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As filed with the Securities and Exchange Commission on July 27, 2018
File No. 333-222353
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
X Pre-Effective Amendment No. 2
☐ Post-Effective Amendment No.
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: Number, Street, City, State, Zip Code)
(801) 533-0777
(Area Code and Telephone Number)
(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 Chapman and Cutler LLP 111 West Monroe Street Chicago, IL 60603 |
Approximate date of proposed public offering: As soon as practicable after the effective date of this Registration Statement.
Title of securities being registered: Shares of beneficial interest, no par value, of the Registrant.
The Registrant hereby amends this Registration Statement under the Securities Act of 1933 on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with the provisions of Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
No filing fee is required because of reliance on Section 24(f) and an indefinite number of shares have previously been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
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WASATCH FUNDS TRUST
Important Information for Shareholders of Wasatch Long/Short Fund
At a special meeting of shareholders of Wasatch Long/Short Fund (the “Target Fund”), a series of Wasatch Funds Trust (the “Trust”), you will be asked to vote on the reorganization of your fund into Wasatch Global Value Fund (formerly, Wasatch Large Cap Value Fund) (the “Acquiring Fund”), also a series of the Trust (the “Reorganization”). The Target Fund and the Acquiring Fund are collectively referred to herein as the “Funds” and individually as a “Fund.”
The Board of Trustees of the Trust, including the Independent Trustees, unanimously recommends that you vote FOR the proposal.
Although we recommend that you read the complete Proxy Statement/Prospectus, for your convenience we have provided the following brief overview of the matter to be voted on.
Q. Why is the Reorganization being proposed?
A. Wasatch Advisors, Inc. (the “Advisor”), the investment advisor to the Target Fund and the Acquiring Fund, has proposed the Reorganization given the limited future growth prospects of the Target Fund, its relative poor performance and the economic infeasibility of the Target Fund over the long term in light of the costs associated with the continued operation of the Target Fund and its likely inability to attract assets in the foreseeable future. In evaluating the Target Fund and the Acquiring Fund, the Advisor recognized the material differences between the investment objectives and principal investment strategies of the Funds. In particular, the Target Fund is a long/short fund investing primarily in the equity securities of domestic companies by maintaining long and short equity positions, whereas the Acquiring Fund is a global value fund that invests primarily in the equity securities of foreign and domestic companies and does not employ a short sale strategy.
Although the investment objectives and strategies are materially different between the Target Fund and the Acquiring Fund, the Advisor has proposed the Reorganization with the Acquiring 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 Acquiring Fund compared to the Target 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 Acquiring Fund which would be in effect through January 31, 2020; and the anticipated federal income tax-free nature of the Reorganization compared to a taxable event for shareholders if the Target Fund was liquidated. For additional information, see “Approval of the Proposed Reorganization by the Board of Trustees” at page 37.
Q. How will the Reorganization affect my shares?
A. Upon the closing of the Reorganization, each Target Fund shareholder will receive shares of the Acquiring Fund in an amount equal in total value to the total value of the Target Fund shares surrendered by such shareholder. Shareholders of Investor Class shares and Institutional Class shares of the Target Fund will receive the same class of shares of the Acquiring Fund.
Q. Will Target Fund shareholders incur sales loads or contingent deferred sales charges on Acquiring Fund shares received in the Reorganization?
A. No. Neither Fund charges a front-end sales load or a contingent deferred sales charge.
Q. Are the Funds managed by the same Advisor?
A. Both Funds are advised by Wasatch Advisors, Inc. Beginning October 2017, both Funds are managed by David Powers.
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Q. How do the Funds’ investment objectives and principal investment strategies compare?
A. You should note that the Funds’ investment objectives and principal investment strategies are materially different. The Target Fund’s investment objective is capital appreciation, and the Acquiring Fund’s investment objective is capital appreciation and income. While the investment objectives of both Funds share a capital appreciation component, the Target Fund’s objective also includes income.
In addition, while both Funds invest primarily in equity securities, generally common stock, the Funds follow materially different investment strategies. The Target Fund is a long/short fund and pursues its investment objective by maintaining long equity positions and short equity positions. When the Target Fund takes a long position, it purchases the security outright. When the Fund takes a short position, it sells a security that it does not own in hope of repurchasing such security at a lower price. The use of both long and short positions allows the Advisor to invest based on both its positive and negative views on individual stocks. Unlike the Target Fund, the Acquiring Fund does not engage in short sales as a principal investment strategy but rather invests primarily in equity securities of domestic and foreign securities through a long only portfolio. The Target Fund further seeks to achieve higher risk-adjusted returns with lower volatility compared to the equity markets (as represented by the S&P 500), whereas the Acquiring Fund does not have a similar mandate.
The Target Fund also invests primarily in the equity securities of domestic companies and has limited exposure to foreign securities. The Acquiring Fund, however, is a global value fund that invests its net assets primarily in the equity securities of foreign and domestic companies of all market capitalizations. The Acquiring Fund will typically invest in securities issued by companies domiciled in at least three countries, including the United States. The Acquiring Fund will invest a significant portion of its total assets in securities of companies domiciled in foreign countries (under normal market conditions, at least 40% will be invested outside the United States, or if conditions are not favorable, 30% of its assets will be invested outside the United States). The Acquiring Fund is also permitted to invest a significant amount of its total assets at the time of purchase in securities issued by companies domiciled in emerging and frontier markets, which are those countries currently included in the Morgan Stanley Capital International (MSCI) EFM (Emerging + Frontier Markets) Index, including the Asia-Pacific region, Eastern Europe, the Middle East, Central and South America and Africa (under normal market conditions we expect to invest between 5% to 50% in securities domiciled in emerging and frontier markets ). Securities issued by foreign companies incorporated outside the United States whose securities are principally traded in the United States are not defined as “foreign companies” and are not subject to this limitation. Accordingly, to qualify as a foreign company under the above limitations, the company must be incorporated outside the United States and its securities principally traded in a foreign jurisdiction.
As a principal investment strategy, the Target Fund is permitted to invest in early stage companies, initial public offerings, and fixed income securities of any maturity, including those that are less than investment grade known as “junk bonds.” The Acquiring Fund, however, is permitted to invest in investment grade fixed-income securities, early stage companies and IPOs but not as a principal investment strategy. The Acquiring Fund is not permitted to invest in “junk bonds.”
Beginning October 2017, the Funds share the same portfolio manager. Although the Funds have material differences in their investment strategies, the portfolio manager of the Funds employs a similar valuation analysis to evaluate potential investment opportunities for the Funds which emphasizes company fundamentals (such as, price-to-sales, price-to-book, price-to-earnings, price/earnings-to-growth ratios and discounted cash flow models) as well as considers other economic and market factors. Further, both Funds have generally acquired larger capitalization companies. In this regard, the Acquiring Fund is permitted to invest in companies of any size but is expected to invest a significant portion of the Fund’s assets in U.S. and foreign companies with a market capitalization of over US $5 billion at the time of purchase. The Target Fund also is permitted to invest in the equity securities of U.S. companies with a market capitalization of at least $100 million at the time of purchase, and the Target Fund has historically been invested in securities of over US $5 billion, similar to the Acquiring Fund. For comparison, as of June 30, 2018 the Target Fund invested 88% of its assets in securities of U.S. companies with a market capitalization of over US $5 billion and the Acquiring Fund invested 85% of its assets in securities of U.S. and foreign companies with a market capitalization of over US $5 billion. As of June 30, 2018, eighteen of the twenty larger cap U.S. companies held by the Target Fund (approximately 70% of the Target Fund’s portfolio) were also held by the Acquiring Fund.
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A more detailed comparison of the principal investment strategies of the Funds is contained in the Proxy Statement/Prospectus. Please see the section entitled “Comparison of the Funds – Investment Objectives” and “Comparison of the Funds –Principal Investment Strategies” for additional information.
Q. Will the portfolio of the Target Fund be repositioned as a result of the Reorganization?
A. Yes. The Target Fund’s portfolio will be repositioned in connection with the Reorganization. The companies currently held in the Target Fund that are not also held in the Acquiring Fund (approximately 6% of the value of the Target Fund) will be sold prior to the Reorganization. In addition, the short positions in the Target Fund will be closed (approximately 22% of the value of the Target Fund) prior to the Reorganization. The total estimated expenses of the Reorganization of the Target Fund are $394,000 which includes, among other things, the legal, audit and proxy solicitation fees of approximately $338,000, and brokerage costs. Brokerage costs are the only transaction cost associated with the repositioning of the Target Fund, which are estimated at approximately $56,000 (0.09% of the Target Fund’s net assets) assuming it had occurred as of March 31, 2018. The Advisor and the Target Fund have agreed to split evenly the costs of the Reorganization, subject to contractual expense caps. Accordingly, based on these estimates, approximately $197,000 of these costs are expected to be paid by the Target Fund and approximately $197,000 will be paid by the Advisor. These are estimates and actual amounts may vary. There are some foreign securities that cannot be purchased until the Reorganization is complete. The Acquiring Fund and indirectly its shareholders (including former shareholders of the Target Fund who hold shares in the Acquiring Fund) are estimated to incur approximately $20,000 in brokerage commissions related to the acquisition of portfolio securities from cash received in the Reorganization. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceed the Fund’s current expense cap, the Advisor will pay more of the Reorganization expenses as necessary to keep each Fund’s share classes operating within their respective expense cap.
Q. How do the principal risks of the Target Fund and the Acquiring Fund compare?
A. As both Funds invest in equity securities through long positions, both Funds are subject to market risk that the price of securities will decline. As a result of the differences in the principal investment strategies of the Funds, however, certain principal risks of the Funds are also materially different. As noted, the Target Fund as a long/short fund engages in short sales as a principal investment strategy and therefore is subject to risks associated with short sales, including experiencing losses if the market price of the security increases, reducing the returns of the Target Fund compared to if the Fund held only long positions, increasing the Target Fund’s liquidity risk and exposing the Target Fund to the risk that the third party will not honor its contract terms. Unlike the Target Fund, the Acquiring Fund does not employ a short sale strategy as a principal investment strategy and therefore does not have the related principal risk.
Unlike the Target Fund which invests primarily in the equity securities of domestic companies, the Acquiring Fund may invest a significant portion of its total assets in foreign securities, including in equity securities of companies domiciled in emerging and frontier markets. The Acquiring Fund is therefore exposed to risks associated with investing in foreign securities, including, among other things, more volatility; less liquidity; different regulatory, accounting and auditing standards; less publicly available information; fluctuations in currency exchange rates; and restrictions on repatriating investments or income and such risks can be further increased for emerging and frontier markets.
The Target Fund is also subject to certain additional principal risks related to investment strategies that are its principal investment strategies but are not principal investment strategies of the Acquiring Fund (including investments in initial public offerings, fixed-income securities including those that are less than investment grade, and early stage companies). A more detailed comparison of the principal risks of the Funds is contained in Proxy Statement/Prospectus. Please see the section entitled “ Risk Factors” for additional information.
Q. Do the Target Fund and the Acquiring Fund have different fundamental and non-fundamental investment restrictions?
A. The Target Fund and the Acquired Fund are both part of the Wasatch Funds Trust, and the Trust has adopted the same stated fundamental and non-fundamental investment restrictions for both Funds, subject to certain exceptions. In particular, the Acquiring Fund has a fundamental investment restriction, in general terms, prohibiting it
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from investing more that 5% of its total assets in any one issuer or holding more than 10% of the outstanding voting securities of such issuer except that up to 25% of the Acquiring Fund’s total assets may be invested without regard to such limitations, and various U.S. government, agency and instrumentality obligations or repurchase agreements secured by such obligations are also excluded from such limitations. The Target Fund does not have such a fundamental restriction. In addition, the Acquiring Fund has adopted the following two non-fundamental investment restrictions that the Acquiring Fund will not (a) make investments for the purpose of exercising control or management and (b) invest more than 10% of its total assets (taken at market value at the time of each investment) in Special Situations (i.e., companies in the process of reorganization or buy-out). The Target Fund has not adopted such non-fundamental investment restrictions. Further, the non-fundamental investment policies of the Funds may be changed upon Board approval without shareholder approval. See the section of the Proxy/Statement Prospectus entitled “Comparison of the Funds” for additional information regarding the Funds’ fundamental and non-fundamental investment restrictions.
Q. How do the investment performance of the Acquiring Fund and the Target Fund compare?
A. The Acquiring Fund formerly had been a large cap value fund investing primarily in the equity securities of domestic companies with a market capitalization of $5 billion at time of purchase and as of February 2017, the Acquiring Fund increased its ability to invest up to 20% of its total assets in the securities issued by foreign companies in developed or emerging markets. The Fund sought to further expand its foreign investment exposure becoming a global value fund as of October 31, 2017. Accordingly, the performance information prior to such date would be for the prior investment strategy and would not reflect the current investment strategy. In comparing past performance, the Investor Class shares of the Acquiring Fund outperformed the Investor Class shares of the Target Fund for the one-, three-, five- and ten-year periods ended December 31, 2017. Furthermore, based on the Investor Class shares for the calendar years from 2008 through 2017, the Acquiring Fund outperformed the Target Fund in six of those ten calendar years. Although the inception dates of the Institutional Class shares of the Global Value Fund and Long/Short Fund was January 31, 2012 and December 13, 2012, respectively, the performance of the Institutional Class of a Fund was similar to that of its Investor Class as the classes are invested in the same portfolio of securities and differences in performance between the classes would be principally attributed to differences in expenses. However, you should be aware that the usefulness of the comparisons of the performance may be limited given that the performance history of the Acquiring Fund does not reflect the recent changes to its principal investment strategies.
Q. How will the Reorganization impact fees and expenses?
A. Based on the unaudited annualized expenses as of March 31, 2018, the total gross and net annual operating expenses are expected to decrease for the shareholders of both classes of the Target Fund following the Reorganization. In this regard, the management fee will be reduced from 1.10% for the Target Fund to 0.90% for the combined Acquiring Fund for both classes. The total gross annual fund operating expenses of the Investor Class and Institutional Class shares of the Target Fund of 1.91% and 1.77%, respectively, are estimated to be reduced to 1.20% and 1.13%, respectively, based on the pro forma gross expenses of the combined fund as a result of the proposed Reorganization. The net annual fund operating expenses of the Investor Class and Institutional Class shares of the Target Fund of 1.86% and 1.36%, respectively, are estimated to be reduced to 1.10% and 0.95%, respectively, based on the pro forma net expenses of the combined fund as a result of the proposed Reorganization. Pro forma amounts are estimated and actual operating expenses may vary.
In addition, the total annual fund operating expenses after waivers is based on a contractual expense limitation agreement pursuant to which the Advisor has contractually agreed to waive fees and/or reimburse expenses of the Target Fund and the Acquiring Fund so that total annual operating expenses of each class of the respective Fund do not exceed certain levels (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment-related costs, acquired fund fees and expenses, and extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of business). The expense limitation on both classes of the Acquiring Fund is lower than the expense limitation on the corresponding class of the Target Fund, and the contractual expense agreement of the Acquiring Fund will remain in effect through January 31, 2020 compared to January 31, 2019 for the Target Fund. If the expense cap of the Acquiring Fund is not renewed after January 31, 2020, the total annual fund operating expenses after waivers of the Acquiring Fund could increase depending upon, among other things, the size of the Acquiring Fund at that time.
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Under the expense limitation agreement of both Funds, the Advisor may recoup certain amounts previously paid. In this regard, to calculate the required waiver or reimbursement, the Advisor will waive or reimburse expenses each day that the amount of the annualized operating expenses of a class exceeds its expense limit; however, the Advisor may be reimbursed such amounts on any day during the fiscal year the annualized expenses of a class are below its expense limit to the extent the reimbursement does not cause the class’s expenses to exceed the expense cap. The Fund may only make repayments to the Advisor if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. Regardless of the ability to recoup expenses under the terms of the current expense limitation agreement, the Advisor has agreed that it will not attempt to recoup any Reorganization expenses from the Target Fund.
See the section entitled “Comparison of the Funds – Fees and Expenses” in the Proxy Statement/Prospectus for additional information.
Q. Why does the Board recommend the Reorganization?
A. The Board of Trustees, including the Independent Trustees, approved the Reorganization. The Board concluded that the Reorganization was in the best interests of the Target Fund and the Acquiring Fund and their respective shareholders, and further that the interests of existing shareholders of each Fund would not be diluted as a result of the Reorganization. The Board considered various factors in evaluating the Reorganization and reaching its conclusion, with no single factor identified as all-important or controlling, including, among other things:
• | the compatibility of the Funds’ investment objectives, principal investments strategies and related risks; |
• | the consistency of portfolio management; |
• | the Funds’ relative sizes; |
• | the relative fees and expense ratios of the Funds, including the contractual expense caps on the combined fund’s expenses for both share classes; |
• | the anticipated federal income tax-free nature of the Reorganization; |
• | the expected costs of the Reorganization and the extent to which the Funds would bear any such costs; |
• | the terms of the Reorganization and whether the Reorganization would dilute the interests of the shareholders; |
• | the effect of the Reorganization on shareholder rights; |
• | alternatives to the Reorganization, and |
• | any potential benefits of the Reorganization to the Advisor and its affiliates as a result of the Reorganization. |
For a more complete discussion of the Board’s considerations, please see the section entitled “Approval of the Proposed Reorganization by the Board of Trustees” in the Proxy Statement/Prospectus.
Q. Will the Reorganization create a taxable event for me?
A. No. The Reorganization is intended to qualify as a tax-free reorganization for federal income tax purposes. It is expected that you will recognize no gain or loss for federal income tax purposes as a direct result of the Reorganization. Prior to the closing of the Reorganization, the Target Fund expects to distribute all of its net investment income and net capital gains, if any. The Target Fund is not expected to have any capital gain distributions as a direct result of the Reorganization. All or a portion of such a distribution may be taxable to Target Fund shareholders and will generally be taxed as ordinary income or capital gains for federal income tax purposes, unless you are investing through a tax-advantaged account such as an IRA or 401(k) plan (in which case you may be taxed upon withdrawal of your investment from such account). The tax character of such distributions will be the same regardless of whether they are paid in cash or reinvested in additional shares. In addition, the Target Fund may recognize gains or losses as a result of portfolio sales and closing of short positions effected prior to the Reorganization, including sales anticipated in connection with the repositioning described above. Such gains or losses may increase or decrease the net capital gains or net investment income to be distributed by the Target Fund to its shareholders, and may increase or decrease the Target Fund’s capital loss carryforwards. The Target Fund is expected to have significant short-term and long-term losses to be carried forward, subject to IRS limitations and expiration (“loss carryforwards”).
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Q. Who will bear the costs of the Reorganization?
A. The costs of the Reorganization incurred by the Target Fund will be split equally between the Advisor and Target Fund, subject to the contractual expense cap limitations. The total estimated expenses of the Reorganization of the Target Fund are $394,000 which includes, among other things, the legal, audit and proxy solicitation fees of approximately $338,000, and brokerage costs. Brokerage costs are the only transaction cost associated with the repositioning of the Target Fund, which are estimated at approximately $56,000 (0.09% of the Target Fund’s net assets) assuming it had occurred as of March 31, 2018. These are estimates and actual amounts may vary. Amounts charged to the Target Fund will generally be allocated between its share classes based on the relative net assets of the share classes, except that each class separately bears expenses related specifically to that class. To the extent that the Target Fund’s expenses, (including any Reorganization expenses for which the Target Fund is responsible), exceed the Fund’s current contractual expense cap on the respective share class, the Advisor also will waive and/or reimburse the Target Fund’s expenses (including the portion of the Reorganization expenses allocated to the Target Fund) to the extent necessary for the Fund’s share classes to operate within their respective cap. Regardless of the ability to recoup expenses under the terms of the current expense limitation agreement, the Advisor has agreed that it will not seek to recoup any Reorganization expenses.
In addition, the Acquiring Fund and indirectly its shareholders (including former shareholders of the Target Fund who hold shares in the Acquiring Fund ) also are estimated to incur approximately $20,000 in brokerage commission related to the acquisition of portfolio securities from cash received in the Reorganization.
If the Reorganization is not approved or completed, the Advisor will pay all expenses associated with the Reorganization. See the section entitled “The Proposed Reorganization—Reorganization Expenses” in the Proxy Statement/Prospectus for additional information.
Q. What is the timetable for the Reorganization?
A. If approved by the Target Fund’s shareholders at the special meeting of shareholders on August 30, 2018, the Reorganization of the Target Fund is expected to occur at the close of business on September 7, 2018 or as soon as practicable thereafter.
Q. What happens if shareholders do not approve the Reorganization?
A. If the Reorganization is not approved, the Board of Trustees will take such action as it deems to be in the best interests of the Target Fund, including continuing to operate the Target Fund as a stand-alone Fund, liquidating the Target Fund, or other options the Board of Trustees may consider.
General
Q. Whom do I call if I have questions?
A. If you need any assistance, or have any questions regarding the proposals or how to vote your shares, please call AST Fund Solutions, the proxy solicitor hired by the Target Fund, at (800) 628-8532 weekdays during its business hours of 9:00 a.m. to 10:00 p.m. Eastern time. Please have your proxy materials available when you call.
Q. How do I vote my shares?
A. You may vote in person, by mail, by telephone or over the Internet:
• To vote in person, please attend the special meeting of shareholders and bring your photographic identification. If you hold your Target Fund shares through a bank, broker or other nominee, you must also bring satisfactory proof of ownership of those shares and a “legal proxy” from the nominee.
• To vote by mail, please mark, sign, date and mail the enclosed proxy card. No postage is required if mailed in the United States.
• To vote by telephone, please call the toll-free number located on your proxy card and follow the recorded instructions, using your proxy card as a guide.
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• To vote over the Internet, go to the Internet address provided on your proxy card and follow the instructions, using your proxy card as a guide.
Q. Will anyone contact me?
A. You may receive a call from AST Fund Solutions, the proxy solicitor hired by the Target Fund, to verify that you received your proxy materials, to answer any questions you may have about the proposals and to encourage you to vote your proxy.
We recognize the inconvenience of the proxy solicitation process and would not impose on you if we did not believe that the matters being proposed were important. Once your vote has been registered with the proxy solicitor, your name will be removed from the solicitor’s follow-up contact list.
Q. How does the Board of Trustees suggest that I vote?
A. After careful consideration, the Board has agreed unanimously that the proposed Reorganization is in the best interests of the Target Fund and recommends that you vote “FOR” the proposal. If shareholders do not approve the Reorganization, the Board of Trustees will take such action as it deems to be in the best interests of the Target Fund, including continuing to operate the Fund as a stand-alone fund, liquidating the Fund, or such other options the Board of Trustees may consider.
Your vote is very important. We encourage you as a shareholder to participate in your Fund’s governance by returning your vote as soon as possible. If enough shareholders fail to cast their votes, your Fund may not be able to hold its shareholder meeting or the vote on the issue, and your Fund will be required to incur additional solicitation costs in order to obtain sufficient shareholder participation.
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WASATCH FUNDS TRUST
July 27, 2018
Dear Shareholders:
We are pleased to invite you to the special meeting of shareholders of Wasatch Long/Short Fund (the “Target Fund”) (the “Special Meeting”). The Special Meeting is scheduled for August 30, 2018, at 10:00 a.m. Mountain time, at the offices of Wasatch Advisors, Inc. at 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84018. At the Special Meeting, you will be asked to consider the reorganization of your fund into Wasatch Global Value Fund (formerly Wasatch Large Cap Value Fund) (the “Acquiring Fund” and together with the Target Fund, the “Funds” and each a “Fund”) (the “Reorganization”). It is important for you to recognize that the Acquiring Fund and the Target Fund have materially different investment strategies.
The Target Fund’s investment objective is capital appreciation, whereas the Acquiring Fund’s investment objective is capital appreciation and income. The Target Fund is a long/short fund that pursues its investment objective by primarily investing in equity securities of domestic companies through long and short positions, which means that when the Target Fund takes a long position, it purchases the security outright in hope that the price will rise, and when it takes a short position, it sells a security that it does not own in hope that the price will fall and the Fund can repurchase such security at a lower price. The use of both long and short positions allows the investment advisor to invest based on both its positive and negative views of individual stocks. Unlike the Target Fund, the Acquiring Fund does not engage in short sales as a principal investment strategy. While both Funds invest primarily in equity securities, the Acquiring Fund is a global value fund that invests primarily in equity securities of domestic and foreign securities (including companies domiciled in emerging and frontier markets) through a long only portfolio. As the Target Fund invests primarily in the equity securities of domestic companies, the Target Fund has limited exposure to foreign securities.
While there are differences in the investment objectives and strategies of the Funds, Wasatch Advisors, Inc. (the “Advisor”), each Fund’s investment adviser, has proposed the Reorganization due to, among other things, the limited growth prospects and economic infeasibility of the Target Fund over the long term, the similar analysis used by the portfolio manager to evaluate potential investments for both Funds despite the differing investment strategies, the overlap of portfolio holdings, the lower contractual management fee and estimated lower gross and net expense ratios (before and after fee waivers) of the combined fund for both share classes following the Reorganization, the lower contractual expense cap of the combined fund for both classes, and the tax consequences to shareholders if the Target Fund was liquidated compared to the anticipated tax-free nature of the Reorganization. Given the foregoing, the Advisor and Board of Trustees believe that it would be in the best interests of the Target Fund shareholders to reorganize the Target Fund into the Acquiring Fund and recommend that you vote “FOR” the Reorganization.
Please review the attached Proxy Statement/Prospectus which provides more information about the proposal.
All shareholders are cordially invited to attend the Special Meeting. In order to avoid delay and additional expense and to assure that your shares are represented, please vote as promptly as possible, regardless of whether or not you plan to attend the Special Meeting. You may vote by mail, by telephone or over the Internet. To vote by mail, please mark, sign, date and mail the enclosed proxy card. No postage is required if mailed in the United States. To vote by telephone, please call the toll-free number located on your proxy card and follow the recorded instructions, using your proxy card as a guide. To vote over the Internet, go to the Internet address provided on your proxy card and follow the instructions, using your proxy card as a guide.
If you intend to attend the Special Meeting in person and you are a record holder of the Target Fund’s shares, in order to gain admission, you must show photographic identification, such as your driver’s license. If you intend to attend the Special Meeting in person and you hold your shares through a bank, broker or other nominee, in order to gain admission, you must show photographic identification, such as your driver’s license, and satisfactory proof of ownership of shares of the Target Fund, such as your voting instruction form (or a copy thereof) or broker’s statement indicating ownership as of a recent date. If you hold your shares in a brokerage account or through a bank or other nominee, you will not be able to vote in person at the Special Meeting unless you have previously requested and obtained a “legal proxy” from your broker, bank or other nominee and present it at the Special Meeting.
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We appreciate your continued support and confidence in Wasatch and our family of funds.
Very truly yours, |
Eric S. Bergeson |
President |
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JULY 27, 2018
WASATCH LONG/SHORT FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 30, 2018
To the Shareholders:
Notice is hereby given that a special meeting of shareholders of Wasatch Long/Short Fund (the “Target Fund”), a series of Wasatch Funds Trust (the “Trust”), a Massachusetts business trust, will be held at the offices of Wasatch Advisors, Inc. at 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84018, on August 30, 2018 at 10:00 a.m., Mountain time (the “Special Meeting”), for the purposes described below.
1. | To approve an Agreement and Plan of Reorganization (and the related transactions) which provides for (i) the transfer of all the assets of the Target Fund to Wasatch Global Value Fund (formerly Wasatch Large Cap Value Fund) (the “Acquiring Fund”) in exchange solely for Investor Class and Institutional Class shares of beneficial interest of the Acquiring Fund and the assumption by the Acquiring Fund of all the liabilities of the Target Fund; and (ii) the pro rata distribution of Investor Class and Institutional Class shares of the Acquiring Fund to the shareholders of Investor Class and Institutional Class shares of the Target Fund, respectively, in complete liquidation and termination of the Target Fund (the “Reorganization”). |
2. | To transact such other business as may properly come before the Special Meeting. |
Only shareholders of record as of the close of business on June 30, 2018 are entitled to vote at the Special Meeting or any adjournments or postponements thereof.
All shareholders are cordially invited to attend the Special Meeting. In order to avoid delay and additional expense and to assure that your shares are represented, please vote as promptly as possible, regardless of whether or not you plan to attend the Special Meeting. You may vote by mail, by telephone or over the Internet. To vote by mail, please mark, sign, date and mail the enclosed proxy card. No postage is required if mailed in the United States. To vote by telephone, please call the toll-free number located on your proxy card and follow the recorded instructions, using your proxy card as a guide. To vote over the Internet, go to the Internet address provided on your proxy card and follow the instructions, using your proxy card as a guide.
If you intend to attend the Special Meeting in person and you are a record holder of the Target Fund’s shares, in order to gain admission, you must show photographic identification, such as your driver’s license. If you intend to attend the Special Meeting in person and you hold your shares through a bank, broker or other nominee, in order to gain admission, you must show photographic identification, such as your driver’s license, and satisfactory proof of ownership of shares of the Target Fund, such as your voting instruction form (or a copy thereof) or broker’s statement indicating ownership as of a recent date. If you hold your shares in a brokerage account or through a bank or other nominee, you will not be able to vote in person at the Special Meeting unless you have previously requested and obtained a “legal proxy” from your broker, bank or other nominee and present it at the Special Meeting.
Eric S. Bergeson
President
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PROXY STATEMENT/PROSPECTUS
DATED JULY 27, 2018
Relating to the Acquisition of the Assets and Liabilities of
WASATCH LONG/SHORT FUND
By
WASATCH GLOBAL VALUE FUND
This Proxy Statement/Prospectus is being furnished to shareholders of Wasatch Long/Short Fund (the “Target Fund”), a series of Wasatch Funds Trust, a Massachusetts business trust (the “Trust”), and an open-end investment company registered under the Investment Company Act of 1940 Act, as amended (the “1940 Act”), and relates to the special meeting of shareholders of the Target Fund to be held at the offices of Wasatch Advisors, Inc. at 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84018, on August 30, 2018 at 10:00 a.m., Mountain time and at any and all adjournments and postponements thereof (the “Special Meeting”). This Proxy Statement/Prospectus is provided in connection with the solicitation by the Board of Trustees of the Trust (the “Board of Trustees” or the “Trustees”) of proxies to be voted at the Special Meeting. The purpose of the Special Meeting is to allow the shareholders of the Target Fund to consider and vote on the proposed reorganization (the “Reorganization”) of the Target Fund into Wasatch Global Value Fund (formerly Wasatch Large Cap Value Fund) (the “Acquiring Fund”), also a series of the Trust. The Target Fund and the Acquiring Fund are collectively referred to herein as the “Funds” and individually as a “Fund.”
If shareholders approve the Reorganization of the Target Fund and the Reorganization is completed, each Target Fund shareholder will receive shares of the Acquiring Fund in an amount equal in total value to the total value of the Target Fund shares surrendered by such shareholder. Shareholders of Investor Class shares of the Target Fund will receive Investor Class shares of the Acquiring Fund. Shareholders of Institutional Class shares of the Target Fund will receive Institutional Class shares of the Acquiring Fund. The Board of Trustees has determined that the Reorganization of the Target Fund is in the best interests of the Target Fund. The address, principal executive office and telephone number of the Funds and the Trust is 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84108, (800) 551-1700.
The enclosed proxy and this Proxy Statement/Prospectus are first being sent to shareholders of the Target Fund on or about July 30, 2018. Shareholders of record as of the close of business on June 30, 2018 are entitled to vote at the Special Meeting.
The Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this Proxy Statement/Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This Proxy Statement/Prospectus concisely sets forth the information shareholders of the Target Fund should know before voting on the Reorganization (in effect, investing in Investor Class and Institutional Class shares of the Acquiring Fund, as applicable) and constitutes an offering of Investor Class and Institutional Class shares of beneficial interest of the Acquiring Fund. Please read it carefully and retain it for future reference.
The following documents have been filed with the Securities and Exchange Commission (“SEC”) and are incorporated into this Proxy Statement/Prospectus by reference:
(i) | the Acquiring Fund’s Prospectus for Investor Class shares dated January 31, 2018, only insofar as it relates to the Acquiring Fund (File Nos. 033- 10451 and 811-04920); and |
(ii) | the Acquiring Fund’s Prospectus for Institutional Class shares dated January 31, 2018, only insofar as it relates to the Acquiring Fund (File Nos. 033- 10451 and 811-04920); and |
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(iii) | the audited financial statements contained in the Acquiring Fund’s Annual Report, only insofar as they relate to the Acquiring Fund, for the fiscal year ended September 30, 2017 (File No. 811-04920); and |
(iv) | the financial statements contained in the Acquiring Fund’s Semi-Annual Report, only insofar as they relate to the Acquiring Fund, for the six months ended March 31, 2018 (File No. 811-04920). |
The following documents contain additional information about the Funds and have been filed with the SEC and are incorporated into this Proxy Statement/Prospectus by reference:
(i) | the Statement of Additional Information relating to the Reorganization, dated July 27, 2018 (the “Proxy Statement/Prospectus SAI”); and |
(ii) | the Target Fund’s Prospectus for Investor Class shares dated January 31, 2018, only insofar as it relates to the Target Fund (File Nos. 33- 10451 and 811-04920); and |
(iii) | the Target Fund’s Prospectus for Institutional Class shares dated January 31, 2018, only insofar as it relates to the Target Fund (File Nos. 33- 10451 and 811-04920); and |
(iv) | the audited financial statements contained in the Funds’ Annual Report, only insofar as they relate to the Funds, for the fiscal year ended September 30, 2017 (File No. 811-04920); and |
(v) | the financial statements contained in the Funds’ Semi-Annual Report, only insofar as they relate to the Funds, for the six months ended March 31, 2018 (File No. 811-04920); and |
(vi) | the Target Fund’s Statement of Additional Information for Investor Class shares dated January 31, 2018, only insofar as it relates to the Target Fund (File Nos. 033- 10451 and 811-04920); and |
(vii) | the Acquiring Fund’s Statement of Additional Information for Investor Class shares dated January 31, 2018, only insofar as it relates to the Acquiring Fund (File Nos. 033- 10451 and 811-04920); and |
(viii) | the Target Fund’s Statement of Additional Information for Institutional Class shares dated January 31, 2018, only insofar as it relates to the Target Fund (File Nos. 033- 10451 and 811-04920); and |
(ix) | the Acquiring Fund’s Statement of Additional Information for Institutional Class shares dated January 31, 2018, only insofar as it relates to the Acquiring Fund (File Nos. 033- 10451 and 811-04920). |
No other parts of the Funds’ Annual Report or Semi-Annual Report are incorporated by reference herein.
Copies of the foregoing may be obtained without charge by calling or writing the Funds at (800) 551-1700 or by writing to Wasatch Funds, P.O. Box 2172, Milwaukee WI 53201. If you wish to request the Proxy Statement/Prospectus SAI, please ask for the “Proxy Statement/Prospectus SAI.” In addition, the Acquiring Fund will furnish, without charge, a copy of its most recent annual report to a shareholder upon request. Any such request should be directed to the Acquiring Fund at the telephone number or address shown above.
The Trust is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the 1940 Act, and in accordance therewith files reports and other information with the SEC. Reports, proxy statements, registration statements and other information filed by the Trust (including the Registration Statement relating to the Acquiring Fund on Form N-14 of which this Proxy Statement/Prospectus is a part) may be inspected without charge and copied (for a duplication fee at prescribed rates) at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or at the SEC’s Northeast Regional Office (3 World Financial Center, New York, New York 10281) or Midwest Regional Office (175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604). You may call the SEC at (202) 551-8090 for information about the operation of the Public Reference Room. You may obtain copies of this information, with payment of a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549. You may also access
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reports and other information about the Funds on the EDGAR database on the SEC’s Internet site at http://www.sec.gov.
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REORGANIZATION OF THE TARGET FUND INTO THE ACQUIRING FUND
The following is a summary of, and should be read in conjunction with, the more complete information contained in this Proxy Statement/Prospectus and the information attached hereto or incorporated herein by reference, including the form of Agreement and Plan of Reorganization.
As discussed more fully below and elsewhere in this Proxy Statement/Prospectus, the Board of Trustees is recommending that shareholders approve the Reorganization of the Wasatch Long/Short Fund (the Target Fund) into the Wasatch Global Value Fund (the Acquiring Fund). The Board of Trustees believes the proposed Reorganization is in the best interests of the Target Fund and that the interests of the Target Fund’s existing shareholders would not be diluted as a result of the Reorganization. The Reorganization is intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986. If shareholders of the Target Fund approve the Reorganization and it is completed, the Target Fund shareholders will become shareholders of the Acquiring Fund and will cease to be shareholders of the Target Fund.
Shareholders should read the entire Proxy Statement/Prospectus carefully together with the Acquiring Fund’s Prospectus that accompanies this Proxy Statement/Prospectus, which is incorporated herein by reference. Shareholders should read carefully and understand that the Target Fund and the Acquiring Fund have materially different investment strategies and objectives. See the section entitled “Comparison of the Funds” below for a comparison of investment policies, fees and expenses, and other matters. This Proxy Statement/Prospectus constitutes an offering of Investor Class and Institutional Class shares of the Acquiring Fund.
Wasatch Advisors, Inc. (“Wasatch” or the “Advisor”) serves as the investment adviser to each of the Funds. After considering the costs associated with the continued operation of the Target Fund, its relative poor performance and its limited future growth prospects and economic infeasibility over the long term given the costs of continued operation and its likely inability to attract assets in the foreseeable future, the Advisor has proposed the Reorganization of the Target Fund into the Acquiring Fund. Although the investment objectives and strategies are materially different between the Target Fund and the Acquiring Fund, the Advisor has proposed the Reorganization with the Acquiring 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 Acquiring Fund compared to the Target 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 Acquiring Fund which would be in effect through January 31, 2020 and the anticipated federal income tax-free nature of the Reorganization compared to a taxable event for shareholders if the Target Fund was liquidated.
This Proxy Statement/Prospectus is being furnished to shareholders of the Target Fund in connection with the proposed combination of the Target Fund into the Acquiring Fund pursuant to the terms and conditions of the Agreement and Plan of Reorganization entered into by (i) Wasatch Funds Trust (the “Trust”), on behalf of each Fund, and (ii) the Advisor (the “Agreement”).
The Agreement provides for (i) the transfer of all the assets of the Target Fund to the Acquiring Fund in exchange solely for Investor Class and Institutional Class shares of beneficial interest of the Acquiring Fund (“Acquiring Fund Shares”) and the assumption by the Acquiring Fund of all the liabilities of the Target Fund; and (ii) the pro rata distribution of Investor Class and Institutional Class shares of the Acquiring Fund to the shareholders of Investor Class and Institutional Class shares of the Target Fund, respectively, in complete liquidation and termination of the Target Fund.
If shareholders of the Target Fund approve the Reorganization and it is completed, Target Fund shareholders will become shareholders of the Acquiring Fund. The Board of Trustees has determined that the Reorganization is in the best interests of the Target Fund and that the interests of existing Target Fund shareholders would not be diluted as a result of the Reorganization. The Board of Trustees unanimously approved the Reorganization and the Agreement at
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a meeting held on November 7-8, 2017 (the “November Meeting”). The Board of Trustees recommends a vote “FOR” the Reorganization.
The costs of the Reorganization of the Target Fund will be split equally between the Advisor and Target Fund, subject to the contractual expense cap limitations. The total estimated expenses of the Reorganization are $394,000 which includes, among other things, the legal, audit and proxy solicitation fees of approximately $338,000, and brokerage costs. Brokerage costs are the only transaction cost associated with the repositioning of the Target Fund, which are estimated at approximately $56,000 (0.09% of the Target Fund’s net assets) assuming it had occurred as of March 31, 2018. These amounts are estimated and actual amounts may vary. Amounts charged to the Target Fund generally will be allocated between its share classes based on the relative net assets of the share classes, except that each class separately bears expenses related specifically to the class. To the extent that the Target Fund’s expenses (including any Reorganization expenses for which the Target Fund is responsible), exceed the Fund’s current contractual expense cap on the respective share class, the Advisor will waive and/or reimburse the Target Fund’s expenses (including the portion of the Reorganization expenses allocated to the Target Fund) to the extent necessary for the Fund’s share classes to operate within their contractual expense cap. Regardless of the ability to recoup expenses under the terms of the current expense limitation agreement, the Advisor has agreed that it will not seek to recoup any Reorganization expenses. Based on current expense levels, it is anticipated that the Advisor will absorb a significant portion of the Reorganization expenses charged to the Target Fund. In addition, the Acquiring Fund and indirectly its shareholders (including former shareholders of the Target Fund who hold shares in the Acquiring Fund) are estimated to incur approximately $20,000 in brokerage commission related to the acquisition of portfolio securities from cash received in the Reorganization. If the Reorganization is not approved or not completed, the Advisor will pay all expenses associated with the Reorganization.
