch Advisors, Inc.’s presentation thereof.
43
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Operating Expenses (UNAUDITED)
EXPENSE EXAMPLE
As a shareholder of Wasatch Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Wasatch Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000.00 invested at the beginning of the period and held for the entire six-month period ended March 31, 2018.
ACTUAL EXPENSES
The first line of the table on the next page 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, 2018. 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 $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 on the next page.
HYPOTHETICAL EXAMPLEFOR COMPARISON PURPOSES
The second line of the table on the next page 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 $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 on the next page. 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 Income Fund has no contractual limitation on expenses.
44
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Account Value | Expenses Paid | Annualized Expense | ||||||||||||||
| Fund/Class and Return | Beginning of Period October 1, 2017 | End of Period March 31, 2018 | ||||||||||||||
Core Growth Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,121.10 | $6.29 | 1.19% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.00 | $5.99 | 1.19% | ||||||||||||
Core Growth Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,121.90 | $5.55 | 1.05% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.70 | $5.29 | 1.05% | ||||||||||||
Emerging India Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,075.00 | $8.54 | 1.65% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.70 | $8.30 | 1.65% | ||||||||||||
Emerging India Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,074.50 | $7.81 | 1.51% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.40 | $7.59 | 1.51% | ||||||||||||
Emerging Markets Select Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,074.60 | $7.81 | 1.51% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.40 | $7.59 | 1.51% | ||||||||||||
Emerging Markets Select Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,075.50 | $6.26 | 1.21% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.90 | $6.09 | 1.21% | ||||||||||||
Emerging Markets Small Cap Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,080.30 | $10.17 | 1.96% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.16 | $9.85 | 1.96% | ||||||||||||
Emerging Markets Small Cap Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,080.00 | $9.39 | 1.81% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.91 | $9.10 | 1.81% | ||||||||||||
Frontier Emerging Small Countries Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,080.00 | $11.56 | 2.23% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.66 | $11.20 | 2.23% | ||||||||||||
Frontier Emerging Small Countries Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,083.30 | $10.54 | 2.03% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,014.66 | $10.20 | 2.03% | ||||||||||||
Global Opportunities Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,148.40 | $8.30 | 1.55% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.20 | $7.80 | 1.55% | ||||||||||||
Global Opportunities Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,148.40 | $7.28 | 1.36% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.15 | $6.84 | 1.36% | ||||||||||||
Global Value Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,013.80 | $5.52 | 1.10% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.45 | $5.54 | 1.10% | ||||||||||||
Global Value Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,014.60 | $4.77 | 0.95% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.19 | $4.78 | 0.95% | ||||||||||||
International Growth Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,094.60 | $7.57 | 1.45% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.70 | $7.29 | 1.45% | ||||||||||||
International Growth Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,095.10 | $7.05 | 1.35% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.20 | $6.79 | 1.35% | ||||||||||||
International Opportunities Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,092.20 | $11.06 | 2.12% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,014.36 | $10.65 | 2.12% | ||||||||||||
International Opportunities Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,091.40 | $10.17 | 1.95% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.21 | $9.80 | 1.95% | ||||||||||||
45
Table of Contents
| WASATCH FUNDS | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Operating Expenses (continued)
| Account Value | Expenses Paid | Annualized Expense | ||||||||||||||
| Fund/Class and Return | Beginning of Period October 1, 2017 | End of Period March 31, 2018 | ||||||||||||||
Long/Short Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $987.30 | $9.22 | 1.86% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.66 | $9.35 | 1.86% | ||||||||||||
Long/Short Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $989.70 | $6.75 | 1.36% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.15 | $6.84 | 1.36% | ||||||||||||
Micro Cap Fund |
| |||||||||||||||
Actual | $1,000.00 | $1,127.00 | $8.75 | 1.65% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.70 | $8.30 | 1.65% | ||||||||||||
Micro Cap Value Fund |
| |||||||||||||||
Actual | $1,000.00 | $1,045.70 | $8.82 | 1.73% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.31 | $8.70 | 1.73% | ||||||||||||
Small Cap Growth Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,142.50 | $6.57 | 1.23% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.80 | $6.19 | 1.23% | ||||||||||||
Small Cap Growth Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,143.50 | $5.61 | 1.05% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.70 | $5.29 | 1.05% | ||||||||||||
Small Cap Value Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,043.40 | $6.11 | 1.20% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.95 | $6.04 | 1.20% | ||||||||||||
Small Cap Value Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,044.80 | $5.35 | 1.05% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.70 | $5.29 | 1.05% | ||||||||||||
Strategic Income Fund |
| |||||||||||||||
Actual | $1,000.00 | $1,016.00 | $4.77 | 0.95% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.19 | $4.78 | 0.95% | ||||||||||||
Ultra Growth Fund |
| |||||||||||||||
Actual | $1,000.00 | $1,122.80 | $6.67 | 1.26% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.65 | $6.34 | 1.26% | ||||||||||||
World Innovators Fund — Investor Class |
| |||||||||||||||
Actual | $1,000.00 | $1,105.00 | $9.39 | 1.79% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.01 | $9.00 | 1.79% | ||||||||||||
World Innovators Fund — Institutional Class |
| |||||||||||||||
Actual | $1,000.00 | $1,106.30 | $8.14 | 1.55% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.20 | $7.80 | 1.55% | ||||||||||||
Income Fund |
| |||||||||||||||
Actual | $1,000.00 | $996.40 | $3.68 | 0.74% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,021.24 | $3.73 | 0.74% | ||||||||||||
U.S. Treasury Fund |
| |||||||||||||||
Actual | $1,000.00 | $990.50 | $3.47 | 0.70% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,021.44 | $3.53 | 0.70% | ||||||||||||
*Expenses are equal to a fund’s 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).
46
Table of Contents
| WASATCH CORE GROWTH FUND (WGROX / WIGRX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 97.9% | ||||||||
| Airlines 1.9% | ||||||||
| 189,465 | Allegiant Travel Co. | $ | 32,692,186 | |||||
|
| |||||||
| Application Software 6.6% | ||||||||
| 436,556 | Guidewire Software, Inc.* | 35,286,822 | ||||||
| 215,318 | Tyler Technologies, Inc.* | 45,423,485 | ||||||
| 144,176 | Ultimate Software Group, Inc. (The)* | 35,135,691 | ||||||
|
| |||||||
| 115,845,998 | ||||||||
|
| |||||||
| Asset Management & Custody Banks 1.5% | ||||||||
| 709,755 | Hamilton Lane, Inc., Class A | 26,424,179 | ||||||
|
| |||||||
| Automotive Retail 2.9% | ||||||||
| 941,049 | Monro, Inc. | 50,440,226 | ||||||
|
| |||||||
| Biotechnology 3.4% | ||||||||
| 1,908,420 | Abcam plc (United Kingdom) | 33,144,515 | ||||||
| 556,795 | Sangamo Therapeutics Inc.* | 10,579,105 | ||||||
| 311,800 | Seattle Genetics, Inc.* | 16,319,612 | ||||||
|
| |||||||
| 60,043,232 | ||||||||
|
| |||||||
| Building Products 2.5% | ||||||||
| 402,793 | Trex Co., Inc.* | 43,811,794 | ||||||
|
| |||||||
| Commercial Printing 2.9% | ||||||||
| 328,486 | Cimpress N.V.* | 50,816,784 | ||||||
|
| |||||||
| Consumer Finance 2.1% | ||||||||
| 112,207 | Credit Acceptance Corp.* | 37,074,315 | ||||||
|
| |||||||
| Data Processing & Outsourced Services 2.1% | ||||||||
| 461,678 | Euronet Worldwide, Inc.* | 36,435,628 | ||||||
|
| |||||||
| Distributors 2.7% | ||||||||
| 328,200 | Pool Corp. | 47,989,404 | ||||||
|
| |||||||
| Diversified Banks 1.1% | ||||||||
| 7,321,641 | City Union Bank Ltd. (India) | 19,439,726 | ||||||
|
| |||||||
| Diversified Support Services 5.7% | ||||||||
| 1,158,015 | Copart, Inc.* | 58,977,704 | ||||||
| 934,132 | Healthcare Services Group, Inc. | 40,616,059 | ||||||
|
| |||||||
| 99,593,763 | ||||||||
|
| |||||||
| General Merchandise Stores 2.2% | ||||||||
| 654,894 | Ollie’s Bargain Outlet Holdings, Inc.* | 39,490,108 | ||||||
|
| |||||||
| Health Care Equipment 2.6% | ||||||||
| 407,741 | Cantel Medical Corp. | 45,426,425 | ||||||
|
| |||||||
| Health Care Facilities 2.2% | ||||||||
| 1,489,903 | Ensign Group, Inc. (The) | 39,184,449 | ||||||
|
| |||||||
| Health Care Supplies 2.2% | ||||||||
| 568,410 | Neogen Corp.* | 38,077,786 | ||||||
|
| |||||||
| Industrial Machinery 8.4% | ||||||||
| 811,515 | Altra Industrial Motion Corp. | 37,289,114 | ||||||
| 664,239 | Barnes Group, Inc. | 39,781,274 | ||||||
| 351,401 | RBC Bearings, Inc.* | 43,644,004 | ||||||
| 509,005 | Sun Hydraulics Corp. | 27,262,308 | ||||||
|
| |||||||
| 147,976,700 | ||||||||
|
| |||||||
| Industrial REITs 1.3% | ||||||||
| 1,521,481 | Monmouth Real Estate Investment Corp. | 22,883,074 | ||||||
|
| |||||||
| Internet & Direct Marketing Retail 1.0% | ||||||||
| 254,856 | Wayfair, Inc., Class A* | 17,210,426 | ||||||
|
| |||||||
| Internet Software & Services 2.0% | ||||||||
| 350,935 | Envestnet, Inc.* | 20,108,575 | ||||||
| 344,753 | Q2 Holdings, Inc.* | 15,703,499 | ||||||
|
| |||||||
| 35,812,074 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| IT Consulting & Other Services 3.7% | ||||||||
| 319,418 | EPAM Systems, Inc.* | $ | 36,579,749 | |||||
| 444,522 | InterXion Holding N.V.* (Netherlands) | 27,609,262 | ||||||
|
| |||||||
| 64,189,011 | ||||||||
|
| |||||||
| Leisure Facilities 1.8% | ||||||||
| 830,373 | Planet Fitness, Inc., Class A* | 31,363,188 | ||||||
|
| |||||||
| Life Sciences Tools & Services 3.0% | ||||||||
| 452,985 | ICON plc* (Ireland) | 53,515,648 | ||||||
|
| |||||||
| Managed Health Care 1.6% | ||||||||
| 461,672 | HealthEquity, Inc.* | 27,949,623 | ||||||
|
| |||||||
| Personal Products 1.2% | ||||||||
| 283,139 | Nu Skin Enterprises, Inc., Class A | 20,870,176 | ||||||
|
| |||||||
| Real Estate Services 1.1% | ||||||||
| 374,039 | HFF, Inc., Class A | 18,589,738 | ||||||
|
| |||||||
| Regional Banks 11.2% | ||||||||
| 756,231 | Eagle Bancorp, Inc.* | 45,260,425 | ||||||
| 340,636 | Independent Bank Corp. | 24,372,506 | ||||||
| 727,101 | Metro Bank plc* (United Kingdom) | 35,820,388 | ||||||
| 343,485 | South State Corp. | 29,299,271 | ||||||
| 334,096 | Texas Capital Bancshares, Inc.* | 30,035,230 | ||||||
| 564,573 | Webster Financial Corp. | 31,277,344 | ||||||
|
| |||||||
| 196,065,164 | ||||||||
|
| |||||||
| Semiconductors 1.6% | ||||||||
| 237,314 | Monolithic Power Systems, Inc. | 27,473,842 | ||||||
|
| |||||||
| Specialty Chemicals 2.1% | ||||||||
| 461,056 | Balchem Corp. | 37,691,328 | ||||||
|
| |||||||
| Specialty Stores 2.4% | ||||||||
| 564,973 | Five Below, Inc.* | 41,435,120 | ||||||
|
| |||||||
| Systems Software 3.2% | ||||||||
| 642,523 | Fortinet, Inc.* | 34,426,382 | ||||||
| 188,794 | Proofpoint, Inc.* | 21,456,438 | ||||||
|
| |||||||
| 55,882,820 | ||||||||
|
| |||||||
| Trading Companies & Distributors 2.8% | ||||||||
| 301,627 | SiteOne Landscape Supply, Inc.* | 23,237,344 | ||||||
| 417,753 | WESCO International, Inc.* | 25,921,574 | ||||||
|
| |||||||
| 49,158,918 | ||||||||
|
| |||||||
| Trucking 4.9% | ||||||||
| 778,810 | Knight-Swift Transportation Holdings, Inc. | 35,833,048 | ||||||
| 336,768 | Old Dominion Freight Line, Inc. | 49,494,793 | ||||||
|
| |||||||
| 85,327,841 | ||||||||
|
| |||||||
| Total Common Stocks (cost $1,049,825,095) | 1,716,180,694 | |||||||
|
| |||||||
| PREFERRED STOCKS 0.3% | ||||||||
| Systems Software 0.3% | ||||||||
| 209,500 | DocuSign, Inc., Series F Pfd.* *** † | 5,721,445 | ||||||
|
| |||||||
| Total Preferred Stocks (cost $4,000,004) | 5,721,445 | |||||||
|
| |||||||
47
Table of Contents
| WASATCH CORE GROWTH FUND (WGROX / WIGRX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 1.4% | ||||||||
| Repurchase Agreement 1.4% | ||||||||
| $24,177,779 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $25,490,000 of United States Treasury Notes 2.000% due 5/31/24; value: $24,664,965; repurchase proceeds: $24,178,531 (cost $24,177,779) | $ | 24,177,779 | |||||
|
| |||||||
| Total Short-Term Investments (cost $24,177,779) | 24,177,779 | |||||||
|
| |||||||
| Total Investments (cost $1,078,002,878) 99.6%§ | 1,746,079,918 | |||||||
| Other Assets less Liabilities 0.4% | 6,784,091 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 1,752,864,009 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 5.04%.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch Core Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
India | 1.1 | |||
Ireland | 3.1 | |||
Netherlands | 1.6 | |||
United Kingdom | 4.0 | |||
United States | 90.2 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
48
Table of Contents
| WASATCH EMERGING INDIA FUND (WAINX / WIINX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 100.1% | ||||||||
| Apparel, Accessories & Luxury Goods 4.1% | ||||||||
| 30,021 | Page Industries Ltd. (India) | $ | 10,433,694 | |||||
|
| |||||||
| Auto Parts & Equipment 5.7% | ||||||||
| 603,614 | Endurance Technologies Ltd. (India) | 11,732,107 | ||||||
| 22,585 | WABCO India Ltd. (India) | 2,717,240 | ||||||
|
| |||||||
| 14,449,347 | ||||||||
|
| |||||||
| Building Products 3.5% | ||||||||
| 542,445 | Kajaria Ceramics Ltd. (India) | 4,861,040 | ||||||
| 410,894 | Somany Ceramics Ltd. (India) | 4,176,397 | ||||||
|
| |||||||
| 9,037,437 | ||||||||
|
| |||||||
| Cable & Satellite 0.1% | ||||||||
| 1,385,051 | SITI Networks Ltd.* (India) | 312,170 | ||||||
|
| |||||||
| Commodity Chemicals 6.7% | ||||||||
| 1,787,776 | Berger Paints India Ltd. (India) | 7,081,233 | ||||||
| 698,809 | Gulf Oil Lubricants India Ltd. (India) | 9,884,179 | ||||||
|
| |||||||
| 16,965,412 | ||||||||
|
| |||||||
| Consumer Finance 9.7% | ||||||||
| 1,014,582 | AU Small Finance Bank Ltd.* (India) | 9,671,320 | ||||||
| 467,386 | Bajaj Finance Ltd. (India) | 12,815,269 | ||||||
| 275,056 | Repco Home Finance Ltd. (India) | 2,342,856 | ||||||
|
| |||||||
| 24,829,445 | ||||||||
|
| |||||||
| Department Stores 5.0% | ||||||||
| 441,846 | V-Mart Retail Ltd. (India) | 12,836,965 | ||||||
|
| |||||||
| Diversified Banks 5.2% | ||||||||
| 8,518 | Bandhan Bank Ltd.* (India) | 61,382 | ||||||
| 353,360 | Bandhan Bank Ltd. Anchor Shares* *** † (India) | 2,455,438 | ||||||
| 68,957 | HDFC Bank Ltd. ADR (India) | 6,810,883 | ||||||
| 138,349 | IndusInd Bank Ltd. (India) | 3,844,972 | ||||||
|
| |||||||
| 13,172,675 | ||||||||
|
| |||||||
| Diversified Chemicals 3.9% | ||||||||
| 713,914 | Pidilite Industries Ltd. (India) | 10,021,692 | ||||||
|
| |||||||
| Electrical Components & Equipment 4.6% | ||||||||
| 950,346 | Amara Raja Batteries Ltd. (India) | 11,645,191 | ||||||
|
| |||||||
| Financial Exchanges & Data 2.1% | ||||||||
| 185,597 | CRISIL Ltd. (India) | 5,394,741 | ||||||
|
| |||||||
| Food Retail 1.2% | ||||||||
| 152,668 | Avenue Supermarts Ltd.* (India) | 3,093,756 | ||||||
|
| |||||||
| Health Care Services 3.6% | ||||||||
| 687,029 | Dr. Lal PathLabs Ltd. (India) | 9,137,569 | ||||||
|
| |||||||
| Hotels, Resorts & Cruise Lines 1.0% | ||||||||
| 968,158 | Byke Hospitality Ltd. (The) (India) | 2,503,042 | ||||||
|
| |||||||
| Housewares & Specialties 2.1% | ||||||||
| 1,182,502 | LA Opala RG Ltd. (India) | 5,238,664 | ||||||
|
| |||||||
| Human Resource & Employment Services 4.2% | ||||||||
| 672,149 | Quess Corp. Ltd.* (India) | 10,583,855 | ||||||
|
| |||||||
| Industrial Conglomerates 2.2% | ||||||||
| 18,804 | 3M India Ltd.* (India) | 5,600,991 | ||||||
|
| |||||||
| Industrial Machinery 2.9% | ||||||||
| 1,905,724 | Elgi Equipments Ltd. (India) | 7,419,499 | ||||||
|
| |||||||
| Internet & Direct Marketing Retail 4.5% | ||||||||
| 333,270 | MakeMyTrip Ltd.* (India) | 11,564,469 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Internet Software & Services 1.0% | ||||||||
| 138,155 | Info Edge India Ltd. (India) | $ | 2,481,491 | |||||
|
| |||||||
| IT Consulting & Other Services 0.5% | ||||||||
| 58,306 | Larsen & Toubro Infotech Ltd. (India) | 1,204,512 | ||||||
|
| |||||||
| Life & Health Insurance 2.3% | ||||||||
| 642,669 | ICICI Prudential Life Insurance Co. Ltd. (India) | 3,835,151 | ||||||
| 308,210 | Max Financial Services Ltd.* (India) | 2,146,538 | ||||||
|
| |||||||
| 5,981,689 | ||||||||
|
| |||||||
| Life Sciences Tools & Services 4.4% | ||||||||
| 664,335 | Divi’s Laboratories Ltd. (India) | 11,199,230 | ||||||
|
| |||||||
| Packaged Foods & Meats 4.2% | ||||||||
| 96,052 | Britannia Industries Ltd. (India) | 7,351,812 | ||||||
| 1,394,855 | Prabhat Dairy Ltd. (India) | 3,254,126 | ||||||
|
| |||||||
| 10,605,938 | ||||||||
|
| |||||||
| Personal Products 4.8% | ||||||||
| 254,571 | Dabur India Ltd. (India) | 1,277,698 | ||||||
| 447,140 | Godrej Consumer Products Ltd. (India) | 7,532,763 | ||||||
| 23,619 | Procter & Gamble Hygiene & Health Care Ltd. (India) | 3,450,398 | ||||||
|
| |||||||
| 12,260,859 | ||||||||
|
| |||||||
| Pharmaceuticals 0.5% | ||||||||
| 159,961 | Amrutanjan Health Care Ltd. (India) | 1,328,324 | ||||||
|
| |||||||
| Property & Casualty Insurance 1.1% | ||||||||
| 224,971 | ICICI Lombard General Insurance Co. Ltd. (India) | 2,723,406 | ||||||
|
| |||||||
| Specialty Chemicals 3.2% | ||||||||
| 349,596 | Asian Paints Ltd. (India) | 6,026,147 | ||||||
| 555,585 | SH Kelkar & Co. Ltd. (India) | 2,211,157 | ||||||
|
| |||||||
| 8,237,304 | ||||||||
|
| |||||||
| Thrifts & Mortgage Finance 5.8% | ||||||||
| 320,256 | GRUH Finance Ltd. (India) | 2,825,987 | ||||||
| 422,889 | Housing Development Finance Corp. Ltd. (India) | 11,881,960 | ||||||
|
| |||||||
| 14,707,947 | ||||||||
|
| |||||||
| Total Common Stocks (cost $199,114,536) | 254,971,314 | |||||||
|
| |||||||
| Total Investments (cost $199,114,536) 100.1%§ | 254,971,314 | |||||||
| Liabilities less Other Assets (0.1%) | (315,946 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 254,655,368 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 87.58%.
ADR American Depositary Receipt.
See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch Emerging India Fund’s investments, excluding short-term investments, were in the following country:
| Country | % | |||
India | 100.0 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
49
Table of Contents
| WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 97.6% | ||||||||
| Airport Services 4.1% | ||||||||
| 102,569 | Grupo Aeroportuario del Pacifico S.A.B. de C.V., Class B (Mexico) | $ | 1,013,447 | |||||
| 57,806 | Grupo Aeroportuario del Sureste S.A.B. de C.V., Class B (Mexico) | 972,623 | ||||||
|
| |||||||
| 1,986,070 | ||||||||
|
| |||||||
| Apparel, Accessories & Luxury Goods 3.0% | ||||||||
| 4,243 | Page Industries Ltd. (India) | 1,474,640 | ||||||
|
| |||||||
| Biotechnology 5.2% | ||||||||
| 3,689 | Medytox, Inc. (Korea) | 2,533,743 | ||||||
|
| |||||||
| Commodity Chemicals 2.6% | ||||||||
| 312,443 | Berger Paints India Ltd. (India) | 1,237,561 | ||||||
|
| |||||||
| Consumer Finance 5.4% | ||||||||
| 95,181 | Bajaj Finance Ltd. (India) | 2,609,770 | ||||||
|
| |||||||
| Diversified Banks 9.4% | ||||||||
| 58,966 | HDFC Bank Ltd. (India) | 1,721,288 | ||||||
| 200,076 | Kasikornbank Public Co. Ltd. (Thailand) | 1,356,447 | ||||||
| 870,464 | PT Bank Central Asia Tbk (Indonesia) | 1,478,732 | ||||||
|
| |||||||
| 4,556,467 | ||||||||
|
| |||||||
| Drug Retail 3.8% | ||||||||
| 81,058 | Raia Drogasil S.A. (Brazil) | 1,836,508 | ||||||
|
| |||||||
| Food Retail 2.8% | ||||||||
| 8,403 | BGF Retail Co. Ltd. (Korea) | 1,332,308 | ||||||
|
| |||||||
| Health Care Facilities 5.6% | ||||||||
| 686,037 | Bangkok Dusit Medical Services Public Co. Ltd., Class F (Thailand) | 515,570 | ||||||
| 46,196 | NMC Health plc (United Arab Emirates) | 2,202,847 | ||||||
|
| |||||||
| 2,718,417 | ||||||||
|
| |||||||
| Highways & Railtracks 1.6% | ||||||||
| 75,777 | Promotora y Operadora de Infraestructura S.A.B. de C.V. (Mexico) | 753,477 | ||||||
|
| |||||||
| Home Furnishings 1.8% | ||||||||
| 91,000 | Nien Made Enterprise Co. Ltd. (Taiwan) | 875,450 | ||||||
|
| |||||||
| Household Appliances 2.1% | ||||||||
| 177,000 | Techtronic Industries Co. Ltd. (Hong Kong) | 1,038,828 | ||||||
|
| |||||||
| Human Resource & Employment Services 3.2% | ||||||||
| 17,768 | 51job, Inc. ADR* (China) | 1,528,759 | ||||||
|
| |||||||
| Industrial Machinery 2.0% | ||||||||
| 141,635 | Weg S.A. (Brazil) | 969,988 | ||||||
|
| |||||||
| Internet & Direct Marketing Retail 7.3% | ||||||||
| 41,179 | Ctrip.com International Ltd. ADR* (China) | 1,919,765 | ||||||
| 46,862 | MakeMyTrip Ltd.* (India) | 1,626,111 | ||||||
|
| |||||||
| 3,545,876 | ||||||||
|
| |||||||
| Internet Software & Services 12.4% | ||||||||
| 14,255 | Alibaba Group Holding Ltd. ADR* (China) | 2,616,363 | ||||||
| 2,672 | MercadoLibre, Inc. (Brazil) | 952,274 | ||||||
| 45,625 | Tencent Holdings Ltd. (China) | 2,449,129 | ||||||
|
| |||||||
| 6,017,766 | ||||||||
|
| |||||||
| Life & Health Insurance 4.3% | ||||||||
| 72,706 | Discovery Ltd. (South Africa) | 1,048,907 | ||||||
| 172,581 | ICICI Prudential Life Insurance Co. Ltd. (India) | 1,029,883 | ||||||
|
| |||||||
| 2,078,790 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Marine Ports & Services 1.5% | ||||||||
| 381,990 | International Container Terminal Services, Inc. (Philippines) | $ | 735,451 | |||||
|
| |||||||
| Packaged Foods & Meats 6.1% | ||||||||
| 15,061 | Britannia Industries Ltd. (India) | 1,152,767 | ||||||
| 52,038 | M Dias Branco S.A. (Brazil) | 804,028 | ||||||
| 391,905 | Vitasoy International Holdings Ltd. (China) | 1,011,396 | ||||||
|
| |||||||
| 2,968,191 | ||||||||
|
| |||||||
| Personal Products 4.3% | ||||||||
| 66,527 | Godrej Consumer Products Ltd. (India) | 1,120,750 | ||||||
| 859 | LG Household & Health Care Ltd. (Korea) | 973,517 | ||||||
|
| |||||||
| 2,094,267 | ||||||||
|
| |||||||
| Semiconductors 3.5% | ||||||||
| 76,567 | Silergy Corp. (Taiwan) | 1,685,908 | ||||||
|
| |||||||
| Specialty Chemicals 2.4% | ||||||||
| 67,895 | Asian Paints Ltd. (India) | 1,170,337 | ||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 1.9% | ||||||||
| 53,672 | Ennoconn Corp. (Taiwan) | 912,113 | ||||||
|
| |||||||
| Thrifts & Mortgage Finance 1.3% | ||||||||
| 31,093 | PNB Housing Finance Ltd. (India) | 618,324 | ||||||
|
| |||||||
| Total Common Stocks (cost $35,443,888) | 47,279,009 | |||||||
|
| |||||||
| PREFERRED STOCKS 2.8% | ||||||||
| Diversified Banks 2.8% | ||||||||
| 126,468 | Banco Davivienda S.A., 2.91% (Colombia) | 1,363,327 | ||||||
|
| |||||||
| Total Preferred Stocks (cost $1,237,221) | 1,363,327 | |||||||
|
| |||||||
| Total Investments (cost $36,681,109) 100.4%§ | 48,642,336 | |||||||
| Liabilities less Other Assets (0.4%) | (169,804 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 48,472,532 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 50.40%.
ADR American Depositary Receipt. See Notes to Financial Statements. |
| |||||||
50
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
At March 31, 2018, Wasatch Emerging Markets Select Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Brazil | 9.4 | |||
China | 19.6 | |||
Colombia | 2.8 | |||
Hong Kong | 2.1 | |||
India | 28.3 | |||
Indonesia | 3.0 | |||
Korea | 10.0 | |||
Mexico | 5.6 | |||
Philippines | 1.5 | |||
South Africa | 2.2 | |||
Taiwan | 7.1 | |||
Thailand | 3.9 | |||
United Arab Emirates | 4.5 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
51
Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 96.9% | ||||||||
| Air Freight & Logistics 0.7% | ||||||||
| 3,856,900 | Aramex PJSC (United Arab Emirates) | $ | 4,620,237 | |||||
|
| |||||||
| Airport Services 2.4% | ||||||||
| 1,740,512 | Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (Mexico) | 8,502,468 | ||||||
| 409,002 | Grupo Aeroportuario del Sureste S.A.B. de C.V., Class B (Mexico) | 6,881,717 | ||||||
|
| |||||||
| 15,384,185 | ||||||||
|
| |||||||
| Asset Management & Custody Banks 0.5% | ||||||||
| 1,739,472 | Peregrine Holdings Ltd. (South Africa) | 3,084,069 | ||||||
|
| |||||||
| Auto Parts & Equipment 1.4% | ||||||||
| 2,007,768 | Minth Group Ltd. (Hong Kong) | 9,211,827 | ||||||
|
| |||||||
| Automobile Manufacturers 0.7% | ||||||||
| 282,565 | Indus Motor Co. Ltd. (Pakistan) | 4,304,586 | ||||||
|
| |||||||
| Automotive Retail 3.9% | ||||||||
| 11,055,124 | China Yongda Automobiles Services Holdings Ltd. (China) | 11,815,637 | ||||||
| 5,119,500 | China ZhengTong Auto Services Holdings Ltd. (China) | 3,760,410 | ||||||
| 3,463,735 | Zhongsheng Group Holdings Ltd. (China) | 9,515,775 | ||||||
|
| |||||||
| 25,091,822 | ||||||||
|
| |||||||
| Biotechnology 4.5% | ||||||||
| 100,908 | China Biologic Products Holdings, Inc.* (China) | 8,173,548 | ||||||
| 30,877 | Medytox, Inc. (Korea) | 21,207,479 | ||||||
|
| |||||||
| 29,381,027 | ||||||||
|
| |||||||
| Building Products 1.4% | ||||||||
| 980,635 | Kajaria Ceramics Ltd. (India) | 8,787,814 | ||||||
|
| |||||||
| Commodity Chemicals 1.7% | ||||||||
| 2,322,946 | Berger Paints India Ltd. (India) | 9,200,996 | ||||||
| 1,300,048 | TOA Paint Thailand Public Co. Ltd.* (Thailand) | 1,600,635 | ||||||
|
| |||||||
| 10,801,631 | ||||||||
|
| |||||||
| Consumer Finance 7.6% | ||||||||
| 561,997 | AU Small Finance Bank Ltd.* (India) | 5,357,135 | ||||||
| 228,204 | Bajaj Finance Ltd. (India) | 6,257,132 | ||||||
| 105,547 | KRUK S.A. (Poland) | 6,733,206 | ||||||
| 4,433,175 | Muangthai Leasing Public Co. Ltd. (Thailand) | 5,387,293 | ||||||
| 376,563 | Repco Home Finance Ltd. (India) | 3,207,467 | ||||||
| 5,846,549 | Srisawad Corp. Public Co. Ltd. (Thailand) | 11,405,164 | ||||||
| 3,247,251 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 10,984,925 | ||||||
|
| |||||||
| 49,332,322 | ||||||||
|
| |||||||
| Data Processing & Outsourced Services 1.2% | ||||||||
| 10,841,527 | My EG Services Berhad (Malaysia) | 8,128,342 | ||||||
|
| |||||||
| Department Stores 0.9% | ||||||||
| 474,521 | Poya International Co. Ltd. (Taiwan) | 5,915,848 | ||||||
|
| |||||||
| Diversified Banks 3.7% | ||||||||
| 1,093,710 | Moneta Money Bank AS (Czech Republic) | 4,530,342 | ||||||
| 1,449,284 | Security Bank Corp. (Philippines) | 6,703,419 | ||||||
| 578,994 | TCS Group Holding plc GDR (Russia) | 12,736,267 | ||||||
|
| |||||||
| 23,970,028 | ||||||||
|
| |||||||
| Diversified Chemicals 1.0% | ||||||||
| 482,907 | Pidilite Industries Ltd. (India) | 6,778,891 | ||||||
|
| |||||||
| Diversified Support Services 1.2% | ||||||||
| 9,452,000 | Greentown Service Group Co. Ltd. (China) | 8,053,546 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Drug Retail 4.0% | ||||||||
| 933,516 | Clicks Group Ltd. (South Africa) | $ | 14,422,022 | |||||
| 522,207 | Raia Drogasil S.A. (Brazil) | 11,831,493 | ||||||
|
| |||||||
| 26,253,515 | ||||||||
|
| |||||||
| Electrical Components & Equipment 3.8% | ||||||||
| 620,105 | Amara Raja Batteries Ltd. (India) | 7,598,539 | ||||||
| 691,647 | Bizlink Holding, Inc. (Taiwan) | 5,693,154 | ||||||
| 615,021 | Voltronic Power Technology Corp. (Taiwan) | 11,685,757 | ||||||
|
| |||||||
| 24,977,450 | ||||||||
|
| |||||||
| Electronic Equipment & Instruments 1.9% | ||||||||
| 2,110,616 | Chroma ATE, Inc. (Taiwan) | 12,233,567 | ||||||
|
| |||||||
| Electronic Manufacturing Services 0.9% | ||||||||
| 8,203,700 | Inari Amertron Berhad (Malaysia) | 5,832,517 | ||||||
|
| |||||||
| Fertilizers & Agricultural Chemicals 0.5% | ||||||||
| 50,042 | Bayer CropScience Ltd. (India) | 3,287,467 | ||||||
|
| |||||||
| Food Retail 0.8% | ||||||||
| 33,220 | BGF Retail Co. Ltd. (Korea) | 5,267,079 | ||||||
|
| |||||||
| Footwear 1.8% | ||||||||
| 388,500 | Arezzo Industria e Comercio S.A. (Brazil) | 5,948,500 | ||||||
| 82,550 | CCC S.A. (Poland) | 5,638,835 | ||||||
|
| |||||||
| 11,587,335 | ||||||||
|
| |||||||
| General Merchandise Stores 2.5% | ||||||||
| 558,032 | Magazine Luiza S.A. (Brazil) | 16,549,369 | ||||||
|
| |||||||
| Health Care Equipment 1.1% | ||||||||
| 168,367 | DIO Corp.* (Korea) | 7,044,909 | ||||||
|
| |||||||
| Health Care Services 0.4% | ||||||||
| 204,410 | Dr. Lal PathLabs Ltd. (India) | 2,718,678 | ||||||
|
| |||||||
| Highways & Railtracks 2.3% | ||||||||
| 3,054,050 | EcoRodovias Infraestrutura e Logistica S.A. (Brazil) | 8,094,303 | ||||||
| 8,628,875 | Yuexiu Transport Infrastructure Ltd. (China) | 6,666,127 | ||||||
|
| |||||||
| 14,760,430 | ||||||||
|
| |||||||
| Home Furnishings 2.9% | ||||||||
| 32,915 | Hanssem Co. Ltd. (Korea) | 4,770,961 | ||||||
| 11,677,122 | Man Wah Holdings Ltd. (China) | 9,313,657 | ||||||
| 477,878 | Nien Made Enterprise Co. Ltd. (Taiwan) | 4,597,345 | ||||||
|
| |||||||
| 18,681,963 | ||||||||
|
| |||||||
| Hotels, Resorts & Cruise Lines 2.4% | ||||||||
| 51,060 | China Lodging Group Ltd. ADR (China) | 6,725,113 | ||||||
| 7,213,891 | Minor International Public Co. Ltd. (Thailand) | 8,824,155 | ||||||
|
| |||||||
| 15,549,268 | ||||||||
|
| |||||||
| Human Resource & Employment Services 3.5% | ||||||||
| 262,851 | 51job, Inc. ADR* (China) | 22,615,700 | ||||||
|
| |||||||
| Industrial Conglomerates 1.4% | ||||||||
| 29,938 | 3M India Ltd.* (India) | 8,917,383 | ||||||
|
| |||||||
| Industrial Machinery 2.2% | ||||||||
| 688,583 | Airtac International Group (Taiwan) | 11,678,303 | ||||||
| 686,437 | Elgi Equipments Ltd. (India) | 2,672,485 | ||||||
|
| |||||||
| 14,350,788 | ||||||||
|
| |||||||
52
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Shares | Value | |||||||
| Internet & Direct Marketing Retail 0.9% | ||||||||
| 176,041 | MakeMyTrip Ltd.* (India) | $ | 6,108,623 | |||||
|
| |||||||
| Internet Software & Services 0.9% | ||||||||
| 338,734 | Info Edge India Ltd. (India) | 6,084,219 | ||||||
|
| |||||||
| Life & Health Insurance 0.4% | ||||||||
| 395,185 | Max Financial Services Ltd.* (India) | 2,752,278 | ||||||
|
| |||||||
| Marine 0.5% | ||||||||
| 3,546,597 | SITC International Holdings Co. Ltd. (China) | 3,549,307 | ||||||
|
| |||||||
| Marine Ports & Services 1.0% | ||||||||
| 3,500,325 | International Container Terminal Services, Inc. (Philippines) | 6,739,227 | ||||||
|
| |||||||
| Movies & Entertainment 1.5% | ||||||||
| 94,699 | Loen Entertainment, Inc. (Korea) | 9,755,090 | ||||||
|
| |||||||
| Oil & Gas Exploration & Production 0.7% | ||||||||
| 320,419 | Parex Resources, Inc.* (Colombia) | 4,506,533 | ||||||
|
| |||||||
| Packaged Foods & Meats 3.3% | ||||||||
| 101,103 | Britannia Industries Ltd. (India) | 7,738,415 | ||||||
| 555,410 | Manpasand Beverages Ltd. (India) | 3,180,757 | ||||||
| 4,207,243 | Vitasoy International Holdings Ltd. (China) | 10,857,703 | ||||||
|
| |||||||
| 21,776,875 | ||||||||
|
| |||||||
| Pharmaceuticals 0.8% | ||||||||
| 13,017,213 | China Animal Healthcare Ltd.* *** (China) | 16,586 | ||||||
| 10,590 | Hanmi Pharm Co. Ltd. (Korea) | 5,076,921 | ||||||
|
| |||||||
| 5,093,507 | ||||||||
|
| |||||||
| Real Estate Operating Companies 0.9% | ||||||||
| 2,024,012 | Parque Arauco S.A. (Chile) | 6,071,366 | ||||||
|
| |||||||
| Regional Banks 1.3% | ||||||||
| 633,428 | Banregio Grupo Financiero S.A.B. de C.V. (Mexico) | 3,914,502 | ||||||
| 17,288,060 | PT Bank Tabungan Negara Tbk (Indonesia) | 4,787,097 | ||||||
|
| |||||||
| 8,701,599 | ||||||||
|
| |||||||
| Research & Consulting Services 0.0% | ||||||||
| 1 | Sporton International, Inc. (Taiwan) | 5 | ||||||
|
| |||||||
| Restaurants 1.4% | ||||||||
| 708,984 | Gourmet Master Co. Ltd. (Taiwan) | 9,118,531 | ||||||
|
| |||||||
| Semiconductor Equipment 2.8% | ||||||||
| 141,779 | Koh Young Technology, Inc. (Korea) | 13,274,739 | ||||||
| 184,413 | TES Co. Ltd. (Korea) | 5,242,250 | ||||||
|
| |||||||
| 18,516,989 | ||||||||
|
| |||||||
| Semiconductors 8.3% | ||||||||
| 485,645 | ASPEED Technology, Inc. (Taiwan) | 14,590,837 | ||||||
| 394,982 | eMemory Technology, Inc. (Taiwan) | 4,714,262 | ||||||
| 409,735 | Parade Technologies Ltd. (Taiwan) | 8,150,574 | ||||||
| 599,352 | Silergy Corp. (Taiwan) | 13,196,968 | ||||||
| 1,223,760 | Win Semiconductors Corp. (Taiwan) | 13,200,004 | ||||||
|
| |||||||
| 53,852,645 | ||||||||
|
| |||||||
| Specialty Chemicals 2.4% | ||||||||
| 20,208,824 | D&L Industries, Inc. (Philippines) | 4,482,295 | ||||||
| 122,492 | Frutarom Industries Ltd. (Israel) | 11,262,834 | ||||||
|
| |||||||
| 15,745,129 | ||||||||
|
| |||||||
| Systems Software 1.8% | ||||||||
| 210,616 | Douzone Bizon Co. Ltd. (Korea) | 11,440,723 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Technology Hardware, Storage & Peripherals 1.9% | ||||||||
| 737,158 | Ennoconn Corp. (Taiwan) | $ | 12,527,413 | |||||
|
| |||||||
| Thrifts & Mortgage Finance 0.9% | ||||||||
| 294,407 | PNB Housing Finance Ltd. (India) | 5,854,661 | ||||||
|
| |||||||
| Total Common Stocks (cost $422,275,161) | 631,668,313 | |||||||
|
| |||||||
| PREFERRED STOCKS 1.3% | ||||||||
| Personal Products 1.3% | ||||||||
| 12,371 | LG Household & Health Care Ltd., 1.29% (Korea) | 8,333,219 | ||||||
|
| |||||||
| Total Preferred Stocks (cost $5,366,273) | 8,333,219 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 1.5% | ||||||||
| Repurchase Agreement 1.5% | ||||||||
| $9,922,705 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $10,460,000 of United States Treasury Notes 2.000% due 5/31/24; value: $10,121,441; repurchase proceeds: $9,923,013 (cost $9,922,705) | $ | 9,922,705 | |||||
|
| |||||||
| Total Short-Term Investments (cost $9,922,705) | 9,922,705 | |||||||
|
| |||||||
| Total Investments (cost $437,564,139) 99.7%§ | 649,924,237 | |||||||
| Other Assets less Liabilities 0.3% | 2,001,425 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 651,925,662 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 44.62%.
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
See Notes to Financial Statements.
|
| |||||||
53
Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
At March 31, 2018, Wasatch Emerging Markets Small Cap Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Brazil | 6.6 | |||
Chile | 1.0 | |||
China | 15.8 | |||
Colombia | 0.7 | |||
Czech Republic | 0.7 | |||
Hong Kong | 1.4 | |||
India | 15.1 | |||
Indonesia | 0.7 | |||
Israel | 1.8 | |||
Korea | 14.3 | |||
Malaysia | 2.2 | |||
Mexico | 4.7 | |||
Pakistan | 0.7 | |||
Philippines | 2.8 | |||
Poland | 1.9 | |||
Russia | 2.0 | |||
South Africa | 2.7 | |||
Taiwan | 19.9 | |||
Thailand | 4.3 | |||
United Arab Emirates | 0.7 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
54
Table of Contents
| WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 93.5% | ||||||||
| Air Freight & Logistics 4.3% | ||||||||
| 6,065,527 | Aramex PJSC (United Arab Emirates) | $ | 7,265,983 | |||||
|
| |||||||
| Airport Services 0.9% | ||||||||
| 324,300 | Airports Corp. of Vietnam JSC (Vietnam) | 1,508,504 | ||||||
|
| |||||||
| Apparel, Accessories & Luxury Goods 1.8% | ||||||||
| 340,000 | Phu Nhuan Jewelry JSC (Vietnam) | 3,070,650 | ||||||
|
| |||||||
| Automobile Manufacturers 1.6% | ||||||||
| 295,579 | Honda Atlas Cars Pakistan Ltd. (Pakistan) | 1,219,199 | ||||||
| 99,190 | Indus Motor Co. Ltd. (Pakistan) | 1,511,058 | ||||||
|
| |||||||
| 2,730,257 | ||||||||
|
| |||||||
| Cable & Satellite 3.4% | ||||||||
| 23,519 | Naspers Ltd., Class N (South Africa) | 5,755,402 | ||||||
|
| |||||||
| Commodity Chemicals 1.1% | ||||||||
| 72,917 | Berger Paints Bangladesh Ltd. (Bangladesh) | 1,881,107 | ||||||
|
| |||||||
| Consumer Finance 6.3% | ||||||||
| 2,245,200 | Srisawad Corp. Public Co. Ltd. (Thailand) | 4,379,828 | ||||||
| 904,037 | Transaction Capital Ltd. (South Africa) | 1,301,981 | ||||||
| 1,488,820 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 5,036,437 | ||||||
|
| |||||||
| 10,718,246 | ||||||||
|
| |||||||
| Diversified Banks 21.0% | ||||||||
| 2,714,685 | Banca Transilvania S.A. (Romania) | 1,877,906 | ||||||
| 636,556 | BDO Unibank, Inc. (Philippines) | 1,706,935 | ||||||
| 560,686 | Commercial International Bank S.A.E (Egypt) | 2,832,689 | ||||||
| 18,262 | Credicorp Ltd. (Peru) | 4,146,204 | ||||||
| 106,537 | Grupo Financiero Galicia S.A. ADR (Argentina) | 7,005,873 | ||||||
| 206,025 | Grupo Supervielle S.A. ADR (Argentina) | 6,250,798 | ||||||
| 1,426,900 | HDBank* (Vietnam) | 2,871,379 | ||||||
| 1,676,153 | National Bank of Kuwait SAK (Kuwait) | 4,198,562 | ||||||
| 65,350 | TBC Bank Group plc (Georgia) | 1,686,175 | ||||||
| 150,644 | TCS Group Holding plc GDR (Russia) | 3,313,752 | ||||||
|
| |||||||
| 35,890,273 | ||||||||
|
| |||||||
| Diversified Real Estate Activities 3.6% | ||||||||
| 5,212,126 | Ayala Land, Inc. (Philippines) | 4,124,571 | ||||||
| 824,787 | Consultatio S.A. (Argentina) | 1,984,100 | ||||||
|
| |||||||
| 6,108,671 | ||||||||
|
| |||||||
| Education Services 1.8% | ||||||||
| 240,700 | Human Soft Holding Co. KSC (Kuwait) | 3,134,081 | ||||||
|
| |||||||
| Electric Utilities 0.5% | ||||||||
| 14,962 | Pampa Energia S.A. ADR* (Argentina) | 891,735 | ||||||
|
| |||||||
| Financial Exchanges & Data 3.2% | ||||||||
| 278,855 | Bolsas y Mercados Argentinos S.A.* (Argentina) | 5,506,409 | ||||||
|
| |||||||
| Food Retail 7.0% | ||||||||
| 101,542 | BIM Birlesik Magazalar A.S. (Turkey) | 1,850,523 | ||||||
| 1,320,200 | CP ALL Public Co. Ltd. (Thailand) | 3,715,306 | ||||||
| 2,659,514 | Philippine Seven Corp. (Philippines) | 6,320,344 | ||||||
|
| |||||||
| 11,886,173 | ||||||||
|
| |||||||
| Health Care Distributors 2.2% | ||||||||
| 6,779,403 | Ibnsina Pharma S.A.E.* (Egypt) | 3,710,791 | ||||||
|
| |||||||
| Health Care Facilities 5.6% | ||||||||
| 10,508,945 | Cleopatra Hospital* (Egypt) | 2,253,194 | ||||||
| 154,021 | NMC Health plc (United Arab Emirates) | 7,344,461 | ||||||
|
| |||||||
| 9,597,655 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Industrial Conglomerates 1.3% | ||||||||
| 126,485 | SM Investments Corp. (Philippines) | $ | 2,238,409 | |||||
|
| |||||||
| Internet Software & Services 1.1% | ||||||||
| 5,399 | MercadoLibre, Inc. (Brazil) | 1,924,150 | ||||||
|
| |||||||
| Multi-Sector Holdings 2.4% | ||||||||
| 223,220 | Ayala Corp. (Philippines) | 4,073,141 | ||||||
|
| |||||||
| Oil & Gas Storage & Transportation 1.9% | ||||||||
| 158,894 | Transportadora de Gas del Sur S.A. ADR* (Argentina) | 3,231,904 | ||||||
|
| |||||||
| Packaged Foods & Meats 6.9% | ||||||||
| 1,116,321 | Alicorp S.A. (Peru) | 3,892,875 | ||||||
| 568,155 | Olympic Industries Ltd. (Bangladesh) | 1,885,085 | ||||||
| 664,145 | Vietnam Dairy Products JSC (Vietnam) | 5,910,758 | ||||||
|
| |||||||
| 11,688,718 | ||||||||
|
| |||||||
| Pharmaceuticals 2.7% | ||||||||
| 540,543 | Searle Company Ltd. (The) (Pakistan) | 1,646,970 | ||||||
| 808,698 | Square Pharmaceuticals Ltd. (Bangladesh) | 3,004,075 | ||||||
|
| |||||||
| 4,651,045 | ||||||||
|
| |||||||
| Real Estate Development 0.4% | ||||||||
| 400,404 | Nam Long Investment Corp. (Vietnam) | 647,752 | ||||||
|
| |||||||
| Real Estate Operating Companies 1.0% | ||||||||
| 2,623,609 | SM Prime Holdings, Inc. (Philippines) | 1,705,770 | ||||||
|
| |||||||
| Restaurants 2.8% | ||||||||
| 37,684 | AmRest Holdings SE* (Poland) | 4,827,850 | ||||||
|
| |||||||
| Specialty Chemicals 1.7% | ||||||||
| 13,233,697 | D&L Industries, Inc. (Philippines) | 2,935,219 | ||||||
|
| |||||||
| Technology Distributors 4.3% | ||||||||
| 2,777,400 | FPT Corp. (Vietnam) | 7,391,139 | ||||||
|
| |||||||
| Wireless Telecommunication Services 2.7% | ||||||||
| 15,092,038 | Safaricom plc (Kenya) | 4,612,934 | ||||||
|
| |||||||
| Total Common Stocks (cost $119,212,589) | 159,583,968 | |||||||
|
| |||||||
| PREFERRED STOCKS 2.3% | ||||||||
| Diversified Banks 2.3% | ||||||||
| 360,485 | Banco Davivienda S.A., 2.91% (Colombia) | 3,886,033 | ||||||
|
| |||||||
| Total Preferred Stocks (cost $3,642,842) | 3,886,033 | |||||||
|
| |||||||
| PARTICIPATION NOTES 1.5% | ||||||||
| Diversified Banks 1.5% | ||||||||
| 130,798 | Al-Rajhi Bank, HSBC Bank plc, expiring 1/19/21* *** (Saudi Arabia) | 2,632,353 | ||||||
|
| |||||||
| Total Participation Notes (cost $2,656,584) | 2,632,353 | |||||||
|
| |||||||
55
Table of Contents
| WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 1.6% | ||||||||
| Repurchase Agreement 1.6% | ||||||||
| $2,725,364 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $2,875,000 of United States Treasury Notes 2.000% due 5/31/24; value: $2,781,945; repurchase proceeds: $2,725,449 (cost $2,725,364) | $ | 2,725,364 | |||||
|
| |||||||
| Total Short-Term Investments (cost $2,725,364) | 2,725,364 | |||||||
|
| |||||||
| Total Investments (cost $128,237,379) 98.9%§ | 168,827,718 | |||||||
| Other Assets less Liabilities 1.1%§§ | 1,820,079 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 170,647,797 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 37.36%.
§§Other Assets less Liabilities included U.S. dollars held in Zimbabwe. The position was fair valued during the period (see Note 12).
ADR American Depositary Receipt.
GDR Global Depositary Receipt. See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch Frontier Emerging Small Countries Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Argentina | 15.0 | |||
Bangladesh | 4.1 | |||
Brazil | 1.2 | |||
Colombia | 2.3 | |||
Egypt | 5.3 | |||
Georgia | 1.0 | |||
Kenya | 2.8 | |||
Kuwait | 4.4 | |||
Mexico | 3.0 | |||
Pakistan | 2.6 | |||
Peru | 4.8 | |||
Philippines | 13.9 | |||
Poland | 2.9 | |||
Romania | 1.1 | |||
Russia | 2.0 | |||
Saudi Arabia | 1.6 | |||
South Africa | 4.3 | |||
Thailand | 4.9 | |||
Turkey | 1.1 | |||
United Arab Emirates | 8.8 | |||
Vietnam | 12.9 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
56
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 98.4% | ||||||||
| Airlines 2.1% | ||||||||
| 9,235 | Allegiant Travel Co. | $ | 1,593,499 | |||||
| 19,694 | Spirit Airlines, Inc.* | 744,040 | ||||||
|
| |||||||
| 2,337,539 | ||||||||
|
| |||||||
| Apparel, Accessories & Luxury Goods 0.8% | ||||||||
| 26,575 | Ted Baker plc (United Kingdom) | 932,119 | ||||||
|
| |||||||
| Application Software 8.7% | ||||||||
| 13,831 | Aveva Group plc (United Kingdom) | 370,941 | ||||||
| 14,827 | Callidus Software, Inc.* | 533,030 | ||||||
| 20,368 | Globant S.A.* (Argentina) | 1,049,767 | ||||||
| 20,277 | HubSpot, Inc.* | 2,195,999 | ||||||
| 8,255 | Tyler Technologies, Inc.* | 1,741,475 | ||||||
| 8,781 | Ultimate Software Group, Inc. (The)* | 2,139,930 | ||||||
| 38,387 | Zendesk, Inc.* | 1,837,585 | ||||||
|
| |||||||
| 9,868,727 | ||||||||
|
| |||||||
| Automotive Retail 1.4% | ||||||||
| 30,154 | Monro, Inc. | 1,616,254 | ||||||
|
| |||||||
| Biotechnology 8.9% | ||||||||
| 106,661 | Abcam plc (United Kingdom) | 1,852,437 | ||||||
| 13,494 | China Biologic Products Holdings, Inc.* (China) | 1,093,014 | ||||||
| 26,770 | Exact Sciences Corp.* | 1,079,634 | ||||||
| 5,659 | Medytox, Inc. (Korea) | 3,886,813 | ||||||
| 62,297 | Sangamo Therapeutics Inc.* | 1,183,643 | ||||||
| 19,007 | Seattle Genetics, Inc.* | 994,826 | ||||||
|
| |||||||
| 10,090,367 | ||||||||
|
| |||||||
| Building Products 3.3% | ||||||||
| 141,009 | Somany Ceramics Ltd. (India) | 1,433,240 | ||||||
| 21,679 | Trex Co., Inc.* | 2,358,025 | ||||||
|
| |||||||
| 3,791,265 | ||||||||
|
| |||||||
| Commercial Printing 1.6% | ||||||||
| 12,006 | Cimpress N.V.* | 1,857,328 | ||||||
|
| |||||||
| Consumer Finance 5.2% | ||||||||
| 34,477 | Bajaj Finance Ltd. (India) | 945,326 | ||||||
| 4,108 | Credit Acceptance Corp.* | 1,357,324 | ||||||
| 692,783 | Srisawad Corp. Public Co. Ltd. (Thailand) | 1,351,447 | ||||||
| 660,800 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 2,235,380 | ||||||
|
| |||||||
| 5,889,477 | ||||||||
|
| |||||||
| Data Processing & Outsourced Services 0.7% | ||||||||
| 8,300 | GMO Payment Gateway, Inc. (Japan) | 825,281 | ||||||
|
| |||||||
| Diversified Chemicals 0.9% | ||||||||
| 75,307 | Pidilite Industries Ltd. (India) | 1,057,135 | ||||||
|
| |||||||
| Diversified Real Estate Activities 0.9% | ||||||||
| 44,379 | Patrizia Immobilien AG* (Germany) | 984,868 | ||||||
|
| |||||||
| Diversified Support Services 2.5% | ||||||||
| 56,288 | Copart, Inc.* | 2,866,748 | ||||||
|
| |||||||
| Drug Retail 0.5% | ||||||||
| 6,890 | Ain Holdings, Inc. (Japan) | 514,783 | ||||||
|
| |||||||
| Electrical Components & Equipment 2.0% | ||||||||
| 96,242 | Amara Raja Batteries Ltd. (India) | 1,179,314 | ||||||
| 58,641 | Voltronic Power Technology Corp. (Taiwan) | 1,114,213 | ||||||
|
| |||||||
| 2,293,527 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| General Merchandise Stores 3.4% | ||||||||
| 40,904 | Ollie’s Bargain Outlet Holdings, Inc.* | $ | 2,466,511 | |||||
| 27,584 | Seria Co. Ltd. (Japan) | 1,394,690 | ||||||
|
| |||||||
| 3,861,201 | ||||||||
|
| |||||||
| Health Care Equipment 3.2% | ||||||||
| 17,651 | Cantel Medical Corp. | 1,966,498 | ||||||
| 12,089 | Cochlear Ltd. (Australia) | 1,697,868 | ||||||
|
| |||||||
| 3,664,366 | ||||||||
|
| |||||||
| Health Care Facilities 1.9% | ||||||||
| 81,675 | Ensign Group, Inc. (The) | 2,148,053 | ||||||
|
| |||||||
| Health Care Services 0.8% | ||||||||
| 71,555 | Dr. Lal PathLabs Ltd. (India) | 951,690 | ||||||
|
| |||||||
| Health Care Supplies 2.3% | ||||||||
| 38,995 | Asahi Intecc Co. Ltd. (Japan) | 1,544,701 | ||||||
| 12,302 | Sartorius Stedim Biotech (France) | 1,110,584 | ||||||
|
| |||||||
| 2,655,285 | ||||||||
|
| |||||||
| Health Care Technology 0.8% | ||||||||
| 20,680 | M3, Inc. (Japan) | 929,001 | ||||||
|
| |||||||
| Highways & Railtracks 0.9% | ||||||||
| 397,600 | EcoRodovias Infraestrutura e Logistica S.A. (Brazil) | 1,053,779 | ||||||
|
| |||||||
| Homebuilding 1.7% | ||||||||
| 26,917 | LGI Homes, Inc.* | 1,899,533 | ||||||
|
| |||||||
| Human Resource & Employment Services 1.5% | ||||||||
| 30,193 | en-japan, Inc. (Japan) | 1,750,771 | ||||||
|
| |||||||
| Industrial Conglomerates 1.1% | ||||||||
| 4,332 | 3M India Ltd.* (India) | 1,290,337 | ||||||
|
| |||||||
| Industrial Machinery 5.3% | ||||||||
| 20,883 | Altra Industrial Motion Corp. | 959,574 | ||||||
| 16,246 | RBC Bearings, Inc.* | 2,017,753 | ||||||
| 347,031 | Rotork plc (United Kingdom) | 1,387,026 | ||||||
| 32,117 | Sun Hydraulics Corp. | 1,720,186 | ||||||
|
| |||||||
| 6,084,539 | ||||||||
|
| |||||||
| Internet & Direct Marketing Retail 3.6% | ||||||||
| 71,818 | MakeMyTrip Ltd.* (India) | 2,492,085 | ||||||
| 15,155 | Wayfair, Inc., Class A* | 1,023,417 | ||||||
| 30,675 | Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 622,984 | ||||||
|
| |||||||
| 4,138,486 | ||||||||
|
| |||||||
| Internet Software & Services 5.7% | ||||||||
| 28,300 | Envestnet, Inc.* | 1,621,590 | ||||||
| 48,989 | Infomart Corp. (Japan) | 470,070 | ||||||
| 4,969 | MercadoLibre, Inc. (Brazil) | 1,770,902 | ||||||
| 7,842 | Rightmove plc (United Kingdom) | 478,708 | ||||||
| 29,315 | SMS Co. Ltd. (Japan) | 1,249,410 | ||||||
| 2,875 | XING SE (Germany) | 838,104 | ||||||
|
| |||||||
| 6,428,784 | ||||||||
|
| |||||||
| Life & Health Insurance 1.5% | ||||||||
| 291,667 | ICICI Prudential Life Insurance Co. Ltd. (India) | 1,740,534 | ||||||
|
| |||||||
| Managed Health Care 2.5% | ||||||||
| 47,019 | HealthEquity, Inc.* | 2,846,530 | ||||||
|
| |||||||
| Movies & Entertainment 1.0% | ||||||||
| 10,989 | Loen Entertainment, Inc. (Korea) | 1,131,994 | ||||||
|
| |||||||
| Packaged Foods & Meats 1.0% | ||||||||
| 416,000 | Vitasoy International Holdings Ltd. (China) | 1,073,578 | ||||||
|
| |||||||
57
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
Shares | Value | |||||||
| Pharmaceuticals 1.9% | ||||||||
| 25,464 | Intra-Cellular Therapies, Inc.* | $ | 536,017 | |||||
| 10,223 | Ipsen S.A. (France) | 1,589,018 | ||||||
|
| |||||||
| 2,125,035 | ||||||||
|
| |||||||
| Regional Banks 6.0% | ||||||||
| 34,472 | Canadian Western Bank (Canada) | 884,309 | ||||||
| 28,452 | Eagle Bancorp, Inc.* | 1,702,852 | ||||||
| 55,238 | Metro Bank plc* (United Kingdom) | 2,721,282 | ||||||
| 17,219 | Texas Capital Bancshares, Inc.* | 1,547,988 | ||||||
|
| |||||||
| 6,856,431 | ||||||||
|
| |||||||
| Research & Consulting Services 1.9% | ||||||||
| 63,400 | Nihon M&A Center, Inc. (Japan) | 2,180,762 | ||||||
|
| |||||||
| Restaurants 0.6% | ||||||||
| 22,244 | Domino’s Pizza Enterprises Ltd. (Australia) | 716,753 | ||||||
|
| |||||||
| Semiconductor Equipment 0.8% | ||||||||
| 73,600 | Japan Material Co. Ltd. (Japan) | 954,542 | ||||||
|
| |||||||
| Semiconductors 0.9% | ||||||||
| 10,649 | Melexis N.V. (Belgium) | 1,064,585 | ||||||
|
| |||||||
| Specialized Finance 0.6% | ||||||||
| 16,916 | Banca IFIS S.p.A. (Italy) | 651,913 | ||||||
|
| |||||||
| Specialty Chemicals 2.0% | ||||||||
| 16,010 | Frutarom Industries Ltd. (Israel) | 1,472,079 | ||||||
| 81,221 | Hexpol AB (Sweden) | 755,029 | ||||||
|
| |||||||
| 2,227,108 | ||||||||
|
| |||||||
| Specialty Stores 1.7% | ||||||||
| 18,258 | Five Below, Inc.* | 1,339,042 | ||||||
| 51,649 | XXL ASA (Norway) | 532,626 | ||||||
|
| |||||||
| 1,871,668 | ||||||||
|
| |||||||
| Trading Companies & Distributors 2.2% | ||||||||
| 35,600 | MISUMI Group, Inc. (Japan) | 977,281 | ||||||
| 42,400 | MonotaRO Co. Ltd. (Japan) | 1,522,184 | ||||||
|
| |||||||
| 2,499,465 | ||||||||
|
| |||||||
| Trucking 2.1% | ||||||||
| 51,289 | Knight-Swift Transportation Holdings, Inc. | 2,359,807 | ||||||
|
| |||||||
| Total Common Stocks (cost $70,826,450) | 112,081,948 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 2.1% | ||||||||
| Repurchase Agreement 2.1% | ||||||||
| $2,441,709 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $2,450,000 of United States Treasury Notes 0.125% due 7/15/24; value: $2,493,115; repurchase proceeds: $2,441,785 (cost $2,441,709) | $ | 2,441,709 | |||||
|
| |||||||
| Total Short-Term Investments (cost $2,441,709) | 2,441,709 | |||||||
|
| |||||||
| Total Investments (cost $73,268,159) 100.5%§ | 114,523,657 | |||||||
| Liabilities less Other Assets (0.5%) | (553,249 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 113,970,408 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 28.54%.