The Board of Trustees is asking shareholders of the Target Fund to approve the Reorganization at the Special Meeting to be held on August 30, 2018. Approval of the Reorganization requires the affirmative vote of the holders of a majority of the total number of the Target Fund’s shares outstanding and entitled to vote. This means the vote of (1) 67% or more of the voting securities present at a meeting, if the holders of more than 50% of the outstanding voting securities are present or represented by proxy or (2) more than 50% of the outstanding voting securities, whichever is less. See “Voting Information and Requirements” below.
If shareholders of the Target Fund approve the Reorganization, it is expected that the Reorganization will occur at the close of business on September 7, 2018 or such other date as agreed to by the parties (the “Closing Date”). If the Reorganization is not approved, the Board of Trustees will take such action as it deems to be in the best interests of the Target Fund, including continuing to operate the Target Fund as a stand-alone Fund, liquidating the Target Fund, or other options the Board of Trustees may consider. The Closing Date may be delayed and the Reorganization may be abandoned at any time by the mutual agreement of the parties. In addition, either Fund may at its option terminate the Agreement at or before the closing due to (i) a breach by any other party of any representation, warranty or agreement contained in the Agreement to be performed at or before the closing, if not cured within 30 days of notification to the breaching party and prior to the closing, (ii) a condition precedent to the obligations of the terminating party that has not been met or waived and it reasonably appears that it will not or cannot be met or (iii) a determination by the Board of Trustees that the consummation of the transactions contemplated by the Agreement is not in the best interests of such Fund.
Comparison of Investment Objectives and Investment Policies
The Target Fund’s investment objective is capital appreciation. The Acquiring Fund’s investment objectives are to seek capital appreciation and income. The investment objective of each Fund may be changed without shareholder approval upon at least 60 days advance notice to shareholders of the applicable Fund.
Although both Funds invest primarily in equity securities, there are certain material differences in their investment strategies. The Target Fund pursues its investment objective by primarily investing in equity securities of domestic companies, maintaining long equity and short equity positions, whereas the Acquiring Fund pursues its investment objectives by primarily investing in equity securities of foreign and domestic companies through a long only portfolio. When evaluating a potential long or short investment for the Target Fund or a potential investment for the Acquiring Fund, the portfolio manager uses a comprehensive valuation analysis with particular emphasis on company fundamentals (such as, price-to-sales, price-to-book, price-to-earnings and price/earnings-to-growth ratios and discounted cash flow models) as well as considers other economic and market factors which is intended to establish a range for fair valuation or intrinsic company value for the potential investment. The portfolio manager of
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the Target Fund and the Acquiring Fund, however, may consider additional factors in determining an investment’s valuation as described in further detail in the section entitled “Comparison of the Funds –Principal Investment Strategies” of the Proxy Statement/Prospectus.
In pursuit of its investment objectives, under normal conditions, the Acquiring Fund will invest its net assets primarily in the equity securities of foreign and domestic companies of all market capitalizations. The Acquiring Fund will typically invest in securities issued by companies domiciled in at least three countries, including the United States. The Acquiring Fund will invest a significant portion of its total assets in securities of companies domiciled in foreign countries (under normal market conditions, at least 40% of its assets will be invested outside the United States, or if conditions are not favorable, 30% of its will be invested outside the United States). The Acquiring Fund is also permitted to invest a significant amount of its total assets at the time of purchase in securities issued by companies domiciled in emerging and frontier markets, which are those countries currently included in the Morgan Stanley Capital International (MSCI) EFM (Emerging + Frontier Markets) Index, including the Asia-Pacific region, Eastern Europe, the Middle East, Central and South America and Africa (under normal market conditions we expect to invest between 5% to 50% in securities domiciled in emerging and frontier markets). Securities issued by foreign companies incorporated outside the U.S. whose securities are principally traded in the United States are not defined as “foreign companies” and therefore are not subject to this limitation. Accordingly, to qualify as a foreign company under the above limitations, the company must be incorporated outside of the United States and its securities principally traded in a foreign jurisdiction. Although the Target Fund is permitted to invest in foreign securities, it is not a principal investment strategy of the Fund and therefore the Acquiring Fund has additional risks associated with its investments in foreign securities, including emerging and frontier markets.
With respect to the Target Fund, the Target Fund invests primarily in equity securities by maintaining long equity and short equity positions. Under normal market conditions, the Target Fund invests its assets in the equity securities of companies with market capitalizations of at least $100 million at the time of purchase that the Advisor has identified as being undervalued (long equity positions) and sell those securities (short equity positions) that the Advisor has identified as being overvalued. The Fund is permitted at any time have either a net long exposure or a net short exposure to the equity markets. The Target Fund is not managed to maintain either net long or net short market exposures. Although the Acquiring Fund may make short sales of securities, it is not a principal investment strategy of the Fund. Accordingly, the Target Fund will be subject to certain additional risks associated with its use of short sales. In addition, the Target Fund seeks to achieve a higher risk-adjusted return with lower volatility compared to equity markets in general (as represented by the S&P 500 Index). The Acquiring Fund does not have a similar mandate.
While the Target Fund and the Acquiring Fund have materially different investment strategies, they have both been invested in securities of relatively large capitalization companies. The Target Fund also is permitted to invest in the equity securities of U.S. companies with a market capitalization of at least $100 million at the time of purchase, and the Target Fund has historically been invested in securities of over US $5 billion, similar to the Acquiring Fund. For comparison, as of June 30, 2018 the Target Fund invested 88% of its assets in securities of U.S. companies with a market capitalization of over US $5 billion and the Acquiring Fund invested 85% of its assets in securities of U.S. and foreign companies with a market capitalization of over US $5 billion. As of June 30, 2018, eighteen of the twenty larger cap U.S. companies held by the Target Fund (approximately 70% of the Target Fund’s portfolio) were also held by the Acquiring Fund.
As a principal investment strategy, the Target Fund also is permitted to invest in early stage companies, initial public offerings (“IPOs”), and fixed income securities of any maturity, including those that are less than investment grade. The Acquiring Fund, however, may invest in investment grade fixed-income securities, early stage companies and IPOs but not as a principal investment strategy. Both Funds are also permitted to invest a large percentage of their assets in a few sectors.
Although the Funds have some similar principal risks as a result of their exposure to equity securities, the principal risks of investing in each of the Funds have some significant differences due to the differences in principal strategies. In particular, the Target Fund is subject to short sales and market direction risks associated with its short sale strategy; interest rate risk, credit risk and non-investment grade risk associated with its ability to invest in fixed-income securities as a principal investment strategy; as well as smaller company stock risk, early stage company risk and
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initial public offering risk all of which are not principal risks of the Acquiring Fund. Similarly, the Acquiring Fund is subject to the principal risks associated with investing in foreign securities, including emerging market and frontier market risks, but these are not principal risks of the Target Fund. See the section of the Proxy Statement/Prospectus entitled “Risk Factors” for a comparison of and additional information regarding each Fund’s principal investment risks and “Comparison of the Funds” for additional information regarding the Funds’ investment strategies.
Relative Investment Performance
The Acquiring Fund formerly had been a large cap value fund investing primarily in the equity securities of domestic companies with a market capitalization of $5 billion at time of purchase and as of February 2017, the Acquiring Fund increased its ability to invest up to 20% of its total assets in the securities issued by foreign companies in developed or emerging markets. The Fund sought to further expand its foreign investment exposure becoming a global value fund as of October 31, 2017. Accordingly, the performance information prior to such date would be for the prior investment strategy and would not reflect the current investment strategy. In reviewing performance, the Investor Class shares of the Acquiring Fund outperformed the Investor Class shares of the Target Fund for the one-, three-, five- and ten-year periods ended December 31, 2017. Furthermore, based on the Investor Class shares for the calendar years from 2008 through 2017, the Acquiring Fund outperformed the Target Fund in six of those ten calendar years. Although the inception dates of the Institutional Class shares of the Global Value Fund and Long/Short Fund was January 31, 2012 and December 13, 2012, respectively, the performance of the Institutional Class was similar to that of the Investor Class as the classes are invested in the same portfolio of securities and differences in performance between the classes would be principally attributed to differences in expenses. However, the usefulness of the comparisons of the performance may be limited given the performance history of the Acquiring Fund does not reflect the recent changes to its principal investment strategies.
Distribution, Purchase, Redemption, Exchange of Shares and Dividends
The Funds have identical procedures for purchasing, exchanging and redeeming shares for each corresponding share class. The Target Fund and the Acquiring Fund each offer two classes of shares: Investor Class and Institutional Class shares. The corresponding classes of each Fund have the same investment eligibility criteria. The Target Fund normally declares and pays dividends from net investment income, if any, annually. The Acquiring Fund normally declares and pays dividends from net investment income, if any, quarterly. For each Fund, any net capital gains are normally distributed at least once a year. See “Comparison of the Funds—Distribution, Purchase, Redemption, Exchange of Shares and Dividends” below for a more detailed discussion.
Material Federal Income Tax Consequences of the Reorganization
As a condition to closing the Reorganization, the Target Fund and the Acquiring Fund will receive an opinion from Chapman & Cutler LLP., subject to certain representations, assumptions and conditions, substantially to the effect that the Reorganization will qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, it is expected that neither Fund will recognize any gain or loss for federal income tax purposes as a direct result of the Reorganization. Prior to the Closing Date, the Target Fund will declare a distribution of all of its net investment income and net capital gains, if any. All or a portion of such a distribution may be taxable to the Target Fund’s shareholders for federal income tax purposes.
Prior to the closing of the reorganization, the Target Fund will reposition its portfolio. For comparison, as of June 30, 2018 the Target Fund invested 88% of its assets in securities of U.S. companies with a market capitalization of over US $5 billion and the Acquiring Fund invested 85% of its assets in securities of U.S. and foreign companies with a market capitalization of over US $5 billion. As of June 30, 2018, eighteen of the twenty larger cap U.S. companies held by the Target Fund (approximately 70% of the Target Fund’s portfolio) were also held by the Acquiring Fund. The Target Fund’s portfolio will be repositioned in connection with the Reorganization. The companies currently held in the Target Fund that are not also held in the Acquiring Fund (approximately 6% of the value of the Target Fund) will be sold prior to the Reorganization. In addition, the short positions in the Target Fund will be closed (approximately 22% of the value of the Target Fund) prior to the Reorganization. If such purchases and sales had occurred as of March 31, 2018, it is estimated that such portfolio repositioning of the Target Fund would have resulted in total brokerage commissions or other transaction costs of approximately $56,000. Approximately $28,000 of these costs are expected to be paid by for the Target Fund and approximately $28,000 by the Advisor. These are estimates and actual amounts may vary. These transaction costs represent expenses of the Target Fund that will not be subject to the Target Fund’s expense cap and will be borne by the Target Fund and indirectly borne by the Target Fund’s shareholders. As of September 30, 2017,
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the Target Fund had unused short-term capital loss carryforwards of $26.2 million and long-term capital loss carryforwards of $127.7 million that will be used to offset any gains recognized by the Fund prior to the Reorganization. In the unlikely event that gains exceed the loss carryforwards, capital gains from such portfolio sales may result in increased distributions of net capital gain and net investment income. If such sales occurred as of January 1, 2018, the sales would not have resulted in increased distributions of net capital gain and net investment income to shareholders.
Taking into account the repositioning of the Target Fund, the Acquiring Fund is not expected to sell a material portion of the Target Fund’s assets received in the Reorganization in order to meet its investment policies and restrictions. An estimated $20,000 in brokerage commissions related to the acquisition of portfolio securities by the Acquiring Fund from cash received in the Reorganization is borne by the Acquiring Fund and indirectly by its shareholders (including former shareholders of the Target Fund who hold shares of the Acquiring Fund following the Reorganization).
For a more detailed discussion of the federal income tax consequences of the Reorganization, please see “The Proposed Reorganization—Material Federal Income Tax Consequences” below.
In evaluating the Reorganization, you should consider carefully the risks of the Acquiring Fund to which you will be subject if the Reorganization is approved and completed. Investing in a mutual fund involves risk, including the risk that you may receive little or no return on your investment or even that you may lose part or all of your investment. Because of these and other risks, you should consider an investment in the Acquiring Fund to be a long-term investment. An investment in the Acquiring Fund may not be appropriate for all shareholders. An investment in either Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. For a complete description of the risks of an investment in the Acquiring Fund, see the sections in the Acquiring Fund’s Prospectus for your share class entitled “Principal Risks” and “Wasatch Funds-Additional Information about the Funds.”
Both Funds share many of the same principal risks associated with their investments in equity securities. Additionally, each Fund has principal risks unique to its principal investment strategies. The following table provides a comparison of the principal risks associated with an investment in each Fund. A description of each principal risk is also provided below.
Principal Risks | Target Fund | Acquiring Fund | ||
Stock Market Risk | X | X | ||
Market Direction Risk | X | |||
Stock Selection Risk | X | X | ||
Short Sales Risk | X | |||
Smaller Company Stock Risk | X | |||
Early Stage Companies Risk | X | |||
Initial Public Offerings Risk | X | |||
Early Stage Companies Risk | X | |||
Value Investing Risk | X | X | ||
Interest Rate Risk & Effective Duration | X | |||
Credit Risk | X | |||
Non-Investment Grade Securities Risk | X | |||
Equity Securities Risk | X | X | ||
Foreign Securities Risk | X | |||
Emerging Markets Risk | X | |||
Frontier Markets Risk | X | |||
Portfolio Turnover Rate | X | |||
Sector and Industry Weightings Risk | X | X | ||
Consumer Discretionary Sector Risk | X | X | ||
Consumer Staples Sector Risk | X | X | ||
Energy Sector Risk | X | X | ||
Financials Sector Risk | X | X |
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Principal Risks | Target Fund | Acquiring Fund | ||
Health Care Sector Risk | X | X | ||
Industrials Sector Risk | X | X | ||
Information Technology Sector Risk | X | X | ||
Materials Sector Risk | X | X | ||
Real Estate Sector Risk | X | X | ||
Telecommunications Sector Risk | X | X | ||
Utilities Sector Risk | X | X |
Principal
| Target Fund | Acquiring Fund | How They Compare | |||
Stock Market Risk
| The Fund’s investments may decline in value due to movements in the overall stock market. | The Fund’s investments may decline in value due to movements in the overall stock market. | Same | |||
Market Direction Risk | Since the Fund has both a “long” and a “short” portfolio, an investment in the Fund will involve market risks associated with different investment decisions than those made for a typical “long only” stock fund. The Fund’s results will suffer both when there is a general stock market advance and the Fund holds significant “short” equity positions, or when there is a general stock market decline and the Fund holds significant “long” equity positions.
| Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. | |||
Stock Selection Risk | The Fund’s investment may decline in value even when the overall stock market is not in general decline.
| The Fund’s investment may decline in value even when the overall stock market is not in general decline. | Same | |||
Short Sales Risk | The Fund can make short sales of securities, which means it may experience a loss if the market price of the security increases between the date of the short sale and the date the security is replaced. Short sales may reduce a fund’s returns or increase volatility. In addition, a lender may request, or market conditions may dictate, that securities sold short be returned to the lender on short notice, which may result in the Fund having to buy the securities sold short at an unfavorable price to close out a short position. If this occurs, any anticipated gain to the Fund may be reduced or eliminated or the short sale may result in a loss.
In a rising stock market, the Fund’s short positions may significantly impact the Fund’s overall performance and cause the Fund to underperform traditional long-only equity funds or to sustain losses, particularly in a sharply rising market. The use of short sales may also cause the Fund to have higher | Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. |
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Principal Risk
| Target Fund | Acquiring Fund | How They Compare | |||
expenses than other funds.
Because losses on short sales arise from increases in the value of the security sold short, such losses are theoretically unlimited. By contrast, a loss on a long position arises from decreases in the value of the security and is limited by the fact that a security’s value cannot go below zero. The use of short sales in combination with long positions in seeking to improve Fund performance or reduce overall portfolio risk may not be successful and may result in greater losses or lower positive returns than if the Fund held only long positions. In addition, the Fund’s short selling strategies may limit its ability to fully benefit from increases in the equity markets. Short positions also typically involve increased liquidity risk and the risk that the third party to the short sale may fail to honor its contract terms.
Furthermore, regulatory authorities in various countries, including the United States, have enacted temporary rules prohibiting the short-selling of certain stocks in response to market events. If regulatory authorities were to reinstitute such rules or otherwise restrict short selling, the Fund might not be able to fully implement its short-selling strategy.
The Fund will comply with guidelines established by the Securities and Exchange Commission and its prime broker with respect to coverage of short positions, and, if the guidelines so require, will set aside appropriate liquid assets in a segregated custodial account in the amount prescribed. As a result, there is the possibility that segregation of a large percentage of the Fund’s assets could impede portfolio management or the Fund’s ability to meet redemption requests or other current obligations.
|
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| Target Fund | Acquiring Fund | How They Compare | |||
Smaller Company Stock Risk | Small- and mid-cap stocks may be very sensitive to changing economic conditions and market downturns. In particular, the issuers of small company stocks have more narrow markets for their products and services, fewer product lines, and more limited managerial and financial resources than larger issuers. The stocks of small companies may therefore be more volatile and the ability to sell these stocks at a desirable time or price may be more limited.
| Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. | |||
Early Stage Companies Risk | Early stage companies may never obtain necessary financing, may rely on untested business plans, may not be successful in developing markets for their products or services, and may remain an insignificant part of their industry, and as such may never be profitable. Stocks of early stage companies may be illiquid, privately traded, and more volatile and speculative than the securities of larger companies.
| Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. | |||
Initial Public Offerings Risk | IPOs involve a higher degree of risk because companies involved in IPOs generally have limited operating histories and their prospects for future profitability are uncertain. Prices of IPOs may also be unstable due to the absence of a prior public market, the small number of shares available for trading and limited investor information.
| Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. | |||
Value Investing Risk | A value investing strategy attempts to identify strong companies with stocks selling at a discount from their perceived true worth. It is subject to the risk that the stocks’ intrinsic values may never be fully recognized or realized by the market, their prices may go down, or that stocks judged to be undervalued may actually be appropriately priced.
| A value investing strategy attempts to identify strong companies with stocks selling at a discount from their perceived true worth. It is subject to the risk that the stocks’ intrinsic values may never be fully recognized or realized by the market, their prices may go down, or that stocks judged to be undervalued may actually be appropriately priced. | Same | |||
Interest Rate Risk & Effective Duration | Interest rate risk is the risk that a debt security’s value will decline due to changes in market interest rates. Even though some interest-bearing securities offer a stable stream of income, their prices will still fluctuate with changes in interest rates. The Target Fund may be subject to greater risk of rising interest rates than would normally be the case due to the current period of | Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. |
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| Target Fund | Acquiring Fund | How They Compare | |||
historically low rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives. When interest rates change, the values of longer-duration debt securities usually change more than the values of shorter-duration debt securities. 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 approximately 5%. Similarly, if the interest rate increased 1%, the price of a bond with an effective duration of 15 years would decline approximately 15%. Generally, investors will receive the par value of the bond at maturity. However, the effects of inflation, higher interest rates and the macroeconomic environment can have a negative or positive impact on the value of bonds prior to maturity. This could have an adverse effect on the value of the Fund.
| ||||||
Credit Risk | Credit risk is the risk that the issuer of a debt security will fail to repay principal and interest on the security when due. Credit risk is affected by the issuer’s credit status and is generally higher for non-investment grade securities. See “Non-Investment Grade Securities Risk.”
| Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. | |||
Non-Investment Grade Securities Risk | Non-investment grade securities (also known as “high yield” or “junk bonds”) are those rated below investment grade by the primary rating agencies (e.g., below BB/Ba by S&P/Moody’s). Such securities tend to have more volatile prices and increased price sensitivity to changing interest rates and adverse economic and business developments than investment grade securities. In addition, compared to investments in investment grade securities, investments in non-investment grade securities are subject to greater risk of loss due to default by the issuer or decline in the issuer’s credit quality. There is a greater likelihood that adverse economic or company-specific events will make the issuer unable to make interest and/or principal payments, and the issuer may be more susceptible to negative market | Not a principal risk of the Acquiring Fund. | A principal risk of the Target Fund. Not a principal risk of the Acquiring Fund. |
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| Target Fund | Acquiring Fund | How They Compare | |||
sentiment, leading to depressed prices and decreased liquidity for the non-investment grade securities.
| ||||||
Sector and Industry Weightings Risk | To the extent the Fund emphasizes, from time to time, investments in a particular sector, the Fund will be subject to a greater degree to the risks particular to that sector, including the sectors described below. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect all the securities in a single sector. If the Fund invests in a few sectors, it may have increased exposure to the price movements of securities in those sectors. The Fund may also from time to time make significant investments in an industry or industries within a particular sector. The industries that constitute a sector may all react in the same way to economic, political or regulatory events. Adverse conditions in such industry or industries could have a correspondingly adverse effect on the financial condition of issuers. These conditions may cause the value of the Fund’s shares to fluctuate more than the values of shares of funds that invest in a greater variety of investments.
| To the extent the Fund emphasizes, from time to time, investments in a particular sector, the Fund will be subject to a greater degree to the risks particular to that sector, including the sectors described below. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect all the securities in a single sector. If the Fund invests in a few sectors, it may have increased exposure to the price movements of securities in those sectors. The Fund may also from time to time make significant investments in an industry or industries within a particular sector. The industries that constitute a sector may all react in the same way to economic, political or regulatory events. Adverse conditions in such industry or industries could have a correspondingly adverse effect on the financial condition of issuers. These conditions may cause the value of the Fund’s shares to fluctuate more than the values of shares of funds that invest in a greater variety of investments.
| Same | |||
Consumer Discretionary Sector Risk | The consumer discretionary sector includes companies in industries such as, consumer and household durables, hotels, restaurants, media, retailing, and automobiles. Companies in the consumer discretionary sector may be significantly impacted by the performance of the overall domestic and global economy and interest rates. The consumer discretionary sector relies heavily on disposable household income and spending. Companies in this sector may be subject to severe competition, which may have an adverse impact on their respective profitability. The retail industry can be significantly affected by changes in demographics and consumer tastes, which can also affect the demand for, and success of, consumer products and services in the marketplace. The automotive industry is highly cyclical and can be significantly affected by labor relations and fluctuating component prices. The media industry can be significantly affected by | The consumer discretionary sector includes companies in industries such as, consumer and household durables, hotels, restaurants, media, retailing, and automobiles. Companies in the consumer discretionary sector may be significantly impacted by the performance of the overall domestic and global economy and interest rates. The consumer discretionary sector relies heavily on disposable household income and spending. Companies in this sector may be subject to severe competition, which may have an adverse impact on their respective profitability. The retail industry can be significantly affected by changes in demographics and consumer tastes, which can also affect the demand for, and success of, consumer products and services in the marketplace. The automotive industry is highly cyclical and can be significantly affected by labor relations and fluctuating component prices. The media industry can be significantly affected by technological advances and government regulation. | Same |
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| Target Fund | Acquiring Fund | How They Compare | |||
technological advances and government regulation.
| ||||||
Consumer Staples Sector Risk | The consumer staples sector includes companies in the food and staples retailing, food, beverage and tobacco, and household and personal products industry groups. Companies in the consumer staples sector may be affected by demographics and product trends, competitive pricing, food fads, marketing campaigns, environmental factors, changes in consumer demands, the performance of the overall domestic and global economy, interest rates, consumer confidence and spending, and changes in commodity prices. Consumer staples companies may be subject to government regulations that may affect the permissibility of using various food additives and production methods. Tobacco companies may be adversely affected by regulation, legislation and/or litigation.
| The consumer staples sector includes companies in the food and staples retailing, food, beverage and tobacco, and household and personal products industry groups. Companies in the consumer staples sector may be affected by demographics and product trends, competitive pricing, food fads, marketing campaigns, environmental factors, changes in consumer demands, the performance of the overall domestic and global economy, interest rates, consumer confidence and spending, and changes in commodity prices. Consumer staples companies may be subject to government regulations that may affect the permissibility of using various food additives and production methods. Tobacco companies may be adversely affected by regulation, legislation and/or litigation.
| Same | |||
Energy Sector Risk | The energy sector includes companies in energy equipment and services, and oil, gas and consumable fuels industry groups. The value of companies in these industry groups is particularly vulnerable to developments in the energy sector, fluctuations in the price and supply of energy fuels, energy conservation, the supply of, and demand for, specific energy-related products or services, and tax policy and other government regulation. Oil and gas companies develop and produce crude oil and natural gas and provide related resources such as production and distribution related services. Stock prices for oil and gas companies in particular are affected by supply and demand both for their specific product or service and for energy products in general. The price of oil and gas, exploration and production spending, government regulation, world events and economic conditions will likewise affect the performance of these companies. Correspondingly, companies in the energy sector are subject to swift price and supply fluctuations caused by events relating to international politics, energy conservation, the success of exploration projects, and tax and other governmental regulatory policies. Weak demand for energy companies’ | The energy sector includes companies in energy equipment and services, and oil, gas and consumable fuels industry groups. The value of companies in these industry groups is particularly vulnerable to developments in the energy sector, fluctuations in the price and supply of energy fuels, energy conservation, the supply of, and demand for, specific energy-related products or services, and tax policy and other government regulation. Oil and gas companies develop and produce crude oil and natural gas and provide related resources such as production and distribution related services. Stock prices for oil and gas companies in particular are affected by supply and demand both for their specific product or service and for energy products in general. The price of oil and gas, exploration and production spending, government regulation, world events and economic conditions will likewise affect the performance of these companies. Correspondingly, companies in the energy sector are subject to swift price and supply fluctuations caused by events relating to international politics, energy conservation, the success of exploration projects, and tax and other governmental regulatory policies. Weak demand for energy companies’ products or services or for energy products and services in general, as well as negative | Same |
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| Target Fund | Acquiring Fund | How They Compare | |||
products or services or for energy products and services in general, as well as negative developments in these other areas, would adversely impact the energy stocks in which the Fund invests and the Fund’s performance. Oil and gas exploration and production companies can be significantly affected by natural disasters as well as changes in exchange rates, interest rates, government regulation, world events and economic conditions, and the companies may be at risk for environmental damage claims.
| developments in these other areas, would adversely impact the energy stocks in which the Fund invests and the Fund’s performance. Oil and gas exploration and production companies can be significantly affected by natural disasters as well as changes in exchange rates, interest rates, government regulation, world events and economic conditions, and the companies may be at risk for environmental damage claims. | |||||
Financials Sector Risk | The financials sector includes companies in the banks, capital markets, diversified financials, and insurance industry groups. Companies in the financials sector are subject to extensive government regulation, can be subject to relatively rapid change due to increasingly blurred distinctions between service segments, and can be significantly affected by the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, and price competition. Banking companies may be affected by extensive government regulation which may limit both the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, and the amount of capital they must maintain. Profitability is largely dependent on the availability and cost of capital funds, and can fluctuate significantly when interest rates change. Credit losses resulting from financial difficulties of borrowers can negatively affect banking companies. Banks may also be subject to severe price competition. Competition is high among banking companies and failure to maintain or increase market share may result in lost market value. Capital markets may be affected by extensive governmental regulation, economic and other financial events that could cause fluctuations in the stock market, impacting the overall value of investments. The insurance industry may be affected by extensive government regulation and can be significantly affected by interest rates, general economic conditions, and price and marketing competition. Different | The financials sector includes companies in the banks, capital markets, diversified financials, and insurance industry groups. Companies in the financials sector are subject to extensive government regulation, can be subject to relatively rapid change due to increasingly blurred distinctions between service segments, and can be significantly affected by the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, and price competition. Banking companies may be affected by extensive government regulation which may limit both the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, and the amount of capital they must maintain. Profitability is largely dependent on the availability and cost of capital funds, and can fluctuate significantly when interest rates change. Credit losses resulting from financial difficulties of borrowers can negatively affect banking companies. Banks may also be subject to severe price competition. Competition is high among banking companies and failure to maintain or increase market share may result in lost market value. Capital markets may be affected by extensive governmental regulation, economic and other financial events that could cause fluctuations in the stock market, impacting the overall value of investments. The insurance industry may be affected by extensive government regulation and can be significantly affected by interest rates, general economic conditions, and price and marketing competition. Different segments of the insurance industry can be significantly affected by natural disasters, | Same |
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| Target Fund | Acquiring Fund | How They Compare | |||
segments of the insurance industry can be significantly affected by natural disasters, mortality and morbidity rates and environmental clean-up.
| mortality and morbidity rates and environmental clean-up. | |||||
Health Care Sector Risk | The health care sector includes companies in the health care equipment and services, pharmaceuticals, and biotechnology and life sciences industry groups. Health care companies are strongly affected by worldwide scientific or technological developments. Their products may rapidly become obsolete. Many health care companies are also subject to significant government regulation and may be affected by changes in government policies. Companies in the pharmaceutical, biotechnology and life sciences industry group in particular are heavily dependent on patent protection, and the expiration of patents may adversely affect the profitability of such companies. These companies are also subject to extensive litigation based on product liability and other similar claims. Many new products are subject to government approval and the process of obtaining government approval can be long and costly, and even approved products are susceptible to obsolescence. These companies are also subject to competitive forces that may make it difficult to increase prices, or that may lead to price reductions.
| The health care sector includes companies in the health care equipment and services, pharmaceuticals, and biotechnology and life sciences industry groups. Health care companies are strongly affected by worldwide scientific or technological developments. Their products may rapidly become obsolete. Many health care companies are also subject to significant government regulation and may be affected by changes in government policies. Companies in the pharmaceutical, biotechnology and life sciences industry group in particular are heavily dependent on patent protection, and the expiration of patents may adversely affect the profitability of such companies. These companies are also subject to extensive litigation based on product liability and other similar claims. Many new products are subject to government approval and the process of obtaining government approval can be long and costly, and even approved products are susceptible to obsolescence. These companies are also subject to competitive forces that may make it difficult to increase prices, or that may lead to price reductions.
| Same | |||
Industrials Sector Risk | The industrials sector includes companies in the commercial and professional services and transportation industry groups, including companies engaged in the business of human capital management, business research and consulting, air freight and logistics, airlines, maritime shipping and transportation, railroads and trucking, transportation infrastructure, and aerospace and defense. Companies in the industrials sector can be significantly affected by general economic trends, including such factors as employment and economic growth, interest rate changes, changes in consumer spending, legislative and government regulation and spending, import controls, commodity prices, and worldwide competition. Changes in the economy, | The industrials sector includes companies in the commercial and professional services and transportation industry groups, including companies engaged in the business of human capital management, business research and consulting, air freight and logistics, airlines, maritime shipping and transportation, railroads and trucking, transportation infrastructure, and aerospace and defense. Companies in the industrials sector can be significantly affected by general economic trends, including such factors as employment and economic growth, interest rate changes, changes in consumer spending, legislative and government regulation and spending, import controls, commodity prices, and worldwide competition. Changes in the economy, fuel prices, labor agreements, and insurance costs | Same |
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| Target Fund | Acquiring Fund | How They Compare | |||
fuel prices, labor agreements, and insurance costs may result in occasional sharp price movements in transportation securities. Aerospace and defense companies rely, to a significant extent, on government demand for their products and services. The financial condition of, and investor interest in, aerospace and defense companies are heavily influenced by governmental defense spending policies.
| may result in occasional sharp price movements in transportation securities. Aerospace and defense companies rely, to a significant extent, on government demand for their products and services. The financial condition of, and investor interest in, aerospace and defense companies are heavily influenced by governmental defense spending policies. | |||||
Information Technology Sector Risk | The information technology sector includes companies in the software and services, technology hardware and equipment and semiconductors and semiconductor equipment industry groups. Companies in the information technology sector is subject to rapid obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants, and general economic conditions. Stocks of companies in the information technology sector, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall market. Technological developments, fixed rate pricing, and the ability to retain skilled employees can significantly affect the software industry. Additionally, the success of companies in the software industry is subject to the continued demand for internet services.
| The information technology sector includes companies in the software and services, technology hardware and equipment and semiconductors and semiconductor equipment industry groups. Companies in the information technology sector is subject to rapid obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants, and general economic conditions. Stocks of companies in the information technology sector, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall market. Technological developments, fixed rate pricing, and the ability to retain skilled employees can significantly affect the software industry. Additionally, the success of companies in the software industry is subject to the continued demand for internet services.
| Same | |||
Materials Sector Risk | The materials sector includes companies in the chemicals, construction materials, containers and packaging, paper products, and mining industry groups. Changes in world events, political, environmental and economic conditions, energy conservation, environmental policies, commodity price volatility, changes in currency exchange rates, imposition of import and export controls, increased competition, and labor relations may adversely affect companies engaged in the production and distribution of materials. Other risks may include liabilities for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control. Companies in the chemicals industry may be subject to risks associated with the production, handling and disposal of hazardous | The materials sector includes companies in the chemicals, construction materials, containers and packaging, paper products, and mining industry groups. Changes in world events, political, environmental and economic conditions, energy conservation, environmental policies, commodity price volatility, changes in currency exchange rates, imposition of import and export controls, increased competition, and labor relations may adversely affect companies engaged in the production and distribution of materials. Other risks may include liabilities for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control. Companies in the chemicals industry may be subject to risks associated with the production, handling and disposal of hazardous components. Mining could be affected by supply and demand and operational costs. | Same |
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| Target Fund | Acquiring Fund | How They Compare | |||
components. Mining could be affected by supply and demand and operational costs.
| ||||||
Real Estate Sector Risk | The real estate sector includes companies involved in real estate management and development and issuers of real estate investment trusts (REITs, including retail REITs, residential REITs, healthcare REITs, Office REITs and mortgage REITs). Securities of companies in the real estate sector may be adversely affected by, among other things, rental income fluctuation, depreciation, property tax value changes, differences in real estate market values, overbuilding and extended vacancies, increased competition, costs of materials, operating expenses or zoning laws, costs of environmental clean-up or damages from natural disasters, cash flow fluctuations, and defaults by borrowers and tenants.
| The real estate sector includes companies involved in real estate management and development and issuers of real estate investment trusts (REITs, including retail REITs, residential REITs, healthcare REITs, Office REITs and mortgage REITs). Securities of companies in the real estate sector may be adversely affected by, among other things, rental income fluctuation, depreciation, property tax value changes, differences in real estate market values, overbuilding and extended vacancies, increased competition, costs of materials, operating expenses or zoning laws, costs of environmental clean-up or damages from natural disasters, cash flow fluctuations, and defaults by borrowers and tenants. | Same | |||
Telecommunications Sector Risk | The telecommunications services sector includes diversified telecommunications services and wireless telecommunication services. The telecommunications services industry is subject to government regulation and can be significantly affected by intense competition and technology changes, which may make the products and services of certain companies obsolete. The wireless industry can be significantly affected by failure or delays in obtaining financing or regulatory approval, intense competition, product incompatibility, changing consumer preferences, rapid obsolescence, significant capital expenditures, and heavy debt burdens.
| The telecommunications services sector includes diversified telecommunications services and wireless telecommunication services. The telecommunications services industry is subject to government regulation and can be significantly affected by intense competition and technology changes, which may make the products and services of certain companies obsolete. The wireless industry can be significantly affected by failure or delays in obtaining financing or regulatory approval, intense competition, product incompatibility, changing consumer preferences, rapid obsolescence, significant capital expenditures, and heavy debt burdens. | Same | |||
Utilities Sector Risk | The utilities sector includes electric utilities, gas utilities, water utilities, multi-utilities (electric, gas and water), and independent power and renewable electricity producers. Companies in the utilities sector are affected by supply and demand, consumer incentives, operating costs, government regulation, environmental factors, liabilities for environmental damage and general civil liabilities, and rate caps or rate changes. The value of regulated utility company stocks may have an inverse relationship to the movement of interest
| The utilities sector includes electric utilities, gas utilities, water utilities, multi-utilities (electric, gas and water), and independent power and renewable electricity producers. Companies in the utilities sector are affected by supply and demand, consumer incentives, operating costs, government regulation, environmental factors, liabilities for environmental damage and general civil liabilities, and rate caps or rate changes. The value of regulated utility company stocks may have an inverse relationship to the movement of interest rates. Also,
| Same |
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| Target Fund | Acquiring Fund | How They Compare | |||
rates. Also, certain utility companies have experienced full or partial deregulation in recent years, which may permit them to diversify outside of their original geographic regions and their traditional lines of business. Conversely, companies that remain heavily regulated may be at a competitive disadvantage, making them less profitable.
In addition, natural disasters, terrorist attacks, government intervention or other factors may render a utility company’s equipment unusable and may have an adverse impact on profitability. Utility companies are subject to the high cost of borrowing to finance capital construction during inflationary periods, restrictions on operations and increased costs and delays associated with compliance with environmental and nuclear safety regulations, and the difficulties involved in obtaining natural gas for resale or fuel for generating electricity at reasonable prices. Other risks include those related to the construction and operation of nuclear power plants, the effects of energy conservation and the effects of regulatory changes.
| certain utility companies have experienced full or partial deregulation in recent years, which may permit them to diversify outside of their original geographic regions and their traditional lines of business. Conversely, companies that remain heavily regulated may be at a competitive disadvantage, making them less profitable.
In addition, natural disasters, terrorist attacks, government intervention or other factors may render a utility company’s equipment unusable and may have an adverse impact on profitability. Utility companies are subject to the high cost of borrowing to finance capital construction during inflationary periods, restrictions on operations and increased costs and delays associated with compliance with environmental and nuclear safety regulations, and the difficulties involved in obtaining natural gas for resale or fuel for generating electricity at reasonable prices. Other risks include those related to the construction and operation of nuclear power plants, the effects of energy conservation and the effects of regulatory changes.
| |||||
Equity Securities Risk | Equity securities represent ownership in a company. Stock markets are volatile. The price of equity securities will fluctuate and can decline and reduce the value of a portfolio investing in equity securities. The value of equity securities purchased by the Fund could decline if the financial condition of the companies the Fund invests in declines or if overall market and economic conditions deteriorate. The value of equity securities may also decline due to factors that affect a particular industry or industries, such as labor shortages or an increase in production costs and competitive conditions within an industry. In addition, the value may decline due to general market conditions that are not specifically related to a company or industry, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or generally adverse investor sentiment.
| Equity securities represent ownership in a company. Stock markets are volatile. The price of equity securities will fluctuate and can decline and reduce the value of a portfolio investing in equity securities. The value of equity securities purchased by the Fund could decline if the financial condition of the companies the Fund invests in declines or if overall market and economic conditions deteriorate. The value of equity securities may also decline due to factors that affect a particular industry or industries, such as labor shortages or an increase in production costs and competitive conditions within an industry. In addition, the value may decline due to general market conditions that are not specifically related to a company or industry, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or generally adverse investor sentiment.
| Same |
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| Target Fund | Acquiring Fund | How They Compare | |||
Foreign Securities Risk | Not a principal risk of the Target Fund. | Foreign securities are generally more volatile and less liquid than U.S. securities. Further, foreign securities may be subject to additional risks not associated with investments in U.S. securities. Differences in the economic and political environment, the amount of available public information, the degree of market regulation, and financial reporting, accounting and auditing standards, and, in the case of foreign currency-denominated securities, fluctuations in currency exchange rates, can have a significant effect on the value of a foreign security. Additionally, certain countries may utilize formal or informal currency-exchange controls or “capital controls.” Capital controls may impose restrictions on the Fund’s ability to repatriate investments or income. Such capital controls can also have a significant effect on the value of the Fund’s holdings.
| A principal risk of the Acquiring Fund. Not a principal risk of the Target Fund. | |||
Emerging Markets Risk | Not a principal risk of the Target Fund. | In addition to the risks of investing in foreign securities in general, the risks of investing in the securities of companies domiciled in emerging market countries include increased political or social instability, economies based on only a few industries, unstable currencies, runaway inflation, highly volatile and less liquid securities markets, unpredictable shifts in policies relating to foreign investments, lack of protection for investors against parties that fail to complete transactions, and the potential for government seizure of assets or nationalization of companies.
| A principal risk of the Acquiring Fund. Not a principal risk of the Target Fund. | |||
Frontier Markets Risk | Not a principal risk of the Target Fund. | In addition to the risks of investing in foreign securities and emerging markets, frontier market securities involve unique risks, such as exposure to economies less diverse and mature than those of the U.S. or more established foreign markets. Economic or political instability may cause larger price changes in frontier market securities than in securities of issuers based in more developed foreign countries, including securities of issuers in larger emerging markets. Frontier markets generally receive less investor attention than developed markets or larger emerging markets. These risks can result in the potential for extreme price volatility and illiquidity.
| A principal risk of the Acquiring Fund. Not a principal risk of the Target Fund. | |||
Portfolio Turnover Rate | The Fund’s annual portfolio turnover rate is expected to exceed 200%. This type of fund generally has high | Not a principal risk of the Target Fund. | A principal risk of the Acquiring Fund. Not a principal risk of the |
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| Target Fund | Acquiring Fund | How They Compare | |||
portfolio turnover that necessarily results in greater transaction costs and causes more short-term capital gains (or losses) to be realized. Distributions to shareholders of short-term capital gains are taxed as ordinary income under federal income tax laws.
| Target Fund. |
The Target Fund’s investment objective is capital appreciation. The Acquiring Fund’s investment objectives are to seek capital appreciation and income. The investment objective of each Fund may be changed without shareholder approval upon at least 60 days advance notice to shareholders of the applicable Fund.