See Notes to Financial Statements.
|
| |||||||
At March 31, 2018, Wasatch Global Opportunities Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Argentina | 0.9 | |||
Australia | 2.2 | |||
Belgium | 1.0 | |||
Brazil | 2.5 | |||
Canada | 0.8 | |||
China | 1.9 | |||
France | 2.4 | |||
Germany | 1.6 | |||
India | 9.9 | |||
Israel | 1.3 | |||
Italy | 0.6 | |||
Japan | 13.3 | |||
Korea | 4.5 | |||
Mexico | 2.0 | |||
Norway | 0.5 | |||
Sweden | 0.7 | |||
Taiwan | 1.0 | |||
Thailand | 1.2 | |||
United Kingdom | 6.9 | |||
United States | 44.8 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
58
Table of Contents
| WASATCH GLOBAL VALUE FUND (FMIEX / WILCX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 96.8% | ||||||||
| Airlines 2.4% | ||||||||
| 101,000 | Japan Airlines Co. Ltd. (Japan) | $ | 4,064,489 | |||||
|
| |||||||
| Communications Equipment 4.2% | ||||||||
| 163,000 | Cisco Systems, Inc.†† | 6,991,070 | ||||||
|
| |||||||
| Construction & Engineering 1.4% | ||||||||
| 1,360,000 | CTCI Corp. (Taiwan) | 2,259,903 | ||||||
|
| |||||||
| Data Processing & Outsourced Services 0.9% | ||||||||
| 250,000 | Cielo S.A. (Brazil) | 1,566,736 | ||||||
|
| |||||||
| Diversified Banks 19.0% | ||||||||
| 57,000 | BNP Paribas S.A. (France) | 4,227,159 | ||||||
| 80,000 | Citigroup, Inc. | 5,400,000 | ||||||
| 297,000 | ING Groep N.V. ADR (Netherlands) | 5,028,210 | ||||||
| 2,750,000 | Mizuho Financial Group, Inc. (Japan) | 4,946,666 | ||||||
| 565,000 | Nordea Bank AB (Sweden) | 6,045,478 | ||||||
| 112,000 | Wells Fargo & Co. | 5,869,920 | ||||||
|
| |||||||
| 31,517,433 | ||||||||
|
| |||||||
| Drug Retail 3.9% | ||||||||
| 103,000 | CVS Health Corp. | 6,407,630 | ||||||
|
| |||||||
| Electric Utilities 5.7% | ||||||||
| 23,000 | Entergy Corp. | 1,811,940 | ||||||
| 198,000 | Exelon Corp. | 7,723,980 | ||||||
|
| |||||||
| 9,535,920 | ||||||||
|
| |||||||
| Electrical Components & Equipment 3.1% | ||||||||
| 65,000 | Eaton Corp. plc | 5,194,150 | ||||||
|
| |||||||
| Health Care Services 3.0% | ||||||||
| 31,000 | Laboratory Corp. of America Holdings* | 5,014,250 | ||||||
|
| |||||||
| Hypermarkets & Super Centers 2.8% | ||||||||
| 51,700 | Walmart, Inc. | 4,599,749 | ||||||
|
| |||||||
| Integrated Oil & Gas 6.9% | ||||||||
| 89,500 | Royal Dutch Shell plc ADR (Netherlands) | 5,710,995 | ||||||
| 165,000 | Suncor Energy, Inc. (Canada) | 5,699,100 | ||||||
|
| |||||||
| 11,410,095 | ||||||||
|
| |||||||
| Oil & Gas Drilling 0.8% | ||||||||
| 310,000 | Ensco plc, Class A | 1,360,900 | ||||||
|
| |||||||
| Oil & Gas Equipment & Services 2.3% | ||||||||
| 59,400 | Schlumberger Ltd. | 3,847,932 | ||||||
|
| |||||||
| Oil & Gas Storage & Transportation 2.3% | ||||||||
| 173,000 | Enbridge Income Fund Holdings, Inc. (Canada) | 3,749,105 | ||||||
|
| |||||||
| Other Diversified Financial Services 3.0% | ||||||||
| 2,910,000 | Fubon Financial Holding Co. Ltd. (Taiwan) | 5,010,186 | ||||||
|
| |||||||
| Pharmaceuticals 8.7% | ||||||||
| 80,575 | Novartis AG (Switzerland) | 6,516,977 | ||||||
| 226,000 | Pfizer, Inc. | 8,020,740 | ||||||
|
| |||||||
| 14,537,717 | ||||||||
|
| |||||||
| Property & Casualty Insurance 2.7% | ||||||||
| 78,100 | Axis Capital Holdings Ltd. | 4,496,217 | ||||||
|
| |||||||
| Reinsurance 4.1% | ||||||||
| 29,000 | Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Germany) | 6,743,695 | ||||||
|
| |||||||
| Specialized REITs 3.0% | ||||||||
| 91,000 | EPR Properties | 5,041,400 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Systems Software 3.9% | ||||||||
| 141,000 | Oracle Corp. | $ | 6,450,750 | |||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 1.0% | ||||||||
| 10,000 | Apple, Inc.†† | 1,677,800 | ||||||
|
| |||||||
| Tobacco 2.4% | ||||||||
| 43,000 | KT&G Corp. (Korea) | 4,034,150 | ||||||
|
| |||||||
| Water Utilities 1.9% | ||||||||
| 2,000,000 | Guangdong Investment Ltd. (China) | 3,168,533 | ||||||
|
| |||||||
| Wireless Telecommunication Services 7.4% | ||||||||
| 720,000 | China Mobile Ltd. (China) | 6,599,082 | ||||||
| 220,100 | NTT DOCOMO, Inc. (Japan) | 5,619,112 | ||||||
|
| |||||||
| 12,218,194 | ||||||||
|
| |||||||
| Total Common Stocks (cost $147,364,200) | 160,898,004 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 3.9% | ||||||||
| Repurchase Agreement 3.9% | ||||||||
| $6,458,741 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $6,810,000 of United States Treasury Notes 2.000% due 5/31/24; value: $6,589,581; repurchase proceeds: $6,458,942 (cost $6,458,741) | $ | 6,458,741 | |||||
|
| |||||||
| Total Short-Term Investments (cost $6,458,741) | 6,458,741 | |||||||
|
| |||||||
| Total Investments (cost $153,822,941) 100.7%§ | 167,356,745 | |||||||
| Liabilities less Other Assets (0.7%) | (1,143,529 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 166,213,216 | ||||||
|
| |||||||
*Non-income producing.
††All or a portion of this security has been designated as collateral for call options written (see Note 4).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 33.19%.
ADR American Depositary Receipt.
REIT Real Estate Investment Trust. See Notes to Financial Statements. |
| |||||||
59
Table of Contents
| WASATCH GLOBAL VALUE FUND (FMIEX / WILCX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
At March 31, 2018, Wasatch Global Value Fund’s investments, excluding short-term investments and call options written, were in the following countries:
| Country | % | |||
Brazil | 1.0 | |||
Canada | 5.9 | |||
China | 6.1 | |||
France | 2.6 | |||
Germany | 4.2 | |||
Japan | 9.1 | |||
Korea | 2.5 | |||
Netherlands | 6.7 | |||
Sweden | 3.7 | |||
Switzerland | 4.0 | |||
Taiwan | 4.5 | |||
United States | 49.7 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
WRITTEN OPTION CONTRACTS — March 31, 2018 (Unaudited)
| Description | Exercise Price | Expiration Date | Number of Contracts | Market Value | Premiums (Received) by Fund | Unrealized Appreciation | ||||||||||||||||||
Call Options Written |
| |||||||||||||||||||||||
Apple, Inc. | $ | 190.00 | 4/20/2018 | (100 | ) | $ | (1,100 | ) | $ | (10,321 | ) | $ | 9,221 | |||||||||||
Cisco Systems, Inc. | $ | 47.00 | 5/18/2018 | (200 | ) | (7,600 | ) | (21,642 | ) | 14,042 | ||||||||||||||
Total call options written | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
Total written option contracts | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
60
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 97.8% | ||||||||
| Airport Services 1.0% | ||||||||
| 3,287,072 | Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (Mexico) | $ | 16,057,473 | |||||
|
| |||||||
| Apparel, Accessories & Luxury Goods 3.4% | ||||||||
| 602,561 | Moncler S.p.A. (Italy) | 22,932,383 | ||||||
| 37,929 | Page Industries Ltd. (India) | 13,182,092 | ||||||
| 572,507 | Ted Baker plc (United Kingdom) | 20,080,694 | ||||||
|
| |||||||
| 56,195,169 | ||||||||
|
| |||||||
| Application Software 3.9% | ||||||||
| 527,304 | Aveva Group plc (United Kingdom) | 14,142,041 | ||||||
| 1,290,333 | Computer Modelling Group Ltd. (Canada) | 9,304,299 | ||||||
| 128,396 | Nemetschek SE (Germany) | 14,398,715 | ||||||
| 3,397,119 | Technology One Ltd. (Australia) | 13,655,688 | ||||||
| 1,652,857 | WiseTech Global Ltd. (Australia) | 12,078,339 | ||||||
|
| |||||||
| 63,579,082 | ||||||||
|
| |||||||
| Asset Management & Custody Banks 1.1% | ||||||||
| 915,962 | Burford Capital Ltd. (United Kingdom) | 17,275,520 | ||||||
|
| |||||||
| Auto Parts & Equipment 0.0% | ||||||||
| 10,569 | Endurance Technologies Ltd. (India) | 205,424 | ||||||
|
| |||||||
| Biotechnology 3.8% | ||||||||
| 2,458,735 | Abcam plc (United Kingdom) | 42,702,119 | ||||||
| 28,646 | Medytox, Inc. (Korea) | 19,675,145 | ||||||
|
| |||||||
| 62,377,264 | ||||||||
|
| |||||||
| Commodity Chemicals 1.0% | ||||||||
| 3,985,443 | Berger Paints India Ltd. (India) | 15,786,009 | ||||||
| 915,195 | TOA Paint Thailand Public Co. Ltd.* (Thailand) | 1,126,799 | ||||||
|
| |||||||
| 16,912,808 | ||||||||
|
| |||||||
| Construction Machinery & Heavy Trucks 0.7% | ||||||||
| 543,200 | Takeuchi Manufacturing Co. Ltd. (Japan) | 12,124,430 | ||||||
|
| |||||||
| Consumer Finance 0.1% | ||||||||
| 137,991 | AU Small Finance Bank Ltd.* (India) | 1,315,374 | ||||||
|
| |||||||
| Data Processing & Outsourced Services 1.2% | ||||||||
| 200,600 | GMO Payment Gateway, Inc. (Japan) | 19,945,942 | ||||||
|
| |||||||
| Diversified Banks 0.9% | ||||||||
| 3,163,860 | Security Bank Corp. (Philippines) | 14,633,902 | ||||||
|
| |||||||
| Diversified Real Estate Activities 1.5% | ||||||||
| 1,141,752 | Patrizia Immobilien AG* (Germany) | 25,338,004 | ||||||
|
| |||||||
| Drug Retail 5.7% | ||||||||
| 273,128 | Ain Holdings, Inc. (Japan) | 20,406,631 | ||||||
| 1,061,306 | Clicks Group Ltd. (South Africa) | 16,396,268 | ||||||
| 65,499 | Cosmos Pharmaceutical Corp. (Japan) | 13,290,009 | ||||||
| 288,100 | Create SD Holdings Co. Ltd. (Japan) | 7,489,165 | ||||||
| 259,300 | Kusuri no Aoki Holdings Co. Ltd. (Japan) | 18,788,619 | ||||||
| 753,700 | Raia Drogasil S.A. (Brazil) | 17,076,363 | ||||||
|
| |||||||
| 93,447,055 | ||||||||
|
| |||||||
| Electrical Components & Equipment 2.1% | ||||||||
| 1,289,330 | Amara Raja Batteries Ltd. (India) | 15,798,977 | ||||||
| 938,277 | Voltronic Power Technology Corp. (Taiwan) | 17,827,810 | ||||||
|
| |||||||
| 33,626,787 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Electronic Equipment & Instruments 2.5% | ||||||||
| 598,012 | Ai Holdings Corp. (Japan) | $ | 16,652,503 | |||||
| 1,434,211 | Halma plc (United Kingdom) | 23,740,860 | ||||||
|
| |||||||
| 40,393,363 | ||||||||
|
| |||||||
| Electronic Manufacturing Services 1.5% | ||||||||
| 1,156,840 | Venture Corp. Ltd. (Singapore) | 25,018,807 | ||||||
|
| |||||||
| General Merchandise Stores 2.7% | ||||||||
| 3,613,075 | B&M European Value Retail S.A. (United Kingdom) | 19,833,210 | ||||||
| 471,026 | Seria Co. Ltd. (Japan) | 23,815,797 | ||||||
|
| |||||||
| 43,649,007 | ||||||||
|
| |||||||
| Health Care Distributors 1.0% | ||||||||
| 568,400 | Japan Lifeline Co. Ltd. (Japan) | 16,559,748 | ||||||
|
| |||||||
| Health Care Equipment 2.1% | ||||||||
| 247,855 | Cochlear Ltd. (Australia) | 34,810,572 | ||||||
|
| |||||||
| Health Care Supplies 2.0% | ||||||||
| 683,896 | Asahi Intecc Co. Ltd. (Japan) | 27,091,036 | ||||||
| 2,653,565 | Nanosonics Ltd.* (Australia) | 5,283,786 | ||||||
|
| |||||||
| 32,374,822 | ||||||||
|
| |||||||
| Health Care Technology 1.3% | ||||||||
| 464,160 | M3, Inc. (Japan) | 20,851,321 | ||||||
|
| |||||||
| Home Furnishing Retail 0.7% | ||||||||
| 333,291 | Maisons du Monde S.A. (France) | 12,172,745 | ||||||
|
| |||||||
| Hotels, Resorts & Cruise Lines 2.1% | ||||||||
| 1,036,336 | Corporate Travel Management Ltd. (Australia) | 18,854,632 | ||||||
| 12,129,113 | Minor International Public Co. Ltd. (Thailand) | 14,836,539 | ||||||
|
| |||||||
| 33,691,171 | ||||||||
|
| |||||||
| Household Products 1.3% | ||||||||
| 490,084 | Pigeon Corp. (Japan) | 22,131,043 | ||||||
|
| |||||||
| Human Resource & Employment Services 2.5% | ||||||||
| 254,273 | 51job, Inc. ADR* (China) | 21,877,649 | ||||||
| 321,939 | en-japan, Inc. (Japan) | 18,667,954 | ||||||
|
| |||||||
| 40,545,603 | ||||||||
|
| |||||||
| Industrial Machinery 4.1% | ||||||||
| 730,000 | Airtac International Group (Taiwan) | 12,380,732 | ||||||
| 7,299,295 | Rotork plc (United Kingdom) | 29,174,076 | ||||||
| 85,133 | Stabilus S.A. (Germany) | 8,126,814 | ||||||
| 107,142 | VAT Group AG* (Switzerland) | 18,041,656 | ||||||
|
| |||||||
| 67,723,278 | ||||||||
|
| |||||||
| Internet & Direct Marketing Retail 1.6% | ||||||||
| 119,567 | ASOS plc* (United Kingdom) | 11,696,818 | ||||||
| 841,070 | Webjet Ltd. (Australia) | 7,176,172 | ||||||
| 346,647 | Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 7,040,122 | ||||||
|
| |||||||
| 25,913,112 | ||||||||
|
| |||||||
| Internet Software & Services 6.8% | ||||||||
| 2,106,043 | Infomart Corp. (Japan) | 20,208,354 | ||||||
| 258,431 | Rightmove plc (United Kingdom) | 15,775,694 | ||||||
| 426,126 | Scout24 AG (Germany) | 19,868,930 | ||||||
| 756,155 | SMS Co. Ltd. (Japan) | 32,227,460 | ||||||
| 82,014 | XING SE (Germany) | 23,908,261 | ||||||
|
| |||||||
| 111,988,699 | ||||||||
|
| |||||||
61
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | ||
| ||
| ||
Schedule of Investments (continued)
| Shares | Value | |||||||
| Investment Banking & Brokerage 0.5% | ||||||||
| 151,929 | Avanza Bank Holding AB (Sweden) | $ | 8,034,292 | |||||
|
| |||||||
| IT Consulting & Other Services 0.7% | ||||||||
| 201,882 | Reply S.p.A. (Italy) | 11,134,421 | ||||||
|
| |||||||
| Life & Health Insurance 0.7% | ||||||||
| 1,623,222 | Max Financial Services Ltd.* (India) | 11,304,980 | ||||||
|
| |||||||
| Life Sciences Tools & Services 0.8% | ||||||||
| 58,466 | Tecan Group AG (Switzerland) | 12,382,026 | ||||||
|
| |||||||
| Movies & Entertainment 1.9% | ||||||||
| 414,777 | CTS Eventim AG & Co KGaA (Germany) | 19,444,005 | ||||||
| 110,085 | Loen Entertainment, Inc. (Korea) | 11,340,025 | ||||||
|
| |||||||
| 30,784,030 | ||||||||
|
| |||||||
| Oil & Gas Equipment & Services 2.6% | ||||||||
| 650,859 | Pason Systems, Inc. (Canada) | 8,714,493 | ||||||
| 102,070 | Schoeller-Bleckmann Oilfield Equipment AG* (Austria) | 11,257,240 | ||||||
| 944,149 | TGS-NOPEC Geophysical Co. ASA (Norway) | 23,162,503 | ||||||
|
| |||||||
| 43,134,236 | ||||||||
|
| |||||||
| Other Diversified Financial Services 1.0% | ||||||||
| 93,007 | Hypoport AG* (Germany) | 15,625,956 | ||||||
|
| |||||||
| Packaged Foods & Meats 3.6% | ||||||||
| 312,497 | Calbee, Inc. (Japan) | 10,337,761 | ||||||
| 158,212 | Kotobuki Spirits Co. Ltd. (Japan) | 8,326,556 | ||||||
| 15,541,449 | Vitasoy International Holdings Ltd. (China) | 40,108,079 | ||||||
|
| |||||||
| 58,772,396 | ||||||||
|
| |||||||
| Pharmaceuticals 1.9% | ||||||||
| 196,367 | Ipsen S.A. (France) | 30,522,420 | ||||||
|
| |||||||
| Regional Banks 3.0% | ||||||||
| 803,542 | Canadian Western Bank (Canada) | 20,613,237 | ||||||
| 571,248 | Metro Bank plc* (United Kingdom) | 28,142,342 | ||||||
|
| |||||||
| 48,755,579 | ||||||||
|
| |||||||
| Research & Consulting Services 1.7% | ||||||||
| 18,277 | Funai Soken Holdings, Inc. (Japan) | 391,116 | ||||||
| 810,728 | Nihon M&A Center, Inc. (Japan) | 27,886,514 | ||||||
|
| |||||||
| 28,277,630 | ||||||||
|
| |||||||
| Restaurants 0.6% | ||||||||
| 328,842 | Domino’s Pizza Enterprises Ltd. (Australia) | 10,596,051 | ||||||
|
| |||||||
| Semiconductor Equipment 0.9% | ||||||||
| 951,900 | Japan Material Co. Ltd. (Japan) | 12,345,491 | ||||||
| 28,784 | Koh Young Technology, Inc. (Korea) | 2,695,040 | ||||||
|
| |||||||
| 15,040,531 | ||||||||
|
| |||||||
| Semiconductors 2.9% | ||||||||
| 200,671 | Melexis N.V. (Belgium) | 20,061,162 | ||||||
| 777,040 | Silergy Corp. (Taiwan) | 17,109,431 | ||||||
| 56,864 | U-Blox Holding AG* (Switzerland) | 10,245,095 | ||||||
|
| |||||||
| 47,415,688 | ||||||||
|
| |||||||
| Soft Drinks 1.1% | ||||||||
| 507,488 | Fevertree Drinks plc (United Kingdom) | 18,747,982 | ||||||
|
| |||||||
| Specialized Finance 0.8% | ||||||||
| 327,680 | Banca IFIS S.p.A. (Italy) | 12,628,208 | ||||||
|
| |||||||
| Specialty Chemicals 4.1% | ||||||||
| 305,629 | Chr. Hansen Holding A/S (Denmark) | 26,451,301 | ||||||
| 244,371 | Frutarom Industries Ltd. (Israel) | 22,469,305 | ||||||
| 1,873,405 | Hexpol AB (Sweden) | 17,415,133 | ||||||
|
| |||||||
| 66,335,739 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Specialty Stores 0.8% | ||||||||
| 1,258,967 | XXL ASA (Norway) | $ | 12,982,993 | |||||
|
| |||||||
| Systems Software 2.5% | ||||||||
| 456,939 | Douzone Bizon Co. Ltd. (Korea) | 24,821,060 | ||||||
| 246,740 | Kinaxis, Inc.* (Canada) | 15,865,209 | ||||||
|
| |||||||
| 40,686,269 | ||||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 1.3% | ||||||||
| 1,272,305 | Ennoconn Corp. (Taiwan) | 21,621,810 | ||||||
|
| |||||||
| Thrifts & Mortgage Finance 0.9% | ||||||||
| 762,620 | PNB Housing Finance Ltd. (India) | 15,165,678 | ||||||
|
| |||||||
| Trading Companies & Distributors 4.9% | ||||||||
| 1,051,035 | Diploma plc (United Kingdom) | 16,878,520 | ||||||
| 971,515 | MISUMI Group, Inc. (Japan) | 26,669,755 | ||||||
| 549,512 | MonotaRO Co. Ltd. (Japan) | 19,727,793 | ||||||
| 706,946 | Richelieu Hardware Ltd. (Canada) | 16,527,507 | ||||||
|
| |||||||
| 79,803,575 | ||||||||
|
| |||||||
| Total Common Stocks (cost $1,044,445,263) | 1,600,610,015 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 3.1% | ||||||||
| Repurchase Agreement 3.1% | ||||||||
| $50,075,525 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $52,790,000 of United States Treasury Notes 2.000% due 5/31/24; value: $51,081,346; repurchase proceeds: $50,077,083 (cost $50,075,525) | $ | 50,075,525 | |||||
|
| |||||||
| Total Short-Term Investments (cost $50,075,525) | 50,075,525 | |||||||
|
| |||||||
| Total Investments (cost $1,094,520,788) 100.9%§ | 1,650,685,540 | |||||||
| Liabilities less Other Assets (0.9%) | (14,135,003 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 1,636,550,537 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 66.11%.
ADR American Depositary Receipt. See Notes to Financial Statements. |
| |||||||
62
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
At March 31, 2018, Wasatch International Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Australia | 6.4 | |||
Austria | 0.7 | |||
Belgium | 1.3 | |||
Brazil | 1.1 | |||
Canada | 4.4 | |||
China | 3.9 | |||
Denmark | 1.6 | |||
France | 2.7 | |||
Germany | 7.9 | |||
India | 4.5 | |||
Israel | 1.4 | |||
Italy | 2.9 | |||
Japan | 25.2 | |||
Korea | 3.7 | |||
Mexico | 1.0 | |||
Norway | 2.3 | |||
Philippines | 0.9 | |||
Singapore | 1.6 | |||
South Africa | 1.0 | |||
Sweden | 1.6 | |||
Switzerland | 2.5 | |||
Taiwan | 4.3 | |||
Thailand | 1.0 | |||
United Kingdom | 16.1 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
63
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 97.0% | ||||||||
| Advertising 1.6% | ||||||||
| 14,646,600 | Plan B Media Public Co. Ltd. (Thailand) | $ | 2,740,090 | |||||
| 242,000 | Vector, Inc. (Japan) | 5,585,752 | ||||||
|
| |||||||
| 8,325,842 | ||||||||
|
| |||||||
| Aerospace & Defense 0.6% | ||||||||
| 183,082 | Avon Rubber plc (United Kingdom) | 3,262,175 | ||||||
|
| |||||||
| Air Freight & Logistics 1.1% | ||||||||
| 1,258,273 | Allcargo Logistics Ltd. (India) | 2,858,953 | ||||||
| 519,695 | Freightways Ltd. (New Zealand) | 2,852,925 | ||||||
|
| |||||||
| 5,711,878 | ||||||||
|
| |||||||
| Apparel Retail 0.6% | ||||||||
| 221,520 | Tokyo Base Co. Ltd.* (Japan) | 3,068,657 | ||||||
|
| |||||||
| Apparel, Accessories & Luxury Goods 0.5% | ||||||||
| 199,557 | Mavi Giyim Sanayi Ve Ticaret AS* (Turkey) | 2,731,371 | ||||||
|
| |||||||
| Application Software 5.8% | ||||||||
| 424,134 | Computer Modelling Group Ltd. (Canada) | 3,058,334 | ||||||
| 81,690 | Esker S.A. (France) | 5,234,752 | ||||||
| 759,306 | Fortnox AB (Sweden) | 4,510,477 | ||||||
| 814,938 | GB Group plc (United Kingdom) | 4,613,452 | ||||||
| 80,342 | Lectra (France) | 2,268,904 | ||||||
| 460,135 | Linx S.A. (Brazil) | 2,820,922 | ||||||
| 193,834 | Logo Yazilim Sanayi Ve Ticaret A.S.* (Turkey) | 2,405,422 | ||||||
| 134,300 | Systena Corp. (Japan) | 5,540,877 | ||||||
|
| |||||||
| 30,453,140 | ||||||||
|
| |||||||
| Asset Management & Custody Banks 1.7% | ||||||||
| 1,778,200 | Peregrine Holdings Ltd. (South Africa) | 3,152,733 | ||||||
| 565,900 | Sanne Group plc (United Kingdom) | 5,613,284 | ||||||
|
| |||||||
| 8,766,017 | ||||||||
|
| |||||||
| Auto Parts & Equipment 1.3% | ||||||||
| 1,023,000 | Hota Industrial Manufacturing Co. Ltd. (Taiwan) | 4,350,653 | ||||||
| 502,265 | Hu Lane Associate, Inc. (Taiwan) | 2,463,350 | ||||||
|
| |||||||
| 6,814,003 | ||||||||
|
| |||||||
| Automobile Manufacturers 0.6% | ||||||||
| 795,500 | PAK Suzuki Motor Co. Ltd. (Pakistan) | 3,292,295 | ||||||
|
| |||||||
| Automotive Retail 0.9% | ||||||||
| 2,117,400 | Hascol Petroleum Ltd. (Pakistan) | 4,917,359 | ||||||
|
| |||||||
| Brewers 2.1% | ||||||||
| 685,845 | Carlsberg Brewery Malaysia Berhad, Class B (Malaysia) | 3,347,661 | ||||||
| 117,246 | Royal Unibrew A/S (Denmark) | 7,783,826 | ||||||
|
| |||||||
| 11,131,487 | ||||||||
|
| |||||||
| Building Products 0.6% | ||||||||
| 2,828,760 | Concepcion Industrial Corp. (Philippines) | 3,317,907 | ||||||
|
| |||||||
| Commodity Chemicals 3.1% | ||||||||
| 980,135 | Berger Paints India Ltd. (India) | 3,882,234 | ||||||
| 473,886 | Gulf Oil Lubricants India Ltd. (India) | 6,702,796 | ||||||
| 288,077 | Supreme Industries Ltd. (India) | 5,409,388 | ||||||
|
| |||||||
| 15,994,418 | ||||||||
|
| |||||||
| Consumer Finance 2.8% | ||||||||
| 287,511 | Gruppo MutuiOnline S.p.A. (Italy) | 4,560,731 | ||||||
| 407,302 | MAS Financial Services Ltd. (India) | 3,650,132 | ||||||
| 1,816,862 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 6,146,150 | ||||||
|
| |||||||
| 14,357,013 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Department Stores 1.3% | ||||||||
| 184,908 | Poya International Co. Ltd. (Taiwan) | $ | 2,305,246 | |||||
| 157,105 | V-Mart Retail Ltd. (India) | 4,564,376 | ||||||
|
| |||||||
| 6,869,622 | ||||||||
|
| |||||||
| Diversified Support Services 3.0% | ||||||||
| 1,248,728 | Clipper Logistics plc (United Kingdom) | 6,393,148 | ||||||
| 103,128 | Japan Elevator Service Holdings Co. Ltd. (Japan) | 2,229,166 | ||||||
| 585,900 | Prestige International, Inc. (Japan) | 7,092,140 | ||||||
|
| |||||||
| 15,714,454 | ||||||||
|
| |||||||
| Drug Retail 1.9% | ||||||||
| 65,900 | Kusuri no Aoki Holdings Co. Ltd. (Japan) | 4,775,048 | ||||||
| 135,200 | Yakuodo Co. Ltd. (Japan) | 5,069,762 | ||||||
|
| |||||||
| 9,844,810 | ||||||||
|
| |||||||
| Electrical Components & Equipment 1.9% | ||||||||
| 252,355 | Amara Raja Batteries Ltd. (India) | 3,092,266 | ||||||
| 350,627 | Voltronic Power Technology Corp. (Taiwan) | 6,662,117 | ||||||
|
| |||||||
| 9,754,383 | ||||||||
|
| |||||||
| Electronic Equipment & Instruments 3.1% | ||||||||
| 81,622 | accesso Technology Group plc* (United Kingdom) | 2,628,136 | ||||||
| 27,696 | Isra Vision AG (Germany) | 5,840,704 | ||||||
| 743,876 | Smart Metering Systems plc (United Kingdom) | 7,672,251 | ||||||
|
| |||||||
| 16,141,091 | ||||||||
|
| |||||||
| Electronic Manufacturing Services 0.7% | ||||||||
| 256,008 | HMS Networks AB (Sweden) | 3,667,931 | ||||||
|
| |||||||
| Financial Exchanges & Data 0.7% | ||||||||
| 1,003,429 | Morningstar Japan KK (Japan) | 3,706,100 | ||||||
|
| |||||||
| Food Retail 5.2% | ||||||||
| 22,250,161 | 7-Eleven Malaysia Holdings Berhad, Class B (Malaysia) | 8,628,553 | ||||||
| 5,057,282 | Philippine Seven Corp. (Philippines) | 12,018,647 | ||||||
| 79,639 | Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (Israel) | 4,017,226 | ||||||
| 3,661,600 | Sheng Siong Group Ltd. (Singapore) | 2,601,734 | ||||||
|
| |||||||
| 27,266,160 | ||||||||
|
| |||||||
| General Merchandise Stores 1.0% | ||||||||
| 106,144 | Seria Co. Ltd. (Japan) | 5,366,803 | ||||||
|
| |||||||
| Health Care Equipment 1.5% | ||||||||
| 115,190 | DIO Corp.* (Korea) | 4,819,846 | ||||||
| 80,358 | Vieworks Co. Ltd. (Korea) | 2,962,820 | ||||||
|
| |||||||
| 7,782,666 | ||||||||
|
| |||||||
| Health Care Facilities 0.7% | ||||||||
| 17,205,696 | Cleopatra Hospital* (Egypt) | 3,689,026 | ||||||
|
| |||||||
| Health Care Supplies 1.5% | ||||||||
| 1,067,169 | Advanced Medical Solutions Group plc (United Kingdom) | 4,734,946 | ||||||
| 1,472,451 | Nanosonics Ltd.* (Australia) | 2,931,949 | ||||||
|
| |||||||
| 7,666,895 | ||||||||
|
| |||||||
| Health Care Technology 2.7% | ||||||||
| 112,058 | Nexus AG (Germany) | 3,504,101 | ||||||
| 348,700 | Onyx Healthcare, Inc. (Taiwan) | 2,296,203 | ||||||
| 1,339,743 | Pro Medicus Ltd. (Australia) | 8,462,798 | ||||||
|
| |||||||
| 14,263,102 | ||||||||
|
| |||||||
64
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Shares | Value | |||||||
| Home Furnishing Retail 0.2% | ||||||||
| 220,156 | Nick Scali Ltd. (Australia) | $ | 1,136,290 | |||||
|
| |||||||
| Home Improvement Retail 2.2% | ||||||||
| 4,500,567 | Italtile Ltd. (South Africa) | 5,645,310 | ||||||
| 59,630,900 | PT Ace Hardware Indonesia Tbk (Indonesia) | 5,760,603 | ||||||
|
| |||||||
| 11,405,913 | ||||||||
|
| |||||||
| Hotels, Resorts & Cruise Lines 0.4% | ||||||||
| 835,773 | Byke Hospitality Ltd. (The) (India) | 2,160,778 | ||||||
|
| |||||||
| Human Resource & Employment Services 1.8% | ||||||||
| 111,752 | en-japan, Inc. (Japan) | 6,480,051 | ||||||
| 90,700 | Trust Tech, Inc. (Japan) | 2,983,413 | ||||||
|
| |||||||
| 9,463,464 | ||||||||
|
| |||||||
| Industrial Machinery 1.0% | ||||||||
| 34,573 | Aumann AG* (Germany) | 2,194,374 | ||||||
| 133,539 | va-Q-tec AG* (Germany) | 2,914,620 | ||||||
|
| |||||||
| 5,108,994 | ||||||||
|
| |||||||
| Internet & Direct Marketing Retail 5.8% | ||||||||
| 156,915 | Evolable Asia Corp. (Japan) | 3,214,837 | ||||||
| 434,318 | Open Door, Inc.* (Japan) | 9,408,420 | ||||||
| 1,092,560 | Webjet Ltd. (Australia) | 9,321,933 | ||||||
| 417,873 | Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 8,486,665 | ||||||
|
| |||||||
| 30,431,855 | ||||||||
|
| |||||||
| Internet Software & Services 6.7% | ||||||||
| 604,900 | Infomart Corp. (Japan) | 5,804,266 | ||||||
| 72,800 | Itokuro, Inc.* (Japan) | 4,823,457 | ||||||
| 464,186 | Rakus Co. Ltd. (Japan) | 7,481,594 | ||||||
| 273,731 | SMS Co. Ltd. (Japan) | 11,666,464 | ||||||
| 18,123 | XING SE (Germany) | 5,283,115 | ||||||
|
| |||||||
| 35,058,896 | ||||||||
|
| |||||||
| Investment Banking & Brokerage 2.0% | ||||||||
| 125,183 | M&A Capital Partners Co. Ltd.* (Japan) | 10,600,055 | ||||||
|
| |||||||
| IT Consulting & Other Services 2.3% | ||||||||
| 53,934 | Aubay (France) | 2,772,634 | ||||||
| 50,681 | CANCOM SE (Germany) | 5,230,085 | ||||||
| 212,496 | eWork Group AB (Sweden) | 2,477,103 | ||||||
| 22,303 | Infotel S.A. (France) | 1,481,529 | ||||||
|
| |||||||
| 11,961,351 | ||||||||
|
| |||||||
| Life Sciences Tools & Services 0.6% | ||||||||
| 1,403,804 | Horizon Discovery Group plc* (United Kingdom) | 2,954,307 | ||||||
|
| |||||||
| Office Services & Supplies 0.6% | ||||||||
| 4,176,200 | Riverstone Holdings Ltd. (Singapore) | 3,285,118 | ||||||
|
| |||||||
| Other Diversified Financial Services 1.7% | ||||||||
| 52,488 | Hypoport AG* (Germany) | 8,818,424 | ||||||
|
| |||||||
| Packaged Foods & Meats 5.4% | ||||||||
| 257,500 | Dutch Lady Milk Industries Berhad (Malaysia) | 4,560,173 | ||||||
| 145,386 | Kotobuki Spirits Co. Ltd. (Japan) | 7,651,535 | ||||||
| 40,052,854 | PT Nippon Indosari Corpindo Tbk (Indonesia) | 3,505,625 | ||||||
| 2,263,120 | Vitasoy International Holdings Ltd. (China) | 5,840,472 | ||||||
| 4,102,000 | Yihai International Holding Ltd. (China) | 6,382,657 | ||||||
|
| |||||||
| 27,940,462 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Personal Products 3.0% | ||||||||
| 723,120 | BWX Ltd. (Australia) | $ | 2,709,822 | |||||
| 283,604 | Sarantis S.A. (Greece) | 5,000,424 | ||||||
| 575,521 | TCI Co. Ltd. (Taiwan) | 8,023,778 | ||||||
|
| |||||||
| 15,734,024 | ||||||||
|
| |||||||
| Pharmaceuticals 0.7% | ||||||||
| 22,330,405 | PT Kimia Farma Persero Tbk (Indonesia) | 3,558,902 | ||||||
|
| |||||||
| Property & Casualty Insurance 1.6% | ||||||||
| 2,925,000 | Qualitas Controladora S.A.B. de C.V. (Mexico) | 8,125,000 | ||||||
|
| |||||||
| Real Estate Operating Companies 1.1% | ||||||||
| 42,982 | Corestate Capital Holding S.A. (Germany) | 2,446,032 | ||||||
| 215,000 | Japan Property Management Center Co. Ltd. (Japan) | 3,267,281 | ||||||
|
| |||||||
| 5,713,313 | ||||||||
|
| |||||||
| Research & Consulting Services 0.6% | ||||||||
| 45,703 | Akka Technologies (France) | 2,782,963 | ||||||
| 21,778 | IR Japan Holdings Ltd. (Japan) | 496,532 | ||||||
|
| |||||||
| 3,279,495 | ||||||||
|
| |||||||
| Restaurants 3.9% | ||||||||
| 62,506 | AmRest Holdings SE* (Poland) | 8,007,897 | ||||||
| 212,200 | Arcland Service Holdings Co. Ltd. (Japan) | 4,840,087 | ||||||
| 552,200 | Patisserie Holdings plc (United Kingdom) | 2,924,632 | ||||||
| 925,949 | Restaurant Brands New Zealand Ltd. (New Zealand) | 4,805,496 | ||||||
|
| |||||||
| 20,578,112 | ||||||||
|
| |||||||
| Semiconductor Equipment 2.0% | ||||||||
| 464,100 | Japan Material Co. Ltd. (Japan) | 6,019,059 | ||||||
| 91,673 | TES Co. Ltd. (Korea) | 2,605,959 | ||||||
| 22,075 | Tokai Carbon Korea Co. Ltd. (Korea) | 1,673,384 | ||||||
|
| |||||||
| 10,298,402 | ||||||||
|
| |||||||
| Semiconductors 0.3% | ||||||||
| 54,461 | KoMiCo Ltd. (Korea) | 1,548,146 | ||||||
|
| |||||||
| Soft Drinks 0.0% | ||||||||
| 152 | Pepsi-Cola Products Philippines, Inc. (Philippines) | 8 | ||||||
|
| |||||||
| Specialty Chemicals 0.8% | ||||||||
| 738,505 | DuluxGroup Ltd. (Australia) | 4,216,143 | ||||||
|
| |||||||
| Specialty Stores 0.2% | ||||||||
| 109,726 | Gear4Music Holdings plc* (United Kingdom) | 1,034,515 | ||||||
|
| |||||||
| Systems Software 1.4% | ||||||||
| 96,600 | Digital Arts, Inc. (Japan) | 3,731,272 | ||||||
| 156,814 | Minwise Co. Ltd. (Korea) | 3,501,429 | ||||||
|
| |||||||
| 7,232,701 | ||||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 0.7% | ||||||||
| 53,149 | MGI Digital Graphic Technology* (France) | 3,866,366 | ||||||
|
| |||||||
| Thrifts & Mortgage Finance 1.5% | ||||||||
| 518,305 | Can Fin Homes Ltd. (India) | 3,873,880 | ||||||
| 88,892 | Equitable Group, Inc. (Canada) | 3,703,747 | ||||||
|
| |||||||
| 7,577,627 | ||||||||
|
| |||||||
| Total Common Stocks (cost $355,130,180) | 506,965,266 | |||||||
|
| |||||||
65
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 3.5% | ||||||||
| Repurchase Agreement 3.5% | ||||||||
| $18,365,249 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $19,360,000 of United States Treasury Notes 2.000% due 5/31/24; value: $18,733,375; repurchase proceeds: $18,365,821 (cost $18,365,249) | $ | 18,365,249 | |||||
|
| |||||||
| Total Short-Term Investments (cost $18,365,249) | 18,365,249 | |||||||
|
| |||||||
| Total Investments (cost $373,495,429) 100.5%§ | 525,330,515 | |||||||
| Liabilities less Other Assets (0.5%) | (2,755,854 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 522,574,661 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 49.64%.
See Notes to Financial Statements.
|
| |||||||
At March 31, 2018, Wasatch International Opportunities Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Australia | 5.7 | |||
Brazil | 0.6 | |||
Canada | 1.3 | |||
China | 2.4 | |||
Denmark | 1.5 | |||
Egypt | 0.7 | |||
France | 3.6 | |||
Germany | 7.2 | |||
Greece | 1.0 | |||
India | 7.1 | |||
Indonesia | 2.5 | |||
Israel | 0.8 | |||
Italy | 0.9 | |||
Japan | 27.5 | |||
Korea | 3.4 | |||
Malaysia | 3.3 | |||
Mexico | 2.8 | |||
New Zealand | 1.5 | |||
Pakistan | 1.6 | |||
Philippines | 3.0 | |||
Poland | 1.6 | |||
Singapore | 1.2 | |||
South Africa | 1.7 | |||
Sweden | 2.1 | |||
Taiwan | 5.2 | |||
Thailand | 0.5 | |||
Turkey | 1.0 | |||
United Kingdom | 8.3 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
66
Table of Contents
| WASATCH LONG/SHORT FUND (FMLSX / WILSX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 90.4% | ||||||||
| Automobile Manufacturers 1.5% | ||||||||
| 28,500 | General Motors Co. | $ | 1,035,690 | |||||
|
| |||||||
| Communications Equipment 5.5% | ||||||||
| 90,200 | Cisco Systems, Inc.‡ | 3,868,678 | ||||||
|
| |||||||
| Diversified Banks 12.0% | ||||||||
| 49,016 | Citigroup, Inc. | 3,308,580 | ||||||
| 136,800 | ING Groep N.V. ADR (Netherlands) | 2,316,024 | ||||||
| 54,000 | Wells Fargo & Co. | 2,830,140 | ||||||
|
| |||||||
| 8,454,744 | ||||||||
|
| |||||||
| Drug Retail 2.8% | ||||||||
| 32,000 | CVS Health Corp. | 1,990,720 | ||||||
|
| |||||||
| Electric Utilities 7.1% | ||||||||
| 9,000 | Entergy Corp. | 709,020 | ||||||
| 110,135 | Exelon Corp.‡ | 4,296,366 | ||||||
|
| |||||||
| 5,005,386 | ||||||||
|
| |||||||
| Electrical Components & Equipment 1.7% | ||||||||
| 18,023 | Emerson Electric Co. | 1,230,971 | ||||||
|
| |||||||
| Fertilizers & Agricultural Chemicals 2.7% | ||||||||
| 79,995 | Mosaic Co. (The) | 1,942,279 | ||||||
|
| |||||||
| Food Retail 1.9% | ||||||||
| 56,600 | Kroger Co. (The) | 1,355,004 | ||||||
|
| |||||||
| Health Care Equipment 2.8% | ||||||||
| 24,700 | Medtronic plc | 1,981,434 | ||||||
|
| |||||||
| Health Care Services 3.0% | ||||||||
| 13,205 | Laboratory Corp. of America Holdings* | 2,135,909 | ||||||
|
| |||||||
| Hotels, Resorts & Cruise Lines 2.7% | ||||||||
| 98,255 | Extended Stay America, Inc.** | 1,942,501 | ||||||
|
| |||||||
| Integrated Oil & Gas 7.0% | ||||||||
| 37,900 | Royal Dutch Shell plc ADR (Netherlands) | 2,418,399 | ||||||
| 73,000 | Suncor Energy, Inc. (Canada) | 2,521,420 | ||||||
|
| |||||||
| 4,939,819 | ||||||||
|
| |||||||
| Integrated Telecommunication Services 4.3% | ||||||||
| 45,000 | AT&T, Inc. | 1,604,250 | ||||||
| 30,300 | Verizon Communications, Inc. | 1,448,946 | ||||||
|
| |||||||
| 3,053,196 | ||||||||
|
| |||||||
| Oil & Gas Drilling 0.9% | ||||||||
| 141,000 | Ensco plc, Class A | 618,990 | ||||||
|
| |||||||
| Oil & Gas Exploration & Production 3.4% | ||||||||
| 40,000 | Anadarko Petroleum Corp. | 2,416,400 | ||||||
|
| |||||||
| Packaged Foods & Meats 2.0% | ||||||||
| 31,960 | General Mills, Inc. | 1,440,118 | ||||||
|
| |||||||
| Pharmaceuticals 16.8% | ||||||||
| 8,000 | Allergan plc | 1,346,320 | ||||||
| 25,948 | Johnson & Johnson | 3,325,236 | ||||||
| 39,273 | Novartis AG ADR (Switzerland) | 3,175,222 | ||||||
| 112,400 | Pfizer, Inc.‡ | 3,989,076 | ||||||
|
| |||||||
| 11,835,854 | ||||||||
|
| |||||||
| Semiconductors 2.9% | ||||||||
| 75,000 | Tower Semiconductor Ltd.* (Israel) | 2,018,250 | ||||||
|
| |||||||
| Specialized REITs 3.6% | ||||||||
| 45,500 | EPR Properties | 2,520,700 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Systems Software 3.9% | ||||||||
| 59,650 | Oracle Corp. | $ | 2,728,987 | |||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 1.9% | ||||||||
| 8,000 | Apple, Inc.‡ | 1,342,240 | ||||||
|
| |||||||
| Total Common Stocks (cost $59,672,142) | 63,857,870 | |||||||
|
| |||||||
| LIMITED PARTNERSHIP INTEREST 3.7% | ||||||||
| Asset Management & Custody Banks 3.7% | ||||||||
| 80,892 | Blackstone Group L.P. (The)‡ | 2,584,499 | ||||||
|
| |||||||
| Total Limited Partnership Interest (cost $2,437,027) | 2,584,499 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 5.3% | ||||||||
| Repurchase Agreement 5.3% | ||||||||
| $3,729,660 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $3,820,000 of United States Treasury Notes 0.125% due 7/15/24; value: $1,526,397; United States Treasury Notes 2.250% due 10/31/24; value: $2,278,047; repurchase proceeds: $3,729,776 (cost $3,729,660) | $ | 3,729,660 | |||||
|
| |||||||
| Total Short-Term Investments (cost $3,729,660) | 3,729,660 | |||||||
|
| |||||||
| Total Investments (cost $65,838,829) 99.4% | 70,172,029 | |||||||
| Other Assets less Liabilities 0.6% | 438,008 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 70,610,037 | ||||||
|
| |||||||
67
Table of Contents
| WASATCH LONG/SHORT FUND (FMLSX / WILSX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
| Shares | Value | |||||||
| SECURITIES SOLD SHORT 25.6% | ||||||||
| Application Software 2.9% | ||||||||
| 19,200 | Paycom Software, Inc.* | $ | 2,061,888 | |||||
|
| |||||||
| Automotive Retail 2.4% | ||||||||
| 27,963 | CarMax, Inc.* | 1,732,028 | ||||||
|
| |||||||
| Copper 2.2% | ||||||||
| 88,000 | Freeport-McMoRan, Inc.* | 1,546,160 | ||||||
|
| |||||||
| Distillers & Vintners 2.7% | ||||||||
| 35,625 | Brown-Forman Corp., Class B | 1,938,000 | ||||||
|
| |||||||
| Health Care Equipment 2.3% | ||||||||
| 13,500 | Inogen, Inc.* | 1,658,340 | ||||||
|
| |||||||
| Home Furnishing Retail 1.0% | ||||||||
| 7,399 | RH* | 704,977 | ||||||
|
| |||||||
| Hotels, Resorts & Cruise Lines 2.1% | ||||||||
| 18,120 | Choice Hotels International, Inc. | 1,452,318 | ||||||
|
| |||||||
| Packaged Foods & Meats 4.5% | ||||||||
| 79,200 | Blue Buffalo Pet Products, Inc.* | 3,152,952 | ||||||
|
| |||||||
| Personal Products 3.5% | ||||||||
| 16,300 | Estee Lauder Cos., Inc. (The), Class A | 2,440,436 | ||||||
|
| |||||||
| Pharmaceuticals 2.0% | ||||||||
| 41,000 | Prestige Brands Holdings, Inc.* | 1,382,520 | ||||||
|
| |||||||
| Total Securities Sold Short (proceeds $12,392,190) | 18,069,619 | |||||||
|
| |||||||
*Non-income producing.
**Common units.
‡All or a portion of this security has been designated as collateral for short sales (see Note 3).
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch Long/Short Fund’s investments, excluding short-term investments and securities sold short, were in the following countries:
| Country | % | |||
Canada | 3.8 | |||
Israel | 3.0 | |||
Netherlands | 7.1 | |||
Switzerland | 4.8 | |||
United States | 81.3 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
68
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 91.7% | ||||||||
| Apparel, Accessories & Luxury Goods 2.3% | ||||||||
| 320,322 | Superior Uniform Group, Inc. | $ | 8,414,859 | |||||
|
| |||||||
| Application Software 7.4% | ||||||||
| 77,715 | Digimarc Corp.* | 1,861,274 | ||||||
| 54,600 | Esker S.A. (France) | 3,498,807 | ||||||
| 104,244 | Everbridge, Inc.* | 3,815,331 | ||||||
| 427,000 | Fortnox AB (Sweden) | 2,536,492 | ||||||
| 55,458 | Globant S.A.* (Argentina) | 2,858,305 | ||||||
| 29,581 | HubSpot, Inc.* | 3,203,622 | ||||||
| 20,300 | Tyler Technologies, Inc.* | 4,282,488 | ||||||
| 181,856 | Upland Software, Inc.* | 5,235,634 | ||||||
|
| |||||||
| 27,291,953 | ||||||||
|
| |||||||
| Asset Management & Custody Banks 1.2% | ||||||||
| 9,475 | Diamond Hill Investment Group, Inc. | 1,957,156 | ||||||
| 800,000 | Tatton Asset Management plc (United Kingdom) | 2,381,784 | ||||||
|
| |||||||
| 4,338,940 | ||||||||
|
| |||||||
| Biotechnology 7.3% | ||||||||
| 241,491 | Abcam plc (United Kingdom) | 4,194,099 | ||||||
| 227,158 | ChemoCentryx, Inc.* | 3,089,349 | ||||||
| 206,600 | Cytokinetics, Inc.* | 1,487,520 | ||||||
| 46,579 | Esperion Therapeutics, Inc.* | 3,369,059 | ||||||
| 94,075 | Exact Sciences Corp.* | 3,794,045 | ||||||
| 98,437 | Flexion Therapeutics, Inc.* | 2,205,973 | ||||||
| 212,853 | Inovio Pharmaceuticals, Inc.* | 1,002,537 | ||||||
| 230,728 | Sangamo Therapeutics Inc.* | 4,383,832 | ||||||
| 138,488 | Selecta Biosciences, Inc.* | 1,411,193 | ||||||
| 171,700 | Unum Therapeutics, Inc.* | 1,907,587 | ||||||
|
| |||||||
| 26,845,194 | ||||||||
|
| |||||||
| Building Products 0.8% | ||||||||
| 25,836 | Trex Co., Inc.* | 2,810,182 | ||||||
|
| |||||||
| Construction & Engineering 1.0% | ||||||||
| 64,188 | NV5 Global, Inc.* | 3,578,481 | ||||||
|
| |||||||
| Consumer Electronics 1.1% | ||||||||
| 347,058 | ZAGG, Inc.* | 4,234,108 | ||||||
|
| |||||||
| Consumer Finance 0.6% | ||||||||
| 250,000 | MAS Financial Services Ltd. (India) | 2,240,433 | ||||||
|
| |||||||
| Department Stores 2.5% | ||||||||
| 317,634 | V-Mart Retail Ltd. (India) | 9,228,230 | ||||||
|
| |||||||
| Diversified Banks 1.1% | ||||||||
| 1,461,736 | City Union Bank Ltd. (India) | 3,881,063 | ||||||
|
| |||||||
| Diversified Support Services 1.9% | ||||||||
| 425,000 | Clipper Logistics plc (United Kingdom) | 2,175,885 | ||||||
| 229,700 | Japan Elevator Service Holdings Co. Ltd. (Japan) | 4,965,086 | ||||||
|
| |||||||
| 7,140,971 | ||||||||
|
| |||||||
| Drug Retail 0.8% | ||||||||
| 74,000 | Yakuodo Co. Ltd. (Japan) | 2,774,870 | ||||||
|
| |||||||
| Education Services 1.9% | ||||||||
| 623,663 | Cambium Learning Group, Inc.* | 6,985,026 | ||||||
|
| |||||||
| Electronic Equipment & Instruments 2.2% | ||||||||
| 28,862 | Mesa Laboratories, Inc. | 4,284,275 | ||||||
| 344,476 | Napco Security Technologies, Inc.* | 4,030,369 | ||||||
|
| |||||||
| 8,314,644 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Electronic Manufacturing Services 0.9% | ||||||||
| 109,261 | Fabrinet* | $ | 3,428,610 | |||||
|
| |||||||
| Environmental & Facilities Services 1.2% | ||||||||
| 186,494 | Heritage-Crystal Clean, Inc.* | 4,391,934 | ||||||
|
| |||||||
| Food Distributors 1.0% | ||||||||
| 156,796 | Chefs’ Warehouse, Inc. (The)* | 3,606,308 | ||||||
|
| |||||||
| General Merchandise Stores 1.6% | ||||||||
| 99,177 | Ollie’s Bargain Outlet Holdings, Inc.* | 5,980,373 | ||||||
|
| |||||||
| Health Care Distributors 1.4% | ||||||||
| 199,975 | PetIQ, Inc.* | 5,319,335 | ||||||
|
| |||||||
| Health Care Equipment 2.7% | ||||||||
| 136,769 | AtriCure, Inc.* | 2,806,500 | ||||||
| 102,991 | LeMaitre Vascular, Inc. | 3,731,364 | ||||||
| 154,628 | Oxford Immunotec Global plc* | 1,925,118 | ||||||
| 306,405 | Tandem Diabetes Care, Inc.* | 1,519,769 | ||||||
|
| |||||||
| 9,982,751 | ||||||||
|
| |||||||
| Health Care Facilities 1.5% | ||||||||
| 213,017 | Ensign Group, Inc. (The) | 5,602,347 | ||||||
|
| |||||||
| Health Care Technology 2.5% | ||||||||
| 52,297 | Omnicell, Inc.* | 2,269,690 | ||||||
| 181,778 | Tabula Rasa HealthCare, Inc.* | 7,052,986 | ||||||
|
| |||||||
| 9,322,676 | ||||||||
|
| |||||||
| Heavy Electrical Equipment 1.0% | ||||||||
| 119,373 | TPI Composites, Inc.* | 2,679,924 | ||||||
| 643,719 | Triveni Turbine Ltd. (India) | 988,286 | ||||||
|
| |||||||
| 3,668,210 | ||||||||
|
| |||||||
| Homebuilding 3.1% | ||||||||
| 49,615 | Installed Building Products, Inc.* | 2,979,381 | ||||||
| 69,387 | LGI Homes, Inc.* | 4,896,640 | ||||||
| 260,000 | Select Interior Concepts, Inc.* *** † | 3,445,000 | ||||||
|
| |||||||
| 11,321,021 | ||||||||
|
| |||||||
| Human Resource & Employment Services 1.5% | ||||||||
| 174,100 | UT Group Co. Ltd.* (Japan) | 5,726,704 | ||||||
|
| |||||||
| Industrial Machinery 5.2% | ||||||||
| 122,483 | Altra Industrial Motion Corp. | 5,628,094 | ||||||
| 616,621 | Elgi Equipments Ltd. (India) | 2,400,672 | ||||||
| 59,458 | Kadant, Inc. | 5,618,781 | ||||||
| 246,322 | Kornit Digital Ltd.* (Israel) | 3,177,554 | ||||||
| 111,977 | va-Q-tec AG* (Germany) | 2,444,008 | ||||||
|
| |||||||
| 19,269,109 | ||||||||
|
| |||||||
| Industrial REITs 1.2% | ||||||||
| 296,775 | Monmouth Real Estate Investment Corp. | 4,463,496 | ||||||
|
| |||||||
| Internet & Direct Marketing Retail 0.8% | ||||||||
| 142,800 | Open Door, Inc.* (Japan) | 3,093,407 | ||||||
|
| |||||||
| Internet Software & Services 6.7% | ||||||||
| 98,730 | Bandwidth, Inc., Class A* | 3,224,522 | ||||||
| 73,521 | Envestnet, Inc.* | 4,212,753 | ||||||
| 144,767 | Five9, Inc.* | 4,312,609 | ||||||
| 97,182 | Instructure, Inc.* | 4,096,221 | ||||||
| 112,000 | SMS Co. Ltd. (Japan) | 4,773,460 | ||||||
| 183,430 | TrueCar, Inc.* | 1,735,248 | ||||||
| 43,465 | Tucows, Inc., Class A* | 2,434,040 | ||||||
|
| |||||||
| 24,788,853 | ||||||||
|
| |||||||
69
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
| Shares | Value | |||||||
| Investment Banking & Brokerage 1.1% | ||||||||
| 50,000 | M&A Capital Partners Co. Ltd.* (Japan) | $ | 4,233,824 | |||||
|
| |||||||
| Leisure Products 1.1% | ||||||||
| 160,384 | MCBC Holdings, Inc.* | 4,041,677 | ||||||
|
| |||||||
| Managed Health Care 1.4% | ||||||||
| 86,880 | HealthEquity, Inc.* | 5,259,715 | ||||||
|
| |||||||
| Oil & Gas Equipment & Services 1.5% | ||||||||
| 197,618 | Pason Systems, Inc. (Canada) | 2,645,951 | ||||||
| 174,608 | Solaris Oilfield Infrastructure, Inc.* | 2,891,508 | ||||||
|
| |||||||
| 5,537,459 | ||||||||
|
| |||||||
| Oil & Gas Exploration & Production 0.6% | ||||||||
| 1,039,285 | Abraxas Petroleum Corp.* | 2,307,213 | ||||||
|
| |||||||
| Packaged Foods & Meats 2.8% | ||||||||
| 406,442 | Freshpet, Inc.* | 6,685,971 | ||||||
| 1,500,000 | Prabhat Dairy Ltd. (India) | 3,499,424 | ||||||
|
| |||||||
| 10,185,395 | ||||||||
|
| |||||||
| Pharmaceuticals 1.1% | ||||||||
| 190,779 | Intra-Cellular Therapies, Inc.* | 4,015,898 | ||||||
|
| |||||||
| Regional Banks 3.2% | ||||||||
| 128,865 | CBTX, Inc. | 3,793,786 | ||||||
| 74,875 | Customers Bancorp, Inc.* | 2,182,606 | ||||||
| 184,312 | People’s Utah Bancorp | 5,953,277 | ||||||
|
| |||||||
| 11,929,669 | ||||||||
|
| |||||||
| Restaurants 3.5% | ||||||||
| 149,548 | Chuy’s Holdings, Inc.* | 3,918,157 | ||||||
| 264,266 | Fiesta Restaurant Group, Inc.* | 4,888,921 | ||||||
| 275,004 | Zoe’s Kitchen, Inc.* | 3,971,058 | ||||||
|
| |||||||
| 12,778,136 | ||||||||
|
| |||||||
| Semiconductors 2.0% | ||||||||
| 139,664 | Inphi Corp.* | 4,203,886 | ||||||
| 37,045 | NVE Corp. | 3,078,810 | ||||||
|
| |||||||
| 7,282,696 | ||||||||
|
| |||||||
| Systems Software 4.2% | ||||||||
| 88,589 | CyberArk Software Ltd.* (Israel) | 4,519,811 | ||||||
| 19,735 | ForeScout Technologies, Inc.* | 640,203 | ||||||
| 197,111 | Rapid7, Inc.* | 5,040,128 | ||||||
| 89,647 | Varonis Systems, Inc.* | 5,423,644 | ||||||
|
| |||||||
| 15,623,786 | ||||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 1.5% | ||||||||
| 632,944 | USA Technologies, Inc.* | 5,696,496 | ||||||
|
| |||||||
| Thrifts & Mortgage Finance 3.3% | ||||||||
| 78,507 | Equitable Group, Inc. (Canada) | 3,271,049 | ||||||
| 416,495 | GRUH Finance Ltd. (India) | 3,675,215 | ||||||
| 15,721 | LendingTree, Inc.* | 5,158,846 | ||||||
|
| |||||||
| 12,105,110 | ||||||||
|
| |||||||
| Total Common Stocks (cost $223,709,130) | 339,041,162 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 8.9% | ||||||||
| Repurchase Agreement 8.9% | ||||||||
| $32,894,481 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $34,675,000 of United States Treasury Notes 2.000% due 5/31/24; value: $33,552,674; repurchase proceeds: $32,895,505 (cost $32,894,481) | $ | 32,894,481 | |||||
|
| |||||||
| Total Short-Term Investments (cost $32,894,481) | 32,894,481 | |||||||
|
| |||||||
| Total Investments (cost $256,603,611) 100.6%§ | 371,935,643 | |||||||
| Liabilities less Other Assets (0.6%) | (2,360,566 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 369,575,077 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 10.99%.
REIT Real Estate Investment Trust.
See Notes to Financial Statements.
|
| |||||||
At March 31, 2018, Wasatch Micro Cap Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Argentina | 0.8 | |||
Canada | 1.8 | |||
France | 1.0 | |||
Germany | 0.7 | |||
India | 7.6 | |||
Israel | 2.3 | |||
Japan | 7.5 | |||
Sweden | 0.8 | |||
United Kingdom | 2.6 | |||
United States | 74.9 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
70
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 94.6% | ||||||||
| Air Freight & Logistics 0.8% | ||||||||
| 500,000 | Radiant Logistics, Inc.* | $ | 1,935,000 | |||||
|
| |||||||
| Alternative Carriers 1.6% | ||||||||
| 200,113 | Gamma Communications plc (United Kingdom) | 1,965,311 | ||||||
| 212,000 | ORBCOMM, Inc.* | 1,986,440 | ||||||
|
| |||||||
| 3,951,751 | ||||||||
|
| |||||||
| Apparel, Accessories & Luxury Goods 1.0% | ||||||||
| 95,000 | Superior Uniform Group, Inc. | 2,495,650 | ||||||
|
| |||||||
| Application Software 4.0% | ||||||||
| 37,000 | Ebix, Inc. | 2,756,500 | ||||||
| 31,000 | Esker S.A. (France) | 1,986,502 | ||||||
| 80,000 | Everbridge, Inc.* | 2,928,000 | ||||||
| 46,000 | Globant S.A.* (Argentina) | 2,370,840 | ||||||
|
| |||||||
| 10,041,842 | ||||||||
|
| |||||||
| Asset Management & Custody Banks 2.4% | ||||||||
| 800,000 | Fiducian Group Ltd. (Australia) | 2,987,336 | ||||||
| 82,000 | Hamilton Lane, Inc., Class A | 3,052,860 | ||||||
|
| |||||||
| 6,040,196 | ||||||||
|
| |||||||
| Biotechnology 1.1% | ||||||||
| 150,000 | Cytokinetics, Inc.* | 1,080,000 | ||||||
| 39,000 | Exact Sciences Corp.* | 1,572,870 | ||||||
|
| |||||||
| 2,652,870 | ||||||||
|
| |||||||
| Brewers 0.9% | ||||||||
| 700,000 | Turk Tuborg Bira ve Malt Sanayii A.S. (Turkey) | 2,247,991 | ||||||
|
| |||||||
| Building Products 1.6% | ||||||||
| 64,500 | Patrick Industries, Inc.* | 3,989,325 | ||||||
|
| |||||||
| Computer & Electronics Retail 0.5% | ||||||||
| 3,000,000 | GAME Digital plc (United Kingdom) | 1,204,347 | ||||||
|
| |||||||
| Construction & Engineering 1.2% | ||||||||
| 54,000 | NV5 Global, Inc.* | 3,010,500 | ||||||
|
| |||||||
| Construction Machinery & Heavy Trucks 1.3% | ||||||||
| 162,000 | Wabash National Corp. | 3,371,220 | ||||||
|
| |||||||
| Consumer Electronics 0.9% | ||||||||
| 191,000 | ZAGG, Inc.* | 2,330,200 | ||||||
|
| |||||||
| Consumer Finance 0.8% | ||||||||
| 155,559 | OP Bancorp* | 1,936,710 | ||||||
|
| |||||||
| Diversified Banks 0.8% | ||||||||
| 780,000 | City Union Bank Ltd. (India) | 2,070,982 | ||||||
|
| |||||||
| Diversified Metals & Mining 0.7% | ||||||||
| 160,000 | Ferroglobe plc* (United Kingdom) | 1,716,800 | ||||||
|
| |||||||
| Diversified Support Services 1.0% | ||||||||
| 1,350,000 | Johnson Service Group plc (United Kingdom) | 2,564,545 | ||||||
|
| |||||||
| Education Services 0.9% | ||||||||
| 328,000 | AcadeMedia AB* (Sweden) | 2,143,282 | ||||||
|
| |||||||
| Electronic Equipment & Instruments 2.5% | ||||||||
| 285,000 | Napco Security Technologies, Inc.* | 3,334,500 | ||||||
| 106,000 | Optex Group Co. Ltd. (Japan) | 2,800,301 | ||||||
|
| |||||||
| 6,134,801 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Electronic Manufacturing Services 1.2% | ||||||||
| 98,000 | Fabrinet* | $ | 3,075,240 | |||||
|
| |||||||
| Environmental & Facilities Services 0.7% | ||||||||
| 338,000 | Hudson Technologies, Inc.* | 1,669,720 | ||||||
|
| |||||||
| Financial Exchanges & Data 0.3% | ||||||||
| 200,000 | Infront ASA* (Norway) | 714,395 | ||||||
|
| |||||||
| Food Retail 0.6% | ||||||||
| 290,000 | Majestic Wine plc (United Kingdom) | 1,619,343 | ||||||
|
| |||||||
| General Merchandise Stores 1.6% | ||||||||
| 36,000 | Ollie’s Bargain Outlet Holdings, Inc.* | 2,170,800 | ||||||
| 36,000 | Seria Co. Ltd. (Japan) | 1,820,215 | ||||||
|
| |||||||
| 3,991,015 | ||||||||
|
| |||||||
| Health Care Distributors 1.3% | ||||||||
| 118,000 | PetIQ, Inc.* | 3,138,800 | ||||||
|
| |||||||
| Health Care Equipment 3.0% | ||||||||
| 118,000 | AtriCure, Inc.* | 2,421,360 | ||||||
| 194,000 | Oxford Immunotec Global plc* | 2,415,300 | ||||||
| 80,000 | Tactile Systems Technology, Inc.* | 2,544,000 | ||||||
|
| |||||||
| 7,380,660 | ||||||||
|
| |||||||
| Health Care Facilities 2.1% | ||||||||
| 97,000 | Ensign Group, Inc. (The) | 2,551,100 | ||||||
| 92,000 | Japan Animal Referral Medical Center Co. Ltd.* (Japan) | 2,650,063 | ||||||
|
| |||||||
| 5,201,163 | ||||||||
|
| |||||||
| Health Care Services 1.8% | ||||||||
| 42,000 | LHC Group, Inc.* | 2,585,520 | ||||||
| 63,000 | National Research Corp., Class A | 1,842,750 | ||||||
|
| |||||||
| 4,428,270 | ||||||||
|
| |||||||
| Health Care Supplies 1.1% | ||||||||
| 181,000 | OrthoPediatrics Corp.* | 2,725,860 | ||||||
|
| |||||||
| Health Care Technology 2.0% | ||||||||
| 106,000 | Nexus AG (Germany) | 3,314,665 | ||||||
| 41,000 | Omnicell, Inc.* | 1,779,400 | ||||||
|
| |||||||
| 5,094,065 | ||||||||
|
| |||||||
| Heavy Electrical Equipment 0.8% | ||||||||
| 88,000 | TPI Composites, Inc.* | 1,975,600 | ||||||
|
| |||||||
| Home Furnishing Retail 1.1% | ||||||||
| 77,000 | Sleep Number Corp.* | 2,706,550 | ||||||
|
| |||||||
| Homebuilding 3.5% | ||||||||
| 29,000 | Installed Building Products, Inc.* | 1,741,450 | ||||||
| 44,000 | LGI Homes, Inc.* | 3,105,080 | ||||||
| 300,000 | Select Interior Concepts, Inc.* *** † | 3,975,000 | ||||||
|
| |||||||
| 8,821,530 | ||||||||
|
| |||||||
| Housewares & Specialties 0.1% | ||||||||
| 272,692 | OurPet’s Co.* | 313,596 | ||||||
|
| |||||||
| Human Resource & Employment Services 1.1% | ||||||||
| 142,691 | BG Staffing, Inc. | 2,709,702 | ||||||
|
| |||||||
| Industrial Machinery 4.1% | ||||||||
| 55,000 | Altra Industrial Motion Corp. | 2,527,250 | ||||||
| 24,000 | John Bean Technologies Corp. | 2,721,600 | ||||||
| 20,000 | Kadant, Inc. | 1,890,000 | ||||||
| 43,580 | Taylor Devices, Inc.* | 470,664 | ||||||
| 116,000 | va-Q-tec AG* (Germany) | 2,531,814 | ||||||
|
| |||||||
| 10,141,328 | ||||||||
|
| |||||||
71
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) | ||
| ||
| ||
Schedule of Investments (continued)
| Shares | Value | |||||||
| Industrial REITs 0.7% | ||||||||
| 115,489 | Monmouth Real Estate Investment Corp. | $ | 1,736,955 | |||||
|
| |||||||
| Integrated Telecommunication Services 1.0% | ||||||||
| 220,000 | Ooma, Inc.* | 2,398,000 | ||||||
|
| |||||||
| Internet Software & Services 2.5% | ||||||||
| 118,000 | Rakus Co. Ltd. (Japan) | 1,901,884 | ||||||
| 86,000 | Reis, Inc. | 1,844,700 | ||||||
| 47,000 | Tucows, Inc., Class A* | 2,632,000 | ||||||
|
| |||||||
| 6,378,584 | ||||||||
|
| |||||||
| IT Consulting & Other Services 1.4% | ||||||||
| 217,000 | Hackett Group, Inc. (The) | 3,485,020 | ||||||
|
| |||||||
| Mortgage REITs 0.7% | ||||||||
| 210,000 | Arbor Realty Trust, Inc. | 1,852,200 | ||||||
|
| |||||||
| Multi-Sector Holdings 0.9% | ||||||||
| 144,000 | Compass Diversified Holdings | 2,361,600 | ||||||
|
| |||||||
| Oil & Gas Equipment & Services 0.9% | ||||||||
| 130,000 | Solaris Oilfield Infrastructure, Inc.* | 2,152,800 | ||||||
|
| |||||||
| Oil & Gas Exploration & Production 1.0% | ||||||||
| 253,000 | Earthstone Energy, Inc., Class A* | 2,560,360 | ||||||
|
| |||||||
| Packaged Foods & Meats 2.6% | ||||||||
| 168,000 | Freshpet, Inc.* | 2,763,600 | ||||||
| 1,736,400 | Kawan Food BHD (Malaysia) | 996,589 | ||||||
| 1,700,000 | Yihai International Holding Ltd. (China) | 2,645,177 | ||||||
|
| |||||||
| 6,405,366 | ||||||||
|
| |||||||
| Personal Products 0.8% | ||||||||
| 120,000 | Sarantis S.A. (Greece) | 2,115,805 | ||||||
|
| |||||||
| Pharmaceuticals 0.6% | ||||||||
| 67,000 | Intra-Cellular Therapies, Inc.* | 1,410,350 | ||||||
|
| |||||||
| Property & Casualty Insurance 2.7% | ||||||||
| 150,000 | Atlas Financial Holdings, Inc.* | 1,552,500 | ||||||
| 81,000 | HCI Group, Inc. | 3,090,960 | ||||||
| 126,000 | Kingstone Cos., Inc. | 2,116,800 | ||||||
|
| |||||||
| 6,760,260 | ||||||||
|
| |||||||
| Publishing 0.7% | ||||||||
| 119,918 | Proto Corp. (Japan) | 1,876,448 | ||||||
|
| |||||||
| Real Estate Operating Companies 1.0% | ||||||||
| 157,000 | Japan Property Management Center Co. Ltd. (Japan) | 2,385,875 | ||||||
|
| |||||||
| Regional Banks 11.1% | ||||||||
| 82,480 | Bankwell Financial Group, Inc. | 2,662,454 | ||||||
| 133,000 | Blue Hills Bancorp, Inc. | 2,773,050 | ||||||
| 75,000 | Customers Bancorp, Inc.* | 2,186,250 | ||||||
| 166,925 | Esquire Financial Holdings, Inc.* | 4,072,970 | ||||||
| 96,000 | First of Long Island Corp. (The) | 2,635,200 | ||||||
| 98,000 | Investar Holding Corp. | 2,533,300 | ||||||
| 57,000 | Metropolitan Bank Holding Corp.* | 2,400,270 | ||||||
| 79,000 | People’s Utah Bancorp | 2,551,700 | ||||||
| 143,000 | SmartFinancial, Inc.* | 3,369,080 | ||||||
| 71,713 | Sound Financial Bancorp, Inc. | 2,628,282 | ||||||
|
| |||||||
| 27,812,556 | ||||||||
|
| |||||||
| Research & Consulting Services 1.0% | ||||||||
| 110,000 | IR Japan Holdings Ltd. (Japan) | 2,507,965 | ||||||
|
| |||||||
| Semiconductor Equipment 1.1% | ||||||||
| 113,555 | Ichor Holdings Ltd.* | 2,749,167 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Semiconductors 1.9% | ||||||||
| 64,000 | Inphi Corp.* | $ | 1,926,400 | |||||
| 105,000 | Tower Semiconductor Ltd.* (Israel) | 2,825,550 | ||||||
|
| |||||||
| 4,751,950 | ||||||||
|
| |||||||
| Specialized Consumer Services 0.8% | ||||||||
| 200,000 | Tear Corp. (Japan) | 1,945,397 | ||||||
|
| |||||||
| Specialty Chemicals 1.1% | ||||||||
| 107,000 | Ferro Corp.* | 2,484,540 | ||||||
| 13,636 | Northern Technologies International Corp. | 306,810 | ||||||
|
| |||||||
| 2,791,350 | ||||||||
|
| |||||||
| Steel 0.2% | ||||||||
| 16,122 | Haynes International, Inc. | 598,287 | ||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 2.5% | ||||||||
| 549,990 | One Stop Systems, Inc.* | 2,419,956 | ||||||
| 415,000 | USA Technologies, Inc.* | 3,735,000 | ||||||
|
| |||||||
| 6,154,956 | ||||||||
|
| |||||||
| Thrifts & Mortgage Finance 4.7% | ||||||||
| 96,000 | BofI Holding, Inc.* | 3,890,880 | ||||||
| 103,000 | Entegra Financial Corp.* | 2,987,000 | ||||||
| 186,086 | Luther Burbank Corp. | 2,234,893 | ||||||
| 290,000 | Mortgage Advice Bureau Holdings Ltd. (United Kingdom) | 2,552,752 | ||||||
|
| |||||||
| 11,665,525 | ||||||||
|
| |||||||
| Trading Companies & Distributors 2.3% | ||||||||
| 161,000 | Hardwoods Distribution, Inc. (Canada) | 2,349,362 | ||||||
| 43,000 | SiteOne Landscape Supply, Inc.* | 3,312,720 | ||||||
|
| |||||||
| 5,662,082 | ||||||||
|
| |||||||
| Total Common Stocks (cost $169,150,139) | 236,063,707 | |||||||
|
| |||||||
| CONVERTIBLE PREFERRED STOCKS 0.6% | ||||||||
| Oil & Gas Refining & Marketing 0.6% | ||||||||
| 580,849 | Vertex Energy, Inc., Pfd., 6.00% PIK Series B* *** † | 1,544,189 | ||||||
|
| |||||||
| Total Convertible Preferred Stocks (cost $1,705,632) | 1,544,189 | |||||||
|
| |||||||
| RIGHTS 0.1% | ||||||||
| Health Care Supplies 0.0% | ||||||||
| 375,000 | Synergetics USA, Inc.* *** † | 3,750 | ||||||
|
| |||||||
| Pharmaceuticals 0.1% | ||||||||
| 1 | Acetylon Pharmaceuticals, Inc.* *** † | 326,356 | ||||||
| 1 | Acetylon Pharmaceuticals, Inc.* *** † | — | ||||||
|
| |||||||
| 326,356 | ||||||||
|
| |||||||
| Total Rights (cost $71,250) | 330,106 | |||||||
|
| |||||||
72
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Shares | Value | |||||||
| LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST 0.0% | ||||||||
| Pharmaceuticals 0.0% | ||||||||
| 50,528 | Regenacy Pharmaceuticals, LLC* *** † | $ | 46,991 | |||||
|
| |||||||
| Total Limited Liability Company Membership Interest (cost $30,001) | 46,991 | |||||||
|
| |||||||
| WARRANTS 0.0% | ||||||||
| Oil & Gas Refining & Marketing 0.0% | ||||||||
| 250,000 | Vertex Energy, Inc., expiring 12/24/2020* *** † | 11,448 | ||||||
|
| |||||||
| Total Warrants (cost $95,000) | 11,448 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 6.1% | ||||||||
| Repurchase Agreement 6.1% | ||||||||
| $15,171,597 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $15,995,000 of United States Treasury Notes 2.000% due 5/31/24; value: $15,477,290; repurchase proceeds: $15,172,069 (cost $15,171,597) | $ | 15,171,597 | |||||
|
| |||||||
| Total Short-Term Investments (cost $15,171,597) | 15,171,597 | |||||||
|
| |||||||
| Total Investments (cost $186,223,619) 101.4%§ | 253,168,038 | |||||||
| Liabilities less Other Assets (1.4%) | (3,545,684 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 249,622,354 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 12.04%.
PIK Payment in kind.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch Micro Cap Value Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Argentina | 1.0 | |||
Australia | 1.3 | |||
Canada | 1.0 | |||
China | 1.1 | |||
France | 0.8 | |||
Germany | 2.5 | |||
Greece | 0.9 | |||
India | 0.9 | |||
Israel | 1.2 | |||
Japan | 7.5 | |||
Malaysia | 0.4 | |||
Norway | 0.3 | |||
Sweden | 0.9 | |||
Turkey | 0.9 | |||
United Kingdom | 4.9 | |||
United States | 74.4 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
73
Table of Contents
| WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 94.2% | ||||||||
| Aerospace & Defense 3.3% | ||||||||
| 808,858 | HEICO Corp., Class A | $ | 57,388,475 | |||||
|
| |||||||
| Air Freight & Logistics 1.6% | ||||||||
| 23,918,023 | Aramex PJSC* (United Arab Emirates) | 28,651,748 | ||||||
|
| |||||||
| Airlines 1.9% | ||||||||
| 192,453 | Allegiant Travel Co. | 33,207,765 | ||||||
|
| |||||||
| Application Software 9.9% | ||||||||
| 501,273 | Globant S.A.* (Argentina) | 25,835,610 | ||||||
| 207,801 | HubSpot, Inc.* | 22,504,848 | ||||||
| 921,146 | Paylocity Holding Corp.* | 47,190,310 | ||||||
| 175,913 | Ultimate Software Group, Inc. (The)* | 42,869,998 | ||||||
| 727,838 | Zendesk, Inc.* | 34,841,605 | ||||||
|
| |||||||
| 173,242,371 | ||||||||
|
| |||||||
| Automotive Retail 1.9% | ||||||||
| 626,669 | Monro, Inc. | 33,589,458 | ||||||
|
| |||||||
| Biotechnology 9.0% | ||||||||
| 2,099,449 | Abcam plc (United Kingdom) | 36,462,214 | ||||||
| 1,086,829 | ChemoCentryx, Inc.* | 14,780,874 | ||||||
| 640,249 | Cytokinetics, Inc.* | 4,609,793 | ||||||
| 287,373 | Esperion Therapeutics, Inc.* | 20,785,689 | ||||||
| 472,938 | Exact Sciences Corp.* | 19,073,590 | ||||||
| 302,906 | Flexion Therapeutics, Inc.* | 6,788,123 | ||||||
| 1,218,886 | Inovio Pharmaceuticals, Inc.* | 5,740,953 | ||||||
| 546,626 | MacroGenics, Inc.* | 13,753,110 | ||||||
| 1,211,109 | Sangamo Therapeutics Inc.* | 23,011,071 | ||||||
| 227,469 | Seattle Genetics, Inc.* | 11,905,728 | ||||||
|
| |||||||
| 156,911,145 | ||||||||
|
| |||||||
| Building Products 2.1% | ||||||||
| 937,385 | AAON, Inc. | 36,558,015 | ||||||
|
| |||||||
| Diversified Support Services 5.3% | ||||||||
| 1,150,330 | Copart, Inc.* | 58,586,307 | ||||||
| 784,060 | Healthcare Services Group, Inc. | 34,090,929 | ||||||
|
| |||||||
| 92,677,236 | ||||||||
|
| |||||||
| Food Distributors 1.2% | ||||||||
| 933,440 | Chefs’ Warehouse, Inc. (The)* | 21,469,120 | ||||||
|
| |||||||
| General Merchandise Stores 2.8% | ||||||||
| 823,903 | Ollie’s Bargain Outlet Holdings, Inc.* | 49,681,351 | ||||||
|
| |||||||
| Health Care Equipment 3.5% | ||||||||
| 386,209 | Cantel Medical Corp. | 43,027,545 | ||||||
| 215,671 | Insulet Corp.* | 18,694,362 | ||||||
|
| |||||||
| 61,721,907 | ||||||||
|
| |||||||
| Health Care Facilities 2.2% | ||||||||
| 1,466,643 | Ensign Group, Inc. (The) | 38,572,711 | ||||||
|
| |||||||
| Health Care Supplies 2.0% | ||||||||
| 529,812 | Neogen Corp.* | 35,492,106 | ||||||
|
| |||||||
| Homebuilding 1.1% | ||||||||
| 271,966 | LGI Homes, Inc.* | 19,192,641 | ||||||
|
| |||||||
| Industrial Machinery 5.9% | ||||||||
| 522,015 | Barnes Group, Inc. | 31,263,478 | ||||||
| 345,824 | RBC Bearings, Inc.* | 42,951,341 | ||||||
| 553,946 | Sun Hydraulics Corp. | 29,669,348 | ||||||
|
| |||||||
| 103,884,167 | ||||||||
|
| |||||||
| Internet & Direct Marketing Retail 1.1% | ||||||||
| 283,659 | Wayfair, Inc., Class A* | 19,155,492 | ||||||
|
| |||||||
| Internet Software & Services 1.7% | ||||||||
| 509,181 | Envestnet, Inc.* | 29,176,071 | ||||||
|
| |||||||
| Shares | Value | |||||||
| IT Consulting & Other Services 1.5% | ||||||||
| 409,744 | InterXion Holding N.V.* (Netherlands) | $ | 25,449,200 | |||||
|
| |||||||
| Life Sciences Tools & Services 3.3% | ||||||||
| 488,975 | ICON plc* (Ireland) | 57,767,506 | ||||||
|
| |||||||
| Managed Health Care 1.9% | ||||||||
| 550,644 | HealthEquity, Inc.* | 33,335,988 | ||||||
|
| |||||||
| Pharmaceuticals 1.0% | ||||||||
| 792,780 | Intra-Cellular Therapies, Inc.* | 16,688,019 | ||||||
|
| |||||||
| Real Estate Services 1.4% | ||||||||
| 497,861 | HFF, Inc., Class A | 24,743,692 | ||||||
|
| |||||||
| Regional Banks 8.1% | ||||||||
| 658,878 | Eagle Bancorp, Inc.* | 39,433,849 | ||||||
| 877,593 | Metro Bank plc* (United Kingdom) | 43,234,326 | ||||||
| 461,044 | Pinnacle Financial Partners, Inc. | 29,599,025 | ||||||
| 330,168 | Texas Capital Bancshares, Inc.* | 29,682,103 | ||||||
|
| |||||||
| 141,949,303 | ||||||||
|
| |||||||
| Restaurants 2.0% | ||||||||
| 631,556 | Chuy’s Holdings, Inc.* | 16,546,767 | ||||||
| 977,427 | Fiesta Restaurant Group, Inc.* | 18,082,400 | ||||||
|
| |||||||
| 34,629,167 | ||||||||
|
| |||||||
| Semiconductors 2.0% | ||||||||
| 294,371 | Monolithic Power Systems, Inc. | 34,079,331 | ||||||
|
| |||||||
| Specialty Stores 4.4% | ||||||||
| 770,784 | Five Below, Inc.* | 56,529,298 | ||||||
| 631,980 | National Vision Holdings, Inc.* | 20,419,274 | ||||||
|
| |||||||
| 76,948,572 | ||||||||
|
| |||||||
| Systems Software 5.9% | ||||||||
| 361,704 | CyberArk Software Ltd.* (Israel) | 18,454,138 | ||||||
| 296,812 | Forescout Technologies, Inc.* *** † | 9,294,790 | ||||||
| 535,664 | Fortinet, Inc.* | 28,700,877 | ||||||
| 220,959 | Proofpoint, Inc.* | 25,111,990 | ||||||
| 838,608 | Rapid7, Inc.* | 21,443,207 | ||||||
|
| |||||||
| 103,005,002 | ||||||||
|
| |||||||
| Trading Companies & Distributors 3.3% | ||||||||
| 393,314 | SiteOne Landscape Supply, Inc.* | 30,300,910 | ||||||
| 445,393 | WESCO International, Inc.* | 27,636,636 | ||||||
|
| |||||||
| 57,937,546 | ||||||||
|
| |||||||
| Trucking 2.9% | ||||||||
| 1,099,266 | Knight-Swift Transportation Holdings, Inc. | 50,577,229 | ||||||
|
| |||||||
| Total Common Stocks (cost $1,030,485,360) | 1,647,682,334 | |||||||
|
| |||||||
| PREFERRED STOCKS 2.6% | ||||||||
| Biotechnology 0.0% | ||||||||
| 677,966 | Nanosys, Inc., Series D Pfd.* *** † | 305,627 | ||||||
| 161,519 | Nanosys, Inc., Series E Pfd.* *** † | 189,058 | ||||||
|
| |||||||
| 494,685 | ||||||||
|
| |||||||
| Oil & Gas Equipment & Services 0.9% | ||||||||
| 5,818,582 | Drilling Info Holdings, Inc., Series B Pfd., 0.49%*** † | 15,350,001 | ||||||
|
| |||||||
74
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Shares | Value | |||||||
| Systems Software 1.7% | ||||||||
| 1,114,610 | DataStax, Inc., Series E Pfd.* *** † | $ | 6,397,861 | |||||
| 33,296 | DocuSign, Inc., Series B Pfd.* *** † | 909,314 | ||||||
| 9,974 | DocuSign, Inc., Series B-1 Pfd.* *** † | 272,390 | ||||||
| 23,905 | DocuSign, Inc., Series D Pfd.* *** † | 652,846 | ||||||
| 618,152 | DocuSign, Inc., Series E Pfd.* *** † | 16,881,731 | ||||||
| 157,124 | DocuSign, Inc., Series F Pfd.* *** † | 4,291,057 | ||||||
|
| |||||||
| 29,405,199 | ||||||||
|
| |||||||
| Total Preferred Stocks (cost $34,472,294) | 45,249,885 | |||||||
|
| |||||||
| LIMITED PARTNERSHIP INTEREST 0.2% | ||||||||
| Asset Management & Custody Banks 0.2% | ||||||||
| Greenspring Global Partners II-B, L.P.* *** † | 1,952,685 | |||||||
| Greenspring Global Partners III-B, L.P.* *** † | 1,055,562 | |||||||
|
| |||||||
| 3,008,247 | ||||||||
|
| |||||||
| Total Limited Partnership Interest (cost $2,707,239) | 3,008,247 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 2.9% | ||||||||
| Repurchase Agreement 2.9% | ||||||||
| $51,521,965 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $54,315,000 of United States Treasury Notes 2.000% due 5/31/24; value: $52,556,986; repurchase proceeds: $51,523,568 (cost $51,521,965) | $ | 51,521,965 | |||||
|
| |||||||
| Total Short-Term Investments (cost $51,521,965) | 51,521,965 | |||||||
|
| |||||||
| Total Investments (cost $1,119,186,858) 99.9%§ | 1,747,462,431 | |||||||
| Other Assets less Liabilities 0.1% | 1,256,332 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 1,748,718,763 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 4.56%.
See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch Small Cap Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Argentina | 1.5 | |||
Ireland | 3.4 | |||
Israel | 1.1 | |||
Netherlands | 1.5 | |||
United Arab Emirates | 1.7 | |||
United Kingdom | 4.7 | |||
United States | 86.1 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
75
Table of Contents
| WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 97.9% | ||||||||
| Aerospace & Defense 2.5% | ||||||||
| 136,605 | HEICO Corp., Class A | $ | 9,692,125 | |||||
|
| |||||||
| Airlines 1.7% | ||||||||
| 37,995 | Allegiant Travel Co. | 6,556,037 | ||||||
|
| |||||||
| Apparel Retail 0.5% | ||||||||
| 458,267 | J.Jill, Inc.* | 2,025,540 | ||||||
|
| |||||||
| Application Software 1.9% | ||||||||
| 98,815 | Ebix, Inc. | 7,361,718 | ||||||
|
| |||||||
| Asset Management & Custody Banks 1.8% | ||||||||
| 189,785 | Hamilton Lane, Inc., Class A | 7,065,696 | ||||||
|
| |||||||
| Auto Parts & Equipment 2.4% | ||||||||
| 140,230 | Dorman Products, Inc.* | 9,284,628 | ||||||
|
| |||||||
| Automotive Retail 6.1% | ||||||||
| 88,111 | Lithia Motors, Inc., Class A | 8,856,918 | ||||||
| 279,508 | Monro, Inc. | 14,981,629 | ||||||
|
| |||||||
| 23,838,547 | ||||||||
|
| |||||||
| Commercial Printing 2.3% | ||||||||
| 57,371 | Cimpress N.V.* | 8,875,294 | ||||||
|
| |||||||
| Consumer Electronics 1.7% | ||||||||
| 546,866 | ZAGG, Inc.* | 6,671,765 | ||||||
|
| |||||||
| Consumer Finance 1.7% | ||||||||
| 20,683 | Credit Acceptance Corp.* | 6,833,870 | ||||||
|
| |||||||
| Data Processing & Outsourced Services 3.6% | ||||||||
| 179,494 | Euronet Worldwide, Inc.* | 14,165,666 | ||||||
|
| |||||||
| Diversified Banks 1.1% | ||||||||
| 1,624,218 | City Union Bank Ltd. (India) | 4,312,469 | ||||||
|
| |||||||
| Diversified Support Services 2.4% | ||||||||
| 184,588 | Copart, Inc.* | 9,401,067 | ||||||
|
| |||||||
| Electronic Manufacturing Services 1.5% | ||||||||
| 188,568 | Fabrinet* | 5,917,264 | ||||||
|
| |||||||
| Health Care Facilities 2.8% | ||||||||
| 411,833 | Ensign Group, Inc. (The) | 10,831,208 | ||||||
|
| |||||||
| Health Care REITs 1.5% | ||||||||
| 321,778 | Sabra Health Care REIT, Inc. | 5,679,382 | ||||||
|
| |||||||
| Health Care Services 2.0% | ||||||||
| 125,178 | LHC Group, Inc.* | 7,705,958 | ||||||
|
| |||||||
| Home Furnishing Retail 2.5% | ||||||||
| 279,595 | Sleep Number Corp.* | 9,827,764 | ||||||
|
| |||||||
| Homebuilding 1.5% | ||||||||
| 80,903 | LGI Homes, Inc.* | 5,709,325 | ||||||
|
| |||||||
| Hotel & Resort REITs 1.9% | ||||||||
| 540,446 | Summit Hotel Properties, Inc. | 7,355,470 | ||||||
|
| |||||||
| Industrial Machinery 4.7% | ||||||||
| 274,368 | Altra Industrial Motion Corp. | 12,607,210 | ||||||
| 60,095 | Kadant, Inc. | 5,678,977 | ||||||
|
| |||||||
| 18,286,187 | ||||||||
|
| |||||||
| Industrial REITs 2.2% | ||||||||
| 568,353 | Monmouth Real Estate Investment Corp. | 8,548,029 | ||||||
|
| |||||||
| Internet Software & Services 1.4% | ||||||||
| 28,030 | Stamps.com, Inc.* | 5,635,432 | ||||||
|
| |||||||
| IT Consulting & Other Services 2.3% | ||||||||
| 567,176 | Hackett Group, Inc. (The) | 9,108,847 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Life Sciences Tools & Services 2.0% | ||||||||
| 66,253 | ICON plc* (Ireland) | $ | 7,827,129 | |||||
|
| |||||||
| Mortgage REITs 4.9% | ||||||||
| 1,178,364 | Arbor Realty Trust, Inc. | 10,393,170 | ||||||
| 1,143,977 | MFA Financial, Inc. | 8,614,147 | ||||||
|
| |||||||
| 19,007,317 | ||||||||
|
| |||||||
| Oil & Gas Equipment & Services 1.4% | ||||||||
| 202,791 | Oil States International, Inc.* | 5,313,124 | ||||||
|
| |||||||
| Oil & Gas Exploration & Production 2.7% | ||||||||
| 387,359 | Earthstone Energy, Inc., Class A* | 3,920,073 | ||||||
| 2,422,751 | Gran Tierra Energy, Inc.* (Colombia) | 6,759,475 | ||||||
|
| |||||||
| 10,679,548 | ||||||||
|
| |||||||
| Personal Products 1.8% | ||||||||
| 93,379 | Nu Skin Enterprises, Inc., Class A | 6,882,966 | ||||||
|
| |||||||
| Property & Casualty Insurance 2.2% | ||||||||
| 388,948 | Atlas Financial Holdings, Inc.* | 4,025,612 | ||||||
| 116,894 | HCI Group, Inc. | 4,460,675 | ||||||
|
| |||||||
| 8,486,287 | ||||||||
|
| |||||||
| Regional Banks 12.3% | ||||||||
| 352,245 | First of Long Island Corp. (The) | 9,669,125 | ||||||
| 87,772 | Metropolitan Bank Holding Corp.* | 3,696,079 | ||||||
| 149,251 | Prosperity Bancshares, Inc. | 10,840,100 | ||||||
| 193,669 | Republic First Bancorp, Inc.* | 1,684,920 | ||||||
| 405,742 | State Bank Financial Corp. | 12,176,318 | ||||||
| 182,642 | Webster Financial Corp. | 10,118,367 | ||||||
|
| |||||||
| 48,184,909 | ||||||||
|
| |||||||
| Restaurants 1.2% | ||||||||
| 244,522 | Fiesta Restaurant Group, Inc.* | 4,523,657 | ||||||
|
| |||||||
| Semiconductors 1.5% | ||||||||
| 216,463 | Tower Semiconductor Ltd.* (Israel) | 5,825,019 | ||||||
|
| |||||||
| Specialized REITs 2.1% | ||||||||
| 327,715 | National Storage Affiliates Trust | 8,219,092 | ||||||
|
| |||||||
| Specialty Chemicals 2.3% | ||||||||
| 129,165 | Innospec, Inc. | 8,860,719 | ||||||
|
| |||||||
| Thrifts & Mortgage Finance 2.2% | ||||||||
| 212,536 | BofI Holding, Inc.* | 8,614,084 | ||||||
|
| |||||||
| Trading Companies & Distributors 2.6% | ||||||||
| 165,968 | WESCO International, Inc.* | 10,298,314 | ||||||
|
| |||||||
| Trucking 4.7% | ||||||||
| 252,147 | Knight-Swift Transportation Holdings, Inc. | 11,601,283 | ||||||
| 46,705 | Old Dominion Freight Line, Inc. | 6,864,234 | ||||||
|
| |||||||
| 18,465,517 | ||||||||
|
| |||||||
| Total Common Stocks (cost $298,557,254) | 381,876,970 | |||||||
|
| |||||||
| LIMITED PARTNERSHIP INTEREST 0.9% | ||||||||
| Oil & Gas Storage & Transportation 0.9% | ||||||||
| 125,462 | Delek Logistics Partners L.P. | 3,556,848 | ||||||
|
| |||||||
| Total Limited Partnership Interest (cost $4,353,289) | 3,556,848 | |||||||
|
| |||||||
76
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 2.1% | ||||||||
| Repurchase Agreement 2.1% | ||||||||
| $8,282,068 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $8,735,000 of United States Treasury Notes 2.000% due 5/31/24; value: $8,452,274; repurchase proceeds: $8,282,326 (cost $8,282,068) | $ | 8,282,068 | |||||
|
| |||||||
| Total Short-Term Investments (cost $8,282,068) | 8,282,068 | |||||||
|
| |||||||
| Total Investments (cost $311,192,611) 100.9%§ | 393,715,886 | |||||||
| Liabilities less Other Assets (0.9%) | (3,385,082 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 390,330,804 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 1.10%.
REIT Real Estate Investment Trust.
See Notes to Financial Statements.
|
| |||||||
At March 31, 2018, Wasatch Small Cap Value Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Colombia | 1.8 | |||
India | 1.1 | |||
Ireland | 2.0 | |||
Israel | 1.5 | |||
United States | 93.6 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
77
Table of Contents
| WASATCH STRATEGIC INCOME FUND (WASIX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 72.6% | ||||||||
| Air Freight & Logistics 1.3% | ||||||||
| 2,800 | FedEx Corp. | $ | 672,308 | |||||
|
| |||||||
| Apparel Retail 1.3% | ||||||||
| 8,605 | Ross Stores, Inc. | 671,018 | ||||||
|
| |||||||
| Asset Management & Custody Banks 7.3% | ||||||||
| 71,788 | Alcentra Capital Corp. | 499,645 | ||||||
| 3,050 | Ameriprise Financial, Inc. | 451,217 | ||||||
| 74,606 | Ares Capital Corp. | 1,183,997 | ||||||
| 59,913 | Medallion Financial Corp.* | 278,595 | ||||||
| 53,600 | Solar Capital Ltd. | 1,088,616 | ||||||
| 34,621 | Triangle Capital Corp. | 385,332 | ||||||
|
| |||||||
| 3,887,402 | ||||||||
|
| |||||||
| Broadcasting 1.2% | ||||||||
| 12,860 | CBS Corp., Class B | 660,875 | ||||||
|
| |||||||
| Cable & Satellite 4.6% | ||||||||
| 63,700 | Comcast Corp., Class A | 2,176,629 | ||||||
| 1,000 | Naspers Ltd., Class N (South Africa) | 244,713 | ||||||
|
| |||||||
| 2,421,342 | ||||||||
|
| |||||||
| Consumer Finance 0.9% | ||||||||
| 6,489 | Discover Financial Services | 466,754 | ||||||
|
| |||||||
| Data Processing & Outsourced Services 7.6% | ||||||||
| 12,285 | MasterCard, Inc., Class A | 2,151,841 | ||||||
| 15,725 | Visa, Inc., Class A | 1,881,024 | ||||||
|
| |||||||
| 4,032,865 | ||||||||
|
| |||||||
| Diversified REITs 2.5% | ||||||||
| 91,000 | Colony NorthStar, Inc., Class A | 511,420 | ||||||
| 355,714 | Star Asia Capital Corp Ltd.* *** † | 811,028 | ||||||
|
| |||||||
| 1,322,448 | ||||||||
|
| |||||||
| Drug Retail 4.4% | ||||||||
| 14,672 | CVS Health Corp. | 912,745 | ||||||
| 21,879 | Walgreens Boots Alliance, Inc. | 1,432,418 | ||||||
|
| |||||||
| 2,345,163 | ||||||||
|
| |||||||
| Financial Exchanges & Data 0.3% | ||||||||
| 1,091 | MSCI, Inc., Class A | 163,072 | ||||||
| 300 | OTC Markets Group, Inc. | 8,040 | ||||||
|
| |||||||
| 171,112 | ||||||||
|
| |||||||
| Health Care Distributors 0.5% | ||||||||
| 1,847 | McKesson Corp. | 260,187 | ||||||
|
| |||||||
| Home Improvement Retail 2.5% | ||||||||
| 7,500 | Home Depot, Inc. (The) | 1,336,800 | ||||||
|
| |||||||
| Hotels, Resorts & Cruise Lines 1.5% | ||||||||
| 40,158 | Extended Stay America, Inc.** | 793,924 | ||||||
|
| |||||||
| Industrial Conglomerates 0.6% | ||||||||
| 19,570 | General Electric Co. | 263,804 | ||||||
| 436 | Siemens AG (Germany) | 55,632 | ||||||
|
| |||||||
| 319,436 | ||||||||
|
| |||||||
| Industrial Machinery 1.0% | ||||||||
| 3,500 | Snap-on, Inc. | 516,390 | ||||||
|
| |||||||
| Integrated Oil & Gas 3.2% | ||||||||
| 49,854 | Suncor Energy, Inc. (Canada) | 1,721,585 | ||||||
|
| |||||||
| IT Consulting & Other Services 2.0% | ||||||||
| 13,250 | Cognizant Technology Solutions Corp., Class A | 1,066,625 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Managed Health Care 2.3% | ||||||||
| 5,640 | UnitedHealth Group, Inc. | $ | 1,206,960 | |||||
|
| |||||||
| Mortgage REITs 8.9% | ||||||||
| 121,990 | Arbor Realty Trust, Inc. | 1,075,952 | ||||||
| 13,650 | Blackstone Mortgage Trust, Inc., Class A | 428,883 | ||||||
| 33,000 | Granite Point Mortgage Trust, Inc. | 545,820 | ||||||
| 82,400 | Great Ajax Corp. | 1,116,520 | ||||||
| 41,092 | Resource Capital Corp. | 390,785 | ||||||
| 56,700 | Starwood Property Trust, Inc. | 1,187,865 | ||||||
|
| |||||||
| 4,745,825 | ||||||||
|
| |||||||
| Movies & Entertainment 0.6% | ||||||||
| 3,250 | Walt Disney Co. (The) | 326,430 | ||||||
|
| |||||||
| Personal Products 3.4% | ||||||||
| 8,200 | Herbalife Ltd.* | 799,254 | ||||||
| 13,871 | Nu Skin Enterprises, Inc., Class A | 1,022,431 | ||||||
|
| |||||||
| 1,821,685 | ||||||||
|
| |||||||
| Railroads 2.6% | ||||||||
| 19,167 | Canadian National Railway Co. (Canada) | 1,400,834 | ||||||
|
| |||||||
| Retail REITs 1.3% | ||||||||
| 4,285 | Simon Property Group, Inc. | 661,390 | ||||||
|
| |||||||
| Semiconductor Equipment 2.5% | ||||||||
| 10,500 | BE Semiconductor Industries N.V. (Netherlands) | 1,077,093 | ||||||
| 170,000 | Micro-Mechanics Holdings Ltd. (Singapore) | 264,741 | ||||||
|
| |||||||
| 1,341,834 | ||||||||
|
| |||||||
| Semiconductors 5.2% | ||||||||
| 18,400 | Microchip Technology, Inc. | 1,681,024 | ||||||
| 24,515 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 1,072,776 | ||||||
|
| |||||||
| 2,753,800 | ||||||||
|
| |||||||
| Specialty Stores 2.0% | ||||||||
| 16,800 | Tractor Supply Co. | 1,058,736 | ||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 0.0% | ||||||||
| 81 | Apple, Inc. | 13,590 | ||||||
|
| |||||||
| Trading Companies & Distributors 1.1% | ||||||||
| 5,230 | MSC Industrial Direct Co., Inc., Class A | 479,643 | ||||||
| 299 | W.W. Grainger, Inc. | 84,399 | ||||||
|
| |||||||
| 564,042 | ||||||||
|
| |||||||
| Total Common Stocks (cost $32,151,247) | 38,561,360 | |||||||
|
| |||||||
| RIGHTS 0.1% | ||||||||
| Personal Products 0.1% | ||||||||
| 14,761 | Herbalife Ltd. CVR* *** † | 57,821 | ||||||
|
| |||||||
| Total Rights (cost $0) | 57,821 | |||||||
|
| |||||||
| LIMITED PARTNERSHIP INTEREST 6.5% | ||||||||
| Asset Management & Custody Banks 2.7% | ||||||||
| 48,500 | Ares Management L.P. | 1,037,900 | ||||||
| 6,500 | Blackstone Group L.P. (The) | 207,675 | ||||||
| 10,094 | KKR & Co. L.P. | 204,908 | ||||||
|
| |||||||
| 1,450,483 | ||||||||
|
| |||||||
78
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Shares | Value | |||||||
| Oil & Gas Storage & Transportation 3.8% | ||||||||
| 30,300 | Golar LNG Partners L.P. | $ | 518,433 | |||||
| 25,771 | Magellan Midstream Partners L.P. | 1,503,738 | ||||||
|
| |||||||
| 2,022,171 | ||||||||
|
| |||||||
| Total Limited Partnership Interest (cost $3,944,772) | 3,472,654 | |||||||
|
| |||||||
| LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST 1.0% | ||||||||
| Asset Management & Custody Banks 1.0% | ||||||||
| 36,500 | Ellington Financial, LLC | 540,565 | ||||||
|
| |||||||
| Total Limited Liability Company Membership Interest (cost $555,461) | 540,565 | |||||||
|
| |||||||
| EXCHANGE-TRADED FUNDS 5.8% | ||||||||
| Asset Management & Custody Banks 5.8% | ||||||||
| 36,500 | iShares 1-3 Year Treasury Bond ETF | 3,049,940 | ||||||
|
| |||||||
| Total Exchange-Traded Funds (cost $3,046,272) | 3,049,940 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 13.3% | ||||||||
| Repurchase Agreement 13.3% | ||||||||
| $7,041,530 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $7,315,000 of United States Treasury Notes 2.250% due 10/31/24; value: $7,182,723; repurchase proceeds: $7,041,749 (cost $7,041,530) | $ | 7,041,530 | |||||
|
| |||||||
| Total Short-Term Investments (cost $7,041,530) | 7,041,530 | |||||||
|
| |||||||
| Total Investments (cost $46,739,282) 99.3%§ | 52,723,870 | |||||||
| Other Assets less Liabilities 0.7% | 365,442 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 53,089,312 | ||||||
|
| |||||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 3.09%.
ADR American Depositary Receipt.
CVR Contingent Value Right.
ETF Exchange-Traded Fund.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch Strategic Income Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Canada | 6.8 | |||
Germany | 0.1 | |||
Netherlands | 2.4 | |||
Singapore | 0.6 | |||
South Africa | 0.5 | |||
Taiwan | 2.4 | |||
United States | 87.2 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
79
Table of Contents
| WASATCH ULTRA GROWTH FUND (WAMCX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 91.9% | ||||||||
| Application Software 9.4% | ||||||||
| 23,872 | HubSpot, Inc.* | $ | 2,585,338 | |||||
| 72,392 | Paylocity Holding Corp.* | 3,708,642 | ||||||
| 16,442 | Ultimate Software Group, Inc. (The)* | 4,006,915 | ||||||
| 47,407 | Zendesk, Inc.* | 2,269,373 | ||||||
|
| |||||||
| 12,570,268 | ||||||||
|
| |||||||
| Automotive Retail 1.2% | ||||||||
| 30,012 | Monro, Inc. | 1,608,643 | ||||||
|
| |||||||
| Biotechnology 12.2% | ||||||||
| 8,071 | Atara Biotherapeutics, Inc.* | 314,769 | ||||||
| 67,318 | Bellicum Pharmaceuticals, Inc.* | 441,606 | ||||||
| 134,601 | ChemoCentryx, Inc.* | 1,830,574 | ||||||
| 96,489 | Cytokinetics, Inc.* | 694,721 | ||||||
| 25,386 | Denali Therapeutics, Inc.* | 499,850 | ||||||
| 16,165 | Esperion Therapeutics, Inc.* | 1,169,215 | ||||||
| 65,177 | Exact Sciences Corp.* | 2,628,588 | ||||||
| 14,120 | Flexion Therapeutics, Inc.* | 316,429 | ||||||
| 335,618 | Idera Pharmaceuticals, Inc.* | 617,537 | ||||||
| 282,361 | Infinity Pharmaceuticals, Inc.* | 592,958 | ||||||
| 242,625 | Inovio Pharmaceuticals, Inc.* | 1,142,764 | ||||||
| 37,945 | MacroGenics, Inc.* | 954,696 | ||||||
| 112,415 | Sangamo Therapeutics Inc.* | 2,135,885 | ||||||
| 31,185 | Seattle Genetics, Inc.* | 1,632,223 | ||||||
| 60,427 | Selecta Biosciences, Inc.* | 615,751 | ||||||
| 67,700 | Unum Therapeutics, Inc.* | 752,147 | ||||||
|
| |||||||
| 16,339,713 | ||||||||
|
| |||||||
| Building Products 3.4% | ||||||||
| 58,325 | AAON, Inc. | 2,274,675 | ||||||
| 21,260 | Trex Co., Inc.* | 2,312,450 | ||||||
|
| |||||||
| 4,587,125 | ||||||||
|
| |||||||
| Communications Equipment 1.2% | ||||||||
| 9,105 | Palo Alto Networks, Inc.* | 1,652,740 | ||||||
|
| |||||||
| Department Stores 1.8% | ||||||||
| 82,194 | V-Mart Retail Ltd. (India) | 2,387,985 | ||||||
|
| |||||||
| Diversified Banks 1.5% | ||||||||
| 734,360 | City Union Bank Ltd. (India) | 1,949,803 | ||||||
|
| |||||||
| Electronic Manufacturing Services 0.9% | ||||||||
| 5,321 | IPG Photonics Corp.* | 1,241,815 | ||||||
|
| |||||||
| Environmental & Facilities Services 2.1% | ||||||||
| 40,156 | Waste Connections, Inc. | 2,880,791 | ||||||
|
| |||||||
| General Merchandise Stores 1.5% | ||||||||
| 34,426 | Ollie’s Bargain Outlet Holdings, Inc.* | 2,075,888 | ||||||
|
| |||||||
| Health Care Equipment 7.9% | ||||||||
| 78,306 | AtriCure, Inc.* | 1,606,839 | ||||||
| 50,151 | Glaukos Corp.* | 1,546,155 | ||||||
| 18,917 | Insulet Corp.* | 1,639,726 | ||||||
| 273,598 | Oxford Immunotec Global plc* | 3,406,295 | ||||||
| 473,639 | Tandem Diabetes Care, Inc.* | 2,349,250 | ||||||
|
| |||||||
| 10,548,265 | ||||||||
|
| |||||||
| Health Care Services 0.9% | ||||||||
| 91,204 | Dr. Lal PathLabs Ltd. (India) | 1,213,024 | ||||||
|
| |||||||
| Health Care Technology 1.5% | ||||||||
| 27,593 | Veeva Systems, Inc., Class A* | 2,014,841 | ||||||
|
| |||||||
| Homebuilding 3.2% | ||||||||
| 22,796 | Installed Building Products, Inc.* | 1,368,900 | ||||||
| 40,503 | LGI Homes, Inc.* | 2,858,296 | ||||||
|
| |||||||
| 4,227,196 | ||||||||
|
| |||||||
| Shares | Value | |||||||
| Industrial Machinery 4.3% | ||||||||
| 26,550 | Barnes Group, Inc. | $ | 1,590,080 | |||||
| 141,860 | Kornit Digital Ltd.* (Israel) | 1,829,994 | ||||||
| 20,126 | Proto Labs, Inc.* | 2,365,811 | ||||||
|
| |||||||
| 5,785,885 | ||||||||
|
| |||||||
| Industrial REITs 1.4% | ||||||||
| 128,506 | Monmouth Real Estate Investment Corp. | 1,932,730 | ||||||
|
| |||||||
| Internet & Direct Marketing Retail 3.2% | ||||||||
| 50,030 | MakeMyTrip Ltd.* (India) | 1,736,041 | ||||||
| 23,328 | Wayfair, Inc., Class A* | 1,575,340 | ||||||
| 5,495 | zooplus AG* (Germany) | 1,001,577 | ||||||
|
| |||||||
| 4,312,958 | ||||||||
|
| |||||||
| Internet Software & Services 4.6% | ||||||||
| 90,695 | Box, Inc., Class A* | 1,863,782 | ||||||
| 30,608 | Cornerstone OnDemand, Inc.* | 1,197,079 | ||||||
| 46,685 | Instructure, Inc.* | 1,967,773 | ||||||
| 49,913 | Reis, Inc. | 1,070,634 | ||||||
|
| |||||||
| 6,099,268 | ||||||||
|
| |||||||
| IT Consulting & Other Services 0.9% | ||||||||
| 20,373 | InterXion Holding N.V.* (Netherlands) | 1,265,367 | ||||||
|
| |||||||
| Managed Health Care 1.7% | ||||||||
| 38,383 | HealthEquity, Inc.* | 2,323,707 | ||||||
|
| |||||||
| Oil & Gas Equipment & Services 1.0% | ||||||||
| 24,950 | Oil States International, Inc.* | 653,690 | ||||||
| 37,371 | Solaris Oilfield Infrastructure, Inc.* | 618,864 | ||||||
|
| |||||||
| 1,272,554 | ||||||||
|
| |||||||
| Packaged Foods & Meats 2.8% | ||||||||
| 228,802 | Freshpet, Inc.* | 3,763,793 | ||||||
|
| |||||||
| Pharmaceuticals 1.2% | ||||||||
| 74,781 | Intra-Cellular Therapies, Inc.* | 1,574,140 | ||||||
|
| |||||||
| Regional Banks 9.1% | ||||||||
| 38,756 | Bank of the Ozarks, Inc. | 1,870,752 | ||||||
| 42,117 | Eagle Bancorp, Inc.* | 2,520,703 | ||||||
| 55,676 | Esquire Financial Holdings, Inc.* | 1,358,494 | ||||||
| 65,887 | Metro Bank plc* (United Kingdom) | 3,245,901 | ||||||
| 27,338 | Pinnacle Financial Partners, Inc. | 1,755,100 | ||||||
| 160,562 | Republic First Bancorp, Inc.* | 1,396,889 | ||||||
|
| |||||||
| 12,147,839 | ||||||||
|
| |||||||
| Restaurants 2.4% | ||||||||
| 44,964 | Chuy’s Holdings, Inc.* | 1,178,057 | ||||||
| 118,225 | Habit Restaurants, Inc. (The)* | 1,040,380 | ||||||
| 69,679 | Zoe’s Kitchen, Inc.* | 1,006,165 | ||||||
|
| |||||||
| 3,224,602 | ||||||||
|
| |||||||
| Semiconductor Equipment 1.2% | ||||||||
| 132,481 | PDF Solutions, Inc.* | 1,544,728 | ||||||
|
| |||||||
| Semiconductors 3.8% | ||||||||
| 63,533 | Inphi Corp.* | 1,912,343 | ||||||
| 18,107 | Monolithic Power Systems, Inc. | 2,096,247 | ||||||
| 13,668 | NVE Corp. | 1,135,948 | ||||||
|
| |||||||
| 5,144,538 | ||||||||
|
| |||||||
| Specialty Chemicals 1.6% | ||||||||
| 19,176 | Balchem Corp. | 1,567,638 | ||||||
| 411,433 | EcoSynthetix, Inc.* (Canada) | 616,343 | ||||||
|
| |||||||
| 2,183,981 | ||||||||
|
| |||||||
| Specialty Stores 1.2% | ||||||||
| 22,232 | Five Below, Inc.* | 1,630,495 | ||||||
|
| |||||||
| Systems Software 1.7% | ||||||||
| 30,534 | Qualys, Inc.* | 2,221,348 | ||||||
|
| |||||||
80
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Shares | Value | |||||||
| Trucking 1.1% | ||||||||
| 31,152 | Knight-Swift Transportation Holdings, Inc. | $ | 1,433,304 | |||||
|
| |||||||
| Total Common Stocks (cost $86,934,561) | 123,159,334 | |||||||
|
| |||||||
| LIMITED PARTNERSHIP INTEREST 2.1% | ||||||||
| Asset Management & Custody Banks 2.1% | ||||||||
| Greenspring Global Partners II-B, L.P.* *** † | 1,757,409 | |||||||
| Greenspring Global Partners III-B, L.P.* *** † | 1,055,562 | |||||||
|
| |||||||
| 2,812,971 | ||||||||
|
| |||||||
| Total Limited Partnership Interest (cost $2,513,851) | 2,812,971 | |||||||
|
| |||||||
| PREFERRED STOCKS 0.9% | ||||||||
| Biotechnology 0.1% | ||||||||
| 169,492 | Nanosys, Inc., Series D Pfd.* *** † | 76,407 | ||||||
| 40,380 | Nanosys, Inc., Series E Pfd.* *** † | 47,265 | ||||||
|
| |||||||
| 123,672 | ||||||||
|
| |||||||
| Oil & Gas Equipment & Services 0.8% | ||||||||
| 435,920 | Drilling Info Holdings, Inc., 0.49%, Series B Pfd.*** † | 1,150,000 | ||||||
|
| |||||||
| Total Preferred Stocks (cost $1,466,790) | 1,273,672 | |||||||
|
| |||||||
| WARRANTS 0.2% | ||||||||
| Health Care Equipment 0.2% | ||||||||
| 60,000 | Tandem Diabetes Care, Inc., expiring 4/17/2018* *** † | 87,798 | ||||||
| 60,000 | Tandem Diabetes Care, Inc., expiring 10/17/2022* *** † | 155,636 | ||||||
|
| |||||||
| 243,434 | ||||||||
|
| |||||||
| Total Warrants (cost $64,989) | 243,434 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 6.4% | ||||||||
| Repurchase Agreement 6.4% | ||||||||
| $8,560,764 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $9,025,000 of United States Treasury Notes 2.000% due 5/31/24; value: $8,732,888; repurchase proceeds: $8,561,030 (cost $8,560,764) | $ | 8,560,764 | |||||
|
| |||||||
| Total Short-Term Investments (cost $8,560,764) | 8,560,764 | |||||||
|
| |||||||
| Total Investments (cost $99,540,955) 101.5%§ | 136,050,175 | |||||||
| Liabilities less Other Assets (1.5%) | (2,022,623 | ) | ||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 134,027,552 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 7.31%.
See Notes to Financial Statements.
|
| |||||||
At March 31, 2018, Wasatch Ultra Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Canada | 0.5 | |||
Germany | 0.8 | |||
India | 5.7 | |||
Israel | 1.4 | |||
Netherlands | 1.0 | |||
United Kingdom | 2.6 | |||
United States | 88.0 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
81
Table of Contents
| WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | ||
| ||
| ||
Schedule of Investments
| Shares | Value | |||||||
| COMMON STOCKS 82.9% | ||||||||
| Aerospace & Defense 2.2% | ||||||||
| 260,120 | Avon Rubber plc (United Kingdom) | $ | 4,634,847 | |||||
|
| |||||||
| Agricultural Products 3.7% | ||||||||
| 16,800 | Kaneko Seeds Co. Ltd. (Japan) | 248,515 | ||||||
| 8,000,000 | PT BISI International Tbk (Indonesia) | 1,147,630 | ||||||
| 34,000 | Sakata Seed Corp. (Japan) | 1,203,045 | ||||||
| 60,000 | Vilmorin & Cie S.A. (France) | 5,221,864 | ||||||
|
| |||||||
| 7,821,054 | ||||||||
|
| |||||||
| Airport Services 0.4% | ||||||||
| 73,800 | AGP Corp. (Japan) | 817,033 | ||||||
|
| |||||||
| Alternative Carriers 3.9% | ||||||||
| 850,000 | Gamma Communications plc (United Kingdom) | 8,347,854 | ||||||
|
| |||||||
| Application Software 0.6% | ||||||||
| 1,000,000 | EVR Holdings plc* (United Kingdom) | 162,748 | ||||||
| 165,000 | Tracsis plc (United Kingdom) | 1,197,918 | ||||||
|
| |||||||
| 1,360,666 | ||||||||
|
| |||||||
| Biotechnology 1.7% | ||||||||
| 3,999,000 | BBI Life Sciences Corp. (China) | 1,730,265 | ||||||
| 54,063 | Bioventix plc (United Kingdom) | 1,972,111 | ||||||
|
| |||||||
| 3,702,376 | ||||||||
|
| |||||||
| Broadcasting 1.0% | ||||||||
| 20,000,000 | PT Media Nusantara Citra Tbk (Indonesia) | 2,067,689 | ||||||
|
| |||||||
| Computer & Electronics Retail 1.8% | ||||||||
| 9,491,636 | GAME Digital plc‡‡ (United Kingdom) | 3,810,408 | ||||||
|
| |||||||
| Construction Machinery & Heavy Trucks 0.3% | ||||||||
| 31,900 | Morita Holdings Corp. (Japan) | 603,793 | ||||||
|
| |||||||
| Consumer Electronics 5.2% | ||||||||
| 90,000 | Roku, Inc.* | 2,799,000 | ||||||
| 150,000 | Sony Corp. (Japan) | 7,254,358 | ||||||
| 561,318 | Sprue Aegis plc (United Kingdom) | 1,098,604 | ||||||
|
| |||||||
| 11,151,962 | ||||||||
|
| |||||||
| Electrical Components & Equipment 2.3% | ||||||||
| 300,000 | Enphase Energy, Inc.* | 1,371,000 | ||||||
| 1,000,000 | FineTek Co. Ltd. (Taiwan) | 3,566,897 | ||||||
|
| |||||||
| 4,937,897 | ||||||||
|
| |||||||
| Electronic Equipment & Instruments 3.9% | ||||||||
| 10,000 | Barco N.V. (Belgium) | 1,232,802 | ||||||
| 1,000,000 | Catapult Group International Ltd.* (Australia) | 925,814 | ||||||
| 1,819,126 | Eroad Ltd.* (New Zealand) | 5,054,195 | ||||||
| 4,000 | V Technology Co. Ltd. (Japan) | 1,146,563 | ||||||
|
| |||||||
| 8,359,374 | ||||||||
|
| |||||||
| Fertilizers & Agricultural Chemicals 1.0% | ||||||||
| 45,000 | Nutrien Ltd. (Canada) | 2,126,700 | ||||||
|
| |||||||
| Financial Exchanges & Data 0.4% | ||||||||
| 260,415 | Infront ASA* (Norway) | 930,196 | ||||||
|
| |||||||
| Food Distributors 1.9% | ||||||||
| 117,000 | Kato Sangyo Co. Ltd. (Japan) | 4,095,907 | ||||||
|
| |||||||
| Food Retail 2.1% | ||||||||
| 800,000 | Majestic Wine plc (United Kingdom) | 4,467,154 | ||||||
|
| |||||||
| Shares | Value | |||||||
| Health Care Facilities 1.2% | ||||||||
| 90,000 | Japan Animal Referral Medical Center Co. Ltd.* (Japan) | $ | 2,592,453 | |||||
|
| |||||||
| Health Care Services 3.3% | ||||||||
| 180,000 | Miraca Holdings, Inc. (Japan) | 7,028,805 | ||||||
|
| |||||||
| Health Care Supplies 9.8% | ||||||||
| 800,000 | Advanced Medical Solutions Group plc (United Kingdom) | 3,549,538 | ||||||
| 100,000 | Guerbet (France) | 7,961,009 | ||||||
| 159,400 | Menicon Co. Ltd. (Japan) | 3,960,844 | ||||||
| 60,000 | Sartorius Stedim Biotech (France) | 5,416,600 | ||||||
|
| |||||||
| 20,887,991 | ||||||||
|
| |||||||
| Health Care Technology 3.8% | ||||||||
| 50,000 | Cegedim S.A.* (France) | 2,307,093 | ||||||
| 125,000 | Computer Programs and Systems, Inc. | 3,650,000 | ||||||
| 70,000 | Nexus AG (Germany) | 2,188,930 | ||||||
|
| |||||||
| 8,146,023 | ||||||||
|
| |||||||
| Home Entertainment Software 5.0% | ||||||||
| 11,000 | Nintendo Co. Ltd. (Japan) | 4,844,321 | ||||||
| 50,000 | Square Enix Holdings Co. Ltd. (Japan) | 2,288,426 | ||||||
| 37,079 | Take-Two Interactive Software, Inc.* | 3,625,585 | ||||||
|
| |||||||
| 10,758,332 | ||||||||
|
| |||||||
| Home Improvement Retail 0.5% | ||||||||
| 800,000 | Italtile Ltd. (South Africa) | 1,003,484 | ||||||
|
| |||||||
| Household Appliances 2.1% | ||||||||
| 48,000 | SodaStream International Ltd.* (Israel) | 4,407,840 | ||||||
|
| |||||||
| Hypermarkets & Super Centers 2.6% | ||||||||
| 30,000 | Costco Wholesale Corp. | 5,652,900 | ||||||
|
| |||||||
| Industrial Machinery 2.8% | ||||||||
| 250,000 | Golden Friends Corp. (Taiwan) | 514,456 | ||||||
| 50,000 | Sansei Technologies, Inc. (Japan) | 566,233 | ||||||
| 3,300,000 | Skellerup Holdings Ltd. (New Zealand) | 4,351,972 | ||||||
| 250,000 | Yungtay Engineering Co. Ltd. (Taiwan) | 483,589 | ||||||
|
| |||||||
| 5,916,250 | ||||||||
|
| |||||||
| Internet & Direct Marketing Retail 0.1% | ||||||||
| 200,000 | AO World plc* (United Kingdom) | 324,374 | ||||||
|
| |||||||
| Internet Software & Services 0.9% | ||||||||
| 2,500,000 | nearmap Ltd.* (Australia) | 1,857,020 | ||||||
|
| |||||||
| Leisure Facilities 0.9% | ||||||||
| 2,000,000 | Goals Soccer Centres plc* (United Kingdom) | 2,034,351 | ||||||
|
| |||||||
| Leisure Products 5.0% | ||||||||
| 148,000 | Bandai Namco Holdings, Inc. (Japan) | 4,861,238 | ||||||
| 2,500,000 | Photo-Me International plc (United Kingdom) | 5,773,348 | ||||||
|
| |||||||
| 10,634,586 | ||||||||
|
| |||||||
| Movies & Entertainment 3.5% | ||||||||
| 82,577 | AFC Ajax N.V. (Netherlands) | 1,067,123 | ||||||
| 160,000 | Borussia Dortmund GmbH & Co. KGaA (Germany) | 1,007,225 | ||||||
| 3,300 | Celtic plc* (United Kingdom) | 6,065 | ||||||
| 2,300,000 | Juventus Football Club S.p.A.* (Italy) | 1,829,450 | ||||||
| 110,000 | Toho Co. Ltd. (Japan) | 3,649,265 | ||||||
|
| |||||||
| 7,559,128 | ||||||||
|
| |||||||
| Packaged Foods & Meats 0.5% | ||||||||
| 1,500,000 | Juhayna Food Industries (Egypt) | 977,863 | ||||||
|
| |||||||
| Pharmaceuticals 0.0% | ||||||||
| 25,623 | SwedenCare AB* (Sweden) | 104,795 | ||||||
|
| |||||||
82
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Shares | Value | |||||||
| Publishing 3.0% | ||||||||
| 200,000 | New York Times Co. (The) | $ | 4,820,000 | |||||
| 106,882 | Proto Corp. (Japan) | 1,672,464 | ||||||
|
| |||||||
| 6,492,464 | ||||||||
|
| |||||||
| Research & Consulting Services 1.0% | ||||||||
| 400,000 | Sporton International, Inc. (Taiwan) | 2,195,013 | ||||||
|
| |||||||
| Semiconductor Equipment 0.2% | ||||||||
| 220,200 | Micro-Mechanics Holdings Ltd. (Singapore) | 342,918 | ||||||
|
| |||||||
| Specialty Chemicals 0.2% | ||||||||
| 405,280 | Polygiene AB* (Sweden) | 469,997 | ||||||
|
| |||||||
| Specialty Stores 1.8% | ||||||||
| 30,400 | Fenix Outdoor International AG (Switzerland) | 3,779,992 | ||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 1.3% | ||||||||
| 100,000 | Mimaki Engineering Co. Ltd. (Japan) | 742,446 | ||||||
| 87,000 | Roland DG Corp. (Japan) | 2,002,378 | ||||||
|
| |||||||
| 2,744,824 | ||||||||
|
| |||||||
| Wireless Telecommunication Services 1.0% | ||||||||
| 8,000,000 | PT Sarana Menara Nusantara Tbk (Indonesia) | 2,080,262 | ||||||
|
| |||||||
| Total Common Stocks (cost $155,420,547) | 177,226,575 | |||||||
|
| |||||||
| RIGHTS 0.0% | ||||||||
| Personal Products 0.0% | ||||||||
| 19,023 | Herbalife Ltd. CVR* *** † | 74,515 | ||||||
|
| |||||||
| Total Rights (cost $0) | 74,515 | |||||||
|
| |||||||
| LIMITED PARTNERSHIP INTEREST 0.1% | ||||||||
| Asset Management & Custody Banks 0.1% | ||||||||
| Greenspring Global Partners II-B, L.P.* *** † | 195,270 | |||||||
|
| |||||||
| Total Limited Partnership Interest (cost $196,712) | 195,270 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 15.8% | ||||||||
| Repurchase Agreement 15.8% | ||||||||
| $33,811,282 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $35,645,000 of United States Treasury Notes 2.000% due 5/31/24; value: $34,491,278; repurchase proceeds: $33,812,334 (cost $33,811,282) | $ | 33,811,282 | |||||
|
| |||||||
| Total Short-Term Investments (cost $33,811,282) | 33,811,282 | |||||||
|
| |||||||
| Total Investments (cost $189,428,541) 98.8%§ | 211,307,642 | |||||||
| Other Assets less Liabilities 1.2% | 2,643,228 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 213,950,870 | ||||||
|
| |||||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
‡‡Affiliated company (see Note 8).