Principal Investment Strategies
Although the Funds both invest primarily in equity securities, there are some differences in their principal investment strategies. The following table compares the principal investment strategies between the Funds.
Target Fund Principal Investment Strategy: | Acquiring Fund Principal Investment Strategy: | Differences | ||
The Target Fund invests primarily in equity securities by maintaining long equity positions and short equity positions. | The Acquiring Fund invests primarily in equity securities of foreign and domestic companies. | Materially Different. The Target Fund maintains short positions as a principal investment strategy while the Acquiring Fund does not, and the Acquiring Fund buys stock of foreign and domestic companies as a principal investment strategy. | ||
The Target Fund may at any time have either a net long exposure or a net short exposure to the equity markets. The Target Fund will not be managed to maintain either net long or net short market exposure. | None. | Materially Different. The Acquiring Fund will not a have a net short exposure as a principal investment strategy. | ||
The Fund seeks to achieve higher risk-adjusted returns with lower volatility compared to the equity markets in general (as represented by the S&P 500 Index). | None. | Materially Different. The Acquiring Fund does not seek to achieve risk adjusted returns or lower volatility than the market in general. | ||
Foreign Securities: | Foreign Securities: | |||
Not a principal investment strategy of the Fund. | Under normal market conditions, the Advisor will invest the Acquiring Fund’s net assets primarily in the equity securities of foreign and domestic companies of all market capitalizations. | Materially Different. The Acquiring Fund invests in equity securities of foreign companies as a principal investment strategy and the Target Fund does not invest in foreign companies as a principal investment strategy. |
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Target Fund Principal Investment Strategy: | Acquiring Fund Principal Investment Strategy: | Differences | ||
The Fund will typically invest in securities issued by companies domiciled in at least three countries, including the United States. The Fund will invest a significant portion of its total assets in companies domiciled in foreign countries (under normal market conditions, at least 40% of its assets will be invested outside the United States or if conditions are not favorable, 30% of its assets will be invested outside the United States). Securities issued by foreign companies incorporated outside the U.S. whose securities are principally traded in the United States are not defined as “foreign companies” and are not subject to this limitation. | ||||
Emerging and Frontier Markets: | Emerging and Frontier Markets: | |||
Not a principal investment strategy of the Fund. | The Acquiring Fund may invest a significant amount of its total assets (5% to 50% under normal market conditions) at the time of purchase in securities issued by companies domiciled in emerging and frontier markets, which are those countries currently included in the Morgan Stanley Capital International (MSCI) EFM (Emerging + Frontier Markets) Index. These companies typically are located in the Asia-Pacific region, Eastern Europe, the Middle East, Central and South America, and Africa. | Materially Different. The Acquiring Fund is permitted to invest a significant amount of its total assets in companies domiciled in emerging and frontier markets as a principal investment strategy, and the Target Fund is permitted to, but does not invest in such companies as a principal investment strategy. | ||
Market Capitalization: | Market Capitalization: | |||
Under normal market conditions, the Advisor will invest the Target | The Acquiring Fund may invest in the equity securities of | Similar. Although the Target Fund has a minimum market capitalization |
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Target Fund Principal Investment Strategy: | Acquiring Fund Principal Investment Strategy: | Differences | ||
Fund’s assets in the equity securities of companies with market capitalizations (the total market value of the shares outstanding) of at least $100 million at the time of purchase that we have identified as being undervalued (long equity positions) and we will sell short those securities (short equity positions) that we have identified as being overvalued. | companies of any size, although the Advisor expects a significant portion of the Fund’s assets to be invested in companies with market capitalizations (the total market value of the shares outstanding) of over US $5 billion at the time of purchase. | requirement of US $100 million for eligible investments, and the Acquiring Fund may invest in companies of any size, but is expected to invest a significant portion of the Fund’s assets in companies with a market capitalization of over US $5 billion at the time of purchase, both Funds have historically generally invested in companies with a market capitalization of over US $5 billion at the time of purchase. | ||
Early Stage Companies and IPOs: | Early Stage Companies and IPOs: | |||
The Target Fund may invest in early stage companies and initial public offerings (IPOs) as a principal investment strategy. | Not a principal investment strategy of the Fund . | Materially Different. Both Funds are permitted to purchase IPOs. The Target Fund may invest in IPOs and early stage companies as a principal investment strategy, and the Acquiring Fund may invest in IPOs, but does not do so as a principal investment strategy. | ||
Fixed Income Securities: | Fixed Income Securities: | |||
The Target Fund may invest in fixed-income securities of any maturity consisting of corporate notes, bonds and debentures, including those that are rated less than investment grade at the time of purchase. | The Acquiring Fund may invest in investment grade fixed-income securities, but not as a principal investment strategy. | Materially Different. The Target Fund is permitted to invest in fixed income securities, including those rated less than investment grade , or “junk bonds,” as a principal investment strategy. The Acquiring Fund is not permitted to invest in fixed income securities as a principal investment strategy and is permitted to invest only in investment grade fixed income securities. | ||
Sector Weightings: | Sector Weightings: | |||
The Target Fund may invest a large percentage of its assets in a few sectors, including consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, telecommunications, and utilities. | The Acquiring Fund may invest a large percentage of its assets in a few sectors, including consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, telecommunications, and | Same. Both Funds are permitted to invest a large percentage of their assets in a few sectors. |
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Target Fund Principal Investment Strategy: | Acquiring Fund Principal Investment Strategy: | Differences | ||
utilities. | ||||
Portfolio Turnover: | Portfolio Turnover: | |||
The Target Fund is expected to have a high portfolio turnover rate. | The Acquiring Fund is not expected to have a high turnover rate. | Materially Different. The Acquiring Fund is expected to have low portfolio turnover rate and the Target Fund expects a high turnover rate. | ||
Diversification: | Diversification: | |||
The Target Fund is a diversified fund under the 1940 Act. | The Acquiring Fund is a diversified fund under the 1940 Act. | Same. Both Funds are diversified Funds under the 1940 Act. | ||
Temporary Defensive Positions: | Temporary Defensive Positions: | |||
The Target Fund may from time to time take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in an attempt to respond to adverse market, economic, political or other conditions. | The Acquiring Fund may from time to time take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in an attempt to respond to adverse market, economic, political or other conditions. | Same. Both Funds may take temporary defensive positions that are inconsistent with the Funds’ strategies. |
Target Fund
In managing the Target Fund, the Advisor believes that the best opportunities to make both short and long equity investments are when the market’s perception of the values of individual companies (measured by the stock price) differs widely from our assessment of the intrinsic values of such companies. When evaluating a potential long or short investment for the Target Fund, the Advisor employs a comprehensive valuation analysis intended to establish a range for fair valuation or intrinsic company value, with a particular emphasis on company fundamentals. The Advisor believes opportunities to buy stocks or sell stocks short arise due to a variety of market inefficiencies, including:
● | Changes in market participant psychology and circumstances. |
● | Imperfect information. |
● | Forecasts and projections by Wall Street analysts and company representatives that differ from experienced reality. |
When evaluating long investments, we typically look for stocks that are appropriately valued or undervalued based on our analysis.
When evaluating a short investment, we typically look for signs of current overvaluation. For example, we look for companies that we believe:
● | Have earnings that appear to be reflected in the current stock price. |
● | Are likely to fall short of market expectations. |
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● | Are in industries that exhibit weakness. |
● | Have poor management. |
● | Are likely to suffer an event affecting long-term earnings. |
Acquiring Fund
To achieve the Acquiring Fund’s investment objectives, the Acquiring Fund invests in securities that the Advisor believes are priced below their intrinsic long- term value based on our valuation analysis.
When evaluating a potential investment for the Acquiring Fund, the Advisor employs a comprehensive valuation analysis intended to establish a range for fair valuation or intrinsic company value, with a particular emphasis on company fundamentals. The initial valuation review may include:
● | Calculating and reviewing standard ratios, such as price-to-sales, price-to-book, price-to-earnings, and price/earnings-to-growth. |
● | Discounted cash flow models with sensitivity analysis for changes to revenue growth rates, operating margins, outstanding share counts, earnings multiples, and tangible book value. |
The Acquiring Fund typically seeks to sell a security when the issuing company becomes overvalued relative to our analysis of its intrinsic long-term value.
In evaluating the Reorganization, shareholders should consider the risks of investing in the Acquiring Fund. The principal risks of investing in the Acquiring Fund are described in the section above entitled “Risk Factors.”
The tables below describe the fees and expenses that you may pay if you buy, sell or hold each class of shares of the Funds and the pro forma fees and expenses of the combined fund. Shareholder fees reflect the fees currently in effect for each Fund. Pro forma numbers are estimated and therefore actual expenses may vary. The pro forma fees and expenses of the combined fund are based on the amounts shown in the table for each Fund, which reflect the unaudited annualized expenses for each Fund as of March 31, 2018.
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. The average net assets of the Acquiring Fund Institutional Class were only $4.6 million for the six months ended March 31, 2018. The cost of class specific expenses such as federal and state registration fees amounted to higher expenses in basis points for such class because of its small net assets. After the Reorganization, however, the pro forma gross and net expenses of the combined fund with the larger asset base are expected to be lower than the gross and net expenses of both classes of the Target Fund.
Shareholder Fees
(fees paid directly from your investment)
Target Fund | Acquiring Fund | Pro Forma Acquiring Fund | ||||||||||
Maximum Sales Charge (Load) Imposed on | ||||||||||||
Investor Class | None | None | None | |||||||||
Institutional Class | None | None | None | |||||||||
Redemption Fee (as a % of amount redeemed | ||||||||||||
Investor Class | 2.00 | % | 2.00 | % | 2.00 | % |
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Target Fund | Acquiring Fund | Pro Forma Acquiring Fund | ||||||||||
Institutional Class | 2.00 | % | 2.00 | % | 2.00 | % | ||||||
Exchange Fee | ||||||||||||
Investor Class | None | None | None | |||||||||
Institutional Class | None | None | None | |||||||||
Maximum Account Fee | ||||||||||||
Investor Class | None | None | None | |||||||||
Institutional Class | None | None | None |
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
Target Fund | Acquiring Fund | Pro Forma Acquiring Fund a(1) | ||||||||||
Management Fees | ||||||||||||
Investor Class | 1.10 | % | 0.90 | % | 0.90 | % | ||||||
Institutional Class | 1.10 | % | 0.90 | % | 0.90 | % | ||||||
Distribution and Service (12b-1) Fees | ||||||||||||
Investor Class | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
Institutional Class | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
Other Expenses | ||||||||||||
Investor Class | 0.55 | % | 0.28 | % | 0.30 | % | ||||||
Institutional Class | 0.46 | % | 0.63 | % | 0.23 | % | ||||||
Interest Expenses & Dividends on Securities Sold Short | ||||||||||||
Investor Class | 0.26 | % | 0.00 | % | 0.00 | % | ||||||
Institutional Class | 0.21 | % | 0.00 | % | 0.00 | % | ||||||
Total Annual Fund Operating Expenses | ||||||||||||
Investor Class | 1.91 | % | 1.18 | % | 1.20 | % | ||||||
Institutional Class | 1.77 | % | 1.53 | % | 1.13 | % | ||||||
Fee Waivers and/or Expense Reimbursements | ||||||||||||
Investor Class | (0.05 | )%2 | (0.08 | )%4 | (0.10 | )% | ||||||
Institutional Class | (0.41 | )%3 | (0.58 | )%5 | (0.18 | )% | ||||||
Total Annual Fund Operating Expenses – After Fee Waivers and/or Expense Reimbursements | ||||||||||||
Investor Class | 1.86 | % | 1.10 | % | 1.10 | % | ||||||
Institutional Class | 1.36 | % | 0.95 | % | 0.95 | % |
(1) | Pro forma expenses do not include the expenses to be charged to the Funds in connection with the Reorganization. See “The Proposed Reorganization—Reorganization Expenses” for additional information about these expenses. |
(2) | Wasatch Advisors, Inc. (Advisor) has contractually agreed to reimburse the Investor Class shares of the Target Fund for Total Annual Fund Operating Expenses in excess of 1.60% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Fund may only make repayments to the Advisor for amounts reimbursed if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. Shareholder expenses will increase if the Advisor does not renew the contractual expense cap after its expiration date. |
(3) | The Advisor, has contractually agreed to reimburse the Institutional Class shares of the Target Fund for Total Annual Fund Operating Expenses in excess of 1.15% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Fund may only make repayments to the Advisor for amounts reimbursed if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. Shareholder expenses will increase if the Advisor does not renew the contractual expense cap after its expiration date. |
(4) | The Advisor has contractually agreed to reimburse the Investor Class shares of the Acquiring Fund for Total Annual Fund Operating Expenses in excess of 1.10% of average daily net assets until at least January 31, 2020 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other |
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expenses not incurred in the ordinary course of business). The Fund may only make repayments to the Advisor for amounts reimbursed if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. Shareholder expenses will increase if the Advisor does not renew the contractual expense cap after its expiration date. |
(5) | The Advisor has contractually agreed to reimburse the Institutional Class shares of the Acquiring Fund for Total Annual Fund Operating Expenses in excess of 0.95% of average daily net assets until at least January 31, 2020 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Fund may only make repayments to the Advisor for amounts reimbursed if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. Shareholder expenses will increase if the Advisor does not renew the contractual expense cap after its expiration date. |
The examples below are intended to help you compare the cost of investing in each Fund and the pro forma cost of investing in the combined fund. The examples assume you invest $10,000 in a Fund for the time periods indicated (based on information in the tables above) and then either redeem or do not redeem your shares at the end of a period. The examples assume that your investment has a 5% return each year and that a Fund’s expenses remain at the level shown in the table above. For purposes of calculating the impact of each Fund’s and the Acquiring Fund’s Pro Forma fee waivers and expense reimbursements in the examples below, the fee waivers and expense reimbursements are taken into account for the periods stated below as of the effective date of this registration statement. These amounts are estimated; actual operating expenses will vary based on asset size and other factors.
The examples below assume that you sell your shares at the end of a period, but the estimated costs are the same if you do not sell your shares at the end of a period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Estimated Costs Assuming You Sold Your Shares at the End of the Period
Target Fund | Acquiring Fund | Pro Forma Acquiring Fund | ||||||||||
1 Year | ||||||||||||
Investor Class | $ 191 | $ 112 | $ 112 | |||||||||
Institutional Class | $ 156 | $ 97 | $ 97 | |||||||||
3 Years | ||||||||||||
Investor Class | $ 597 | $ 363 | $ 365 | |||||||||
Institutional Class | $ 534 | $ 393 | $ 331 | |||||||||
5 Years | ||||||||||||
Investor Class | $1,029 | $ 638 | $ 644 | |||||||||
Institutional Class | $ 937 | $ 747 | $ 594 | |||||||||
10 Years | ||||||||||||
Investor Class | $2,230 | $1,422 | $1,440 | |||||||||
Institutional Class | $2,063 | $1,744 | $1,349 |
The total returns of each Fund for the periods ended December 31, 2017, based on historical fees and expenses for each period, are set forth in the bar charts and tables below.
Target Fund
The Target Fund commenced operations on December 15, 2008, upon the reorganization of the 1st Source Monogram Long/Short Fund (the “Predecessor Fund”), into the Target Fund. As a result of the reorganization, the Target Fund assumed the financial and performance history of the Predecessor Fund. Accordingly, the performance information below prior to December 15, 2008 reflects the performance of the Predecessor Fund which was advised
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by a different advisor and subject to different expenses as a result and may have produced different investment results. The lead portfolio manager of the Fund through 2016, however, was also the portfolio manager of the Predecessor Fund.
The following tables provide information on how the Target Fund has performed over time. The past performance, before and after taxes, of the Target Fund’s is not necessarily an indication of how these shares will perform in the future. The bar chart below is intended to provide you with an indication of the risks of investing in the Target Fund by showing changes in the Target Fund’s performance from year to year, as represented by the Investor Class of the Target Fund. The performance of the Institutional Class will differ due to different expense structures. The table below is designed to help you evaluate your risk tolerance by showing the best and worst quarterly performance of the Fund’s Investor Class for the calendar years shown in the bar chart. The average annual total returns table allows you to compare the Target Fund’s performance over the time periods indicated to the primary benchmark (the S&P 500 Index), which reflects the effects of general stock market risk, and to a secondary benchmark (the Citigroup U.S. Domestic 3-Month U.S. Treasury Bills Index), which reflects short-term interest rates and is usually free from the risk of principal fluctuation. After-tax returns are shown only for Investor Class shares; after-tax returns for Institutional Class shares will vary. Performance information is updated regularly and is available on the Target Fund’s website www.WasatchFunds.com.
Target Fund—Investor Class*
Year by Year Total Returns
* | The performance of the Institutional Class share will differ due to a different expense structure. |
Year-to-date Return
6/30/18 -2.15%
Best and Worst Quarterly Returns – Investor Class
Best — 6/30/2009 | 16.00% | |
Worst — 12/31/2008 | -15.94% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years | Since Inception 12/13/12 (Institutional Class) | ||||||||||||
Target Fund — Investor Class | ||||||||||||||||
Return Before Taxes | -2.11 | % | 2.42 | % | 3.44 | % | — | |||||||||
Return After Taxes on Distributions | -2.11 | % | 1.54 | % | 2.88 | % | — | |||||||||
Return After Taxes on Distributions and Sale of Fund Shares | -1.19 | % | 1.83 | % | 2.64 | % | — |
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Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years | Since Inception 12/13/12 (Institutional Class) | ||||||||||||
Target Fund – Institutional Class | ||||||||||||||||
Return Before Taxes | -1.80 | % | 2.66 | % | — | 2.76 | % | |||||||||
S&P 500 Index (reflects no deductions for fees, expenses or taxes) | 21.83 | % | 15.79 | % | 8.50 | % | 15.62 | % | ||||||||
Citigroup U.S. Domestic 3-Month Treasury Bills Index (reflects no deductions for fees, expenses or taxes) | 0.84 | % | 0.24 | % | 0.34 | % | 0.24 | % |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns are not relevant to investors who hold Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
The Fund’s returns after taxes on distributions and sale of Fund shares may be higher than returns before taxes and after taxes on distributions because they include the effect of a tax benefit an investor may receive from the capital losses that would have been incurred.
Acquiring Fund
The Acquiring Fund commenced operations on December 15, 2008 upon the reorganization of the 1st Source Monogram Income Equity Fund (the “Predecessor Fund”) into the Acquiring Fund. As a result of the reorganization, the Acquiring Fund assumed the financial and performance history of the Predecessor Fund. Accordingly, the performance information below prior to December 15, 2008 reflects the performance of the Predecessor Fund which was advised by a different advisor and had different expenses and as a result may have produced different investment results. Effective October 31, 2017, the Acquiring Fund changed its principal investment strategy and correspondingly updated its name and changed its comparison benchmark index to reflect the change in principal investment strategy. The Acquiring Fund formerly had been a large cap value fund investing primarily in the equity securities of domestic companies with a market capitalization of $5 billion at time of purchase and as of February 2017, the Acquiring Fund adopted an investment policy permitting it to invest up to 20% of its total assets in the securities issued by foreign companies in developed or emerging markets. The Acquiring Fund sought to further expand its foreign investment exposure becoming a global value fund as of October 31, 2017. Accordingly, the performance information prior to such date would be for the prior investment strategy and would not reflect the current investment strategy.
The following tables provide information on how the Acquiring Fund has performed over time. The past performance, before and after taxes, of the Acquiring Fund is not necessarily an indication of how these shares will perform in the future. The bar chart below is intended to provide you with an indication of the risks of investing in the Acquiring Fund by showing changes in the Acquiring Fund’s performance from year to year, as represented by the Investor Class of the Acquiring Fund. The performance of the Institutional Class will differ due to different expense structures. The table below is designed to help you evaluate your risk tolerance by showing the best and worst quarterly performance of the Acquiring Fund’s Investor Class for the years shown in the bar chart. The average annual total returns table below allows you to compare the Acquiring Fund’s performance over the time periods indicated to that of a broad-based market index. After-tax returns are shown only for Investor Class shares; after-tax returns for Institutional Class shares will vary. Performance information is updated regularly and is available on the Acquiring Fund’s website www.WasatchFunds.com.
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Acquiring Fund—Investor Class*
Year by Year Total Returns
* | The performance of the Institutional Class share will differ due to a different expense structure. |
Year-to-date Return
6/30/18 -0.51%
Best and Worst Quarterly Returns – Investor Class
Best — 6/30/2009 | 14.66% | |
Worst — 12/31/2008 | -19.38% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years | Since Inception 1/31/12 Class) | ||||||||||||
Acquiring Fund — Investor Class | ||||||||||||||||
Return Before Taxes | 11.21% | 10.84% | 5.40% | — | ||||||||||||
Return After Taxes on Distributions | 7.34% | 6.21% | 2.96% | — | ||||||||||||
Return After Taxes on Distributions and Sale of Fund Shares | 9.37% | 7.96% | 3.92% | — | ||||||||||||
Acquiring Fund – Institutional Class | ||||||||||||||||
Return Before Taxes | 11.51% | 10.98% | — | 10.24% | ||||||||||||
MSCI ACWI Index*† (reflects no deductions for fees, expenses or taxes) | 23.97% | 10.80% | 4.65% | 10.85% | ||||||||||||
Russell 1000® Value Index** (reflects no deductions for fees, expenses or taxes) | 13.66% | 14.04% | 7.10% | 14.09% |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns are not relevant to investors who hold Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
The Fund’s returns after taxes on distributions and sale of Fund shares may be higher than returns before taxes and after taxes on distributions because they include the effect of a tax benefit an investor may receive from the capital losses that would have been incurred.
*The MSCI ACWI(All Country World Index) is a broad-based market index that captures large and mid-cap representation across 23 developed markets and 23 emerging markets countries.
†Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI.
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** The Russell 1000 Value Index® is a market-capitalization weighted index of those firms in the Russell 1000 with lower price-to-book ratios and lower forecasted growth values. Consistent with the name and strategy change, effective October 31, 2017, the Fund’s primary benchmark index changed from the Russell 1000 Value Index® to the MSCI ACWI Index. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Each Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect a Fund’s performance. During their most recent fiscal years, the Funds had the following portfolio turnover rates:
Fund | Fiscal Year | Rate | ||||||
Target Fund | 9/30/17 | 40 | % | |||||
Acquiring Fund | 9/30/17 | 44 | % |
Fundamental Investment Restrictions and Non-Fundamental Restrictions
Except for fundamental investment restriction 1, below the Funds have the same fundamental investment restrictions listed below, which cannot be changed without shareholder approval.
Each Fund may not:
1. | Purchase securities of any one issuer, other than obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities and repurchase agreements secured by such obligations, if, immediately after such purchase, more than 5% of the Fund’s total assets would be invested in such issuer or the Fund would hold more than 10% of the outstanding voting securities of such issuer, except that up to 25% of the Fund’s total assets may be invested without regard to such limitations. There is no limit to the percentage of assets that may be invested in U.S. Treasury bills, notes, or other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities or repurchase agreements secured by such obligations. (This restriction does not apply to the Target Fund). |
2. | Purchase any securities which would cause more than 25% of the Fund’s total assets at the time of purchase to be invested in securities of one or more issuers conducting their principal business activities in the same industry; provided that (a) there is no limitation with respect to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities and repurchase agreements secured by such obligations; (b) wholly owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of their parents; and (c) utilities will be divided according to their services. For example, gas, gas transmission, electric and gas, electric, and telephone will each be considered a separate industry. |
3. | Borrow money or issue senior securities except as and to the extent permitted by the 1940 Act or any rule, order or interpretation thereunder. |
4. | Make loans, except that each Fund may purchase or hold debt instruments and lend portfolio securities in accordance with its investment objectives and policies, make time deposits with financial institutions, and enter into repurchase agreements. |
5. | Purchase securities on margin, except for use of short-term credit necessary for clearance of purchases of portfolio securities and except as may be necessary to make margin payments in connection with derivative securities transactions. |
6. | Underwrite the securities issued by other persons, except to the extent that the Fund may be deemed to be an underwriter under certain securities laws in the disposition of “restricted securities.” |
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7. | Purchase or sell real estate (although investments in marketable securities of companies engaged in such activities and securities secured by real estate or interests therein are not prohibited by this restriction). |
8. | Purchase or sell commodities or commodities contracts, except to the extent disclosed in the current Prospectus of the Fund. |
The following restrictions are non-fundamental and may be changed by the Trust’s Board of Trustees without shareholder vote.
Each Fund will not:
1. | Invest in other investment companies except to the extent permitted by the 1940 Act, or any rules or regulations thereunder, and any exemptive relief granted by the SEC upon which the Fund can rely. |
2. | Purchase or sell interests in oil, gas or other mineral exploration or development programs, although they may invest in securities of issuers which invest in or sponsor such programs. |
3. | Invest more than 15% of its net assets at the time of purchase in all forms of illiquid investments, as determined pursuant to applicable SEC rules and interpretations. |
4. | Mortgage or hypothecate the Fund’s assets in excess of one-third of the Fund’s total assets. |
The Acquiring Fund will not:
1. | Make investments for the purpose of exercising control or management. |
2. | Invest more than 10% of its total assets (taken at market value at the time of each investment) in Special Situations, (i.e., companies in the process of reorganization or buy-out). |
If any percentage restriction or requirement described above is satisfied at the time of investment, a later increase or decrease in such percentage resulting from a change in asset value will not constitute a violation of such restriction or requirement, except that any borrowing by a Fund that exceeds the investment restriction stated above must be reduced to meet such limitations within the period required by the 1940 Act (currently three days, excluding Sundays and holidays). However, should a change in net asset value or other external events cause a Fund’s investments in illiquid securities, repurchase agreements with maturities in excess of seven days and other instruments in such Fund which are not readily marketable to exceed the limit set forth in such Fund’s Prospectus or herein for its investment in illiquid securities, the Fund will act to cause the aggregate amount of such securities to come within such limit as soon as reasonably practicable.
Any investment restriction or limitation, fundamental or otherwise, appearing in the Funds’ Prospectus or Statement of Additional Information (“SAI”), which involves a maximum percentage of securities or assets shall not be considered to be violated unless an excess over the percentage occurs immediately after an acquisition of securities or utilization of assets, and such excess results therefrom.
The Advisor is responsible for making investment decisions, providing certain administrative services and managing the business affairs for the Funds under an advisory and service contract with the Trust on behalf of the respective Funds. The Advisor, organized in September 1975, has been in the business of investment management since November 1975, and had total assets under management, including the assets of the Funds, of approximately $17.2 billion as of June 30, 2018. In December 2007, the Advisor created WA Holdings, Inc. to act as a holding company of the Advisor. The Advisor is a wholly-owned subsidiary of WA Holdings, Inc., which is 100% owned by the employees of the Advisor. The Advisor and the Trust are located at 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84108.
Eric S. Bergeson is President of Wasatch Funds Trust and an Officer and Director of the Advisor. The principal executive officers and directors of the Advisor are Roger D. Edgley, Director; Michael K. Yeates, Chief
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Financial Officer and Treasurer, Vice President and Director; JB Taylor, Chief Executive Officer and Director; and Daniel D. Thurber, General Counsel, Vice President, Secretary and Chief Compliance Officer.
David Powers, CFA, has been the lead portfolio manager for the Global Value Fund (formerly, the Large Cap Value Fund) since August 19, 2013, and the lead portfolio manager for the Long/Short Fund since October 5, 2017 and the sole portfolio manager of the Long/Short Fund since November 13, 2017. Mr. Powers has many years of investment experience, most recently serving as a portfolio manager with Eagle Asset Management. Prior to joining Eagle, he worked as a portfolio manager with ING Investment Management, where he was responsible for the ING Large Cap Value Fund from 2007 through 2012. While at ING, Mr. Powers also worked as a senior sector analyst covering telecommunication services, utilities, energy and materials. His experience includes several senior investment positions with Federated Investors from 2001 through 2007. Mr. Powers began his investment career at the State Teachers Retirement System of Ohio. He holds a Bachelor of Science in Accounting from Fairleigh Dickinson University and a Master’s degree in Accounting and earned a Master of Business Administration from Kent State University. Mr. Powers serves as a portfolio manager for the Acquiring Fund and will continue to serve as a portfolio manager for the Acquiring Fund upon completion of the Reorganization.
For a complete description of the advisory services provided to each Fund, see the section of each Fund’s Prospectus entitled “Management-Portfolio Managers” and the sections of the Funds’ Statement of Additional Information for the applicable share class entitled “Investment Advisory and Other Services-Investment Advisor”. Additional information about the portfolio manager compensation structure, other accounts managed by the portfolio managers and the portfolio managers’ ownership of securities in the Funds is provided in the respective Fund’s Statement of Additional Information for the applicable share class.
Pursuant to the advisory and service contract between Wasatch and the Trust, on behalf of the Funds, each Fund currently pays the Advisor a monthly fee computed on average daily net assets as set forth below:
Management Fees | Target Fund | Acquiring Fund | ||
Investor Class | 1.10% | 0.90% | ||
Institutional Class | 1.10% | 0.90% |
The pro forma net assets of the combined fund as of March 31, 2018 are an assumed $237 million.
Information regarding the basis for the Board of Trustees’ approval of the investment advisory agreement with the Advisor at its meeting held on November 7-8, 2017 is be available in the Funds’ semi-annual report dated March 31, 2018.
Wasatch has contractually agreed to reimburse the Investor Class shares and Institutional Class shares of the Target Fund for Total Annual Fund Operating Expenses in excess of 1.60% and 1.15%, respectively, of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Fund may only make repayments to the Advisor for amounts reimbursed if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date.
Wasatch has contractually agreed to reimburse the Investor Class shares and Institutional Class shares of the Acquiring Fund for Total Annual Fund Operating Expenses in excess of 1.10% and 0.95%, respectively, of average daily net assets until at least January 31, 2020 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary
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expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Fund may only make repayments to the Advisor for amounts reimbursed if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. Shareholder expenses will increase if the Advisor does not renew the contractual expense cap after its expiration date.
For a complete description of each Fund’s distribution and service arrangements, see the section of the respective Fund’s Prospectus for the applicable share class entitled “Wasatch Funds-Account Policies” and the section of the respective Fund’s Statement of Additional Information for the applicable share class entitled “Other Information.”
The management of each Fund, including general oversight of the duties performed by the Advisor under the Advisory and Service Contract for each Fund, is the responsibility of the Board of Trustees. Each Fund has the same individuals serving as Trustees and officers. As of the date of this Proxy Statement/Prospectus, there are four members of the Board of Trustees, all of whom are not “interested persons” as that term is defined in the 1940 Act (the “Independent Trustees”).
The names and business addresses of the Trustees and officers of the Trust and their principal occupations and other affiliations during the past five years are set forth below.
Name, Address and Age | Position(s) Held or to be Held with the Trust | Term of Office1 and Length of Time Served | Principal Occupation(s) during Past 5 Years | Number of Portfolios in Fund Complex Overseen or to Be Overseen by Trustee | Other Directorships Held by Trustee2 | |||||
Independent Trustees | ||||||||||
James U. Jensen, J.D., MBA 505 Wakara Way, 3rd Floor Salt Lake City, Utah 84108 Age 74 | 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. | 18 | 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; and Director of the University of Utah Research Foundation since 1998. |
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Name, Address and Age | Position(s) Held or to be Held with the Trust | Term of Office1 and Length of Time Served | Principal Occupation(s) during Past 5 Years | Number of Portfolios in Fund Complex Overseen or to Be Overseen by Trustee | Other Directorships Held by Trustee2 | |||||
Miriam M. Allison 505 Wakara Way, 3rd Floor Salt Lake City, Utah 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.
| 18 | Director, Northwestern Mutual Series Fund, Inc. (27 portfolios) since 2006.
| |||||
Heikki Rinne 505 Wakara Way, 3rd Floor Salt Lake City, Utah 84108 Age 66 | Trustee | 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.
| 18 | Director, Halton Group Ltd. since 2016. | |||||
Kristen M. Fletcher 505 Wakara Way 3rd Floor Salt Lake City, Utah 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 – 2012; Chairman and CEO, ABN AMRO, Inc. and U.S. Country Representative, ABN AMRO Bank, NV from 2002-2004. | 18 | Director, Youth Sports Alliance since 2015; Trustee, Woodlands Commercial Bank (a/k/a Lehman Brothers Commercial Bank) 2009 – 2012; Director Emeritus, Utah Symphony/Utah Opera since September 2017; and Director, Utah Symphony/Utah Opera from 2005-September 2017. |
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. 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. |
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Officers
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 | |||
Eric S. Bergeson 505 Wakara Way, 3rd Floor Salt Lake City, Utah 84108 Age 52 | President | Indefinite
Served as President since May 2018
| President for the Trust since May 2018; President of the Advisor since January 2017; and Vice President of Institutional Sales for the Advisor since June 1998.
| |||
Russell L. Biles 505 Wakara Way, 3rd Floor Salt Lake City, Utah 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 the Trust since February 2007; Secretary for the Trust since November 2008; and Counsel for the Advisor since October 2006. | |||
Michael K. Yeates 505 Wakara Way, 3rd Floor Salt Lake City, Utah 84108 Age 35 | Treasurer | Indefinite
Served as Treasurer since May 2018
| Treasurer for the Trust since May 2018; and Chief Financial Officer of the Advisor since September 2007. | |||
David Corbett 505 Wakara Way, 3rd Floor Salt Lake City, Utah 84108 Age 45 | Assistant Vice President | Indefinite
Served as Assistant Vice President since August 2012
| Assistant Vice President for the Trust since August 2012; and Director of Mutual Fund Services for the Advisor since June 2007. | |||
Cheryl Reich 505 Wakara Way, 3rd Floor Salt Lake City, Utah 84108 Age 34 | Assistant Secretary | Indefinite
Served as Assistant Secretary since February 2017 | Assistant Secretary for the Trust since February 2017; Compliance Associate for the Advisor since September 2012; and Branch Manager for Investment Planning Counsel Corp. since November 2009.
| |||
Kara H. Becker 505 Wakara Way, 3rd Floor Salt Lake City, Utah 84108 Age 34 | Assistant Treasurer | Indefinite
Served as Assistant Treasurer since May 2018 | Assistant Treasurer for the Trust since May 2018; and Controller for the Advisor since January 2012. |
Distribution, Purchase, Redemption, Exchange of Shares and Dividends
The Target Fund and the Acquiring Fund each currently offer two classes of shares: Investor Class and Institutional Class shares. You may purchase, redeem or exchange shares of the Funds on any business day, which is any day on which the New York Stock Exchange is open for business. You may purchase, redeem or exchange shares of the Funds through a financial advisor or other financial intermediary or directly from such Fund. No initial sales charge or contingent deferred sales charges will be imposed on shares of the Acquiring Fund received or shares of the Target Fund exchanged in connection with the Reorganization. The Acquiring Fund’s initial and subsequent investment minimums generally are as set forth in the table below, although the Fund may reduce or waive the minimums for any reason. The Acquiring Fund will waive the initial investment minimum for the applicable share class of the Target Fund shareholders who receive shares in connection with the Reorganization. The Target Fund’s investment minimums are identical to those of the Acquiring Fund for each respective share class as outlined below.
Investor Class | Institutional Class | |||||
Investment Minimums | ||||||
New Accounts | $2,000 | $100,000* | ||||
New Accounts with Automatic Investment Plan | $1,000 | $100,000* |
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Investor Class | Institutional Class | |||||
Individual Retirement Accounts (IRAs) | $2,000 | $100,000* | ||||
Coverdell Education Savings Account | $1,000 | — | ||||
Minimum including IRAs | $100,000* | |||||
Subsequent Purchases (other than reinvestment of dividends, minimum for subsequent investments) | ||||||
Regular Accounts and IRAs | $100 | $5,000* | ||||
Automatic Investment Plan | $50 per month and/or $100 per quarter | $5,000* |
*As noted, the Acquiring Fund may reduce or waive the investment minimums for any reason, including for accounts opened by qualified retirement or profit sharing plans held through third party service providers or record keepers, and/or omnibus accounts established by financial intermediaries where such financial intermediary can demonstrate to the satisfaction of a Fund officer or authorized Advisor employee at the time the account is opened that its investment in the Fund is expected to meet the stated investment minimum within a reasonable time period. Investors and/or Registered Investment Advisors (RIAs) and Broker-Dealers may generally meet the minimum investment amount at the time an account is opened by aggregating multiple accounts with common ownership or discretionary control within the Fund. Requests for waivers may be made to a Fund officer or authorized Advisor employee through the Funds’ transfer agent.
Shareholders of each Fund are eligible to exchange their shares for shares of the same class of another Wasatch mutual fund available in the shareholder’s state. Shares of a class held by any shareholder of a Fund who is eligible to hold shares of another class of the same or another Wasatch Fund may be exchanged upon the shareholder’s request on the basis of the relative NAV of the class held and the class to be purchased. Such exchanges may result in taxable gain or loss to the shareholder. The exchange of Target Fund shares for Acquiring Fund shares in the Reorganization will not result in taxable gain or loss to the shareholder.
For a complete description of purchase, redemption and exchange options as well as pricing of the Fund shares, see the sections of the respective Funds’ Prospectus for the applicable share class entitled “Wasatch Funds Shareholders Guide” and “Wasatch Funds-Account Policies, Wasatch Funds-Account Policies-Purchasing Shares, Wasatch Funds-Account Policies-Selling (Redeeming Shares) and Wasatch Funds-Account Policies-Exchanging Shares” and the section of the respective Fund’s Statement of Additional Information for the applicable share class entitled “Purchase, Redemption and Pricing of Securities Being Offered.”
The Target Fund normally declares and pays dividends from net investment income, if any, annually. The Acquiring Fund normally declares and pays dividends from net investment income, if any, quarterly. For each Fund, any net capital gains are normally distributed at least once a year. See the section of the respective Funds’ Prospectus for the applicable share class entitled “Wasatch Funds-Dividends, Capital Gain Distributions and Taxes” for additional information. If the Reorganization is approved by the Target Fund shareholders, the Target Fund intends to distribute to its shareholders, prior to the closing of the Reorganization, all its net investment income and net capital gains, if any, for the period ending on the Closing Date. See the section of the Proxy Statement/Prospectus entitled “Material Federal Income Tax Consequences,” which discusses such distributions in more detail.
The tax character of dividends and distributions will be the same regardless of whether they are paid in cash or reinvested in additional shares. The Funds’ dividends and distributions are taxable and will generally be taxed as ordinary income or capital gains, unless you are investing through a tax-advantaged account, such as an IRA or 401(k) plan (in which case you may be taxed upon withdrawal of your investment from such account). Unlike the Acquiring Fund, the Target Fund expected that as a result of its objectives and strategies, its distributions, if any, will consist primarily of capital gains.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Funds through a broker-dealer or other financial intermediary (such as a bank), the Advisor or its affiliates may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary or your individual financial advisor to recommend the Fund over another investment. Ask your individual financial advisor or visit your financial intermediary’s website for more information.
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Additional information concerning the Acquiring Fund and the Target Fund is contained in this Proxy Statement/Prospectus, and additional information regarding the Acquiring Fund is contained in the accompanying Acquiring Fund Prospectus for the respective share class. The cover page of this Proxy Statement/Prospectus describes how you may obtain further information.
Approval of the Proposed Reorganization by the Board of Trustees
The Advisor has proposed the Reorganization given the limited future growth prospects of the Target Fund and the economic infeasibility of the Target Fund over the long term in light of the costs associated with the continued operation of the Target Fund and the likely inability for it to attract assets in the foreseeable future. As part of its evaluation of the Target Fund, the Advisor proposed the Target Fund’s Reorganization into the Acquiring Fund because of, among other things, the similar valuation process used to evaluate potential investments despite differing investment strategies; the overlap in portfolio holdings; the relative performance of the Acquiring Fund compared to the Target Fund; the lower contractual management fees and lower estimated gross and net expense ratios (after taking into account the contractual expense caps) of the combined fund for both share classes; and the anticipated federal income tax-free nature of the proposed Reorganization.
At the November Meeting, the Advisor provided the Board of Trustees with information regarding the proposed Reorganization and potential alternatives to the proposed Reorganization. Prior to approving the Reorganization, the Independent Trustees reviewed and discussed the foregoing information with their independent legal counsel and with management, reviewed with independent legal counsel applicable law and their duties in considering such matters and met with independent legal counsel in a private session without management present. Based on the foregoing, the Board of Trustees considered the following factors, among others, in approving the Reorganization and recommending that shareholders of the Target Fund approve the Reorganization:
• The compatibility of the Funds’ investment objectives, principal investment strategies and related risks;
• The consistency of portfolio management;
• the Funds’ relative sizes;
• the relative investment performance of the Funds;
• the relative fees and expense ratios of the Funds, including the contractual expense cap on the combined fund’s expenses for both share classes;
• the anticipated federal income tax-free nature of the Reorganization;
• the expected costs of the Reorganization and the extent to which the Funds would bear any such costs;
• the terms of the Reorganization and whether the Reorganization would dilute the interests of the existing shareholders of the Target Fund;
• the effect of the Reorganization on shareholder rights;
• alternatives to the Reorganization; and
• any potential benefits of the Reorganization to the Advisor and its affiliates as a result of the Reorganization.
Compatibility of Investment Objectives, Principal Investment Strategies and Related Risks
In comparing the Funds, the Board of Trustees recognized the differences between the investment objectives and principal investment strategies of the Funds. The Board noted that the Target Fund’s investment objective is capital appreciation, whereas the investment objective of the Acquiring Fund is to seek capital appreciation and
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income. While the objectives of both Funds share a capital appreciation component, the Acquiring Fund’s objective also includes income.
The Board of Trustees further noted that both Funds invest primarily in equity securities but follow materially different investment strategies. The Independent Trustees recognized, in particular, the differences in the use of a short sale strategy and the exposure to foreign securities between the Funds. In this regard, the Target Fund is a long/short fund that pursues its investment objective by primarily investing in equity securities of domestic companies through long and short positions whereas the Acquiring Fund is a global value fund that invests primarily in equity securities of foreign and domestic companies through a long only portfolio. Unlike the Target Fund, the Acquiring Fund does not employ a short sale strategy as a principal investment strategy and therefore any protections or returns earned from the short strategy as well as any related principal risks will no longer be applicable under the combined fund. The Target Fund further seeks to achieve higher risk-adjusted returns with lower volatility compared to the equity markets (as represented by the S&P 500 Index) whereas the Acquiring Fund does not have a similar mandate. In addition, the Target Fund invests primarily in the equity securities of domestic companies and has limited exposure to foreign securities. As a global value fund, the Acquiring Fund may invest a significant portion of its total assets in the equity securities of companies domiciled in foreign countries, including securities issued by companies domiciled in emerging and frontier markets.
As a principal investment strategy, the Target Fund also may invest in early stage companies, initial public offerings (“IPOs”), and fixed income securities of any maturity, including those that are less than investment grade known as “junk bonds.” The Acquiring Fund, however, may invest in investment grade fixed-income securities, early stage companies and IPOs but not as a principal investment strategy.
Notwithstanding the above differences, the Board noted that the portfolio manager(s) of the Funds employed a similar valuation analysis on companies (with particular emphasis in considering company fundamentals) to determine their potential as a portfolio investment for the Funds. In addition, both Funds have generally invested in larger capitalization companies. In this regard, the Acquiring Fund may invest in companies of any size but expected to invest a significant portion of the Fund’s assets in companies with a market capitalization of over US $5 billion at the time of purchase, and the Target Fund also may invest in the equity companies with a market capitalization of at least $100 million at the time of purchase but the weighted average market cap of the Fund was much higher. As a result, the Board noted the significant overlap in the long positions of the Funds which should help with a smooth transition in a merger.
In comparing the Funds, the Board of Trustees also considered the principal risks of each Fund, including the differences in the risks as a result of the differing investment strategies. As both Funds invest in equity securities through long positions, both Funds are subject to the risk that the price of such securities will decline. However, the Target Fund also engages in a short sale principal investment strategy and therefore is subject to the risks of engaging in short sales, including experiencing losses if the market price of the security increases, reducing the returns of the Fund compared to if the Fund held only long positions, increasing the Fund’s liquidity risk and exposing the Fund to the risk that the third party to the short sale will not honor its contract terms. Unlike the Target Fund, the Acquiring Fund invests significantly in foreign securities, including emerging and frontier markets. The Acquiring Fund is therefore subject to the risks associated with foreign securities including, among other things, more volatility; less liquidity; different regulatory, accounting and auditing standards; less publicly available information; fluctuations in currency exchange rates and restrictions on repatriating investments or income, and such risks are further increased for investments in emerging and frontier markets.
In addition, unlike the Acquiring Fund, the Target Fund may also invest in fixed income securities, including non-investment grade securities, as a principal investment strategy. The Target Fund therefore is subject to the risks of such investments including interest rate risk (the risk that the debt security’s value will decline due to changes in market interest rates) and credit risk (the risk the issuer of a debt security will fail to repay principal and interest on the security when due) which is further increased with respect to non-investment grade securities. As the Target Fund may also invest as a principal investment strategy in early stage companies and initial public offerings, the risks associated with such strategies also apply to the Target Fund but these are not principal risks of the Acquiring Fund. For a more detailed description of the principal investment objectives and risks of each Fund, please see the section entitled “Risk Factors” and “Comparison of the Funds – Investment Objectives – Principal Strategies.”
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Portfolio Management
The Board of Trustees noted that the Funds have the same investment adviser. The Board of Trustees also noted that the portfolio manager of the Acquiring Fund became the lead portfolio manager of the Target Fund as of October 5, 2017.
The Board of Trustees considered that as of September 30, 2017, the Acquiring Fund had net assets of approximately $180 million, and the Target Fund had net assets of approximately $106 million and the combined fund with a larger asset base may lead to potential lower expenses as fixed costs are spread over a larger asset base.
Relative Investment Performance
The Board of Trustees considered the relative investment performance of the Funds over various periods. In reviewing the performance, the Board recognized that the Acquiring Fund formerly had been a large cap value fund investing primarily in the equity securities of domestic companies with a market capitalization of $5 billion at time of purchase and as of February 2017, the Acquiring Fund increased its ability to invest in foreign securities by adopting an investment policy permitting it to invest up to 20% of its total assets in the securities issued by foreign companies in developed or emerging markets. The Fund sought to further expand its foreign investment exposure becoming a global value fund as of October 30, 2017. Accordingly, the performance information prior to such date would be for the prior investment strategy and would not reflect the current investment strategy. The Board of Trustees observed, among other things, that except for the one-year ended December 31, 2016, the Investor Class shares of the Acquiring Fund outperformed the Investor Class shares of the Target Fund for the three-, five- and ten-year periods ended December 31, 2016. The Board of Trustees further observed that based on the Investor Class shares for the calendar years from 2007 through 2016, the Acquiring Fund outperformed the Target Fund in six of those ten calendar years. Although the inception dates of the Institutional Class shares of the Global Value Fund and Long/Short Fund was January 31, 2012 and December 13, 2012, respectively, the Board recognized that the performance of the Funds’ Institutional Class during their existence was similar to that of the Investor Class as the classes are invested in the same portfolio of securities and differences in performance between the classes would be principally attributed to differences in expenses. In its review, the Board, however, was aware of the limitations on the usefulness of the comparative performance data given that the performance history of the Acquiring Fund did not reflect the recent changes to its principal investment strategies.
The Board of Trustees considered the fees and expense ratios of the Funds, including the estimated fees expenses of the combined fund, before and after any reimbursement of expenses by the Advisor pursuant to the applicable contractual expense cap and assuming different levels of asset retention. In this regard, the Independent Trustees noted that the Acquiring Fund had a lower contractual management fee than that of the Target Fund generally because the Acquiring Fund does not engage in short sales as a principal investment strategy and therefore does not incur the research and resources required to manage the short positions nor would the Acquiring Fund incur the expenses associated with a short sale principal investment strategy, such as transaction costs and borrowing fees in connection with the short sales and payments to the lender equal to dividends paid during the loan. The Independent Trustees further noted that the gross and net expenses of the Acquiring Fund were lower than that of the Target Fund for both classes, subject to the following exception. Given the small asset size of the Institutional Class of the Acquiring Fund, its gross expense ratio was higher than that of the Target Fund for its Institutional Class based on the data available to the Board. However, after combining the assets of the Funds, the pro forma gross expense ratios of the combined fund for both classes were estimated to be lower than that of the Target Fund. In addition, the Independent Trustees considered that the contractual expense cap to which the Advisor agreed for each class of the combined fund was lower than the contractual expense cap for each class of the Target Fund. Accordingly, the gross and net expense ratios (after taking into account the expense caps) of the combined fund following the Reorganization were expected to be lower than that of the Target Fund for both share classes.
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Tax Consequences of the Reorganization
The Board of Trustees considered the tax implications of the Reorganization. The Board of Trustees noted that the Reorganization will be structured with the intention that it qualify as a tax-free reorganization for federal income tax purposes. The Board of Trustees recognized that with fund reorganizations, applicable tax laws would impose limits on the amount of capital loss carryforwards that an acquiring fund may use in any one year. The Board of Trustees further recognized that there may be some gains or losses resulting from portfolio realignment prior to the Reorganization that could result in less of the Target Fund’s unrealized capital gains being transferred to the combined fund.
The Independent Trustees did not identify any single factor as all-important or controlling, but rather the decision of the Reorganization 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. In addition, the Independent Trustees considered the limited growth prospects and limited economic feasibility of the Target Fund continuing long term and that any liquidation would result in a forced taxable event to shareholders. As noted, the Independent Trustees recognized some of the benefits from the Reorganization including the potential lower gross and net expense ratio of the combined fund, the lower contractual expense cap on both classes of the combined fund, the tax-free nature of the Reorganization, the avoidance of a taxable event if the Target Fund was liquidated and the similarities in the evaluation of eligible investments for the Funds despite the differing investment strategies and the overlap in portfolio holdings that may contribute to a smooth merger. The Independent Trustees also considered the costs of the Reorganization, including the brokerage costs in repositioning the Target Fund portfolio to connection with the Reorganization. In light of the foregoing factors, among others, the Independent Trustees determined that it was reasonable to split the costs of the Reorganization evenly (including brokerage expenses) between the Advisor and the Target Fund, subject to the expense cap limitations. Accordingly, to the extent the Target Fund’s expenses, including the Reorganization expenses, exceed the Fund’s current expense cap on the respective share class, the Advisor will also absorb the Fund’s expenses (including the portion of the Reorganization expenses allocated to the Target Fund) to the extent necessary for the Fund to operate within its respective expense cap for each class of shares. The Advisor will not seek to recoup any Reorganization expenses allocated to the Advisor. Further, the Acquiring Fund also may incur some brokerage commissions in connection with the investment of cash received in the Reorganization. If the Reorganization is not ultimately completed, the Advisor will bear all the expenses incurred in connection with the proposed Reorganization.
The terms of the Reorganization are intended to avoid dilution of the interests of the existing shareholders of the Funds. In this regard, shareholders of the Target Fund will receive shares of the Acquiring Fund in an amount equal in total value to the total value of the shares of the Target Fund surrendered. Holders of Investor Class and Institutional Class shares of the Target Fund will receive the same class of shares of the Acquiring Fund.
The Board of Trustees noted that holders of Investor Class and Institutional Class shares of the Target Fund will receive the same class of shares of the Acquiring Fund. The Board of Trustees further considered that each Fund is a series of the Trust, a Massachusetts business trust. In this regard, the rights of each Fund’s shareholders are the same under the Trust’s Declaration of Trust.
Alternatives to the Reorganization
The Board of Trustees considered various alternatives, including liquidation. The Board of Trustees, however, determined that liquidation was not in the best interests of shareholders as liquidation is a taxable event.
Potential Benefits to the Advisor and its Affiliates
Although the Board recognized that the Advisor would be receiving a lower management fee on the combined assets as the contractual management fee rate of the Acquiring Fund of 0.90% is lower than the contractual management fee rate of the Target Fund of 1.10%, the Board of Trustees also recognized that the Reorganization may
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result in some benefits and economies for the Advisor and its affiliates. These benefits may include any cost savings to the Advisor as a result of the elimination of the Target Fund as a separate fund in the Wasatch complex and the potential reduction or elimination of the Advisor’s expense reimbursement requirement under the applicable contractual expense cap of the Acquiring Fund and Target Fund. More specifically, the Board considered the potential reduction in the Advisor’s expense reimbursement obligations under the applicable contractual expense reimbursement cap to the Acquiring Fund due to the larger asset size of the combined fund. In this regard, the Advisor had reimbursed 0.09% of average net assets to the Investor Class and 1.36% of average net assets of the Institutional Class shares of the Acquiring Fund for the fiscal year ended September 30, 2017 and considered the potential for lower reimbursement rates of the Advisor of the combined fund following the Reorganization. Additionally, the Board noted that the Advisor’s obligation to waive fees or reimburse expenses of the classes of the Target Fund under its expense reimbursement agreement with the Target Fund would also be eliminated as a result of the Reorganization.
The Board of Trustees, including the Independent Trustees, approved the Reorganization, concluding that the Reorganization is in the best interests of each Fund and that the interests of existing shareholders of each Fund would not be diluted as a result of the Reorganization. The Board of Trustees did not identify any single factor discussed above as all-important or controlling, but considered all such factors together in approving the Reorganization.
The proposed Reorganization will be governed by the Agreement, a form of which is attached as Appendix A. The Agreement provides that the Target Fund will transfer all its assets to the Acquiring Fund solely in exchange for the issuance of full and fractional shares of beneficial interest of the Acquiring Fund and the assumption by the Acquiring Fund of all the liabilities of the Target Fund. The closing of the Reorganization will take place at the close of business on the Closing Date.
The Target Fund will transfer all its assets to the Acquiring Fund, and in exchange, the Acquiring Fund will assume all the liabilities of the Target Fund and deliver to the Target Fund a number of full and fractional shares of the Acquiring Fund having a net asset value equal to the value of the assets of the Target Fund less the liabilities of the Target Fund assumed by the Acquiring Fund as of the close of regular trading on the New York Stock Exchange on the Closing Date. At the designated time on the Closing Date as set forth in the Agreement, the Target Fund will distribute in complete liquidation of the Target Fund, pro rata to its shareholders of record, by class, all Acquiring Fund shares received by the Target Fund. This distribution will be accomplished by the transfer of the Acquiring Fund shares credited to the account of the Target Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the name of such Target Fund shareholders, and representing the respective pro rata number, by class, of Acquiring Fund shares due such shareholders. All issued and outstanding shares of the Target Fund will simultaneously be canceled on the books of the Target Fund.
As a result of the Reorganization, each Target Fund Investor Class and Institutional Class shareholder will receive a number of Acquiring Fund Investor Class and Institutional Class shares, respectively, equal in value, as of the close of regular trading on the New York Stock Exchange on the Closing Date, to the value of the Target Fund Investor Class and Institutional Class shares surrendered by such shareholder.
The Board of Trustees determined that the Reorganization is in the best interests of each Fund, and the Board of Trustees has further determined that the interests of the existing shareholders of such Funds would not be diluted as a result of the transactions contemplated by the Agreement.
The consummation of the Reorganization is subject to the terms and conditions of, and the representations and warranties being true as set forth in the Agreement. The Agreement may be terminated by mutual agreement of the Funds. In addition, either Fund may at its option terminate the Agreement at or before the closing due to (i) a breach by any other party of any representation, warranty, or agreement to be performed at or before the closing, if not cured within 30 days of notification to the breaching party and prior to the closing, (ii) a condition precedent to the obligations of the terminating party that has not been met or waived and it reasonably appears that it will not or cannot be met, or (iii) a determination by the Board of Trustees that the consummation of the transactions contemplated by the Agreement is not in the best interests of such Fund.
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The Target Fund will, within a reasonable period of time before the Closing Date, furnish the Acquiring Fund with a list of the Target Fund’s portfolio securities and other investments.
The Acquiring Fund will, within a reasonable period of time before the Closing Date, furnish the Target Fund with a list of the securities, if any, on the Target Fund’s list referred to above that do not conform to the Acquiring Fund’s investment objective, policies, or restrictions. The Target Fund, if requested by the Acquiring Fund, will dispose of securities on the list provided by the Acquiring Fund before the Closing Date. In addition, if it is determined that the portfolios of the Funds, when aggregated, would contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments, the Target Fund, if requested by the Acquiring Fund, will dispose of a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the closing. The sale of such investments could result in taxable distributions to shareholders of the Target Fund prior to the Reorganization. Notwithstanding the foregoing, nothing in the Agreement will require the Target Fund to dispose of any investments or securities if, in the reasonable judgment of the Board of Trustees or the Advisor, such disposition would adversely affect the tax-free nature of the Reorganization for federal income tax purposes or would otherwise not be in the best interests of the Target Fund. See “Material Federal Income Tax Consequences” below.
Description of Securities to Be Issued
Shares of Beneficial Interest. Each Fund has established and designated two classes of shares consisting of Investor Class and Institutional Class. Only Investor Class and Institutional Class shares to be issued to Target Fund shareholders in the Reorganization are offered through this Proxy Statement/Prospectus. The Trust’s Declaration of Trust permits the Board of Trustees, in its sole discretion, and subject to compliance with the 1940 Act, to further subdivide the shares of the Acquiring Fund into one or more other classes of shares.
Voting Rights of Shareholders. Holders of shares of each Fund are entitled to one vote per share on matters as to which they are entitled to vote, with fractional shares voting proportionally. Each Fund operates as a series of the Trust, an open-end management investment company registered with the SEC under the 1940 Act. The Trust currently has 18 series, including the Acquiring Fund and the Target Fund, and the Board of Trustees may, in its sole discretion, create additional series from time to time. Each class of shares represents an interest in the same portfolio of investments of a Fund. Each class of shares has equal rights as to voting, redemption, dividends and liquidation, except that each bears different class expenses and each has exclusive voting rights with respect to matters that relate solely to that class or for which the interests of one class differ from the interests of another class. There are no conversion, preemptive or other subscription rights except that the shares of the Institutional Class held by any shareholder who is no longer eligible to hold such shares may be converted at the discretion of the Board or any authorized officer, to shares of a class in the same Fund in which the shareholder is eligible on the basis of the relative net asset values of the purchase class and target class without the imposition of any sales load fee or other charge, subject to prior notice. In addition to the specific voting rights described above, shareholders of each Fund are entitled, under current law, to vote with respect to certain other matters, including changes in fundamental investment policies and restrictions. The Board of Trustees of the Trust has the right to establish additional series and classes of shares in the future, to change those series or classes and to determine the relative rights, preferences, privileges, limitations, restrictions and other terms of a series or class and as may be modified by the Trustees from time to time.
Under Massachusetts law applicable to Massachusetts business trusts, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the Declaration of Trust of the Trust contains an express disclaimer of shareholder personal liability for the debts, liabilities, obligations or expenses of the Trust or any series or class thereof and requires that notice of this disclaimer be given in each note, bond, contract, certificate, instrument or other undertaking entered into or executed by or on behalf of the Trust or the trustees. The Trust’s Declaration of Trust further provides for indemnification out of the assets and property of the Trust or applicable series for all losses and expenses of any shareholder held personally liable for the obligations of the Trust or applicable series solely by reason of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust or a Fund itself was unable to meet its obligations. The Trust believes the likelihood of the occurrence of these circumstances is remote.
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Continuation of Shareholder Accounts, Plans and Privileges; Share Certificates
If the Reorganization is approved and completed, the Acquiring Fund will establish an account for each Target Fund shareholder containing the appropriate number of shares of the appropriate class of the Acquiring Fund. The shareholder services and shareholder programs of the Funds are substantially the same. Shareholders of the Target Fund who are accumulating shares through systematic investing, or who are receiving payments under the systematic withdrawal plan, will retain the same rights and privileges after the Reorganization through plans maintained by the Acquiring Fund. No certificates for Acquiring Fund shares will be issued as part of the Reorganization.
State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City, Missouri 64105, serves as the custodian for the assets of each Fund. UMB Fund Services, Inc. located at 253 West Galena Street, Milwaukee, Wisconsin 53212, serves as the transfer agent, shareholder services agent and dividend paying agent for each Fund.
PricewaterhouseCoopers LLP located at 1100 Walnut Street, Suite 1300, Kansas City, Missouri 64106, serves as the independent auditors for each Fund. ALPS Distributors, Inc., located at 1290 Broadway, Suite 1100, Denver, Colorado 80203, serves as principal underwriter for each Fund.
Material Federal Income Tax Consequences
As a condition to each Fund’s obligation to consummate the Reorganization, the Fund will receive a tax opinion from Chapman and Cutler, LLP (which opinion will be based on certain factual representations and certain customary assumptions and exclusions) with respect to the Reorganization substantially to the effect that, on the basis of the existing provisions of the Code, current administrative rules and court decisions, for federal income tax purposes:
1. | The transfer of all the assets of the Target Fund to the Acquiring Fund in exchange solely for Acquiring Fund shares and the assumption by the Acquiring Fund of all the liabilities of the Target Fund, immediately followed by the pro rata, by class, distribution to the Target Fund shareholders of all the Acquiring Fund shares received by the Target Fund in complete liquidation of the Target Fund and the termination of the Target Fund as soon as practicable thereafter, will constitute a “reorganization” within the meaning of Section 368(a)(1) of the Code, and the Acquiring Fund and the Target Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code, with respect to the Reorganization. |
2. | No gain or loss will be recognized by the Acquiring Fund upon the receipt of all the assets of the Target Fund solely in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of all the liabilities of the Target Fund. |
3. | No gain or loss will be recognized by the Target Fund upon the transfer of all the Target Fund’s assets to the Acquiring Fund solely in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of all the liabilities of the Target Fund or upon the distribution (whether actual or constructive) of such Acquiring Fund shares to Target Fund shareholders solely in exchange for such shareholders’ shares of the Target Fund in complete liquidation of the Target Fund. |
4. | No gain or loss will be recognized by the Target Fund’s shareholders upon the exchange, pursuant to the Reorganization, of their Target Fund shares solely for Acquiring Fund shares. |
5. | The aggregate basis of the Acquiring Fund shares received by each Target Fund shareholder pursuant to the Reorganization will be the same as the aggregate basis of the Target Fund shares exchanged therefor by such shareholder. The holding period of the Acquiring Fund shares received by each Target Fund shareholder in the Reorganization will include the period during which the Target Fund shares exchanged therefor were held by such shareholder, provided such Target Fund shares are held as capital assets at the effective time of the Reorganization. |
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6. | The basis of the Target Fund’s assets transferred to the Acquiring Fund will be the same as the basis of such assets in the hands of the Target Fund immediately before the effective time of the Reorganization. The holding period of the assets of the Target Fund received by the Acquiring Fund will include the period during which such assets were held by the Target Fund. |
No opinion will be expressed as to (1) the effect of the Reorganization on the Target Fund, the Acquiring Fund or any Target Fund shareholder with respect to any asset (including, without limitation, any stock held in a passive foreign investment company as defined in Section 1297(a) of the Code) as to which any unrealized gain or loss is required to be recognized under federal income tax principles (a) at the end of a taxable year (or on the termination thereof) or (b) upon the transfer of such asset regardless of whether such transfer would otherwise be a non-taxable transaction under the Code, or (2) any other federal tax issues (except those set forth above) and all state, local or foreign tax issues of any kind.
The opinion will be based on certain factual representations, reasonable assumptions and such other representations as Chapman and Cutler LLP may request of the Funds. The opinion will rely on such representations and will assume the accuracy of such representations. If such representations and assumptions are incorrect, the Reorganization may not qualify as a tax-free reorganization for federal income tax purposes, and the Target Fund and Target Fund shareholders may recognize taxable gain or loss as a result of the Reorganization.
Prior to the closing of the Reorganization, the Target Fund will declare a distribution to its shareholders, which, together with all previous distributions, will have the effect of distributing to shareholders all of the Target Fund’s net investment income and realized net capital gains (after reduction by any available capital loss carryforwards and excluding any net capital gain on which the Target Fund paid federal income tax), if any, through the Closing Date. To the extent distributions are attributable to ordinary taxable income or capital gains, the distribution will be taxable to shareholders for federal income tax purposes and may include net capital gains resulting from the sale of portfolio assets discussed below. Additional distributions may be made if necessary. All dividends and distributions will be reinvested in additional shares of the Target Fund unless a shareholder has made an election to receive dividends and distributions in cash. Dividends and distributions are treated the same for federal income tax purposes whether received in cash or additional shares.
To the extent that a portion of the Target Fund’s portfolio assets are sold prior to the Reorganization, the federal income tax effect of such sales will depend on the holding periods of such assets and the difference between the price at which such portfolio assets were sold and the Fund’s basis in such assets. Any net capital gains (net long-term capital gain in excess of any net short-term capital loss) recognized in these sales, after the application of any available capital loss carryforwards (capital losses from prior taxable years that may be used to offset future capital gains), would be distributed to the Target Fund’s shareholders as capital gain dividends. Any net short-term capital gains (net short-term capital gain in excess of any net long-term capital loss and after application of any available capital loss carryforwards) would be distributed as ordinary dividends. All such distributions would be made during or with respect to the Target Fund’s taxable year in which the sale occurs and would be taxable to shareholders for federal income tax purposes.
As explained above, the Target Fund will experience portfolio turnover due to portfolio repositioning prior to the Reorganization. To the extent the Target Fund realizes net losses from the sale of portfolio securities as part of such portfolio repositioning, the net capital gain or net investment income to be distributed by the Target Fund prior to the closing of the Reorganization will be reduced. In the event the Target Fund realizes income or gain as a result of such sales, the net capital gain or net investment income to be distributed by the Target Fund will be increased if such income or gain cannot be offset by available capital loss carryforwards.
The Acquiring Fund will be the accounting survivor following the Reorganization. After the Reorganization, the Acquiring Fund’s ability to use the Target Fund’s or the Acquiring Fund’s pre-Reorganization capital losses, if any, may be limited under certain federal income tax rules applicable to reorganizations of this type. Therefore, in certain circumstances, shareholders may pay federal income tax sooner, or may pay more federal income taxes, than they would have had the Reorganization not occurred. The effect of these potential limitations, however, will depend on a number of factors, including the amount of the losses, the amount of gains to be offset, the exact timing of the Reorganization and the amount of unrealized capital gains in the Funds at the time of the Reorganization. As of
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September 30, 2017, the Funds had unused capital loss carryforwards available for federal income tax purposes to be applied against capital gains, if any, per the table below.
CAPITAL LOSS CARRYFORWARDS | ||||||||||||||||
Target Fund | Acquiring Fund | |||||||||||||||
Short Term | Long Term | Short Term | Long Term | |||||||||||||
Capital losses to be carried forward – not subject to expiration* | $26,195,256 | $127,709,466 | - | - |
*IRC Sections 381, 382, 383 and 384 limit the pre-reorganization carryforward losses that may be used in any one year following a reorganization. The estimate of the amount of loss that may be utilized is limited to approximately $2.0 million per year.
The Target Fund’s capital loss carryforwards arose in the 2016 taxable year when $157,346,427 was deferred as a post-October capital loss for the period November 1, 2015 through September 30, 2016. The amounts above are first shown as a capital loss carryforward in the annual report dated September 30, 2017 and can be carried forward indefinitely.
Shareholders of the Target Fund will receive a proportionate share of any taxable income and gains realized by the Acquiring Fund and not distributed to its shareholders prior to the Reorganization when such income and gains are eventually distributed by the Acquiring Fund. Furthermore, any gain the Acquiring Fund realizes after the Reorganization, including any built-in gain in the portfolio investments of the Target Fund and Acquiring Fund that was unrealized at the time of the Reorganization, may result in taxable distributions to shareholders holding shares of the Acquiring Fund (including former shareholders of the Target Fund who hold shares of the Acquiring Fund following the Reorganization). As a result, shareholders of the Target Fund may receive a greater amount of taxable distributions than they would have had the Reorganization not occurred.
This description of the federal income tax consequences of the Reorganization is made without regard to the particular facts and circumstances of any shareholder. Shareholders are urged to consult their own tax advisors as to the specific consequences to them of the Reorganization, including the applicability and effect of state, local, non-U.S. and other tax laws.
The costs of the Reorganization of the Target Fund will be split equally between the Advisor and the Target Fund, subject to the contractual expense cap limitations. The total estimated expenses in connection with the Reorganization are $394,000 which includes, among other things, the legal, audit and proxy solicitation fees of approximately $338,000, and brokerage costs. Brokerage costs are the only transaction cost associated with the repositioning of the Target Fund, which are estimated at approximately $56,000 (0.09% of the Target Fund’s net assets) assuming it had occurred as of March 31, 2018. These amounts are estimates and actual amounts may vary. Amounts charged to the Target Fund will generally be allocated between its share classes based on the relative net assets of the share classes, except that each class separately bears expenses related specifically to that class. To the extent that the Target Fund’s expenses (including Reorganization expenses for which the Target Fund is responsible), exceeds the Fund’s current contractual expense cap on the respective share class, the Advisor will waive and/or reimburse the Target Fund’s expenses (including the portion of the Reorganization expenses allocated to it) to the extent necessary for the Fund’s share classes to operate within their respective expense cap.
The Target Fund –Investor Class and Institutional Class expense caps are 1.60% and 1.15%, respectively, of average daily net assets until at least January 31, 2019. The Acquiring Fund Investor Class and Institutional Class expense caps are 1.10% and 0.95%, respectively, of average daily net assets until at least January 31, 2020. Interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expense, such as litigation and other expenses not incurred in the ordinary course of business are excluded. The Fund may only make repayments to the Advisor for amounts reimbursed if such repayment does not cause the Fund’s expense ratio after the repayment is taken into account to exceed both (i) the expense cap in place at the time such amounts were waived; and (ii) the Fund’s current expense cap. The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. Shareholder expenses will increase if the Advisor does not renew the contractual expense cap after its expiration date.
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Under the expense limitation agreement of both Funds, the Advisor may recoup certain amounts previously paid in a prior or current fiscal year, but only during the term of the current agreement. In this regard, to calculate the required waiver or reimbursement, the Advisor will waive or reimburse expenses each day that the amount of the annualized operating expenses of a class exceeds its expense limit; however, the Advisor may be reimbursed such amounts on any day during the fiscal year the annualized expenses of a class are below its expense limit to the extent the reimbursement does not cause the respective Fund class’s Fund’s expenses to exceed the expense cap during the term of the Agreement. Regardless of the ability to recoup expenses under the terms of the current expense limitation agreement, the Advisor has agreed that it will not seek to recoup any Reorganization expenses. Brokerage commissions and other transaction costs incurred in connection with the repositioning of the Target Fund portfolio are not subject to the Target Fund’s contractual expense cap and will be borne by the Target Fund and indirectly by the Target Fund’s shareholders. The Advisor, however, has agreed to pay for half of the brokerage commissions incurred in repositioning the Target Fund portfolio. Based on current expense levels, it is anticipated that the Advisor will absorb a significant portion of the Reorganization expenses charged to the Target Fund. In addition, the Acquiring Fund and indirectly its shareholders (including former shareholders of the Target Fund who hold shares in the Acquiring Fund) are estimated to incur approximately $20,000 in brokerage commissions related to the acquisition of portfolio securities from cash received in the Reorganization. If the Reorganization is not approved or not completed, Wasatch will pay all expenses associated with the Reorganization.
The Trust has engaged AST Fund Solutions to assist in the solicitation of proxies at an estimated cost of $68,000 - $75,000 plus reasonable expenses, which is included in the expense estimate above.
Overview of Massachusetts Business Trusts
Each Fund is a series of the Trust, a Massachusetts business trust organized on November 6, 2009. The following description is based on relevant provisions of applicable Massachusetts law and the Funds’ operative documents. This summary does not purport to be complete, and we refer you to applicable Massachusetts law and the Funds’ operative documents.
Each Fund is a series of a Massachusetts business trust. A fund organized as a series of a Massachusetts business trust is governed by the trust’s declaration of trust or a similar instrument. Massachusetts law allows the trustees of a business trust to set the terms of a fund’s governance in its declaration of trust. All power and authority to manage the fund and its affairs generally reside with the trustees, and shareholder voting and other rights are limited to those provided to the shareholders in the declaration of trust. Because Massachusetts law governing business trusts provides more flexibility compared to typical state corporate statutes, the Massachusetts business trust has become a common form of organization for mutual funds. However, some consider it less desirable than other entities because it relies on the terms of the applicable declaration of trust and judicial interpretations rather than statutory provisions for substantive issues, such as the personal liability of shareholders and trustees, and does not provide the level of certainty that corporate laws, or newer statutory trust laws, such as those of Delaware, provide.
Shareholders of a Massachusetts business trust are not afforded the statutory limitation of personal liability generally afforded to shareholders of a corporation from the trust’s liabilities. Instead, the declaration of trust of a fund organized as a Massachusetts business trust typically provides that a shareholder will not be personally liable, and further provides for indemnification to the extent that a shareholder is found personally liable, for the fund’s acts or obligations. The Trust’s Declaration of Trust contains such provisions.
Similarly, the trustees of a Massachusetts business trust are not afforded statutory protection from personal liability for the obligations of the trust. Courts in Massachusetts have, however, recognized limitations of a trustee’s personal liability in contract actions for the obligations of a trust contained in the trust’s declaration, and declarations may also provide that trustees may be indemnified out of the assets of the trust to the extent held personally liable. The Declaration of Trust contains such provisions.
The Trust, of which each Fund is a series, is organized as a Massachusetts business trust and is governed by its Declaration of Trust and by-laws. Under the Trust’s Declaration of Trust, in construing its provisions, the
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presumption shall be in favor of a grant of power to the trustees of the Trust. Under the Trust’s Declaration of Trust, any action taken or determination made by or pursuant to the direction of the trustees in good faith and consistent with the provisions of the Declaration of Trust shall be final and conclusive and shall be binding upon the Trust and every shareholder. The following is a summary of some of the key provisions of the Trust’s governing documents.
Shareholder Voting. The Trust’s Declaration of Trust provides that shareholders shall not have the power to vote on any matter except: (i) for the election or removal of trustees to the extent and as provided in the Declaration of Trust; and (ii) with respect to such additional matters relating to the Trust as may be required by law or as the trustees may consider and determine necessary or desirable. The 1940 Act requires a vote of shareholders on matters that Congress has determined might have a material effect on shareholders and their investments. For example, shareholder consent is required under the 1940 Act to approve new investment advisory agreements in many cases, an increase in an advisory fee or a 12b-1 fee, changes to fundamental policies, the election of directors or trustees in certain circumstances, and the merger or reorganization of a fund in certain circumstances, particularly where the merger or consolidation involves an affiliated party.
Under the By-Laws of the Trust, there shall be no annual meetings of shareholders except as required by law. A meeting of shareholders of the Trust or any series or class shall be called by the Secretary when ordered by (i) a majority of the trustees then in office, (ii) the Chairman of the Board or (iii) the President of the Trust. Subject to certain exceptions, meetings of shareholders of the Trust or of any series or class shall also be called by the Secretary upon the order of the trustees upon the written request of the shareholders holding shares representing in the aggregate not less than one-third of the voting power of the outstanding shares entitled to vote on the matters specified in such written request provided that (1) such request shall state the purposes of such meeting and the matters proposed to be acting on, and (2) the shareholders requesting such meeting shall have paid to the Trust the reasonably estimated cost of preparing and mailing the notice thereof, which the Secretary shall determine and specify to such shareholders.
Under the By-Laws, the holders of outstanding shares entitled to vote and present in person or by proxy representing 30% of the voting power of the Trust shall constitute a quorum at any meeting of shareholders, except that where pursuant to any provision of law, the Declaration of Trust or the By-Laws a vote shall be taken by individual series or class then the outstanding shares entitled to vote and present in person or by proxy representing 30% of the voting power of that series or class shall be necessary to constitute a quorum for the transaction of business by that series or class.
The shareholders shall take action by the affirmative vote of the holders of shares representing a majority, except in case of the election of trustees which shall only require a plurality, of votes cast at a meeting of shareholders at which a quorum is present, except as may be otherwise required by applicable law or any provision of the Declaration of Trust or the By-Laws.
Shareholders have no power to vote on any matter except as required by applicable law or the governing documents, or as is otherwise determined by the trustees.
Election and Removal of Trustees. The Declaration of Trust provides that the trustees determine the size of the Board of Trustees. Subject to certain exceptions, each trustee shall hold office until the next meeting of shareholders called for the purpose of considering the election or re-election of such trustee or of a successor to such trustee, and until his successor, if any, is elected, qualified and serving as a trustee thereunder. Any trustee vacancy may be filled by the affirmative vote or consent of a majority of the trustees then in office, except when a shareholder vote is required under the 1940 Act. Therefore, there will be no meetings of shareholders for the purpose of electing trustees unless and until such time as required by law. Trustees are then elected by a plurality vote of the shareholders. Under the Declaration of Trust, if for any reason there are no trustees then in office, vacancies may be filled by certain officers of the Trust or may be filled in any other manner permitted by the 1940 Act. Subject to certain exceptions for resignation and retirement, any trustee may be removed from office only (i) by action of at least two-thirds (2/3) of the voting power of the outstanding shares, or (ii) by the action of at least two-thirds (2/3) of the remaining trustees, specifying the date when such removal shall become effective.
Issuance of Shares. Under the Declaration of Trust, the number of shares is unlimited. The trustees may authorize shares of the Trust to be issued either for cash or for such other consideration and on such terms as the trustees from time to time deem advisable. Shareholders shall not have any right to acquire, purchase or subscribe for
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any additional shares, or have any preference, preemptive, appraisal, conversion or exchange rights, except as the trustees may determine from time to time.
Series and Classes. The Declaration of Trust gives broad authority to the trustees to establish series and classes in addition to those currently established and to determine the rights, preferences, privileges, limitations and restrictions and such other relative terms as shall be determined by the trustees from time to time. The trustees are also authorized to terminate the Trust or any series at any time upon written notice to the shareholders of the Trust or such series, as the case may be, and may terminate a class at any time without notice to shareholders.
Amendments to Declarations of Trust. A majority of the trustees of the Trust then in office may vote to amend or otherwise supplement the Declaration of Trust with certain limitations. Any amendment to the provisions relating to the qualification and number, term and election, resignation and removal, or certain other provisions regarding the trustees contained in its Declaration of Trust requires the approval of two-thirds of the trustees. Additionally, the Declaration of Trust may not be amended to impair any exemption from or limitation of personal liability of any shareholder, trustee, officer or employee of the Trust or limit the rights to indemnification, advancement of expenses or insurance provided in certain provisions of the Declaration of Trust with respect to actions or omissions of persons entitled to indemnification, advancement or insurance under such provisions of the Declaration of Trust prior to such amendment.
Shareholder, Trustee and Officer Liability. The Declaration of Trust provides that shareholders have no personal liability for any debt, liability, obligation or expense of the Trust or any series or class and require the Trust or applicable series to indemnify a shareholder from any loss or expense arising solely by reason of his or her being or having been a shareholder and not because of his or her acts or omissions or for some other reason. In addition, the Trust or applicable series will assume the defense of any claim against its shareholder for any act or obligation of the Trust or applicable series at the request of the shareholder and satisfy the judgement thereon. Similarly, the Declaration of Trust provides that any person who is a trustee, officer or employee of the Trust is not personally liable to any person in connection with the affairs of the Trust, other than to the Trust and its shareholders arising from bad faith, willful misfeasance, gross negligence or reckless disregard for his or her duty. Subject to certain exceptions and limitations, the Declaration of Trust further provides for indemnification of such persons and advancement of the expenses of defending any such actions for which indemnification might be sought. The Declaration of Trust also provides that the trustees may rely in good faith on expert advice.
Preemptive Rights. Pursuant to the Declaration of Trust, shareholders have no preemptive rights or other rights to subscribe to additional shares except as the trustees may determine.
Derivative Actions. The Declaration of Trust provides that no shareholders may bring a derivative or similar action or proceeding in the right of the Trust or any series to recover a judgment in its favor unless the conditions set forth in the Declaration have been met, including, among other things, making a written demand on the trustees to request that the trustees cause the Trust to file the action itself on behalf of the affected series or class pursuant to the process and requirements set forth in the Declaration.
The foregoing is only a summary of certain rights of shareholders under the governing documents of the Trust and under applicable state law and is not a complete description of provisions contained in those sources. Shareholders should refer to the provisions of those documents and state law directly for a more thorough description.
The following tables set forth the unaudited capitalization and ratios of the Target Fund and the Acquiring Fund as of March 31, 2018, and the pro forma capitalization of the combined fund after the Reorganization. There is no assurance that the Reorganization will occur. These numbers may differ at the Closing Date of the Reorganization.