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 41.50%.
CVR Contingent Value Right.
See Notes to Financial Statements. |
| |||||||
At March 31, 2018, Wasatch World Innovators Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Australia | 1.6 | |||
Belgium | 0.7 | |||
Canada | 1.2 | |||
China | 1.0 | |||
Egypt | 0.5 | |||
France | 11.8 | |||
Germany | 1.8 | |||
Indonesia | 3.0 | |||
Israel | 2.5 | |||
Italy | 1.0 | |||
Japan | 27.9 | |||
Netherlands | 0.6 | |||
New Zealand | 5.3 | |||
Norway | 0.5 | |||
Singapore | 0.2 | |||
South Africa | 0.6 | |||
Sweden | 0.3 | |||
Switzerland | 2.1 | |||
Taiwan | 3.8 | |||
United Kingdom | 21.1 | |||
United States | 12.5 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
83
Table of Contents
| WASATCH-1ST SOURCE INCOME FUND (FMEQX) | ||
| ||
| ||
Schedule of Investments
| Principal Amount | Value | |||||||
| CORPORATE BONDS 52.5% | ||||||||
| Automobile Manufacturers 1.4% | ||||||||
| $1,250,000 | Ford Motor Credit Co., LLC, 5.75%, 2/1/21 | $ | 1,322,369 | |||||
|
| |||||||
| Biotechnology 1.0% | ||||||||
| 1,000,000 | Roche Holdings, Inc., 2.25%, 9/30/19† | 994,865 | ||||||
|
| |||||||
| Computer Services 1.4% | ||||||||
| 1,350,000 | Apple, Inc., 1.70%, 2/22/19 | 1,342,444 | ||||||
|
| |||||||
| Diversified Banks 10.5% | ||||||||
| 1,100,000 | Bank of America Corp., 4.00%, 4/1/24 MTN | 1,124,044 | ||||||
| 1,200,000 | Citigroup, Inc., 3-month LIBOR + 0.550%, 2.494%, 8/25/36††† | 1,050,000 | ||||||
| 1,000,000 | Fulton Financial Corp., 3.60%, 3/16/22 | 990,245 | ||||||
| 1,000,000 | HSBC Holdings plc, 3-month LIBOR + 2.240%, 4.287%, 3/8/21††† (United Kingdom) | 1,050,396 | ||||||
| 1,250,000 | PNC Bank NA, 3.80%, 7/25/23 | 1,265,923 | ||||||
| 1,250,000 | Royal Bank of Canada, 2.20%, 9/23/19 (Canada) | 1,242,775 | ||||||
| 1,100,000 | Societe Generale S.A., 5.20%, 4/15/21† (France) | 1,160,180 | ||||||
| 1,125,000 | US Bancorp, 3.00%, 3/15/22 MTN | 1,118,423 | ||||||
| 1,150,000 | USB Capital IX, 3-month LIBOR + 1.020%, 3.50%, 4/30/18††† §§§ | 1,038,508 | ||||||
|
| |||||||
| 10,040,494 | ||||||||
|
| |||||||
| Diversified Financial Services 4.0% | ||||||||
| 1,600,000 | General Electric Co., 4.65%, 10/17/21 MTN | 1,670,553 | ||||||
| 1,250,000 | General Electric Co., 3-month LIBOR + 3.330%, 5.00%, 1/21/21, Series D††† §§§ | 1,237,500 | ||||||
| 880,000 | General Electric Co., 5.50%, 1/8/20 MTN | 915,262 | ||||||
|
| |||||||
| 3,823,315 | ||||||||
|
| |||||||
| E-Commerce/Products 1.3% | ||||||||
| 1,250,000 | Alibaba Group Holding Ltd., 3.125%, 11/28/21 (Cayman Islands) | 1,247,195 | ||||||
|
| |||||||
| Enterprise Software & Services 1.2% | ||||||||
| 1,100,000 | CA, Inc., 3.60%, 8/15/22 | 1,109,735 | ||||||
|
| |||||||
| Insurance 5.1% | ||||||||
| 1,000,000 | Allstate Corp. (The), 3-month LIBOR + 1.935%, 3.774%, 5/15/67††† | 985,000 | ||||||
| 1,150,000 | Aspen Insurance Holdings Ltd., 4.65%, 11/15/23 (Bermuda) | 1,188,515 | ||||||
| 1,421,000 | Athene Global Funding, 4.00%, 1/25/22† | 1,438,574 | ||||||
| 1,275,000 | Lincoln National Corp., 3-month LIBOR + 2.358%, 4.242%, 5/17/66††† | 1,230,579 | ||||||
|
| |||||||
| 4,842,668 | ||||||||
|
| |||||||
| Integrated Telecommunication Services 2.5% | ||||||||
| 1,000,000 | Crown Castle Towers, LLC, 4.883%, 8/15/40† | 1,034,972 | ||||||
| 1,250,000 | Verizon Communications, Inc., 5.15%, 9/15/23 | 1,348,611 | ||||||
|
| |||||||
| 2,383,583 | ||||||||
|
| |||||||
| Internet & Direct Marketing Retail 1.1% | ||||||||
| 1,000,000 | eBay, Inc., 3-month LIBOR + 0.870%, 2.637%, 1/30/23††† | 1,007,156 | ||||||
|
| |||||||
| Principal Amount | Value | |||||||
| Investment Banking & Brokerage 7.0% | ||||||||
| $ 1,820,000 | Goldman Sachs Group, Inc. (The), 3-month LIBOR + 1.750%, 3.51%, 10/28/27 MTN††† | $ | 1,905,813 | |||||
| 1,250,000 | JPMorgan Chase & Co., 3-month LIBOR + 1.230%, 2.971%, 10/24/23††† | 1,268,372 | ||||||
| 1,000,000 | JPMorgan Chase & Co., 3.25%, 9/23/22 | 997,040 | ||||||
| 1,250,000 | Morgan Stanley, 3-month LIBOR + 1.400%, 3.141%, 10/24/23 MTN††† | 1,278,362 | ||||||
| 1,200,000 | Morgan Stanley, 4.875%, 11/1/22 | 1,257,433 | ||||||
|
| |||||||
| 6,707,020 | ||||||||
|
| |||||||
| Office Furnishings 1.4% | ||||||||
| 1,250,000 | Steelcase, Inc., 6.375%, 2/15/21 | 1,345,317 | ||||||
|
| |||||||
| Oil & Gas Refining & Marketing 1.0% | ||||||||
| 1,000,000 | Phillips 66, 3-month LIBOR + 0.750%, 2.472%, 4/15/20† ††† | 1,001,069 | ||||||
|
| |||||||
| Oil Companies—Integrated 1.6% | ||||||||
| 1,500,000 | BP Capital Markets plc, 3.245%, 5/6/22 (United Kingdom) | 1,502,821 | ||||||
|
| |||||||
| Pharmaceuticals 0.8% | ||||||||
| 575,000 | Pharmacia, LLC, 6.75%, 12/15/27 | 718,217 | ||||||
|
| |||||||
| Pipelines 1.0% | ||||||||
| 1,000,000 | Enterprise Products Operating, LLC, 3-month LIBOR + 2.778%, 4.784%, 6/1/67††† | 996,250 | ||||||
|
| |||||||
| Property & Casualty Insurance 1.0% | ||||||||
| 1,000,000 | XLIT Ltd., 3-month LIBOR + 2.458%, 4.179%, 4/30/18, Series E††† §§§ (Cayman Islands) | 992,500 | ||||||
|
| |||||||
| Residential REITs 2.5% | ||||||||
| 1,200,000 | AvalonBay Communities, Inc., 4.20%, 12/15/23 MTN | 1,245,099 | ||||||
| 1,055,000 | EPR Properties, 5.75%, 8/15/22 | 1,127,184 | ||||||
|
| |||||||
| 2,372,283 | ||||||||
|
| |||||||
| Semiconductor Equipment 1.1% | ||||||||
| 1,000,000 | Applied Materials, Inc., 4.30%, 6/15/21 | 1,038,614 | ||||||
|
| |||||||
| Semiconductors 1.5% | ||||||||
| 1,400,000 | QUALCOMM, Inc., 3-month LIBOR + 0.730%, 2.497%, 1/30/23††† | 1,388,021 | ||||||
|
| |||||||
| Super-Regional Banks—U.S. 1.3% | ||||||||
| 1,250,000 | Wells Fargo & Co., 4.125%, 8/15/23 | 1,267,739 | ||||||
|
| |||||||
| Technology Hardware, Storage & Peripherals 1.7% | ||||||||
| 1,600,000 | Dell International, LLC / EMC Corp., 4.42%, 6/15/21† | 1,641,229 | ||||||
|
| |||||||
| Trucking & Leasing 1.1% | ||||||||
| 1,000,000 | Aviation Capital Group Corp., 6.75%, 4/6/21† | 1,100,100 | ||||||
|
| |||||||
| Total Corporate Bonds (cost $50,387,669) | 50,185,004 | |||||||
|
| |||||||
84
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Principal Amount | Value | |||||||
| ASSET-BACKED SECURITIES 16.7% | ||||||||
| $ 995,000 | Applebee’s Funding, LLC / IHOP Funding, LLC, 4.277%, 9/5/44, Series 2014-1, Class A2† | $ | 976,613 | |||||
| 1,000,000 | Avis Budget Rental Car Funding AESOP, LLC, 2.50%, 7/20/21, Series 2015-1A, Class A† | 989,157 | ||||||
| 2,000,000 | Citibank Credit Card Issuance Trust, 1-month LIBOR + 0.770%, 2.535%, 5/14/29, Series 2017-A6, Class A6††† | 2,019,753 | ||||||
| 1,951,852 | Cronos Containers Program I Ltd., 3.27%, 11/18/29, Series 2014-2A, Class A† (Bermuda) | 1,936,622 | ||||||
| 1,393,000 | Domino’s Pizza Master Issuer, LLC, 3-month LIBOR + 1.250%, 2.995%, 7/25/47, Series 2017-1A, Class A2I† ††† | 1,404,534 | ||||||
| 1,050,000 | Element Rail Leasing I, LLC, 3.668%, 4/19/44, Series 2014-1A, Class A2† | 1,052,485 | ||||||
| 1,268,675 | Fairway Outdoor Funding, LLC, 4.212%, 10/15/42, Series 2012-1A, Class A2† | 1,272,874 | ||||||
| 918,728 | Global SC Finance IV Ltd., 3.85%, 4/15/37, Series 2017-1A, Class A† | 914,268 | ||||||
| 1,000,000 | Hertz Vehicle Financing, LLC 2016-2, 2.95%, 3/25/22, Series 2016-2A, Class A† | 989,817 | ||||||
| 955,000 | HOA Funding, LLC, 5.50%, 8/20/44, Series 2015-1A, Class A2† | 929,530 | ||||||
| 1,000,000 | Scala Funding Co., LLC, 3.91%, 2/15/21, Series 2016-1, Class A*** † | 968,438 | ||||||
| 1,130,014 | Shenton Aircraft Investment I Ltd., 4.75%, 10/15/42, Series 2015-1A, Class A† (Cayman Islands) | 1,162,662 | ||||||
| 1,278,975 | Spirit Master Funding, LLC, 5.37%, 7/20/40, Series 2014-1A, Class A2† | 1,314,093 | ||||||
|
| |||||||
| Total Asset-Backed Securities (cost $16,097,464) | 15,930,846 | |||||||
|
| |||||||
| MORTGAGE-BACKED SECURITIES 10.9% | ||||||||
| 896,591 | Federal Home Loan Mortgage Corp., 12-month LIBOR + 1.816%, 2.693%, 1/1/43, Series 840522††† | 934,770 | ||||||
| 1,297,905 | Federal Home Loan Mortgage Corp., 3.50%, 2/1/32, Series G18637 | 1,324,650 | ||||||
| 1,000,000 | Federal National Mortgage Assoc., 2.42%, 4/1/22, Series AM8263 | 978,483 | ||||||
| 1,617,432 | Federal National Mortgage Assoc., 3.00%, 3/1/29, Series AL4936 | 1,621,126 | ||||||
| 1,477,477 | Federal National Mortgage Assoc., 3.003%, 3/1/48, Series BM3571††† | 1,474,772 | ||||||
| 851,165 | Federal National Mortgage Assoc., 12-month LIBOR + 1.455%, 3.07%, 4/1/44, Series AL9804††† | 876,241 | ||||||
| 987,915 | Federal National Mortgage Assoc., 12-month LIBOR + 1.600%, 3.112%, 5/1/47, Series BH0393††† | 988,198 | ||||||
| 1,067,487 | Federal National Mortgage Assoc., 3.50%, 9/1/32, Series AP8284 | 1,086,285 | ||||||
| 1,154,786 | Government National Mortgage Assoc., 3.87%, 10/15/36, Series AO0029 | 1,184,870 | ||||||
|
| |||||||
| Total Mortgage-Backed Securities (cost $10,675,165) | 10,469,395 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| U.S. TREASURY NOTES 7.0% | ||||||||
| $ 1,500,000 | U.S. Treasury Note, 1.816%, 10/31/19††† | $ | 1,500,889 | |||||
| 1,100,000 | U.S. Treasury Note, 2.625%, 8/15/20 | 1,106,918 | ||||||
| 2,500,000 | U.S. Treasury Note, 3.625%, 8/15/19 | 2,546,680 | ||||||
| 1,500,000 | U.S. Treasury Note, 3.625%, 2/15/20 | 1,536,797 | ||||||
|
| |||||||
| Total U.S. Treasury Notes (cost $6,766,210) | 6,691,284 | |||||||
|
| |||||||
| MUNICIPAL BONDS 3.2% | ||||||||
| 500,000 | Iowa Student Loan Liquidity Corp., 2.86%, 12/1/22, Series A-2 | 490,370 | ||||||
| 1,325,000 | Municipal Electric Authority of Georgia, 4.03%, 1/1/20, Series A | 1,339,045 | ||||||
| 1,200,000 | State of New York Mortgage Agency, 3.653%, 4/1/23, Series 172 | 1,224,612 | ||||||
|
| |||||||
| Total Municipal Bonds (cost $3,077,162) | 3,054,027 | |||||||
|
| |||||||
| U.S. GOVERNMENT AGENCY SECURITIES 2.2% | ||||||||
| 1,000,000 | Federal Farm Credit Banks, 4.95%, 12/16/19 | 1,044,431 | ||||||
| 1,000,000 | Tennessee Valley Authority, 3.875%, 2/15/21 | 1,038,464 | ||||||
|
| |||||||
| Total U.S. Government Agency Securities (cost $2,123,332) | 2,082,895 | |||||||
|
| |||||||
| COMMERCIAL MORTGAGE-BACKED SECURITIES 2.8% | ||||||||
| Agency Collat PAC 2.8% | ||||||||
| 1,600,000 | Citigroup Commercial Mortgage Trust 2012-GC8, Series 2012-GC8, Class B† | 1,634,419 | ||||||
| 1,000,000 | GS Mortgage Securities Trust 2013-GC13, Series 2013-GC13, Class AS† ††† | 1,029,367 | ||||||
|
| |||||||
| 2,663,786 | ||||||||
|
| |||||||
| Total Commercial Mortgage-Backed Securities (cost $2,734,698) | 2,663,786 | |||||||
|
| |||||||
| U.S. TREASURY INFLATION-PROTECTED SECURITIES 2.1% | ||||||||
| 905,250 | Treasury Inflation-Protected Security, 2.00%, 1/15/26 | 999,607 | ||||||
| 981,138 | Treasury Inflation-Protected Security, 2.125%, 1/15/19 | 998,372 | ||||||
|
| |||||||
| Total U.S. Treasury Inflation-Protected Securities (cost $2,013,034) | 1,997,979 | |||||||
|
| |||||||
85
Table of Contents
| WASATCH -1ST SOURCE INCOME FUND (FMEQX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments (continued)
| Principal Amount | Value | |||||||
| U.S. TREASURY BONDS 1.2% | ||||||||
| Sovereign 1.2% | ||||||||
| $ 1,100,000 | U.S. Treasury Bond, 3.75%, 11/15/18 | $ | 1,111,430 | |||||
|
| |||||||
| Total U.S. Treasury Bonds (cost $1,113,049) | 1,111,430 | |||||||
|
| |||||||
| FOREIGN BONDS 1.0% | ||||||||
| Diversified Banks 1.0% | ||||||||
| 1,000,000 | Export-Import Bank of Korea, 2.625%, 12/30/2020 (Korea) | 984,347 | ||||||
|
| |||||||
| Total Foreign Bonds (cost $1,000,324) | 984,347 | |||||||
|
| |||||||
| Total Investments (cost $95,988,107) 99.6% | 95,170,993 | |||||||
| Other Assets less Liabilities 0.4% | 367,186 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 95,538,179 | ||||||
|
| |||||||
†Liquid security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933.
***Security was fair valued under procedures adopted by the Board of Trustees (see Note 12).
†††Variable rate securities.
§§§Perpetual maturity. Callable any time after first call date. Maturity date is next call date.
LIBOR London Interbank Offered Rate.
MTN Medium Term Note.
See Notes to Financial Statements.
|
| |||||||
At March 31, 2018, Wasatch-1st Source Income Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | |||
Bermuda | 3.3 | |||
Canada | 1.3 | |||
Cayman Islands | 3.6 | |||
France | 1.2 | |||
Korea | 1.0 | |||
United Kingdom | 2.7 | |||
United States | 86.9 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
| |||
86
Table of Contents
| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Schedule of Investments
| Principal Amount | Value | |||||||
| U.S. GOVERNMENT OBLIGATIONS 98.4% | ||||||||
| $ | 129,800,000 | U.S. Treasury Bond, 2.25%, 8/15/46 | $ | 111,805,461 | ||||
| 58,250,000 | U.S. Treasury Bond, 2.50%, 2/15/45 | 53,187,256 | ||||||
| 8,000,000 | U.S. Treasury Bond, 3.125%, 8/15/44 | 8,238,125 | ||||||
| 14,100,000 | U.S. Treasury Bond, 3.75%, 11/15/43 | 16,105,395 | ||||||
| 39,000,000 | U.S. Treasury Strip, principal only, 8/15/40 | 20,324,944 | ||||||
| 81,000,000 | U.S. Treasury Strip, principal only, 5/15/44 | 37,212,738 | ||||||
| 175,700,000 | U.S. Treasury Strip, principal only, 8/15/45 | 77,438,038 | ||||||
|
| |||||||
| Total U.S. Government Obligations (cost $348,381,753) | 324,311,957 | |||||||
|
| |||||||
| Principal Amount | Value | |||||||
| SHORT-TERM INVESTMENTS 1.5% | ||||||||
| Repurchase Agreement 1.5% | ||||||||
| $ 5,098,090 | Repurchase Agreement dated 3/29/18, 0.28% due 4/2/18 with Fixed Income Clearing Corp. collateralized by $5,375,000 of United States Treasury Notes 2.000% due 5/31/24; value: $5,201,027; repurchase proceeds: $5,098,249 (cost $5,098,090) | $ | 5,098,090 | |||||
|
| |||||||
| Total Short-Term Investments (cost $5,098,090) | 5,098,090 | |||||||
|
| |||||||
| Total Investments (cost $353,479,843) 99.9% | 329,410,047 | |||||||
| Other Assets less Liabilities 0.1% | 380,550 | |||||||
|
| |||||||
| NET ASSETS 100.0% | $ | 329,790,597 | ||||||
|
| |||||||
| See Notes to Financial Statements. | ||||||||
87
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Assets and Liabilities
| CORE GROWTH FUND | EMERGING INDIA FUND | EMERGING MARKETS SELECT FUND | ||||||||||
Assets: |
| |||||||||||
Investments, at cost |
| |||||||||||
Unaffiliated issuers | $ | 1,053,825,099 | $ | 199,114,536 | $ | 36,681,109 | ||||||
Repurchase agreements | 24,177,779 | — | — | |||||||||
|
|
|
|
|
| |||||||
| $ | 1,078,002,878 | $ | 199,114,536 | $ | 36,681,109 | |||||||
|
|
|
|
|
| |||||||
Investments, at market value |
| |||||||||||
Unaffiliated issuers | $ | 1,721,902,139 | $ | 254,971,314 | $ | 48,642,336 | ||||||
Repurchase agreements | 24,177,779 | — | — | |||||||||
|
|
|
|
|
| |||||||
| 1,746,079,918 | 254,971,314 | 48,642,336 | ||||||||||
Cash | 1,970,168 | — | — | |||||||||
Foreign currency on deposit (cost of $1, $2,443,559, $1, $28,904, $172,357, $5,714, $0 and $1,227,081, respectively) | 1 | 2,437,536 | 1 | |||||||||
Receivable for investment securities sold | 8,361,911 | 373,481 | — | |||||||||
Receivable from broker for securities options written | — | — | — | |||||||||
Capital shares receivable | 1,002,394 | 239,451 | 24,500 | |||||||||
Interest and dividends receivable | 621,981 | 29,721 | 64,676 | |||||||||
Prepaid expenses and other assets | 77,721 | 45,599 | 20,997 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 1,758,114,094 | 258,097,102 | 48,752,510 | |||||||||
|
|
|
|
|
| |||||||
Liabilities: |
| |||||||||||
Call options written at value (premiums of $0, $0, $0, $0, $0, $0, $31,963 and $0, respectively) | — | — | — | |||||||||
Bank overdraft | — | — | — | |||||||||
Payable for securities purchased | 2,388,614 | — | — | |||||||||
Capital shares payable | 854,942 | 379,654 | 22,572 | |||||||||
Dividends payable to shareholders | — | — | — | |||||||||
Payable to Advisor | 1,488,887 | 268,769 | 32,717 | |||||||||
Accrued fund administration fees | 24,374 | 2,539 | 41 | |||||||||
Accrued expenses and other liabilities | 321,453 | 61,385 | 33,823 | |||||||||
Foreign capital gains taxes payable | 171,815 | 1,985,563 | 44,425 | |||||||||
Line of credit payable | — | 743,824 | 146,400 | |||||||||
Other payables | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 5,250,085 | 3,441,734 | 279,978 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 1,752,864,009 | $ | 254,655,368 | $ | 48,472,532 | ||||||
|
|
|
|
|
| |||||||
Net Assets Consist of: |
| |||||||||||
Capital stock | $ | 245,859 | $ | 597,099 | $ | 42,683 | ||||||
Paid-in-capital in excess of par | 1,007,784,891 | 197,884,866 | 44,092,382 | |||||||||
Undistributed net investment income (loss) | (12,978,292 | ) | (4,043,483 | ) | (369,457 | ) | ||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | 89,905,895 | 6,353,312 | (7,209,813 | ) | ||||||||
Unrealized Appreciation (depreciation) on: | ||||||||||||
Investments | 667,905,225 | 53,871,215 | 11,916,802 | |||||||||
Options Written | — | — | — | |||||||||
Foreign currency translations | 431 | (7,641 | ) | (65 | ) | |||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 1,752,864,009 | $ | 254,655,368 | $ | 48,472,532 | ||||||
|
|
|
|
|
| |||||||
Net Assets |
| |||||||||||
Investor Class | 1,281,052,133 | 225,213,867 | 15,788,907 | |||||||||
Institutional Class | 471,811,876 | 29,441,501 | 32,683,625 | |||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, $0.01 par value) | ||||||||||||
Investor Class | 17,999,944 | 52,837,335 | 1,403,469 | |||||||||
Institutional Class | 6,585,930 | 6,872,582 | 2,864,802 | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING PRICE PER SHARE | ||||||||||||
Investor Class | $ | 71.17 | $ | 4.26 | $ | 11.25 | ||||||
|
|
|
|
|
| |||||||
Institutional Class | $ | 71.64 | $ | 4.28 | $ | 11.41 | ||||||
|
|
|
|
|
| |||||||
| 1 | Incudes U.S. dollars held in Zimbabwe. The position was fair valued during the period (see Note 12). |
See Notes to Financial Statements.
88
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| EMERGING MARKETS SMALL CAP FUND | FRONTIER EMERGING SMALL COUNTRIES FUND | GLOBAL OPPORTUNITIES FUND | GLOBAL VALUE FUND | INTERNATIONAL GROWTH FUND | ||||||||||||||
| $ | 427,641,434 | $ | 125,512,015 | $ | 70,826,450 | $ | 147,364,200 | $ | 1,044,445,263 | |||||||||
| 9,922,705 | 2,725,364 | 2,441,709 | 6,458,741 | 50,075,525 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 437,564,139 | $ | 128,237,379 | $ | 73,268,159 | $ | 153,822,941 | $ | 1,094,520,788 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 640,001,532 | $ | 166,102,354 | $ | 112,081,948 | $ | 160,898,004 | $ | 1,600,610,015 | |||||||||
| 9,922,705 | 2,725,364 | 2,441,709 | 6,458,741 | 50,075,525 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 649,924,237 | 168,827,718 | 114,523,657 | 167,356,745 | 1,650,685,540 | ||||||||||||||
| 72,651 | 2,600,953 | 1 | — | — | — | |||||||||||||
| 28,904 |
| 172,357 | 5,714 | — | 1,227,082 | ||||||||||||
| 1,608,348 | 846,847 | 145,748 | 1,356,057 | 9,367,748 | ||||||||||||||
| — | — | — | 3 | — | ||||||||||||||
| 592,740 | 125,610 | 10,712 | 11,621 | 159,888 | ||||||||||||||
| 1,608,210 | 381,341 | 110,565 | 515,466 | 2,564,007 | ||||||||||||||
| 41,423 | 29,520 | 21,658 | 28,042 | 44,767 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 653,876,513 | 172,984,346 | 114,818,054 | 169,267,934 | 1,664,049,032 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| — | — | — | 8,700 | — | ||||||||||||||
| — | — | 80,873 | 462,358 | 17,378,323 | ||||||||||||||
| 61,645 | 52,776 | 606,364 | 2,176,673 | 7,342,014 | ||||||||||||||
| 743,762 | 381,161 | 2,410 | 163,818 | 741,434 | ||||||||||||||
| — | — | — | 7,323 | — | ||||||||||||||
| 913,891 | 210,996 | 115,989 | 113,649 | 1,732,019 | ||||||||||||||
| 11,173 | 4,052 | 1,139 | 2,654 | 24,830 | ||||||||||||||
| 220,380 | 232,608 | 40,871 | 119,543 | 279,875 | ||||||||||||||
| — | 381,800 | — | — | — | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| — | 1,073,156 | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 1,950,851 | 2,336,549 | 847,646 | 3,054,718 | 27,498,495 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 651,925,662 | $ | 170,647,797 | $ | 113,970,408 | $ | 166,213,216 | $ | 1,636,550,537 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 2,027,281 | $ | 573,412 | $ | 293,547 | $ | 190,949 | $ | 454,647 | |||||||||
| 420,850,601 | 257,731,649 | 64,013,813 | 137,648,416 | 1,024,823,394 | ||||||||||||||
| (8,897,187 | ) | (5,015,464 | ) | (1,375,170 | ) | 182,169 | 1,143,019 | |||||||||||
| 25,585,205 | (121,615,745 | ) | 9,781,955 | 14,632,502 | 53,903,056 | |||||||||||||
| 212,360,098 | 40,287,309 | 41,255,498 | 13,533,804 | 556,164,752 | ||||||||||||||
| — | — | — | 23,263 | — | ||||||||||||||
| (336 | ) | (1,313,364 | ) | 765 | 2,113 | 61,669 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 651,925,662 | $ | 170,647,797 | $ | 113,970,408 | $ | 166,213,216 | $ | 1,636,550,537 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 375,772,132 | 142,076,023 | 103,678,872 | 161,825,757 | 740,380,752 | ||||||||||||||
| 276,153,530 | 28,571,774 | 10,291,536 | 4,387,459 | 896,169,785 | ||||||||||||||
| 117,018,845 | 47,787,712 | 26,706,124 | 18,590,178 | 20,587,139 | ||||||||||||||
| 85,709,231 | 9,553,509 | 2,648,588 | 504,720 | 24,877,594 | ||||||||||||||
| $ | 3.21 | $ | 2.97 | $ | 3.88 | $ | 8.70 | $ | 35.96 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 3.22 | $ | 2.99 | $ | 3.89 | $ | 8.69 | $ | 36.02 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
89
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Assets and Liabilities (continued)
| INTERNATIONAL OPPORTUNITIES FUND | LONG/ SHORT FUND | MICRO CAP FUND | ||||||||||
Assets: |
| |||||||||||
Investments, at cost |
| |||||||||||
Unaffiliated issuers | $ | 355,130,180 | $ | 62,109,169 | $ | 223,709,130 | ||||||
Repurchase agreements | 18,365,249 | 3,729,660 | 32,894,481 | |||||||||
|
|
|
|
|
| |||||||
| $ | 373,495,429 | $ | 65,838,829 | $ | 256,603,611 | |||||||
|
|
|
|
|
| |||||||
Investments, at market value |
| |||||||||||
Unaffiliated issuers | $ | 506,965,266 | $ | 66,442,369 | $ | 339,041,162 | ||||||
Repurchase agreements | 18,365,249 | 3,729,660 | 32,894,481 | |||||||||
|
|
|
|
|
| |||||||
| 525,330,515 | 70,172,029 | 371,935,643 | ||||||||||
Cash | — | — | — | |||||||||
Foreign currency on deposit (cost of $153,396, $0, $151,835, $36,201, $0, $0, $3 and $0, respectively) | 153,396 | — | 151,835 | |||||||||
Receivable for investment securities sold | 2,278,502 | — | 489,149 | |||||||||
Receivable from broker for securities sold short | — | 18,772,964 | — | |||||||||
Capital shares receivable | 466,982 | 2,807 | 1,245,448 | |||||||||
Interest and dividends receivable | 819,130 | 381,802 | 115,014 | |||||||||
Prepaid expenses and other assets | 31,966 | 13,900 | 17,206 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 529,080,491 | 89,343,502 | �� | 373,954,295 | ||||||||
|
|
|
|
|
| |||||||
Liabilities: |
| |||||||||||
Securities sold short, at value (proceeds of $0, $12,392,190, $0, $0, $0, $0, $0 and $0, respectively) | — | 18,069,619 | — | |||||||||
Bank overdraft | 1,449,535 | — | — | |||||||||
Payable for securities purchased | 3,727,738 | 33,093 | 3,838,880 | |||||||||
Capital shares payable | 361,754 | 452,992 | 35,265 | |||||||||
Payable to Trustees | — | 135 | — | |||||||||
Payable to Advisor | 771,860 | 37,225 | 454,174 | |||||||||
Accrued fund administration fees | 6,776 | 6,395 | 4,597 | |||||||||
Accrued expenses and other liabilities | 188,167 | 73,916 | 46,302 | |||||||||
Foreign capital gains taxes payable | — | — | — | |||||||||
Dividends payable on securities sold short | — | 60,090 | — | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 6,505,830 | 18,733,465 | 4,379,218 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 522,574,661 | $ | 70,610,037 | $ | 369,575,077 | ||||||
|
|
|
|
|
| |||||||
Net Assets Consist of: |
| |||||||||||
Capital stock | $ | 1,475,197 | $ | 56,758 | $ | 459,596 | ||||||
Paid-in-capital in excess of par | 374,789,891 | 234,255,738 | 220,175,347 | |||||||||
Undistributed net investment income (loss) | (6,928,439 | ) | (135,610 | ) | (4,632,926 | ) | ||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | 1,392,839 | (162,222,620 | ) | 38,241,127 | ||||||||
Unrealized Appreciation on: | ||||||||||||
Investments | 151,835,086 | 4,333,200 | 115,332,032 | |||||||||
Securities sold short | — | (5,677,429 | ) | — | ||||||||
Foreign currency translations | 10,087 | — | (99 | ) | ||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 522,574,661 | $ | 70,610,037 | $ | 369,575,077 | ||||||
|
|
|
|
|
| |||||||
Net Assets |
| |||||||||||
Investor Class | 268,264,556 | 60,269,644 | 369,575,077 | |||||||||
Institutional Class | 254,310,105 | 10,340,393 | — | |||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, | ||||||||||||
Investor Class | 76,098,282 | 4,850,856 | 45,959,632 | |||||||||
Institutional Class | 71,421,378 | 824,929 | — | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING PRICE PER SHARE | ||||||||||||
Investor Class | $ | 3.53 | $ | 12.42 | $ | 8.04 | ||||||
|
|
|
|
|
| |||||||
Institutional Class | $ | 3.56 | $ | 12.53 | $ | — | ||||||
|
|
|
|
|
| |||||||
See Notes to Financial Statements.
90
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| MICRO CAP VALUE FUND | SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | ULTRA GROWTH FUND | ||||||||||||||
| $ | 171,052,022 | $ | 1,067,664,893 | $ | 302,910,543 | $ | 39,697,752 | $ | 90,980,191 | |||||||||
| 15,171,597 | 51,521,965 | 8,282,068 | 7,041,530 | 8,560,764 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 186,223,619 | $ | 1,119,186,858 | $ | 311,192,611 | $ | 46,739,282 | $ | 99,540,955 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 237,996,441 | $ | 1,695,940,466 | $ | 385,433,818 | $ | 45,682,340 | $ | 127,489,411 | |||||||||
| 15,171,597 | 51,521,965 | 8,282,068 | 7,041,530 | 8,560,764 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 253,168,038 | 1,747,462,431 | 393,715,886 | 52,723,870 | 136,050,175 | ||||||||||||||
| 340,909 | — | — | 32,391 | — | ||||||||||||||
| | 36,201 | — | — | 7 | — | |||||||||||||
| 926,976 | 12,568,868 | 1,076,427 | 210,518 | — | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 98,004 | 624,855 | 81,360 | — | 49,153 | ||||||||||||||
| 136,425 | 287,452 | 437,403 | 156,559 | 5,632 | ||||||||||||||
| 43,432 | 50,158 | 38,801 | 19,990 | 19,993 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 254,749,985 | 1,760,993,764 | 395,349,877 | 53,143,335 | 136,124,953 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| | — | — | — | — | — | |||||||||||||
| — | — | — | — | — | ||||||||||||||
| 4,710,591 | 8,963,991 | 4,471,669 | — | 1,933,367 | ||||||||||||||
| 23,795 | 1,365,736 | 125,393 | 2,066 | 7,794 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 320,802 | 1,483,990 | 332,092 | 27,422 | 111,742 | ||||||||||||||
| 2,984 | 27,641 | 4,990 | 139 | 1,219 | ||||||||||||||
| 57,805 | 433,643 | 84,929 | 24,396 | 43,279 | ||||||||||||||
| 11,654 | — | — | — | — | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 5,127,631 | 12,275,001 | 5,019,073 | 54,023 | 2,097,401 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 249,622,354 | $ | 1,748,718,763 | $ | 390,330,804 | $ | 53,089,312 | $ | 134,027,552 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 741,316 | $ | 373,271 | $ | 501,892 | $ | 44,943 | $ | 61,245 | |||||||||
| 175,385,542 | 935,696,782 | 292,196,165 | 51,451,334 | 90,969,590 | ||||||||||||||
| (2,259,649 | ) | (16,971,783 | ) | 392,543 | (235,712 | ) | (2,001,335 | ) | ||||||||||
| 8,821,536 | 204,894,227 | 14,716,929 | (4,155,862 | ) | 11,755,214 | |||||||||||||
| 66,932,765 | 624,723,299 | 82,523,275 | 5,984,588 | 33,243,472 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 844 | 2,967 | — | 21 | (634 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 249,622,354 | $ | 1,748,718,763 | $ | 390,330,804 | $ | 53,089,312 | $ | 134,027,552 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 249,622,354 | 1,184,918,099 | 328,180,311 | 53,089,312 | 134,027,552 | ||||||||||||||
| — | 563,800,664 | 62,150,493 | — | — | ||||||||||||||
| 74,131,598 | 25,333,595 | 42,230,450 | 4,494,287 | 6,124,530 | ||||||||||||||
| — | 11,993,516 | 7,958,733 | — | — | ||||||||||||||
| $ | 3.37 | $ | 46.77 | $ | 7.77 | $ | 11.81 | $ | 21.88 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | — | $ | 47.01 | $ | 7.81 | $ | — | $ | — | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
91
Table of Contents
| WASATCH FUNDS | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Statements of Assets and Liabilities (continued)
| WORLD INNOVATORS FUND | INCOME FUND | U.S. TREASURY FUND | ||||||||||
Assets: | ||||||||||||
Investments, at cost | ||||||||||||
Unaffiliated issuers | $ | 151,318,825 | $ | 95,988,107 | $ | 348,381,753 | ||||||
Affiliated issuers | 4,298,434 | — | — | |||||||||
Repurchase agreements | 33,811,282 | — | 5,098,090 | |||||||||
|
|
|
|
|
| |||||||
| $ | 189,428,541 | $ | 95,988,107 | $ | 353,479,843 | |||||||
|
|
|
|
|
| |||||||
Investments, at market value | ||||||||||||
Unaffiliated issuers | $ | 173,685,952 | $ | 95,170,993 | $ | 324,311,957 | ||||||
Affiliated issuers | 3,810,408 | — | — | |||||||||
Repurchase agreements | 33,811,282 | — | 5,098,090 | |||||||||
|
|
|
|
|
| |||||||
| 211,307,642 | 95,170,993 | 329,410,047 | ||||||||||
Cash | 39,613 | — | — | |||||||||
Foreign currency on deposit (cost of $20, $0 and $0, respectively) | 20 | — | — | |||||||||
Receivable for investment securities sold | 2,545,429 | — | — | |||||||||
Capital shares receivable | 22,281 | 2,102 | 155,310 | |||||||||
Interest and dividends receivable | 493,701 | 643,497 | 775,375 | |||||||||
Prepaid expenses and other assets | 40,813 | 13,256 | 26,822 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 214,449,499 | 95,829,848 | 330,367,554 | |||||||||
|
|
|
|
|
| |||||||
Liabilities: | ||||||||||||
Bank overdraft | — | 34,828 | — | |||||||||
Payable for securities purchased | 53,809 | — | — | |||||||||
Capital shares payable | 69,782 | 111,493 | 243,793 | |||||||||
Dividends payable to shareholders | — | 62,662 | 110,257 | |||||||||
Payable to Advisor | 288,392 | 44,875 | 135,651 | |||||||||
Accrued fund administration fees | 3,098 | 816 | 3,787 | |||||||||
Accrued expenses and other liabilities | 83,548 | 36,995 | 83,469 | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 498,629 | 291,669 | 576,957 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 213,950,870 | $ | 95,538,179 | $ | 329,790,597 | ||||||
|
|
|
|
|
| |||||||
Net Assets Consist of: | ||||||||||||
Capital stock | $ | 98,440 | $ | 95,745 | $ | 206,158 | ||||||
Paid-in-capital in excess of par | 170,192,154 | 96,441,093 | 369,139,783 | |||||||||
Undistributed net investment income (loss) | (919,536 | ) | 193,488 | 57,868 | ||||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | 22,978,036 | (375,033 | ) | (15,543,416 | ) | |||||||
Unrealized appreciation (depreciation) on: | ||||||||||||
Investments | 21,595,898 | (817,114 | ) | (24,069,796 | ) | |||||||
Foreign currency translations | 5,878 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 213,950,870 | $ | 95,538,179 | $ | 329,790,597 | ||||||
|
|
|
|
|
| |||||||
Net Assets | ||||||||||||
Investor Class | 208,808,584 | 95,538,179 | 329,790,597 | |||||||||
Institutional Class | 5,142,286 | — | — | |||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, | ||||||||||||
Investor Class | 9,609,006 | 9,574,523 | 20,615,800 | |||||||||
Institutional Class | 234,987 | — | — | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING PRICE PER SHARE | ||||||||||||
Investor Class | $ | 21.73 | $ | 9.98 | $ | 16.00 | ||||||
|
|
|
|
|
| |||||||
Institutional Class | $ | 21.88 | $ | — | $ | — | ||||||
|
|
|
|
|
| |||||||
See Notes to Financial Statements.
92
Table of Contents
(This page intentionally left blank.)
93
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Operations
| CORE GROWTH FUND | EMERGING INDIA FUND | EMERGING FUND | ||||||||||
Investment Income: |
| |||||||||||
Interest | $ | 19,165 | $ | 4,401 | $ | 628 | ||||||
Dividends1 |
| |||||||||||
Unaffiliated issuers | 4,914,766 | 273,526 | 107,612 | |||||||||
|
|
|
|
|
| |||||||
Total investment income | 4,933,931 | 277,927 | 108,240 | |||||||||
|
|
|
|
|
| |||||||
Expenses: |
| |||||||||||
Investment advisory fees | 8,442,673 | 1,586,095 | 234,738 | |||||||||
Shareholder servicing fees — Investor Class | 707,385 | 192,471 | 19,288 | |||||||||
Shareholder servicing fees — Institutional Class | 4,210 | 1,245 | 1,693 | |||||||||
Fund administration fees | 139,455 | 20,955 | 3,876 | |||||||||
Fund accounting fees | 84,152 | 24,472 | 12,331 | |||||||||
Reports to shareholders — Investor Class | 63,117 | 15,614 | 2,806 | |||||||||
Reports to shareholders — Institutional Class | 12,007 | 1,199 | 772 | |||||||||
Custody fees | 39,142 | 137,483 | 28,427 | |||||||||
Federal and state registration fees — Investor Class | 22,157 | 19,975 | 7,400 | |||||||||
Federal and state registration fees — Institutional Class | 19,726 | 7,960 | 8,544 | |||||||||
Legal fees | 51,573 | 7,516 | 1,525 | |||||||||
Trustees’ fees | 118,759 | 17,696 | 3,284 | |||||||||
Interest | 26,628 | 7,828 | 3,242 | |||||||||
Audit fees | 16,517 | 16,408 | 16,408 | |||||||||
Other expenses | 40,346 | 20,652 | 15,094 | |||||||||
|
|
|
|
|
| |||||||
Total expenses before reimbursement | 9,787,847 | 2,077,569 | 359,428 | |||||||||
Reimbursement of expenses by Advisor | (56,919 | ) | (5,782 | ) | (51,282 | ) | ||||||
|
|
|
|
|
| |||||||
Net Expenses | 9,730,928 | 2,071,787 | 308,146 | |||||||||
|
|
|
|
|
| |||||||
Net Investment Income (Loss) | (4,796,997 | ) | (1,793,860 | ) | (199,906 | ) | ||||||
|
|
|
|
|
| |||||||
Realized Gain (Loss): |
| |||||||||||
Investments sold | 113,412,016 | 15,120,022 | 2,082,344 | |||||||||
Foreign currency transactions | 9,144 | (44,848 | ) | (16,888 | ) | |||||||
Foreign capital gains taxes | (1 | ) | (890,484 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net realized gain | 113,421,159 | 14,184,690 | 2,065,456 | |||||||||
|
|
|
|
|
| |||||||
Change in Unrealized Appreciation (Depreciation): |
| |||||||||||
Investments | 82,871,991 | 3,342,720 | 1,311,154 | |||||||||
Foreign currency translations | 431 | (5,235 | ) | (151 | ) | |||||||
Options written | — | — | — | |||||||||
Deferred foreign capital gains taxes | (25,853 | ) | 556,737 | 133,339 | ||||||||
|
|
|
|
|
| |||||||
Net change in unrealized appreciation (depreciation) | 82,846,569 | 3,894,222 | 1,444,342 | |||||||||
|
|
|
|
|
| |||||||
Net gain on investments | 196,267,728 | 18,078,912 | 3,509,798 | |||||||||
|
|
|
|
|
| |||||||
Net Increase in Net Assets Resulting from Operations | $ | 191,470,731 | $ | 16,285,052 | $ | 3,309,892 | ||||||
|
|
|
|
|
| |||||||
| 1 | Net of $0, $0, $11,510, $232,861, $81,925, $10,372, $202,175 and $565,231 in foreign withholding taxes, respectively. |
See Notes to Financial Statements.
94
Table of Contents
| FOR THE SIX MONTHS ENDED MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| EMERGING MARKETS SMALL CAP FUND | FRONTIER EMERGING SMALL COUNTRIES FUND | GLOBAL OPPORTUNITIES FUND | GLOBAL VALUE FUND | INTERNATIONAL GROWTH FUND | ||||||||||||||
| $ | 7,438 | $ | 2,895 | $ | 1,750 | $ | 4,347 | $ | 47,909 | |||||||||
| 2,467,792 | 1,021,749 | 411,525 | 2,658,788 | 12,807,339 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 2,475,230 | 1,024,644 | 413,275 | 2,663,135 | 12,855,248 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 5,396,357 | 1,623,061 | 672,326 | 786,796 | 9,684,799 | ||||||||||||||
| 293,545 | 234,814 | 49,448 | 127,819 | 386,399 | ||||||||||||||
| 2,405 | 1,165 | 1,080 | 921 | 3,981 | ||||||||||||||
| 54,041 | 15,609 | 8,885 | 14,450 | 127,959 | ||||||||||||||
| 45,354 | 20,664 | 18,493 | 17,055 | 84,901 | ||||||||||||||
| 29,078 | 37,273 | 5,292 | 14,923 | 50,725 | ||||||||||||||
| 3,872 | 1,962 | 831 | 1,427 | 40,977 | ||||||||||||||
| 292,913 | 195,457 | 19,862 | 10,443 | 204,530 | ||||||||||||||
| 13,471 | 12,454 | 8,340 | 10,325 | 14,483 | ||||||||||||||
| 11,815 | 9,834 | 6,200 | 6,555 | 14,435 | ||||||||||||||
| 21,267 | 6,175 | 3,222 | 5,461 | 48,831 | ||||||||||||||
| 47,804 | 14,378 | 7,632 | 13,091 | 108,620 | ||||||||||||||
| 28,644 | 10,306 | 6,052 | 2,657 | 27,547 | ||||||||||||||
| 16,270 | 16,365 | 16,408 | 19,785 | 16,408 | ||||||||||||||
| 50,693 | 25,471 | 14,954 | 7,116 | 40,495 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 6,307,529 | 2,224,988 | 839,025 | 1,038,824 | 10,855,090 | ||||||||||||||
| (101,485 | ) | (157,923 | ) | (13,978 | ) | (78,005 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 6,206,044 | 2,067,065 | 825,047 | 960,819 | 10,855,090 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| (3,730,814 | ) | (1,042,421 | ) | (411,772 | ) | 1,702,316 | 2,000,158 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 41,340,413 | 30,374,664 | 11,383,345 | 17,150,468 | 71,442,952 | ||||||||||||||
| (158,229 | ) | (154,567 | ) | (11,378 | ) | (59,944 | ) | (109,238 | ) | |||||||||
| (20,205 | ) | (178,298 | ) | (109,835 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 41,161,979 | 30,041,799 | 11,262,132 | 17,090,524 | 71,333,714 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 8,626,168 | (12,530,135 | ) | 3,647,320 | (16,108,857 | ) | 64,128,879 | ||||||||||||
| (2,351 | ) | (1,310,985 | ) | (591 | ) | 1,338 | 12,029 | |||||||||||
| — | — | — | 23,263 | — | ||||||||||||||
| 194,004 | 310,342 | 211,637 | — | 399,631 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 8,817,821 | (13,530,778 | ) | 3,858,366 | (16,084,256 | ) | 64,540,539 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 49,979,800 | 16,511,021 | 15,120,498 | 1,006,268 | 135,874,253 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 46,248,986 | $ | 15,468,600 | $ | 14,708,726 | $ | 2,708,584 | $ | 137,874,411 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
95
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Operations (continued)
| INTERNATIONAL OPPORTUNITIES FUND | LONG/SHORT FUND | MICRO CAP FUND | ||||||||||
Investment Income: |
| |||||||||||
Interest | $ | 15,505 | $ | 32,016 | $ | 7,612 | ||||||
Dividends1 | ||||||||||||
Unaffiliated issuers | 1,419,039 | 1,082,239 | 686,443 | |||||||||
|
|
|
|
|
| |||||||
Total investment income | 1,434,544 | 1,114,255 | 694,055 | |||||||||
|
|
|
|
|
| |||||||
Expenses: |
| |||||||||||
Investment advisory fees | 4,458,426 | 499,371 | 2,475,237 | |||||||||
Shareholder servicing fees — Investor Class | 259,734 | 76,255 | 82,629 | |||||||||
Shareholder servicing fees — Institutional Class | 72,392 | 2,075 | — | |||||||||
Fund administration fees | 42,090 | 7,512 | 27,253 | |||||||||
Fund accounting fees | 41,162 | 11,562 | 24,205 | |||||||||
Reports to shareholders — Investor Class | 33,021 | 28,211 | 8,449 | |||||||||
Reports to shareholders — Institutional Class | 18,897 | 8,687 | — | |||||||||
Custody fees | 150,271 | 3,839 | 23,933 | |||||||||
Federal and state registration fees — Investor Class | 12,953 | 13,890 | 10,905 | |||||||||
Federal and state registration fees — Institutional Class | 9,009 | 11,159 | — | |||||||||
Legal fees | 16,538 | 48,325 | 9,621 | |||||||||
Trustees’ fees | 36,747 | 8,194 | 23,069 | |||||||||
Dividends on securities sold short | — | 112,265 | — | |||||||||
Interest | 8,192 | 1,367 | 4,914 | |||||||||
Audit fees | 15,997 | 13,268 | 15,147 | |||||||||
Other expenses | 28,718 | 7,440 | 14,251 | |||||||||
|
|
|
|
|
| |||||||
Total expenses before reimbursement | 5,204,147 | 853,420 | 2,719,613 | |||||||||
Reimbursement of expenses by Advisor | (18,038 | ) | (59,195 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net Expenses | 5,186,109 | 794,225 | 2,719,613 | |||||||||
|
|
|
|
|
| |||||||
Net Investment Income (Loss) | (3,751,565 | ) | 320,030 | (2,025,558 | ) | |||||||
|
|
|
|
|
| |||||||
Realized Gain (Loss): |
| |||||||||||
Investments sold | 8,659,731 | (8,364,208 | ) | 49,013,143 | ||||||||
Foreign currency transactions | (82,584 | ) | 148 | (1,172 | ) | |||||||
Foreign capital gains taxes | (679,936 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net realized gain (loss) | 7,897,211 | (8,364,060 | ) | 49,011,971 | ||||||||
|
|
|
|
|
| |||||||
Change in Unrealized Appreciation (Depreciation): |
| |||||||||||
Investments | 38,214,710 | 1,918,896 | (7,826,927 | ) | ||||||||
Foreign currency translations | 15,854 | — | 7 | |||||||||
Short positions | — | 6,164,568 | — | |||||||||
Deferred foreign capital gains taxes | 608,007 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net change in unrealized appreciation (depreciation) | 38,838,571 | 8,083,464 | (7,826,920 | ) | ||||||||
|
|
|
|
|
| |||||||
Net gain (loss) on investments | 46,735,782 | (280,596 | ) | 41,185,051 | ||||||||
|
|
|
|
|
| |||||||
Net Increase in Net Assets Resulting from Operations | $ | 42,984,217 | $ | 39,434 | $ | 39,159,493 | ||||||
|
|
|
|
|
| |||||||
| 1 | Net of $127,048, $31,416, $19,547, $12,821, $4,814, $0, $6,019 and $1,689 in foreign withholding taxes, respectively. |
See Notes to Financial Statements.
96
Table of Contents
| FOR THE SIX MONTHS ENDED MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| MICRO CAP VALUE FUND | SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | ULTRA GROWTH FUND | ||||||||||||||
| $ | 14,774 | $ | 20,940 | $ | 6,194 | $ | 6,281 | $ | 2,971 | |||||||||
| 1,012,478 | 2,810,616 | 3,247,099 | 704,853 | 158,583 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 1,027,252 | 2,831,556 | 3,253,293 | 711,134 | 161,554 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 1,783,182 | 8,508,695 | 1,938,685 | 170,341 | 587,878 | ||||||||||||||
| 123,180 | 827,709 | 176,116 | 35,593 | 66,639 | ||||||||||||||
| — | 5,949 | 1,591 | — | — | ||||||||||||||
| 19,631 | 140,573 | 32,023 | 4,018 | 9,708 | ||||||||||||||
| 22,634 | 86,158 | 25,821 | 10,247 | 14,318 | ||||||||||||||
| 12,637 | 71,176 | 16,157 | 3,381 | 6,758 | ||||||||||||||
| — | 28,986 | 1,510 | — | — | ||||||||||||||
| 21,539 | 111,710 | 8,569 | 2,044 | 5,425 | ||||||||||||||
| 11,721 | 17,821 | 12,966 | 9,009 | 9,237 | ||||||||||||||
| — | 13,179 | 9,130 | — | — | ||||||||||||||
| 6,783 | 53,816 | 11,658 | 1,387 | 3,423 | ||||||||||||||
| 16,236 | 122,844 | 27,324 | 3,315 | 8,212 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| 3,428 | 25,999 | 5,736 | 678 | 1,791 | ||||||||||||||
| 15,835 | 20,150 | 16,906 | 15,941 | 15,383 | ||||||||||||||
| 14,159 | 46,113 | 15,165 | 3,893 | 9,261 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 2,050,965 | 10,080,878 | 2,299,357 | 259,847 | 738,033 | ||||||||||||||
| — | (100,416 | ) | (21,156 | ) | (27,992 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 2,050,965 | 9,980,462 | 2,278,201 | 231,855 | 738,033 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| (1,023,713 | ) | (7,148,906 | ) | 975,092 | 479,279 | (576,479 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 11,403,591 | 230,792,981 | 24,919,961 | 1,478,555 | 11,446,759 | ||||||||||||||
| (2,173 | ) | (28,421 | ) | 6,086 | 251 | 7,821 | ||||||||||||
| (74,671 | ) | — | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 11,326,747 | 230,764,560 | 24,926,047 | 1,478,806 | 11,454,580 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| (481,548 | ) | 3,239,947 | (10,039,445 | ) | (1,217,141 | ) | 2,232,000 | |||||||||||
| 555 | 2,329 | — | (17 | ) | (634 | ) | ||||||||||||
| — | — | — | — | — | ||||||||||||||
| 30,161 | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| (450,832 | ) | 3,242,276 | (10,039,445 | ) | (1,217,158 | ) | 2,231,366 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| 10,875,915 | 234,006,836 | 14,886,602 | 261,648 | 13,685,946 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| $ | 9,852,202 | $ | 226,857,930 | $ | 15,861,694 | $ | 740,927 | $ | 13,109,467 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
97
Table of Contents
| WASATCH FUNDS | FOR THE SIX MONTHS ENDED MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Statements of Operations (continued)
| WORLD INNOVATORS FUND | INCOME FUND | U.S. TREASURY FUND | ||||||||||
Investment Income: |
| |||||||||||
Interest | $ | 35,080 | $ | 1,350,381 | $ | 4,691,157 | ||||||
Dividends1 | ||||||||||||
Unaffiliated issuers | 996,994 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total investment income | 1,032,074 | 1,350,381 | 4,691,157 | |||||||||
|
|
|
|
|
| |||||||
Expenses: |
| |||||||||||
Investment advisory fees | 1,606,426 | 262,715 | 844,068 | |||||||||
Shareholder servicing fees — Investor Class | 155,235 | 16,866 | 179,888 | |||||||||
Shareholder servicing fees — Institutional Class | 871 | — | — | |||||||||
Fund administration fees | 17,681 | 7,894 | 27,912 | |||||||||
Fund accounting fees | 25,453 | 14,702 | 18,362 | |||||||||
Reports to shareholders — Investor Class | 11,675 | 2,779 | 15,274 | |||||||||
Reports to shareholders — Institutional Class | 887 | — | — | |||||||||
Custody fees | 33,964 | 6,918 | 5,286 | |||||||||
Federal and state registration fees — Investor Class | 11,386 | 9,498 | 17,639 | |||||||||
Federal and state registration fees — Institutional Class | 6,094 | — | — | |||||||||
Legal fees | 6,098 | 2,923 | 10,718 | |||||||||
Trustees’ fees | 14,541 | 7,034 | 25,827 | |||||||||
Interest | 3,052 | 1,445 | 5,341 | |||||||||
Audit fees | 16,408 | 15,298 | 15,147 | |||||||||
Other expenses | 12,861 | 3,740 | 8,792 | |||||||||
|
|
|
|
|
| |||||||
Total expenses before reimbursement | 1,922,632 | 351,812 | 1,174,254 | |||||||||
Reimbursement of expenses by Advisor | (12,766 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net Expenses | 1,909,866 | 351,812 | 1,174,254 | |||||||||
|
|
|
|
|
| |||||||
Net Investment Income (Loss) | (877,792 | ) | 998,569 | 3,516,903 | ||||||||
|
|
|
|
|
| |||||||
Realized Gain (Loss): |
| |||||||||||
Investments sold | 34,166,998 | (70,828 | ) | (159,554 | ) | |||||||
Foreign currency transactions | (65,506 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net realized gain (loss) | 34,101,492 | (70,828 | ) | (159,554 | ) | |||||||
|
|
|
|
|
| |||||||
Change in Unrealized Appreciation (Depreciation): |
| |||||||||||
Investments | (13,609,824 | ) | (1,316,331 | ) | (6,682,843 | ) | ||||||
Foreign currency translations | 3,763 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net change in unrealized depreciation | (13,606,061 | ) | (1,316,331 | ) | (6,682,843 | ) | ||||||
|
|
|
|
|
| |||||||
Net gain (loss) on investments | 20,495,431 | (1,387,159 | ) | (6,842,397 | ) | |||||||
|
|
|
|
|
| |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 19,617,639 | $ | (388,590 | ) | $ | (3,325,494 | ) | ||||
|
|
|
|
|
| |||||||
| 1 | Net of $78,425, $0 and $0 in foreign withholding taxes, respectively. |
See Notes to Financial Statements.