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Pro Forma Condensed Combined Capitalization Table and Ratios
as of March 31, 2018 (Unaudited)
Target Fund | Acquiring Fund | Pro Forma Adjustments(1) | Pro Forma Acquiring Fund | |||||||||||||||||||||||||||
Net Assets | ||||||||||||||||||||||||||||||
Investor Class | $ | 60,269,644 | $ | 161,825,757 | $ | (162,374 | ) | $ | 221,933,027 | |||||||||||||||||||||
Institutional Class | 10,340,393 | 4,387,459 | (27,858 | ) | 14,699,994 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total | $ | 70,610,037 | $ | 166,213,216 | $ | (190,232 | ) | $ | 236,633,021 | |||||||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||||||||
Shares Outstanding | ||||||||||||||||||||||||||||||
Investor Class | 4,850,856 | 18,590,178 | 2,058,026 | 25,499,060 | ||||||||||||||||||||||||||
Institutional Class | 824,929 | 504,720 | 361,784 | 1,691,433 | ||||||||||||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||||||||
Total | 5,675,785 | 19,094,898 | 2,419,810 | 27,190,493 | ||||||||||||||||||||||||||
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|
|
|
|
Target Fund | Acquiring Fund | Pro Forma Acquiring Fund | ||||||||||
Net Asset Value Per Share | ||||||||||||
Investor Class | $ | 12.42 | $ | 8.70 | $ | 8.70 | ||||||
Institutional Class | $ | 12.53 | $ | 8.69 | $ | 8.69 | ||||||
Shares Authorized | ||||||||||||
Investor Class | Unlimited | Unlimited | Unlimited | |||||||||
Institutional Class | Unlimited | Unlimited | Unlimited | |||||||||
Ratio of Expense to Average Net Assets | ||||||||||||
Before Fee Waivers | ||||||||||||
Investor Class | 1.91% | 1.18% | 1.20% | |||||||||
Institutional Class | 1.77% | 1.53% | 1.13% | |||||||||
After Fee Waivers | ||||||||||||
Investor Class | 1.86% | 1.10% | 1.10% | |||||||||
Institutional Class | 1.36% | 0.95% | 0.95% |
(1) | The pro forma balances are presented as if the Reorganization was effective as of March 31, 2018, and are presented for informational purposes only. The actual Closing Date of the Reorganization is expected to be on or about September 7, 2018 or such later time agreed to by the parties, at which time the results would be reflective of the actual composition of shareholders’ equity as of that date. All pro forma adjustments are directly attributable to the Reorganization. |
(2) | The costs of the Reorganization will be split equally between the Advisor and Target Fund, subject to the expense cap limitations. The estimated expenses in connection with the Reorganization for the Target Fund is $394,000. Amounts charged to the Target Fund will generally be allocated between its share classes based on the relative net assets of the share classes, except that each class separately bears expenses related specifically to that class. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceeds the Fund’s current expense cap on the respective share class, the Advisor will absorb the portion of the Reorganization expenses necessary for the Fund to operate within its respective cap. Based on current expense levels, it is anticipated that the Advisor will absorb a significant portion of the Reorganization expenses charged to the Target Fund. The Acquiring Fund is estimated to incur approximately $20,000 in brokerage commissions resulting from investing cash received in the Reorganization. If the Reorganization is not approved or completed, the Advisor will pay all expenses associated with the Reorganization. See the section entitled “The Proposed Reorganization—Reorganization Expenses” in the Proxy Statement/Prospectus for additional information. |
(3) | Reflects the issuance by the Acquiring Fund of approximately 6,908,882 Investor Class shares and 1,186,713 Institutional Class shares to Investor Class and Institutional Class shareholders, respectively, of the Target Fund in connection with the Reorganization. |
Certain legal matters concerning the issuance of Investor Class and Institutional Class shares of the Acquiring Fund pursuant to the Agreement will be passed on by Chapman and Cutler, LLP, 111 West Monroe Street, Chicago, Illinois 60603 and Morgan, Lewis & Bockius, LLP, One Federal Street, Boston, MA 02110-1726.
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Information Filed with the Securities and Exchange Commission
This Proxy Statement/Prospectus and the related Proxy Statement/Prospectus SAI do not contain all the information set forth in the registration statements and the exhibits relating thereto and the annual and semi-annual reports which the Funds have filed with the SEC pursuant to the applicable requirements of the Securities Act of 1933, as amended, and the 1940 Act, to which reference is hereby made. The SEC file number for the registration statement containing the current Prospectus and Statement of Additional Information for each class of each Fund is Registration No. 811-4920. Each Prospectus and Statement of Additional Information relating to the respective Fund of each share class of the Fund are incorporated herein by reference, only insofar as they relate to the Funds.
For each Fund, the following tables set forth the percentage of ownership of each person who, as of June 30, 2018, the record date with respect to the Special Meeting of the Target Fund, owns of record, or is known by the Fund to own of record or beneficially, 5% or more of any class of shares of the Fund. The tables also set forth the estimated percentage of shares of the combined fund that would have been owned by such parties assuming the Reorganization occurred on June 30, 2018. These amounts may differ on the Closing Date. Shareholders who have the power to vote a larger percentage of shares (at least 25% of the shares) of the Target Fund may be able to control the Target Fund and determine the outcome of a shareholder meeting.
Target Fund - Long/Short Fund | ||||||
Class Name | Address of Owner | Percentage of Ownership | Estimated Pro Forma Percentage of Ownership of Combined Fund After Reorganization of Target Fund into Acquiring Fund | |||
Institutional | National Financial Services Corp for the Exclusive Benefit of Our Customers One World Financial Center New York, NY 10281 | 34.31% | 19.57% | |||
Institutional | Charles Schwab & Co. Inc. Special Acct for the Benefit 211 Main St. San Francisco, CA 94105 | 28.15% | 16.06% | |||
Institutional | First Clearing LLC Special Cust A/C Benefit of Customer Saint Louis, MO 63103 | 12.68% | 7.23% | |||
Investor | National Financial Services Corp for the Exclusive Benefit of Our Customers One World Financial Center New York, NY 10281 | 42.62% | 11.24% | |||
Investor | Charles Schwab & Co. Inc. Special Custody Acct Attn Mutual Funds San Francisco, CA 94101 | 17.86% | 4.71% | |||
Investor | LPL Financial Attn Mutual Fund Trading San Diego, CA 92121 | 7.35% | 1.94% | |||
Investor | TD Ameritrade Inc. for the Exclusive Benefit of our Clients P.O. Box 2226 Omaha, NE 68103 | 6.01% | 1.58% |
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Acquiring Fund – Global Value Fund | ||||||
Class Name | Address of Owner | Percentage of Ownership | Estimated Pro Forma Percentage of Ownership of Combined Fund After Reorganization of Target Fund into Acquiring Fund | |||
Institutional | National Financial Services Corp. for the Exclusive Benefit of our Customers One World Financial Center New York, NY 10281 | 55.96% | 24.03% | |||
Institutional | Charles Schwab & Co, Inc. 211 Main Street San Francisco, CA 94105 | 17.96% | 7.71% | |||
Institutional | TD Ameritrade Inc. for the Exclusive Benefit of our Clients P.O. Box 2226 Omaha, NE 68103 | 16.54% | 7.10% | |||
Institutional | First Clearing LLC 2801 Market Street Saint Louis, MO 63103 | 5.96% | 2.56% | |||
Investor | National Financial Services Corp. for the Exclusive Benefit of our Customers One World Financial Center New York, NY 10281 | 47.65% | 35.09% | |||
Investor | Charles Schwab & Co, Inc. 101 Montgomery Street San Francisco, CA 94104 | 25.59% | 18.85% | |||
Investor | DCGT as TTEE and/or Cust FBO PLIC Various Retirement Plans Attn NPIO Trade Desk Des Moines, IA 50392 | 5.57% | 4.10% |
At the close of business on June 30, 2018, there were 4,292,728 Investor Class shares and 485,520 Institutional Class shares of the Target Fund outstanding. As of June 30, 2018, the Trustees and officers of the Target Fund as a group owned less than 1% of the total outstanding shares of the Target Fund and as a group owned less than 1% of each class of shares of the Target Fund.
At the close of business on June 30, 2018, there were 17,472,818 Investor Class shares and 538,553 Institutional Class shares of the Acquiring Fund outstanding. As of June 30, 2018, the Trustees and officers of the Acquiring Fund as a group owned less than 1% of the total outstanding shares of the Acquiring Fund and as a group owned less than 1% of each class of shares of the Acquiring Fund.
The Funds generally do not hold annual shareholders’ meetings but will hold a special meeting as required or deemed desirable. Because the Funds do not hold regular meetings of shareholders, the anticipated date of a Fund’s next shareholder meeting cannot be provided. To be considered for inclusion in the proxy statement for any meeting of a Fund’s shareholders, a shareholder proposal must be submitted a reasonable time before the proxy statement for the meeting is mailed. Whether a proposal is included in the proxy statement will be determined in accordance with applicable federal and state laws. The timely submission of a proposal does not guarantee its inclusion. Shareholders wishing to submit proposals for inclusion in a proxy statement for a shareholder meeting should send their written proposal to the respective Fund at 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84108.
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Shareholders who want to communicate with the Board of Trustees or any individual Trustee should write to their Fund, to the attention of Russell Biles, Secretary of the Funds, 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84108. The letter should indicate that you are a Fund shareholder and identify the Fund or Funds that you own and with respect to which Fund or Funds your letter is concerned. If the communication is intended for a specific Trustee and so indicates, it will be sent only to that Trustee. If a communication does not indicate a specific Trustee, it will be sent to the chair of the nominating and governance committee and to the Board of Trustees’ independent legal counsel for further distribution as deemed appropriate by such persons.
Proxy Statement/Prospectus Delivery
Please note that only one Proxy Statement/Prospectus may be delivered to two or more shareholders of the Target Fund who share an address, unless the Target Fund has received instructions to the contrary. To request a separate copy of the Proxy Statement/Prospectus, or for instructions as to how to request a separate copy of such document or how to request a single copy if multiple copies of such document are received, shareholders should call Wasatch Funds at (800) 551-1700 or write to Wasatch Funds at PO BOX 2172, Milwaukee WI 53201
Financial Statements
The pro forma financial statements for the Acquiring Fund are set forth herein as Appendix B.
VOTING INFORMATION AND REQUIREMENTS
Holders of shares of the Target Fund are entitled to one vote per share on matters as to which they are entitled to vote, with fractional shares voting proportionally.
Shareholder Approval of the Reorganization
Approval of the Reorganization will require the affirmative vote of the holders of a majority of the outstanding voting securities of the Target Fund entitled to vote. This means the vote of (1) 67% or more of the voting securities present at a meeting, if the holders of more than 50% of the outstanding voting securities are present or represented by proxy or (2) more than 50% of the outstanding voting securities, whichever is less.
Each valid proxy given by a shareholder of the Target Fund will be voted by the persons named in the proxy in accordance with the instructions marked thereon and as the persons named in the proxy may determine on such other business as may come before the Special Meeting on which shareholders are entitled to vote. If no designation is made, the proxy will be voted by the persons named in the proxy, as recommended by the Board of Trustees, “FOR” approval of the Reorganization. Abstentions and broker non-votes (i.e., shares held by brokers or nominees, typically in “street name,” as to which (i) instructions have not been received from beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) count as present for purposes of determining quorum but do not count as votes “FOR” the Reorganization and have the same effect as a vote “AGAINST” the Reorganization.
Shareholders who execute proxies may revoke their proxy at any time before the proxy is voted by delivering a duly executed proxy bearing a later date, or by attending the Special Meeting or adjournment or postponement thereof and voting in person. The giving of a proxy will not affect your right to vote in person if you attend the Special Meeting and wish to do so.
Quorum and Other Voting Requirements
The presence in person or by proxy of the holders of 30% of the shares of the Target Fund issued and outstanding and entitled to vote at the Special Meeting shall constitute a quorum for the transaction of any business. For purposes of establishing whether a quorum is present, all shares present and entitled to vote, including abstentions and broker non-votes, shall be counted.
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If a quorum is not obtained, the trustee or officer presiding at the Special Meeting may adjourn the meeting to permit further solicitation of proxies. The Special Meeting may also be adjourned by the trustee or officer presiding at the Special Meeting with respect to one or more matters to be considered at the meeting, even if a quorum is present with respect to such matters, when such adjournment is approved by the vote of the holders of shares representing a majority of the voting power of the Shares present and entitled to vote with respect to the matter or matters adjourned. Unless a proxy is otherwise limited in this regard, any shares present and entitled to vote at a meeting that are represented by broker non-votes may, at the direction of the proxies named therein, be voted in favor of such an adjournment. An adjourned meeting may be held without further notice if the date, time and place were announced at the time of adjournment.
Proxies of shareholders of the Target Fund are solicited by the Board of Trustees of the Trust. Additional solicitation may be made by mail, telephone, email, internet or other electronic means or oral communications by representatives of the Advisor or Wasatch, or by dealers or their representatives. As noted above, the Trust has retained AST Fund Solutions to assist in the solicitation of proxies.
It is not anticipated that any action will be asked of the shareholders of the Target Fund other than as indicated above, but if other matters are properly brought before the Special Meeting, it is intended that the persons named in the proxy will vote in accordance with their judgment.
July 27, 2018
Please sign and return your proxy promptly.
Your vote is important, and your participation in the affairs of your Fund does make a difference.
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FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this [ ] day of [ ], 2017 by Wasatch Funds Trust, a Massachusetts business trust (the “Trust”), on behalf of and between Wasatch Global Value Fund, a series of the Trust (the “Acquiring Fund”), and Wasatch Long/Short Fund, a series of the Trust (the “Target Fund”), and Wasatch Advisors, Inc. (for purposes of Section 9.1 of the Agreement only), the investment adviser to each of the Acquiring Fund and the Target Fund (the “Adviser”). The Acquiring Fund and the Target Fund may each be referred to herein as a “Fund” and may collectively be referred to herein as the “Funds.”
This Agreement is intended to be, and is adopted as, a plan of reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder. The reorganization will consist of: (i) the transfer of all the assets of the Target Fund to the Acquiring Fund in exchange solely for Investor Class and Institutional Class shares of beneficial interest of the Acquiring Fund (“Acquiring Fund Shares”) and the assumption by the Acquiring Fund of all the liabilities of the Target Fund; and (ii) the pro rata distribution, by class, of all the Acquiring Fund Shares to the shareholders of each corresponding class of the Target Fund, in complete liquidation and termination of the Target Fund as provided herein, all upon the terms and conditions set forth in this Agreement (the “Reorganization”).
WHEREAS, each Fund is a separate series of the Trust, each Fund has designated two separate classes, an Investor Class and an Institutional Class, and the Trust is an open-end, management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Target Fund owns securities that generally are assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue the Acquiring Fund Shares; and
WHEREAS, the Board of Trustees of the Trust (the “Board”) has made the determinations required by Rule 17a-8 under the 1940 Act with respect to the Target Fund and Acquiring Fund, respectively.
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE TARGET FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES AND THE ASSUMPTION OF THE TARGET FUND LIABILITIES AND
TERMINATION AND LIQUIDATION OF THE TARGET FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein and on the basis of the representations and warranties contained herein, the Target Fund agrees to transfer all of its assets, as set forth in Section 1.2, to the Acquiring Fund. In consideration therefor, the Acquiring Fund agrees: (i) to deliver to the Target Fund the number of full and fractional Acquiring Fund Shares, computed in the manner set forth in Section 2.3; and (ii) to assume all the liabilities of the Target Fund, as set forth in Section 1.3. All Acquiring Fund Shares delivered to the Target Fund shall be delivered at net asset value without a sales load, commission or other similar fee being imposed. Such transactions shall take place at the closing provided for in Section 3.1 (the “Closing”).
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1.2 ASSETS TO BE TRANSFERRED. The Target Fund shall transfer all of its assets to the Acquiring Fund, including, without limitation, all cash, securities, commodities, interests in futures, dividends or interest receivables owned by the Target Fund and any deferred or prepaid expenses shown as an asset on the books of the Target Fund as of the Closing.
The Target Fund will, within a reasonable period of time before the Closing Date, as such term is defined in Section 3.1, furnish the Acquiring Fund with a list of the Target Fund’s portfolio securities and other investments. The Acquiring Fund will, within a reasonable period of time before the Closing Date, furnish the Target Fund with a list of the securities, if any, on the Target Fund’s list referred to above that do not conform to the Acquiring Fund’s investment objective, policies, and restrictions. The Target Fund, if requested by the Acquiring Fund, will dispose of securities on the list provided by the Acquiring Fund before the Closing. In addition, if it is determined that the portfolios of the Target Fund and the Acquiring Fund, when aggregated, would contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments, the Target Fund, if requested by the Acquiring Fund, will dispose of a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Closing. Notwithstanding the foregoing, nothing herein will require the Target Fund to dispose of any investments or securities if, in the reasonable judgment of the Board or the Adviser, such disposition would adversely affect the status of the Reorganization as a “reorganization” as such term is used in the Code or would otherwise not be in the best interests of the Target Fund.
1.3 LIABILITIES TO BE ASSUMED. The Target Fund will endeavor to discharge all of its known liabilities and obligations to the extent possible before the Closing Date. Notwithstanding the foregoing, any liabilities not so discharged shall be assumed by the Acquiring Fund, which assumed liabilities shall include all of the Target Fund’s liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Closing, and whether or not specifically referred to in this Agreement.
1.4 LIQUIDATING DISTRIBUTION. As of the Effective Time, the Target Fund will distribute in complete liquidation of the Target Fund each class of the Acquiring Fund Shares received pursuant to Section 1.1 to its shareholders of record with respect to each corresponding class of shares, determined as of the time of such distribution (each a “Target Fund Shareholder” and collectively, the “Target Fund Shareholders”), on a pro rata basis within that class. Such distribution will be accomplished with respect to each class of shares of the Target Fund by the transfer of the Acquiring Fund Shares of the corresponding class then credited to the account of the Target Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Target Fund Shareholders of such class. All issued and outstanding shares of the Target Fund will simultaneously be cancelled on the books of the Target Fund and retired. The Acquiring Fund shall not issue certificates representing Acquiring Fund Shares in connection with such transfers.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s transfer agent. Acquiring Fund Shares will be issued to the Target Fund, in an amount computed in the manner set forth in Section 2.3, to be distributed to the Target Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of Acquiring Fund Shares due a Target Fund Shareholder pursuant to Section 1.4 that result from such issuance being made to an account in a name other than the registered holder of such Target Fund shares on the books of the Target Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.7 LIQUIDATION AND TERMINATION. The Target Fund shall completely liquidate and be dissolved, terminated and have its affairs wound up in accordance with Massachusetts state law promptly following the Closing and the making of all distributions pursuant to Section 1.4, but in no event later than 12 months following the Closing Date.
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1.8 REPORTING. Any reporting responsibility of the Target Fund including, without limitation, the responsibility for filing of regulatory reports, tax returns or other documents with the Securities and Exchange Commission (the “Commission”), any state securities commission and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Target Fund.
1.9 BOOKS AND RECORDS. All books and records of the Target Fund, including all books and records required to be maintained under the 1940 Act, and the rules and regulations thereunder, shall be available to the Acquiring Fund from and after the Closing Date and shall be turned over to the Acquiring Fund as soon as practicable following the Closing.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Target Fund’s assets and liabilities shall be computed as of the close of regular trading on the New York Stock Exchange (“NYSE”) on the Closing Date (such time and date being hereinafter called the “Valuation Time”), using the valuation procedures set forth in the Acquiring Fund’s Prospectus and Statement of Additional Information (in effect as of the Closing Date) or such other valuation procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share per class of Acquiring Fund Shares shall be the net asset value per share for such class computed as of the Valuation Time, using the valuation procedures set forth in Section 2.1.
2.3 SHARES TO BE ISSUED. The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in consideration for the net assets as described in Article I, shall be determined with respect to each class by dividing the value of the assets (net of liabilities) with respect to each class of shares of the Target Fund determined in accordance with Section 2.1 by the net asset value of an Acquiring Fund Share of the corresponding class determined in accordance with Section 2.2. Shareholders of record of Investor Class shares of the Target Fund at the Closing will be credited with full and fractional Investor Class shares of the Acquiring Fund. Shareholders of record of Institutional Class shares of the Target Fund at the Closing will be credited with full and fractional Institutional Class shares of the Acquiring Fund.
2.4 EFFECT OF SUSPENSION IN TRADING. In the event that on the Closing Date, either: (a) the NYSE or another primary exchange on which the portfolio securities of the Acquiring Fund or the Target Fund are purchased or sold shall be closed to trading or trading on such exchange shall be restricted; or (b) trading or the reporting of trading on the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Target Fund is impracticable, the Closing Date shall be postponed until at least the first business day when trading is fully resumed and reporting is restored.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING. The Closing shall occur on September 7, 2018 or such other date as the parties may agree (the “Closing Date”). Unless otherwise provided, all acts taking place at the Closing shall be deemed to take place as of immediately after the Valuation Time on the Closing Date (the “Effective Time”). The Closing shall be held as of the close of business at the offices of Wasatch Advisors, Inc. in Salt Lake City, Utah or at such other time and/or place as the parties may agree.
3.2 CUSTODIAN’S CERTIFICATE. The Target Fund shall cause its custodian to deliver to the Acquiring Fund at the Closing a certificate of an authorized officer stating that: (a) the Target Fund’s
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portfolio securities, cash, and any other assets shall have been delivered in proper form to the Acquiring Fund’s custodian on behalf of the Acquiring Fund on the Closing Date; and (b) all necessary taxes, including all applicable federal and state stock transfer stamps, if any, shall have been paid, or provision for payment shall have been made, in conjunction with the delivery of portfolio securities by the Target Fund.
3.3 TRANSFER AGENT’S CERTIFICATE. The Target Fund shall cause its transfer agent to deliver to the Acquiring Fund at the Closing a certificate of an authorized officer stating that such transfer agent’s records contain the names and addresses of all the Investor Class and Institutional Class Shareholders, and the number and percentage ownership of outstanding shares per class owned by each such shareholder as of the Closing. The Acquiring Fund shall issue and deliver or cause its transfer agent to issue and deliver to the Target Fund a confirmation evidencing the Investor Class and Institutional Class Acquiring Fund Shares to be credited at the Closing to the Secretary of the Trust or provide evidence satisfactory to the Target Fund that such Acquiring Fund Shares have been credited to the Target Fund’s account on the books of the Acquiring Fund.
3.4 DELIVERY OF ADDITIONAL ITEMS. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, share certificates, receipts and other documents, if any, as such other party or its counsel may reasonably request to effect the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE TARGET FUND. The Trust, on behalf of the Target Fund, represents and warrants as follows:
(a) The Trust is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts.
(b) The Target Fund is a separate series of the Trust duly authorized in accordance with the applicable provisions of the Trust’s Declaration of Trust, as amended (the “Declaration of Trust”).
(c) The Trust is registered as an open-end management investment company under the 1940 Act, and such registration is in full force and effect.
(d) The Target Fund is not, and the execution, delivery, and performance of this Agreement (subject to shareholder approval) will not result in, the violation of any provision of the Trust’s Declaration of Trust or By-Laws, as amended and restated (the “By-Laws”) or of any material agreement, indenture, instrument, contract, lease, or other undertaking to which the Target Fund is a party or by which it is bound.
(e) Except as otherwise disclosed in writing to and accepted by the Acquiring Fund, the Target Fund has no material contracts or other commitments that will be terminated with liability to the Target Fund before the Closing.
(f) No litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Target Fund or any of its properties or assets, which, if adversely determined, would materially and adversely affect the Target Fund’s financial condition, the conduct of its business, or the ability of the Target Fund to carry out the transactions contemplated by this Agreement. The Target Fund knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
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(g) The financial statements of the Target Fund as of September 30, 2017, and for the year then ended have been prepared in accordance with generally accepted accounting principles and have been audited by an independent registered public accounting firm, and such statements (copies of which have been furnished to the Acquiring Fund) fairly reflect the financial condition of the Target Fund as of September 30, 2017, and there are no known liabilities, contingent or otherwise, of the Target Fund as of such date that are not disclosed in such statements.
(h) Since the date of the financial statements referred to in subsection (g) above, there have been no material adverse changes in the Target Fund’s financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of business) and there are no known contingent liabilities of the Target Fund arising after such date. For the purposes of this subsection (h), a decline in the net asset value of the Target Fund shall not constitute a material adverse change.
(i) All federal, state, local and other tax returns and reports of the Target Fund required by law to be filed by it (taking into account permitted extensions for filing) have been timely filed and are complete and correct in all material respects. All federal, state, local and other taxes of the Target Fund required to be paid (whether or not shown on any such return or report) have been paid, or provision shall have been made for the payment thereof and any such unpaid taxes, as of the date of the financial statements referred to in subsection (g) above, are properly reflected thereon. To the best of the Target Fund’s knowledge, no tax authority is currently auditing or preparing to audit the Target Fund, and no assessment for taxes, interest, additions to tax or penalties has been asserted against the Target Fund.
(j) All issued and outstanding shares of the Target Fund are, and as of the Closing will be, duly and validly issued and outstanding, fully paid and non-assessable by the Target Fund (recognizing that under Massachusetts law, Target Fund shareholders, under certain circumstances, could be held personally liable for the obligations of the Target Fund). All the issued and outstanding shares of the Target Fund will, at the time of the Closing, be held by the persons and in the amounts set forth in the records of the Target Fund’s transfer agent as provided in Section 3.3. The Target Fund has no outstanding options, warrants or other rights to subscribe for or purchase any shares of the Target Fund, and has no outstanding securities convertible into shares of the Target Fund.
(k) At the Closing, the Target Fund will have good and marketable title to the Target Fund’s assets to be transferred to the Acquiring Fund pursuant to Section 1.2, and full right, power, and authority to sell, assign, transfer, and deliver such assets free and clear of any liens, encumbrances and restrictions on transfer, except those liens, encumbrances and restrictions for which the Acquiring Fund has received written notice of prior to the Closing and not objected to, and the Acquiring Fund will acquire good and marketable title thereto, subject to no other restrictions on the full transfer thereof, including such restrictions as might arise under the Securities Act of 1933, as amended (the “1933 Act”), except those restrictions as to which the Acquiring Fund has received notice and necessary documentation at or prior to the Closing.
(l) The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Target Fund including the determinations of the Board required by Rule 17a-8(a) of the 1940 Act. Subject to approval by the Target Fund shareholders, this Agreement constitutes a valid and binding obligation of the Target Fund, enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights and to general equity principles.
(m) The information to be furnished by the Target Fund for use in no-action letters, applications for orders, registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated herein shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations.
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(n) From the effective date of the Registration Statement (as defined in Section 5.7), through the time of the meeting of the Target Fund shareholders and on the Closing Date, any written information furnished by the Trust with respect to the Target Fund for use in the Registration Statement, Proxy Materials (as defined in Section 5.7) and any supplement or amendment thereto or to the documents included or incorporated by reference therein, or any other materials provided in connection with the Reorganization, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading.
(o) For each taxable year of its operations (including the taxable year ending on the Closing Date), the Target Fund (i) has elected to qualify, and has qualified or will qualify (in the case of the taxable year ending on the Closing Date), as a “regulated investment company” under the Code (a “RIC”); (ii) has been eligible to compute and has computed its federal income tax under Section 852 of the Code, and on or prior to the Closing Date will have declared and paid a distribution with respect to all of its investment company taxable income (determined without regard to the deduction for dividends paid), the excess of its interest income excludible from gross income under Section 103(a) of the Code over its deductions disallowed under Sections 265 and 171(a)(2) of the Code and its net capital gain (after reduction for any available capital loss carryforward) (as such terms are defined in the Code) that has accrued or will accrue on or prior to the Closing Date; and (iii) has been, and will be (in the case of the taxable year ending on the Closing Date), treated as a separate corporation for federal income tax purposes pursuant to Section 851(g) of the Code.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Trust, on behalf of the Acquiring Fund, represents and warrants as follows:
(a) The Trust is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts.
(b) The Acquiring Fund is a separate series of the Trust duly authorized in accordance with the applicable provisions of the Trust’s Declaration of Trust.
(c) The Trust is registered as an open-end management investment company under the 1940 Act, and such registration is in full force and effect.
(d) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement will not result, in a violation of the Trust’s Declaration of Trust or By-Laws or of any material agreement, indenture, instrument, contract, lease, or other undertaking to which the Acquiring Fund is a party or by which it is bound.
(e) No litigation, administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquiring Fund or any of its properties or assets, which, if adversely determined, would materially and adversely affect the Acquiring Fund’s financial condition, the conduct of its business or the ability of the Acquiring Fund to carry out the transactions contemplated by this Agreement. The Acquiring Fund knows of no facts that might form the basis for the institution of such proceedings and it is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transaction contemplated herein.
(f) The financial statements of the Acquiring Fund as of September 30, 2017 and for the fiscal year then ended have been prepared in accordance with generally accepted accounting principles and have been audited by an independent registered public accounting firm, and such statements (copies of which have been furnished to the Target Fund) fairly reflect the financial condition of the Acquiring Fund as of September 30, 2017, and there are no known liabilities, contingent or otherwise, of the Acquiring Fund as of such date that are not disclosed in such statements.
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(g) Since the date of the financial statements referred to in subsection (f) above, there have been no material adverse changes in the Acquiring Fund’s financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of business) and there are no known contingent liabilities of the Acquiring Fund arising after such date. For the purposes of this subsection (g), a decline in the net asset value of the Acquiring Fund shall not constitute a material adverse change.
(h) All federal, state, local and other tax returns and reports of the Acquiring Fund required by law to be filed by it (taking into account permitted extensions for filing) have been timely filed and are complete and correct in all material respects. All federal, state, local and other taxes of the Acquiring Fund required to be paid (whether or not shown on any such return or report) have been paid or provision shall have been made for their payment and any such unpaid taxes, as of the date of the financial statements referred to above, are properly reflected thereon. To the best of the Acquiring Fund’s knowledge, no tax authority is currently auditing or preparing to audit the Acquiring Fund, and no assessment for taxes, interest, additions to tax or penalties has been asserted against the Acquiring Fund.
(i) All issued and outstanding shares of the Acquiring Fund are, and, as of the Closing will be, duly and validly issued, fully paid and non-assessable by the Acquiring Fund (recognizing that under Massachusetts law, Acquiring Fund shareholders, under certain circumstances, could be held personally liable for the obligations of the Acquiring Fund). The Acquiring Fund has no outstanding options, warrants, or other rights to subscribe for or purchase shares of the Acquiring Fund, and there are no outstanding securities convertible into shares of the Acquiring Fund.
(j) The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Acquiring Fund, including the determination of the Board required pursuant to Rule 17a-8(a) of the 1940 Act. This Agreement constitutes a valid and binding obligation of the Acquiring Fund, enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights and to general equity principles.
(k) The Acquiring Fund Shares to be issued and delivered to the Target Fund for the account of the Target Fund Shareholders pursuant to the terms of this Agreement will, at the time of the Closing, have been duly authorized. When so issued and delivered, such shares will be duly and validly issued shares of the Acquiring Fund, and will be fully paid and non-assessable (recognizing that under Massachusetts law, Acquiring Fund shareholders, under certain circumstances, could be held personally liable for the obligations of the Acquiring Fund).
(l) The information to be furnished by the Acquiring Fund for use in no-action letters, applications for orders, registration statements, proxy materials, and other documents that may be necessary in connection with the transactions contemplated herein shall be accurate and complete in all material respects and shall comply in all material respects with federal securities laws and other laws and regulations.
(m) From the effective date of the Registration Statement (as defined in Section 5.7), through the time of the meeting of the Target Fund shareholders and on the Closing Date, any written information furnished by the Trust with respect to the Acquiring Fund for use in the Registration Statement, Proxy Materials and any supplement or amendment thereto or to the documents included or incorporated by reference therein, or any other materials provided in connection with the Reorganization, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading.
(n) For each taxable year of its operations, including the taxable year that includes the Closing Date, the Acquiring Fund (i) has elected to qualify, has qualified or will qualify (in the case of the year that includes the Closing Date) and intends to continue to qualify as a RIC under the Code; (ii) has been
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eligible to and has computed its federal income tax under Section 852 of the Code, and will do so for the taxable year that includes the Closing Date; and (iii) has been, and will be (in the case of the taxable year that includes the Closing Date), treated as a separate corporation for federal income tax purposes pursuant to Section 851(g) of the Code.
ARTICLE V
COVENANTS OF THE FUNDS
5.1 OPERATION IN ORDINARY COURSE. Subject to Sections 1.2 and 7.3, each of the Acquiring Fund and the Target Fund will operate its respective business in the ordinary course between the date of this Agreement and the Closing, it being understood that such ordinary course of business will include customary dividends and distributions, any other distribution necessary or desirable to avoid federal income or excise taxes, and shareholder purchases and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Trust will call a special meeting of the Target Fund shareholders to consider and act upon this Agreement (and the transactions contemplated thereby) and to take all other appropriate action necessary to obtain approval of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Target Fund covenants that the Acquiring Fund Shares to be issued pursuant to this Agreement are not being acquired for the purpose of making any distribution, other than in connection with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Target Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Target Fund’s shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, each Fund will take or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including any actions required to be taken after the Closing Date. The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act, and any state securities laws as it may deem appropriate in order to continue its operations after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any case within 60 days after the Closing Date, the Target Fund shall furnish the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring Fund and which shall be certified by the Trust’s Controller or Treasurer, a statement of the earnings and profits of the Target Fund for federal income tax purposes, as well as any net operating loss carryovers and capital loss carryovers, that will be carried over to the Acquiring Fund pursuant to Section 381 of the Code.
5.7 PREPARATION OF REGISTRATION STATEMENT AND PROXY MATERIALS. The Trust will prepare and file with the Commission a registration statement on Form N-14 relating to the Acquiring Fund Shares to be issued to the Target Fund for distribution to Target Fund Shareholders (the “Registration Statement”). The Registration Statement shall include a proxy statement of the Target Fund and a prospectus of the Acquiring Fund relating to the transactions contemplated by this Agreement. The Registration Statement shall be in compliance with the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act, as applicable. Each party will provide the other party with the materials and information necessary to prepare the proxy statement and related materials (the “Proxy Materials”), for inclusion therein, in connection with the meeting of the Target Fund’s shareholders to consider the approval of this Agreement and the transactions contemplated herein.
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5.8 TAX STATUS OF REORGANIZATION. The intention of the parties is that the Reorganization will qualify as a reorganization within the meaning of Section 368(a) of the Code. None of the Target Fund, the Acquiring Fund or the Trust shall take any action, or cause any action to be taken (including, without limitation, the filing of any tax return), that is inconsistent with such treatment or results in the failure of the transaction to qualify as a reorganization within the meaning of Section 368(a) of the Code. At or prior to the Closing, the Target Fund, the Acquiring Fund and the Trust will take such action, or cause such action to be taken, as is reasonably necessary to enable counsel to render the tax opinion contemplated in Section 8.6 herein.
ARTICLE VI
CONDITION PRECEDENT TO OBLIGATIONS OF THE TARGET FUND
The obligations of the Target Fund to consummate the transactions provided for herein shall be subject to the fulfillment or waiver of the following conditions:
6.1 The Acquiring Fund shall have delivered to the Target Fund on the Closing Date a certificate executed in its name by the Trust’s President or any Vice President, in a form reasonably satisfactory to the Target Fund and dated as of the Closing Date, to the effect that the representations, covenants, and warranties of the Trust, on behalf of the Acquiring Fund, made in this Agreement are true and correct in all material respects as of the Closing, with the same force and effect as if made as of the Closing, and as to such other matters as the Target Fund shall reasonably request.
6.2 The Acquiring Fund shall have performed and complied in all material respects with all terms, conditions, covenants, obligations, agreements and restrictions required by this Agreement to be performed or complied with by the Acquiring Fund prior to or at the Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions provided for herein shall be subject to the fulfillment or waiver of the following conditions:
7.1 The Target Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in its name by the Trust’s Chief Administrative Officer or any Vice President, in a form reasonably satisfactory to the Acquiring Fund and dated as of the Closing Date, to the effect that the representations, covenants, and warranties of the Trust, on behalf of the Target Fund, made in this Agreement are true and correct in all material respects as of the Closing, with the same force and effect as if made as of the Closing, and as to such other matters as the Acquiring Fund shall reasonably request.
7.2 The Target Fund shall have delivered to the Acquiring Fund a statement of the Target Fund’s assets and liabilities, together with a list of the Target Fund’s portfolio securities showing the tax basis of such securities by lot and the holding periods of such securities, as of the Closing, certified by the Controller or Treasurer of the Trust.
7.3 The Target Fund shall have declared and paid prior to the Valuation Time a dividend or dividends which, together with all previous such dividends, shall have the effect of distributing to its shareholders at least all of the Target Fund’s investment company taxable income for all taxable periods ending on or before the Closing Date (computed without regard to any deduction for dividends paid), if any, plus the excess of its interest income excludible from gross income under Section 103(a) of the Code, if any, over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for all taxable periods ending on or before the Closing Date and all of its net capital gains realized in all taxable periods ending on or before the
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Closing Date (after reduction for any available capital loss carry forward and excluding any net capital gain on which the Target Fund paid tax under Section 852(b)(3)(A) of the Code).
7.4 The Target Fund shall have performed and complied in all material respects with all terms, conditions, covenants, obligations, agreements and restrictions required by this Agreement to be performed or complied with by the Target Fund prior to or at the Closing.
7.5 The Target Fund shall have delivered to the Acquiring Fund such records, agreements, certificates, instruments and such other documents as the Acquiring Fund shall reasonably request.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT
The obligations of the Target Fund and the Acquiring Fund to consummate the transactions provided for herein shall also be subject to the fulfillment (or waiver by the affected parties) of the following conditions:
8.1 This Agreement and the transactions contemplated herein, with respect to the Target Fund, shall have been approved by the requisite vote of the holders of the outstanding shares of the Target Fund in accordance with applicable law and the provisions of the Trust’s Declaration of Trust and By-Laws. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Target Fund may waive the conditions set forth in this Section 8.1.
8.2 On the Closing Date, the Commission shall not have issued an unfavorable report under Section 25(b) of the 1940 Act, or instituted any proceeding seeking to enjoin the consummation of the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action, suit or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with this Agreement or the transactions contemplated herein.
8.3 All required consents of other parties and all other consents, orders, and permits of federal, state and local regulatory authorities (including those of the Commission and of state securities authorities, including any necessary “no-action” positions and exemptive orders from such federal and state authorities) to permit consummation of the transactions contemplated herein shall have been obtained.
8.4 The Registration Statement shall have become effective under the 1933 Act, and no stop orders suspending the effectiveness thereof shall have been issued. To the best knowledge of the parties to this Agreement, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The Funds shall have received on the Closing Date an opinion from Chapman and Cutler LLP and/or Morgan Lewis & Bockius LLP, dated as of the Closing Date, substantially to the effect that:
(a) The Trust is a validly existing voluntary association with shares of beneficial interest commonly referred to as a “Massachusetts business trust,” and is existing under the laws of the Commonwealth of Massachusetts.
(b) The execution and delivery of the Agreement by the Trust, on behalf of the Funds, did not, and the exchange of the Target Fund’s assets for Acquiring Fund Shares pursuant to the Agreement and the issuance of Acquiring Fund Shares pursuant to the Agreement will not, violate the Trust’s Declaration of Trust or By-Laws.
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(c) To the knowledge of such counsel, and without any independent investigation, (i) the Trust is registered with the Commission as an open-end management investment company under the 1940 Act, and such registration under the 1940 Act is in full force and effect and is not subject to any stop order; and (ii) all regulatory consents, authorizations, orders, approvals or filings required to be obtained or made by a Fund under the federal laws of the United States of America or the laws of the Commonwealth of Massachusetts for the transfer of the Target Fund’s assets and liabilities in exchange for Acquiring Fund Shares, and for the issuance of Acquiring Fund Shares, as applicable, and all other transactions pursuant to the Agreement have been obtained or made.
8.6 The Funds shall have received on the Closing Date an opinion of Chapman and Cutler LLP addressed to the Acquiring Fund and the Target Fund substantially to the effect that for federal income tax purposes:
(a) The transfer of all the Target Fund’s assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of all the liabilities of the Target Fund immediately followed by the pro rata, by class, distribution to the Target Fund Shareholders of all the Acquiring Fund Shares received by the Target Fund in complete liquidation of the Target Fund and the termination of the Target Fund as soon as practicable thereafter will constitute a “reorganization” within the meaning of Section 368(a)(1) of the Code and the Acquiring Fund and the Target Fund will each be a “party to a reorganization,” within the meaning of Section 368(b) of the Code, with respect to the Reorganization.
(b) No gain or loss will be recognized by the Acquiring Fund upon the receipt of all the assets of the Target Fund solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of all the liabilities of the Target Fund.
(c) No gain or loss will be recognized by the Target Fund upon the transfer of all the Target Fund’s assets to the Acquiring Fund solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of all the liabilities of the Target Fund or upon the distribution (whether actual or constructive) of such Acquiring Fund Shares to the Target Fund Shareholders solely in exchange for such shareholders’ shares of the Target Fund in complete liquidation of the Target Fund.
(d) No gain or loss will be recognized by the Target Fund Shareholders upon the exchange of their Target Fund shares solely for Acquiring Fund Shares in the Reorganization.
(e) The aggregate basis of the Acquiring Fund Shares received by each Target Fund Shareholder pursuant to the Reorganization will be the same as the aggregate basis of the Target Fund shares exchanged therefor by such shareholder. The holding period of the Acquiring Fund Shares received by each Target Fund Shareholder in the Reorganization will include the period during which the Target Fund shares exchanged therefor were held by such shareholder, provided such Target Fund shares are held as capital assets at the time of the Reorganization.