98
Table of Contents
(This page intentionally left blank.)
99
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Changes in Net Assets
| CORE GROWTH FUND | EMERGING INDIA FUND | |||||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||||
Operations: | ||||||||||||||||
Net investment loss | $ | (4,796,997 | ) | $ | (10,825,622 | ) | $ | (1,793,860 | ) | $ | (1,291,008 | ) | ||||
Net realized gain (loss) on investments, foreign | 113,421,159 | 76,972,163 | 14,184,690 | 337,887 | ||||||||||||
Change in unrealized appreciation (depreciation) on | 82,846,569 | 186,468,265 | 3,894,222 | 26,464,287 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 191,470,731 | 252,614,806 | 16,285,052 | 25,511,166 | ||||||||||||
Dividends paid from: | ||||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gains | (74,038,213 | ) | (1,693,023 | ) | (6,742,776 | ) | (681,183 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (74,038,213 | ) | (1,693,023 | ) | (6,742,776 | ) | (681,183 | ) | |||||||||
Institutional Class | ||||||||||||||||
Net investment income | — | (131,773 | ) | — | — | |||||||||||
Net realized gains | (25,182,119 | ) | (427,998 | ) | (754,072 | ) | (138,465 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (25,182,119 | ) | (559,771 | ) | (754,072 | ) | (138,465 | ) | |||||||||
Capital share transactions: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 85,984,601 | 158,213,538 | 69,568,037 | 173,266,065 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 72,335,681 | 1,656,949 | 6,714,681 | 675,573 | ||||||||||||
Shares redeemed | (157,418,642 | ) | (224,407,684 | ) | (67,096,274 | ) | (58,350,522 | ) | ||||||||
Redemption fees | 20,666 | 18,973 | 79,147 | 197,218 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 922,306 | (64,518,224 | ) | 9,265,591 | 115,788,334 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 93,187,337 | 136,598,360 | 9,624,343 | 21,762,904 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 24,509,684 | 533,314 | 754,071 | 63,166 | ||||||||||||
Shares redeemed | (52,262,992 | ) | (62,595,979 | ) | (5,465,672 | ) | (12,400,532 | ) | ||||||||
Redemption fees | 9,684 | 7,603 | 332 | 11,033 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 65,443,713 | 74,543,298 | 4,913,074 | 9,436,571 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 158,616,418 | 260,387,086 | 22,966,869 | 149,916,423 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 1,594,247,591 | 1,333,860,505 | 231,688,499 | 81,772,076 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 1,752,864,009 | $ | 1,594,247,591 | $ | 254,655,368 | $ | 231,688,499 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment loss included | $ | (12,978,292 | ) | $ | (8,181,295 | ) | $ | (4,043,483 | ) | $ | (2,249,623 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 1,225,145 | 2,604,740 | 16,006,004 | 45,211,975 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 1,057,230 | 28,319 | 1,522,603 | 229,008 | ||||||||||||
Shares redeemed | (2,241,054 | ) | (3,700,842 | ) | (15,677,947 | ) | (15,673,561 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 41,321 | (1,067,783 | ) | 1,850,660 | 29,767,422 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 1,313,958 | 2,250,747 | 2,177,835 | 5,981,814 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 355,987 | 9,075 | 169,836 | 21,340 | ||||||||||||
Shares redeemed | (734,319 | ) | (1,003,821 | ) | (1,270,154 | ) | (3,087,664 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 935,626 | 1,256,001 | 1,077,517 | 2,915,490 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
See Notes to Financial Statements.
100
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| EMERGING MARKETS SELECT FUND | EMERGING MARKETS SMALL CAP FUND | FRONTIER EMERGING SMALL COUNTRIES FUND | ||||||||||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||||||||
| $ | (199,906 | ) | $ | (70,308 | ) | $ | (3,730,814 | ) | $ | (2,494,433 | ) | $ | (1,042,421 | ) | $ | (1,473,195 | ) | |||||
| 2,065,456 | (569,305 | ) | 41,161,979 | 71,270,719 | 30,041,799 | (8,115,718 | ) | |||||||||||||||
| 1,444,342 | 5,667,067 | 8,817,821 | (9,352,461 | ) | (13,530,778 | ) | 2,787,356 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 3,309,892 | 5,027,454 | 46,248,986 | 59,423,825 | 15,468,600 | (6,801,557 | ) | ||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| 1,430,354 | 5,170,460 | 29,219,626 | 71,727,934 | 6,401,333 | 50,572,101 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (2,029,388 | ) | (3,358,306 | ) | (71,821,632 | ) | (390,658,618 | ) | (32,260,710 | ) | (329,333,843 | ) | |||||||||||
| 395 | 4,694 | 2,343 | 14,789 | 2,693 | 8,464 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (598,639 | ) | 1,816,848 | (42,599,663 | ) | (318,915,895 | ) | (25,856,684 | ) | (278,753,278 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 4,259,809 | 4,104,118 | 49,195,733 | 148,425,692 | 1,628,546 | 17,267,589 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (2,640,165 | ) | (5,462,642 | ) | (44,697,238 | ) | (80,570,428 | ) | (18,356,918 | ) | (111,498,183 | ) | |||||||||||
| — | 1,073 | 51,952 | 1,856 | 20 | 712 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1,619,644 | (1,357,451 | ) | 4,550,447 | 67,857,120 | (16,728,352 | ) | (94,229,882 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 4,330,897 | 5,486,851 | 8,199,770 | (191,634,950 | ) | (27,145,610 | ) | (379,784,717 | ) | ||||||||||||||
| 44,141,635 | 38,654,784 | 643,725,892 | 835,360,842 | 197,764,233 | 577,548,950 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | 48,472,532 | $ | 44,141,635 | $ | 651,925,662 | $ | 643,725,892 | $ | 170,647,797 | $ | 197,764,233 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | (369,457 | ) | $ | (169,551 | ) | $ | (8,897,187 | ) | $ | (5,165,459 | ) | $ | (5,015,464 | ) | $ | (3,973,043 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 129,341 | 533,891 | 9,210,892 | 27,967,821 | 2,218,654 | 20,091,652 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (185,517 | ) | (363,175 | ) | (22,846,239 | ) | (150,247,286 | ) | (11,098,165 | ) | (130,050,975 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (56,176 | ) | 170,716 | (13,635,347 | ) | (122,279,465 | ) | (8,879,511 | ) | (109,959,323 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 373,547 | 414,375 | 15,582,447 | 53,895,941 | 560,567 | 6,898,616 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (233,167 | ) | (561,923 | ) | (14,178,652 | ) | (29,814,247 | ) | (6,211,115 | ) | (44,682,757 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 140,380 | (147,548 | ) | 1,403,795 | 24,081,694 | (5,650,548 | ) | (37,784,141 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
101
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Changes in Net Assets (continued)
| GLOBAL OPPORTUNITIES FUND | GLOBAL VALUE FUND | |||||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (411,772 | ) | $ | (1,208,416 | ) | $ | 1,702,316 | $ | 3,607,580 | ||||||
Net realized gain (loss) on investments, foreign | 11,262,132 | 10,511,340 | 17,090,524 | 25,170,035 | ||||||||||||
Net realized gain on options written | — | — | — | 99,363 | ||||||||||||
Net realized loss on short positions | — | — | — | — | ||||||||||||
Change in unrealized appreciation (depreciation) on | 3,858,366 | 3,438,339 | (16,084,256 | ) | (810,916 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase in net assets resulting from operations | 14,708,726 | 12,741,263 | 2,708,584 | 28,066,062 | ||||||||||||
Dividends paid from: | ||||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | — | (141,725 | ) | (1,469,082 | ) | (3,557,468 | ) | |||||||||
Net realized gains | (10,116,438 | ) | (7,610,212 | ) | (21,771,105 | ) | (6,413,391 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (10,116,438 | ) | (7,751,937 | ) | (23,240,187 | ) | (9,970,859 | ) | |||||||||
Institutional Class | ||||||||||||||||
Net investment income | — | (20,477 | ) | (43,323 | ) | (75,697 | ) | |||||||||
Net realized gains | (782,771 | ) | (396,985 | ) | (595,551 | ) | (63,659 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (782,771 | ) | (417,462 | ) | (638,874 | ) | (139,356 | ) | |||||||||
Capital share transactions: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 11,170,477 | 9,564,866 | 6,171,249 | 7,997,702 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 10,031,552 | 7,688,280 | 23,066,915 | 9,870,606 | ||||||||||||
Shares redeemed | (16,856,120 | ) | (76,357,387 | ) | (22,537,556 | ) | (49,536,033 | ) | ||||||||
Redemption fees | 473 | 3,721 | 1,195 | 1,840 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 4,346,382 | (59,100,520 | ) | 6,701,803 | (31,665,885 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 2,502,805 | 1,731,118 | 144,234 | 4,408,174 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 653,577 | 338,803 | 634,638 | 137,747 | ||||||||||||
Shares redeemed | (338,570 | ) | (837,522 | ) | (420,443 | ) | (3,793,616 | ) | ||||||||
Redemption fees | — | — | — | 1,100 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 2,817,812 | 1,232,399 | 358,429 | 753,405 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 10,973,711 | (53,296,257 | ) | (14,110,245 | ) | (12,956,633 | ) | |||||||||
Net assets: | ||||||||||||||||
Beginning of period | 102,996,697 | 156,292,954 | 180,323,461 | 193,280,094 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 113,970,408 | $ | 102,996,697 | $ | 166,213,216 | $ | 180,323,461 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment income (loss) included | $ | (1,375,170 | ) | $ | (963,398 | ) | $ | 182,169 | $ | (7,742 | ) | |||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 2,864,027 | 2,822,944 | 681,294 | 843,060 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 2,725,965 | 2,606,197 | 2,596,986 | 1,045,628 | ||||||||||||
Shares redeemed | (4,396,962 | ) | (22,787,072 | ) | (2,384,653 | ) | (5,213,402 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 1,193,030 | (17,357,931 | ) | 893,627 | (3,324,714 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 656,011 | 515,951 | 14,554 | 460,307 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 177,602 | 114,848 | 71,534 | 14,478 | ||||||||||||
Shares redeemed | (87,901 | ) | (246,570 | ) | (44,529 | ) | (409,841 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 745,712 | 384,229 | 41,559 | 64,944 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
102
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| INTERNATIONAL GROWTH FUND | INTERNATIONAL OPPORTUNITIES FUND | LONG/SHORT FUND | ||||||||||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||||||||
| $ | 2,000,158 | $ | (3,106,494 | ) | $ | (3,751,565 | ) | $ | (4,032,634 | ) | $ | 320,030 | $ | (1,076,344 | ) | |||||||
| 71,333,714 |
| 32,278,787 | 7,897,211 | 76,542,399 | (8,364,060 | ) | 23,313,928 | ||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| — | — | — | — | — | (18,701,895 | ) | ||||||||||||||||
| 64,540,539 |
| 126,910,430 | 38,838,571 | (41,137,947 | ) | 8,083,464 | (3,154,014 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 137,874,411 | 156,082,723 | 42,984,217 | 31,371,818 | 39,434 | 381,675 | |||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||
| (21,443,568 | ) | (29,626,224 | ) | (17,973,730 | ) | — | — | (42,943 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (21,443,568 | ) | (29,626,224 | ) | (17,973,730 | ) | — | — | (42,943 | ) | |||||||||||||
| — | (393,058 | ) | — | — | — | — | ||||||||||||||||
| (19,841,666 | ) | (17,283,293 | ) | (16,042,894 | ) | — | — | (18,132 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (19,841,666 | ) | (17,676,351 | ) | (16,042,894 | ) | — | — | (18,132 | ) | |||||||||||||
| 39,937,338 | 106,544,800 | 10,117,649 | 244,935,438 | 1,481,491 | 14,964,816 | |||||||||||||||||
| 20,391,366 | 28,617,516 | 17,102,675 | — | — | 42,349 | |||||||||||||||||
| (173,001,984 | ) | (330,404,896 | ) | (29,421,118 | ) | (503,406,532 | ) | (20,749,837 | ) | (119,778,795 | ) | |||||||||||
| 1,557 | 16,380 | 204 | 13,213 | 384 | 4,131 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (112,671,723 | ) | (195,226,200 | ) | (2,200,590 | ) | (258,457,881 | ) | (19,267,962 | ) | (104,767,499 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 215,907,830 | 219,622,439 | 35,295,339 | 81,335,149 | 2,420,286 | 31,752,233 | |||||||||||||||||
| 18,746,866 | 16,749,716 | 12,562,516 | — | — | 18,116 | |||||||||||||||||
| (43,499,051 | ) | (142,642,997 | ) | (32,724,929 | ) | (33,966,318 | ) | (18,505,678 | ) | (69,587,600 | ) | |||||||||||
| 4,516 | 5,704 | 628 | 3,525 | 5,348 | 15,367 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 191,160,161 | 93,734,862 | 15,133,554 | 47,372,356 | (16,080,044 | ) | (37,801,884 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 175,077,615 | 7,288,810 | 21,900,557 | (179,713,707 | ) | (35,308,572 | ) | (142,248,783 | ) | ||||||||||||||
| 1,461,472,922 | 1,454,184,112 | 500,674,104 | 680,387,811 | 105,918,609 | 248,167,392 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | 1,636,550,537 | $ | 1,461,472,922 | $ | 522,574,661 | $ | 500,674,104 | $ | 70,610,037 | $ | 105,918,609 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 1,143,019 |
| $ | (857,139 | ) | $ | (6,928,439 | ) | $ | (3,176,874 | ) | $ | (135,610 | ) | $ | (455,640 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1,143,933 | 3,614,830 | 2,874,462 | 78,958,491 | 114,130 | 1,146,753 | |||||||||||||||||
| 595,542 | 1,081,948 | 4,957,297 | — | — | 3,177 | |||||||||||||||||
| (4,928,189 | ) | (10,993,871 | ) | (8,360,224 | ) | (161,991,381 | ) | (1,609,463 | ) | (9,381,896 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (3,188,714 | ) | (6,297,093 | ) | (528,465 | ) | (83,032,890 | ) | (1,495,333 | ) | (8,231,966 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 6,177,342 | 7,190,613 | 9,945,255 | 25,860,622 | 187,483 | 2,406,680 | |||||||||||||||||
| 546,715 | 633,020 | 3,609,918 | — | — | 1,353 | |||||||||||||||||
| (1,235,340 | ) | (4,615,613 | ) | (9,221,904 | ) | (10,875,848 | ) | (1,422,536 | ) | (5,398,348 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 5,488,717 | 3,208,020 | 4,333,269 | 14,984,774 | (1,235,053 | ) | (2,990,315 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
103
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Changes in Net Assets (continued)
| MICRO CAP FUND | MICRO CAP VALUE FUND | |||||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (2,025,558 | ) | $ | (3,976,227 | ) | $ | (1,023,713 | ) | $ | (1,541,548 | ) | ||||
Net realized gain on investments, foreign | 49,011,971 | 39,173,711 | 11,326,747 | 19,891,004 | ||||||||||||
Change in unrealized appreciation (depreciation) on | (7,826,920 | ) | 28,515,635 | (450,832 | ) | 22,157,781 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase in net assets resulting from operations | 39,159,493 | 63,713,119 | 9,852,202 | 40,507,237 | ||||||||||||
Dividends paid from: | ||||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | — | (194,392 | ) | — | (119,575 | ) | ||||||||||
Net realized gains | (44,480,704 | ) | (22,635,465 | ) | (17,823,539 | ) | (2,945,428 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (44,480,704 | ) | (22,829,857 | ) | (17,823,539 | ) | (3,065,003 | ) | |||||||||
Institutional Class | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gains | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| — | — | — | — | |||||||||||||
Capital share transactions: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 39,750,033 | 8,493,440 | 51,188,216 | 29,303,153 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 41,927,060 | 21,444,591 | 17,525,661 | 3,005,231 | ||||||||||||
Shares redeemed | (18,378,704 | ) | (36,929,156 | ) | (27,224,451 | ) | (32,783,681 | ) | ||||||||
Redemption fees | 14,649 | 190 | 17,041 | 3,915 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 63,313,038 | (6,990,935 | ) | 41,506,467 | (471,382 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | — | — | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | — | — | ||||||||||||
Shares redeemed | — | — | — | — | ||||||||||||
Redemption fees | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 57,991,827 | 33,892,327 | 33,535,130 | 36,970,852 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 311,583,250 | 277,690,923 | 216,087,224 | 179,116,372 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 369,575,077 | $ | 311,583,250 | $ | 249,622,354 | $ | 216,087,224 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment income (loss) included in net assets at end of period | $ | (4,632,926 | ) | $ | (2,607,368 | ) | $ | (2,259,649 | ) | $ | (1,095,632 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 4,938,032 | 1,187,956 | 14,785,091 | 9,461,106 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 5,459,253 | 3,309,350 | 5,109,522 | 1,029,189 | ||||||||||||
Shares redeemed | (2,299,282 | ) | (5,256,054 | ) | (7,865,934 | ) | (10,751,970 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 8,098,003 | (758,748 | ) | 12,028,679 | (261,675 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | — | — | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | — | — | ||||||||||||
Shares redeemed | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase in shares outstanding | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
See Notes to Financial Statements.
104
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | ||||||||||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||||||||
| $ | (7,148,906 | ) | $ | (14,311,581 | ) | $ | 975,092 | $ | 209,668 | $ | 479,279 | $ | 721,341 | |||||||||
| | 230,764,560 | 147,279,152 | 24,926,047 | 27,358,515 | 1,478,806 | 2,719,511 | ||||||||||||||||
| | 3,242,276 | 97,387,849 | (10,039,445 | ) | 33,444,326 | (1,217,158 | ) | 2,097,330 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 226,857,930 | 230,355,420 | 15,861,694 | 61,012,509 | 740,927 | 5,538,182 | |||||||||||||||||
| — | — | (312,448 | ) | (204,563 | ) | (643,904 | ) | (516,716 | ) | |||||||||||||
| (123,041,326 | ) | (114,348,061 | ) | (20,674,647 | ) | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (123,041,326 | ) | (114,348,061 | ) | (20,987,095 | ) | (204,563 | ) | (643,904 | ) | (516,716 | ) | |||||||||||
| — | — | (142,371 | ) | (86,356 | ) | — | — | |||||||||||||||
| (54,835,253 | ) | (29,795,156 | ) | (3,450,077 | ) | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (54,835,253 | ) | (29,795,156 | ) | (3,592,448 | ) | (86,356 | ) | — | — | |||||||||||||
| 38,068,582 | 101,783,116 | 20,496,322 | 58,194,449 | 12,175,647 | 3,250,647 | |||||||||||||||||
| 119,583,666 | 111,807,878 | 20,420,605 | 197,942 | 635,203 | 509,614 | |||||||||||||||||
| (188,581,973 | ) | (631,140,322 | ) | (26,632,956 | ) | (61,034,771 | ) | (4,863,464 | ) | (18,849,418 | ) | |||||||||||
| 3,886 | 21,451 | 1,934 | 8,744 | 201 | 561 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (30,925,839 | ) | (417,527,877 | ) | 14,285,905 | (2,633,636 | ) | 7,947,587 | (15,088,596 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 67,683,522 | 231,976,705 | 13,040,439 | 25,348,797 | — | — | |||||||||||||||||
| 51,205,368 | 27,104,939 | 3,561,192 | 85,869 | — | — | |||||||||||||||||
| (79,179,310 | ) | (119,228,883 | ) | (2,488,331 | ) | (6,422,594 | ) | — | — | |||||||||||||
| 8,623 | 7,043 | — | 299 | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 39,718,203 | 139,859,804 | 14,113,300 | 19,012,371 | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 57,773,715 | (191,455,870 | ) | 19,681,356 | 77,100,325 | 8,044,610 | (10,067,130 | ) | |||||||||||||||
| 1,690,945,048 | 1,882,400,918 | 370,649,448 | 293,549,123 | 45,044,702 | 55,111,832 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | 1,748,718,763 | $ | 1,690,945,048 | $ | 390,330,804 | $ | 370,649,448 | $ | 53,089,312 | $ | 45,044,702 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | (16,971,783 | ) | $ | (9,822,810 | ) | $ | 392,543 | $ | (127,730 | ) | $ | (235,712 | ) | $ | (69,552 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 829,023 | 2,390,725 | 2,543,915 | 8,126,959 | 1,023,005 | 289,909 | |||||||||||||||||
| 2,752,847 | 2,797,995 | 2,565,403 | 27,919 | 52,802 | 46,032 | |||||||||||||||||
| (4,112,444 | ) | (14,822,528 | ) | (3,305,303 | ) | (8,511,232 | ) | (404,822 | ) | (1,699,886 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| (530,574 | ) | (9,633,808 | ) | 1,804,015 | (356,354 | ) | 670,985 | (1,363,945 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1,468,162 | 5,418,588 | 1,599,371 | 3,512,510 | — | — | |||||||||||||||||
| 1,173,358 | 676,777 | 445,149 | 12,060 | — | — | |||||||||||||||||
| (1,725,905 | ) | (2,764,509 | ) | (307,669 | ) | (886,905 | ) | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 915,615 | 3,330,856 | 1,736,851 | 2,637,665 | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
105
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Statements of Changes in Net Assets (continued)
| ULTRA GROWTH FUND | WORLD INNOVATORS FUND | |||||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (576,479 | ) | $ | (1,064,997 | ) | $ | (877,792 | ) | $ | (1,034,505 | ) | ||||
Net realized gain (loss) on investments, foreign | 11,454,580 | 11,892,472 | 34,101,492 | 21,819,097 | ||||||||||||
Change in unrealized appreciation (depreciation) on | 2,231,366 | 9,619,447 | (13,606,061 | ) | 15,415,124 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 13,109,467 | 20,446,922 | 19,617,639 | 36,199,716 | ||||||||||||
Dividends paid from: | ||||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | (520,869 | ) | (520,867 | ) | — | — | ||||||||||
Net realized gains | (11,827,106 | ) | (9,189,783 | ) | (27,785,763 | ) | (6,256,560 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
| (12,347,975 | ) | (9,710,650 | ) | (27,785,763 | ) | (6,256,560 | ) | |||||||||
Institutional Class | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gains | — | — | (635,561 | ) | (128,118 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
| — | — | (635,561 | ) | (128,118 | ) | |||||||||||
Capital share transactions: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 16,185,539 | 4,951,716 | 32,589,566 | 18,432,994 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 12,027,368 | 9,435,416 | 27,070,171 | 6,041,921 | ||||||||||||
Shares redeemed | (6,315,188 | ) | (15,159,900 | ) | (33,260,994 | ) | (56,466,951 | ) | ||||||||
Redemption fees | 2,718 | 215 | 4,346 | 2,501 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 21,900,437 | (772,553 | ) | 26,403,089 | (31,989,535 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | 1,298,838 | 5,854,133 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | 621,806 | 128,118 | ||||||||||||
Shares redeemed | — | — | (425,732 | ) | (8,754,213 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | — | — | 1,494,912 | (2,771,962 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 22,661,929 | 9,963,719 | 19,094,316 | (4,946,459 | ) | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 111,365,623 | 101,401,904 | 194,856,554 | 199,803,013 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 134,027,552 | $ | 111,365,623 | $ | 213,950,870 | $ | 194,856,554 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment income (loss) included | $ | (2,001,335 | ) | $ | (903,987 | ) | $ | (919,536 | ) | $ | (41,744 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 728,132 | 254,111 | 1,452,714 | 909,168 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 583,853 | 538,244 | 1,271,497 | 326,414 | ||||||||||||
Shares redeemed | (293,003 | ) | (784,313 | ) | (1,511,229 | ) | (2,869,552 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 1,018,982 | 8,042 | 1,212,982 | (1,633,970 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | 57,325 | 299,276 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | 29,016 | �� | 6,903 | |||||||||||
Shares redeemed | — | — | (19,122 | ) | (447,088 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | — | — | 67,219 | (140,909 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
See Notes to Financial Statements.
106
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| INCOME FUND | U.S. TREASURY FUND | |||||||||||||
| Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | Six Months Ended March 31, 2018 (Unaudited) | Year Ended September 30, 2017 | |||||||||||
| $ | 998,569 | $ | 1,793,857 | $ | 3,516,903 | $ | 7,051,224 | |||||||
| (70,828 | ) | (98,032 | ) | (159,554 | ) | (15,383,863 | ) | ||||||
| (1,316,331 | ) | (999,732 | ) | (6,682,843 | ) | (39,287,510 | ) | ||||||
|
|
|
|
|
|
|
| |||||||
| (388,590 | ) | 696,093 | (3,325,494 | ) | (47,620,149 | ) | ||||||||
| (984,812 | ) | (1,793,675 | ) | (3,495,373 | ) | (7,013,012 | ) | |||||||
| — | (124,947 | ) | — | (23,928,558 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||
| (984,812 | ) | (1,918,622 | ) | (3,495,373 | ) | (30,941,570 | ) | |||||||
| — | — | — | — | |||||||||||
| — | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
| — | — | — | — | |||||||||||
| 8,658,878 | 19,939,924 | 36,970,892 | 172,273,407 | |||||||||||
| 630,937 | 1,297,779 | 3,278,156 | 29,434,378 | |||||||||||
| (9,250,473 | ) | (22,860,288 | ) | (64,513,875 | ) | (251,422,062 | ) | |||||||
| 5,681 | 5,601 | 10,527 | 130,945 | |||||||||||
|
|
|
|
|
|
|
| |||||||
| 45,023 | (1,616,984 | ) | (24,254,300 | ) | (49,583,332 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||
| — | — | — | — | |||||||||||
| — | — | — | — | |||||||||||
| — | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
| — | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
| (1,328,379 | ) | (2,839,513 | ) | (31,075,167 | ) | (128,145,051 | ) | |||||||
| 96,866,558 | 99,706,071 | 360,865,764 | 489,010,815 | |||||||||||
|
|
|
|
|
|
|
| |||||||
| $ | 95,538,179 | $ | 96,866,558 | $ | 329,790,597 | $ | 360,865,764 | |||||||
|
|
|
|
|
|
|
| |||||||
$ | 193,488 |
| $ | 4,835 | $ | 57,868 | $ | 36,338 | ||||||
|
|
|
|
|
|
|
| |||||||
| 861,291 | 1,972,799 | 2,289,758 | 10,519,433 | |||||||||||
| 62,831 | 128,472 | 199,955 | 1,897,444 | |||||||||||
| (919,200 | ) | (2,260,040 | ) | (3,983,657 | ) | (14,924,367 | ) | |||||||
|
|
|
|
|
|
|
| |||||||
| 4,922 | (158,769 | ) | (1,493,944 | ) | (2,507,490 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||
| — | — | — | — | |||||||||||
| — | — | — | — | |||||||||||
| — | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
| — | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
107
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Financial Highlights
| Income (Loss) from Investment Operations | Less Distributions | |||||||||||||||||||||||||||||||
| Net Asset Value Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Operations | Redemption Fees (See Note 2) | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |||||||||||||||||||||||||
Core Growth Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 67.44 | (0.21 | ) | 8.21 | 8.00 | — | 4 | — | (4.27 | ) | (4.27 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 56.90 | (0.50 | ) | 11.13 | 10.63 | — | 4 | — | (0.09 | ) | (0.09 | ) | |||||||||||||||||||
Year ended 9/30/1619 | $ | 57.83 | (0.30 | ) | 6.09 | 5.79 | — | 4 | — | (6.72 | ) | (6.72 | ) | |||||||||||||||||||
Year ended 9/30/15 | $ | 53.46 | (0.14 | )12 | 5.95 | 5.81 | — | 4 | — | (1.44 | ) | (1.44 | ) | |||||||||||||||||||
Year ended 9/30/14 | $ | 52.49 | (0.39 | ) | 2.12 | 1.73 | — | 4 | — | (0.76 | ) | (0.76 | ) | |||||||||||||||||||
Year ended 9/30/13 | $ | 41.41 | (0.12 | ) | 11.19 | 11.07 | 0.01 | — | — | — | ||||||||||||||||||||||
Core Growth Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 67.81 | (0.07 | ) | 8.17 | 8.10 | — | 4 | — | (4.27 | ) | (4.27 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 57.16 | (0.30 | ) | 11.07 | 10.77 | — | 4 | (0.03 | ) | (0.09 | ) | (0.12 | ) | ||||||||||||||||||
Year ended 9/30/1619 | $ | 57.99 | (0.14 | ) | 6.03 | 5.89 | — | 4 | — | (6.72 | ) | (6.72 | ) | |||||||||||||||||||
Year ended 9/30/15 | $ | 53.58 | 0.06 | 5.79 | 5.85 | — | 4 | — | (1.44 | ) | (1.44 | ) | ||||||||||||||||||||
Year ended 9/30/14 | $ | 52.57 | (0.23 | ) | 2.00 | 1.77 | — | 4 | — | (0.76 | ) | (0.76 | ) | |||||||||||||||||||
Year ended 9/30/13 | $ | 41.44 | (0.07 | ) | 11.20 | 11.13 | — | 4 | — | — | — | |||||||||||||||||||||
Emerging India Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 4.08 | (0.03 | ) | 0.34 | 0.31 | — | 4 | — | (0.13 | ) | (0.13 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 3.39 | 0.02 | 20 | 0.70 | 0.72 | — | 4 | — | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Year ended 9/30/1619 | $ | 3.07 | (0.03 | ) | 0.39 | 0.36 | — | 4 | — | (0.04 | ) | (0.04 | ) | |||||||||||||||||||
Year ended 9/30/15 | $ | 2.73 | (0.04 | ) | 0.38 | 0.34 | — | 4 | — | 4 | — | — | 4 | |||||||||||||||||||
Year ended 9/30/14 | $ | 1.78 | (— | )4 | 0.95 | 0.95 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/13 | $ | 2.02 | (0.01 | ) | (0.23 | ) | (0.24 | ) | — | 4 | — | — | — | |||||||||||||||||||
Emerging India Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 4.10 | (0.01 | ) | 0.32 | 0.31 | — | — | (0.13 | ) | (0.13 | ) | ||||||||||||||||||||
Year ended 9/30/17 | $ | 3.40 | 0.02 | 20 | 0.71 | 0.73 | — | 4 | — | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Period ended 9/30/1617 19 | $ | 2.82 | (0.01 | ) | 0.59 | 0.58 | — | — | — | — | ||||||||||||||||||||||
Emerging Markets Select Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 10.46 | (0.06 | ) | 0.85 | 0.79 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/17 | $ | 9.23 | (0.03 | ) | 1.26 | 1.23 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 8.35 | (0.05 | ) | 0.93 | 0.88 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/15 | $ | 10.31 | (0.04 | ) | (1.89 | ) | (1.93 | ) | — | 4 | (0.03 | ) | — | (0.03 | ) | |||||||||||||||||
Year ended 9/30/14 | $ | 9.56 | (0.01 | ) | 0.77 | 0.76 | — | 4 | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
Period ended 9/30/1310 | $ | 10.00 | — | 4 | (0.44 | ) | (0.44 | ) | — | 4 | — | — | — | |||||||||||||||||||
Emerging Markets Select Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 10.60 | (0.04 | ) | 0.85 | 0.81 | — | — | — | — | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 9.32 | (0.01 | ) | 1.29 | 1.28 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 8.41 | 0.04 | 0.87 | 0.91 | — | — | — | — | |||||||||||||||||||||||
Year ended 9/30/15 | $ | 10.37 | (0.03 | ) | (1.88 | ) | (1.91 | ) | — | 4 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||
Year ended 9/30/14 | $ | 9.61 | — | 4 | 0.78 | 0.78 | — | 4 | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
Period ended 9/30/1311 | $ | 10.00 | (— | )4 | (0.39 | ) | (0.39 | ) | — | 4 | — | — | — | |||||||||||||||||||
Emerging Markets Small Cap Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 2.99 | (0.03 | ) | 0.25 | 0.22 | — | — | — | — | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 2.67 | (0.04 | ) | 0.36 | 0.32 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 2.39 | (0.04 | ) | 0.32 | 0.28 | — | 4 | — | 4 | — | — | 4 | |||||||||||||||||||
Year ended 9/30/15 | $ | 2.74 | (0.03 | ) | (0.32 | ) | (0.35 | ) | — | 4 | — | 4 | — | — | 4 | |||||||||||||||||
Year ended 9/30/14 | $ | 2.67 | (0.01 | ) | 0.14 | 0.13 | — | 4 | — | (0.06 | ) | (0.06 | ) | |||||||||||||||||||
Year ended 9/30/13 | $ | 2.66 | 0.01 | 0.01 | 0.02 | — | 4 | (0.01 | ) | — | (0.01 | ) | ||||||||||||||||||||
Emerging Markets Small Cap Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 3.00 | (0.02 | ) | 0.24 | 0.22 | — | — | — | — | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 2.67 | 0.01 | 0.32 | 0.33 | — | 4 | — | — | — | ||||||||||||||||||||||
Period ended 9/30/1617 19 | $ | 2.31 | (— | )4 | 0.36 | 0.36 | — | — | — | — | ||||||||||||||||||||||
Frontier Emerging Small Countries Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 2.75 | (0.06 | ) | 0.28 | 0.22 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/17 | $ | 2.63 | (0.08 | ) | 0.20 | 0.12 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 2.77 | 0.02 | (0.16 | ) | (0.14 | ) | — | 4 | — | 4 | — | — | 4 | ||||||||||||||||||
Year ended 9/30/15 | $ | 3.32 | 0.02 | (0.50 | ) | (0.48 | ) | — | 4 | (0.02 | ) | (0.05 | ) | (0.07 | ) | |||||||||||||||||
Year ended 9/30/14 | $ | 2.97 | 0.03 | 0.33 | 0.36 | — | 4 | (0.01 | ) | — | (0.01 | ) | ||||||||||||||||||||
Year ended 9/30/13 | $ | 2.41 | 0.01 | 0.55 | 0.56 | — | 4 | — | 4 | — | 4 | — | 4 | |||||||||||||||||||
Frontier Emerging Small Countries Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 2.76 | (0.10 | ) | 0.33 | 0.23 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/17 | $ | 2.64 | (0.06 | ) | 0.18 | 0.12 | — | 4 | — | — | — | |||||||||||||||||||||
Period ended 9/30/1617 19 | $ | 2.58 | 0.02 | 0.04 | 0.06 | — | 4 | — | — | — | ||||||||||||||||||||||
See Notes to Financial Highlights and Notes to Financial Statements.
108
Table of Contents
| (for a share outstanding throughout each period) | ||
| ||
| ||
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||
| Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and | Expenses Before Waivers and | Net Investment of Waivers and | Net Investment Before Waivers and | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |||||||||||||||||||||||
| $ | 71.17 | 12.11 | 1.19 | 5 | 1.19 | 5 | (0.60 | ) | (0.60 | ) | $ | 1,281,052 | 18% | |||||||||||||||||
| $ | 67.44 | 18.69 | 1.21 | 5 | 1.21 | 5 | (0.78 | ) | (0.78 | ) | $ | 1,211,089 | 26% | |||||||||||||||||
| $ | 56.90 | 10.69 | 1.21 | 5 | 1.21 | 5 | (0.62 | ) | (0.62 | ) | $ | 1,082,679 | 18% | |||||||||||||||||
| $ | 57.83 | 10.87 | 1.17 | 5 | 1.17 | 5 | (0.29 | )12 | (0.29 | )12 | $ | 1,014,515 | 39% | |||||||||||||||||
| $ | 53.46 | 3.26 | 1.18 | 5 | 1.18 | 5 | (0.64 | ) | (0.64 | ) | $ | 859,086 | 26% | |||||||||||||||||
| $ | 52.49 | 26.76 | 1.21 | 5 | 1.21 | 5 | (0.39 | ) | (0.39 | ) | $ | 924,304 | 16% | |||||||||||||||||
| $ | 71.64 | 12.19 | 1.05 | 5 | 1.08 | 5 | (0.46 | ) | (0.49 | ) | $ | 471,812 | 18% | |||||||||||||||||
| $ | 67.81 | 18.87 | 1.05 | 5 | 1.10 | 5 | (0.63 | ) | (0.67 | ) | $ | 383,159 | 26% | |||||||||||||||||
| $ | 57.16 | 10.83 | 1.07 | 5 | 1.09 | 5 | (0.48 | ) | (0.50 | ) | $ | 251,181 | 18% | |||||||||||||||||
| $ | 57.99 | 10.94 | 1.12 | 5 | 1.13 | 5 | (0.29 | )12 | (0.30 | )12 | $ | 150,614 | 39% | |||||||||||||||||
| $ | 53.58 | 3.31 | 1.13 | 5 | 1.19 | 5 | (0.59 | ) | (0.65 | )5 | $ | 49,369 | 26% | |||||||||||||||||
| $ | 52.57 | 26.86 | 1.12 | 5 | 1.32 | 5 | (0.32 | ) | (0.52 | )5 | $ | 19,971 | 16% | |||||||||||||||||
| $ | 4.26 | 7.50 | 1.65 | 5 | 1.65 | 5 | (1.43 | ) | (1.43 | ) | $ | 225,214 | 26% | |||||||||||||||||
| $ | 4.08 | 21.65 | 1.73 | 5 | 1.73 | 5 | (0.92 | ) | (0.92 | ) | $ | 207,949 | 17% | |||||||||||||||||
| $ | 3.39 | 11.98 | 1.82 | 5 | 1.96 | 5 | (1.18 | ) | (1.32 | ) | $ | 71,973 | 42% | |||||||||||||||||
| $ | 3.07 | 12.51 | 1.95 | 5 | 2.12 | 5 | (1.38 | ) | (1.55 | ) | $ | 63,850 | 36% | |||||||||||||||||
| $ | 2.73 | 53.37 | 1.96 | 5 | 2.58 | 5 | (0.76 | ) | (1.38 | ) | $ | 44,150 | 13% | |||||||||||||||||
| $ | 1.78 | (11.88 | ) | 1.95 | 5 | 2.99 | 5 | (0.99 | ) | (2.03 | ) | $ | 15,938 | 40% | ||||||||||||||||
| $ | 4.28 | 7.45 | 1.51 | 5 | 1.55 | 5 | (1.28 | ) | (1.33 | ) | $ | 29,442 | 26% | |||||||||||||||||
| $ | 4.10 | 21.89 | 1.50 | 5 | 1.67 | 5 | (0.77 | ) | (0.94 | ) | $ | 23,739 | 17% | |||||||||||||||||
| $ | 3.40 | 20.57 | 1.50 | 5 | 2.00 | 5 | (0.70 | ) | (1.20 | ) | $ | 9,799 | 42% | |||||||||||||||||
| $ | 11.25 | 7.46 | 21 | 1.51 | 6 | 1.73 | 6 | (1.05 | ) | (1.26 | ) | $ | 15,789 | 22% | ||||||||||||||||
| $ | 10.46 | 13.33 | 1.51 | 6 | 1.90 | 6 | (0.38 | ) | (0.76 | ) | $ | 15,273 | 55% | |||||||||||||||||
| $ | 9.23 | 10.54 | 1.58 | 6 | 1.98 | 6 | (0.15 | ) | (0.55 | ) | $ | 11,892 | 62% | |||||||||||||||||
| $ | 8.35 | (18.81 | ) | 1.70 | 6 | 2.00 | 6 | (0.23 | ) | (0.53 | ) | $ | 18,527 | 46% | ||||||||||||||||
| $ | 10.31 | 7.92 | 1.69 | 5 | 1.88 | 5 | (0.09 | ) | (0.28 | ) | $ | 26,502 | 59% | |||||||||||||||||
| $ | 9.56 | (4.40 | ) | 1.69 | 5 | 2.40 | 5 | 0.04 | (0.67 | ) | $ | 29,374 | 43% | |||||||||||||||||
| $ | 11.41 | 7.55 | 21 | 1.21 | 6 | 1.43 | 6 | (0.75 | ) | (0.97 | ) | $ | 32,684 | 22% | ||||||||||||||||
| $ | 10.60 | 13.73 | 1.21 | 6 | 1.52 | 6 | (0.09 | ) | (0.39 | ) | $ | 28,868 | 55% | |||||||||||||||||
| $ | 9.32 | 10.82 | 1.29 | 6 | 1.59 | 6 | 0.29 | (0.01 | ) | $ | 26,763 | 62% | ||||||||||||||||||
| $ | 8.41 | (18.67 | ) | 1.51 | 6 | 1.77 | 6 | (0.06 | ) | (0.32 | ) | $ | 19,270 | 46% | ||||||||||||||||
| $ | 10.37 | 8.13 | 1.51 | 5 | 1.71 | 5 | 0.05 | (0.15 | ) | $ | 32,306 | 59% | ||||||||||||||||||
| $ | 9.61 | (3.90 | ) | 1.50 | 5 | 2.21 | 5 | (0.18 | ) | (0.89 | ) | $ | 28,861 | 43% | ||||||||||||||||
| $ | 3.21 | 8.03 | 21 | 1.96 | 5 | 1.99 | 5 | (1.20 | ) | (1.24 | ) | $ | 375,772 | 15% | ||||||||||||||||
| $ | 2.99 | 11.99 | 1.96 | 6 | 2.02 | 6 | (0.49 | ) | (0.56 | ) | $ | 390,903 | 58% | |||||||||||||||||
| $ | 2.67 | 11.73 | 1.96 | 6 | 2.00 | 6 | (0.75 | ) | (0.79 | ) | $ | 674,632 | 42% | |||||||||||||||||
| $ | 2.39 | (12.65 | ) | 1.95 | 5 | 2.01 | 5 | (0.63 | ) | (0.69 | ) | $ | 981,367 | 59% | ||||||||||||||||
| $ | 2.74 | 4.90 | 1.95 | 5 | 2.02 | 5 | (0.28 | ) | (0.35 | ) | $ | 1,457,882 | 55% | |||||||||||||||||
| $ | 2.67 | 0.85 | 1.95 | 5 | 2.06 | 5 | 0.21 | 0.09 | $ | 1,785,681 | 41% | |||||||||||||||||||
| $ | 3.22 | 8.00 | 21 | 1.81 | 5 | 1.84 | 5 | (1.05 | ) | (1.08 | ) | $ | 276,154 | 15% | ||||||||||||||||
| $ | 3.00 | 12.36 | 1.81 | 6 | 1.88 | 6 | (0.05 | ) | (0.12 | ) | $ | 252,823 | 58% | |||||||||||||||||
| $ | 2.67 | 15.58 | 1.80 | 6 | 1.81 | 6 | (0.03 | ) | (0.04 | ) | $ | 160,729 | 42% | |||||||||||||||||
| $ | 2.97 | 8.00 | 2.23 | 5 | 2.41 | 5 | (1.13 | ) | (1.32 | ) | $ | 142,076 | 24% | |||||||||||||||||
| $ | 2.75 | 4.56 | 2.28 | 6 | 2.46 | 6 | (0.48 | ) | (0.67 | ) | $ | 155,758 | 59% | |||||||||||||||||
| $ | 2.63 | (4.89 | ) | 2.25 | 5 | 2.39 | 5 | 0.35 | 0.21 | $ | 437,850 | 80% | ||||||||||||||||||
| $ | 2.77 | (14.88 | ) | 2.25 | 5 | 2.28 | 5 | 0.39 | 0.36 | $ | 1,027,673 | 34% | ||||||||||||||||||
| $ | 3.32 | 11.97 | 2.24 | 5 | 2.24 | 5 | 0.79 | 0.79 | $ | 1,324,694 | 22% | |||||||||||||||||||
| $ | 2.97 | 22.88 | 2.25 | 5 | 2.43 | 5 | 0.81 | 0.63 | $ | 730,694 | 13% | |||||||||||||||||||
| $ | 2.99 | 8.33 | 2.03 | 6 | 2.13 | 6 | (0.99 | ) | (1.09 | ) | $ | 28,572 | 24% | |||||||||||||||||
| $ | 2.76 | 4.55 | 2.08 | 6 | 2.17 | 6 | (0.34 | ) | (0.44 | ) | $ | 42,006 | 59% | |||||||||||||||||
| $ | 2.64 | 2.33 | 2.06 | 6 | 2.06 | 6 | 1.40 | 1.40 | $ | 139,699 | 80% | |||||||||||||||||||
109
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Financial Highlights (continued)
| Income (Loss) from Investment Operations | Less Distributions | |||||||||||||||||||||||||||||||
| Net Asset Value Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Operations | Redemption Fees (See Note 2) | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |||||||||||||||||||||||||
Global Opportunities Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 3.76 | (0.01 | ) | 0.54 | 0.53 | — | 4 | — | (0.41 | ) | (0.41 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 3.52 | (0.07 | ) | 0.58 | 0.51 | — | 4 | — | 4 | (0.27 | ) | (0.27 | ) | ||||||||||||||||||
Year ended 9/30/1619 | $ | 3.51 | (0.04 | ) | 0.51 | 0.47 | — | 4 | (0.01 | ) | (0.45 | ) | (0.46 | ) | ||||||||||||||||||
Year ended 9/30/15 | $ | 4.28 | (0.05 | ) | (0.08 | ) | (0.13 | ) | — | 4 | (0.01 | ) | (0.63 | ) | (0.64 | ) | ||||||||||||||||
Year ended 9/30/14 | $ | 4.58 | (0.05 | ) | 0.23 | 0.18 | — | 4 | — | 4 | (0.48 | ) | (0.48 | ) | ||||||||||||||||||
Year ended 9/30/13 | $ | 4.15 | (0.02 | ) | 0.93 | 0.91 | — | 4 | — | (0.48 | ) | (0.48 | ) | |||||||||||||||||||
Global Opportunities Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 3.76 | 0.01 | 0.53 | 0.54 | — | — | (0.41 | ) | (0.41 | ) | |||||||||||||||||||||
Year ended 9/30/17 | $ | 3.52 | (0.02 | ) | 0.54 | 0.52 | — | (0.01 | ) | (0.27 | ) | (0.28 | ) | |||||||||||||||||||
Period ended 9/30/1617 19 | $ | 3.09 | (— | )4 | 0.43 | 0.43 | — | — | — | — | ||||||||||||||||||||||
Global Value Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 9.93 | 0.09 | 0.05 | 0.14 | — | 4 | (0.08 | ) | (1.29 | ) | (1.37 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 9.02 | 0.19 | 1.23 | 1.42 | — | 4 | (0.19 | ) | (0.32 | ) | (0.51 | ) | |||||||||||||||||||
Year ended 9/30/1619 | $ | 8.84 | 0.16 | 1.01 | 1.17 | — | 4 | (0.16 | ) | (0.83 | ) | (0.99 | ) | |||||||||||||||||||
Year ended 9/30/15 | $ | 12.69 | 0.15 | (0.69 | ) | (0.54 | ) | — | 4 | (0.16 | ) | (3.15 | ) | (3.31 | ) | |||||||||||||||||
Year ended 9/30/14 | $ | 16.57 | 0.21 | 1.49 | 1.70 | — | 4 | (0.22 | ) | (5.36 | ) | (5.58 | ) | |||||||||||||||||||
Year ended 9/30/13 | $ | 14.31 | 0.22 | 2.37 | 2.59 | — | 4 | (0.20 | ) | (0.13 | ) | (0.33 | ) | |||||||||||||||||||
Global Value Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 9.92 | 0.10 | 0.05 | 0.15 | — | 4 | (0.09 | ) | (1.29 | ) | (1.38 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 9.01 | 0.18 | 1.25 | 1.43 | — | 4 | (0.20 | ) | (0.32 | ) | (0.52 | ) | |||||||||||||||||||
Year ended 9/30/1619 | $ | 8.84 | 0.29 | 0.88 | 1.17 | — | 4 | (0.17 | ) | (0.83 | ) | (1.00 | ) | |||||||||||||||||||
Year ended 9/30/15 | $ | 12.69 | (0.04 | ) | (0.49 | ) | (0.53 | ) | — | 4 | (0.17 | ) | (3.15 | ) | (3.32 | ) | ||||||||||||||||
Year ended 9/30/14 | $ | 16.57 | 0.20 | 1.52 | 1.72 | — | 4 | (0.24 | ) | (5.36 | ) | (5.60 | ) | |||||||||||||||||||
Year ended 9/30/13 | $ | 14.31 | 0.22 | 2.39 | 2.61 | — | 4 | (0.22 | ) | (0.13 | ) | (0.35 | ) | |||||||||||||||||||
International Growth Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 33.84 | (0.01 | ) | 3.06 | 3.05 | — | 4 | — | (0.93 | ) | (0.93 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 31.43 | (0.13 | ) | 3.61 | 3.48 | — | 4 | — | (1.07 | ) | (1.07 | ) | |||||||||||||||||||
Year ended 9/30/1619 | $ | 27.88 | (0.22 | ) | 3.77 | 3.55 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/15 | $ | 26.78 | (0.09 | ) | 1.39 | 1.30 | — | 4 | (0.01 | ) | (0.19 | ) | (0.20 | ) | ||||||||||||||||||
Year ended 9/30/14 | $ | 28.76 | (0.02 | ) | (1.24 | ) | (1.26 | ) | — | 4 | — | (0.72 | ) | (0.72 | ) | |||||||||||||||||
Year ended 9/30/13 | $ | 22.44 | 0.07 | 6.32 | 6.39 | 0.01 | (0.08 | ) | — | (0.08 | ) | |||||||||||||||||||||
International Growth Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 33.88 | 0.05 | 3.02 | 3.07 | — | 4 | — | (0.93 | ) | (0.93 | ) | ||||||||||||||||||||
Year ended 9/30/17 | $ | 31.46 | (0.05 | ) | 3.56 | 3.51 | — | 4 | (0.02 | ) | (1.07 | ) | (1.09 | ) | ||||||||||||||||||
Period ended 9/30/1617 19 | $ | 28.46 | 0.01 | 2.99 | 3.00 | — | 4 | — | — | — | ||||||||||||||||||||||
International Opportunities Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 3.47 | (0.03 | ) | 0.33 | 0.30 | — | 4 | — | (0.24 | ) | (0.24 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 3.21 | (0.04 | ) | 0.30 | 0.26 | — | 4 | — | — | — | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 2.74 | (0.01 | ) | 0.61 | 0.60 | — | 4 | — | (0.13 | ) | (0.13 | ) | |||||||||||||||||||
Year ended 9/30/15 | $ | 3.09 | (0.01 | ) | (0.04 | ) | (0.05 | ) | — | 4 | — | (0.30 | ) | (0.30 | ) | |||||||||||||||||
Year ended 9/30/14 | $ | 2.94 | (0.01 | ) | 0.33 | 0.32 | — | 4 | — | (0.17 | ) | (0.17 | ) | |||||||||||||||||||
Year ended 9/30/13 | $ | 2.41 | (— | )4 | 0.53 | 0.53 | — | 4 | — | — | — | |||||||||||||||||||||
International Opportunities Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 3.50 | (0.02 | ) | 0.32 | 0.30 | — | 4 | — | (0.24 | ) | (0.24 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 3.23 | (0.01 | ) | 0.28 | 0.27 | — | 4 | — | — | — | |||||||||||||||||||||
Period ended 9/30/1617 19 | $ | 2.71 | 0.01 | 0.51 | 0.52 | — | 4 | — | — | — | ||||||||||||||||||||||
Long/Short Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 12.58 | — | 4 | (0.16 | ) | (0.16 | ) | — | 4 | — | — | 4 | — | 4 | |||||||||||||||||
Year ended 9/30/17 | $ | 12.63 | (0.14 | ) | 0.09 | (0.05 | ) | — | 4 | — | — | 4 | — | 4 | ||||||||||||||||||
Year ended 9/30/1619 | $ | 12.36 | (0.08 | ) | 1.60 | 1.52 | — | 4 | (0.01 | ) | (1.24 | ) | (1.25 | ) | ||||||||||||||||||
Year ended 9/30/15 | $ | 16.29 | 0.02 | (3.00 | ) | (2.98 | ) | — | 4 | (0.14 | ) | (0.81 | ) | (0.95 | ) | |||||||||||||||||
Year ended 9/30/14 | $ | 15.82 | 0.17 | 0.65 | 0.82 | — | 4 | — | (0.35 | ) | (0.35 | ) | ||||||||||||||||||||
Year ended 9/30/13 | $ | 13.66 | (0.04 | ) | 2.23 | 2.19 | — | 4 | — | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Long/Short Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 12.66 | (0.08 | ) | (0.06 | ) | (0.14 | ) | 0.01 | — | — | 4 | — | 4 | ||||||||||||||||||
Year ended 9/30/17 | $ | 12.67 | (0.12 | ) | 0.10 | (0.02 | ) | 0.01 | — | — | 4 | — | 4 | |||||||||||||||||||
Year ended 9/30/1619 | $ | 12.38 | 0.21 | 1.33 | 1.54 | 0.02 | (0.03 | ) | (1.24 | ) | (1.27 | ) | ||||||||||||||||||||
Year ended 9/30/15 | $ | 16.32 | 0.06 | (3.02 | ) | (2.96 | ) | — | 4 | (0.17 | ) | (0.81 | ) | (0.98 | ) | |||||||||||||||||
Year ended 9/30/14 | $ | 15.83 | 0.18 | 0.66 | 0.84 | — | 4 | — | (0.35 | ) | (0.35 | ) | ||||||||||||||||||||
Period ended 9/30/1311 | $ | 13.80 | (0.01 | ) | 2.07 | 2.06 | — | 4 | — | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
See Notes to Financial Highlights and Notes to Financial Statements.