(f) The basis of the Target Fund’s assets transferred to the Acquiring Fund will be the same as the basis of such assets in the hands of the Target Fund immediately before the effective time of the Reorganization. The holding period of the assets of the Target Fund received by the Acquiring Fund will include the period during which such assets were held by the Target Fund.
No opinion will be expressed as to (1) the effect of the Reorganization on the Target Fund, the Acquiring Fund or any Target Fund Shareholder with respect to any asset (including, without limitation, any stock held in a passive foreign investment company as defined in Section 1297(a) of the Code) as to which any unrealized gain or loss is required to be recognized under federal income tax principles (a) at the end of a taxable year (or on the termination thereof) or (b) upon the transfer of such asset regardless of whether such transfer would otherwise be a non-taxable transaction under the Code, or (2) any other federal tax issues (except those set forth above) and all state, local or foreign tax issues of any kind.
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Such opinion shall be based on certain factual representations, reasonable assumptions and such other representations as Chapman and Cutler LLP may request of the Funds, and the Target Fund and the Acquiring Fund will cooperate to make and certify the accuracy of such representations. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Target Fund may waive the conditions set forth in this Section 8.6.
ARTICLE IX
EXPENSES
9.1 The Adviser and the Target Fund will each pay one-half of the expenses incurred in connection with the Reorganization (“Reorganization Expenses”), subject to any contractual expense cap limitation then in effect. Reorganization Expenses include, without limitation: (a) expenses associated with the preparation and filing of the Registration Statement and other Proxy Materials; (b) postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each Fund; (f) solicitation costs of the transaction; (g) brokerage commissions incurred by the Target Fund in connection with its portfolio repositioning for the Reorganization; and (h) other related administrative or operational costs. To the extent that the payment of Reorganization Expenses would cause the Target Fund to exceed its contractual expense cap then in effect, the Adviser or an affiliate thereof will reimburse the portion of Reorganization Expenses necessary for the Target Fund to operate within its cap. for each share class. Notwithstanding any other agreement between the Advisor and the Trust, the Advisor will not recoup any Reorganization expenses paid pursuant to this section. If the Reorganization is not consummated, the Adviser or an affiliate thereof will bear full responsibility for payment of the Reorganization Expenses.
9.2 Each Fund represents and warrants to the other Fund that there is no person or entity entitled to receive any broker’s fees or similar fees or commission payments in connection with the transactions provided for herein.
9.3 Notwithstanding the foregoing, Reorganization Expenses will in any event be paid by the party directly incurring such Reorganization Expenses if and to the extent that the payment by another party of such Reorganization Expenses would result in the disqualification of the Target Fund or the Acquiring Fund, as the case may be, as a RIC under the Code.
ARTICLE X
ENTIRE AGREEMENT
10.1 The parties agree that no party has made to the other parties any representation, warranty and/or covenant not set forth herein, and that this Agreement constitutes the entire agreement between and among the parties.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the parties and such termination may be effected by the Trust’s President, or any Vice President without further action by the Board. In addition, either Fund may, at its option, terminate this Agreement at or before the Closing due to:
(a) a breach by any other party of any representation, warranty, or agreement contained herein to be performed at or before the Closing, if not cured within 30 days of notification to the breaching party and prior to the Closing;
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(b) a condition precedent to the obligations of the terminating party that has not been met or waived and it reasonably appears that it will not or cannot be met; or
(c) a determination by the Board that the consummation of the transactions contemplated herein is not in the best interests of the Target Fund or Acquiring Fund, respectively.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such manner as may be mutually agreed upon in writing by the officers of the Trust as specifically authorized by the Board; provided, however, that following the meeting of the Target Fund shareholders called by the Target Fund pursuant to Section 5.2 of this Agreement, no such amendment, modification or supplement may have the effect of changing the provisions for determining the number of Acquiring Fund Shares to be issued to the Target Fund Shareholders under this Agreement to the detriment of such shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The article and section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
13.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but, except as provided in this section, no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other parties. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm, or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of each Fund hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents, or employees of the Trust personally, but shall bind only the property of such Fund, as provided in the Trust’s Declaration of Trust, which is on file with the Secretary of the Commonwealth of Massachusetts. The execution and delivery of this Agreement have been authorized by the Trustees of the Trust, on behalf of each Fund, and signed by authorized officers of the Trust acting as such. Neither the authorization by such Trustees nor the execution and delivery by such officers shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of such Fund as provided in the Trust’s Declaration of Trust.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first written above.
WASATCH FUNDS TRUST, on behalf of the Wasatch Long/Short Fund | ||
By: | ||
Name : | ||
Title: | ||
ACKNOWLEDGED: | ||
By: | ||
Name : | ||
WASATCH FUNDS TRUST, on behalf of Wasatch Global Value Fund | ||
By: | ||
Name : | ||
Title: | ||
ACKNOWLEDGED: | ||
By: | ||
Name : | ||
The undersigned is a party to this Agreement for the purposes of Section 9.1 only: | ||
WASATCH ADVISORS INC. | ||
By: | ||
Name : | ||
Title: | ||
ACKNOWLEDGED: | ||
By: | ||
Name : |
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Pro Forma Financial Statements for the Reorganization of Wasatch Long/Short Fund (the “Target Fund”) into Wasatch Global Value Fund (the “Acquiring Fund”)
The unaudited pro forma financial statements are presented to show the effect of the proposed reorganization of the Wasatch Long/Short Fund (the “Target Fund”) into the Wasatch Global Value Fund (the “Acquiring Fund”) (formerly Wasatch Large Cap Value Fund), each an open-end management investment company under the Investment Company Act of 1940, as amended (the “Reorganization”). The Reorganization will consist of (i) the transfer of all the assets of the Target Fund to the Acquiring Fund in exchange solely for shares of beneficial interest of the Acquiring Fund and the assumption by the Acquiring Fund of all of the liabilities of the Target Fund; and (ii) the pro rata distribution of shares of the Acquiring Fund to the shareholders of the Target Fund in complete liquidation and termination of the Target Fund. The Pro Forma Schedule of Investments and the Pro Forma Statement of Assets and Liabilities are presented for the Acquiring Fund, the Target Fund and the combination of the Acquiring Fund and the Target Fund (the “Pro Forma Acquiring Fund”) as of March 31, 2018. The Pro Forma Statement of Operations is presented for the Acquiring Fund, the Target Fund and the Pro Forma Acquiring Fund for the period from April 1, 2017 through March 31, 2018.
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Pro Forma Combined Schedule of Investments
As of March 31, 2018 (Unaudited)
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
Common Stocks 95.0% † | ||||||||||||||||||||||||||||
Airlines 1.7% | ||||||||||||||||||||||||||||
Japan Airlines Co. Ltd. (Japan) | - | 101,000 | 101,000 | $ | - | $ | 4,064,489 | $ | - | $ | 4,064,489 | |||||||||||||||||
Automobile Manufacturers 0.4% | ||||||||||||||||||||||||||||
General Motors Co.# | 28,500 | - | 28,500 | 1,035,690 | - | - | 1,035,690 | |||||||||||||||||||||
Communications Equipment 4.6% | ||||||||||||||||||||||||||||
Cisco Systems, Inc.†† | 90,200 | 163,000 | 253,200 | 3,868,678 | 6,991,070 | - | 10,859,748 | |||||||||||||||||||||
Construction & Engineering 1.0% | ||||||||||||||||||||||||||||
CTCI Corp. (Taiwan) | - | 1,360,000 | 1,360,000 | - | 2,259,903 | - | 2,259,903 | |||||||||||||||||||||
Data Processing & Outsourced Services 0.7% | ||||||||||||||||||||||||||||
Cielo S.A. (Brazil) | - | 250,000 | 250,000 | - | 1,566,736 | - | 1,566,736 | |||||||||||||||||||||
Diversified Banks 16.9% | ||||||||||||||||||||||||||||
BNP Paribas S.A. (France) | - | 57,000 | 57,000 | 4,227,159 | 4,227,159 | |||||||||||||||||||||||
Citigroup, Inc.# | 49,016 | 80,000 | 129,016 | 3,308,580 | 5,400,000 | - | 8,708,580 | |||||||||||||||||||||
ING Groep N.V., ADR (Netherlands) | 136,800 | 297,000 | 433,800 | 2,316,024 | 5,028,210 | - | 7,344,234 | |||||||||||||||||||||
Mizuho Financial Group, Inc. (Japan) | - | 2,750,000 | 2,750,000 | - | 4,946,666 | - | 4,946,666 | |||||||||||||||||||||
Nordea Bank AB (Sweden) | - | 565,000 | 565,000 | - | 6,045,478 | - | 6,045,478 | |||||||||||||||||||||
Wells Fargo & Co. | 54,000 | 112,000 | 166,000 | 2,830,140 | 5,869,920 | - | 8,700,060 | |||||||||||||||||||||
8,454,744 | 31,517,433 | - | 39,972,177 | |||||||||||||||||||||||||
Drug Retail 3.6% | ||||||||||||||||||||||||||||
CVS Health Corp. | 32,000 | 103,000 | 135,000 | 1,990,720 | 6,407,630 | - | 8,398,350 | |||||||||||||||||||||
Electric Utilities 6.2% | ||||||||||||||||||||||||||||
Entergy Corp. | 9,000 | 23,000 | 32,000 | 709,020 | 1,811,940 | 2,520,960 | ||||||||||||||||||||||
Exelon Corp.†† # | 110,135 | 198,000 | 308,135 | 4,296,366 | 7,723,980 | - | 12,020,346 | |||||||||||||||||||||
5,005,386 | 9,535,920 | - | 14,541,306 | |||||||||||||||||||||||||
Electrical Components & Equipment 2.7% | ||||||||||||||||||||||||||||
Eaton Corp. plc |
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| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
- | 65,000 | 65,000 | - | 5,194,150 | - | 5,194,150 | ||||||||||||||||||||||
Emerson Electric Co.# | 18,023 | - | 18,023 | 1,230,971 | - | - | 1,230,971 | |||||||||||||||||||||
1,230,971 | 5,194,150 | - | 6,425,121 | |||||||||||||||||||||||||
Fertilizers & Agricultural Chemicals 0.8% | ||||||||||||||||||||||||||||
Mosaic Co. (The)# | 79,995 | - | 79,995 | 1,942,279 | - | - | 1,942,279 | |||||||||||||||||||||
Food Retail 0.6% | ||||||||||||||||||||||||||||
Kroger Co. (The)# | 56,600 | - | 56,600 | 1,355,004 | - | - | 1,355,004 | |||||||||||||||||||||
Health Care Equipment 0.8% | ||||||||||||||||||||||||||||
Medtronic plc# | 24,700 | - | 24,700 | 1,981,434 | - | - | 1,981,434 | |||||||||||||||||||||
Health Care Services 3.0% | ||||||||||||||||||||||||||||
Laboratory Corp. of America Holdings* | 13,205 | 31,000 | 44,205 | 2,135,909 | 5,014,250 | 7,150,159 | ||||||||||||||||||||||
Hotels, Resorts & Cruise Lines 0.8% | ||||||||||||||||||||||||||||
Extended Stay America, Inc.** # | 98,255 | - | 98,255 | 1,942,501 | - | - | 1,942,501 | |||||||||||||||||||||
Hypermarkets & Super Centers 1.9% | ||||||||||||||||||||||||||||
Wal-Mart Stores, Inc. | - | 51,700 | 51,700 | - | 4,599,749 | - | 4,599,749 | |||||||||||||||||||||
Integrated Oil & Gas 6.9% | ||||||||||||||||||||||||||||
Royal Dutch Shell plc ADR (Netherlands) | 37,900 | 89,500 | 127,400 | 2,418,399 | 5,710,995 | - | 8,129,394 | |||||||||||||||||||||
Suncor Energy, Inc. (Canada) | 73,000 | 165,000 | 238,000 | 2,521,420 | 5,699,100 | - | 8,220,520 | |||||||||||||||||||||
4,939,819 | 11,410,095 | - | 16,349,914 | |||||||||||||||||||||||||
Integrated Telecommunication Services 1.3% | ||||||||||||||||||||||||||||
AT&T, Inc.# | 45,000 | - | 45,000 | 1,604,250 | - | - | 1,604,250 | |||||||||||||||||||||
Verizon Communications, Inc.# | 30,300 | - | 30,300 | 1,448,946 | - | - | 1,448,946 | |||||||||||||||||||||
3,053,196 | - | - | 3,053,196 | |||||||||||||||||||||||||
Oil & Gas Drilling 0.8% | ||||||||||||||||||||||||||||
Ensco plc, Class A | 141,000 | 310,000 | 451,000 | 618,990 | 1,360,900 | - | 1,979,890 | |||||||||||||||||||||
Oil & Gas Equipment & Services 1.6% | ||||||||||||||||||||||||||||
Schlumberger Ltd. | - | 59,400 | 59,400 | - | 3,847,932 | - | 3,847,932 | |||||||||||||||||||||
Oil & Gas Exploration & Production 1.0% | ||||||||||||||||||||||||||||
Anadarko Petroleum Corp.# | 40,000 | - | 40,000 | 2,416,400 | - | - | 2,416,400 | |||||||||||||||||||||
Oil & Gas Storage & |
B-3
Table of Contents
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
Transportation 1.6% | ||||||||||||||||||||||||||||
Enbridge Income Fund Holdings, Inc. (Canada) | - | 173,000 | 173,000 | - | 3,749,105 | - | 3,749,105 | |||||||||||||||||||||
Other Diversified Financial Services 2.1% | ||||||||||||||||||||||||||||
Fubon Financial Holding Co. Ltd. (Taiwan) | - | 2,910,000 | 2,910,000 | - | 5,010,186 | - | 5,010,186 | |||||||||||||||||||||
Packaged Foods & Meats 0.6% | ||||||||||||||||||||||||||||
General Mills, Inc.# | 31,960 | 31,960 | 1,440,118 | - | 1,440,118 | |||||||||||||||||||||||
Pharmaceuticals 11.2% | ||||||||||||||||||||||||||||
Allergan plc# | 8,000 | 8,000 | 1,346,320 | - | - | 1,346,320 | ||||||||||||||||||||||
Johnson & Johnson# | 25,948 | 25,948 | 3,325,236 | - | - | 3,325,236 | ||||||||||||||||||||||
Novartis AG (Switzerland) | 39,273 | 80,575 | 119,848 | 3,175,222 | 6,516,977 | - | 9,692,199 | |||||||||||||||||||||
Pfizer, Inc.†† | 112,400 | 226,000 | 338,400 | 3,989,076 | 8,020,740 | - | 12,009,816 | |||||||||||||||||||||
11,835,854 | 14,537,717 | - | 26,373,571 | |||||||||||||||||||||||||
Property & Casualty Insurance 1.9% | ||||||||||||||||||||||||||||
Axis Capital Holdings Ltd. | 78,100 | 78,100 | - | 4,496,217 | - | 4,496,217 | ||||||||||||||||||||||
Reinsurance 2.8% | ||||||||||||||||||||||||||||
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Germany) | 29,000 | 29,000 | - | 6,743,695 | - | 6,743,695 | ||||||||||||||||||||||
Semiconductors 0.9% | ||||||||||||||||||||||||||||
Tower Semiconductor Ltd.* #(Israel) | 75,000 | �� | 75,000 | 2,018,250 | - | - | 2,018,250 | |||||||||||||||||||||
Specialized REITs 3.2% | ||||||||||||||||||||||||||||
EPR Properties | 45,500 | 91,000 | 136,500 | 2,520,700 | 5,041,400 | - | 7,562,100 | |||||||||||||||||||||
Systems Software 3.9% | ||||||||||||||||||||||||||||
Oracle Corp. | 59,650 | 141,000 | 200,650 | 2,728,987 | 6,450,750 | - | 9,179,737 | |||||||||||||||||||||
Technology Hardware, Storage & Peripherals 1.3% | ||||||||||||||||||||||||||||
Apple, Inc.†† # | 8,000 | 10,000 | 18,000 | 1,342,240 | 1,677,800 | - | 3,020,040 | |||||||||||||||||||||
Tobacco 1.7% | ||||||||||||||||||||||||||||
KT&G Corp. (Korea) | - | 43,000 | 43,000 | - | 4,034,150 | - | 4,034,150 | |||||||||||||||||||||
Water Utilities 1.3% | ||||||||||||||||||||||||||||
Guangdong Investment Ltd. (China) | - | 2,000,000 | 2,000,000 | - | 3,168,533 | - | 3,168,533 | |||||||||||||||||||||
Wireless Telecommunication Services 5.2% | ||||||||||||||||||||||||||||
ChinaMobile Ltd. (China) | - | 720,000 | 720,000 | - | 6,599,082 | - | 6,599,082 | |||||||||||||||||||||
NTT DOCOMO, Inc. (Japan) |
B-4
Table of Contents
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
- | 220,100 | 220,100 | - | 5,619,112 | - | 5,619,112 | ||||||||||||||||||||||
- | 12,218,194 | - | 12,218,194 | |||||||||||||||||||||||||
Total Common Stocks (Cost $207,036,342) | 63,857,870 | 160,898,004 | - | 224,755,874 | ||||||||||||||||||||||||
Limited Partnership Interest (1.1%) | ||||||||||||||||||||||||||||
Asset Management & Custody Banks (1.1%) | ||||||||||||||||||||||||||||
Blackstone Group L.P. (The)†† # | 80,892 | - | 80,892 | 2,584,499 | - | - | 2,584,499 | |||||||||||||||||||||
Total Limited Partnership Interest (Cost $2,437,027) | - | 2,584,499 | - | - | 2,584,499 | |||||||||||||||||||||||
| Principal Amount | | | Principal Amount | | | Principal Amount | | Value | Value | Value | |||||||||||||||||
Short-Term Investments (4.6%) | ||||||||||||||||||||||||||||
Repurchase Agreements (4.6%) | ||||||||||||||||||||||||||||
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 | - | $ | 3,729,660 | $ | 3,729,660 | - | 643,255 | 4,372,915 | ||||||||||||||||||
Repurchase Agreement dated 3/29/18, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $6,810,000 of United States Treasury Notes 2.000% due 5/31/24; value: | ||||||||||||||||||||||||||||
$6,458,942; repurchase proceeds: $6,458,942 | - | $ | 6,458,741 | $ | 6,458,741 | $ | - | $ | 6,458,741 | $ | - | $ | 6,458,741 | |||||||||||||||
Total Short-Term Investments (Cost $10,831,656) | 3,729,660 | 6,458,741 | 643,255 | 10,831,656 | ||||||||||||||||||||||||
Total Investments (100.7%) (Cost $220,305,025) | 70,172,029 | 167,356,745 | 643,255 | 238,172,029 | ||||||||||||||||||||||||
Liabilities in Excess of Other Assets (0.7%) | 438,008 | (1,143,529 | ) | (833,487 | ) | (1,539,008 | ) | |||||||||||||||||||||
Net Assets (100.0%) | $ | 70,610,037 | $ | 166,213,216 | $ | (190,232 | ) | $ | 236,633,021 | |||||||||||||||||||
| Target Fund Long/Short Fund | | | Acquiring Fund Global Value Fund+ | | | Pro Forma Acquiring Fund | | | Target Fund Long/ Short Fund |
| | Acquiring Fund Global Value Fund+ | | | Pro Forma Acquiring Fund | | |||||||||||
Shares | Shares | Shares | Value | Value | | Adjust- ments |
| Value | ||||||||||||||||||||
Securities Sold Short 0.0% ## | ||||||||||||||||||||||||||||
Application Software 2.9% | ||||||||||||||||||||||||||||
Paycom Software, Inc.* | 19,200 | - | - | $ | 2,061,888 | - | $ | (2,061,888 | ) | - | ||||||||||||||||||
Automotive Retail 2.4% | ||||||||||||||||||||||||||||
CarMax, Inc.* | 27,963 | - | - | 1,732,028 | - | (1,732,028 | ) | - |
B-5
Table of Contents
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
Copper 2.2% | ||||||||||||||||||||||||||||
Freeport-McMoRan, Inc.* | 88,000 | - | - | 1,546,160 | - | (1,546,160 | ) | - | ||||||||||||||||||||
Distillers & Vintners 2.7% | ||||||||||||||||||||||||||||
Brown-Forman Corp., Class B | 35,625 | - | - | 1,938,000 | - | (1,938,000 | ) | - | ||||||||||||||||||||
Health Care Equipment 2.3% | ||||||||||||||||||||||||||||
Inogen, Inc.* | 13,500 | - | - | 1,658,340 | - | (1,658,340 | ) | - | ||||||||||||||||||||
Home Furnishing Retail 1.0% | ||||||||||||||||||||||||||||
RH* | 7,399 | - | - | 704,977 | - | (704,977 | ) | - | ||||||||||||||||||||
Hotels, Resorts & Cruise Lines 2.1% | ||||||||||||||||||||||||||||
Choice Hotels International, Inc. | 18,120 | - | - | 1,452,318 | - | (1,452,318 | ) | - | ||||||||||||||||||||
Packaged Foods & Meats 4.5% | ||||||||||||||||||||||||||||
Blue Buffalo Pet Products, Inc.* | 79,200 | - | - | 3,152,952 | - | (3,152,952 | ) | - | ||||||||||||||||||||
Personal Products 3.5% | ||||||||||||||||||||||||||||
Estee Lauder Cos., Inc. (The), Class A | 16,300 | - | - | 2,440,436 | - | (2,440,436 | ) | - | ||||||||||||||||||||
Pharmaceuticals 2.0% | ||||||||||||||||||||||||||||
Prestige Brands Holdings, Inc.* | 41,000 | - | - | 1,382,520 | - | (1,382,520 | ) | - | ||||||||||||||||||||
Total Securities Sold Short (proceeds $12,392,190) | 18,069,619 | - | (18,069,619 | ) | - |
+As of 10/31/17, the Wasatch Large Cap Value Fund changed its name to the Wasatch Global Value Fund.
†All percentages shown in the Pro Forma Combined Schedule of Investments are based on the Pro Forma Acquiring Fund’s net assets
††All or a portion of this security has been designated as collateral for short sales. Since the Acquiring Fund will not sell securities short, the collateral will no longer be needed.
*Non-income producing.
**Common units.
#It is currently anticipated that the security, or a portion of the security, may be disposed of before the Reorganization. Actual portfolio sales will depend on portfolio composition, market conditions and other factors at the time of the Reorganization and will be at the discretion of the Portfolio Manager of the Advisor.
##The Pro Forma Acquiring Fund will not sell securities short. The reduction in Securities sold short on the Pro Forma Acquiring Fund is offset by a reduction in Receivable from broker for securities sold short and an increase in the Repurchase agreements. The industry groups percentage in the Securities sold short section is based upon the Target Fund’s net assets.
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Pro Forma Condensed Combined Financial Statements.
B-6
Table of Contents
WRITTEN OPTION CONTRACTS - March 31, 2018 (Unaudited)
Description | Global Value
Exercise | Global Value
Expiration | Global Value Fund
Number of | Global Value
Market | Global Value Fund Premiums (Received) by Fund | Global Value
Unrealized | ||||||||||||||||||
Calls | ||||||||||||||||||||||||
Apple, Inc. | $ | 190 | 4/20/2018 | (100 | ) | $ | (1,100 | ) | $ | (10,321 | ) | $ | 9,221 | |||||||||||
Cisco Systems, Inc. | $ | 47 | 5/18/2018 | (200 | ) | (7,600 | ) | (21,642 | ) | 14,042 | ||||||||||||||
Total calls | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
Total written option contracts | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
WRITTEN OPTION CONTRACTS - March 31, 2018 (Unaudited)
|
| |||||||||||||||||||||||
Description | Pro Forma
Exercise | Pro Forma Fund
Expiration | Pro Forma
Number of | Pro Forma Fund
Market | Pro Forma Fund | Pro Forma
Unrealized | ||||||||||||||||||
Calls | ||||||||||||||||||||||||
Apple, Inc. | $ | 190 | 4/20/2018 | (100 | ) | $ | (1,100 | ) | $ | (10,321 | ) | $ | 9,221 | |||||||||||
Cisco Systems, Inc. | $ | 47 | 5/18/2018 | (200 | ) | (7,600 | ) | (21,642 | ) | 14,042 | ||||||||||||||
Total calls | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
Total written option contracts | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 |
B-7
Table of Contents
Pro Forma Condensed Combined Statement of Assets and Liabilities
As of March 31, 2018 (Unaudited)
TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||
Assets: | ||||||||||||||||||
Investments, at cost | ||||||||||||||||||
Unaffiliated issuers | $ | 62,109,169 | $ | 147,364,200 | $ | 209,473,369 | ||||||||||||
Repurchase agreements | 3,729,660 | 6,458,741 | 643,255 | 2 | 10,831,656 | |||||||||||||
|
|
|
| |||||||||||||||
$ | 65,838,829 | $ | 153,822,941 | $ | 643,255 | 220,305,025 | ||||||||||||
|
|
|
| |||||||||||||||
Investments, at market value | ||||||||||||||||||
Unaffiliated issuers | $ | 66,442,369 | $ | 160,898,004 | $ | 227,340,373 | ||||||||||||
Repurchase agreements | 3,729,660 | 6,458,741 | 643,255 | 2 | 10,831,656 | |||||||||||||
|
|
|
| |||||||||||||||
70,172,029 | 167,356,745 | 643,255 | 238,172,029 | |||||||||||||||
Receivable for investment securities sold | - | 1,356,057 | 1,356,057 | |||||||||||||||
Receivable from broker for securities sold short | 18,772,964 | - | (18,772,964 | ) | 2 | - | ||||||||||||
Receivable from broker for securities options written | - | 3 | 3 | |||||||||||||||
Capital shares receivable | 2,807 | 11,621 | 14,428 | |||||||||||||||
Interest and dividends receivable | 381,802 | 515,466 | 897,268 | |||||||||||||||
Prepaid expenses and other assets | 13,900 | 28,042 | 41,942 | |||||||||||||||
|
|
|
| |||||||||||||||
Total Assets | 89,343,502 | 169,267,934 | (18,129,709 | ) | 240,481,727 | |||||||||||||
|
|
|
| |||||||||||||||
Liabilities: | ||||||||||||||||||
Securities sold short, at value (proceeds of $0 and $12,392,190, respectively) | 18,069,619 | - | (18,069,619 | ) | 2 | - | ||||||||||||
Call options written at value (premiums of $0 and $31,963, respectively) | - | 8,700 | 8,700 | |||||||||||||||
Bank overdraft | 462,358 | 462,358 | ||||||||||||||||
Payable for securities purchased | 33,093 | 2,176,673 | 2,209,766 | |||||||||||||||
Capital shares payable | 452,992 | 163,818 | 616,810 | |||||||||||||||
Dividends payable to shareholders | - | 7,323 | 7,323 | |||||||||||||||
Payable to Trustees | 135 | 135 |
B-8
Table of Contents
TARGET FUND LONG/SHORT FUND | ACQUIRING FUND GLOBAL VALUE FUND1 | PRO FORMA ADJUST- MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Payable to Advisor | 37,225 | 113,649 | (6,768) | 3 | 144,106 | |||||||||||||||
Accrued fund administration fees | 6,395 | 2,654 | 9,049 | |||||||||||||||||
Accrued expenses and other liabilities | 73,916 | 119,543 | 193,459 | |||||||||||||||||
Dividends payable on securities sold short | 60,090 | - | (60,090) | 2 | - | |||||||||||||||
Payable for reorganization costs | 197,000 | 4 | 197,000 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Total Liabilities | 18,733,465 | 3,054,718 | (17,939,477) | 3,848,706 | ||||||||||||||||
|
|
|
| |||||||||||||||||
Net Assets | $ | 70,610,037 | $ | 166,213,216 | $ | (190,232) | $ | 236,633,021 | ||||||||||||
|
|
|
| |||||||||||||||||
Net Assets Consist of: | ||||||||||||||||||||
Capital stock | $ | 56,758 | $ | 190,949 | $ | 24,198 | $ | 271,905 | ||||||||||||
Paid-in-capital in excess of par | 234,255,738 | 137,648,416 | (24,198) | 371,879,956 | ||||||||||||||||
Undistributed net investment loss | (135,610) | 182,169 | (190,232) | 3,4 | (143,673) | |||||||||||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | (162,222,620) | 14,632,502 | (5,677,429) | 2 | (153,267,547) | |||||||||||||||
Unrealized appreciation (depreciation) on: | - | |||||||||||||||||||
Investments | 4,333,200 | 13,533,804 | 17,867,004 | |||||||||||||||||
Options Written | 23,263 | 23,263 | ||||||||||||||||||
Securities sold short | (5,677,429) | - | 5,677,429 | 2 | - | |||||||||||||||
Foreign currency translations | - | 2,113 | 2,113 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Net Assets | $ | 70,610,037 | $ | 166,213,216 | $ | (190,232) | $ | 236,633,021 | ||||||||||||
|
|
|
| |||||||||||||||||
Net Assets | ||||||||||||||||||||
Investor Class | 60,269,644 | 161,825,757 | (162,374) | 221,933,027 | ||||||||||||||||
Institutional Class | 10,340,393 | 4,387,459 | (27,858) | 14,699,994 | ||||||||||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, $0.01 par value) | ||||||||||||||||||||
Investor Class | 4,850,856 | 18,590,178 | 2,058,026 | 5 | 25,499,060 |
B-9
Table of Contents
TARGET FUND LONG/SHORT FUND | ACQUIRING FUND GLOBAL VALUE FUND1 | PRO FORMA ADJUST- MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Institutional Class | 824,929 | 504,720 | 361,784 | 5 | 1,691,433 | |||||||||||||||
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE | ||||||||||||||||||||
Investor Class | $ | 12.42 | $ | 8.70 | $ | 8.70 | ||||||||||||||
|
|
|
| |||||||||||||||||
Institutional Class | $ | 12.53 | $ | 8.69 | $ | 8.69 | ||||||||||||||
|
|
|
|
1As of 10/31/17, the Wasatch Large Cap Value Fund changed its name to the Wasatch Global Value Fund.
2The Pro Forma Acquiring Fund will not sell securities short. The reduction in Securities sold short on the Pro Forma Acquiring Fund is offset by a reduction in Receivable from broker for securities sold short and an increase in Repurchase agreements. In addition, the Dividends payable on securities sold short is removed from Liabilities and Repurchase agreements because the dividends would not have been received.
3Reflects the impact of applying the Acquiring Fund’s management fee rate to the Pro Forma Acquiring Fund’s payable to the advisor.
4 The total estimated expenses of the Reorganization of the Target Fund are $394,000, this includes the legal, audit and proxy solicitation fees of approximately $338,000, and the total brokerage costs of approximately $56,000 for all repositioning. The Advisor and Target Fund have agreed to split evenly the costs of the Reorganization, subject to contractual expenses caps. Accordingly, based on these estimates, approximately $197,000 of these costs are expected to be paid by the Target Fund and approximately $197,000 will be paid by the Advisor. These are estimates and actual amounts may vary. There are some foreign securities that cannot be purchased until the Reorganization is complete. The Acquiring Fund will receive cash to invest in these remaining securities and will bear the cost of the transactions of approximately $20,000. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceed the Fund’s current expense cap, the Advisor will absorb the portion of the Reorganization expenses necessary for the Fund to operate within its respective cap.
5Figures reflect the issuance by the Acquiring Fund of approximately 6,908,882 shares of Investor Class shares and 1,186,713 Institutional Class shares to the Investor Class and Institutional Class shareholders, respectively, of the Target Fund in connection with the Reorganization.
B-10
Table of Contents
Pro Forma Condensed Combined Statement of Operations
April 1, 2017 through March 31, 2018 (Unaudited)
TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Investment Income: | ||||||||||||||||||||
Interest | $ | 32,016 | $ | 6,514 | $ | 38,530 | ||||||||||||||
Dividends2 | - | - | - | |||||||||||||||||
Unaffiliated issuers | 1,927,729 | 5,394,621 | 7,322,350 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Total investment income | 1,959,745 | 5,401,135 | 7,360,880 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Expenses: | ||||||||||||||||||||
Investment advisory fees | 1,210,864 | 1,606,959 | (220,157 | ) | 3 | 2,597,666 | ||||||||||||||
Shareholder servicing fees— Investor Class | 123,013 | 256,342 | (23,678 | ) | 4 | 355,677 | ||||||||||||||
Shareholder servicing fees— Institutional Class | 3,878 | 1,612 | (2,322 | ) | 4 | 3,168 | ||||||||||||||
Fund administration fees | 18,585 | 30,035 | 48,620 | |||||||||||||||||
Fund accounting fees | 22,171 | 31,957 | 54,128 | |||||||||||||||||
Reports to shareholders— Investor Class | 32,814 | 42,950 | (11,600 | ) | 4 | 64,164 | ||||||||||||||
Reports to shareholders— Institutional Class | 14,552 | 11,616 | (6,285 | ) | 4 | 19,883 | ||||||||||||||
Custody fees | 8,411 | 17,063 | 25,474 | |||||||||||||||||
Federal and state registration fees— Investor Class | 26,289 | 20,677 | (10,325 | ) | 4 | 36,641 | ||||||||||||||
Federal and state registration fees— Institutional Class | 19,089 | 12,680 | (6,555 | ) | 4 | 25,214 | ||||||||||||||
Legal fees | 54,108 | 40,897 | (45,489 | ) | 4 | 49,516 | ||||||||||||||
Trustees’ fees | 22,774 | 27,865 | 50,639 | |||||||||||||||||
Dividends on securities sold short | 531,758 | - | (531,758 | ) | 5 | - | ||||||||||||||
Interest | 240,761 | 5,501 | (237,370 | ) | 8,892 | |||||||||||||||
Audit fees | 30,846 | 37,363 | (26,536 | ) | 4 | 41,673 | ||||||||||||||
Other expenses | 17,547 | 24,008 | (5,139 | ) | 4 | 36,416 | ||||||||||||||
|
|
|
| |||||||||||||||||
Total expenses before reimbursement | 2,377,460 | 2,167,525 | (1,127,213 | ) | 6 | 3,417,772 | ||||||||||||||
Reimbursement of expenses by Advisor | (89,054 | ) | (204,638 | ) | 59,738 | (233,954 | ) | |||||||||||||
|
|
|
|
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Table of Contents
TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Net Expenses | 2,288,406 | 1,962,887 | (1,067,476 | ) | 3,183,817 | |||||||||||||||
|
|
|
| |||||||||||||||||
Net Investment Income (Loss) | (328,661 | ) | 3,438,248 | 1,067,476 | 6 | 4,177,063 | ||||||||||||||
|
|
|
| |||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||||||
Investments sold | 2,368,306 | 29,924,245 | 9,166,580 | 5 | 41,459,131 | |||||||||||||||
Foreign currency transactions | 148 | (59,673 | ) | (59,525 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||
Net realized gain (loss) | - | - | - | |||||||||||||||||
|
|
|
| |||||||||||||||||
(10,515,196 | ) | - | (10,515,196 | ) | ||||||||||||||||
Change in Unrealized Appreciation (Depreciation): | (8,146,742 | ) | 29,864,572 | 9,166,580 | 30,884,410 | |||||||||||||||
Investments | ||||||||||||||||||||
Foreign currency translations | ||||||||||||||||||||
Options Written | (3,244,639 | ) | (22,386,180 | ) | (20,000 | ) | 6 | (25,650,819 | ) | |||||||||||
Short positions | - | 2,113 | 2,113 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Net change in unrealized appreciation (depreciation) | - | 23,263 | 23,263 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Net gain (loss) on investments | 5,661,717 | - | (5,661,717 | ) | 5 | - | ||||||||||||||
|
|
|
| |||||||||||||||||
2,417,078 | (22,360,804 | ) | (5,681,717 | ) | 5 | (25,625,443 | ) | |||||||||||||
Net Increase in Net Assets Resulting from Operations | $ | (5,729,664 | ) | $ | 7,503,768 | $ | 3,484,863 | $ | 5,258,967 | |||||||||||
|
|
|
|
1As of 10/31/17, the Wasatch Large Cap Value Fund changed its name to Wasatch Global Value Fund.
2Net of $38,636 and $310,900 in foreign withholding taxes, respectively.
3Reflects the impact of applying the Acquiring Fund’s management fee rate to the Pro Forma Acquiring Fund’s average net assets.
4Reflects the anticipated reduction of certain duplicative expenses eliminated as a result of the Reorganization.
5The Pro Forma Acquiring Fund will not engage in selling short positions.
6 The total estimated expenses of the Reorganization of the Target Fund are $394,000, this includes the legal, audit and proxy solicitation fees of approximately $338,000, and the total brokerage costs of approximately $56,000 for all repositioning. The Advisor and Target Fund have agreed to split evenly the costs of the Reorganization, subject to contractual expenses caps. Accordingly, based on these estimates, approximately $197,000 of these costs are expected to be paid by the Target Fund and approximately $197,000 will be paid by the Advisor. These are estimates and actual amounts may vary. There are some foreign securities that cannot be purchased until the Reorganization is complete. The Acquiring Fund will receive cash to invest in these remaining securities and will bear the cost of the transactions of approximately $20,000. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceed the Fund’s current expense cap, the Advisor will absorb the portion of the Reorganization expenses necessary for the Fund to operate within its respective cap.
7Reflects the increase in expense reimbursement payments the Advisor would have made to the Pro Forma Acquiring Fund if the Reorganization had occurred on the first day of the twelve-month period ended March 31, 2018.
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Table of Contents
Notes to Pro Forma Combined Condensed Financial Statements (Unaudited)
1. DESCRIPTIONOFTHE FUND
The Wasatch Global Value Fund (the “Acquiring Fund”) (formerly Wasatch Large Cap Value Fund) is a series of Wasatch Funds Trust (the “Trust”) a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
There are two classes of shares in the Acquiring Fund: Investor Class and Institutional Class. Each class of shares 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. 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.
The Acquiring Fund is a diversified fund with its own investment strategy. Wasatch Advisors, Inc. (the “Advisor”) is the Acquiring Fund’s investment adviser.
The Acquiring Fund has a lower contractual management fee (0.90%) than that of the Target Fund (1.10%) generally because the Acquiring Fund does not engage in short sales. In addition, the Acquiring Fund’s expense cap following the Reorganization, which will be in effect through January 31, 2020, will result in lower net annual operating expenses for shareholders of each class of the Target Fund during such time.
2. BASISOF COMBINATION
The accompanying pro forma condensed combined financial statements are presented to show the effect of the proposed acquisition of the Wasatch Long/Short Fund, (“Target Fund”) a series of the Trust, by Acquiring Fund as if such acquisition had taken place as of October 1, 2017.
Under the terms of the Plan of Reorganization, the combination of Target Fund and Acquiring Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of Target Fund in exchange for shares of Acquiring Fund at net asset value. The Statement of Assets and Liabilities of Target Fund and Acquiring Fund have been combined as of and for the six months ended March 31, 2018. The Statement of Operations of Target Fund and Acquiring Fund have been combined as of and for the twelve-month period April 1, 2017 through March 31, 2018. Following the reorganization, the Acquiring Fund will be the accounting survivor. In accordance with accounting principles generally accepted in the United States of America, the historical cost of investment securities will be carried forward to the surviving fund and the results of operations for precombination periods of the surviving fund will not be restated.
The total estimated expenses of the Reorganization of the Target Fund are $394,000, this includes the legal, audit and proxy solicitation fees of approximately $338,000, and the total brokerage costs of approximately $56,000 for all repositioning. The Advisor and Target Fund have agreed to split evenly the costs of the Reorganization, subject to contractual expenses caps. Accordingly, based on these estimates, approximately $197,000 of these costs are expected to be paid by the Target Fund and approximately $197,000 will be paid by the Advisor. These are estimates and actual amounts may vary. There are some foreign securities that cannot be purchased until the Reorganization is complete. The Acquiring Fund will receive cash to invest in these remaining securities and will bear the cost of the transactions of approximately $20,000. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceed the Fund’s current expense cap, the Advisor will absorb the portion of the Reorganization expenses necessary for the Fund to operate within its respective cap.
The accompanying pro forma financial statements should be read in conjunction with the financial statements of Acquiring Fund and Target Fund included in their semi-annual report dated March 31, 2018.
The following notes refer to the accompanying pro forma condensed combined financial statements as if the above-mentioned acquisition of Target Fund by Acquiring Fund had taken place as of October 1, 2017.
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Table of Contents
3. FAIR VALUE MEASUREMENTS AND 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 system (“NASDAQ”), such securities are valued using the NASDAQ Official Closing Price (“NOCP”) or last sales price if no NOCP is available. If there are no sales on the primary exchange or market on a 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 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.
B-14
Table of Contents
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:
Portfolios | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other (Level 2) | Significant Unobservable Inputs (Level 3) | Adjustments | Value | |||||||||||||||
| ||||||||||||||||||||
Assets | ||||||||||||||||||||
Common Stocks | $ | 169,584,933 | $ | 55,170,941 | $ | - | $ | - | $ | 224,755,874 | ||||||||||
Limited Partnership Interest | 2,584,499 | - | - | - | 2,584,499 | |||||||||||||||
Short-Term Investments | - | 10,188,401 | - | 643,255 | 1 | 10,831,656 | ||||||||||||||
| ||||||||||||||||||||
$ | 172,169,432 | $ | 65,359,342 | $ | - | $ | 643,255 | $ | 238,172,029 | |||||||||||
| ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Call Options Written | $ | (8,700) | - | - | - | $ (8,700) | ||||||||||||||
| ||||||||||||||||||||
Securities Sold Short |
$ |
(18,069,619) |
|
|
- |
|
|
- |
|
$ |
18,069,619 |
|
|
- |
| |||||
| ||||||||||||||||||||
$ | (18,078,319) | $ | - | $ | - | $ | 18,069,619 | $ (8,700) | ||||||||||||
|
1The Pro Forma Acquiring Fund will not sell securities short. The reduction in Securities sold short on the Pro Forma Acquiring Fund is offset by a reduction in Receivable from broker for securities sold short and an increase in the Repurchase agreements.
4. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of shares of Acquiring Fund that would have been issued at March 31, 2018, in connection with the proposed Reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of Target Fund, as of March 31, 2018, divided by the net asset value per share of the shares of Acquiring Fund as of March 31, 2018. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at March 31, 2018:
Class of Shares | Shares of Acquiring Fund Pre-Combination | Additional Shares Assumed Issued In Reorganization | Total Outstanding Shares Post-Combination | |||||||||
Investor Class | 18,590,178 | 6,908,882 | 25,499,060 | |||||||||
Institutional Class | 504,720 | 1,186,713 | 1,691,433 |
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Table of Contents
5. | 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. After the acquisition, the Acquiring Fund intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal income taxes.
The identified cost of investments for the Acquiring Fund is $153,822,941 for financial accounting and $155,140,325 for Federal income tax purposes. The difference in cost is attributable to the tax deferral of losses on wash sales. The difference between financial accounting and Federal income tax cost of investments for the Target Fund is immaterial. The tax cost of investments will remain unchanged for the combined fund.
Capital Loss Carryforwards as of September 30, 2017 are as follows:
Non-expiring | ||||
Fund | Short Term | Long Term | ||
Long/Short Fund | $26,195,256 | 127,709,466 |
The Fund has 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.
Late-Year Ordinary | ||
Fund | Losses | |
Long/Short Fund | $455,640 |
In a tax-free reorganization, losses of the Target Fund are carried over to the Acquiring Fund on the transfer date. There are several rules in Sections 381, 382, 383 and 384 of the Internal Revenue Code that limit the ability of one fund to utilize the losses of another fund after the transfer date and each rule needs to be evaluated independently. Where more than one rule applies, the most restrictive will govern the amount of the losses available to be utilized. It is estimated that the amount of loss that can be utilized per year is approximately $2 million.
B-16
Table of Contents
STATEMENT OF ADDITIONAL INFORMATION
WASATCH GLOBAL VALUE FUND
Relating to the Acquisition of the Assets and Liabilities of
WASATCH LONG/SHORT FUND
(each a series of Wasatch Funds Trust)
July 27, 2018
505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84108 Telephone: (801) 533-0777
This Statement of Additional Information (“SAI”), which is not a prospectus, supplements and should be read in conjunction with the Proxy Statement/Prospectus dated July 27, 2018 (the “Proxy Statement/Prospectus”) relating specifically to the special meeting of shareholders of Wasatch Long/Short Fund (the “Target Fund”), a series of Wasatch Funds Trust (the “Trust”), to be held on August 30, 2018 at 10:00 a.m., Mountain time and at any and all adjournments and postponements thereof (the “Special Meeting”). At the Special Meeting, shareholders of the Target Fund will be asked to approve the reorganization (the “Reorganization”) of the Target Fund into Wasatch Global Value Fund (the “Acquiring Fund”), also a series of the Trust, as described in the Proxy Statement/Prospectus. The Target Fund and the Acquiring Fund are referred to herein individually as a “Fund” and collectively as the “Funds.” A copy of the Proxy Statement/Prospectus may be obtained upon request and without charge by calling (800) 628-8532 or by writing to: Wasatch Funds at P.O. Box 2172, Milwaukee, Wisconsin 53201-2172.
Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Proxy Statement/Prospectus. The Reorganization will occur in accordance with the terms of the Agreement and Plan of Reorganization.
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Table of Contents
Page | ||||
3 | ||||
Incorporation of Documents by Reference into the Statement of Additional Information | 3 | |||
3 |
B-2
Table of Contents
This SAI and the Proxy Statement/Prospectus are related to the (i) the transfer of all the assets of the Target Fund to the Acquiring Fund in exchange solely for Investor Class and Institutional Class shares of beneficial interest of the Acquiring Fund and the assumption by the Acquiring Fund of all the liabilities of the Target Fund; and (ii) the pro rata distribution of Investor Class and Institutional Class shares of the Acquiring Fund to the shareholders of Investor Class and Institutional Class shares of the Target Fund, respectively, in complete liquidation and termination of the Target Fund (the “Reorganization”). If shareholders approve the Reorganization of the Target Fund and the Reorganization is completed, each Target Fund shareholder will receive shares of the Acquiring Fund in an amount equal in total value to the total value of the Target Fund shares surrendered by such shareholder. Shareholders of Investor Class shares of the Target Fund will receive Investor Class shares of the Acquiring Fund. Shareholders of Institutional Class shares of the Target Fund will receive Institutional Class shares of the Acquiring Fund.
Incorporation of Documents by Reference into the Statement of Additional Information
The SAI consists of the cover page, the accompanying pro forma financial statements and related notes and the following documents, each of which has been filed electronically with the Securities and Exchange Commission and are incorporated by reference herein (and legally considered to part of this SAI). Further information about the Funds is contained in each Fund’s Statement of Additional Information for the Investor Class shares and Institutional Class shares. Each Fund’s Statement of Additional Information for Investor Class shares, dated January 31, 2018 and each Fund’s Statement of Additional Information for Institutional Class shares, dated January 31, 2018 (each as filed January 31, 2018) (File Nos. 33-10451 and 811-04920), as supplemented through the date of this SAI, is incorporated herein by reference only insofar as it relates to each Fund. No other parts are incorporated by reference herein.
The audited financial statements and related independent registered public accounting firm’s report for each Fund are contained in the Funds’ Annual Report for the fiscal year ended September 30, 2017 (as filed December 6, 2017) (File No. 811-04920), which is incorporated herein by reference only insofar as it relates to each Fund. The unaudited pro forma financial information for each Fund are contained in the Fund’s Semi-Annual Report for the six-month period ended March 31, 2018 (as filed June 5, 2018) (File No. 811-04920), which is incorporated by reference only insofar as it relates to each Fund. No other parts of each Fund’s Annual Report are incorporated by reference herein.
Pro Forma Financial Statements
The unaudited pro forma financial information is intended to present the financial condition of the Acquiring Fund as if the Reorganization had been consummated on March 31, 2018 and the results of operations of the Acquiring Fund as if the Reorganization had taken place on the period ended October 1, 2017 through March 31, 2018.
Pro Forma Financial Statements for the Reorganization of Wasatch Long/Short Fund (the “Target Fund”) into Wasatch Global Value Fund (the “Acquiring Fund”)
The unaudited pro forma financial statements are presented to show the effect of the proposed Reorganization of the Target Fund into the Acquiring Fund, each an open-end management investment company under the Investment Company Act of 1940, as amended. The Pro Forma Schedule of Investments and the Pro Forma Statement of Assets and Liabilities are presented for the Acquiring Fund, the Target Fund and the combination of the Acquiring Fund and the Target Fund (the “Pro Forma Acquiring Fund”) as of March 31, 2018. The Pro Forma Statement of Operations is presented for the Acquiring Fund, the Target Fund and the Pro Forma Acquiring Fund for the period from April 1, 2017 through March 31, 2018.
B-3
Table of Contents
Pro Forma Combined Schedule of Investments
As of March 31, 2018 (Unaudited)
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
Common Stocks 95.0% † | ||||||||||||||||||||||||||||
Airlines 1.7% | ||||||||||||||||||||||||||||
Japan Airlines Co. Ltd. (Japan) | - | 101,000 | 101,000 | $ | - | $ | 4,064,489 | $ | - | $ | 4,064,489 | |||||||||||||||||
Automobile Manufacturers 0.4% | ||||||||||||||||||||||||||||
General Motors Co.# | 28,500 | - | 28,500 | 1,035,690 | - | - | 1,035,690 | |||||||||||||||||||||
Communications Equipment 4.6% | ||||||||||||||||||||||||||||
Cisco Systems, Inc.†† | 90,200 | 163,000 | 253,200 | 3,868,678 | 6,991,070 | - | 10,859,748 | |||||||||||||||||||||
Construction & Engineering 1.0% | ||||||||||||||||||||||||||||
CTCI Corp. (Taiwan) | - | 1,360,000 | 1,360,000 | - | 2,259,903 | - | 2,259,903 | |||||||||||||||||||||
Data Processing & Outsourced Services 0.7% | ||||||||||||||||||||||||||||
Cielo S.A. (Brazil) | - | 250,000 | 250,000 | - | 1,566,736 | - | 1,566,736 | |||||||||||||||||||||
Diversified Banks 16.9% | ||||||||||||||||||||||||||||
BNP Paribas S.A. (France) | - | 57,000 | 57,000 | 4,227,159 | 4,227,159 | |||||||||||||||||||||||
Citigroup, Inc.# | 49,016 | 80,000 | 129,016 | 3,308,580 | 5,400,000 | - | 8,708,580 | |||||||||||||||||||||
ING Groep N.V., ADR (Netherlands) | 136,800 | 297,000 | 433,800 | 2,316,024 | 5,028,210 | - | 7,344,234 | |||||||||||||||||||||
Mizuho Financial Group, Inc. (Japan) | - | 2,750,000 | 2,750,000 | - | 4,946,666 | - | 4,946,666 | |||||||||||||||||||||
Nordea Bank AB (Sweden) | - | 565,000 | 565,000 | - | 6,045,478 | - | 6,045,478 | |||||||||||||||||||||
Wells Fargo & Co. | 54,000 | 112,000 | 166,000 | 2,830,140 | 5,869,920 | - | 8,700,060 | |||||||||||||||||||||
8,454,744 | 31,517,433 | - | 39,972,177 | |||||||||||||||||||||||||
Drug Retail 3.6% | ||||||||||||||||||||||||||||
CVS Health Corp. | 32,000 | 103,000 | 135,000 | 1,990,720 | 6,407,630 | - | 8,398,350 | |||||||||||||||||||||
Electric Utilities 6.2% | ||||||||||||||||||||||||||||
Entergy Corp. | 9,000 | 23,000 | 32,000 | 709,020 | 1,811,940 | 2,520,960 | ||||||||||||||||||||||
Exelon Corp.†† # | 110,135 | 198,000 | 308,135 | 4,296,366 | 7,723,980 | - | 12,020,346 | |||||||||||||||||||||
5,005,386 | 9,535,920 | - | 14,541,306 | |||||||||||||||||||||||||
Electrical Components & Equipment 2.7% | ||||||||||||||||||||||||||||
Eaton Corp. plc | - | - |
B-4
Table of Contents
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
- | 65,000 | 65,000 | - | 5,194,150 | - | 5,194,150 | ||||||||||||||||||||||
Emerson Electric Co.# | 18,023 | - | 18,023 | 1,230,971 | - | - | 1,230,971 | |||||||||||||||||||||
1,230,971 | 5,194,150 | - | 6,425,121 | |||||||||||||||||||||||||
Fertilizers & Agricultural Chemicals 0.8% | ||||||||||||||||||||||||||||
Mosaic Co. (The)# | 79,995 | - | 79,995 | 1,942,279 | - | - | 1,942,279 | |||||||||||||||||||||
Food Retail 0.6% | ||||||||||||||||||||||||||||
Kroger Co. (The)# | 56,600 | - | 56,600 | 1,355,004 | - | - | 1,355,004 | |||||||||||||||||||||
Health Care Equipment 0.8% | ||||||||||||||||||||||||||||
Medtronic plc# | 24,700 | - | 24,700 | 1,981,434 | - | - | 1,981,434 | |||||||||||||||||||||
Health Care Services 3.0% | ||||||||||||||||||||||||||||
Laboratory Corp. of America Holdings* | 13,205 | 31,000 | 44,205 | 2,135,909 | 5,014,250 | 7,150,159 | ||||||||||||||||||||||
Hotels, Resorts & Cruise Lines 0.8% | ||||||||||||||||||||||||||||
Extended Stay America, Inc.** # | 98,255 | - | 98,255 | 1,942,501 | - | - | 1,942,501 | |||||||||||||||||||||
Hypermarkets & Super Centers 1.9% | ||||||||||||||||||||||||||||
Wal-Mart Stores, Inc. | - | 51,700 | 51,700 | - | 4,599,749 | - | 4,599,749 | |||||||||||||||||||||
Integrated Oil & Gas 6.9% | ||||||||||||||||||||||||||||
Royal Dutch Shell plc ADR (Netherlands) | 37,900 | 89,500 | 127,400 | 2,418,399 | 5,710,995 | - | 8,129,394 | |||||||||||||||||||||
Suncor Energy, Inc. (Canada) | 73,000 | 165,000 | 238,000 | 2,521,420 | 5,699,100 | - | 8,220,520 | |||||||||||||||||||||
4,939,819 | 11,410,095 | - | 16,349,914 | |||||||||||||||||||||||||
Integrated Telecommunication Services 1.3% | ||||||||||||||||||||||||||||
AT&T, Inc.# | 45,000 | - | 45,000 | 1,604,250 | - | - | 1,604,250 | |||||||||||||||||||||
Verizon Communications, Inc.# | 30,300 | - | 30,300 | 1,448,946 | - | - | 1,448,946 | |||||||||||||||||||||
3,053,196 | - | - | 3,053,196 | |||||||||||||||||||||||||
Oil & Gas Drilling 0.8% | ||||||||||||||||||||||||||||
Ensco plc, Class A | 141,000 | 310,000 | 451,000 | 618,990 | 1,360,900 | - | 1,979,890 | |||||||||||||||||||||
Oil & Gas Equipment & Services 1.6% | ||||||||||||||||||||||||||||
Schlumberger Ltd. | - | 59,400 | 59,400 | - | 3,847,932 | - | 3,847,932 | |||||||||||||||||||||
Oil & Gas Exploration & Production 1.0% | ||||||||||||||||||||||||||||
Anadarko Petroleum Corp.# | 40,000 | - | 40,000 | 2,416,400 | - | - | 2,416,400 | |||||||||||||||||||||
Oil & Gas Storage & |
B-5
Table of Contents
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
Transportation 1.6% | ||||||||||||||||||||||||||||
Enbridge Income Fund Holdings, Inc. (Canada) | - | 173,000 | 173,000 | - | 3,749,105 | - | 3,749,105 | |||||||||||||||||||||
Other Diversified Financial Services 2.1% | ||||||||||||||||||||||||||||
Fubon Financial Holding Co. Ltd. (Taiwan) | - | 2,910,000 | 2,910,000 | - | 5,010,186 | - | 5,010,186 | |||||||||||||||||||||
Packaged Foods & Meats 0.6% | ||||||||||||||||||||||||||||
General Mills, Inc.# | 31,960 | 31,960 | 1,440,118 | - | 1,440,118 | |||||||||||||||||||||||
Pharmaceuticals 11.2% | ||||||||||||||||||||||||||||
Allergan plc# | 8,000 | 8,000 | 1,346,320 | - | - | 1,346,320 | ||||||||||||||||||||||
Johnson & Johnson# | 25,948 | 25,948 | 3,325,236 | - | - | 3,325,236 | ||||||||||||||||||||||
Novartis AG (Switzerland) | 39,273 | 80,575 | 119,848 | 3,175,222 | 6,516,977 | - | 9,692,199 | |||||||||||||||||||||
Pfizer, Inc.†† | 112,400 | 226,000 | 338,400 | 3,989,076 | 8,020,740 | - | 12,009,816 | |||||||||||||||||||||
11,835,854 | 14,537,717 | - | 26,373,571 | |||||||||||||||||||||||||
Property & Casualty Insurance 1.9% | ||||||||||||||||||||||||||||
Axis Capital Holdings Ltd. | 78,100 | 78,100 | - | 4,496,217 | - | 4,496,217 | ||||||||||||||||||||||
Reinsurance 2.8% | ||||||||||||||||||||||||||||
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Germany) | 29,000 | 29,000 | - | 6,743,695 | - | 6,743,695 | ||||||||||||||||||||||
Semiconductors 0.9% | ||||||||||||||||||||||||||||
Tower Semiconductor Ltd.* #(Israel) | 75,000 | 75,000 | 2,018,250 | - | - | 2,018,250 | ||||||||||||||||||||||
Specialized REITs 3.2% | ||||||||||||||||||||||||||||
EPR Properties | 45,500 | 91,000 | 136,500 | 2,520,700 | 5,041,400 | - | 7,562,100 | |||||||||||||||||||||
Systems Software 3.9% | ||||||||||||||||||||||||||||
Oracle Corp. | 59,650 | 141,000 | 200,650 | 2,728,987 | 6,450,750 | - | 9,179,737 | |||||||||||||||||||||
Technology Hardware, Storage & Peripherals 1.3% | ||||||||||||||||||||||||||||
Apple, Inc.†† # | 8,000 | 10,000 | 18,000 | 1,342,240 | 1,677,800 | - | 3,020,040 | |||||||||||||||||||||
Tobacco 1.7% | ||||||||||||||||||||||||||||
KT&G Corp. (Korea) | - | 43,000 | 43,000 | - | 4,034,150 | - | 4,034,150 | |||||||||||||||||||||
Water Utilities 1.3% | ||||||||||||||||||||||||||||
Guangdong Investment Ltd. (China) | - | 2,000,000 | 2,000,000 | - | 3,168,533 | - | 3,168,533 | |||||||||||||||||||||
Wireless Telecommunication Services 5.2% | ||||||||||||||||||||||||||||
ChinaMobile Ltd. (China) | - | 720,000 | 720,000 | - | 6,599,082 | - | 6,599,082 | |||||||||||||||||||||
NTT DOCOMO, Inc. (Japan) | - | - |
B-6
Table of Contents
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
- | 220,100 | 220,100 | 5,619,112 | 5,619,112 | ||||||||||||||||||||||||
- | 12,218,194 | - | 12,218,194 | |||||||||||||||||||||||||
Total Common Stocks (Cost $207,036,342) | 63,857,870 | 160,898,004 | - | 224,755,874 | ||||||||||||||||||||||||
Limited Partnership Interest (1.1%) | ||||||||||||||||||||||||||||
Asset Management & Custody Banks (1.1%) | ||||||||||||||||||||||||||||
Blackstone Group L.P. (The)†† # | 80,892 | - | 80,892 | 2,584,499 | - | - | 2,584,499 | |||||||||||||||||||||
Total Limited Partnership Interest (Cost $2,437,027) | - | 2,584,499 | - | - | 2,584,499 | |||||||||||||||||||||||
| Principal Amount | | | Principal Amount | | | Principal Amount | | Value | Value | Value | |||||||||||||||||
Short-Term Investments (4.6%) | ||||||||||||||||||||||||||||
Repurchase Agreements (4.6%) | ||||||||||||||||||||||||||||
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 | - | $ | 3,729,660 | $ | 3,729,660 | - | 643,255 | 4,372,915 | ||||||||||||||||||
Repurchase Agreement dated 3/29/18, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $6,810,000 of United States Treasury Notes 2.000% due 5/31/24; value: | ||||||||||||||||||||||||||||
$6,458,942; repurchase proceeds: $6,458,942 | - | $ | 6,458,741 | $ | 6,458,741 | $ | - | $ | 6,458,741 | $ | - | $ | 6,458,741 | |||||||||||||||
Total Short-Term Investments (Cost $10,831,656) | 3,729,660 | 6,458,741 | 643,255 | 10,831,656 | ||||||||||||||||||||||||
Total Investments (100.7%) (Cost $220,305,025) | 70,172,029 | 167,356,745 | 643,255 | 238,172,029 | ||||||||||||||||||||||||
Liabilities in Excess of Other Assets (0.7%) | 438,008 | (1,143,529 | ) | (833,487 | ) | (1,539,008 | ) | |||||||||||||||||||||
Net Assets (100.0%) | $ | 70,610,037 | $ | 166,213,216 | $ | (190,232 | ) | $ | 236,633,021 | |||||||||||||||||||
| Target Fund Long/Short Fund | | | Acquiring Fund Global Value Fund+ | | | Pro Forma Acquiring Fund | | | Target Fund Long/ Short Fund |
| | Acquiring Fund Global Value Fund+ | | | Pro Forma Acquiring Fund | | |||||||||||
Shares | Shares | Shares | Value | Value | | Adjust- ments |
| Value | ||||||||||||||||||||
Securities Sold Short 0.0% ## | ||||||||||||||||||||||||||||
Application Software 2.9% | ||||||||||||||||||||||||||||
Paycom Software, Inc.* | 19,200 | - | - | $ | 2,061,888 | - | $ | (2,061,888 | ) | - | ||||||||||||||||||
Automotive Retail 2.4% | ||||||||||||||||||||||||||||
CarMax, Inc.* | (1,732,028 | ) |
B-7
Table of Contents
| Target Fund Long/Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | Target Fund Short Fund | Acquiring Fund Global Value Fund+ | Pro Forma Acquiring Fund | ||||||||||||||||||||||
Shares | Shares | Shares | Value | Value | Adjust- ments | Value | ||||||||||||||||||||||
27,963 | - | - | 1,732,028 | - | - | |||||||||||||||||||||||
Copper 2.2% | ||||||||||||||||||||||||||||
Freeport-McMoRan, Inc.* | 88,000 | - | - | 1,546,160 | - | (1,546,160 | ) | - | ||||||||||||||||||||
Distillers & Vintners 2.7% | ||||||||||||||||||||||||||||
Brown-Forman Corp., Class B | 35,625 | - | - | 1,938,000 | - | (1,938,000 | ) | - | ||||||||||||||||||||
Health Care Equipment 2.3% | ||||||||||||||||||||||||||||
Inogen, Inc.* | 13,500 | - | - | 1,658,340 | - | (1,658,340 | ) | - | ||||||||||||||||||||
Home Furnishing Retail 1.0% | ||||||||||||||||||||||||||||
RH* | 7,399 | - | - | 704,977 | - | (704,977 | ) | - | ||||||||||||||||||||
Hotels, Resorts & Cruise Lines 2.1% | ||||||||||||||||||||||||||||
Choice Hotels International, Inc. | 18,120 | - | - | 1,452,318 | - | (1,452,318 | ) | - | ||||||||||||||||||||
Packaged Foods & Meats 4.5% | ||||||||||||||||||||||||||||
Blue Buffalo Pet Products, Inc.* | 79,200 | - | - | 3,152,952 | - | (3,152,952 | ) | - | ||||||||||||||||||||
Personal Products 3.5% | ||||||||||||||||||||||||||||
Estee Lauder Cos., Inc. (The), Class A | 16,300 | - | - | 2,440,436 | - | (2,440,436 | ) | - | ||||||||||||||||||||
Pharmaceuticals 2.0% | ||||||||||||||||||||||||||||
Prestige Brands Holdings, Inc.* | 41,000 | - | - | 1,382,520 | - | (1,382,520 | ) | - | ||||||||||||||||||||
Total Securities Sold Short (proceeds $12,392,190) | 18,069,619 | - | (18,069,619 | ) | - |
+As of 10/31/17, the Wasatch Large Cap Value Fund changed its name to the Wasatch Global Value Fund.
†All percentages shown in the Pro Forma Combined Schedule of Investments are based on the Pro Forma Acquiring Fund’s net assets
††All or a portion of this security has been designated as collateral for short sales. Since the Acquiring Fund will not sell securities short, the collateral will no longer be needed.
*Non-income producing.
**Common units.
#It is currently anticipated that the security, or a portion of the security, may be disposed of before the Reorganization. Actual portfolio sales will depend on portfolio composition, market conditions and other factors at the time of the Reorganization and will be at the discretion of the Portfolio Manager of the Advisor.
##The Pro Forma Acquiring Fund will not sell securities short. The reduction in Securities sold short on the Pro Forma Acquiring Fund is offset by a reduction in Receivable from broker for securities sold short and an increase in the Repurchase agreements. The industry groups percentage in the Securities sold short section is based upon the Target Fund’s net assets.
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Pro Forma Condensed Combined Financial Statements.
B-8
Table of Contents
WRITTEN OPTION CONTRACTS - March 31, 2018 (Unaudited)
Description | Global Value
Exercise | Global Value
Expiration | Global Value Fund
Number of | Global Value
Market | Global Value Fund Premiums (Received) by Fund | Global Value
Unrealized | ||||||||||||||||||
Calls | ||||||||||||||||||||||||
Apple, Inc. | $ | 190 | 4/20/2018 | (100 | ) | $ | (1,100 | ) | $ | (10,321 | ) | $ | 9,221 | |||||||||||
Cisco Systems, Inc. | $ | 47 | 5/18/2018 | (200 | ) | (7,600 | ) | (21,642 | ) | 14,042 | ||||||||||||||
Total calls | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
Total written option contracts | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
WRITTEN OPTION CONTRACTS - March 31, 2018 (Unaudited)
|
| |||||||||||||||||||||||
Description | Pro Forma
Exercise | Pro Forma Fund
Expiration | Pro Forma
Number of | Pro Forma Fund
Market | Pro Forma Fund | Pro Forma
Unrealized | ||||||||||||||||||
Calls | ||||||||||||||||||||||||
Apple, Inc. | $ | 190 | 4/20/2018 | (100 | ) | $ | (1,100 | ) | $ | (10,321 | ) | $ | 9,221 | |||||||||||
Cisco Systems, Inc. | $ | 47 | 5/18/2018 | (200 | ) | (7,600 | ) | (21,642 | ) | 14,042 | ||||||||||||||
Total calls | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 | ||||||||||||||||
Total written option contracts | $ | (8,700 | ) | $ | (31,963 | ) | $ | 23,263 |
B-9
Table of Contents
Pro Forma Condensed Combined Statement of Assets and Liabilities
As of March 31, 2018 (Unaudited)
TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO FORMA ADJUST- MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Assets: | ||||||||||||||||||||
Investments, at cost | ||||||||||||||||||||
Unaffiliated issuers | $ | 62,109,169 | $ | 147,364,200 | $ | 209,473,369 | ||||||||||||||
Repurchase agreements | 3,729,660 | 6,458,741 | 643,255 | 2 | 10,831,656 | |||||||||||||||
|
|
|
| |||||||||||||||||
$ | 65,838,829 | $ | 153,822,941 | $ | 643,255 | 220,305,025 | ||||||||||||||
|
|
|
| |||||||||||||||||
Investments, at market value | ||||||||||||||||||||
Unaffiliated issuers | $ | 66,442,369 | $ | 160,898,004 | $ | 227,340,373 | ||||||||||||||
Repurchase agreements | 3,729,660 | 6,458,741 | 643,255 | 2 | 10,831,656 | |||||||||||||||
|
|
|
| |||||||||||||||||
70,172,029 | 167,356,745 | 643,255 | 238,172,029 | |||||||||||||||||
Receivable for investment securities sold | - | 1,356,057 | 1,356,057 | |||||||||||||||||
Receivable from broker for securities sold short | 18,772,964 | - | (18,772,964) | 2 | - | |||||||||||||||
Receivable from broker for securities options written | - | 3 | 3 | |||||||||||||||||
Capital shares receivable | 2,807 | 11,621 | 14,428 | |||||||||||||||||
Interest and dividends receivable | 381,802 | 515,466 | 897,268 | |||||||||||||||||
Prepaid expenses and other assets | 13,900 | 28,042 | 41,942 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Total Assets | 89,343,502 | 169,267,934 | (18,129,709) | 240,481,727 | ||||||||||||||||
|
|
|
| |||||||||||||||||
Liabilities: | ||||||||||||||||||||
Securities sold short, at value (proceeds of $0 and $12,392,190, respectively) | 18,069,619 | - | (18,069,619) | 2 | - | |||||||||||||||
Call options written at value (premiums of $0 and $31,963, respectively) | - | 8,700 | 8,700 | |||||||||||||||||
Bank overdraft | 462,358 | 462,358 | ||||||||||||||||||
Payable for securities purchased | 33,093 | 2,176,673 | 2,209,766 | |||||||||||||||||
Capital shares payable | 452,992 | 163,818 | 616,810 | |||||||||||||||||
Dividends payable to shareholders | - | 7,323 | 7,323 | |||||||||||||||||
Payable to Trustees | 135 | 135 |
B-10
Table of Contents
TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO FORMA ADJUST- MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Payable to Advisor | 37,225 | 113,649 | (6,768) | 3 | 144,106 | |||||||||||||||
Accrued fund administration fees | 6,395 | 2,654 | 9,049 | |||||||||||||||||
Accrued expenses and other liabilities | 73,916 | 119,543 | 193,459 | |||||||||||||||||
Dividends payable on securities sold short | 60,090 | - | (60,090) | 2 | - | |||||||||||||||
Payable for reorganization costs | 197,000 | 4 | 197,000 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Total Liabilities | 18,733,465 | 3,054,718 | (17,939,477) | 3,848,706 | ||||||||||||||||
|
|
|
| |||||||||||||||||
Net Assets | $ | 70,610,037 | $ | 166,213,216 | $ | (190,232) | $ | 236,633,021 | ||||||||||||
|
|
|
| |||||||||||||||||
Net Assets Consist of: | ||||||||||||||||||||
Capital stock | $ | 56,758 | $ | 190,949 | $ | 24,198 | $ | 271,905 | ||||||||||||
Paid-in-capital in excess of par | 234,255,738 | 137,648,416 | (24,198) | 371,879,956 | ||||||||||||||||
Undistributed net investment loss | (135,610) | 182,169 | (190,232) | 3,4 | (143,673) | |||||||||||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | (162,222,620) | 14,632,502 | (5,677,429) | 2 | (153,267,547) | |||||||||||||||
Unrealized appreciation (depreciation) on: | - | |||||||||||||||||||
Investments | 4,333,200 | 13,533,804 | 17,867,004 | |||||||||||||||||
Options Written | 23,263 | 23,263 | ||||||||||||||||||
Securities sold short | (5,677,429) | - | 5,677,429 | 2 | - | |||||||||||||||
Foreign currency translations | - | 2,113 | 2,113 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Net Assets | $ | 70,610,037 | $ | 166,213,216 | $ | (190,232) | $ | 236,633,021 | ||||||||||||
|
|
|
| |||||||||||||||||
Net Assets | ||||||||||||||||||||
Investor Class | 60,269,644 | 161,825,757 | (162,374) | 221,933,027 | ||||||||||||||||
Institutional Class | 10,340,393 | 4,387,459 | (27,858) | 14,699,994 | ||||||||||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, $0.01 par value) | ||||||||||||||||||||
Investor Class | 4,850,856 | 18,590,178 | 2,058,026 | 5 | 25,499,060 |
B-11
Table of Contents
TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO FORMA ADJUST- MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Institutional Class | 824,929 | 504,720 | 361,784 | 5 | 1,691,433 | |||||||||||||||
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE | ||||||||||||||||||||
Investor Class | $ | 12.42 | $ | 8.70 | $ | 8.70 | ||||||||||||||
|
|
|
| |||||||||||||||||
Institutional Class | $ | 12.53 | $ | 8.69 | $ | 8.69 | ||||||||||||||
|
|
|
|
1As of 10/31/17, the Wasatch Large Cap Value Fund changed its name to the Wasatch Global Value Fund.
2The Pro Forma Acquiring Fund will not sell securities short. The reduction in Securities sold short on the Pro Forma Acquiring Fund is offset by a reduction in Receivable from broker for securities sold short and an increase in Repurchase agreements. In addition, the Dividends payable on securities sold short is removed from Liabilities and Repurchase agreements because the dividends would not have been received.
3Reflects the impact of applying the Acquiring Fund’s management fee rate to the Pro Forma Acquiring Fund’s payable to the advisor.
4 The total estimated expenses of the Reorganization of the Target Fund are $394,000, this includes the legal, audit and proxy solicitation fees of approximately $338,000, and the total brokerage costs of approximately $56,000 for all repositioning. The Advisor and Target Fund have agreed to split evenly the costs of the Reorganization, subject to contractual expenses caps. Accordingly, based on these estimates, approximately $197,000 of these costs are expected to be paid by the Target Fund and approximately $197,000 will be paid by the Advisor. These are estimates and actual amounts may vary. There are some foreign securities that cannot be purchased until the Reorganization is complete. The Acquiring Fund will receive cash to invest in these remaining securities and will bear the cost of the transactions of approximately $20,000. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceed the Fund’s current expense cap, the Advisor will absorb the portion of the Reorganization expenses necessary for the Fund to operate within its respective cap.
5Figures reflect the issuance by the Acquiring Fund of approximately 6,908,882 shares of Investor Class shares and 1,186,713 Institutional Class shares to the Investor Class and Institutional Class shareholders, respectively, of the Target Fund in connection with the Reorganization.
B-12
Table of Contents
Pro Forma Condensed Combined Statement of Operations
April 1, 2017 through March 31, 2018 (Unaudited)
TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Investment Income: | ||||||||||||||||||||
Interest | $ | 32,016 | $ | 6,514 | $ | 38,530 | ||||||||||||||
Dividends2 | - | - | - | |||||||||||||||||
Unaffiliated issuers | 1,927,729 | 5,394,621 | 7,322,350 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Total investment income | 1,959,745 | 5,401,135 | 7,360,880 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Expenses: | ||||||||||||||||||||
Investment advisory fees | 1,210,864 | 1,606,959 | (220,157 | ) | 3 | 2,597,666 | ||||||||||||||
Shareholder servicing fees— Investor Class | 123,013 | 256,342 | (23,678 | ) | 4 | 355,677 | ||||||||||||||
Shareholder servicing fees— Institutional Class | 3,878 | 1,612 | (2,322 | ) | 4 | 3,168 | ||||||||||||||
Fund administration fees | 18,585 | 30,035 | 48,620 | |||||||||||||||||
Fund accounting fees | 22,171 | 31,957 | 54,128 | |||||||||||||||||
Reports to shareholders— Investor Class | 32,814 | 42,950 | (11,600 | ) | 4 | 64,164 | ||||||||||||||
Reports to shareholders— Institutional Class | 14,552 | 11,616 | (6,285 | ) | 4 | 19,883 | ||||||||||||||
Custody fees | 8,411 | 17,063 | 25,474 | |||||||||||||||||
Federal and state registration fees— Investor Class | 26,289 | 20,677 | (10,325 | ) | 4 | 36,641 | ||||||||||||||
Federal and state registration fees— Institutional Class | 19,089 | 12,680 | (6,555 | ) | 4 | 25,214 | ||||||||||||||
Legal fees | 54,108 | 40,897 | (45,489 | ) | 4 | 49,516 | ||||||||||||||
Trustees’ fees | 22,774 | 27,865 | 50,639 | |||||||||||||||||
Dividends on securities sold short | 531,758 | - | (531,758 | ) | 5 | - | ||||||||||||||
Interest | 240,761 | 5,501 | (237,370 | ) | 8,892 | |||||||||||||||
Audit fees | 30,846 | 37,363 | (26,536 | ) | 4 | 41,673 | ||||||||||||||
Other expenses | 17,547 | 24,008 | (5,139 | ) | 4 | 36,416 | ||||||||||||||
|
|
|
| |||||||||||||||||
Total expenses before reimbursement | 2,377,460 | 2,167,525 | (1,127,213 | ) | 6 | 3,417,772 | ||||||||||||||
Reimbursement of expenses by Advisor | (89,054 | ) | (204,638 | ) | 59,738 | (233,954 | ) | |||||||||||||
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|
|
|
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TARGET FUND LONG/SHORT FUND | ACQUIRING GLOBAL | PRO MENTS | PRO FORMA ACQUIRING FUND | |||||||||||||||||
|
| |||||||||||||||||||
Net Expenses | 2,288,406 | 1,962,887 | (1,067,476 | ) | 3,183,817 | |||||||||||||||
|
|
|
| |||||||||||||||||
Net Investment Income (Loss) | (328,661 | ) | 3,438,248 | 1,067,476 | 6 | 4,177,063 | ||||||||||||||
|
|
|
| |||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||||||
Investments sold | 2,368,306 | 29,924,245 | 9,166,580 | 5 | 41,459,131 | |||||||||||||||
Foreign currency transactions | 148 | (59,673 | ) | (59,525 | ) | |||||||||||||||
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| |||||||||||||||||
Net realized gain (loss) | - | - | - | |||||||||||||||||
|
|
|
| |||||||||||||||||
(10,515,196 | ) | - | (10,515,196 | ) | ||||||||||||||||
Change in Unrealized Appreciation (Depreciation): | (8,146,742 | ) | 29,864,572 | 9,166,580 | 30,884,410 | |||||||||||||||
Investments | ||||||||||||||||||||
Foreign currency translations | ||||||||||||||||||||
Options Written | (3,244,639 | ) | (22,386,180 | ) | (20,000 | ) | 6 | (25,650,819 | ) | |||||||||||
Short positions | - | 2,113 | 2,113 | |||||||||||||||||
|
|
|
| |||||||||||||||||
Net change in unrealized appreciation (depreciation) | - | 23,263 | 23,263 | |||||||||||||||||
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|
|
| |||||||||||||||||
Net gain (loss) on investments | 5,661,717 | - | (5,661,717 | ) | 5 | - | ||||||||||||||
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|
|
| |||||||||||||||||
2,417,078 | (22,360,804 | ) | (5,681,717 | ) | 5 | (25,625,443 | ) | |||||||||||||
Net Increase in Net Assets Resulting from Operations | $ | (5,729,664 | ) | $ | 7,503,768 | $ | 3,484,863 | $ | 5,258,967 | |||||||||||
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|
1As of 10/31/17, the Wasatch Large Cap Value Fund changed its name to Wasatch Global Value Fund.
2Net of $38,636 and $310,900 in foreign withholding taxes, respectively.
3Reflects the impact of applying the Acquiring Fund’s management fee rate to the Pro Forma Acquiring Fund’s average net assets.
4Reflects the anticipated reduction of certain duplicative expenses eliminated as a result of the Reorganization.
5The Pro Forma Acquiring Fund will not engage in selling short positions.
6 The total estimated expenses of the Reorganization of the Target Fund are $394,000, this includes the legal, audit and proxy solicitation fees of approximately $338,000, and the total brokerage costs of approximately $56,000 for all repositioning. The Advisor and Target Fund have agreed to split evenly the costs of the Reorganization, subject to contractual expenses caps. Accordingly, based on these estimates, approximately $197,000 of these costs are expected to be paid by the Target Fund and approximately $197,000 will be paid by the Advisor. These are estimates and actual amounts may vary. There are some foreign securities that cannot be purchased until the Reorganization is complete. The Acquiring Fund will receive cash to invest in these remaining securities and will bear the cost of the transactions of approximately $20,000. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceed the Fund’s current expense cap, the Advisor will absorb the portion of the Reorganization expenses necessary for the Fund to operate within its respective cap.
7Reflects the increase in expense reimbursement payments the Advisor would have made to the Pro Forma Acquiring Fund if the Reorganization had occurred on the first day of the twelve-month period ended March 31, 2018.
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Notes to Pro Forma Combined Condensed Financial Statements (Unaudited)
1. DESCRIPTIONOFTHE FUND
The Wasatch Global Value Fund (the “Acquiring Fund”) (formerly Wasatch Large Cap Value Fund) is a series of Wasatch Funds Trust (the “Trust”) a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
There are two classes of shares in the Acquiring Fund: Investor Class and Institutional Class. Each class of shares 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. 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.
The Acquiring Fund is a diversified fund with its own investment strategy. Wasatch Advisors, Inc. (the “Advisor”) is the Acquiring Fund’s investment adviser.
The Acquiring Fund has a lower contractual management fee (0.90%) than that of the Target Fund (1.10%) generally because the Acquiring Fund does not engage in short sales. In addition, the Acquiring Fund’s expense cap following the Reorganization, which will be in effect through January 31, 2020, will result in lower net annual operating expenses for shareholders of each class of the Target Fund during such time.
2. BASISOF COMBINATION
The accompanying pro forma condensed combined financial statements are presented to show the effect of the proposed acquisition of the Wasatch Long/Short Fund, (“Target Fund”) a series of the Trust, by Acquiring Fund as if such acquisition had taken place as of October 1, 2017.