110
Table of Contents
| (for a share outstanding throughout each period) | ||
| ||
| ||
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||
| Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and | Expenses Before Waivers and | Net Investment of Waivers and | Net Investment Before Waivers and | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |||||||||||||||||||||||
| $ | 3.88 | 14.84 | 21 | 1.55 | 6 | 1.55 | 6 | (0.79 | ) | (0.79 | ) | $ | 103,679 | 24% | ||||||||||||||||
| $ | 3.76 | 16.61 | 1.59 | 6 | 1.59 | 6 | (1.09 | ) | (1.09 | ) | $ | 95,847 | 27% | |||||||||||||||||
| $ | 3.52 | 13.73 | 1.62 | 6 | 1.62 | 6 | (0.98 | ) | (0.98 | ) | $ | 150,945 | 44% | |||||||||||||||||
| $ | 3.51 | (3.88 | ) | 1.81 | 5 | 1.81 | 5 | (1.10 | ) | (1.10 | ) | $ | 155,968 | 54% | ||||||||||||||||
| $ | 4.28 | 3.94 | 1.78 | 5 | 1.78 | 5 | (0.83 | ) | (0.83 | ) | $ | 192,664 | 42% | |||||||||||||||||
| $ | 4.58 | 24.23 | 1.80 | 5 | 1.80 | 5 | (0.70 | ) | (0.70 | ) | $ | 220,460 | 43% | |||||||||||||||||
| $ | 3.89 | 14.84 | 1.36 | 6 | 1.70 | 6 | (0.51 | ) | (0.85 | ) | $ | 10,292 | 24% | |||||||||||||||||
| $ | 3.76 | 16.92 | 1.36 | 5 | 1.93 | 5 | (0.85 | ) | (1.41 | ) | $ | 7,149 | 27% | |||||||||||||||||
| $ | 3.52 | 13.92 | 1.35 | 5 | 2.32 | 5 | (0.57 | ) | (1.54 | ) | $ | 5,348 | 44% | |||||||||||||||||
| $ | 8.70 | 1.38 | 21 | 1.10 | 5 | 1.18 | 5 | 1.94 | 1.87 | $ | 161,826 | 47% | ||||||||||||||||||
| $ | 9.93 | 16.11 | 1.10 | 5 | 1.19 | 5 | 1.93 | 1.84 | $ | 175,730 | 44% | |||||||||||||||||||
| $ | 9.02 | 13.92 | 1.10 | 5 | 1.17 | 5 | 1.70 | 1.63 | $ | 189,691 | 26% | |||||||||||||||||||
| $ | 8.84 | (6.61 | ) | 1.10 | 5 | 1.12 | 5 | 1.34 | 1.32 | $ | 244,056 | 39% | ||||||||||||||||||
| $ | 12.69 | 11.78 | 1.11 | 5 8 | 1.12 | 5 8 | 1.38 | 1.37 | $ | 409,169 | 53% | |||||||||||||||||||
| $ | 16.57 | 18.40 | 1.10 | 5 | 1.16 | 5 | 1.27 | 1.21 | $ | 786,910 | 47% | |||||||||||||||||||
| $ | 8.69 | 1.46 | 21 | 0.95 | 5 | 1.53 | 5 | 2.08 | 1.51 | $ | 4,387 | 47% | ||||||||||||||||||
| $ | 9.92 | 16.31 | 0.95 | 5 | 2.31 | 5 | 2.05 | 0.70 | $ | 4,594 | 44% | |||||||||||||||||||
| $ | 9.01 | 13.97 | 0.96 | 5 | 1.72 | 5 | 1.76 | 1.00 | $ | 3,589 | 26% | |||||||||||||||||||
| $ | 8.84 | (6.50 | ) | 0.98 | 5 | 1.44 | 5 | 1.40 | 0.94 | $ | 1,525 | 39% | ||||||||||||||||||
| $ | 12.69 | 11.95 | 0.98 | 5 | 1.25 | 5 | 1.52 | 1.25 | $ | 8,068 | 53% | |||||||||||||||||||
| $ | 16.57 | 18.54 | 0.98 | 5 | 1.35 | 5 | 1.37 | 1.00 | $ | 15,444 | 47% | |||||||||||||||||||
| $ | 35.96 | 9.46 | 21 | 1.45 | 5 | 1.45 | 5 | 0.15 | 0.15 | $ | 740,381 | 23% | ||||||||||||||||||
| $ | 33.84 | 12.04 | 1.46 | 5 | 1.46 | 5 | (0.28 | ) | (0.28 | ) | $ | 804,613 | 31% | |||||||||||||||||
| $ | 31.43 | 12.73 | 1.48 | 5 | 1.48 | 5 | (0.41 | ) | (0.41 | ) | $ | 945,168 | 50% | |||||||||||||||||
| $ | 27.88 | 4.83 | 1.50 | 5 | 1.50 | 5 | (0.32 | ) | (0.32 | ) | $ | 1,316,095 | 46% | |||||||||||||||||
| $ | 26.78 | (4.53 | ) | 1.46 | 5 | 1.46 | 5 | (0.06 | ) | (0.06 | ) | $ | 1,421,086 | 42% | ||||||||||||||||
| $ | 28.76 | 28.63 | 1.49 | 5 | 1.49 | 5 | 0.25 | 0.25 | $ | 1,326,931 | 44% | |||||||||||||||||||
| $ | 36.02 | 9.51 | 21 | 1.35 | 5 | 1.35 | 5 | 0.37 | 0.37 | $ | 896,170 | 23% | ||||||||||||||||||
| $ | 33.88 | 12.16 | 1.35 | 5 | 1.37 | 5 | (0.14 | ) | (0.16 | ) | $ | 656,860 | 31% | |||||||||||||||||
| $ | 31.46 | 10.54 | 1.35 | 5 | 1.36 | 5 | 0.07 | 0.06 | $ | 509,016 | 50% | |||||||||||||||||||
| $ | 3.53 | 9.22 | 21 | 2.12 | 5 | 2.11 | 5 | (1.55 | ) | (1.55 | ) | $ | 268,265 | 18% | ||||||||||||||||
| $ | 3.47 | 8.10 | 2.24 | 6 | 2.24 | 6 | (0.88 | ) | (0.88 | ) | $ | 265,879 | 59% | |||||||||||||||||
| $ | 3.21 | 22.73 | 2.25 | 5 | 2.29 | 5 | (0.35 | ) | (0.39 | ) | $ | 512,252 | 41% | |||||||||||||||||
| $ | 2.74 | (1.44 | ) | 2.25 | 5 | 2.43 | 5 | (0.36 | ) | (0.54 | ) | $ | 453,495 | 25% | ||||||||||||||||
| $ | 3.09 | 11.53 | 2.25 | 5 | 2.41 | 5 | (0.40 | ) | (0.56 | ) | $ | 339,659 | 38% | |||||||||||||||||
| $ | 2.94 | 21.99 | 2.25 | 5 | 2.42 | 5 | (0.03 | ) | (0.20 | ) | $ | 278,216 | 49% | |||||||||||||||||
| $ | 3.56 | 9.14 | 21 | 1.95 | 5 | 1.97 | 5 | (1.38 | ) | (1.40 | ) | $ | 254,310 | 18% | ||||||||||||||||
| $ | 3.50 | 8.36 | 1.96 | 6 | 2.04 | 6 | (0.39 | ) | (0.47 | ) | $ | 234,795 | 59% | |||||||||||||||||
| $ | 3.23 | 19.19 | 1.95 | 5 | 2.04 | 5 | 0.64 | 0.55 | $ | 168,136 | 41% | |||||||||||||||||||
| $ | 12.42 | (1.27 | ) | 1.86 | 6 7 | 1.91 | 6 7 | 0.64 | 0.59 | $ | 60,270 | 38% | ||||||||||||||||||
| $ | 12.58 | (0.37 | ) | 2.31 | 6 7 | 2.31 | 6 7 | (0.71 | ) | (0.71 | ) | $ | 79,841 | 40% | ||||||||||||||||
| $ | 12.63 | 13.38 | 1.83 | 6 7 | 1.83 | 6 7 | (0.06 | ) | (0.06 | ) | $ | 184,158 | 47% | |||||||||||||||||
| $ | 12.36 | (19.33 | ) | 1.61 | 7 | 1.61 | 7 | 0.12 | 0.12 | $ | 616,192 | 44% | ||||||||||||||||||
| $ | 16.29 | 5.21 | 1.53 | 7 9 | 1.53 | 7 9 | 1.05 | 1.05 | $ | 1,696,707 | 47% | |||||||||||||||||||
| $ | 15.82 | 16.09 | 1.51 | 7 | 1.51 | 7 | (0.22 | ) | (0.22 | ) | $ | 1,479,371 | 47% | |||||||||||||||||
| $ | 12.53 | (1.03 | ) | 1.36 | 6 7 | 1.77 | 6 7 | 0.92 | 0.52 | $ | 10,340 | 38% | ||||||||||||||||||
| $ | 12.66 | (0.05 | ) | 2.03 | 6 7 | 2.15 | 6 7 | (0.44 | ) | (0.55 | ) | $ | 26,078 | 40% | ||||||||||||||||
| $ | 12.67 | 13.71 | 1.52 | 6 7 | 1.57 | 6 7 | 0.18 | 0.13 | $ | 64,009 | 47% | |||||||||||||||||||
| $ | 12.38 | (19.19 | ) | 1.47 | 7 | 1.47 | 7 | 0.25 | 0.25 | $ | 408,792 | 44% | ||||||||||||||||||
| $ | 16.32 | 5.33 | 1.42 | 7 | 1.42 | 7 | 1.18 | 1.18 | $ | 1,022,568 | 47% | |||||||||||||||||||
| $ | 15.83 | 14.99 | 1.39 | 7 | 1.40 | 7 | (0.16 | ) | (0.17 | ) | $ | 824,780 | 47% | |||||||||||||||||
111
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Financial Highlights (continued)
| Income (Loss) from Investment Operations | Less Distributions | |||||||||||||||||||||||||||||||||||
| Net Asset Value Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Operations | Redemption Fees (See Note 2) | Dividends from Net Investment Income | Distributions from Net Realized Gains | Return of Capital Distribution | Total Distributions | ||||||||||||||||||||||||||||
Micro Cap Fund |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 8.23 | (0.03 | ) | 1.01 | 0.98 | — | 4 | — | (1.17 | ) | — | (1.17 | ) | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 7.19 | (0.11 | ) | 1.75 | 1.64 | — | 4 | (0.01 | ) | (0.59 | ) | — | (0.60 | ) | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 7.21 | (0.08 | ) | 1.15 | 1.07 | — | 4 | — | (1.09 | ) | — | (1.09 | ) | ||||||||||||||||||||||
Year ended 9/30/15 | $ | 7.36 | (0.08 | )13 | 0.28 | 0.20 | — | 4 | — | 4 | (0.35 | ) | — | (0.35 | ) | |||||||||||||||||||||
Year ended 9/30/14 | $ | 7.42 | (0.14 | ) | 0.08 | (0.06 | ) | — | 4 | — | — | — | — | |||||||||||||||||||||||
Year ended 9/30/13 | $ | 5.71 | (0.10 | ) | 1.81 | 1.71 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Micro Cap Value Fund |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 3.48 | (0.01 | ) | 0.17 | 0.16 | — | 4 | — | (0.27 | ) | — | (0.27 | ) | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 2.87 | (0.02 | ) | 0.68 | 0.66 | — | 4 | — | 4 | (0.05 | ) | — | (0.05 | ) | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 2.87 | (0.02 | ) | 0.34 | 0.32 | — | 4 | — | (0.32 | ) | — | (0.32 | ) | ||||||||||||||||||||||
Year ended 9/30/15 | $ | 3.02 | (0.02 | )14 | 0.31 | 0.29 | — | 4 | — | (0.44 | ) | — | (0.44 | ) | ||||||||||||||||||||||
Year ended 9/30/14 | $ | 3.45 | (0.04 | ) | 0.18 | 0.14 | — | 4 | — | (0.57 | ) | — | (0.57 | ) | ||||||||||||||||||||||
Year ended 9/30/13 | $ | 2.85 | (0.03 | ) | 0.91 | 0.88 | — | 4 | — | (0.28 | ) | — | (0.28 | ) | ||||||||||||||||||||||
Small Cap Growth Fund — Investor Class |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 45.72 | (0.22 | ) | 6.34 | 6.12 | — | 4 | — | (5.07 | ) | — | (5.07 | ) | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 43.52 | (0.53 | ) | 6.24 | 5.71 | — | 4 | — | (3.51 | ) | — | (3.51 | ) | ||||||||||||||||||||||
Year ended 9/30/1619 | $ | 45.97 | (0.47 | ) | 5.65 | 5.18 | — | 4 | — | (7.63 | ) | — | (7.63 | ) | ||||||||||||||||||||||
Year ended 9/30/15 | $ | 50.25 | (0.40 | ) | 0.93 | 0.53 | — | 4 | — | (4.81 | ) | — | (4.81 | ) | ||||||||||||||||||||||
Year ended 9/30/14 | $ | 51.31 | (0.41 | ) | 1.03 | 0.62 | — | 4 | — | (1.68 | ) | — | (1.68 | ) | ||||||||||||||||||||||
Year ended 9/30/13 | $ | 43.82 | (0.15 | ) | 10.53 | 10.38 | — | 4 | — | (2.89 | ) | — | (2.89 | ) | ||||||||||||||||||||||
Small Cap Growth Fund — Institutional Class |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 45.89 | (0.12 | ) | 6.31 | 6.19 | — | 4 | — | (5.07 | ) | — | (5.07 | ) | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 43.58 | (0.17 | ) | 5.99 | 5.82 | — | 4 | — | (3.51 | ) | — | (3.51 | ) | ||||||||||||||||||||||
Period ended 9/30/1617 19 | $ | 37.58 | (0.07 | ) | 6.07 | 6.00 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Small Cap Value Fund — Investor Class |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 7.94 | 0.02 | 0.34 | 0.36 | — | 4 | (0.01 | ) | (0.52 | ) | — | (0.53 | ) | ||||||||||||||||||||||
Year ended 9/30/17 | $ | 6.61 | — | 4 | 1.33 | 1.33 | — | 4 | — | 4 | — | — | — | |||||||||||||||||||||||
Year ended 9/30/1619 | $ | 5.86 | 0.01 | 0.77 | 0.78 | — | 4 | (0.03 | ) | — | — | (0.03 | ) | |||||||||||||||||||||||
Year ended 9/30/15 | $ | 5.69 | 0.05 | 15 | 0.12 | 0.17 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Year ended 9/30/14 | $ | 5.12 | (0.02 | ) | 0.59 | 0.57 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Year ended 9/30/13 | $ | 3.81 | (0.01 | ) | 1.32 | 1.31 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Small Cap Value Fund — Institutional Class |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 7.98 | 0.03 | 0.34 | 0.37 | — | (0.02 | ) | (0.52 | ) | — | (0.54 | ) | |||||||||||||||||||||||
Year ended 9/30/17 | $ | 6.65 | 0.01 | 1.34 | 1.35 | — | 4 | (0.02 | ) | — | — | (0.02 | ) | |||||||||||||||||||||||
Year ended 9/30/1619 | $ | 5.88 | 0.02 | 0.78 | 0.80 | — | 4 | (0.03 | ) | — | — | (0.03 | ) | |||||||||||||||||||||||
Year ended 9/30/15 | $ | 5.72 | 0.05 | 15 | 0.11 | 0.16 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Year ended 9/30/14 | $ | 5.14 | (0.03 | ) | 0.61 | 0.58 | — | — | — | — | — | |||||||||||||||||||||||||
Year ended 9/30/13 | $ | 3.82 | (0.01 | ) | 1.33 | 1.32 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Strategic Income Fund |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 11.78 | 0.13 | 0.06 | 0.19 | — | 4 | (0.16 | ) | — | — | (0.16 | ) | |||||||||||||||||||||||
Year ended 9/30/17 | $ | 10.62 | 0.16 | 1.12 | 1.28 | — | 4 | (0.12 | ) | — | — | (0.12 | ) | |||||||||||||||||||||||
Year ended 9/30/1619 | $ | 10.49 | 0.26 | 0.49 | 0.75 | — | 4 | (0.23 | ) | (0.35 | ) | (0.04 | ) | (0.62 | ) | |||||||||||||||||||||
Year ended 9/30/15 | $ | 12.63 | 0.30 | (1.38 | ) | (1.08 | ) | — | 4 | (0.44 | ) | (0.62 | ) | — | (1.06 | ) | ||||||||||||||||||||
Year ended 9/30/14 | $ | 11.08 | 0.32 | 1.74 | 2.06 | — | 4 | (0.35 | ) | (0.16 | ) | — | (0.51 | ) | ||||||||||||||||||||||
Year ended 9/30/13 | $ | 9.30 | 0.33 | 1.78 | 2.11 | — | 4 | (0.33 | ) | — | — | (0.33 | ) | |||||||||||||||||||||||
Ultra Growth Fund |
| |||||||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 21.81 | (0.05 | ) | 2.56 | 2.51 | — | 4 | (0.10 | ) | (2.34 | ) | — | (2.44 | ) | |||||||||||||||||||||
Year ended 9/30/17 | $ | 19.89 | (0.20 | ) | 4.12 | 3.92 | — | 4 | (0.11 | ) | (1.89 | ) | — | (2.00 | ) | |||||||||||||||||||||
Year ended 9/30/1619 | $ | 18.06 | (0.18 | ) | 3.66 | 3.48 | — | 4 | — | (1.65 | ) | — | (1.65 | ) | ||||||||||||||||||||||
Year ended 9/30/15 | $ | 23.67 | (0.26 | ) | 1.54 | 1.28 | — | 4 | (0.01 | ) | (6.88 | ) | — | (6.89 | ) | |||||||||||||||||||||
Year ended 9/30/14 | $ | 24.57 | (0.06 | ) | 0.80 | 0.74 | — | 4 | — | (1.64 | ) | — | (1.64 | ) | ||||||||||||||||||||||
Year ended 9/30/13 | $ | 22.83 | (0.15 | ) | 4.96 | 4.81 | — | 4 | — | (3.07 | ) | — | (3.07 | ) | ||||||||||||||||||||||
See Notes to Financial Highlights and Notes to Financial Statements.
112
Table of Contents
| (for a share outstanding throughout each period) | ||
| ||
| ||
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||
| Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and | Expenses Before Waivers and | Net Investment of Waivers and | Net Investment Before Waivers and | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |||||||||||||||||||||||
| $ | 8.04 | 12.70 | 21 | 1.65 | 5 | 1.65 | 5 | (1.23 | ) | (1.23 | ) | $ | 369,575 | 33% | ||||||||||||||||
| $ | 8.23 | 25.10 | 1.75 | 5 | 1.75 | 5 | (1.43 | ) | (1.43 | ) | $ | 311,583 | 31% | |||||||||||||||||
| $ | 7.19 | 16.04 | 1.92 | 5 | 1.92 | 5 | (1.14 | ) | (1.14 | ) | $ | 277,691 | 32% | |||||||||||||||||
| $ | 7.21 | 2.45 | 1.90 | 5 | 1.90 | 5 | (0.85 | )13 | (0.85 | )13 | $ | 273,311 | 31% | |||||||||||||||||
| $ | 7.36 | (0.81 | ) | 1.97 | 1.97 | (1.67 | ) | (1.67 | ) | $ | 293,815 | 26% | ||||||||||||||||||
| $ | 7.42 | 29.95 | 2.13 | 5 | 2.13 | 5 | (1.28 | ) | (1.28 | ) | $ | 323,175 | 17% | |||||||||||||||||
| $ | 3.37 | 4.57 | 1.73 | 5 | 1.73 | 5 | (0.86 | ) | (0.86 | ) | $ | 249,622 | 29% | |||||||||||||||||
| $ | 3.48 | 23.29 | 1.85 | 5 | 1.85 | 5 | (0.81 | ) | (0.81 | ) | $ | 216,087 | 57% | |||||||||||||||||
| $ | 2.87 | 12.04 | 1.95 | 5 | 2.04 | 5 | (0.59 | ) | (0.68 | ) | $ | 179,116 | 73% | |||||||||||||||||
| $ | 2.87 | 9.99 | 1.96 | 6 | 2.02 | 6 | (0.55 | )14 | (0.61 | )14 | $ | 154,169 | 53% | |||||||||||||||||
| $ | 3.02 | 3.26 | 2.03 | 5 | 2.09 | 5 | (1.31 | ) | (1.37 | ) | $ | 158,800 | 71% | |||||||||||||||||
| $ | 3.45 | 33.92 | 2.25 | 5 | 2.25 | 5 | (0.92 | ) | (0.92 | ) | $ | 166,487 | 66% | |||||||||||||||||
| $ | 46.77 | 14.25 | 1.23 | 5 | 1.23 | 5 | (0.90 | ) | (0.90 | ) | $ | 1,184,918 | 20% | |||||||||||||||||
| $ | 45.72 | 14.29 | 1.27 | 5 | 1.27 | 5 | (0.88 | ) | (0.88 | ) | $ | 1,182,573 | 19% | |||||||||||||||||
| $ | 43.52 | 11.87 | 1.29 | 5 | 1.29 | 5 | (0.79 | ) | (0.79 | ) | $ | 1,544,796 | 20% | |||||||||||||||||
| $ | 45.97 | 0.39 | 1.22 | 5 | 1.22 | 5 | (0.75 | ) | (0.75 | ) | $ | 2,000,588 | 31% | |||||||||||||||||
| $ | 50.25 | 1.09 | 1.21 | 5 | 1.21 | 5 | (0.75 | ) | (0.75 | ) | $ | 2,219,638 | 23% | |||||||||||||||||
| $ | 51.31 | 25.34 | 1.23 | 5 | 1.23 | 5 | (0.42 | ) | (0.42 | ) | $ | 2,487,031 | 10% | |||||||||||||||||
| $ | 47.01 | 14.35 | 1.05 | 5 | 1.09 | 5 | (0.72 | ) | (0.76 | ) | $ | 563,801 | 20% | |||||||||||||||||
| $ | 45.89 | 14.54 | 1.05 | 5 | 1.11 | 5 | (0.66 | ) | (0.72 | ) | $ | 508,373 | 19% | |||||||||||||||||
| $ | 43.58 | 15.97 | 1.05 | 5 | 1.11 | 5 | (0.63 | ) | (0.69 | ) | $ | 337,605 | 20% | |||||||||||||||||
| $ | 7.77 | 4.34 | 1.20 | 5 | 1.20 | 5 | 0.48 | 0.48 | $ | 328,180 | 28% | |||||||||||||||||||
| $ | 7.94 | 20.20 | 1.21 | 5 | 1.21 | 5 | 0.04 | 0.04 | $ | 320,978 | 37% | |||||||||||||||||||
| $ | 6.61 | 13.37 | 1.24 | 5 | 1.24 | 5 | 0.23 | 0.23 | $ | 269,710 | 57% | |||||||||||||||||||
| $ | 5.86 | 2.99 | 1.21 | 5 | 1.21 | 5 | 0.82 | 15 | 0.82 | 15 | $ | 257,655 | 57% | |||||||||||||||||
| $ | 5.69 | 11.13 | 1.20 | 5 | 1.20 | 5 | (0.52 | ) | (0.52 | ) | $ | 265,521 | 50% | |||||||||||||||||
| $ | 5.12 | 34.38 | 1.26 | 5 | 1.27 | 5 | (0.21 | ) | (0.22 | ) | $ | 201,581 | 40% | |||||||||||||||||
| $ | 7.81 | 4.48 | 1.05 | 5 | 1.13 | 5 | 0.64 | 0.57 | $ | 62,150 | 28% | |||||||||||||||||||
| $ | 7.98 | 20.28 | 1.05 | 5 | 1.16 | 5 | 0.21 | 0.11 | $ | 49,671 | 37% | |||||||||||||||||||
| $ | 6.65 | 13.54 | 1.08 | 5 | 1.20 | 5 | 0.40 | 0.28 | $ | 23,839 | 57% | |||||||||||||||||||
| $ | 5.88 | 2.97 | 1.15 | 5 | 1.20 | 5 | 0.92 | 15 | 0.87 | 15 | $ | 18,941 | 57% | |||||||||||||||||
| $ | 5.72 | 11.28 | 1.15 | 5 | 1.44 | 5 | (0.49 | ) | (0.78 | ) | $ | 10,436 | 50% | |||||||||||||||||
| $ | 5.14 | 34.55 | 1.15 | 5 | 1.46 | 5 | (0.11 | ) | (0.42 | ) | $ | 9,359 | 40% | |||||||||||||||||
| $ | 11.81 | 1.60 | 0.95 | 5 | 1.07 | 5 | 1.97 | 1.85 | $ | 53,089 | 32% | |||||||||||||||||||
| $ | 11.78 | 12.09 | 0.95 | 5 | 1.10 | 5 | 1.12 | 0.98 | $ | 45,045 | 34% | |||||||||||||||||||
| $ | 10.62 | 7.38 | 0.95 | 5 | 1.04 | 5 | 2.50 | 2.41 | $ | 55,112 | 45% | |||||||||||||||||||
| $ | 10.49 | (9.54 | ) | 0.95 | 5 | 0.95 | 5 | 2.51 | 2.51 | $ | 88,661 | 78% | ||||||||||||||||||
| $ | 12.63 | 18.94 | 0.95 | 5 | 0.96 | 5 | 2.59 | 2.58 | $ | 94,958 | 69% | |||||||||||||||||||
| $ | 11.08 | 23.01 | 0.95 | 5 | 1.06 | 5 | 3.16 | 3.05 | $ | 66,579 | 54% | |||||||||||||||||||
| $ | 21.88 | 12.28 | 21 | 1.26 | 5 | 1.26 | 5 | (0.98 | ) | (0.98 | ) | $ | 134,028 | 26% | ||||||||||||||||
| $ | 21.81 | 22.13 | 1.30 | 5 | 1.30 | 5 | (1.06 | ) | (1.06 | ) | $ | 111,366 | 34% | |||||||||||||||||
| $ | 19.89 | 20.08 | 1.33 | 5 | 1.33 | 5 | (1.03 | ) | (1.03 | ) | $ | 101,402 | 28% | |||||||||||||||||
| $ | 18.06 | 4.02 | 1.31 | 5 | 1.31 | 5 | (1.06 | ) | (1.06 | ) | $ | 96,015 | 38% | |||||||||||||||||
| $ | 23.67 | 2.66 | 1.26 | 5 | 1.26 | 5 | (1.00 | ) | (1.00 | ) | $ | 102,834 | 38% | |||||||||||||||||
| $ | 24.57 | 24.52 | 1.29 | 5 | 1.29 | 5 | (0.64 | ) | (0.64 | ) | $ | 151,697 | 25% | |||||||||||||||||
113
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Financial Highlights (continued)
| Income (Loss) from Investment Operations | Less Distributions | |||||||||||||||||||||||||||||||
| Net Asset Value Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) on Investments | Total from Investment Operations | Redemption Fees (See Note 2) | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |||||||||||||||||||||||||
World Innovators Fund — Investor Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 22.75 | (0.07 | ) | 2.37 | 2.30 | — | 4 | — | (3.32 | ) | (3.32 | ) | |||||||||||||||||||
Year ended 9/30/17 | $ | 19.32 | (0.13 | ) | 4.26 | 4.13 | — | 4 | — | (0.70 | ) | (0.70 | ) | |||||||||||||||||||
Year ended 9/30/1619 | $ | 20.17 | (0.12 | ) | 1.90 | 1.78 | — | 4 | — | (2.63 | ) | (2.63 | ) | |||||||||||||||||||
Year ended 9/30/15 | $ | 22.62 | (0.21 | ) | 0.30 | 0.09 | — | 4 | — | (2.54 | ) | (2.54 | ) | |||||||||||||||||||
Year ended 9/30/14 | $ | 23.15 | (0.24 | ) | 0.91 | 0.67 | — | 4 | — | (1.20 | ) | (1.20 | ) | |||||||||||||||||||
Year ended 9/30/13 | $ | 18.55 | (0.12 | ) | 4.72 | 4.60 | — | 4 | — | — | — | |||||||||||||||||||||
World Innovators Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 22.87 | (0.03 | ) | 2.36 | 2.33 | — | — | (3.32 | ) | (3.32 | ) | ||||||||||||||||||||
Year ended 9/30/17 | $ | 19.36 | (0.09 | ) | 4.30 | 4.21 | — | — | (0.70 | ) | (0.70 | ) | ||||||||||||||||||||
Period ended 9/30/1617 19 | $ | 17.54 | (— | )4 | 1.82 | 1.82 | — | — | — | — | ||||||||||||||||||||||
Income Fund |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 10.12 | 0.10 | (0.14 | ) | (0.04 | ) | — | 4 | (0.10 | ) | — | (0.10 | ) | ||||||||||||||||||
Year ended 9/30/17 | $ | 10.25 | 0.19 | (0.12 | ) | 0.07 | — | 4 | (0.19 | ) | (0.01 | ) | (0.20 | ) | ||||||||||||||||||
Year ended 9/30/1619 | $ | 10.18 | 0.19 | 0.07 | 0.26 | — | 4 | (0.19 | ) | — | (0.19 | ) | ||||||||||||||||||||
Year ended 9/30/15 | $ | 10.15 | 0.16 | 0.03 | 0.19 | — | 4 | (0.16 | ) | — | (0.16 | ) | ||||||||||||||||||||
Year ended 9/30/14 | $ | 10.13 | 0.17 | 0.02 | 0.19 | — | 4 | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||||
Year ended 9/30/13 | $ | 10.44 | 0.17 | (0.31 | ) | (0.14 | ) | — | (0.17 | ) | — | (0.17 | ) | |||||||||||||||||||
U.S. Treasury Fund |
| |||||||||||||||||||||||||||||||
Six Months ended 3/31/18 (unaudited) | $ | 16.32 | 0.17 | (0.32 | ) | (0.15 | ) | — | 4 | (0.17 | ) | — | (0.17 | ) | ||||||||||||||||||
Year ended 9/30/17 | $ | 19.86 | 0.35 | (2.23 | ) | (1.88 | ) | 0.01 | (0.35 | ) | (1.32 | ) | (1.67 | ) | ||||||||||||||||||
Year ended 9/30/1619 | $ | 18.42 | 0.37 | 2.29 | 2.66 | 0.01 | (0.36 | ) | (0.87 | ) | (1.23 | ) | ||||||||||||||||||||
Year ended 9/30/15 | $ | 17.08 | 0.38 | 1.33 | 1.71 | 0.01 | (0.38 | ) | — | (0.38 | ) | |||||||||||||||||||||
Year ended 9/30/14 | $ | 15.33 | 0.45 | 1.75 | 2.20 | — | 4 | (0.45 | ) | — | (0.45 | ) | ||||||||||||||||||||
Year ended 9/30/13 | $ | 18.75 | 0.44 | (3.08 | ) | (2.64 | ) | 0.01 | (0.44 | ) | (0.35 | ) | (0.79 | ) | ||||||||||||||||||
See Notes to Financial Highlights and Notes to Financial Statements.
114
Table of Contents
| (for a share outstanding throughout each period) | ||
| ||
| ||
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||
| Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and | Expenses Before Waivers and | Net Investment of Waivers and | Net Investment Before Waivers and | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |||||||||||||||||||||||
| $ | 21.73 | 10.50 | 21 | 1.79 | 5 | 1.79 | 5 | (0.83 | ) | (0.83 | ) | $ | 208,809 | 104% | ||||||||||||||||
| $ | 22.75 | 22.23 | 1.83 | 5 | 1.83 | 5 | (0.57 | ) | (0.57 | ) | $ | 191,021 | 91% | |||||||||||||||||
| $ | 19.32 | 8.97 | 1.78 | 5 | 1.78 | 5 | (0.66 | ) | (0.66 | ) | $ | 193,826 | 112% | |||||||||||||||||
| $ | 20.17 | 0.32 | 1.76 | 5 | 1.76 | 5 | (0.76 | ) | (0.76 | ) | $ | 186,272 | 100% | |||||||||||||||||
| $ | 22.62 | 2.69 | 1.73 | 5 | 1.73 | 5 | (0.89 | ) | (0.89 | ) | $ | 253,311 | 111% | |||||||||||||||||
| $ | 23.15 | 24.80 | 1.77 | 5 | 1.79 | 5 | (0.84 | ) | (0.86 | ) | $ | 266,911 | 84% | |||||||||||||||||
| $ | 21.88 | 10.63 | 21 | 1.55 | 5 | 2.10 | 5 | (0.55 | ) | (1.10 | ) | $ | 5,142 | 104% | ||||||||||||||||
| $ | 22.87 | 22.55 | 1.55 | 5 | 2.22 | 5 | (0.29 | ) | (0.96 | ) | $ | 3,836 | 91% | |||||||||||||||||
| $ | 19.36 | 10.38 | 1.55 | 5 | 3.69 | 5 | (0.01 | ) | (2.15 | ) | $ | 5,977 | 112% | |||||||||||||||||
| $ | 9.98 | (0.36 | ) | 0.74 | 5 | 0.74 | 5 | 2.09 | 2.09 | $ | 95,538 | 24% | ||||||||||||||||||
| $ | 10.12 | 0.68 | 0.75 | 5 | 0.75 | 5 | 1.83 | 1.83 | $ | 96,867 | 75% | |||||||||||||||||||
| $ | 10.25 | 2.58 | 0.73 | 5 | 0.73 | 5 | 1.85 | 1.85 | $ | 99,706 | 37% | |||||||||||||||||||
| $ | 10.18 | 1.87 | 0.72 | 5 | 0.72 | 5 | 1.57 | 1.57 | $ | 108,959 | 44% | |||||||||||||||||||
| $ | 10.15 | 1.91 | 0.70 | 5 | 0.70 | 5 | 1.66 | 1.66 | $ | 116,752 | 13% | |||||||||||||||||||
| $ | 10.13 | (1.34 | ) | 0.71 | 0.71 | 1.67 | 1.67 | $ | 130,285 | 35% | ||||||||||||||||||||
| $ | 16.00 | (0.95 | ) | 0.70 | 5 | 0.70 | 5 | 2.08 | 2.08 | $ | 329,791 | —% | ||||||||||||||||||
| $ | 16.32 | (8.86 | ) | 0.72 | 5 | 0.72 | 5 | 2.04 | 2.04 | $ | 360,866 | 20% | ||||||||||||||||||
| $ | 19.86 | 15.49 | 0.69 | 5 18 | 0.73 | 5 | 1.97 | 18 | 1.93 | $ | 489,011 | 59% | ||||||||||||||||||
| $ | 18.42 | 10.09 | 0.67 | 5 | 0.67 | 5 | 2.12 | 2.12 | $ | 327,861 | 131% | |||||||||||||||||||
| $ | 17.08 | 14.54 | 0.70 | 5 | 0.70 | 5 | 2.77 | 2.77 | $ | 224,664 | 28% | |||||||||||||||||||
| $ | 15.33 | (14.43 | ) | 0.71 | 5 | 0.71 | 5 | 2.46 | 2.46 | $ | 193,231 | 34% | ||||||||||||||||||
115
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Highlights
| 1 | Not annualized for periods less than one year. |
| 2 | Annualized for periods less than one year. |
| 3 | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. |
| 4 | Represents amounts less than $0.005 per share. |
| 5 | Includes interest expense of less than 0.005%. |
| 6 | Includes interest expenses of more than 0.005%. |
| 7 | Includes interest expense and dividend payments for securities sold short. The ratios excluding such expenses are listed below: |
| Expenses Net of Waivers and Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | |||||||||||
Long/Short Fund — Investor Class | ||||||||||||
Six Months ended 3/31/18 (unaudited) | 1.60 | 1.65 | ||||||||||
Year ended 9/30/17 | 1.42 | 1.42 | ||||||||||
Year ended 9/30/16 | 1.42 | 1.42 | ||||||||||
Year ended 9/30/15 | 1.30 | 1.30 | ||||||||||
Year ended 9/30/14 | 1.27 | 1.27 | ||||||||||
Year ended 9/30/13 | 1.28 | 1.28 | ||||||||||
Long/Short Fund — Institutional Class | ||||||||||||
Six Months ended 3/31/18 (unaudited) | 1.15 | 1.56 | ||||||||||
Year ended 9/30/17 | 1.15 | 1.27 | ||||||||||
Year ended 9/30/16 | 1.17 | 1.22 | ||||||||||
Year ended 9/30/15 | 1.16 | 1.16 | ||||||||||
Year ended 9/30/14 | 1.16 | 1.16 | ||||||||||
Period ended 9/30/1311 | 1.17 | 1.18 | ||||||||||
8Includes extraordinary expenses of 0.01% (see Note 7 in “Notes to Financial Statements.”).
9Includes extraordinary expenses of less than 0.01% (see Note 7 in “Notes to Financial Statements.”).
10Fund inception date was December 13, 2012.
11Institutional class inception date was December 13, 2012.
12Investment income per share reflects a large, non-recurring dividend which amounted to $0.17 and $0.08 per share for the Investor Class and Institutional Class, respectively. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been as follows: | ||||||||||||
| Net Investment Income (Loss) Net of Waivers and Reimbursements (%)2 | Net Investment Income (Loss) Before Waivers and Reimbursements (%)2 | |||||||||||
Core Growth Fund — Investor Class | (0.58 | ) | (0.58 | ) | ||||||||
Core Growth Fund — Institutional Class | (0.59 | ) | (0.60 | ) | ||||||||
13Investment income per share reflects a large, non-recurring dividend which amounted to $0.04 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (1.40)%.
14Investment income per share reflects a large, non-recurring dividend which amounted to $0.01 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (1.04)% for Net Investment Income Net of Waivers and Reimbursements and (1.10)% for Net Investment Income Before Waivers and Reimbursements.
15Investment income per share reflects a large, non-recurring dividend which amounted to $0.05 and $0.05 per share for the Investor Class and Institutional Class, respectively. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been as follows: | ||||||||||||
| Net Investment Income (Loss) Net of Waivers and Reimbursements (%)2 | Net Investment Income (Loss) Before Waivers and Reimbursements (%)2 | |||||||||||
Small Cap Value Fund — Investor Class | — | 16 | — | 16 | ||||||||
Small Cap Value Fund — Institutional Class | 0.10 | 0.05 | ||||||||||
16Amount is less than 0.005%.
17Institutional class inception date was February 1, 2016.
18Includes reimbursement by Hoisington Investment Management Co., the Sub-Advisor, for proxy statement expenses which amounted to $0.01 per share. | ||||||||||||
116
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
19Includes a non-recurring offer to reimburse prior period custody and fund accounting out-of-pocket expenses (see Note 7 “Related Party Transactions” “Custodian Out-of-Pocket Expense Reimbursement” in “Notes to Financial Statements”). Excluding this non-recurring reimbursement, the ratio of expenses to average net assets would have been as follows: | ||||||||||||
| Expenses Net of Waivers and Reimbursements (%) | Expenses Before Waivers and Reimbursements (%) | |||||||||||
Core Growth Fund — Investor Class | 1.21 | 1.21 | ||||||||||
Core Growth Fund — Institutional Class | 1.07 | 1.09 | ||||||||||
Emerging India Fund — Investor Class | 1.84 | 1.98 | ||||||||||
Emerging India Fund — Institutional Class | 1.56 | 2.06 | ||||||||||
Emerging Markets Select Fund — Investor Class | 1.60 | 2.00 | ||||||||||
Emerging Markets Select Fund — Institutional Class | 1.33 | 1.63 | ||||||||||
Emerging Markets Small Cap Fund — Investor Class | 1.97 | 2.01 | ||||||||||
Emerging Markets Small Cap Fund — Institutional Class | 1.82 | 1.83 | ||||||||||
Frontier Emerging Small Countries Fund — Investor Class | 2.25 | 2.39 | ||||||||||
Frontier Emerging Small Countries Fund — Institutional Class | 2.08 | 2.08 | ||||||||||
Global Opportunities Fund — Investor Class | 1.64 | 1.64 | ||||||||||
Global Opportunities Fund — Institutional Class | 1.42 | 2.39 | ||||||||||
Global Value Fund — Investor Class | 1.10 | 1.17 | ||||||||||
Global Value Fund — Institutional Class | 0.96 | 1.72 | ||||||||||
International Growth Fund — Investor Class | 1.48 | 1.48 | ||||||||||
International Growth Fund — Institutional Class | 1.36 | 1.37 | ||||||||||
International Opportunities Fund — Investor Class | 2.26 | 2.30 | ||||||||||
International Opportunities Fund — Institutional Class | 1.97 | 2.06 | ||||||||||
Long/Short Fund — Investor Class | 1.83 | 1.83 | ||||||||||
Long/Short Fund — Institutional Class | 1.52 | 1.57 | ||||||||||
Micro Cap Fund | 1.92 | 1.92 | ||||||||||
Micro Cap Value Fund | 1.96 | 2.05 | ||||||||||
Small Cap Growth Fund — Investor Class | 1.29 | 1.29 | ||||||||||
Small Cap Growth Fund — Institutional Class | 1.05 | 1.11 | ||||||||||
Small Cap Value Fund — Investor Class | 1.24 | 1.24 | ||||||||||
Small Cap Value Fund — Institutional Class | 1.08 | 1.20 | ||||||||||
Strategic Income Fund | 0.95 | 1.04 | ||||||||||
Ultra Growth Fund | 1.34 | 1.34 | ||||||||||
World Innovators Fund — Investor Class | 1.79 | 1.79 | ||||||||||
World Innovators Fund — Institutional Class | 1.63 | 3.77 | ||||||||||
Income Fund | 0.73 | 0.73 | ||||||||||
U.S. Treasury Fund | 0.69 | 0.73 | ||||||||||
20Per share amounts do not correlate to amounts reported in the Statement of Operations due to timing of share activity.
21Since the U.S. stock market was closed on March 30 and March 31, 2018, the Wasatch Funds were not priced on those days and performance was calculated with reference to the March 29, 2018 Net Asset Value (NAV). The Funds listed below held securities in foreign markets which were open on March 30 and/or March 31, 2018, resulting in a small difference in the NAV as of March 31, 2018. Performance for the six months ended March 31, 2018 calculated with the March 31, 2018 NAV date was as follows: | ||||||||||||
| Total Return (%) | ||||||||||||
Emerging Market Select Fund — Investor Class | 7.55 | |||||||||||
Emerging Market Select Fund — Institutional Class | 7.64 | |||||||||||
Emerging Markets Small Cap Fund — Investor Class | 7.36 | |||||||||||
Emerging Markets Small Cap Fund — Institutional Class | 7.33 | |||||||||||
Global Opportunities Fund — Investor Class | 14.55 | |||||||||||
Global Value Fund — Investor Class | 1.27 | |||||||||||
Global Value Fund — Institutional Class | 1.34 | |||||||||||
International Growth Fund — Investor Class | 9.13 | |||||||||||
International Growth Fund — Institutional Class | 9.17 | |||||||||||
International Opportunities Fund — Investor Class | 8.91 | |||||||||||
International Opportunities Fund — Institutional Class | 8.83 | |||||||||||
Micro Cap Fund | 12.56 | |||||||||||
Ultra Growth Fund | 12.23 | |||||||||||
World Innovators Fund — Investor Class | 10.40 | |||||||||||
World Innovators Fund — Institutional Class | 10.53 | |||||||||||
See Notes to Financial Statements.
117
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements
1. ORGANIZATION
Wasatch Funds Trust (the “Trust”) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and consists of 19 series or funds (each a “Fund” and collectively the “Funds”). The Core Growth Fund, Emerging India Fund, Emerging Markets Select Fund, Emerging Markets Small Cap Fund, Frontier Emerging Small Countries Fund, Global Opportunities Fund, Global Value Fund (formerly Large Cap Value Fund), International Growth Fund, International Opportunities Fund, Long/Short Fund, Micro Cap Fund, Micro Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Strategic Income Fund, Ultra Growth Fund, World Innovators Fund, Wasatch-1st Source Income Fund (“Income Fund”) (sub-advised), and Wasatch-Hoisington U.S. Treasury Fund (“U.S. Treasury Fund”) (sub-advised) are each diversified funds. Each Fund maintains its own investment objective(s).
On November 9, 2011, the Trust re-designated the shares of the Funds into Investor Class shares effective January 31, 2012, and authorized and designated a new Institutional Class of shares in the Funds. Currently 13 funds offer Institutional Class shares: Core Growth Fund, Global Value Fund and Small Cap Value Fund, which commenced operations on January 31, 2012, Emerging Markets Select Fund and Long/Short Fund, which commenced operations on December 13, 2012 and Emerging India Fund, Emerging Markets Small Cap Fund, Frontier Emerging Small Countries Fund, Global Opportunities Fund, International Growth Fund, International Opportunities Fund, Small Cap Growth Fund and World Innovators Fund, which commenced operations on February 1, 2016. Each class of shares for each Fund has identical rights and privileges except with respect to purchase minimums, distribution and service charges, shareholder services, voting rights on matters affecting a single class of shares, and the exchange and conversion features. The Funds have entered into an investment advisory agreement with Wasatch Advisors, Inc. (the “Advisor” or “Wasatch”) as investment advisor.
The Core Growth, Emerging India, Emerging Markets Select, Emerging Markets Small Cap, Frontier Emerging Small Countries, Global Opportunities, Global Value, International Growth, International Opportunities, Long/Short, Micro Cap, Micro Cap Value, Small Cap Growth, Small Cap Value, Strategic Income, Ultra Growth and World Innovators Funds are referred to herein as the “Equity Funds.”
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant policies related to investments of the Funds held at March 31, 2018. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Valuation of Securities — All investments in securities are recorded at their estimated fair value as described in Note 12.
Foreign Currency Translations — Values of investments denominated in foreign currencies are converted into U.S. dollars using the current exchange rates each business day (generally 4:00 p.m. Eastern Time). 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. Transactions in foreign denominated assets may involve greater risks than domestic transactions.
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 include return of capital or capital gain distributions, such distributions are recorded as a reduction to cost of the related security or as realized gain or loss.
Expenses — The Funds contract for various services 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 U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported changes in net assets during the reporting period. Actual results could differ from those estimates.
Guarantees and Indemnifications — In the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or their 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.
Other — Income, expenses, and realized and unrealized gains or losses on investments are generally allocated to each class of shares based on its relative net assets, except that each class separately bears expenses related specifically to that class, such as certain shareholder servicing fees.
118
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
3. SECURITIESAND OTHER INVESTMENTS
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. Refer to Note 13 (Offsetting) for more information about the offsetting of assets and liabilities.
Short Sales — The Long/Short Fund and to a lesser extent the other 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 security 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. Refer to Note 13 (Offsetting) for more information about the offsetting of assets and liabilities.
Participation Notes — The Frontier Emerging Small Countries and the Global Opportunities Funds may invest in Participation Notes (P-Notes). P-Notes are promissory notes that are designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes are issued by banks or broker-dealers and allow a fund to gain exposure to common stocks in markets in which the fund is currently not approved to directly invest, or in markets that prohibit direct investment by foreign purchasers. While the holder of a P-Note is entitled to receive from the bank or broker-dealer any dividends or other distributions paid on the underlying securities, the holder is not entitled to the same rights as an owner of the underlying securities, such as voting rights. Income received from P-Notes is recorded as dividend income in the Statement of Operations. P-Notes are considered general unsecured contractual obligations of the bank or broker-dealer. Risks associated with P-Notes include the possible failure of a counterparty (i.e., the issuing bank or broker-dealer) to perform in accordance with the terms of the agreement, inability to transfer or liquidate the notes, potential delays or an
inability to redeem the notes before maturity under certain market conditions, and limited legal recourse against the issuer of the underlying common stock.
4. FINANCIAL DERIVATIVE INSTRUMENTS
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 adverse change in the relationship between the U.S. dollar and a foreign currency involved in an underlying transaction. Foreign currency contracts are agreements between two parties to buy and sell a currency at a set price on a future date. The market value of a foreign currency contract fluctuates with changes in currency exchange rates. Foreign currency contracts are marked-to-market daily and the change in market value is recorded by a fund as unrealized appreciation or depreciation. When a foreign currency contract is closed, the fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. These contracts may involve market risk in excess of the unrealized gain or loss reflected in the Schedule of Investments. In addition, a fund could be exposed to 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.
Options Transactions — The Equity Funds and the Income Fund may buy and sell put and call options and 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. Possible losses from uncovered written options may be unlimited. 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. Refer to Note 13 (Offsetting) for more information about the offsetting of assets and liabilities.
119
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
5. 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 six months ended March 31, 2018 are summarized below:
| Core Growth Fund | Emerging India Fund | Emerging Markets Select Fund | Emerging Markets Small Cap Fund | Frontier Emerging Small Countries Fund | Global Opportunities Fund | |||||||||||||||||||
Purchases | $ | 302,261,260 | $ | 70,360,556 | $ | 11,332,755 | $ | 100,817,230 | $ | 45,022,287 | $ | 25,771,570 | ||||||||||||
Sales | 331,541,699 | 64,403,757 | 10,436,586 | 153,100,751 | 89,739,352 | 31,836,351 | ||||||||||||||||||
| Global Value Fund | International Growth Fund | International Opportunities Fund | Long/Short Fund | Micro Cap Fund | Micro Cap Value Fund | |||||||||||||||||||
Purchases | $ | 80,255,133 | $ | 379,274,151 | $ | 88,841,689 | $ | 32,935,540 | $ | 106,418,202 | $ | 90,187,784 | ||||||||||||
Sales | 96,139,453 | 339,293,787 | 114,001,641 | 66,840,568 | 112,881,757 | 65,490,560 | ||||||||||||||||||
| Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | Ultra Growth Fund | World Innovators Fund | Income Fund | |||||||||||||||||||
Purchases | $ | 343,972,953 | $ | 109,056,126 | $ | 21,035,011 | $ | 37,033,280 | $ | 182,259,907 | $ | 20,563,932 | ||||||||||||
Sales | 532,514,544 | 106,939,840 | 13,365,589 | 30,358,440 | 191,369,513 | 17,188,894 | ||||||||||||||||||
Purchases and sales of U.S. government securities in the Income Fund were $3,023,093 and $4,957,921, respectively. Purchases and sales of U.S. government securities in the U.S. Treasury Fund were $0 and $29,533,033, respectively.
6. FEDERAL INCOME TAX INFORMATION
It is each Fund’s policy to comply with the requirements under Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all taxable income to shareholders. The Funds are no longer subject to examination by tax authorities for years prior to 2014. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total of amounts of unrecognized tax benefits will significantly change in the next 12 months. Accordingly, no provision for federal income or excise taxes has been made.
As of March 31, 2018, the cost and unrealized appreciation (depreciation) of securities on a tax basis were as follows:
| Core Growth Fund | Emerging India Fund | Emerging Markets Select Fund | Emerging Markets Small Cap Fund | Frontier Emerging Small Countries Fund | Global Opportunities Fund | Global Value Fund | ||||||||||||||||||||||
Cost | $ | 1,078,064,702 | $ | 199,280,449 | $ | 36,779,773 | $ | 440,653,812 | $ | 128,313,031 | $ | 73,406,619 | $ | 155,140,325 | ||||||||||||||
|
| |||||||||||||||||||||||||||
Gross appreciation | $ | 678,843,672 | $ | 58,013,799 | $ | 12,011,000 | $ | 232,266,904 | $ | 42,363,020 | $ | 42,798,476 | $ | 17,151,364 | ||||||||||||||
Gross (depreciation) | (10,828,456 | ) | (2,322,934 | ) | (148,437 | ) | (22,996,479 | ) | (1,848,333 | ) | (1,681,438 | ) | (4,943,644 | ) | ||||||||||||||
|
| |||||||||||||||||||||||||||
Net appreciation | $ | 668,015,216 | $ | 55,690,865 | $ | 11,862,563 | $ | 209,270,425 | $ | 40,514,687 | $ | 41,117,038 | $ | 12,207,720 | ||||||||||||||
|
| |||||||||||||||||||||||||||
| International Growth Fund | International Opportunities Fund | Long/Short Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | ||||||||||||||||||||||
Cost | $ | 1,095,185,393 | $ | 374,361,958 | $ | 53,459,262 | $ | 256,917,958 | $ | 186,343,271 | $ | 1,119,342,273 | $ | 311,711,727 | ||||||||||||||
|
| |||||||||||||||||||||||||||
Gross appreciation | $ | 583,677,922 | $ | 161,574,397 | $ | 9,124,919 | $ | 126,540,667 | $ | 70,484,596 | $ | 676,465,954 | $ | 93,404,749 | ||||||||||||||
Gross (depreciation) | (28,177,775 | ) | (10,605,840 | ) | (10,481,771 | ) | (11,522,982 | ) | (3,659,829 | ) | (48,345,796 | ) | (11,400,590 | ) | ||||||||||||||
|
| |||||||||||||||||||||||||||
Net appreciation (depreciation) | $ | 555,500,147 | $ | 150,968,557 | $ | (1,356,852 | ) | $ | 115,017,685 | $ | 66,824,767 | $ | 628,120,158 | $ | 82,004,159 | |||||||||||||
|
| |||||||||||||||||||||||||||
120
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| Strategic Income Fund | Ultra Growth Fund | World Innovators Fund | Income Fund | U.S. Treasury Fund | ||||||||||||||||||||||||
Cost | $ | 47,401,710 | $ | 99,628,813 | $ | 190,384,300 | $ | 95,991,969 | $ | 354,096,223 | ||||||||||||||||||
|
| |||||||||||||||||||||||||||
Gross appreciation | $ | 7,114,284 | $ | 45,154,694 | $ | 26,240,763 | $ | 568,702 | $ | 1,880,811 | ||||||||||||||||||
Gross (depreciation) | (1,792,124 | ) | (8,733,332 | ) | (5,317,421 | ) | (1,389,678 | ) | (26,566,987 | ) | ||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net appreciation (depreciation) | $ | 5,322,160 | $ | 36,421,362 | $ | 20,923,342 | $ | (820,976 | ) | $ | (24,686,176 | ) | ||||||||||||||||
|
| |||||||||||||||||||||||||||
The difference between book-basis and tax-basis unrealized gains is primarily attributable to the tax deferral of losses on wash sales.
The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax basis balances have not been determined as of the date of this report.
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 four funds. The Income Fund typically declares and pays dividends monthly. The Global Value, Strategic Income and U.S. Treasury Funds typically 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 U.S. 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 additional paid-in capital, undistributed net investment income (loss), and undistributed net realized gain (loss) on investments, options and foreign currency translations.
Capital loss carryforwards are available through the date specified below to offset future realized net capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. To the extent future gains are offset by capital loss carryforwards, such gains will not be distributed.
Under the Regulated Investment Company Modernization Act of 2010, capital loss carryforwards are available for an unlimited period. Post-enactment losses that are carried forward retain their character as either short-term or long-term capital losses. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. To the extent future gains are offset by capital loss carryforwards, such gains will not be distributed.
Capital loss carryforwards as of September 30, 2017 are as follows:
| Non-expiring | ||||||||
| Fund | Short Term | Long Term | ||||||
Emerging Markets Select Fund | $ | 7,798,666 | $ | 1,152,970 | ||||
Emerging Markets Small Cap Fund | 11,373,715 | — | ||||||
Frontier Emerging Small Countries Fund | 97,765,929 | 53,783,397 | ||||||
Long/Short Fund | 26,195,256 | 127,709,466 | ||||||
Strategic Income Fund | 4,757,330 | — | ||||||
Income Fund | 91,170 | — | ||||||
U.S. Treasury Fund | 10,816,652 | 3,399,648 | ||||||
During the tax year ended September 30, 2017, the Funds used capital loss carryforwards in the following amounts:
| Fund | Amount Used | |||
Emerging Markets Small Cap Fund | $ | 66,457,413 | ||
International Opportunities Fund | 5,672,021 | |||
Small Cap Value Fund | 12,686,827 | |||
Strategic Income Fund | 2,392,583 | |||
121
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
The Funds have elected to defer losses incurred from November 1, 2016 through September 30, 2017 in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the following fiscal year. The Funds have elected to defer losses as follows:
| Fund | Post-October Capital Losses | Late-Year Ordinary Losses | ||||||
Core Growth Fund | $ | — | $ | 8,181,295 | ||||
Emerging India Fund | — | 1,275,315 | ||||||
Emerging Markets Select Fund | — | 20,605 | ||||||
Emerging Markets Small Cap Fund | — | 1,355,255 | ||||||
Frontier Emerging Small Countries Fund | — | 3,923,739 | ||||||
Global Opportunities Fund | 79,288 | 912,121 | ||||||
International Growth Fund | — | 879,707 | ||||||
International Opportunities Fund | — | 3,171,871 | ||||||
Long/Short Fund | — | 455,640 | ||||||
Micro Cap Fund | — | 2,607,368 | ||||||
Micro Cap Value Fund | — | 1,095,632 | ||||||
Small Cap Growth Fund | — | 9,822,810 | ||||||
Small Cap Value Fund | — | 127,730 | ||||||
Strategic Income Fund | — | 64,525 | ||||||
Ultra Growth Fund | 86,414 | 903,987 | ||||||
EU Reclaims — As a result of several court cases in certain countries across the European Union, the Emerging Markets Small Cap Fund, Global Opportunities Fund, Global Value Fund, International Growth Fund, International Opportunities Fund and World Innovators Fund filed tax reclaims for previously withheld taxes on dividends earned in Finland and Poland (EU Reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as dividend income in the Statements of Operations and related receivables, if any, are reflected as interest and dividends receivable in the Statements of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims and the potential timing of payment, no amounts are reflected in the financial statements.
7. RELATED PARTY TRANSACTIONS
Investment Advisory Fees, Expense Limitations — As the Funds’ 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 certain Funds should a Fund’s operating expenses exceed a specified annual limitation through at least January 31, 2019 (with the exception of Wasatch Global Value Fund, which has been extended through January 31, 2020). If operating expenses are less than the specified expense limit for the Fund, the Advisor shall be entitled to recoup the fees waived or reduced to the extent that the operating expenses and the amounts reimbursed do not exceed such expense limit for the Fund, under the period of the agreement (currently through January 31, 2019 or January 31, 2020 in the case of the Global Value Fund). Such reimbursement shall be paid only while the expense limitation agreement is in effect and only if such amount paid, together with all other amounts reimbursed under this agreement in the fiscal year, do not cause the Fund to exceed the expense limitation. All amounts not recovered at the end of the period expire on January 31, 2019. Ordinary operating expenses exclude any interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment-related costs and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Funds’ business. In late October 2013, it was discovered that the Global Value Fund and Long/Short Fund had a 12b-1 receivable on the books which dated back to 2008 prior to the conversion of the 1st Source Funds to Wasatch Funds. It was determined that the amount should be written off as an extraordinary expense and posted to other expenses. The balance for the Global Value Fund was $70,993 and for the Long/Short Fund was $8,622. The impact of these write-offs is reflected in the Financial Highlights.
122
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
Investment advisory fees and fees waived, if any, for the six months ended March 31, 2018 are disclosed in the Statements of Operations. Investment advisory fee and expense limitation annual rates are shown below.
| Fund | Advisory Fee | Expense Limitation Investor Class | Expense Limitation Institutional Class | Contractual Expense Limitation/ Reimbursement Recoverable Expiration Date | Reimbursement Recoverable | |||||||||||||||
Core Growth Fund | 1.00% | 1.50% | 1.05% | 1/31/2019 | $ | 56,919 | ||||||||||||||
Emerging India Fund | 1.25% | 1.75% | 1.50% | 1/31/2019 | 5,782 | |||||||||||||||
Emerging Markets Select Fund | 1.00% | 1.50% | 1.20% | 1/31/2019 | 51,282 | |||||||||||||||
Emerging Markets Small Cap Fund | 1.65% | 1.95% | 1.80% | 1/31/2019 | 101,485 | |||||||||||||||
Frontier Emerging Small Countries Fund | 1.65% | 2.15% | 1.95% | 1/31/2019 | 157,923 | |||||||||||||||
Global Opportunities Fund | 1.25% | 1.75% | 1.35% | 1/31/2019 | 13,978 | |||||||||||||||
Global Value Fund | 0.90% | 1.10% | 0.95% | 1/31/2020 | 78,005 | |||||||||||||||
International Growth Fund | 1.25% | 1.75% | 1.35% | 1/31/2019 | — | |||||||||||||||
International Opportunities Fund | 1.75% | 2.25% | 1.95% | 1/31/2019 | — | |||||||||||||||
Long/Short Fund | 1.10% | 1.60% | 1.15% | 1/31/2019 | 59,195 | |||||||||||||||
Micro Cap Fund | 1.50% | 1.95% | N/A | 1/31/2019 | — | |||||||||||||||
Micro Cap Value Fund | 1.50% | 1.95% | N/A | 1/31/2019 | — | |||||||||||||||
Small Cap Growth Fund | 1.00% | 1.50% | 1.05% | 1/31/2019 | 100,416 | |||||||||||||||
Small Cap Value Fund | 1.00% | 1.50% | 1.05% | 1/31/2019 | 21,156 | |||||||||||||||
Strategic Income Fund | 0.70% | 0.95% | N/A | 1/31/2019 | 27,992 | |||||||||||||||
Ultra Growth Fund | 1.00% | 1.50% | N/A | 1/31/2019 | — | |||||||||||||||
World Innovators Fund | 1.50% | 1.95% | 1.55% | 1/31/2019 | 12,766 | |||||||||||||||
Income Fund | 0.55% | N/A | N/A | N/A | N/A | |||||||||||||||
U.S. Treasury Fund | 0.50% | 0.75% | N/A | 1/31/2019 | — | |||||||||||||||
Affiliated Trades — Certain Funds are permitted to purchase or sell securities from or to certain related affiliated funds under specified conditions outlined in the procedures adopted by the Board of Trustees (the “Board”). The procedures have been designed to ensure that any purchase or sale of securities by the Funds from or to another fund (or funds) 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 six months ended March 31, 2018, the Funds had no purchases or sales of securities pursuant to Rule 17a-7 of the 1940 Act.
Compensation — Officers serve in that capacity without compensation from the Trust. Beginning in the calendar year of 2017, the Funds’ method of compensating Trustees is to pay each Independent Trustee a retainer of $120,000 per year for services rendered and a fee of $24,000 for each Board of Trustees meeting attended in person or telephonically. In addition, each Independent Trustee receives a fee of $24,000 for attendance at an executive session held with respect to the contract renewal process for the Funds. In addition, the Chairman of the Board receives an additional fee of $30,000 a year as Chairman and $6,000 for attendance in person or telephonically at a Board meeting; the Chairman of the Audit Committee and the Chairman of the Nominating Committee each receive an additional $18,000 per year as Chairman and $3,600 for attendance in person or telephonically at a Board meeting. Additionally, each Independent Trustee is entitled to reimbursement of expenses related to his or her duties as a Trustee of the Funds.
Payments by Advisor — During the 2013 and 2014 fiscal years, the Advisor paid certain audit, legal and/or printing fees of the Core Growth, Emerging Markets Small Cap, Global Value, Long/Short (Institutional Class), Small Cap Growth, Small Cap Value, Strategic Income and World Innovators Funds. The Advisor does not intend to be reimbursed for these amounts.
On February 20, 2013, the Advisor discovered a trade error involving the Frontier Emerging Small Countries Fund. The Advisor reimbursed the Fund $4,421.
On October 16, 2014, the Advisor discovered a trade error involving the Ultra Growth Fund. The Advisor reimbursed the Fund $12,267.
On August 2, 2016, the Advisor discovered a trade error involving the Small Cap Growth Fund. The Advisor reimbursed the Fund $12,890.
The impact of the payments detailed above is reflected in the net expense ratios in the Financial Highlights.
Payments by Sub-Advisor — In June 2016, the Funds filed a proxy statement with the Securities and Exchange Commission to inform shareholders about a Special Meeting of Shareholders of the Wasatch-Hoisington U.S. Treasury Fund. The purpose of the Shareholder Meeting was to ask shareholders to approve a new Sub-Advisory Agreement between Wasatch Advisors, Inc. and Hoisington Investment Management Company (HIMCO) with respect to the Wasatch-Hoisington U.S. Treasury Fund. HIMCO, the Sub-Advisor for the Fund, reimbursed the Wasatch-Hoisington U.S. Treasury Fund for the costs associated with the proxy statement filing. The Sub-Advisor does not intend to be reimbursed for this amount.
Transfer Agent Intermediary Fees Reimbursed to the Advisor — Each Fund paid fees to, and reimbursed certain out-of-pocket expenses of, the Funds’ transfer agent during the period. In addition, the Advisor and the Funds’ distributor have entered into selling dealer agreements and service agreements with certain financial services companies, broker-dealers, banks, advisors, retirement
123
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
service providers or other authorized agents or organizations (each an “Intermediary,” together, “Intermediaries”) to accept purchase, exchange and redemption orders on the Funds’ behalf. For Investor Class shares of the Funds, some Intermediaries do not charge investors a direct transaction fee, but instead charge a fee for accounting and shareholder services that the agent provided to Fund shareholders on the Funds’ behalf. Those services typically included recordkeeping, transaction processing for shareholders’ accounts, communication of tax information, income distribution and other services. Generally, the fee was either a per account charge based on the number of accounts to which the Intermediary provided such services, or was a percentage (as of March 31, 2018 up to 0.40% annually) of the average value of Fund Investor Class shares held in such accounts. The Advisor paid the Intermediary fees and the Funds reimbursed the Advisor for the portion of such fees, which is intended to compensate the Intermediary for provision of services of the type that would be provided by the Funds’ transfer agent or other service providers if the shares were registered on the books of the Funds’ transfer agent. Institutional Class shares of the Funds do not reimburse the Advisor for payments to Intermediaries. The Funds’ reimbursement of expenses incurred for services provided by Intermediaries are included in “Shareholder servicing fees — Investor Class” in the Statements of Operations.
Custodian Out-of-Pocket Expense Reimbursement — In September 2016, State Street Bank and Trust Company (“SSB”), the Funds’ custodian, provided each Fund with an offer to reimburse the Fund for certain out-of-pocket expenses it charged the Fund between 2003 and 2015. The incorrect charges were due to inaccurate billing rates used by SSB for certain out-of-pocket expenses. SSB made the reimbursements in May 2017.
10% Shareholders — As of March 31, 2018, the Funds had individual shareholder accounts and/or omnibus shareholder accounts (comprised of a group of individual shareholders), which individually amounted to more than 10% of the total shares outstanding of the Fund as detailed below:
| Fund | Number of Accounts | Percent of Shares Outstanding | ||||||
Core Growth Fund | 2 | 48 | % | |||||
Emerging India Fund | 2 | 66 | % | |||||
Emerging Markets Select Fund | 3 | 69 | % | |||||
Emerging Markets Small Cap Fund | 3 | 64 | % | |||||
Frontier Emerging Small Countries Fund | 2 | 65 | % | |||||
Global Opportunities Fund | 3 | 57 | % | |||||
Global Value Fund | 2 | 74 | % | |||||
International Growth Fund | 2 | 54 | % | |||||
International Opportunities Fund | 2 | 58 | % | |||||
Long/Short Fund | 2 | 64 | % | |||||
Micro Cap Fund | 2 | 26 | % | |||||
Micro Cap Value Fund | 3 | 65 | % | |||||
Small Cap Growth Fund | 2 | 49 | % | |||||
Small Cap Value Fund | 2 | 42 | % | |||||
Strategic Income Fund | 4 | 61 | % | |||||
Ultra Growth Fund | 2 | 27 | % | |||||
World Innovators Fund | 3 | 57 | % | |||||
Income Fund | 1 | 89 | % | |||||
U.S. Treasury Fund | 4 | 66 | % | |||||
124
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
Affiliated Interests — As of March 31, 2018, Wasatch Advisors, Inc. and its affiliates, and the retirement plans of Wasatch Advisors, Inc. and its affiliates, held shares of the Funds which may be redeemed at any time as detailed below:
| Fund | Number of Accounts* | Percent of Shares Outstanding | ||||||
Core Growth Fund | 19 | 1 | % | |||||
Emerging India Fund | 19 | 5 | % | |||||
Emerging Markets Select Fund | 16 | 16 | % | |||||
Emerging Markets Small Cap Fund | 15 | 1 | % | |||||
Frontier Emerging Small Countries Fund | 14 | 1 | % | |||||
Global Opportunities Fund | 19 | 8 | % | |||||
Global Value Fund | 10 | 1 | % | |||||
International Growth Fund | 13 | 1 | % | |||||
International Opportunities Fund | 17 | 1 | % | |||||
Long/Short Fund | 4 | <1 | % | |||||
Micro Cap Fund | 11 | 1 | % | |||||
Micro Cap Value Fund | 13 | 3 | % | |||||
Small Cap Growth Fund | 16 | 1 | % | |||||
Small Cap Value Fund | 10 | 1 | % | |||||
Strategic Income Fund | 5 | 18 | % | |||||
Ultra Growth Fund | 6 | 3 | % | |||||
World Innovators Fund | 8 | 2 | % | |||||
Income Fund | 5 | <1 | % | |||||
U.S. Treasury Fund | 10 | 1 | % | |||||
| * | Multiple accounts with the same beneficial owner are treated as one account. |
8. TRANSACTIONSWITH AFFILIATES
If a Fund’s holding represents ownership of 5% or more of the voting securities of a company, the company is deemed to be an affiliate as defined by the 1940 Act. The following Funds conducted transactions during the six months ended March 31, 2018 with an “affiliated company” as so defined:
| Share Activity | Dividends period ended | Gain (Loss) period ended | Change in for the period ended | |||||||||||||||||||||||||
| Balance 9/30/2017 | Purchases/ Additions | Sales/ Reductions | Balance 3/31/2018 | |||||||||||||||||||||||||
World Innovators Fund | ||||||||||||||||||||||||||||
GAME Digital plc | — | 9,491,636 | — | 9,491,636 | $ | — | $ | — | $ | (488,026 | ) | |||||||||||||||||
9. RESTRICTED SECURITIES
The Funds may own investments that were purchased through private placement transactions or under Rule 144A of the Securities Act of 1933 (the “Securities Act”) and cannot be sold without prior registration under the Securities Act or may be limited due to certain restrictions. These securities are generally deemed to be illiquid and are valued at fair value as determined by a designated Pricing Committee of the Advisor (“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, 2018, the Funds held the following restricted securities:
| Security Type | Acquisition Date | Cost | Fair Value | Value as Percent of Net Assets | ||||||||||||||
Core Growth Fund | ||||||||||||||||||
DocuSign, Inc., Series F Pfd. | Preferred Stock | 4/30/15 | $ | 4,000,004 | $ | 5,721,445 | 0.33 | % | ||||||||||
| ||||||||||||||||||
Emerging India Fund | ||||||||||||||||||
Bandhan Bank Ltd. Anchor Shares | Common Stock | 11/15/17 | $ | 2,043,488 | $ | 2,455,438 | 0.96 | % | ||||||||||
| ||||||||||||||||||
Micro Cap Fund | ||||||||||||||||||
Select Interior Concepts, Inc. | Common Stock | 11/15/17 | $ | 3,120,000 | $ | 3,445,000 | 0.93 | % | ||||||||||
| ||||||||||||||||||
125
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
| Security Type | Acquisition Date | Cost | Fair Value | Value as Percent of Net Assets | ||||||||||||||
Micro Cap Value Fund | ||||||||||||||||||
Acetylon Pharmaceuticals, Inc. | Right | 12/21/16 | $ | — | $ | 326,356 | 0.13 | % | ||||||||||
Acetylon Pharmaceuticals, Inc. | Right | 12/21/16 | — | — | — | % | ||||||||||||
Regenacy Pharmaceuticals, LLC | LLC Membership Interest | 12/21/16 | 30,001 | 46,991 | 0.02 | % | ||||||||||||
Select Interior Concepts, Inc. | Common Stock | 11/15/17 | 3,600,000 | 3,975,000 | 1.59 | % | ||||||||||||
Synergetics USA, Inc. | Right | 10/14/15 | 71,250 | 3,750 | — | % | ||||||||||||
Vertex Energy, Inc. | Warrant | 6/22/15 | 95,000 | 11,448 | 0.01 | % | ||||||||||||
Vertex Energy, Inc., Pfd. Series B | Convertible Preferred Stock | 6/22/15 - 1/10/18 | 1,705,632 | 1,544,189 | 0.62 | % | ||||||||||||
| $ | 5,501,883 | $ | 5,907,734 | 2.37 | % | |||||||||||||
| ||||||||||||||||||
Small Cap Growth Fund | ||||||||||||||||||
DataStax, Inc., Series E Pfd. | Preferred Stock | 8/12/14 | $ | 8,000,002 | $ | 6,397,861 | 0.37 | % | ||||||||||
DocuSign, Inc., Series B Pfd. | Preferred Stock | 3/3/14 | 437,257 | 909,314 | 0.05 | % | ||||||||||||
DocuSign, Inc., Series B-1 Pfd. | Preferred Stock | 3/3/14 | 130,982 | 272,390 | 0.02 | % | ||||||||||||
DocuSign, Inc., Series D Pfd. | Preferred Stock | 3/3/14 | 313,930 | 652,846 | 0.04 | % | ||||||||||||
DocuSign, Inc., Series E Pfd. | Preferred Stock | 3/3/14 | 8,117,819 | 16,881,731 | 0.96 | % | ||||||||||||
DocuSign, Inc., Series F Pfd. | Preferred Stock | 4/30/15 | 2,999,984 | 4,291,057 | 0.24 | % | ||||||||||||
Drilling Info Holdings, Inc., Series B Pfd. | Preferred Stock | 9/5/13 | 12,287,381 | 15,350,001 | 0.88 | % | ||||||||||||
Forescout Technologies, Inc. | Common Stock | 11/25/15 | 6,000,003 | 9,294,790 | 0.53 | % | ||||||||||||
Greenspring Global Partners II-B, L.P. | LP Interest | 10/10/03 - 3/31/17 | 1,965,006 | 1,952,685 | 0.11 | % | ||||||||||||
Greenspring Global Partners III-B, L.P. | LP Interest | 3/16/06 - 6/29/17 | 742,233 | 1,055,562 | 0.06 | % | ||||||||||||
Nanosys, Inc., Series D Pfd. | Preferred Stock | 11/8/05 | 2,000,000 | 305,627 | 0.02 | % | ||||||||||||
Nanosys, Inc., Series E Pfd. | Preferred Stock | 8/13/10 | 184,939 | 189,058 | 0.01 | % | ||||||||||||
| $ | 43,179,536 | $ | 57,552,922 | 3.29 | % | |||||||||||||
| ||||||||||||||||||
Strategic Income Fund | ||||||||||||||||||
Herbalife Ltd. CVR | Right | 10/13/17 | $ | — | $ | 57,821 | 0.11 | % | ||||||||||
Star Asia Capital Corp Ltd. | Common Stock | 2/22/07 - 5/11/15 | 572,598 | 811,028 | 1.53 | % | ||||||||||||
| $ | 572,598 | $ | 868,849 | 1.64 | % | |||||||||||||
| ||||||||||||||||||
Ultra Growth Fund | ||||||||||||||||||
Drilling Info Holdings, Inc., Series B Pfd. | Preferred Stock | 9/5/13 | $ | 920,553 | $ | 1,150,000 | 0.86 | % | ||||||||||
Greenspring Global Partners II-B, L.P. | LP Interest | 10/10/03 - 3/31/17 | 1,770,606 | 1,757,409 | 1.31 | % | ||||||||||||
Greenspring Global Partners III-B, L.P. | LP Interest | 3/16/06 - 6/29/17 | 743,245 | 1,055,562 | 0.79 | % | ||||||||||||
Nanosys, Inc., Series D Pfd. | Preferred Stock | 11/8/05 | 500,001 | 76,407 | 0.06 | % | ||||||||||||
Nanosys, Inc., Series E Pfd. | Preferred Stock | 8/13/10 | 46,236 | 47,265 | 0.03 | % | ||||||||||||
Tandem Diabetes Care, Inc. | Warrant | 10/13/17 | 56,744 | 155,636 | 0.12 | % | ||||||||||||
Tandem Diabetes Care, Inc. | Warrant | 10/13/17 | 8,245 | 87,798 | 0.06 | % | ||||||||||||
| $ | 4,045,630 | $ | 4,330,077 | 3.23 | % | |||||||||||||
| ||||||||||||||||||
World Innovators Fund | ||||||||||||||||||
Greenspring Global Partners II-B, L.P. | LP Interest | 10/10/13 - 3/31/17 | $ | 196,712 | $ | 195,270 | 0.09 | % | ||||||||||
Herbalife Ltd. CVR | Right | 10/13/17 | — | 74,515 | 0.04 | % | ||||||||||||
| $ | 196,712 | $ | 269,785 | 0.13 | % | |||||||||||||
| ||||||||||||||||||
10. LINEOF CREDIT
Effective May 19, 2017, the Funds in the Trust renewed and amended agreements for two open lines of credit totaling $300,000,000, one of which is $100,000,000 committed, and the other of which is $200,000,000 uncommitted, with State Street Bank and Trust Company (together, the “Line”). The agreements, as amended, have no change in the committed, uncommitted and total amounts available on the Line. The 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 overnight federal-funds rate in effect on the date of borrowing, plus a margin, or (b) the daily 1-Month London Interbank Offered Rate (LIBOR) in effect on the date of borrowing, plus a margin. Commitment fees are pro-rated among the Funds based upon relative average net assets. Interest expense is charged directly to a Fund based upon actual amounts borrowed by that Fund.
126
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
For the six months ended March 31, 2018, the following Funds had borrowings:
| Funds Utilizing the Line of Credit | Average Daily Borrowings | Number of Days Outstanding | Interest Expense | Weighted Average Annualized Interest Rate | Balance at 3/31/2018 | |||||||||||||||
Core Growth Fund | $ | 4,727,180 | 5 | $ | 1,803 | 2.75 | % | $ | — | |||||||||||
Emerging India Fund | 1,177,953 | 40 | 3,847 | 2.94 | % | 743,824 | ||||||||||||||
Emerging Markets Select Fund | 527,722 | 59 | 2,464 | 2.85 | % | 146,400 | ||||||||||||||
Emerging Markets Small Cap Fund | 5,221,531 | 48 | 18,915 | 2.72 | % | — | ||||||||||||||
Frontier Emerging Small Countries Fund | 1,568,692 | 63 | 7,713 | 2.81 | % | — | ||||||||||||||
Global Opportunities Fund | 1,279,064 | 46 | 4,483 | 2.74 | % | — | ||||||||||||||
International Growth Fund | 33,111,186 | 2 | 4,567 | 2.48 | % | — | ||||||||||||||
International Opportunities Fund | 1,051,263 | 12 | 872 | 2.49 | % | — | ||||||||||||||
Long/Short Fund | 1,616,183 | 4 | 508 | 2.83 | % | — | ||||||||||||||
Small Cap Growth Fund | 1,081,959 | 12 | 1,005 | 2.79 | % | — | ||||||||||||||
Ultra Growth Fund | 230,707 | 4 | 73 | 2.85 | % | — | ||||||||||||||
Income Fund | 65,098 | 1 | 5 | 2.83 | % | — | ||||||||||||||
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 loss exists due to changes in the market (market risk) or the 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 with respect to these financial assets approximates their carrying value as recorded in the Funds’ Statements of Assets and Liabilities.
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 currency 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 Funds, except the U.S. Treasury Fund, invest in equity and fixed-income securities of non-U.S. issuers. Because certain foreign markets are illiquid, market prices may not necessarily represent realizable value. Although the Funds maintain diversified investment portfolios, 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. These risks are exaggerated for securities of issuers tied economically to emerging and frontier market countries. Additionally, political or economic developments may have an adverse effect on the liquidity and volatility of portfolio securities and currency holdings. For example, there has been significant political upheaval in Zimbabwe, and as a result the Pricing Committee has applied a discount to the Zimbabwe assets held by the Frontier Emerging Small Countries Fund.
India Region Risk — The securities markets in the India region (India, Bangladesh, Pakistan and Sri Lanka) are substantially smaller, less liquid and more volatile than the major securities markets in the United States and the securities industries in these countries are comparatively underdeveloped. Financial intermediaries may not perform as well as their counterparts in the United States or in other countries with more developed securities markets. In some cases, physical delivery of securities in small lots has been required in India and shortages of vault capacity and trained personnel have existed among qualified custodial Indian banks. A fund may be unable to sell securities when the registration process is incomplete and may experience delays in receipt of dividends. If trading volume is limited by operational difficulties, the ability of the fund to invest may be impaired and the fund’s ability to buy or sell Indian securities may be impaired if the fund’s ability to transact is denied, delayed, suspended or not renewed by local regulators. In recent years, exchange-listed companies in the information-technology sector and related industries (such as software) have grown so as to represent a significant portion of the total capitalization of the Indian market. The value of these companies will generally fluctuate in response to technological and regulatory developments. In addition, governmental actions can have a significant effect on economic conditions in the India region, which could adversely affect the value
127
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
and liquidity of investments. Although the governments of India, Bangladesh, Pakistan and Sri Lanka have recently begun to institute economic reform policies, there can be no assurance that they will continue to pursue such policies or, if they do, that such policies will succeed. The region is an uncertain tax environment and it is difficult to know and predict the potential implications of future tax developments. Religious, cultural and military disputes persist in India, and between India and Pakistan (as well as sectarian groups within each country). The longstanding border dispute with Pakistan remains unresolved. In recent years, terrorists believed to be based in Pakistan struck Mumbai (India’s financial capital), further damaging relations between the two countries. If the Indian government is unable to control the violence and disruption associated with these tensions (including both domestic and external sources of terrorism), the result may be military conflict, which could destabilize the economy of India. Both India and Pakistan have tested nuclear arms, and the threat of deployment of such weapons could hinder development of the Indian economy, and escalating tensions could impact the broader region, including China.
Liquidity Risk — The trading market for a particular security may be less liquid than it appears and market prices may not represent realizable value. This may be likely when a fund has a proportionately large investment in securities with small market capitalizations or securities in foreign markets that trade infrequently. Reduced liquidity will have an adverse impact on a fund’s ability to sell such securities quickly at the currently marked price if necessary to meet redemptions.
Shareholder Concentration Risk — A significant portion of the net assets of the Frontier Emerging Small Countries Fund is owned by a group of shareholders advised by a common investment advisor. The Emerging Markets Select Fund also has a significant portion of net assets concentrated in relatively few related accounts. In the event of significant redemption activity by these shareholders, the Funds could experience a loss when selling portfolio securities to meet such redemption requests. The Funds could be forced to sell portfolio securities at unfavorable prices in an effort to generate sufficient cash to pay redeeming shareholders. Fund expenses may increase and performance may be materially affected.
12. FAIR VALUE MEASUREMENTSAND INVESTMENTS
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds use various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP established a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
| • | Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. The inputs may include quoted prices for the identical investment on an inactive market, prices for similar investments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
| • | Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether a security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
Equity Securities (common and preferred stock) — Securities are valued as of the close of the New York Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern Time) on the valuation date. Equity securities and listed warrants 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 the National Association of Securities Dealer Automated Quotation (“NASDAQ”) system, 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 day, then the security shall be valued at the mean of the last bid and ask price on the primary exchange or market as provided by a pricing service. If the mean cannot be calculated or there is no trade activity on a day, then the security shall be valued at the previous trading day’s price as provided by a pricing service. In some instances, particularly on foreign exchanges, an official close or evaluated price may be used if the pricing service is unable to provide the last trade or most recent mean price. To the extent that these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy. 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
128
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
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. When a Fund uses this fair value pricing method, the values assigned to the Fund’s foreign securities may not be the quoted or published prices of the investments on their primary markets or exchanges, and the securities are categorized in Level 2 of the fair value hierarchy. These valuation procedures apply equally to long or short equity positions in a fund.
Participation Notes — Investments are valued at the market price of the underlying security. Counterparty risk is regularly reviewed and considered for valuation.
Corporate Debt Securities — Investments are valued at current market value by a pricing service, or by using the last sale or bid price based on observable inputs. Observable inputs may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Although most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where observable inputs are not available, they are categorized as Level 3.
Short-Term Notes — Investments maturing in 60 days or less at the 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. To the extent the inputs are observable and timely, the values would be categorized in Level 2 of the fair value hierarchy.
Asset-Backed Securities — Investments are priced using the closing bid as supplied by a pricing service based on observable inputs. Observable inputs may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications, new issue data, monthly payment information and collateral performance. Although most asset-backed securities are categorized in Level 2 of the fair value hierarchy, in instances where observable inputs are not available, they are categorized as Level 3.
U.S. Government Issuers — Investments are priced using the closing bid as supplied by a pricing service based on observable inputs. Observable inputs may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Although most U.S. government bonds are categorized in Level 2 of the fair value hierarchy, in instances where observable inputs are not available, they are categorized as Level 3.
Derivative Instruments — Listed derivatives that are actively traded are valued based on quoted prices from the exchange and categorized in Level 1 of the fair value hierarchy. 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 mean of the last bid price and ask price on the primary exchange or market as provided by a pricing service. Forward foreign currency contracts are valued at the market rate provided by the pricing service and categorized as Level 2.
Restricted Securities — If market quotations are not readily available for the Funds’ investments in securities such as restricted securities, private placements, securities for which trading has been halted or other illiquid securities, these investments are valued at fair value in accordance with Board-approved Pricing Policies and Procedures by the Pricing Committee 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, comparable companies in the public market, the nature and duration of the restrictions for holding the securities, a stated net asset value (NAV) for the partnership, if applicable, and other relevant factors. Depending on the relative significance of valuation inputs, these instruments may be classified in either Level 2 or Level 3 of the fair value hierarchy.
When the last day of the reporting period is a non-business day, certain foreign markets may be open on days the NYSE is closed, which could result in differences between the value of a fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the fund for financial reporting purposes.
129
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
The following is a summary of the fair valuations according to the inputs used as of March 31, 2018 in valuing the Funds’ 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 3/31/2018 | |||||||||||||
Core Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Biotechnology | $ | 26,898,717 | $ | 33,144,515 | $ | — | $ | 60,043,232 | |||||||||
| Diversified Banks | — | 19,439,726 | — | 19,439,726 | ||||||||||||||
| Regional Banks | 160,244,776 | 35,820,388 | — | 196,065,164 | ||||||||||||||
| Other | 1,440,632,572 | — | — | 1,440,632,572 | ||||||||||||||
Preferred Stocks | — | — | 5,721,445 | 5,721,445 | ||||||||||||||
Short-Term Investments | — | 24,177,779 | — | 24,177,779 | ||||||||||||||
|
| |||||||||||||||||
| $ | 1,627,776,065 | $ | 112,582,408 | $ | 5,721,445 | $ | 1,746,079,918 | |||||||||||
|
| |||||||||||||||||
Emerging India Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Cable & Satellite | $ | 312,170 | $ | — | $ | — | $ | 312,170 | |||||||||
| Diversified Banks | 6,872,265 | 3,844,972 | 2,455,438 | 13,172,675 | ||||||||||||||
| Human Resource & Employment Services | 10,583,855 | — | — | 10,583,855 | ||||||||||||||
| Internet & Direct Marketing Retail | 11,564,469 | — | — | 11,564,469 | ||||||||||||||
| Other | — | 219,338,145 | — | 219,338,145 | ||||||||||||||
|
| |||||||||||||||||
| $ | 29,332,760 | $ | 223,183,117 | $ | 2,455,437 | $ | 254,971,314 | |||||||||||
|
| |||||||||||||||||
Emerging Markets Select Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Airport Services | $ | 1,986,070 | $ | — | $ | — | $ | 1,986,070 | |||||||||
| Biotechnology | 2,533,743 | — | — | 2,533,743 | ||||||||||||||
| Drug Retail | 1,836,508 | — | — | 1,836,508 | ||||||||||||||
| Food Retail | 1,332,308 | — | — | 1,332,308 | ||||||||||||||
| Highways & Railtracks | 753,477 | — | — | 753,477 | ||||||||||||||
| Home Furnishings | 875,450 | — | — | 875,450 | ||||||||||||||
| Human Resource & Employment Services | 1,528,759 | — | — | 1,528,759 | ||||||||||||||
| Industrial Machinery | 969,988 | — | — | 969,988 | ||||||||||||||
| Internet & Direct Marketing Retail | 3,545,876 | — | — | 3,545,876 | ||||||||||||||
| Internet Software & Services | 3,568,637 | 2,449,129 | — | 6,017,766 | ||||||||||||||
| Packaged Foods & Meats | 804,028 | 2,164,163 | — | 2,968,191 | ||||||||||||||
| Semiconductors | 1,685,908 | — | — | 1,685,908 | ||||||||||||||
| Technology Hardware, Storage & Peripherals | 912,113 | — | — | 912,113 | ||||||||||||||
| Other | — | 20,332,852 | — | 20,332,852 | ||||||||||||||
Preferred Stocks | 1,363,327 | — | — | 1,363,327 | ||||||||||||||
|
| |||||||||||||||||
| $ | 23,696,192 | $ | 24,946,144 | $ | — | $ | 48,642,336 | |||||||||||
|
| |||||||||||||||||
130
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| 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 3/31/2018 | |||||||||||||
Emerging Markets Small Cap Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Auto Parts & Equipment | $ | — | $ | 9,211,827 | $ | — | $ | 9,211,827 | |||||||||
| Automotive Retail | — | 25,091,822 | — | 25,091,822 | ||||||||||||||
| Building Products | — | 8,787,814 | — | 8,787,814 | ||||||||||||||
| Commodity Chemicals | — | 10,801,631 | — | 10,801,631 | ||||||||||||||
| Consumer Finance | 10,984,925 | 38,347,397 | — | 49,332,322 | ||||||||||||||
| Department Stores | — | 5,915,848 | — | 5,915,848 | ||||||||||||||
| Diversified Banks | — | 23,970,028 | — | 23,970,028 | ||||||||||||||
| Diversified Chemicals | — | 6,778,891 | — | 6,778,891 | ||||||||||||||
| Diversified Support Services | — | 8,053,546 | — | 8,053,546 | ||||||||||||||
| Drug Retail | 11,831,493 | 14,422,022 | — | 26,253,515 | ||||||||||||||
| Electrical Components & Equipment | 17,378,911 | 7,598,539 | — | 24,977,450 | ||||||||||||||
| Electronic Equipment & Instruments | — | 12,233,567 | — | 12,233,567 | ||||||||||||||
| Fertilizers & Agricultural Chemicals | — | 3,287,467 | — | 3,287,467 | ||||||||||||||
| Footwear | 5,948,500 | 5,638,835 | — | 11,587,335 | ||||||||||||||
| Health Care Equipment | — | 7,044,909 | — | 7,044,909 | ||||||||||||||
| Health Care Services | — | 2,718,678 | — | 2,718,678 | ||||||||||||||
| Highways & Railtracks | 8,094,303 | 6,666,127 | — | 14,760,430 | ||||||||||||||
| Home Furnishings | 4,597,345 | 14,084,618 | — | 18,681,963 | ||||||||||||||
| Hotels, Resorts & Cruise Lines | 6,725,113 | 8,824,155 | — | 15,549,268 | ||||||||||||||
| Industrial Conglomerates | — | 8,917,383 | — | 8,917,383 | ||||||||||||||
| Industrial Machinery | 11,678,303 | 2,672,485 | — | 14,350,788 | ||||||||||||||
| Internet Software & Services | — | 6,084,219 | — | 6,084,219 | ||||||||||||||
| Life & Health Insurance | — | 2,752,278 | — | 2,752,278 | ||||||||||||||
| Marine | — | 3,549,307 | — | 3,549,307 | ||||||||||||||
| Marine Ports & Services | — | 6,739,227 | — | 6,739,227 | ||||||||||||||
| Packaged Foods & Meats | — | 21,776,875 | — | 21,776,875 | ||||||||||||||
| Pharmaceuticals | 5,076,921 | — | 16,586 | 5,093,507 | ||||||||||||||
| Regional Banks | 3,914,502 | 4,787,097 | — | 8,701,599 | ||||||||||||||
| Research & Consulting Services | — | 5 | — | 5 | ||||||||||||||
| Specialty Chemicals | — | 15,745,129 | — | 15,745,129 | ||||||||||||||
| Systems Software | — | 11,440,723 | — | 11,440,723 | ||||||||||||||
| Thrifts & Mortgage Finance | — | 5,854,661 | — | 5,854,661 | ||||||||||||||
| Other | 235,624,301 | — | — | 235,624,301 | ||||||||||||||
Preferred Stocks | — | 8,333,219 | — | 8,333,219 | ||||||||||||||
Short-Term Investments | — | 9,922,705 | — | 9,922,705 | ||||||||||||||
|
| |||||||||||||||||
| $ | 321,854,617 | $ | 328,053,034 | $ | 16,586 | $ | 649,924,237 | |||||||||||
|
| |||||||||||||||||
131
Table of Contents
| 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 3/31/2018 | |||||||||||||
Frontier Emerging Small Countries Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Automobile Manufacturers | $ | 1,511,058 | $ | 1,219,199 | $ | — | $ | 2,730,257 | |||||||||
| Cable & Satellite | — | 5,755,402 | — | 5,755,402 | ||||||||||||||
| Consumer Finance | 6,338,418 | 4,379,828 | — | 10,718,246 | ||||||||||||||
| Diversified Banks | 23,106,943 | 12,783,330 | — | 35,890,273 | ||||||||||||||
| Diversified Real Estate Activities | — | 6,108,671 | — | 6,108,671 | ||||||||||||||
| Financial Exchanges & Data | — | 5,506,409 | — | 5,506,409 | ||||||||||||||
| Food Retail | 8,170,867 | 3,715,306 | — | 11,886,173 | ||||||||||||||
| Health Care Facilities | 2,253,194 | 7,344,461 | — | 9,597,655 | ||||||||||||||
| Industrial Conglomerates | — | 2,238,409 | — | 2,238,409 | ||||||||||||||
| Multi-Sector Holdings | — | 4,073,141 | — | 4,073,141 | ||||||||||||||
| Pharmaceuticals | — | 4,651,045 | — | 4,651,045 | ||||||||||||||
| Real Estate Operating Companies | — | 1,705,770 | — | 1,705,770 | ||||||||||||||
| Restaurants | — | 4,827,850 | — | 4,827,850 | ||||||||||||||
| Specialty Chemicals | — | 2,935,219 | — | 2,935,219 | ||||||||||||||
| Wireless Telecommunication Services | — | 4,612,934 | — | 4,612,934 | ||||||||||||||
| Other | 46,346,514 | — | — | 46,346,514 | ||||||||||||||
Preferred Stocks | 3,886,033 | — | — | 3,886,033 | ||||||||||||||
Participation Notes | — | 2,632,353 | — | 2,632,353 | ||||||||||||||
Short-Term Investments | — | 2,725,364 | — | 2,725,364 | ||||||||||||||
Other Assets less Liabilities | (147,248 | ) | — | 1,967,327 | 1,820,079 | |||||||||||||
|
| |||||||||||||||||
| $ | 91,465,779 | $ | 77,214,691 | $ | 1,967,327 | $ | 170,647,797 | |||||||||||
|
| |||||||||||||||||
Global Opportunities Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Application Software | $ | 9,497,786 | $ | 370,941 | $ | — | $ | 9,868,727 | |||||||||
| Biotechnology | 8,237,930 | 1,852,437 | — | 10,090,367 | ||||||||||||||
| Building Products | 2,358,025 | 1,433,240 | — | 3,791,265 | ||||||||||||||
| Consumer Finance | 3,592,704 | 2,296,773 | — | 5,889,477 | ||||||||||||||
| Diversified Chemicals | — | 1,057,135 | — | 1,057,135 | ||||||||||||||
| Diversified Real Estate Activities | — | 984,868 | — | 984,868 | ||||||||||||||
| Drug Retail | — | 514,783 | — | 514,783 | ||||||||||||||
| Electrical Components & Equipment | 1,114,213 | 1,179,314 | — | 2,293,527 | ||||||||||||||
| General Merchandise Stores | 2,466,511 | 1,394,690 | — | 3,861,201 | ||||||||||||||
| Health Care Equipment | 1,966,498 | 1,697,868 | — | 3,664,366 | ||||||||||||||
| Health Care Services | — | 951,690 | — | 951,690 | ||||||||||||||
| Health Care Supplies | 1,544,701 | 1,110,584 | — | 2,655,285 | ||||||||||||||
| Human Resource & Employment Services | — | 1,750,771 | — | 1,750,771 | ||||||||||||||
| Industrial Conglomerates | — | 1,290,337 | — | 1,290,337 | ||||||||||||||
| Industrial Machinery | 4,697,513 | 1,387,026 | — | 6,084,539 | ||||||||||||||
| Internet Software & Services | 5,111,972 | 1,316,812 | — | 6,428,784 | ||||||||||||||
| Life & Health Insurance | — | 1,740,534 | — | 1,740,534 | ||||||||||||||
| Packaged Foods & Meats | — | 1,073,578 | — | 1,073,578 | ||||||||||||||
| Pharmaceuticals | 536,017 | 1,589,018 | — | 2,125,035 | ||||||||||||||
| Regional Banks | 4,135,149 | 2,721,282 | — | 6,856,431 | ||||||||||||||
| Restaurants | — | 716,753 | — | 716,753 | ||||||||||||||
| Semiconductors | — | 1,064,585 | — | 1,064,585 | ||||||||||||||
| Specialized Finance | — | 651,913 | — | 651,913 | ||||||||||||||
| Specialty Chemicals | — | 2,227,108 | — | 2,227,108 | ||||||||||||||
| Specialty Stores | 1,339,042 | 532,626 | — | 1,871,668 | ||||||||||||||
| Trading Companies & Distributors | 1,522,184 | 977,281 | — | 2,499,465 | ||||||||||||||
| Other | 30,077,756 | — | — | 30,077,756 | ||||||||||||||
Short-Term Investments | — | 2,441,709 | — | 2,441,709 | ||||||||||||||
|
| |||||||||||||||||
| $ | 78,198,001 | $ | 36,325,656 | $ | — | $ | 114,523,657 | |||||||||||
|
| |||||||||||||||||
132
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| 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 3/31/2018 | |||||||||||||
Global Value Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Construction & Engineering | $ | — | $ | 2,259,903 | $ | — | $ | 2,259,903 | |||||||||
| Diversified Banks | 16,298,130 | 15,219,303 | — | 31,517,433 | ||||||||||||||
| Other Diversified Financial Services | — | 5,010,186 | — | 5,010,186 | ||||||||||||||
| Pharmaceuticals | 8,020,740 | 6,516,977 | — | 14,537,717 | ||||||||||||||
| Reinsurance | — | 6,743,695 | — | 6,743,695 | ||||||||||||||
| Tobacco | — | 4,034,150 | — | 4,034,150 | ||||||||||||||
| Water Utilities | — | 3,168,533 | — | 3,168,533 | ||||||||||||||
| Wireless Telecommunication Services | — | 12,218,194 | — | 12,218,194 | ||||||||||||||
| Other | 81,408,193 | — | — | 81,408,193 | ||||||||||||||
Short-Term Investments | — | 6,458,741 | — | 6,458,741 | ||||||||||||||
|
| |||||||||||||||||
| $ | 105,727,063 | $ | 61,629,682 | $ | — | $ | 167,356,745 | |||||||||||
|
| |||||||||||||||||
Liabilities | ||||||||||||||||||
Call Options Written | $ | (8,700 | ) | $ | — | $ | — | $ | (8,700 | ) | ||||||||
|
| |||||||||||||||||
| $ | (8,700 | ) | $ | — | $ | — | $ | (8,700 | ) | |||||||||
|
| |||||||||||||||||
International Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Airport Services | $ | 16,057,473 | $ | — | $ | — | $ | 16,057,473 | |||||||||
| Apparel, Accessories & Luxury Goods | 20,080,694 | 36,114,475 | — | 56,195,169 | ||||||||||||||
| Application Software | 9,304,299 | 54,274,783 | — | 63,579,082 | ||||||||||||||
| Biotechnology | 19,675,145 | 42,702,119 | — | 62,377,264 | ||||||||||||||
| Data Processing & Outsourced Services | 19,945,942 | — | — | 19,945,942 | ||||||||||||||
| Drug Retail | 56,644,156 | 36,802,899 | — | 93,447,055 | ||||||||||||||
| Electrical Components & Equipment | 17,827,810 | 15,798,977 | — | 33,626,787 | ||||||||||||||
| Electronic Equipment & Instruments | 16,652,503 | 23,740,860 | — | 40,393,363 | ||||||||||||||
| Health Care Supplies | 27,091,036 | 5,283,786 | — | 32,374,822 | ||||||||||||||
| Health Care Technology | 20,851,321 | — | — | 20,851,321 | ||||||||||||||
| Human Resource & Employment Services | 21,877,649 | 18,667,954 | — | 40,545,603 | ||||||||||||||
| Industrial Machinery | 12,380,732 | 55,342,546 | — | 67,723,278 | ||||||||||||||
| Internet & Direct Marketing Retail | 7,040,122 | 18,872,990 | — | 25,913,112 | ||||||||||||||
| Internet Software & Services | 52,435,814 | 59,552,885 | — | 111,988,699 | ||||||||||||||
| Movies & Entertainment | 11,340,025 | 19,444,005 | — | 30,784,030 | ||||||||||||||
| Oil & Gas Equipment & Services | 8,714,493 | 34,419,743 | — | 43,134,236 | ||||||||||||||
| Packaged Foods & Meats | 10,337,761 | 48,434,635 | — | 58,772,396 | ||||||||||||||
| Regional Banks | 20,613,237 | 28,142,342 | — | 48,755,579 | ||||||||||||||
| Research & Consulting Services | 27,886,514 | 391,116 | — | 28,277,630 | ||||||||||||||
| Semiconductor Equipment | 15,040,531 | — | — | 15,040,531 | ||||||||||||||
| Semiconductors | 17,109,431 | 30,306,257 | — | 47,415,688 | ||||||||||||||
| Systems Software | 15,865,209 | 24,821,060 | — | 40,686,269 | ||||||||||||||
| Technology Hardware, Storage & Peripherals | 21,621,810 | — | — | 21,621,810 | ||||||||||||||
| Trading Companies & Distributors | 36,255,300 | 43,548,275 | — | 79,803,575 | ||||||||||||||
| Other | — | 501,299,301 | — | 501,299,301 | ||||||||||||||
Short-Term Investments | — | 50,075,525 | — | 50,075,525 | ||||||||||||||
|
| |||||||||||||||||
| $ | 502,649,007 | $ | 1,148,036,533 | $ | — | $ | 1,650,685,540 | |||||||||||
|
| |||||||||||||||||
133
Table of Contents
| 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 3/31/2018 | |||||||||||||
International Opportunities Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Advertising | $ | 5,585,752 | $ | 2,740,090 | $ | — | $ | 8,325,842 | |||||||||
| Aerospace & Defense | 3,262,175 | — | — | 3,262,175 | ||||||||||||||
| Apparel Retail | 3,068,657 | — | — | 3,068,657 | ||||||||||||||
| Apparel, Accessories & Luxury Goods | 2,731,371 | — | — | 2,731,371 | ||||||||||||||
| Application Software | 17,408,607 | 13,044,533 | — | 30,453,140 | ||||||||||||||
| Asset Management & Custody Banks | 8,766,017 | — | — | 8,766,017 | ||||||||||||||
| Automobile Manufacturers | 3,292,295 | — | — | 3,292,295 | ||||||||||||||
| Automotive Retail | 4,917,359 | — | — | 4,917,359 | ||||||||||||||
| Brewers | 3,347,661 | 7,783,826 | — | 11,131,487 | ||||||||||||||
| Building Products | 3,317,907 | — | — | 3,317,907 | ||||||||||||||
| Consumer Finance | 6,146,150 | 8,210,863 | — | 14,357,013 | ||||||||||||||
| Diversified Support Services | 2,229,166 | 13,485,288 | — | 15,714,454 | ||||||||||||||
| Drug Retail | 9,844,810 | — | — | 9,844,810 | ||||||||||||||
| Electrical Components & Equipment | 6,662,117 | 3,092,266 | — | 9,754,383 | ||||||||||||||
| Electronic Equipment & Instruments | 2,628,136 | 13,512,955 | — | 16,141,091 | ||||||||||||||
| Food Retail | 20,647,200 | 6,618,960 | — | 27,266,160 | ||||||||||||||
| Health Care Equipment | 2,962,820 | 4,819,846 | — | 7,782,666 | ||||||||||||||
| Health Care Facilities | 3,689,026 | — | — | 3,689,026 | ||||||||||||||
| Health Care Technology | 2,296,203 | 11,966,899 | — | 14,263,102 | ||||||||||||||
| Home Furnishing Retail | 1,136,290 | — | — | 1,136,290 | ||||||||||||||
| Home Improvement Retail | 11,405,913 | — | — | 11,405,913 | ||||||||||||||
| Human Resource & Employment Services | 2,983,413 | 6,480,051 | — | 9,463,464 | ||||||||||||||
| Internet & Direct Marketing Retail | 21,109,922 | 9,321,933 | — | 30,431,855 | ||||||||||||||
| Internet Software & Services | 29,775,781 | 5,283,115 | — | 35,058,896 | ||||||||||||||
| Investment Banking & Brokerage | 10,600,055 | — | — | 10,600,055 | ||||||||||||||
| Life Sciences Tools & Services | 2,954,307 | — | — | 2,954,307 | ||||||||||||||
| Packaged Foods & Meats | 3,505,625 | 24,434,837 | — | 27,940,462 | ||||||||||||||
| Personal Products | 8,023,778 | 7,710,246 | — | 15,734,024 | ||||||||||||||
| Property & Casualty Insurance | 8,125,000 | — | — | 8,125,000 | ||||||||||||||
| Real Estate Operating Companies | 5,713,313 | — | — | 5,713,313 | ||||||||||||||
| Research & Consulting Services | 496,532 | 2,782,963 | — | 3,279,495 | ||||||||||||||
| Restaurants | 7,764,719 | 12,813,393 | — | 20,578,112 | ||||||||||||||
| Semiconductor Equipment | 8,625,018 | 1,673,384 | — | 10,298,402 | ||||||||||||||
| Semiconductors | 1,548,146 | — | — | 1,548,146 | ||||||||||||||
| Specialty Stores | 1,034,515 | — | — | 1,034,515 | ||||||||||||||
| Systems Software | 3,501,429 | 3,731,272 | — | 7,232,701 | ||||||||||||||
| Thrifts & Mortgage Finance | 3,703,747 | 3,873,880 | — | 7,577,627 | ||||||||||||||
| Other | — | 98,773,734 | — | 98,773,734 | ||||||||||||||
Short-Term Investments | — | 18,365,249 | — | 18,365,249 | ||||||||||||||
|
| |||||||||||||||||
| $ | 244,810,932 | $ | 280,519,583 | $ | — | $ | 525,330,515 | |||||||||||
|
| |||||||||||||||||
Long/Short Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 63,857,870 | $ | — | $ | — | $ | 63,857,870 | ||||||||||
Limited Partnership Interest | 2,584,499 | — | — | 2,584,499 | ||||||||||||||
Short-Term Investments | — | 3,729,660 | — | 3,729,660 | ||||||||||||||
|
| |||||||||||||||||
| $ | 66,442,369 | $ | 3,729,660 | $ | — | $ | 70,172,029 | |||||||||||
|
| |||||||||||||||||
Liabilities | ||||||||||||||||||
Securities Sold Short | $ | (18,069,619 | ) | $ | — | $ | — | $ | (18,069,619 | ) | ||||||||
|
| |||||||||||||||||
| $ | (18,069,619 | ) | $ | — | $ | — | $ | (18,069,619 | ) | |||||||||
|
| |||||||||||||||||
134
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| 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 3/31/2018 | |||||||||||||
Micro Cap Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Application Software | $ | 23,793,146 | $ | 3,498,807 | $ | — | $ | 27,291,953 | |||||||||
| Asset Management & Custody Banks | 1,957,156 | 2,381,784 | — | 4,338,940 | ||||||||||||||
| Biotechnology | 22,651,095 | 4,194,099 | — | 26,845,194 | ||||||||||||||
| Consumer Finance | — | 2,240,433 | — | 2,240,433 | ||||||||||||||
| Department Stores | — | 9,228,230 | — | 9,228,230 | ||||||||||||||
| Diversified Banks | — | 3,881,063 | — | 3,881,063 | ||||||||||||||
| Diversified Support Services | 4,965,086 | 2,175,885 | — | 7,140,971 | ||||||||||||||
| Heavy Electrical Equipment | 2,679,924 | 988,286 | — | 3,668,210 | ||||||||||||||
| Homebuilding | 7,876,021 | 3,445,000 | — | 11,321,021 | ||||||||||||||
| Industrial Machinery | 14,424,429 | 4,844,680 | — | 19,269,109 | ||||||||||||||
| Packaged Foods & Meats | 6,685,971 | 3,499,424 | — | 10,185,395 | ||||||||||||||
| Thrifts & Mortgage Finance | 8,429,895 | 3,675,215 | — | 12,105,110 | ||||||||||||||
| Other | 201,525,533 | — | — | 201,525,533 | ||||||||||||||
Short-Term Investments | — | 32,894,481 | — | 32,894,481 | ||||||||||||||
|
| |||||||||||||||||
| $ | 294,988,256 | $ | 76,947,387 | $ | — | $ | 371,935,643 | |||||||||||
|
| |||||||||||||||||
Micro Cap Value Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Application Software | $ | 8,055,340 | $ | 1,986,502 | $ | — | $ | 10,041,842 | |||||||||
| Asset Management & Custody Banks | 3,052,860 | 2,987,336 | — | 6,040,196 | ||||||||||||||
| Computer & Electronics Retail | — | 1,204,347 | — | 1,204,347 | ||||||||||||||
| Diversified Banks | — | 2,070,982 | — | 2,070,982 | ||||||||||||||
| Education Services | — | 2,143,282 | — | 2,143,282 | ||||||||||||||
| Electronic Equipment & Instruments | 3,334,500 | 2,800,301 | — | 6,134,801 | ||||||||||||||
| General Merchandise Stores | 2,170,800 | 1,820,215 | — | 3,991,015 | ||||||||||||||
| Health Care Technology | 1,779,400 | 3,314,665 | — | 5,094,065 | ||||||||||||||
| Homebuilding | 4,846,530 | 3,975,000 | — | 8,821,530 | ||||||||||||||
| Industrial Machinery | 7,609,514 | 2,531,814 | — | 10,141,328 | ||||||||||||||
| Packaged Foods & Meats | 3,760,189 | 2,645,177 | — | 6,405,366 | ||||||||||||||
| Personal Products | — | 2,115,805 | — | 2,115,805 | ||||||||||||||
| Publishing | — | 1,876,448 | — | 1,876,448 | ||||||||||||||
| Thrifts & Mortgage Finance | 9,112,773 | 2,552,752 | — | 11,665,525 | ||||||||||||||
| Other | 158,317,175 | — | — | 158,317,175 | ||||||||||||||
Convertible Preferred Stocks | — | — | 1,544,189 | 1,544,189 | ||||||||||||||
Rights | — | — | 330,106 | 330,106 | ||||||||||||||
Limited Liability Company Membership Interest | — | — | 46,991 | 46,991 | ||||||||||||||
Warrants | — | — | 11,448 | 11,448 | ||||||||||||||
Short-Term Investments | — | 15,171,597 | — | 15,171,597 | ||||||||||||||
|
| |||||||||||||||||
| $ | 202,039,081 | $ | 49,196,223 | $ | 1,932,734 | $ | 253,168,038 | |||||||||||
|
| |||||||||||||||||
Small Cap Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Biotechnology | $ | 120,448,931 | $ | 36,462,214 | $ | — | $ | 156,911,145 | |||||||||
| Regional Banks | 98,714,977 | 43,234,326 | — | 141,949,303 | ||||||||||||||
| Systems Software | 93,710,212 | — | 9,294,790 | 103,005,002 | ||||||||||||||
| Other | 1,245,816,884 | — | — | 1,245,816,884 | ||||||||||||||
Preferred Stocks | — | — | 45,249,885 | 45,249,885 | ||||||||||||||
Limited Partnership Interest1 | — | — | — | 3,008,247 | ||||||||||||||
Short-Term Investments | — | 51,521,965 | — | 51,521,965 | ||||||||||||||
|
| |||||||||||||||||
| $ | 1,558,691,004 | $ | 131,218,505 | $ | 54,544,675 | $ | 1,747,462,431 | |||||||||||
|
| |||||||||||||||||
| 1 | Certain investments measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value levels. The fair value amounts presented in the table are intended to permit reconciliation to the amounts presented in the Schedule of Investments. |
135
Table of Contents
| 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 3/31/2018 | |||||||||||||
Small Cap Value Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Diversified Banks | $ | — | $ | 4,312,469 | $ | — | $ | 4,312,469 | |||||||||
| Other | 377,564,501 | — | — | 377,564,501 | ||||||||||||||
Limited Partnership Interest | 3,556,848 | — | — | 3,556,848 | ||||||||||||||
Short-Term Investments | — | 8,282,068 | — | 8,282,068 | ||||||||||||||
|
| |||||||||||||||||
| $ | 381,121,349 | $ | 12,594,537 | $ | — | $ | 393,715,886 | |||||||||||
|
| |||||||||||||||||
Strategic Income Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Cable & Satellite | $ | 2,176,629 | $ | 244,713 | $ | — | $ | 2,421,342 | |||||||||
| Diversified REITs | 511,420 | — | 811,028 | 1,322,448 | ||||||||||||||
| Industrial Conglomerates | 263,804 | 55,632 | — | 319,436 | ||||||||||||||
| Semiconductor Equipment | — | 1,341,834 | — | 1,341,834 | ||||||||||||||
| Other | 33,156,300 | — | — | 33,156,300 | ||||||||||||||
Rights | — | — | 57,821 | 57,821 | ||||||||||||||
Limited Partnership Interest | 3,472,654 | — | — | 3,472,654 | ||||||||||||||
Limited Liability Company Membership Interest | 540,565 | — | — | 540,565 | ||||||||||||||
Exchange-Traded Funds | 3,049,940 | — | — | 3,049,940 | ||||||||||||||
Short-Term Investments | — | 7,041,530 | — | 7,041,530 | ||||||||||||||
|
| |||||||||||||||||
| $ | 43,171,312 | $ | 8,683,709 | $ | 868,849 | $ | 52,723,870 | |||||||||||
|
| |||||||||||||||||
Ultra Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Department Stores | $ | — | $ | 2,387,985 | $ | — | $ | 2,387,985 | |||||||||
| Diversified Banks | — | 1,949,803 | — | 1,949,803 | ||||||||||||||
| Health Care Services | — | 1,213,024 | — | 1,213,024 | ||||||||||||||
| Internet & Direct Marketing Retail | 3,311,381 | 1,001,577 | — | 4,312,958 | ||||||||||||||
| Regional Banks | 8,901,938 | 3,245,901 | — | 12,147,839 | ||||||||||||||
| Other | 101,147,725 | — | — | 101,147,725 | ||||||||||||||
Preferred Stocks | — | — | 1,273,672 | 1,273,672 | ||||||||||||||
Warrants | — | — | 243,434 | 243,434 | ||||||||||||||
Limited Partnership Interest1 | — | — | — | 2,812,971 | ||||||||||||||
Short-Term Investments | — | 8,560,764 | — | 8,560,764 | ||||||||||||||
|
| |||||||||||||||||
| $ | 113,361,044 | $ | 18,359,054 | $ | 1,517,106 | $ | 136,050,175 | |||||||||||
|
| |||||||||||||||||
136
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
| 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 3/31/2018 | |||||||||||||
World Innovators Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Aerospace & Defense | $ | 4,634,847 | $ | — | $ | — | $ | 4,634,847 | |||||||||
| Agricultural Products | 1,147,630 | 6,673,424 | — | 7,821,054 | ||||||||||||||
| Alternative Carriers | 8,347,854 | — | — | 8,347,854 | ||||||||||||||
| Application Software | 162,748 | 1,197,918 | — | 1,360,666 | ||||||||||||||
| Biotechnology | 1,972,111 | 1,730,265 | — | 3,702,376 | ||||||||||||||
| Consumer Electronics | 3,897,604 | 7,254,358 | — | 11,151,962 | ||||||||||||||
| Electrical Components & Equipment | 4,937,897 | — | — | 4,937,897 | ||||||||||||||
| Fertilizers & Agricultural Chemicals | 2,126,700 | — | — | 2,126,700 | ||||||||||||||
| Financial Exchanges & Data | 930,196 | — | — | 930,196 | ||||||||||||||
| Food Retail | 4,467,154 | — | — | 4,467,154 | ||||||||||||||
| Health Care Facilities | 2,592,453 | — | — | 2,592,453 | ||||||||||||||
| Health Care Supplies | 11,921,853 | 8,966,138 | — | 20,887,991 | ||||||||||||||
| Health Care Technology | 5,957,093 | 2,188,930 | — | 8,146,023 | ||||||||||||||
| Home Entertainment Software | 3,625,585 | 7,132,747 | — | 10,758,332 | ||||||||||||||
| Home Improvement Retail | 1,003,484 | — | — | 1,003,484 | ||||||||||||||
| Household Appliances | 4,407,840 | — | — | 4,407,840 | ||||||||||||||
| Hypermarkets & Super Centers | 5,652,900 | — | — | 5,652,900 | ||||||||||||||
| Internet & Direct Marketing Retail | 324,374 | — | — | 324,374 | ||||||||||||||
| Leisure Facilities | 2,034,351 | — | — | 2,034,351 | ||||||||||||||
| Leisure Products | 10,634,586 | — | — | 10,634,586 | ||||||||||||||
| Movies & Entertainment | 6,065 | 7,553,063 | — | 7,559,128 | ||||||||||||||
| Publishing | 4,820,000 | 1,672,464 | — | 6,492,464 | ||||||||||||||
| Technology Hardware, Storage & Peripherals | 742,446 | 2,002,378 | — | 2,744,824 | ||||||||||||||
| Wireless Telecommunication Services | 2,080,262 | — | — | 2,080,262 | ||||||||||||||
| Other | — | 42,426,857 | — | 42,426,857 | ||||||||||||||
Rights | — | — | 74,515 | 74,515 | ||||||||||||||
Limited Partnership Interest1 | — | — | — | 195,270 | ||||||||||||||
Short-Term Investments | — | 33,811,282 | — | 33,811,282 | ||||||||||||||
|
| |||||||||||||||||
| $ | 88,428,033 | $ | 122,609,824 | $ | 74,515 | $ | 211,307,642 | |||||||||||
|
| |||||||||||||||||
Income Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Corporate Bonds | $ | — | $ | 50,185,004 | $ | — | $ | 50,185,004 | ||||||||||
Asset-Backed Securities | — | 14,962,408 | 968,438 | 15,930,846 | ||||||||||||||
Mortgage-Backed Securities | — | 10,469,395 | — | 10,469,395 | ||||||||||||||
U.S. Treasury Notes | — | 6,691,284 | — | 6,691,284 | ||||||||||||||
Municipal Bonds | — | 3,054,027 | — | 3,054,027 | ||||||||||||||
U.S. Government Agency Securities | — | 2,082,895 | — | 2,082,895 | ||||||||||||||
Commercial Mortgage-Backed Securities | — | 2,663,786 | — | 2,663,786 | ||||||||||||||
U.S. Treasury Inflation-Protected Securities | — | 1,997,979 | — | 1,997,979 | ||||||||||||||
U.S. Treasury Bonds | — | 1,111,430 | — | 1,111,430 | ||||||||||||||
Foreign Bonds | — | 984,347 | — | 984,347 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
| $ | — | $ | 94,202,555 | $ | 968,438 | $ | 95,170,993 | |||||||||||
|
| |||||||||||||||||
U.S. Treasury Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
U.S. Government Obligations | $ | — | $ | 324,311,957 | $ | — | $ | 324,311,957 | ||||||||||
Short-Term Investments | — | 5,098,090 | — | 5,098,090 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
| $ | — | $ | 329,410,047 | $ | — | $ | 329,410,047 | |||||||||||
|
| |||||||||||||||||
| 1 | Certain investments measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value levels. The fair value amounts presented in the table are intended to permit reconciliation to the amounts presented in the Schedule of Investments. |
137
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
| Fund | Fair Value at 3/31/2018 | Unfunded Commitments | Redemption (if currently | Redemption Notice Period | ||||||||||||
Small Cap Growth Fund | ||||||||||||||||
Limited Partnership Interests1 | $ | 3,008,247 | $ | — | — | — | ||||||||||
Ultra Growth Fund | ||||||||||||||||
Limited Partnership Interests1 | $ | 2,812,971 | $ | — | — | — | ||||||||||
World Innovators Fund | ||||||||||||||||
Limited Partnership Interests1 | $ | 195,270 | $ | — | — | — | ||||||||||
| 1 | The fair values of these limited partnership interests have been estimated using the net asset value of the Fund’s Limited Partner’s Capital Account. These limited partnership interests can never be redeemed. Distributions from each limited partnership will be received as the underlying investments are liquidated. It is estimated that the underlying assets of the limited partnerships will be liquidated over the next one to five years. |
If the securities of an Asset Class are all the same level, the asset class is shown in total. If the securities of an Asset Class cross levels, the level with the smallest number of categories and with multiple levels within a category is displayed by category. The remaining categories that do not cross levels are combined into the “Other” category.
The valuation techniques used by the Funds to measure fair value for the six months ended March 31, 2018 maximized the use of observable inputs and minimized the use of unobservable inputs.
The Funds’ policy is to recognize transfers between levels at the end of the reporting period. The table below shows the significant transfers between Level 1 and Level 2 due to fair valuation in certain foreign markets pursuant to a systematic valuation model.
| Fund | Transfers Out Of Level 1 at Market Value | Transfers Into Level 2 at Market Value | ||||||
Core Growth Fund | $ | 77,398,681 | $ | 77,398,681 | ||||
Emerging India Fund | 160,696,074 | 160,696,074 | ||||||
Emerging Markets Select Fund | 19,382,940 | 19,382,940 | ||||||
Emerging Markets Small Cap Fund | 240,816,461 | 240,816,461 | ||||||
Frontier Emerging Small Countries Fund | 66,461,669 | 66,461,669 | ||||||
Global Opportunities Fund | 25,894,797 | 25,894,797 | ||||||
Global Value Fund | 26,404,355 | 26,404,355 | ||||||
International Growth Fund | 827,067,442 | 827,067,442 | ||||||
International Opportunities Fund | 202,119,788 | 202,119,788 | ||||||
Micro Cap Fund | 30,129,929 | 30,129,929 | ||||||
Micro Cap Value Fund | 19,508,145 | 19,508,145 | ||||||
Small Cap Growth Fund | 69,245,931 | 69,245,931 | ||||||
Small Cap Value Fund | 4,077,951 | 4,077,951 | ||||||
Strategic Income Fund | 61,425 | 61,425 | ||||||
Ultra Growth Fund | 6,978,788 | 6,978,788 | ||||||
World Innovators Fund | 28,341,465 | 28,341,465 | ||||||
There was a transfer of $1,521,247 in the Emerging India Fund from Level 3 to Level 1 due to a change in pricing strategy on a private company that came public. This transfer amount represents the beginning of the period value for ICICI Lombard General Insurance Co. Ltd., which transferred to Level 1 during the period in order to properly represent the activity on the Level 3 Rollforward presented below.
During the period, $1,967,327 in the Frontier Emerging Small Countries Fund was transferred from Level 1 to Level 3 due to the fair valuation of U.S. dollars held in Zimbabwe.
138
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Funds during the six months ended March 31, 2018:
| Fund | Market Value Beginning Balance 9/30/2017 | Purchases at Cost | Sales (Proceeds) | Accrued Discounts (Premiums) | Realized Gain/ (Loss) | Change in Unrealized Appreciation (Depreciation) | Transfers in at Market Value | Transfers out at Market Value | Market Value Ending Balance 3/31/2018 | Net Change in Unrealized Appreciation (Depreciation) on Investments Held at 3/31/2018 | ||||||||||||||||||||||||||||||
Core Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Preferred Stocks | $ | 4,024,495 | $ | — | $ | — | $ | — | $ | — | $ | 1,696,950 | $ | — | $ | — | $ | 5,721,445 | $ | 1,696,950 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 4,024,495 | — | — | — | — | 1,696,950 | — | — | 5,721,445 | 1,696,950 | |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Emerging India Fund | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | 1,521,247 | 2,043,488 | — | — | — | 411,950 | — | (1,521,247 | ) | 2,455,438 | 411,950 | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 1,521,247 | 2,043,488 | — | — | — | 411,950 | — | (1,521,247 | ) | 2,455,438 | 411,950 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Emerging Markets | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | 16,664 | — | — | — | — | (78 | ) | — | — | 16,586 | (78 | ) | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 16,664 | — | — | — | — | (78 | ) | — | — | 16,586 | (78 | ) | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Frontier Emerging | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | — | — | — | — | — | — | 1,967,327 | — | 1,967,327 | — | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| — | — | — | — | — | — | 1,967,327 | — | 1,967,327 | — | |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Micro Cap Value Fund | ||||||||||||||||||||||||||||||||||||||||
Convertible Preferred Stocks | 1,460,260 | 52,830 | — | — | — | 31,099 | — | — | 1,544,189 | 31,099 | ||||||||||||||||||||||||||||||
Rights | 345,106 | — | — | — | — | (15,000 | ) | — | — | 330,106 | (15,000 | ) | ||||||||||||||||||||||||||||
Limited Liability Company | 51,476 | — | — | — | — | (4,485 | ) | — | — | 46,991 | (4,485 | ) | ||||||||||||||||||||||||||||
Warrants | 2,500 | — | — | — | — | 8,948 | — | — | 11,448 | 8,948 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 1,859,342 | 52,830 | — | — | — | 20,562 | — | — | 1,932,734 | 20,562 | |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Small Cap Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | — | 6,000,003 | — | — | — | 3,294,787 | — | — | 9,294,790 | 3,294,787 | ||||||||||||||||||||||||||||||
Preferred Stocks | 44,874,176 | — | (6,000,003 | ) | — | — | 6,375,712 | — | — | 45,249,885 | 9,491,749 | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 44,874,176 | 6,000,003 | (6,000,003 | ) | — | — | 9,670,499 | — | — | 54,544,675 | 12,786,536 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Strategic Income Fund | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | 885,728 | — | — | — | — | (74,700 | ) | — | — | 811,028 | (74,700 | ) | ||||||||||||||||||||||||||||
Rights | — | — | — | — | — | 57,821 | — | — | 57,821 | 57,821 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 885,728 | — | — | — | — | (16,879 | ) | — | — | 868,849 | (16,879 | ) | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Ultra Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Preferred Stocks | 1,511,972 | — | (685,492 | ) | — | 285,682 | 161,510 | — | — | 1,273,672 | 27,417 | |||||||||||||||||||||||||||||
Warrants | — | 64,988 | — | — | — | 178,446 | — | — | 243,434 | 178,446 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 1,511,972 | 64,988 | (685,492 | ) | — | 285,682 | 339,956 | — | — | 1,517,106 | 205,863 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
World Innovators Fund | ||||||||||||||||||||||||||||||||||||||||
Rights | — | — | — | — | — | 74,515 | — | — | 74,515 | 74,515 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| — | — | — | — | — | 74,515 | — | — | 74,515 | 74,515 | |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Income Fund | ||||||||||||||||||||||||||||||||||||||||
Asset-Backed | 1,009,375 | — | — | — | — | (40,937 | ) | — | — | 968,438 | (40,937 | ) | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 1,009,375 | — | — | — | — | (40,937 | ) | — | — | 968,438 | (40,937 | ) | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
139
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
| Fund | Description | Fair Value at 3/31/2018 | Valuation Technique | Unobservable Input | Range (Average) | |||||||||
Core Growth Fund | Direct Venture Capital Investments: Systems Software | $ | 5,721,445 | Market comparable companies | EV/R* multiple Discount for lack of marketability | | 7.7 - 11.3 (9.4) 20% |
| ||||||
Emerging India Fund | Common Stock: Diversified Banks | $ | 2,455,437 | Discount for lack of marketability | Discount for lack of marketability | 4% | ||||||||
Micro Cap Value Fund | Rights: Pharmaceuticals | $ | 326,356 | Probability of receipt | Probability of receipt | 50% | ||||||||
Micro Cap Value Fund | Private Investment in a Public Equity: Oil & Gas Refining & Marketing | $ | 1,544,189 | Bond model with call option | Bond model with call option | 100% | ||||||||
Small Cap Growth Fund | Common Stock: Systems Software | $ | 9,294,790 | Discount for lack of marketability | Discount for lack of marketability | 3% | ||||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Biotechnology | $ | 494,685 | Market comparable companies | EV/R* multiple Discount for lack of marketability | | 1.0 - 9.5 (4.5) 20% |
| ||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Systems Software | $ | 6,397,861 | Liquidation preference | Probability weighting | 80% | ||||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Oil & Gas Equipment & Services | $ | 15,350,001 | Market comparable companies | EV/R* multiple Discount for lack of marketability | | 4.3 - 9.5 (6.5) 20% |
| ||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Systems Software | $ | 23,007,338 | Market comparable companies | EV/R* multiple Discount for lack of marketability | | 7.7 - 11.3 (9.4) 20% |
| ||||||
Strategic Income Fund | Common Stock: Diversified REITs | $ | 811,028 | Last trade | Last trade | 100% | ||||||||
Strategic Income Fund | Rights: Personal Products | $ | 57,821 | Probability of take out Premium of take out | Probability of take out Premium of take out | | 8% 20% |
| ||||||
Ultra Growth Fund | Direct Venture Capital Investments: Biotechnology | $ | 123,672 | Market comparable companies | EV/R* multiple Discount for lack of marketability | | 1.0 - 9.5 (4.5) 20% |
| ||||||
Ultra Growth Fund | Direct Venture Capital Investments: Oil & Gas Equipment & Services | $ | 1,150,000 | Market comparable companies | EV/R* multiple Discount for lack of marketability | | 4.3 - 9.5 (6.5) 20% |
| ||||||
Ultra Growth Fund | Warrants: Health Care Equipment | $ | 155,636 | Black Scholes | Black Scholes Take out value | | 90% 10% |
| ||||||
Ultra Growth Fund | Warrants: Health Care Equipment | $ | 87,798 | Black Scholes | Black Scholes | 100% | ||||||||
World Innovators | Rights: Personal Products | $ | 74,515 | Probability of take out Premium of take out | Probability of take out Premium of take out | | 8% 20% |
| ||||||
Income Fund | Asset Backed Security | $ | 968,438 | Broker bid | Broker bid | 100% | ||||||||
Frontier Emerging Small Countries Fund | Other Assets Less Liabilities: USD held in Zimbabwe | $ | 1,967,327 | Discount for lack of marketability of currency | Discount for lack of marketability of currency | 40% | ||||||||
| * | Enterprise-Value-To-Revenue Multiple (“EV/R”) is a measure of the value of a stock that compares a company’s enterprise value to its revenue. |
A change to a multiple may affect the fair value of an investment. Generally, a decrease in this multiple will result in a decrease in the fair value of an investment.
The Funds’ other Level 3 investments have been valued using observable inputs, unadjusted third-party transactions and quotations or unadjusted historical third party information. No unobservable inputs internally developed by the Funds have been applied to these investments, thus they have been excluded from the above table.
13. OFFSETTING
Each Fund is party to various netting arrangements. The Financial Accounting Standards Board (“FASB”) requires disclosure about certain netting arrangements and similar agreements to enable users of a Fund’s financial statements to evaluate the effect or potential effect of netting arrangements on the Fund’s financial position. The scope of the disclosure is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions.
140
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
The following tables present information about financial instruments that were subject to enforceable netting arrangements as of March 31, 2018:
REPURCHASE AGREEMENTS
| Gross Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||
| Fund | Counterparty | Gross Asset Amounts Presented in Statements of Assets and Liabilities | Financial Instrument | Collateral Received1 | Net Amount (not less than 0) | |||||||||||||
Core Growth Fund | Fixed Income Clearing Corp. | $ | 24,177,779 | $ | — | $ | (24,177,779 | ) | $ | — | ||||||||
Emerging Markets Small Cap Fund | Fixed Income Clearing Corp. | 9,922,705 | — | (9,922,705 | ) | — | ||||||||||||
Frontier Emerging Small Countries Fund | Fixed Income Clearing Corp. | 2,725,364 | — | (2,725,364 | ) | — | ||||||||||||
Global Opportunities Fund | Fixed Income Clearing Corp. | 2,441,709 | — | (2,441,709 | ) | — | ||||||||||||
Global Value Fund | Fixed Income Clearing Corp. | 6,458,741 | — | (6,458,741 | ) | — | ||||||||||||
International Growth Fund | Fixed Income Clearing Corp. | 50,075,525 | — | (50,075,525 | ) | — | ||||||||||||
International Opportunities Fund | Fixed Income Clearing Corp. | 18,365,249 | — | (18,365,249 | ) | — | ||||||||||||
Long/Short Fund | Fixed Income Clearing Corp. | 3,729,660 | — | (3,729,660 | ) | — | ||||||||||||
Micro Cap Fund | Fixed Income Clearing Corp. | 32,894,481 | — | (32,894,481 | ) | — | ||||||||||||
Micro Cap Value Fund | Fixed Income Clearing Corp. | 15,171,597 | — | (15,171,597 | ) | — | ||||||||||||
Small Cap Growth Fund | Fixed Income Clearing Corp. | 51,521,965 | — | (51,521,965 | ) | — | ||||||||||||
Small Cap Value Fund | Fixed Income Clearing Corp. | 8,282,068 | — | (8,282,068 | ) | — | ||||||||||||
Strategic Income Fund | Fixed Income Clearing Corp. | 7,041,530 | — | (7,041,530 | ) | — | ||||||||||||
Ultra Growth Fund | Fixed Income Clearing Corp. | 8,560,764 | — | (8,560,764 | ) | — | ||||||||||||
World Innovators Fund | Fixed Income Clearing Corp. | 33,811,282 | — | (33,811,282 | ) | — | ||||||||||||
U.S. Treasury Fund | Fixed Income Clearing Corp. | 5,098,090 | — | (5,098,090 | ) | — | ||||||||||||
| 1 | Repurchase agreements are classified as short-term investments in the Statements of Assets and Liabilities. The market value of the collateral received is greater than the amounts indicated in the table. For further information, see Note 3 — Securities and Other Investments “Repurchase Agreements” and the Schedules of Investments. |
CALL OPTIONS WRITTEN
| Gross Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||
| Fund | Gross Liability Amounts Presented in Statements of Assets and Liabilities | Financial Instrument | Collateral Pledged1 | Net Amount (Not Less | ||||||||||||
Global Value Fund | $ | 8,700 | $ | — | $ | (8,700 | ) | $ | — | |||||||
| 1 | The market value of the collateral received is greater than the amounts indicated in the table. For further information, see Note 4 for “Options Transactions” and the Schedule of Investments. |
SECURITIES BORROWEDFOR SHORT SALES
| Gross Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||
| Fund | Counterparty | Gross Liability Amounts Presented in Statements of Assets and Liabilities | Financial Instrument | Collateral Received1 | Net Amount Than 0) | |||||||||||||
Long/Short Fund | JPMorgan Chase | $ | 18,069,619 | $ | — | $ | (18,069,619 | ) | $ | — | ||||||||
| 1 | The market value of the collateral received is greater than the amounts indicated in the table. For further information, see Note 3 — Securities and Other Investments “Short Sales” and the Schedule of Investments. |
14. FAIR VALUEOF DERIVATIVE INSTRUMENTS*
WASATCH GLOBAL VALUE FUND
Fair Values of Derivative Instruments on the Statements of Assets and Liabilities as of March 31, 2018:
| 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 | $ | — | $ | — | $ | — | $ | 8,700 | $ | — | $ | 8,700 | ||||||||||||
|
| |||||||||||||||||||||||
141
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Notes to Financial Statements (continued)
The Effect of Derivative Instruments on the Statement of Operations for the period ended March 31, 2018:
| 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) | $ | — | $ | — | $ | — | $ | 23,263 | $ | — | $ | 23,263 | ||||||||||||
|
| |||||||||||||||||||||||
For the six months ended March 31, 2018, the average monthly balance of outstanding derivative financial instruments was as follows:
| Global Value Fund | ||||
Option contracts: | ||||
Average number of call contracts written | 50 | |||
Average value of call contracts written | $ | 5,327 | ||
15. SUBSEQUENT EVENTS
At a meeting held on November 7-8, 2017, the Board approved the reorganization of the Wasatch Long/Short Fund (the “Long/Short Fund”) with and into the Wasatch Global Value Fund (the “Global Value Fund”), each a series of the Trust (the “Long/Short Reorganization”). In order for the Long/Short Reorganization to occur, it must be approved by the shareholders of the Long/Short Fund. The Board therefore called for a special meeting of the Shareholders of the Long/Short Fund to vote on the Long/Short Reorganization. The meeting was expected to be held in March 2018. The meeting is now expected to be held in July 2018, pending Securities and Exchange Commission (“SEC”) approval of the proxy solicitation materials. If the Long/Short Reorganization is approved by shareholders, it is anticipated that the Long/Short Reorganization will be consummated approximately one month after the meeting. If the SEC does not approve the solicitation materials or if shareholders do not approve the Long/Short Reorganization, the Board will determine what additional steps may be appropriate and in the best interests of the Long/Short Fund and its shareholders, including, but not limited to, liquidation of the Long/Short Fund. More information about the proposed Long/Short Reorganization and meeting will be provided in the proxy solicitation materials for the Long/Short Reorganization.
At a meeting held on March 15, 2018, the Board approved the reorganization of the Wasatch Strategic Income Fund, a series of the Trust, with and into the Seven Canyons Strategic Income Fund, a series of ALPS Trust (the “Strategic Income Reorganization”). In order for the Strategic Income Reorganization to occur, it must be approved by the shareholders of the Wasatch Strategic Income Fund. The Board therefore called for a special meeting of the Shareholders of the Wasatch Strategic Income Fund to vote on the Strategic Income Reorganization. The meeting is expected to be held in July 2018, and, if approved, it is anticipated that the Strategic Income Reorganization will be consummated approximately one month after the meeting. If shareholders do not approve the Strategic Income Reorganization, the Board will determine what additional steps may be appropriate and in the best interests of the Wasatch Strategic Income Fund and its shareholders, including, but not limited to, liquidation of the Wasatch Strategic Income Fund. More information about the proposed Strategic Income Reorganization and meeting will be provided in the proxy solicitation materials for the Strategic Income Reorganization.
At a meeting held on March 15, 2018, the Board approved the reorganization of the Wasatch World Innovators Fund, a series of the Trust, including both current share classes of the Fund (the Investor Class shares and the Institutional Class shares), with and into the Seven Canyons World Innovators Fund, a series of ALPS Trust (the “World Innovators Reorganization”). In order for the World Innovators Reorganization to occur, it must be approved by the shareholders of both classes of the Wasatch World Innovators Fund. The Board therefore called for a special meeting of the Shareholders of the Wasatch World Innovators Fund to vote on the World Innovators Reorganization. The meeting is expected to be held in July 2018, and, if approved, it is anticipated that the World Innovators Reorganization will be consummated approximately one month after the meeting. If shareholders do not approve the World Innovators Reorganization, the Board will determine what additional steps may be appropriate and in the best interests of the Wasatch World Innovators Fund and its shareholders, including, but not limited to, liquidation of the Wasatch World Innovators Fund. More information about the proposed World Innovators Reorganization and meeting will be provided in the proxy solicitation materials for the World Innovators Reorganization.
At a meeting held on May 15, 2018, the Board approved a plan of liquidation for the Income Fund to close the Income Fund and redeem all of its outstanding shares on or about July 13, 2018 (the “Liquidation Date”). Effective at the close of business on June 30, 2018, the Income Fund will no longer pursue its stated investment objectives. The Income Fund will begin liquidating its portfolio and may invest in cash or cash equivalents, including repurchase agreements or other comparable high quality money market instruments or money market funds until all shares have been redeemed. Effective as of June 1, 2018, the Income Fund will be closed to new investors with the exception of: (1) certain employer-sponsored retirement accounts (including certain 401(k)
142
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
and other types of defined contribution or employee benefit plans); and (2) certain omnibus accounts held by financial intermediaries at the discretion of the Fund’s officers. Such accounts can continue to make investments in the Income Fund through June 30, 2018. After June 30, 2018, the Income Fund will be closed to investments from all accounts. The Income Fund may pay a distribution prior to its termination and liquidation. The record date and payment date will be posted on the Wasatch Funds website as soon as those dates are available.
143
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Management Information. The business affairs of Wasatch Funds are overseen by its Board of Trustees. The Board consists of four Independent Trustees. Two of the Independent Trustees were elected by shareholders to serve until their successors are qualified, appointed or elected in accordance with the Trust’s Declaration of Trust and By-Laws. Two Independent Trustees have been appointed by the elected Independent Trustees to serve until his or her successor is qualified, appointed or elected in accordance with the Trust’s Declaration of Trust and By-Laws.
The Trustees and executive officers of Wasatch Funds and their principal occupations for at least the last five years are set forth below. The Advisor retains proprietary rights to the Trust name.
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 Trustees during Past 5 Years2 | |||||||
Independent Trustees | ||||||||||||
James U. Jensen, J.D., MBA 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 73 | Trustee and Chairman of the Board | Indefinite Served as Chairman of the Board since 2004 and Trustee since 1986 | Chief Executive Officer of Clearwater Law & Governance Group (an operating law firm board governance consulting company) April 2008 to present; Vice President, Corporate Development, Legal Affairs and General Counsel, and Secretary, NPS Pharmaceuticals, Inc. from 1991 to 2004. | 19 | Director and Board Chairman of Agricon Global Corporation (formerly known as Bayhill Capital Corporation (telephone communications) from December 2007 to February 2014; Trustee, Northern Lights Fund Trust III (33 portfolios) since 2012: Director of the University of Utah Research Foundation since 1998. | |||||||
Miriam M. Allison 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 70 | Trustee and Chairman of the Audit Committee | Indefinite Served as Trustee since 2010 | Rancher since 2004. From 2001 to 2005, Chairman of UMB Fund Services, Inc. | 19 | Director, Northwestern Mutual Series Fund, Inc. (27 portfolios) since 2006. | |||||||
Heikki Rinne 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 65 | Trustee and Chairman of the Governance and Nominating Committee | Indefinite Served as Trustee since October 2012 | Chief Executive Officer of the Halton Group Ltd. (an indoor environmental control manufacturing and technology company), from 2002 to 2016; A Founder and Principal Owner of Sitoumus LLC (a training and consulting firm focusing on empowering organizational and individual engagement as well as general consulting), January 2017 to present. | 19 | Director, Halton Group Ltd. since 2016. | |||||||
Kristen M. Fletcher 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 64 | Trustee | Indefinite Served as Trustee since October 2014 | Director, Youth Sports Alliance since 2015; Director, Utah Symphony/Utah Opera since 2005; Trustee, Woodlands Commercial Bank (a/k/a Lehman Brothers Commercial Bank) 2009 to 2012; Chairman and CEO, ABN AMRO, Inc. and U.S. Country Representative, ABN AMRO Bank, NV from 2002 to 2004. | 19 | Director, Youth Sports Alliance since 2015; Trustee, Woodlands Commercial Bank (a/k/a Lehman Brothers Commercial Bank) 2009 to 2012; Director Utah Symphony/Utah Opera since 2005. | |||||||
| ||||||||||||
| 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 he/she attains the age of 75 years. The Board of Trustees reserves the right to permit continued service after the mandatory retirement age for any individual Trustee in its sole discretion. The Board has approved a one-year waiver from the mandatory retirement age for Mr. Jensen. |
| 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. |
144
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
Name, Address and Age | Position(s) Held with the Trust | Term of Office and Length of Time Served | Principal Occupation(s) during Past 5 Years | |||
Officers | ||||||
Eric Bergeson 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 52 | President | Indefinite Served as President since May, 2018 | President for Wasatch Funds since May 2018; President of the Advisor since February 2016; Vice President of Institutional Sales for the Advisor since June 1998. | |||
Russell L. Biles 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 50 | 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; Secretary for Wasatch Funds since November 2008; Counsel for the Advisor since October 2006. | |||
Michael K. Yeates 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 35 | Treasurer | Indefinite Served as Treasurer since May 2018 | Treasurer for Wasatch Funds since May 2018; Chief Financial Officer of the Advisor since September 2007. | |||
David Corbett 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 45 | Assistant Vice President | Indefinite Served as Assistant Vice President since August 2012 | Assistant Vice President for Wasatch Funds since August 2012; Director of Mutual Fund Services for the Advisor since June 2007. | |||
Cheryl Reich 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 34 | Assistant Secretary | Indefinite Served as Assistant Secretary since February 2017 | Assistant Secretary for Wasatch Funds since February 2017; Compliance Associate for the Advisor since September 2012; Branch Manager for Investment Planning Counsel Corp. from November 2009 to August 2012. | |||
Kara H. Becker 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 34 | Assistant Treasurer | Indefinite Served as Assistant Treasurer since May 2018 | Assistant Treasurer for Wasatch Funds since May 2018; Controller for the Advisor since January 2012. | |||
| ||||||
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.
The Funds hereby designate the following amounts or maximum amounts allowable as long-term capital gain dividends for the purpose of the dividends paid deduction. The amounts designated here include the utilization of earnings and profits distributed to shareholders on the redemption of shares.
| Fund | Amount | |||
Core Growth Fund | $ | 2,252,794 | ||
Emerging India Fund | 819,648 | |||
Global Opportunities Fund | 8,169,399 | |||
Global Value Fund | 7,957,722 | |||
International Growth Fund | 47,302,575 | |||
Long/Short Fund | 61,075 | |||
Micro Cap Fund | 22,829,857 | |||
Micro Cap Value Fund | 3,065,003 | |||
Small Cap Growth Fund | 144,143,218 | |||
Small Cap Value Fund | 65,305 | |||
Ultra Growth Fund | 9,710,650 | |||
World Innovators Fund | 6,384,678 | |||
Income Fund | 124,946 | |||
U.S. Treasury Fund | 23,928,544 | |||
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 without charge on the Funds’ website at www.WasatchFunds.com and on 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 quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q filings are available on the SEC’s website at www.sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in
145
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Supplemental Information (continued)
Washington, D.C. (information on the operation of the Public Reference room may be obtained by calling 800.SEC.0330).
BOARD CONSIDERATIONSFOR ADVISORYAND SUB-ADVISORY AGREEMENTSOFTHE WASATCH FUNDS
At a meeting held on November 7-8, 2017 (the “Meeting”), the Board of Trustees (the “Board”) of Wasatch Funds Trust (the “Trust”), including the Independent Trustees, unanimously approved the Advisory and Service Contract (the “Advisory Agreement”) between the Trust and Wasatch Advisors, Inc. (the “Advisor”) on behalf of each series of the Trust (each a “Fund”); 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”) (the foregoing sub-advisory agreements are each a “Sub-Advisory Agreement” and collectively, the “Sub-Advisory Agreements,” and HIMCO and 1st Source are each a “Sub-Advisor”).
The Board, including the Independent Trustees, is responsible for overseeing the management of the Funds and as such, the Board determines each year as required by law whether to continue the Advisory Agreement with the Advisor on behalf of each Fund, the Sub-Advisory Agreement with HIMCO on behalf of the U.S. Treasury Fund and the sub-advisory agreement with 1st Source on behalf of the Income Fund. The Independent Trustees considered their assessment of the Advisor’s and Sub-Advisors’ performance and services to be an ongoing process that occurs throughout the year. The Board generally has four quarterly meetings as well as a fifth meeting at which it considers information prepared specifically for the annual review of the Advisory and Sub-Advisory Agreements. At these meetings, the Board and/or its committees discussed and considered information pertinent to the annual review of the Advisory Agreement and Sub-Advisory Agreements including, among other things, Fund performance, compliance, risk and liquidity management, sales activity, valuation, and the quality of trade execution. The Independent Trustees also met with management of the Advisor (including key investment personnel) at their quarterly meetings. In addition to the information provided throughout the year, the Independent Trustees, through their independent counsel, also requested and received extensive materials specifically prepared for their annual review of the foregoing agreements. The materials provided a broad range of information regarding the Funds, the Advisor and Sub-Advisors, including a description of, among other things, the terms of the Advisory Agreement and Sub-Advisory Agreements; the services provided by the Advisor and each Sub-Advisor; the experience of the relevant investment personnel; each Fund’s performance in absolute terms and as compared to the performance of peers and appropriate benchmark(s) compiled by an independent data provider; the fees and
expenses of each Fund and as compared to peers compiled by an independent data provider; the profitability and/or financial data of the Advisor and Sub-Advisors, as described below; and the Advisor’s evaluation of each Sub-Advisor. The Independent Trustees also received a memorandum from independent legal counsel outlining their fiduciary duties and legal standards in reviewing the Advisory Agreement and Sub-Advisory Agreements.
In continuing their practice, the Independent Trustees met in executive session at a meeting held in October 2017 (the “October Meeting”) to consider and discuss the materials provided in connection with their review of the Advisory and Sub-Advisory Agreements. In their review, the Independent Trustees evaluated the advisory arrangements separately on a Fund-by-Fund and per class basis. The Independent Trustees invited members of management of the Advisor to attend the executive session from time to time to respond to questions and provide additional information. As a result of these discussions as well as a result of the culmination of the Board’s year-round oversight of the Funds, the Independent Trustees presented the Advisor with additional questions and requests for additional information (through their independent counsel) and the Advisor provided a written response to this request.
The Independent Trustees also met, including prior to the Meeting in executive session without management present, to further consider, in relevant part, the renewal of the Advisory and Sub-Advisory Agreements. The Independent Trustees had the benefit of independent legal counsel throughout the process. After their discussions and taking into account the information specifically provided for the evaluation of the Advisory Agreements, the information provided during the year, the accumulated knowledge and experience gained during their tenure as trustees, and the legal advice provided by legal counsel, the Trustees, including the Independent Trustees, approved the renewal of the Advisory Agreement and Sub-Advisory Agreements. The Independent Trustees’ consideration of the contractual fee arrangements for the Funds were the result of several years of review and discussion between the Independent Trustees and Fund management, and the Independent Trustees’ conclusions may be based, in part, on their consideration of the fee arrangements and other factors developed in prior years. The Independent Trustees did not identify any single factor as all-important or controlling, but rather the decision reflected the comprehensive consideration of all the information presented, and each Trustee may have attributed different weights to the various factors and information considered in the approval process. The following summarized the principal factors, but not all the factors, the Board considered in its review of the Advisory and Sub-Advisory Agreements and its conclusions.
| A. | NATURE, EXTENTAND QUALITYOF SERVICES |
The Board, including the Independent Trustees, considered the nature, extent and quality of the Advisor’s and Sub-Advisors’ services to the Funds and the resulting performance of each Fund, as described in further detail below. The Board considered the Advisor’s reputation,
146
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
organization, culture, financial strength and stability. In this regard, the Board noted that the Advisor is an employee-owned firm and considered its management structure including its various committees and their functions, its succession planning in seeking orderly transitions among portfolio managers and other leadership roles over time, and the compensation structure for the portfolio managers and research analysts in seeking to attract and retain qualified investment personnel and to provide appropriate incentives for investment personnel to invest consistently with the respective Fund’s investment parameters and not take undue risks.
The Board further considered the breadth of services the Advisor provides to manage and operate the Funds. The Advisor provides the securities research and portfolio management for the Funds (other than the sub-advised Funds). The Board considered the experience and tenure of each Fund’s portfolio manager(s) as well as the capabilities of the research and trading teams. The Board recognized that the Advisor is a research-oriented firm and considered information describing the investment process the Advisor follows in constructing and managing portfolios, including in identifying and monitoring risks being assumed by the portfolios. The Independent Trustees continue to seek to meet with the portfolio manager(s) of the various Funds during the year to discuss and keep updated on, among other things, the investment approach employed, any adjustments thereto, market conditions and investment performance. As noted below, the Independent Trustees also reviewed Fund performance in considering the Advisor’s investment management performance.
In addition to portfolio management services, the Board considered the quality of the administrative or non-advisory services the Advisor provided to operate the Funds (in addition to those provided by other third-parties). The Advisor oversees the day-to-day operations of the Funds providing the officers and other personnel necessary for their operation and/or overseeing the service providers involved in the daily operations of the Funds. Such non-advisory services include, among other things, service provider oversight (such as overseeing, coordinating and evaluating the activities of the the various service providers, including the Sub-Advisors), Board administration (such as overseeing the organization of the Board and committee meetings and preparing or overseeing the timely preparation of various materials and/or presentations for such meetings), Fund administration (such as overseeing the preparation of registration statements, shareholder reports and other regulatory filings; overseeing shareholder services; overseeing the valuation of portfolio securities and daily pricing; reviewing and certifying the Funds’ financial statements; preparing and filing tax reports; overseeing the Funds’ distributions, analyzing trade execution including monitoring and evaluating cross-trades (if any); and providing other administrative services) and compliance (such as helping to create and maintain the Funds’ compliance program and related policies and procedures; testing for compliance; recommending updates to the compliance program and related policies and procedures to meet new regulatory requirements; and providing
compliance training for personnel). With respect to compliance, the Independent Trustees considered the Advisor’s commitment to compliance, its regulatory history and efforts to address risk management, including cybersecurity risks through its cybersecurity committee, additional technology deployed and third-party assessment of its systems. The Independent Trustees also considered the various material business-related risks the Advisor faces in managing the Funds.
With respect to the Sub-Advisors, the Independent Trustees considered the nature, extent and quality of services the Sub-Advisors provide to the respective Funds. The Independent Trustees reviewed the Advisor’s analysis of each Sub-Advisor and its performance. The Independent Trustees recognized that the Sub-Advisors primarily provide portfolio management services and were not expected to supply other significant administrative services. The Independent Trustees considered the organization, reputation, financial strength and stability of each Sub-Advisor. The Independent Trustees further considered the experience and tenure of the portfolio manager(s) of the Sub-Advised Funds. As the Sub-Advisors primarily provide the portfolio management of the Sub-Advised Funds, the Board considered such Funds’ performance history as described in further detail below. The Board noted that the Advisor recommended the renewal of each Sub-Advisory Agreement.
Based on their review, the Independent Trustees found that, overall, the nature, extent and quality of services provided under the Advisory Agreement and the Sub-Advisory Agreements were satisfactory on behalf of each applicable Fund.
| B. | THE INVESTMENT PERFORMANCEOFTHE FUNDS |
As part of its evaluation of services provided by the Advisor and Sub-Advisors, the Board reviewed the performance history of each Fund. Prior to the October Meeting, the Board received and reviewed a report (the “Broadridge Report”) prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, which generally provided a Fund’s performance data for the one-, two-, three-, four-, five-, and ten-year periods ended August 31, 2017 (or for the periods available for Funds that did not exist for part of the foregoing timeframe) on an absolute basis and as compared to the performance of unaffiliated funds with similar investment objectives or classifications (a “Broadridge Peer Universe”), to a more focused subset thereof, if any (a “Broadridge Peer Group”) and a benchmark assigned by Broadridge (the “Benchmark”) for the prescribed periods. The Board was provided with information describing the methodology Broadridge uses to create the Broadridge Peer Group and Broadridge Peer Universe.
In addition to the Broadridge Report, the Independent Trustees also reviewed materials reflecting the respective Fund’s historic performance for the quarter, one-, three-, five-, and ten-year periods ended September 30, 2017 (or for the periods available for Funds that did not exist for part of the foregoing timeframe together with the average annual return since inception for Funds with the shorter duration) compared to additional benchmark(s) and unaffiliated funds in the respective Fund’s Morningstar investment
147
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Supplemental Information (continued)
category. The Independent Trustees also received analyst reports provided by an unaffiliated party for the following Funds: the Core Growth Fund, the International Opportunities Fund, the Long/Short Fund, the Small Cap Growth Fund, and the U.S. Treasury Fund and considered any Morningstar ratings on the Funds. For Funds with separate accounts following similar strategies (including the Core Growth Fund, the Emerging Markets Select Fund, the Emerging Markets Small Cap Fund, the Frontier Emerging Small Countries Fund, the Global Opportunities Fund, the International Growth Fund, the International Opportunities Fund, the Global Value Fund, the Micro Cap Fund, the Small Cap Growth Fund, the Small Cap Value Fund and the Ultra Growth Fund), the Board reviewed Fund performance data for the institutional and investor classes compared to the performance of a composite of such separate accounts for the one-, three-, five-, and ten-year and since inception periods ended September 30, 2017 (or for such shorter periods if the Funds or separate account composite did not exist for part of the foregoing timeframe). The performance data prepared for the review of the Advisory and Sub-Advisory Agreements supplements the performance data the Trustees received throughout the year as the Board regularly reviews and meets with portfolio manager(s) during the year to discuss, in relevant part, the performance of their respective Fund.
In evaluating performance, the Independent Trustees have recognized some of the limitations of the performance data which may impact the weight given to particular performance data, including the following:
| • | The performance data reflects a snapshot in time as of a particular period (in this case, the periods ended August 31, 2017 and September 30, 2017) and a different performance period could generate significantly different results; |
| • | Long term performance can be adversely affected by even one period of significant underperformance so that a single investment decision or theme has the ability to disproportionately affect long-term performance; |
| • | The investment experience of a particular shareholder in the Funds will vary depending on the shareholder’s particular investment period and the Fund’s performance during that period and the class held (if multiple classes are offered in a Fund); |
| • | Although the performance data included in the Broadridge Report was based on the performance of the investor class shares of the Funds, the Board recognized that certain Funds offer multiple classes. The performance of another class of a Fund, however, should be substantially similar on a relative basis because the classes are invested in the same portfolio of securities and differences in performance between the classes could be principally attributed to the variation in the expenses of each class; and |
| • | There may be difficulties in establishing appropriate peer groups and benchmarks for certain Funds. In this regard, the Independent Trustees considered that the Advisor and Sub-Advisors are responsible for managing each respective Fund in accordance with its investment objectives, investment parameters and guidelines. The Independent Trustees, however, recognized that peers and/or benchmarks may be following different objectives, investment |
parameters and guidelines and risk tolerance levels than that of the corresponding Fund, and these variations will lead to differing performance results and may limit the value of the comparative performance data in assessing a particular Fund’s performance. The Independent Trustees recognized some limitations with the Broadridge Peer Group for the Micro Cap Fund and Micro Cap Value Fund (collectively, the “Micro Cap Funds”) as the respective Broadridge Peer Group generally focuses on companies with a larger market capitalization than those sought by the Micro Cap Funds. As a result, the Independent Trustees also reviewed the Micro Cap Funds’ performance compared to a custom no-load peer group provided by the Advisor for the one-, three, five- and ten-year periods ended September 30, 2017. |
Based on their review of the performance data, the Independent Trustees determined the following:
Core Growth Fund
With respect to the Core Growth Fund, the Fund outperformed the Benchmark for the one-, two-, three-, four-, five- and ten-year periods ended August 31, 2017 and provided generally comparable performance to the median of its Broadridge Peer Group over such periods. Although the Fund underperformed the peer group average in the Morningstar small growth category for the one-year period ended September 30, 2017, the Fund outperformed such peer group average over the longer three-, five, and ten-year periods. The Board was satisfied with the Fund’s overall performance.
Emerging India Fund
With respect to the Emerging India Fund, the Fund outperformed the median of its Broadridge Peer Group in the one-, two-, three-, four- and five-year periods ended August 31, 2017. The Fund also outperformed the average of its peer group in the Morningstar India equity category for the one-, three- and five-year periods ended September 30, 2017. The Board considered that the Fund’s performance had been generally favorable.
Emerging Markets Select Fund
With respect to the Emerging Markets Select Fund, the Independent Trustees noted that except for the three-year period ended August 31, 2017, the Fund provided positive absolute performance in the one-, two- and four-year periods, but the Fund’s relative performance was somewhat challenged. In this regard, the Fund underperformed the median of its Broadridge Peer Group and Benchmark for the one-, two-, three- and four-year periods ended August 31, 2017. The Fund similarly underperformed the average of its peer group in the Morningstar diversified emerging markets category for the one- and three-year periods ended September 30, 2017. In reviewing the comparative data, however, the Independent Trustees recognized that differences between the objectives and strategies of the Fund and the peer groups limit some of the usefulness of the comparative data. The Independent Trustees further considered management’s confidence in the experience of the portfolio
148
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
management team, the strategy of the Fund and the Fund’s adherence to such strategy. The Board was satisfied with the explanation of the Fund’s performance, but would continue to monitor this Fund closely.
Emerging Markets Small Cap Fund
With respect to the Emerging Markets Small Cap Fund, the Independent Trustees noted that the Fund provided positive absolute performance for the one-, two-, three-, four- and five-year periods ended August 31, 2017, but the Fund’s relative performance was challenged. In this regard, the Fund underperformed the median of its Broadridge Peer Group and Benchmark for such periods ended August 31, 2017. Similarly, other than the ten-year period ended September 30, 2017, the Fund underperformed the peer group average in the Morningstar diversified emerging markets category for the one-, three- and five-year periods ended September 30, 2017. The Board, however, noted the Fund’s improved performance for the year-to-date period ended September 30, 2017. In light of the foregoing, the Board would continue to monitor this Fund closely.
Frontier Emerging Small Countries Fund
With respect to the Frontier Emerging Small Countries Fund, the Independent Trustees noted that the Fund has experienced periods of challenged performance underperforming the median of its Broadridge Peer Group and its Benchmark for the one-, two-, three-, four- and five-year periods ended August 31, 2017. The Fund similarly underperformed its peer group average for the Morningstar diversified emerging markets category for the one-, three- and five-year periods ended September 30, 2017. The Board recognized the steps taken to address performance issues, including the changes to portfolio managers of the Fund in 2016. In light of the foregoing, the Board would continue to monitor this Fund closely.
Global Opportunities Fund
With respect to the Global Opportunities Fund, the Independent Trustees noted that although the Fund underperformed the median of its Broadridge Peer Group for the one-year period ended August 31, 2017, the Fund outperformed or matched the performance of the median of its Broadridge Peer Group for the two-, three-, four- and five-year periods ended August 31, 2017. Other than the one-year period ended August 31, 2017, the Fund provided generally comparable performance to the Benchmark for the two-, three-, four- and five-year periods ended August 31, 2017. Similarly, other than the one-year period ended September 30, 2017, the Fund provided generally comparable performance to the peer group average for the Morningstar world small/mid stock category for the three- and five-year periods ended September 30, 2017. The Board was satisfied with the Fund’s overall performance.
Global Value Fund
With respect to the Global Value Fund (formerly, the Large Cap Value Fund), the Independent Trustees noted that the Fund provided positive absolute performance for the
one-, two-, three-, four-, five- and ten-year periods ended August 31, 2017. The Independent Trustees further noted that although the Fund underperformed the performance of the median of its Broadridge Peer Group for the three-, four- and five-year periods ended August 31, 2017, the Fund outperformed the median of the Broadridge Peer Group for the one-, two- and ten-year periods ended August 31, 2017. The Fund, however, underperformed theBenchmark for such periods ended August 31, 2017. Other than the five-year period ended September 30, 2017, the Fund provided generally comparable performance to the performance of the peer group average of the Morningstar large cap value category over the one-, three- and ten-year periods ended September 30, 2017. In reviewing the performance, the Independent Trustees recognized that the Board had approved a change in the principal investment strategies of the Fund to permit the Fund greater ability to invest in foreign securities becoming a global value fund effective October 31, 2017, and the past performance would not reflect the foregoing change. Although the Fund previously had experienced periods of challenged performance, the Board was satisfied with the efforts the Advisor has taken to address performance issues and looks forward to the implementation of the revised principal investment strategy.
U.S. Treasury Fund
With respect to the U.S. Treasury Fund, the Independent Trustees noted that although the Fund underperformed the median of its Broadridge Peer Group and Benchmark for the one-year period ended August 31, 2017, the Fund outperformed the median of its Broadridge Peer Group for the two-, three-, four-, five- and ten-year periods ended August 31, 2017 and its Benchmark for the two-, three-, four- and five-year periods ended August 31, 2017. Other than the one-year period ended September 30, 2017, the Fund also outperformed or matched its peer group average of the Morningstar long government category for the three-, five- and ten-year periods ended September 30, 2017. The Board determined that the Fund’s overall performance over time was generally favorable.
International Growth Fund
With respect to the International Growth Fund, the Independent Trustees noted that the Fund provided positive absolute performance over the one-, two-, three-, four-, five- and ten-year periods ended August 31, 2017. Although the Fund underperformed the median of its Broadridge Peer Group in the one-, two-, three-, four- and five-year periods, the Fund outperformed its median in the longer ten-year period ended August 31, 2017. Similarly, the Fund underperformed the Benchmark in the one-, two-, four- and five-year periods, but the Fund outperformed the Benchmark in the three- and ten-year periods ended August 31, 2017. The Independent Trustees further noted that although the Fund underperformed its peer group average for the Morningstar foreign small/mid growth category for the one- and five-year periods, the Fund outperformed such average in the three- and ten-year periods ended September 31, 2017. The Board determined that it was satisfied with the Fund’s overall performance.
149
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Supplemental Information (continued)
International Opportunities Fund
With respect to the International Opportunities Fund, the Independent Trustees noted that although the Fund underperformed the performance of the median of its Broadridge Peer Group and Benchmark for the one-year period ended August 31, 2017, the Fund outperformed the median of the Broadridge Peer Group and Benchmark for the two-, three-, four-, five- and ten-year periods ended August 31, 2017. The Independent Trustees further noted that although the Fund underperformed its peer group average for the Morningstar foreign small/mid growth category for the one- and three-year periods, the Fund outperformed such peer group average in the five- and ten-year periods ended September 30, 2017. The Board was satisfied with the Fund’s overall performance.
Long/Short Fund
With respect to the Long/Short Fund, the Independent Trustees noted that although the Fund underperformed the median of its Broadridge Peer Group for the one-, three-, and four-year periods ended August 31, 2017, the Fund outperformed or matched the performance of the median of its Broadridge Peer Group for the two-, five- and ten-year periods ended August 31, 2017. Although the Fund underperformed its Benchmark for the one-, two-, three-, four-, and five-year periods ended August 31, 2017, the Fund outperformed the Benchmark in the ten-year period ended August 31, 2017. The Independent Trustees further noted that the Fund underperformed the peer group average of the Morningstar long/short category over the one-, three-, five- and ten-year periods ended September 30, 2017. The Independent Trustees recognized that the Fund has experienced periods of challenged performance, but noted the steps the Advisor has taken to address performance issues. In this regard, the Board considered that the Advisor recently recommended, and the Board approved, the reorganization of the Long/Short Fund into the Global Value Fund, subject to approval by the shareholders of the Long/Short Fund. The Board will continue to monitor this Fund and consider additional steps as necessary if the reorganization is not approved by shareholders.
Micro Cap Fund
With respect to the Micro Cap Fund, the Independent Trustees noted that although the Fund underperformed the median of its Broadridge Peer Group and Benchmark for the ten-year period ended August 31, 2017, the Fund outperformed the median of the Broadridge Peer Group and Benchmark in the one-, two-, three-, four- and five-year periods ended August 31, 2017. In addition, although the Fund underperformed its peer group average for the Morningstar small growth category for the ten-year period ended September 30, 2017, the Fund outperformed such peer group average for the one-, three- and five-year periods ended September 30, 2017. In considering the comparative data, the Independent Trustees have recognized that the Broadridge Peer Group may not adequately reflect the investment strategies and investable universe of the Fund
limiting some of the value of the comparative data. Accordingly, the Independent Trustees also reviewed the Fund’s performance compared to a custom peer group provided by the Advisor and the Russell Microcap Index for the one-, three-, five- and ten-year periods ended September 30, 2017. In considering the foregoing, the Board was satisfied with the Fund’s overall performance.
Micro Cap Value Fund
With respect to the Micro Cap Value Fund, the Independent Trustees noted that the Fund outperformed the median of its Broadridge Peer Group and Benchmark for the one-, two, three-, four-, five-, and ten-year periods ended August 31, 2017. Similarly, the Fund outperformed the peer group average of the Morningstar small growth category for the one-, three-, five- and ten-year periods ended September 30, 2017. In considering the comparative data, as noted above with the Micro Cap Fund, the Independent Trustees recognized that Broadridge Peer Group may not adequately reflect the investment strategies and investable universe of the Fund thereby limiting some of the usefulness of the comparative data. The Independent Trustees accordingly also reviewed the Fund’s performance compared to a custom peer group provided by the Advisor and the Russell Microcap Index for the one-, three-, five- and ten-year periods ended September 30, 2017. In considering the foregoing, the Board determined that the Fund’s overall performance had been generally favorable.
Small Cap Growth Fund
With respect to the Small Cap Growth Fund, the Independent Trustees noted that although the Fund underperformed the median of its Broadridge Peer Group for the one-, two-, three- four-, five- and ten-year periods ended August 31, 2017 and its Benchmark for such periods (except the ten-year period ended August 31, 2017), the Fund had provided positive absolute performance over such periods. In addition, although the Fund underperformed the peer group average for the Morningstar small cap growth category for the one-, three- and five-year periods ended September 30, 2017, the Fund outperformed such peer group average in the ten-year period ended September 30, 2017. With respect to performance, the Board noted that although one portfolio manager was retiring at the end of 2017, the Advisor was confident in the portfolio management team and that the Fund was adhering to its investment process and strategy. The Board was satisfied with the Fund’s overall performance.
Small Cap Value Fund
With respect to the Small Cap Value Fund, the Independent Trustees noted that the Fund outperformed the performance of the median of its Broadridge Peer Group for the one-, two-, three-, four-, five- and ten-year periods ended August 31, 2017. Except for the two- and ten-year periods ended August 31, 2017, the Fund outperformed its Benchmark for the one-, three-, four- and five-year periods ended August 31, 2017. The Fund also outperformed the peer group average of the Morningstar small blend category for
150
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
the one-, three-, five- and ten-year periods ended September 30, 2017. The Board determined the Fund’s performance over time had been generally favorable.
Strategic Income Fund
With respect to the Strategic Income Fund, the Independent Trustees noted that the Fund underperformed the performance of the median of its Broadridge Peer Group for the two-, three-, four-, five- and ten-year periods ended August 31, 2017 but outperformed the median in the recent one-year period ended August 31, 2017. The Fund also underperformed the Benchmark for the various periods ended August 31, 2017 and underperformed the peer group average for the Morningstar mid-cap value category for the one-, three-, five- and ten-year periods ended September 30, 2017. The Board, however, considered that the Fund had provided positive absolute performance for the foregoing periods ended August 31, 2017 and September 30, 2017. The Board also considered the investment strategy of the Fund and in light of the foregoing, the Board was satisfied with the Fund’s overall performance.
Ultra Growth Fund
With respect to the Ultra Growth Fund, the Independent Trustees noted that the Fund outperformed the median of its Broadridge Peer Group and Benchmark for the one-, two-, three-, four-, five- and ten-year periods ended August 31, 2017. In addition, although the Fund underperformed its peer group average of the Morningstar small growth category for the ten-year period ended September 30, 2017, the Fund outperformed such peer group average in the one-, three- and five-year periods ended September 30, 2017. In light of the foregoing, the Board was satisfied with the Fund’s overall performance.
World Innovators Fund
With respect to the World Innovators Fund, the Independent Trustees noted that the Fund outperformed or matched the median of its Broadridge Peer Group for the one-, two-, three-, four-, five- and ten-year periods ended August 31, 2017. Similarly, the Fund outperformed the Benchmark for such periods except the four-year period ended August 31, 2017. Similarly, although the Fund underperformed the peer group average for the Morningstar world small/mid stock category for the five-year period ended September 30, 2017, the Fund outperformed such peer group average in the one-, three-, and ten-year periods ended September 30, 2017. The Board was satisfied with the Fund’s overall performance.
Income Fund
Although the Income Fund underperformed the median of its Broadridge Peer Group in the five- and ten-year periods ended August 31, 2017, the Independent Trustees noted that the Fund outperformed or matched the median in the one-, two-, three- and four-year periods ended August 31, 2017. The Fund, however, underperformed the Benchmark over the various periods ended August 31, 2017. Other than the one-year period ended September 30, 2017, the Fund outperformed or provided generally comparable performance to its
peer group average of the Morningstar short-term bond category for the three-, five- and ten-year periods ended September 30, 2017. The Board was satisfied with the Fund’s overall performance.
| C. | FEES, EXPENSESAND PROFITABILITY |
| 1. | Fees and Expenses |
The Independent Trustees evaluated the management fees and other fees and expenses of each Fund. The Independent Trustees reviewed, among other things, the contractual management fee rate, the expense limitation agreements and/or fee waivers, the net management fee rate (which reflects the management fee rate after taking into effect any expense limitation arrangements and/or fee waivers), and the net total expense ratio of each class of each Fund. The Board considered the net total expense ratio of each class of each Fund (expressed as a percentage of average net assets) as the expense ratio is more reflective of the investors’ net experience in a Fund as it directly reflects the costs of investing in a Fund.
In addition, the Board, including the Independent Trustees, reviewed the Broadridge Report comparing, among other things, each Fund’s contractual and net advisory fees and net total expenses for each class compared to such information for a group of comparable funds selected by Broadridge (the “Broadridge Expense Group”) as well as comparing each Fund’s actual management fees, non-management expenses and actual total expenses for each class against such information for a larger universe of funds selected by Broadridge (the “Broadridge Expense Universe”). The Board reviewed information regarding Broadridge’s methodology for developing the Broadridge Expense Group and Broadridge Expense Universe for its report. In reviewing the comparative data, the Board was aware that various factors may limit some of the usefulness of the data, particularly with respect to the Micro Cap Fund and Micro Cap Value Fund (collectively, the “Micro Cap Funds”). The Independent Trustees therefore also reviewed comparisons of each Micro Cap Fund’s management fee and net expense ratio with those of a custom peer group provided by the Advisor.
In addition to the foregoing fee and expense data, the Board considered various factors that also influence the level of management fees for a Fund. In this regard, the Board considered, among other things, the factors that the Advisor considers in proposing a management fee level for a Fund which includes an assessment of the potential value of the services (such as, the potential for the strategy to deliver alpha, the experience of the management team with the respective strategy), the competitive marketplace (such as, the uniqueness of the fund, the fees of competitor funds) and the economics to the Advisor (such as, the costs to provide the advisory services to the particular Fund and the existence of any capacity constraints of the Fund which may reduce the potential for revenues to the Advisor). In evaluating fees, the Board also considered, among other things, the quality and experience of the portfolio managers, the respective Fund’s investment performance, the Advisor’s willingness to close capacity-constrained Funds when necessary to
151
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Supplemental Information (continued)
protect performance, and the research-intensive process followed by the Advisor and related costs. The Board noted the Advisor’s contractual commitment to limit certain operating expenses of each of the classes of various Funds to the benefit of shareholders and reviewed the amounts the Advisor has reimbursed to the applicable Fund for the last three fiscal years (if any). The Independent Trustees also reviewed the fees that the Advisor charges its other types of clients for discretionary portfolio management services, as described in further detail below.
In considering the fees of the Sub-Advisors for the Income Fund and U.S. Treasury Fund, the Independent Trustees considered the fee rate paid to the respective Sub-Advisor with respect to the applicable Fund in absolute terms and as compared to the Sub-Advisors pricing schedule for portfolio management services for other clients. The Independent Trustees also noted that the Advisor pays the Sub-Advisors from its own revenues and the sub-advisory fees to the Sub-Advisors were established through arm’s length negotiations between the Advisor and the Sub-Advisors, which are unaffiliated with the Advisor.
In its evaluation of the advisory and sub-advisory fees, the Board noted the following:
For the Core Growth Fund, Emerging India Fund, Emerging Markets Small Cap Fund, Frontier Emerging Small Countries Fund, Global Opportunities Fund, International Growth Fund, International Opportunities Fund, Micro Cap Fund, Micro Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund and Ultra Growth Fund
With respect to the foregoing Funds, the Independent Trustees recognized, among other things, the capacity constraints of these Funds and the expertise of the Advisor with the strategies of these Funds. In this regard, the Independent Trustees considered that the foregoing Funds generally invested in small and/or micro-cap securities and therefore were subject to inherent capacity constraints as the Advisor may not be able to replicate its strategy or the investment performance at higher asset levels. As a result, the Advisor has been willing to close Funds to additional investments by new investors to protect performance, but such practice also limits the revenue potential for the Advisor from the respective Fund. The Trustees, however, seek to encourage the practice of closing the Funds when necessary to protect performance for existing shareholders. Further, as the Advisor follows a research-intensive practice, the Board recognized the costs associated with performing the necessary due diligence to evaluate small and micro-cap companies which are further increased when evaluating small and mid-cap foreign companies across various countries around the world. The Independent Trustees further noted the Advisor’s expertise and reputation in the small and micro-cap asset classes. In reviewing management fees, the Trustees also noted that the management fees of several of these Funds had been reduced in recent years, including for the Global Opportunities Fund, the Emerging India Fund, the Emerging Markets Small Cap Fund, the International Opportunities Fund, and the Micro Cap Funds and the management fee rate of the Frontier Fund was being reduced by 10 basis
points. In its review of the comparative data presented, the Board noted the following:
With respect to the Core Growth Fund, the Independent Trustees recognized that although the contractual management fee rate for the institutional and investor class shares was above the median of its respective Broadridge Expense Group, the Fund had a net expense ratio that was slightly higher (within 10 basis points) than the median of its Broadridge Expense Group for the investor class shares and below the median of its Broadridge Expense Group for the institutional class shares.
With respect to the Emerging India Fund, the Fund’s contractual management fee rate for the investor class and institutional class shares was the same as the median of its Broadridge Expense Group and its net expense ratio was the same as the median of its Broadridge Expense Group for the investor class shares and below the median for the institutional class shares.
With respect to the Emerging Markets Small Cap Fund, the Independent Trustees noted that the Fund’s contractual management fee rate and net total expense ratio for the investor class shares and institutional class shares were above the median of its Broadridge Expense Group.
With respect to the Frontier Emerging Small Countries Fund, the Independent Trustees noted that the contractual management fee rate and net expense ratio were above the median of its Broadridge Expense Group for the institutional and investor class shares. The Trustees further noted, however, the Advisor had agreed to reduce the management fees and expense cap on the classes of this Fund by 10 basis points.
With respect to the Global Opportunities Fund, the Independent Trustees noted that the contractual management fee rate of the Fund was above the median of its Broadridge Expense Group for the investor class shares and the institutional class shares, and the Fund’s net expense ratio was above the median of its Broadridge Expense Group for the investor class shares but below the median for the institutional class shares.
With respect to the International Growth Fund, the Independent Trustees noted that the Fund’s contractual management fee rate for the investor class shares and institutional class shares was slightly above (within 5 basis points of) the median of its Broadridge Expense Group but its net expense ratio was below the median of the Broadridge Expense Group for its institutional class shares and investor class shares.
With respect to the International Opportunities Fund, the Independent Trustees noted that the Fund’s contractual management fee rate and net expense ratio were above the median of its Broadridge Expense Group for the investor class shares and institutional class shares.
With respect to the Micro Cap Fund and the Micro Cap Value Fund, the Independent Trustees noted that each Fund’s contractual management fee rate and net expense ratio were above the median of its Broadridge Expense Group. The Trustees, however, recognized that the management fees for these Funds were recently reduced in 2016.
152
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
With respect to the Small Cap Growth Fund, the Independent Trustees noted that the Fund’s contractual management fee rate was above the median of its Broadridge Expense Group for the investor class shares and institutional class shares and its net expense ratio was above the median of its Broadridge Expense Group for the investor class shares and slightly above (within 5 basis points of) the median for the institutional class shares.
With respect to the Small Cap Value Fund, the Independent Trustees noted that the Fund’s contractual management fee rate was above the median of its Broadridge Expense Group for the investor class shares and institutional class shares, and the net expense ratio of the investor class shares was above the median of its Broadridge Expense Group but below the median for the institutional class shares.
With respect to the Ultra Growth Fund, the Independent Trustees noted that the Fund’s contractual management fee rate and net expense ratio for its investor class shares were each slightly higher than (within 10 basis points of) the respective median of the Broadridge Expense Group.
Based on its review, the Board determined the advisory fees for the foregoing Funds were acceptable in light of the nature, extent and quality of services provided.
For the Emerging Markets Select Fund
With respect to the Emerging Markets Select Fund, the Independent Trustees noted that the Fund’s contractual management fee rate was slightly higher (within 10 basis points) than the median of its Broadridge Expense Group for the investor class shares and the institutional class shares and the net expense ratio for the investor class shares was higher than the median for the Broadridge Expense Group, but the net expense ratio for the institutional class was lower than the median. The Trustees recognized that the Fund had more capacity than other Funds which were focused on small and/or micro-cap securities; however, the Trustees also recognized the additional costs to evaluating securities tied to emerging markets. The Independent Trustees further noted that the management fee for this Fund had been reduced in recent years. Based on its review, the Board determined that the advisory fee for the foregoing Fund was acceptable in light of the nature, extent and quality of services provided.
For the Long/Short Fund, Global Value Fund (formerly, the Large Cap Value Fund), Strategic Income Fund and World Innovators Fund
In considering the management fees of the Global Value Fund, Long/Short Fund, Strategic Income Fund and World Innovators Fund, the Independent Trustees recognized that each of such Funds had little or no capacity constraints given their investment strategies. The Independent Trustees also considered, among other things, the comparative fee and expense data and noted the following:
With respect to the Global Value Fund, the Independent Trustees noted that the contractual management fee rate was above the median of its Broadridge Expense Group for the investor class shares and institutional class shares, and the Fund’s net expense ratio was above the median of its Broadridge Expense Group for the investor class shares and
slightly higher than (within 5 basis points of) the median for its institutional class shares.
With respect to the Long/Short Fund, the Independent Trustees noted that the contractual management fee rate was the same as the median of the Broadridge Expense Group for the investor class shares and institutional class shares and the net expense ratios for the investor class shares and institutional class shares were below the median of its Broadridge Expense Group.
With respect to the Strategic Income Fund, the Independent Trustees noted that the contractual management fee rate and net expense ratio were below the median of its Broadridge Expense Group for the investor class shares.
With respect to the World Innovators Fund, the Independent Trustees noted that the Fund’s contractual management fee rate and net expense ratio were above the median of its Broadridge Expense Group for its investor class and institutional class shares.
Based on its review, the Board determined that the advisory fees for the foregoing Funds were acceptable in light of the nature, extent and quality of services provided.
For the Income Fund and U.S. Treasury Fund
In considering the Income Fund and the U.S. Treasury Fund, the Board recognized that each of these Funds did not have any capacity constraints. In considering the comparative data, the Independent Trustees also observed that with respect to the U.S. Treasury Fund, the Independent Trustees noted that the Fund’s contractual management fee was slightly above (within 10 basis points of) the median of its Broadridge Expense Group, and the Fund’s net expense ratio was equal to the median of its Broadridge Expense Group for the investor class shares.
With respect to the Income Fund, the Independent Trustees noted that although the Fund’s contractual management fee rate was slightly higher than (within 10 basis points of) the median of its Broadridge Expense Group, the Fund’s net expense ratio for the investor class shares was below the median.
Based on its review, the Board determined that the advisory fees for the foregoing Funds were acceptable in light of the nature, extent and quality of services provided.
In addition to management fees, the Board recognized that both of these Funds are sub-advised and separately considered the sub-advisory fee rates paid to the Sub-Advisor of the respective Funds and as compared to the Sub-Advisor’s pricing schedule for portfolio management services to other clients. With respect to the U.S. Treasury Fund, the Independent Trustees noted that the sub-advisory fee rate was in line with HIMCO’s fee schedule in light of the asset size of the Fund. With respect to the Income Fund, the Independent Trustees noted that the sub-advisory fee rate paid to 1st Source was on the low end of the range of its fee schedule for institutional accounts. In addition, the Independent Trustees also noted that the Advisor pays the Sub-Advisors from its own revenues and the sub-advisory fees to the respective Sub-Advisor were established through arm’s length negotiations between the Advisor and the Sub-Advisors, which are unaffiliated with the Advisor.
153
Table of Contents
| WASATCH FUNDS | ||
| ||
| ||
Supplemental Information (continued)
Based on its review, the Board determined that the sub-advisory fees for the foregoing Funds were acceptable in light of the nature, extent and quality of services provided.
| 2. | Fees Charged to Other Advisor and Sub-Advisor Clients |
In their review, the Board also considered information regarding the nature of services and fee rates offered by the Advisor and Sub-Advisors to other clients, including separate accounts, unified managed accounts, model accounts, collective investment trusts and certain domestic and foreign funds outside the Wasatch family of funds for which the Advisor serves as a sub-advisor. More specifically, the Independent Trustees reviewed information regarding the fee rates and schedules, the range of fees and their weighted average that the Advisor charges to separate accounts that are managed in a style similar to that used for certain Funds. Such Funds include the Core Growth Fund, Emerging Markets Select Fund, Emerging Markets Small Cap Fund, Frontier Emerging Small Countries Fund, International Growth Fund, Small Cap Growth Fund, and Small Cap Value Fund. The Independent Trustees also reviewed the fee rates of separate accounts managed in investment styles similar to the Micro Cap Funds, the Global Opportunities Fund, the Global Value Fund, the International Opportunities Fund and the Ultra Growth Fund. In addition, the Independent Trustees received the management fee rates of the other types of clients noted above.
The Independent Trustees noted that the fee rates or weighted average fee rates for separate accounts and other types of clients were generally lower than the fees for the comparable Fund, subject to certain exceptions. The Independent Trustees considered the rationale the Advisor provided for the variations in fee rates between the Funds and other types of clients including, in particular, the material differences in the services provided, the extensive regulatory requirements associated with operating registered investment companies, and the differences in the investment parameters and strategies between the investment companies and other clients. The Trustees recognized the additional services provided to support the Funds included, among other things, fund administrative services and operations, oversight of third party service providers, oversight of shareholder servicing, Trustee support, tax administration and compliance, and that such services were not required to the same extent or at all for other types of clients. Given the differences among the products, particularly the extensive services provided to the Funds, the Independent Trustees concluded that such facts justify the different levels of fees.
In addition, with respect to the Sub-Advisory fees for the Sub-Advisors of the Income Fund and U.S. Treasury Fund, the Independent Trustees, as noted above, had reviewed the sub-advisory fee rate paid to the respective Sub-Advisor compared to such Sub-Advisor’s pricing schedule for portfolio management services for other clients and had noted that the fee rates paid these Sub-Advisors for their sub-advisory services were reasonable in comparison to their respective pricing schedule. The Trustees further noted that the Sub-Advisors were unaffiliated with the Advisor and
their respective sub-advisory fees were the result of arms-length negotiations. As noted, the Board considered the sub-advisory fees to be acceptable in light of the nature, extent and quality of services provided.
| 3. | Profitability of the Advisor |
In conjunction with their review of fees, the Independent Trustees reviewed information reflecting the Advisor’s financial condition. The Independent Trustees reviewed the consolidated financial statements of WA Holdings, Inc. (the parent of the Advisor) and its subsidiary (the Advisor) for the years ended December 31, 2016 and 2015.
The Independent Trustees also reviewed the profitability information for the Advisor derived from its relationship with each Fund for the calendar year ended December 31, 2016 on an actual and adjusted basis. In its evaluation of profitability, the Independent Trustees reviewed the Advisor’s methodology used to allocate revenue and expenses for the purposes of calculating profitability per Fund. However, the Independent Trustees recognized the difficulty in calculating profitability at the individual Fund level given the inherent limitations of any allocation methodology as different and reasonable approaches and assumptions may be used and yet yield differing results. Further, the Independent Trustees recognized that employee compensation was the primary expense for the Advisor and as a privately held S corporation owned by employees, the Advisor’s level of profitability could be influenced, in part, by paying employees through compensation expense as opposed to dividends as shareholders. As a result, the Independent Trustees also reviewed the Advisor’s profitability data for 2016 with certain adjustments to the compensation expense to assist in the comparability of the Advisor’s profitability to certain industry peers. In this regard, the Independent Trustees received and reviewed the profit margin (pre tax) of certain other public advisory firms in the industry that resemble the Advisor’s business model. The Trustees, however, noted that the comparative data may be limited as a result of differences in numerous factors between the Advisor and the other advisors that impact profitability such as variations in, among others, fee waivers and expense reimbursements by the advisor, the funds managed, the business mix, the cost allocation methodology, and the capital structure. Nevertheless, the Independent Trustees noted that the Advisor’s profitability (with and without the compensation adjustment) is within a reasonable range compared to the peer group of unaffiliated advisors. Based on its review, the Board was satisfied that the Advisor’s level of profitability from its relationship with each Fund was not unreasonable in light of the services provided.
In addition to the Advisor’s profitability, the Independent Trustees reviewed information reflecting the financial condition of each Sub-Advisor. Although profitability on a per account level was not available, the Trustees reviewed HIMCO’s financial statements for the years ended December 31, 2016 and 2015. The Trustees also reviewed 1st Source’s income statement for the month ended September 30, 2015 and September 30, 2016.
154
Table of Contents
| MARCH 31, 2018 (UNAUDITED) | ||
| ||
| ||
In addition to the above, the Independent Trustees also considered any indirect benefits (such as soft dollars) that the Advisor or Sub-Advisor received that were directly attributable to the management of the applicable Funds. See Section E below for additional information on indirect benefits the Advisor or Sub-Advisors may receive as a result of their relationship with the respective Funds.
Based on its review, including the Sub-Advisors’ fee schedules and the fact that the sub-advisory fees were established through arm’s length negotiations, the Independent Trustees concluded that HIMCO’s and 1st Source’s profitability from the Sub-Advisor’s relationship with the U.S. Treasury Fund and Income Fund, respectively, was not unreasonable.
| D. | ECONOMIESOF SCALEAND WHETHER FEE LEVELS REFLECT THESE ECONOMIESOF SCALE |
The Board considered information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Funds and whether the Funds have appropriately benefited from such economies of scale. In considering economies of scale, the Independent Trustees recognized the economies of scale are difficult to assess, particularly on a Fund-by-Fund basis. The Independent Trustees observed that economies of scale generally occur as assets grow; however, they also noted that Funds with capacity constraints, such as Funds investing primarily in small or micro-cap companies, have limited ability to achieve certain economies of scale. In this regard, the Independent Trustees have considered the Advisor’s willingness to close a Fund to new investments and forgo potential revenues in order to maintain the Fund at asset levels that can be effectively managed. Although closing a Fund may also prevent a Fund from achieving economies of scale that may exist at higher asset levels, the Board recognized the benefit of protecting performance for existing shareholders. The Independent Trustees also recognized the costs of the Advisor’s research intensive investment process in managing Funds. With respect to Funds without capacity constraints, the Independent Trustees considered the Advisor’s position that such Funds were already priced to scale and therefore already share any economies of scale. In addition, although the Board recognized that the Funds’ investment advisory fees will not decrease as assets rise since they are not subject to investment advisory fee breakpoints, the Independent Trustees noted that the Advisor has agreed to temporary expense caps that limit the overall net expense ratios on the respective classes of the Funds (other than the Income
Fund) which may be considered another means for sharing economies of scale.
Considering the factors above, the Independent Trustees concluded the absence of breakpoints in the management fee was acceptable and that such economies as exist are adequately reflected in the Advisor’s fee structure.
| E. | INDIRECT BENEFITS |
The Independent Trustees received and considered information regarding indirect benefits the Advisor and Sub-Advisors may receive as a result of their relationship with the Funds. In this regard, the Independent Trustees recognized that the Advisor may receive benefits from soft dollar arrangements whereby the Advisor may use a portion of the brokerage commissions paid by the Funds to acquire research that may be useful to the Advisor in managing the Funds and other clients. The Independent Trustees recognized that the Advisor’s profitability would be lower if it paid for such research with its own revenues. With respect to the Sub-Advisors, the Independent Trustees recognized that the Sub-Advisors have not participated in soft dollar arrangements with respect to Fund portfolio transactions. The Independent Trustees, however, considered that the Advisor pays certain fees to 1st Source for providing shareholder servicing to the respective Fund. The Independent Trustees further considered the reputational and/or marketing benefits the Advisor and Sub-Advisors may receive as a result of their association with the Funds. The Independent Trustees took these indirect benefits into account when accessing the level of advisory fees paid to the Advisor and sub-advisory fee to the respective Sub-Advisor and concluded that the indirect benefits received were reasonable.
| F. | ANNUAL APPROVALOF ADVISORYAND SUB-ADVISORY AGREEMENTS |
The Independent Trustees did not identify any single factor discussed previously as all-important or controlling. The Board, including a majority of Independent Trustees, concluded that the terms of the Advisory Agreement for each Fund, the Sub-Advisory Agreement with HIMCO on behalf of the U.S. Treasury Fund, and the Sub-Advisory Agreement with 1st Source on behalf of the Income Fund were fair and reasonable, that the Advisor’s and Sub-Advisors’ fees are reasonable in light of the services provided to each respective Fund, and that the Advisory Agreement should be approved on behalf of each Fund and the Sub-Advisory Agreements should be approved on behalf of the U.S. Treasury Fund and the Income Fund, respectively.
155
Table of Contents
| WASATCH FUNDS | MARCH 31, 2018 (UNAUDITED) | |
| ||
| ||
Service Providers
INVESTMENT ADVISOR
Wasatch Advisors, Inc.
505 Wakara Way, 3rd Floor
Salt Lake City, UT 84108
SUB-ADVISORFORTHE WASATCH-1ST SOURCE INCOME FUND
1st Source Corporation Investment Advisors, Inc.
100 North Michigan Street
South Bend, IN 46601
SUB-ADVISORFORTHE WASATCH-HOISINGTON U.S. TREASURY FUND
Hoisington Investment Management Co.
6836 Bee Caves Road
Building 2, Suite 100
Austin, TX 78746
ADMINISTRATORAND 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.
235 West Galena Street
Milwaukee, WI 53212
CUSTODIAN
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105
LEGAL COUNSELTO WASATCH FUNDSANDINDEPENDENT TRUSTEES
Chapman and Cutler, LLP
111 West Monroe Street
Chicago, IL 60603
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
1100 Walnut Street, Suite 1300
Kansas City, MO 64106
| CONTACT WASATCH | ||
| ||
| ||
TELEPHONE
800.551.1700
M - F, 7:00 a.m. to 7:00 p.m. Central Time
Automated Line, 24 Hours
U.S. MAIL
Wasatch Funds
P.O. Box 2172
Milwaukee, WI 53201-2172
OVERNIGHT DELIVERY
Wasatch Funds
235 West Galena Street
Milwaukee, WI 53212
ONLINE
www.WasatchFunds.com
shareholderservice@wasatchfunds.com
156
Table of Contents
2018 Semi-Annual Report
www.WasatchFunds.com 800.551.1700
MIX
Paper from
responsible sources
FSC® C132107
Table of Contents
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.
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees, where those changes were implemented after the Registrant last provided disclosure in response to this item.
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”)) 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) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934). |
(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) 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. |
Table of Contents
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
| (a)(1) | Not required. |
| (a)(2) | The certifications required by Rule 30a-2(a) of the 1940 Act are attached hereto. |
| (a)(3) | Not applicable. |
| (a)(4) | 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. |
Table of Contents
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/ Eric S. Bergeson | |
| Eric S. Bergeson | ||
| President (principal executive officer) of Wasatch Funds Trust | ||
| Date: | June 5, 2018 | |
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/ Eric S. Bergeson | |
| Eric S. Bergeson | ||
| President (principal executive officer) of Wasatch Funds Trust | ||
| Date: | June 5, 2018 | |
| By: | /s/ Michael K. Yeates | |
| Michael K. Yeates | ||
| Treasurer (principal financial officer) of Wasatch Funds Trust | ||
| Date: | June 5, 2018 | |