Under the terms of the Plan of Reorganization, the combination of Target Fund and Acquiring Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of Target Fund in exchange for shares of Acquiring Fund at net asset value. The Statement of Assets and Liabilities of the Target Fund and Acquiring Fund have been combined as of and for the six months ended March 31, 2018. The Statement of Operations of the Target Fund and Acquiring Fund have been combined as of and for the twelve-month period April 1, 2017 through March 31, 2018. Following the reorganization, the Acquiring Fund will be the accounting survivor. In accordance with accounting principles generally accepted in the United States of America, the historical cost of investment securities will be carried forward to the surviving fund and the results of operations for precombination periods of the surviving fund will not be restated.
The total estimated expenses of the Reorganization of the Target Fund are $394,000, this includes the legal, audit and proxy solicitation fees of approximately $338,000, and the total brokerage costs of approximately $56,000 for all repositioning. The Advisor and Target Fund have agreed to split evenly the costs of the Reorganization, subject to contractual expenses caps. Accordingly, based on these estimates, approximately $197,000 of these costs are expected to be paid by the Target Fund and approximately $197,000 will be paid by the Advisor. These are estimates and actual amounts may vary. There are some foreign securities that cannot be purchased until the Reorganization is complete. The Acquiring Fund will receive cash to invest in these remaining securities and will bear the cost of the transactions of approximately $20,000. To the extent that the Target Fund’s expenses, including Reorganization expenses, exceed the Fund’s current expense cap, the Advisor will absorb the portion of the Reorganization expenses necessary for the Fund to operate within its respective cap.
The accompanying pro forma financial statements should be read in conjunction with the financial statements of Acquiring Fund and Target Fund included in their semi-annual report dated March 31, 2018.
The following notes refer to the accompanying pro forma condensed combined financial statements as if the above-mentioned acquisition of Target Fund by Acquiring Fund had taken place as of October 1, 2017.
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Table of Contents
3. FAIR VALUE MEASUREMENTS AND 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 system (“NASDAQ”), such securities are valued using the NASDAQ Official Closing Price (“NOCP”) or last sales price if no NOCP is available. If there are no sales on the primary exchange or market on a 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 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
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Level 2 of the fair value hierarchy. These valuation procedures apply equally to long or short equity positions in a fund.
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:
Portfolios | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other (Level 2) | Significant Unobservable Inputs (Level 3) | Adjustments | Value | |||||||||||||||
Assets | ||||||||||||||||||||
Common Stocks | $ | 169,584,933 | $ | 55,170,941 | $ | - | $ | - | $ | 224,755,874 | ||||||||||
Limited Partnership Interest | 2,584,499 | - | - | - | 2,584,499 | |||||||||||||||
Short-Term Investments | - | 10,188,401 | - | 643,255 | 1 | 10,831,656 | ||||||||||||||
$ | 172,169,432 | $ | 65,359,342 | $ | - | $ | 643,255 | $ | 238,172,029 | |||||||||||
Liabilities | ||||||||||||||||||||
Call Options Written | $ | (8,700 | ) | - | - | - | $ | (8,700 | ) | |||||||||||
Securities Sold Short | $ | (18,069,619 | ) | - | - | $ | 18,069,619 | - | ||||||||||||
$ | (18,078,319 | ) | $ | - | $ | - | $ | 18,069,619 | $ | (8,700 | ) | |||||||||
1The Pro Forma Acquiring Fund will not sell securities short. The reduction in Securities sold short on the Pro Forma Acquiring Fund is offset by a reduction in Receivable from broker for securities sold short and an increase in the Repurchase agreements.
4. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of shares of Acquiring Fund that would have been issued at March 31, 2018, in connection with the proposed Reorganization. The number of shares assumed to be issued is equal to the net asset value of shares of Target Fund, as of March 31, 2018, divided by the net asset value per share of the shares of Acquiring Fund as of March 31, 2018. The pro forma number of shares outstanding, by class, for the combined fund consists of the following at March 31, 2018:
Class of Shares | Shares of Acquiring Fund Pre-Combination | Additional Shares Assumed Issued In Reorganization | Total Outstanding Shares Post-Combination | |||
Investor Class | 18,590,178 | 6,908,882 | 25,499,060 | |||
Institutional Class | 504,720 | 1,186,713 | 1,691,433 |
5. FEDERAL INCOME TAX INFORMATION
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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. After the acquisition, the Acquiring Fund intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal income taxes.
The identified cost of investments for the Acquiring Fund is $153,822,941 for financial accounting and $155,140,325 for Federal income tax purposes. The difference in cost is attributable to the tax deferral of losses on wash sales. The difference between financial accounting and Federal income tax cost of investments for the Target Fund is immaterial. The tax cost of investments will remain unchanged for the combined fund.
Capital Loss Carryforwards as of September 30, 2017 are as follows:
Non-expiring | ||||||||
Fund | Short Term | Long Term | ||||||
Long/Short Fund | $ | 26,195,256 | 127,709,466 |
The Fund has 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.
Late- Year Ordinary | ||||
Fund | Losses | |||
Long/Short Fund | $ | 455,640 |
In a tax-free reorganization, losses of the Target Fund are carried over to the Acquiring Fund on the transfer date. There are several rules in Sections 381, 382, 383 and 384 of the Internal Revenue Code that limit the ability of one fund to utilize the losses of another fund after the transfer date and each rule needs to be evaluated independently. Where more than one rule applies, the most restrictive will govern the amount of the losses available to be utilized. It is estimated that the amount of loss that can be utilized per year is approximately $2 million.
B-18
Table of Contents
PROSPECTUS January 31, 2018INVESTOR CLASS / EQUITY FUNDS / Wasatch Core Growth Fund (WGROX) Wasatch Emerging India Fund (WAINX) Wasatch Emerging Markets Select Fund (WAESX) Wasatch Emerging Markets Small Cap Fund (WAEMX) Wasatch Frontier Emerging Small Countries Fund (WAFMX) Wasatch Global Opportunities Fund (WAGOX) Wasatch Global Value Fund (FMIEX) Wasatch International Growth Fund (WAIGX) Wasatch International Opportunities Fund (WAIOX) Wasatch Micro Cap Fund (WMICX) Wasatch Micro Cap Value Fund (WAMVX) Wasatch Small Cap Growth Fund (WAAEX) Wasatch Small Cap Value Fund (WMCVX) Wasatch Strategic Income Fund (WASIX) Wasatch Ultra Growth Fund (WAMCX) Wasatch World Innovators Fund (WAGTX) BOND FUNDS / Wasatch-1st Source Income Fund (FMEQX) Wasatch-Hoisington U.S. Treasury Fund (WHOSX) As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any statement to the contrary is a criminal offense.
Table of Contents
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.21% |
Total Annual Fund Operating Expenses1 | 1.21% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.50% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Core Growth Fund — Investor Class | $123 | $384 | $665 | $1,465 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img77783d891.jpg)
Best — 6/30/2009 | 29.50% |
Worst — 12/31/2008 | -27.03% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Core Growth Fund — Investor Class | |||
Return Before Taxes | 24.29% | 14.55% | 9.57% |
Return After Taxes on Distributions | 22.56% | 13.40% | 8.97% |
Return After Taxes on Distributions and Sale of Fund Shares | 15.18% | 11.54% | 7.76% |
Russell 2000® Index* (reflects no deductions for fees, expenses or taxes) | 14.65% | 14.12% | 8.71% |
Russell 2000® Growth Index* (reflects no deductions for fees, expenses or taxes) | 22.17% | 15.21% | 9.19% |
JB Taylor Lead Portfolio Manager Since 2000 | Paul Lambert Portfolio Manager Since 2005 | Mike Valentine Portfolio Manager Since August 2017 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.25% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.48% |
Total Annual Fund Operating Expenses1 | 1.73% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.75% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Emerging India Fund — Investor Class | $176 | $546 | $940 | $2,042 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img65606c342.jpg)
Best — 3/31/2017 | 22.67% |
Worst — 12/31/2016 | -10.55% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (4/26/11) |
Wasatch Emerging India Fund — Investor Class | |||
Return Before Taxes | 53.40% | 18.03% | 13.86% |
Return After Taxes on Distributions | 52.03% | 17.68% | 13.59% |
Return After Taxes on Distributions and Sale of Fund Shares | 30.75% | 14.58% | 11.28% |
MSCI IMI (Investable Market Index)* (reflects no deductions for fees, expenses or taxes) | 43.72% | 10.37% | 4.49% |
Ajay Krishnan, CFA Lead Portfolio Manager Since Inception | Matthew Dreith, CFA Associate Portfolio Manager Since January 31, 2016 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.89% |
Interest Expense | 0.01% |
Total Annual Fund Operating Expenses1 | 1.90% |
Expense Reimbursement | (0.39)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.51% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.50% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Emerging Markets Select Fund — Investor Class | $154 | $560 | $991 | $2,192 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img88f55a2c3.jpg)
Best — 3/31/2017 | 14.71% |
Worst — 9/30/2015 | -15.14% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (12/13/12) |
Wasatch Emerging Markets Select Fund — Investor Class | |||
Return Before Taxes | 37.66% | 1.72% | 2.06% |
Return After Taxes on Distributions | 37.66% | 1.75% | 2.09% |
Return After Taxes on Distributions and Sale of Fund Shares | 21.31% | 1.37% | 1.63% |
MSCI Emerging Markets Index* (reflects no deductions for fees, expenses or taxes) | 37.28% | 4.35% | 4.59% |
Ajay Krishnan, CFA Lead Portfolio Manager Since Inception | Roger Edgley, CFA Portfolio Manager Since Inception | Scott Thomas, CFA, CPA Associate Portfolio Manager Since January 31, 2016 | Matthew Dreith, CFA Associate Portfolio Manager Since January 31, 2018 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.65% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.36% |
Interest Expense | 0.01% |
Total Annual Fund Operating Expenses1 | 2.02% |
Expense Reimbursement | (0.06)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.96% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Emerging Markets Small Cap Fund — Investor Class | $199 | $628 | $1,083 | $2,344 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img99b226644.jpg)
Best — 6/30/2009 | 56.10% |
Worst — 12/31/2008 | -32.16% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Emerging Markets Small Cap Fund — Investor Class | |||
Return Before Taxes | 38.20% | 3.25% | 5.45% |
Return After Taxes on Distributions | 38.20% | 3.19% | 5.39% |
Return After Taxes on Distributions and Sale of Fund Shares | 21.62% | 2.55% | 4.38% |
MSCI Emerging Markets Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 33.84% | 5.41% | 2.78% |
MSCI Emerging Markets Index* (reflects no deductions for fees, expenses or taxes) | 37.28% | 4.35% | 1.68% |
Roger Edgley, CFA Lead Portfolio Manager Since 2007 | Andrey Kutuzov, CFA Associate Portfolio Manager Since January 31, 2014 | Scott Thomas, CFA, CPA Associate Portfolio Manager Since January 31, 2015 | Kevin Unger, CFA Associate Portfolio Manager Since January 31, 2018 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee1 | 1.65% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.68% |
Interest Expense | 0.03% |
Total Annual Fund Operating Expenses1, 2 | 2.36% |
Expense Reimbursement | (0.18)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 2.18% |
1 | Effective January 31, 2018, the management fee was reduced from 1.75% to 1.65%. The management fee and the total annual fund operating expenses have been restated to reflect the current management fee. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 2.15% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Frontier Emerging Small Countries Fund — Investor Class | $221 | $719 | $1,244 | $2,682 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imgc9f61d4d5.jpg)
Best — 3/31/2013 | 8.33% |
Worst — 12/31/2016 | -8.37% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (1/31/12) |
Wasatch Frontier Emerging Small Countries Fund — Investor Class | |||
Return Before Taxes | 21.16% | 2.52% | 7.05% |
Return After Taxes on Distributions | 21.16% | 2.52% | 7.04% |
Return After Taxes on Distributions and Sale of Fund Shares | 11.98% | 2.06% | 5.68% |
MSCI Frontier Emerging Markets Index* (reflects no deductions for fees, expenses or taxes) | 26.79% | 3.99% | 5.89% |
MSCI Frontier Markets Index* (reflects no deductions for fees, expenses or taxes) | 31.86% | 9.27% | 9.30% |
Roger Edgley, CFA Lead Portfolio Manager Since June 6, 2016 | Jared Whatcott, CFA Portfolio Manager Since January 31, 2016 | Scott Thomas, CFA, CPA Portfolio Manager Since June 6, 2016 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.25% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.32% |
Interest Expense | 0.02% |
Total Annual Fund Operating Expenses1 | 1.59% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.75% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Global Opportunities Fund — Investor Class | $162 | $502 | $866 | $1,890 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imge347fb896.jpg)
Best — 6/30/2009 | 32.73% |
Worst — 9/30/2011 | -18.94% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (11/17/08) |
Wasatch Global Opportunities Fund — Investor Class | |||
Return Before Taxes | 37.63% | 11.12% | 17.64% |
Return After Taxes on Distributions | 34.39% | 8.20% | 15.34% |
Return After Taxes on Distributions and Sale of Fund Shares | 23.99% | 8.36% | 14.63% |
MSCI ACWI (All Country World) Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 23.81% | 12.36% | 15.90% |
JB Taylor Lead Portfolio Manager Since 2011 | Ajay Krishnan, CFA Lead Portfolio Manager Since 2012 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 0.90% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.29% |
Total Annual Fund Operating Expenses1 | 1.19% |
Expense Reimbursement | (0.09)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.10% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.10% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Global Value Fund — Investor Class | $112 | $369 | $646 | $1,436 |
• | Calculating and reviewing standard ratios, such as price-to-sales, price-to-book, price-to-earnings, and price/earnings-to-growth. |
• | Discounted cash flow models with sensitivity analysis for changes to revenue growth rates, operating margins, outstanding share counts, earnings multiples, and tangible book value. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imgea490e347.jpg)
Best — 6/30/2009 | 14.66% |
Worst — 12/31/2008 | -19.38% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Global Value Fund — Investor Class | |||
Return Before Taxes | 11.21% | 10.84% | 5.40% |
Return After Taxes on Distributions | 7.34% | 6.21% | 2.96% |
Return After Taxes on Distributions and Sale of Fund Shares | 9.37% | 7.96% | 3.92% |
MSCI ACWI (All Country World Index)*† (reflects no deductions for fees, expenses or taxes) | 23.97% | 10.80% | 4.65% |
Russell 1000® Value Index** (reflects no deductions for fees, expenses or taxes) | 13.66% | 14.04% | 7.10% |
†Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indexes or financial products. This report is not approved or produced by MSCI.
**The Russell 1000 Value Index® is a market-capitalization weighted index of those firms in the Russell 1000 with lower price-to-book ratios and lower forecasted growth values. Consistent with the name and strategy change, effective October 31, 2017, the Fund’s primary benchmark index changed from the Russell 1000 Value Index® to the MSCI ACWI Index. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
David Powers, CFA Lead Portfolio Manager Since August 2013 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.25% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.21% |
Total Annual Fund Operating Expenses1 | 1.46% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.75% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
International Growth Fund — Investor Class | $149 | $462 | $798 | $1,747 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imgcee7d8ff8.jpg)
Best — 6/30/2009 | 41.88% |
Worst — 9/30/2008 | -28.61% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch International Growth Fund — Investor Class | |||
Return Before Taxes | 33.01% | 10.03% | 6.73% |
Return After Taxes on Distributions | 32.17% | 9.53% | 6.46% |
Return After Taxes on Distributions and Sale of Fund Shares | 19.37% | 7.89% | 5.40% |
MSCI ACWI (All Country World Index) ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.65% | 10.03% | 4.69% |
MSCI World ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.04% | 11.37% | 5.16% |
Roger Edgley, CFA Lead Portfolio Manager Since 2006 | Ken Applegate, CFA, CMT Portfolio Manager Since January 31, 2016 | Linda Lasater, CFA Associate Portfolio Manager Since January 31, 2014 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.75% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.48% |
Interest Expense | 0.01% |
Total Annual Fund Operating Expenses1 | 2.24% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 2.25% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
International Opportunities Fund — Investor Class | $227 | $700 | $1,199 | $2,573 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img887295bf9.jpg)
Best — 6/30/2009 | 44.35% |
Worst — 9/30/2008 | -27.60% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch International Opportunities Fund — Investor Class | |||
Return Before Taxes | 27.59% | 12.36% | 7.07% |
Return After Taxes on Distributions | 25.59% | 10.92% | 6.10% |
Return After Taxes on Distributions and Sale of Fund Shares | 17.24% | 9.61% | 5.53% |
MSCI ACWI (All Country World Index) ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.65% | 10.03% | 4.69% |
MSCI World ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.04% | 11.37% | 5.16% |
Jared Whatcott, CFA Portfolio Manager Since January 31, 2014 | Linda Lasater, CFA Portfolio Manager Since June 6, 2016 | Allison He, CFA Associate Portfolio Manager Since January 31, 2018 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee1 | 1.50% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.17% |
Total Annual Fund Operating Expenses1, 2 | 1.67% |
1 | Effective January 31, 2017, the management fee was reduced from 1.75% to 1.50%. The management fee and the total annual fund operating expenses have been restated to reflect the 1.50% management fee. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Micro Cap Fund — Investor Class | $170 | $526 | $907 | $1,977 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img6d671d5810.jpg)
Best — 6/30/2009 | 27.00% |
Worst — 12/31/2008 | -31.16% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Micro Cap Fund — Investor Class | |||
Return Before Taxes | 36.06% | 16.02% | 7.65% |
Return After Taxes on Distributions | 31.78% | 13.79% | 6.60% |
Return After Taxes on Distributions and Sale of Fund Shares | 23.96% | 12.60% | 6.06% |
Russell Microcap® Index* (reflects no deductions for fees, expenses or taxes) | 13.17% | 14.29% | 7.68% |
Ken Korngiebel, CFA Lead Portfolio Manager Since July 2017 | Dan Chace, CFA Portfolio Manager Since 2004 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee1 | 1.50% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.27% |
Acquired Fund Fees and Expenses2 | 0.07% |
Total Annual Fund Operating Expenses1, 3 | 1.84% |
1 | Effective January 31, 2017, the management fee was reduced from 1.75% to 1.50%. The management fee and the total annual fund operating expenses have been restated to reflect the 1.50% management fee. |
2 | The Total Annual Fund Operating Expenses may not equal the expense ratio stated in the Fund’s most recent Annual Report and Financial Highlights, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. |
3 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Micro Cap Value Fund — Investor Class | $187 | $579 | $996 | $2,158 |
• | Undiscovered Gems — Companies with good growth potential that have yet to be broadly discovered by Wall Street analysts, thus leaving them attractively undervalued relative to their expected growth rate. |
• | Fallen Angels — High quality growth companies that have experienced a temporary setback and therefore have appealing valuations relative to their long term growth potential. |
• | Value Momentum — Valuation that is inexpensive relative to a company’s history, but catalyst for future growth has been identified. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img6ee6ed5911.jpg)
Best — 6/30/2009 | 40.00% |
Worst — 12/31/2008 | -26.67% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Micro Cap Value Fund — Investor Class | |||
Return Before Taxes | 26.41% | 16.71% | 9.85% |
Return After Taxes on Distributions | 24.18% | 13.92% | 8.36% |
Return After Taxes on Distributions and Sale of Fund Shares | 16.78% | 12.85% | 7.77% |
Russell Microcap® Index* (reflects no deductions for fees, expenses or taxes) | 13.17% | 14.29% | 7.68% |
Brian Bythrow, CFA Lead Portfolio Manager Since 2003 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.27% |
Total Annual Fund Operating Expenses1 | 1.27% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.50% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Small Cap Growth Fund — Investor Class | $129 | $402 | $696 | $1,532 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imga50cfffe12.jpg)
Best — 6/30/2009 | 25.04% |
Worst — 12/31/2008 | -22.04% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Small Cap Growth Fund — Investor Class | |||
Return Before Taxes | 21.73% | 11.30% | 8.37% |
Return After Taxes on Distributions | 18.70% | 8.86% | 6.99% |
Return After Taxes on Distributions and Sale of Fund Shares | 14.80% | 8.71% | 6.69% |
Russell 2000® Growth Index* (reflects no deductions for fees, expenses or taxes) | 22.17% | 15.21% | 9.19% |
Russell 2000® Index* (reflects no deductions for fees, expenses or taxes) | 14.65% | 14.12% | 8.71% |
JB Taylor Lead Portfolio Manager Since 2016 | Ken Korngiebel, CFA Portfolio Manager Since August 2017 | Ryan Snow Portfolio Manager Since August 2017 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.21% |
Acquired Fund Fees and Expenses1 | 0.20% |
Total Annual Fund Operating Expenses2 | 1.41% |
1 | The Total Annual Fund Operating Expenses may not equal the expense ratio stated in the Fund’s most recent Annual Report and Financial Highlights, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.50% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Small Cap Value Fund — Investor Class | $144 | $447 | $772 | $1,691 |
• | Undiscovered Gems — Companies with good growth potential that have yet to be broadly discovered by Wall Street analysts, thus leaving them attractively undervalued relative to their expected growth rate. |
• | Fallen Angels — High quality growth companies that have experienced a temporary setback and therefore have appealing valuations relative to their long-term growth potential. |
• | Quality Value — Quality companies with earnings potential that is not fully reflected in their stock prices. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imgbc211a6513.jpg)
Best — 6/30/2009 | 33.91% |
Worst — 12/31/2008 | -34.04% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Small Cap Value Fund — Investor Class | |||
Return Before Taxes | 19.55% | 16.22% | 9.13% |
Return After Taxes on Distributions | 17.75% | 15.84% | 8.95% |
Return After Taxes on Distributions and Sale of Fund Shares | 12.49% | 13.13% | 7.50% |
Russell 2000® Value Index* (reflects no deductions for fees, expenses or taxes) | 7.84% | 13.01% | 8.17% |
Russell 2000® Index* (reflects no deductions for fees, expenses or taxes) | 14.65% | 14.12% | 8.71% |
Jim Larkins Lead Portfolio Manager Since 1999 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 0.70% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.40% |
Acquired Fund Fees and Expenses1 | 0.48% |
Total Annual Fund Operating Expenses2 | 1.58% |
Expense Reimbursement | (0.15)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.43% |
1 | The Total Annual Fund Operating Expenses may not equal the expense ratio stated in the Fund’s most recent Annual Report and Financial Highlights, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 0.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Strategic Income Fund — Investor Class | $146 | $484 | $846 | $1,866 |
• | Attractive, sustainable dividend yields or the potential for dividend growth. |
• | Experienced top management. |
• | Sustainable competitive advantage. |
• | Stable demand for products and services. |
• | Ability to capitalize on favorable long-term trends. |
• | Rates of current income. |
• | Credit quality of the issuer. |
• | Maturity, duration and other characteristics of the obligation. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img77aa683714.jpg)
Best — 6/30/2009 | 21.21% |
Worst — 12/31/2008 | -28.22% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Strategic Income Fund — Investor Class | |||
Return Before Taxes | 14.32% | 10.49% | 6.72% |
Return After Taxes on Distributions | 13.62% | 9.05% | 5.49% |
Return After Taxes on Distributions and Sale of Fund Shares | 8.30% | 7.95% | 4.96% |
S&P 500® Index (reflects no deductions for fees, expenses or taxes) | 21.83% | 15.79% | 8.50% |
Bloomberg Barclays US Aggregate Bond Index (reflects no deductions for fees, expenses or taxes) | 3.54% | 2.10% | 4.01% |
Samuel S. Stewart, Jr., PhD, CFA Lead Portfolio Manager Since 2006 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.30% |
Acquired Fund Fees and Expenses1 | 0.05% |
Total Annual Fund Operating Expenses2 | 1.35% |
1 | The Total Annual Fund Operating Expenses may not equal the expense ratio stated in the Fund’s most recent Annual Report and Financial Highlights, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.50% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Ultra Growth Fund — Investor Class | $137 | $427 | $739 | $1,623 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imgdd07c33315.jpg)
Best — 6/30/2009 | 28.60% |
Worst — 12/31/2008 | -31.56% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Ultra Growth Fund — Investor Class | |||
Return Before Taxes | 31.56% | 15.46% | 7.44% |
Return After Taxes on Distributions | 28.13% | 11.99% | 5.52% |
Return After Taxes on Distributions and Sale of Fund Shares | 20.51% | 11.75% | 5.67% |
Russell 2000® Growth Index* (reflects no deductions for fees, expenses or taxes) | 22.17% | 15.21% | 9.19% |
John Malooly, CFA Lead Portfolio Manager Since 2012 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.50% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.33% |
Total Annual Fund Operating Expenses1 | 1.83% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
World Innovators Fund — Investor Class | $186 | $576 | $991 | $2,148 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068imgc63f9ead16.jpg)
Best — 6/30/2009 | 27.41% |
Worst — 12/31/2008 | -30.07% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch World Innovators Fund — Investor Class | |||
Return Before Taxes | 32.96% | 13.22% | 8.50% |
Return After Taxes on Distributions | 28.65% | 10.77% | 7.32% |
Return After Taxes on Distributions and Sale of Fund Shares | 22.11% | 10.21% | 6.77% |
MSCI ACWI (All Country World Index) IMI (Investable Market Index)* (reflects no deductions for fees, expenses or taxes) | 23.95% | 11.00% | 4.97% |
Josh Stewart Lead Portfolio Manager Since January 2016 | Samuel S. Stewart, Jr., PhD, CFA Portfolio Manager Since 2008 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 0.55% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.20% |
Total Annual Fund Operating Expenses | 0.75% |
1 Year | 3 Years | 5 Years | 10 Years | |
Wasatch-1st Source Income Fund — Investor Class | $77 | $240 | $417 | $930 |
• | Invest substantially all, but in no event less than 65%, of the Fund’s total assets at the time of purchase in debt securities. |
• | Invest in fixed-income securities consisting of bonds, fixed-income preferred stocks, debentures, notes, zero-coupon securities, mortgage-related and other asset-backed securities, state, municipal or industrial revenue bonds, obligations issued or guaranteed by agencies or instrumentalities of the U.S. government, debt securities convertible into or exchangeable for common stocks, foreign debt securities, income participation loans, guaranteed investment contracts, first mortgage loans and participation certificates in pools of mortgages issued or guaranteed by agencies or instrumentalities of the U.S. government. |
• | Typically invest in debt securities rated at the time of purchase within the four highest rating categories assigned by one or more nationally recognized statistical rating organizations (NRSROs) or, if unrated, those which 1st Source deems to be of comparable quality. The Fund may also invest up to 10% of its total assets in non-investment grade debt securities. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img1ca6238d17.jpg)
Best — 12/31/2008 | 2.77% |
Worst — 6/30/2013 | -2.01% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch-1st Source Income Fund — Investor Class | |||
Return Before Taxes | 2.21% | 1.13% | 2.59% |
Return After Taxes on Distributions | 1.38% | 0.38% | 1.71% |
Return After Taxes on Distributions and Sale of Fund Shares | 1.25% | 0.52% | 1.66% |
Bloomberg Barclays US Government/Credit Bond Index (reflects no deductions for fees, expenses or taxes) | 2.14% | 1.50% | 3.32% |
Wasatch Advisors, Inc. | 1st Source Corporation Investment Advisors, Inc. |
Paul Gifford, CFA Lead Portfolio Manager Since 2008 | Erik Clapsaddle, CFA, CFP Associate Portfolio Manager Since 2016 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 0.50% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.22% |
Total Annual Fund Operating Expenses1 | 0.72% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 0.75% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Wasatch-Hoisington U.S. Treasury Fund — Investor Class | $74 | $231 | $401 | $896 |
• | Typically invest at least 90% of the Fund’s total assets in U.S. Treasury securities and in repurchase agreements collateralized by such securities. |
• | Adjust the average maturity and effective duration of the Fund’s portfolio based on HIMCO’s assessment of multi-year trends in national and international economic conditions. |
• | Invest in long-term U.S. Treasury bonds, including U.S. Treasury Strips (zero coupon Treasury securities), when HIMCO determines that economic conditions suggest lower inflation and the multi-year trend is toward decreasing interest rates. |
• | Invest in U.S. Treasury bills or notes, Treasury Inflation-Protected Securities (TIPS), and Floating Rate Notes (FRNs) (maturities less than five years) when HIMCO determines that economic conditions suggest rising inflation and the multi-year trend is toward increasing interest rates. |
• | The effective duration of the Fund’s holdings is expected to vary from less than a year to a maximum of 25 years. |
• | The Fund’s holdings will range in maturity from less than a year to a maximum of the longest maturity Treasury bonds available. As of September 30, 2017, the effective duration of the Fund’s holdings was 22.60 years, and the average maturity of the Fund’s holdings was 27.66 years. |
• | When the Fund is invested in securities with longer weighted average maturities it will be more sensitive to changes in market interest rates and its share price may be subject to greater volatility. |
• | The Fund’s portfolio turnover rate will vary substantially from year to year. During some periods, turnover will be well below 50%. At other times, turnover could exceed 200% annually. At these times, increased portfolio turnover may result in higher transaction costs and may also result in taxable capital gains. |
• | Portfolio adjustments may require the sale of securities prior to their maturity date. The goal of these transactions will be to increase income and/or change the duration of the overall portfolio. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817068img073d4f8c18.jpg)
Best — 9/30/2011 | 36.15% |
Worst — 12/31/2016 | -14.62% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch-Hoisington U.S. Treasury Fund — Investor Class | |||
Return Before Taxes | 10.46% | 3.55% | 7.35% |
Return After Taxes on Distributions | 9.49% | 1.90% | 5.63% |
Return After Taxes on Distributions and Sale of Fund Shares | 5.90% | 2.19% | 5.38% |
Bloomberg Barclays US Aggregate Bond Index (reflects no deductions for fees, expenses or taxes) | 3.54% | 2.10% | 4.01% |
Wasatch Advisors, Inc. | Hoisington Investment Management Company (HIMCO) |
Van Hoisington Lead Portfolio Manager Since 1996 | Van R. Hoisington, Jr., “V.R.” Portfolio Manager Since January 2016 | David Hoisington Portfolio Manager Since January 2016 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
• | Potential for significant and sustained revenue and earnings growth. |
• | Experienced, proven management team. |
• | High return on capital. |
• | Sustainable competitive advantage. |
• | Market leadership and/or growing market share. |
• | Ability to capitalize on favorable long-term trends. |
• | Strong financial health. |
• | Reasonable use of debt. |
• | Attractive valuation. |
• | Catalysts for improved earnings growth. |
• | New products or services that may increase revenue growth and market share. |
• | Experienced top management with a substantial stake in the company’s future. |
• | Introduction of valuable new products and services. |
• | Low stock valuation as measured by a variety of ratios, including price-to-earnings, price-to-sales, price-to-book, price-to-cash flow and enterprise value-to-EBITDA. |
• | Potential to generate improved financial performance. |
• | The rationale we used to buy the security is no longer valid. |
• | The security becomes overpriced. |
• | We believe another security has better investment potential. |
Wasatch Fund | Annual Management Fees, Net of Reimbursements | Investor Class Shares Expense Limitations |
Core Growth Fund | 1.00% | 1.50% |
Emerging India Fund | 1.25% | 1.75% |
Emerging Markets Select Fund | 0.61% | 1.50% |
Emerging Markets Small Cap Fund | 1.59% | 1.95% |
Frontier Emerging Small Countries Fund1 | 1.57% | 2.15% |
Global Opportunities Fund | 1.25% | 1.75% |
Global Value Fund | 0.81% | 1.10% |
International Growth Fund | 1.25% | 1.75% |
International Opportunities Fund | 1.75% | 2.25% |
Micro Cap Fund2 | 1.58% | 1.95% |
Micro Cap Value Fund2 | 1.58% | 1.95% |
Small Cap Growth Fund | 1.00% | 1.50% |
Small Cap Value Fund | 1.00% | 1.50% |
Strategic Income Fund | 0.55% | 0.95% |
Ultra Growth Fund | 1.00% | 1.50% |
World Innovators Fund | 1.50% | 1.95% |
Income Fund3 | 0.55% | — |
Wasatch Fund | Annual Management Fees, Net of Reimbursements | Investor Class Shares Expense Limitations |
U.S. Treasury Fund4 | 0.50% | 0.75% |
1 | Effective January 31, 2018, the management fee for Frontier Emerging Small Countries Fund was reduced from 1.75% to 1.65%. The expense cap in effect from January 31, 2018 through January 31, 2019 is ten basis points lower than the temporary cap in effect from January 31, 2017 through January 31, 2018 which had been 2.25%. |
2 | Effective January 31, 2017, the management fee for the Micro Cap Fund and Micro Cap Value Fund was reduced from 1.75% to 1.50%. |
3 | The Income Fund is managed by 1st Source. Under a sub-advisory agreement between the Advisor and 1st Source, the Advisor has agreed to pay 1st Source a management fee, which is currently equal to 0.28% of such Fund’s daily net assets. 1st Source may reimburse the Advisor for certain expenses. |
4 | The U.S. Treasury Fund is managed by HIMCO. Under a sub-advisory agreement between the Advisor and HIMCO, the Advisor has agreed to pay HIMCO a management fee, which is currently equal to 0.25% of such Fund’s daily net assets. The net fee may be less due to reimbursements of certain expenses by HIMCO to the Advisor. |
Name of Fund | Portfolio Manager(s) |
Core Growth Fund | JB Taylor, Paul Lambert and Mike Valentine |
Emerging India Fund | Ajay Krishnan, CFA* and Matthew Dreith, CFA |
Emerging Markets Select Fund | Ajay Krishnan, CFA, Roger Edgley, CFA, Scott Thomas, CFA, CPA and Matthew Dreith, CFA |
Emerging Markets Small Cap Fund | Roger Edgley, CFA, Andrey Kutuzov, CFA, Scott Thomas, CFA, CPA and Kevin Unger, CFA |
Frontier Emerging Small Countries Fund | Roger Edgley, CFA, Jared Whatcott, CFA and Scott Thomas, CFA, CPA |
Global Opportunities Fund | JB Taylor and Ajay Krishnan, CFA |
Global Value Fund | David Powers, CFA |
Name of Fund | Portfolio Manager(s) |
International Growth Fund | Roger Edgley, CFA, Ken Applegate, CFA, CMT and Linda Lasater, CFA |
International Opportunities Fund | Jared Whatcott, CFA, Linda Lasater, CFA and Allison He, CFA |
Micro Cap Fund | Ken Korngiebel, CFA and Dan Chace, CFA |
Micro Cap Value Fund | Brian Bythrow, CFA |
Small Cap Growth Fund | JB Taylor, Ken Korngiebel, CFA and Ryan Snow |
Small Cap Value Fund | Jim Larkins |
Strategic Income Fund | Samuel S. Stewart, Jr., PhD, CFA |
Ultra Growth Fund | John Malooly, CFA |
World Innovators Fund | Josh Stewart and Samuel S. Stewart, Jr., PhD, CFA |
Name of Fund | Portfolio Manager(s) |
Income Fund | Paul Gifford, CFA and Erik Clapsaddle, CFA, CFP |
U.S. Treasury Fund | Van Hoisington, V.R. Hoisington and David Hoisington |
505 Wakara Way, 3rd Floor
Salt Lake City, UT 84108
100 North Michigan Street
South Bend, IN 46601
6836 Bee Caves Road
Building 2, Suite 100
Austin, TX 78746-6464
801 Pennsylvania Avenue
Kansas City, MO 64105
1290 Broadway, Suite 1100
Denver, CO 80203
235 West Galena Street
Milwaukee, WI 53212
801 Pennsylvania Avenue
Kansas City, MO 64105
and Independent Trustees
111 West Monroe Street
Chicago, IL 60603
1100 Walnut St., Suite 1300
Kansas City, MO 64106
Investment Minimums — Investor Class | |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Make checks payable to Wasatch Funds |
P.O. Box 2172
Milwaukee, WI 53201-2172
235 West Galena Street
Milwaukee, WI 53212
• | UMB Bank, N.A. |
• | ABA Number 101000695 |
• | Account Number 987-060-9800 |
• | Wasatch (name and Class of Fund) |
• | Your Wasatch account number |
• | Name(s) of investor(s) |
• | Social security or tax ID number |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing (a Medallion signature guarantee is required). |
• | Checks will be mailed to the address on your account. |
• | Redemption requests made within 30 days of an address change must be made in writing and require a Medallion signature guarantee. |
• | Your name |
• | The name and Class of the Fund |
• | Your account number(s) |
• | The dollar amount or number of shares to be redeemed |
• | Your daytime telephone number |
• | Signature(s) of account owners (sign exactly as the account is registered) |
• | Medallion signature guarantee (if required) |
• | If you purchase shares directly from Wasatch Funds, the minimum initial investment for a regular account is $2,000 unless otherwise noted on the application. |
• | The minimum initial investment for Individual Retirement Accounts (IRAs) is $2,000. For regular accounts opened with an automatic investment plan, it is $1,000. |
• | Other than the reinvestment of dividends and capital gains, the minimum for subsequent purchases in regular and IRA accounts is $100. The minimum for subsequent purchases via the automatic investment plan is $50 monthly and/or $100 quarterly. |
• | The Funds reserve the right to waive or lower investment minimums for any reason. |
• | Accounts opened through third parties such as brokers or banks may be subject to different minimums for initial and subsequent purchases. |
• | Individual or Joint Ownership |
• | Gift to Minor |
• | Corporation, Partnership, Trust or Other Entity |
• | Traditional IRA |
• | Rollover IRA |
• | Roth IRA |
• | SEP-IRA |
• | SIMPLE IRA |
• | Section 403(b)(7) Plan |
• | Coverdell Education Savings Account |
• | Use of an exclusive Toll Free number for direct access to an experienced shareholder services team member. |
• | Exemptions for certain account and maintenance fees. |
• | Priority notification of new or reopened Wasatch Funds. |
• | Access to quarterly comments from Wasatch portfolio managers. |
• | Choice of monthly or quarterly statements. |
• | Access to closed funds. |
• | There are no sales charges to purchase Investor Class shares of the Funds. |
• | The purchase price of your Investor Class shares will be determined the next time the Funds' Investor Class share prices are calculated after the transfer agent has received your request in good order prior to the close of regular trading on a day on which the New York Stock Exchange (NYSE) is open. A purchase request is in “good order” when the Fund’s transfer agent has received all the information and documentation it deems necessary to effect your request, which would typically mean that it has received federal funds, a wire, a check or Automated Clearing House (“ACH”) transaction, together with a completed account application, or, if an existing shareholder, a completed additional investment form (or written or verbal instructions, which include your name, account number, name and class of shares of the Fund and investment amount). Please refer to the Shareholder’s Guide for more detailed instructions on purchasing shares of the Funds. |
• | Purchases must be made in U.S. dollars. |
• | Wasatch Funds does not accept cash, money orders, third party checks, travelers checks, credit card checks, checks drawn on banks outside the U.S. or other checks deemed to be high risk. |
• | Purchase requests may not be made via fax or email. |
• | The Funds reserve the right to stop selling Investor Class shares at any time or to reject specific purchase requests, including purchases by exchange from another Wasatch Fund or the Federated Prime Cash Obligations Fund (Money Market Fund). |
• | Purchase requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the purchase will be delayed until the request has been received in good order by the transfer agent. |
• | Purchase requests made by telephone will only be accepted for accounts that have previously established bank information to allow electronic funds transfer from the Automated Clearing House (ACH). |
• | When you make an initial purchase of shares online, the purchase amount will be withdrawn from your bank after the transfer agent has received your online application in good order. You will receive a reference number for your transaction when you submit your application or subsequent purchase. A verification of your request will also be sent to your email address and we will mail a transaction confirmation to you when we have processed |
your online application. Please double check that the bank information you provide is correct. You will be held liable for losses incurred by the Funds due to incorrect bank information. | |
• | A $20.00 fee will be assessed if your purchase cannot be made for any reason. See also “Insufficient Funds Policy.” |
• | You may request that the Funds redeem all or a portion of your Investor Class shares. |
• | The price of Investor Class shares you redeem will be determined the next time the Funds’ share prices are calculated after the transfer agent has received your request in good order. |
• | Most new accounts automatically have the telephone redemption privilege, unless it is specifically declined. Some accounts such as corporate accounts do not receive the redemption privilege unless they complete and return the Redemption and Exchange Privileges Form. |
• | You may redeem shares in your account in amounts of $500 up to $100,000 (including for corporate accounts) online or by telephone. |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing and a Medallion signature guarantee is required. |
• | Wasatch Funds does not accept redemption requests made via fax or email. |
• | The Funds will mail a check to the address on your account within seven days after the transfer agent has received your request in good order. |
• | Redemption proceeds can also be sent by wire ($15.00 fee) or electronic funds transfer to your preauthorized bank account. The Funds’ transfer agent will increase the redemption request by the additional number of shares or partial shares needed to cover the wire transfer fee and will pay that fee to the processing bank. |
• | Payment may be delayed for up to seven days on redemption requests for recent purchases made by check or electronic funds transfer to ensure that the payment has cleared. |
• | Redemption requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the redemption will be delayed until the request has been received in good order by the transfer agent. |
• | The Funds typically expect to pay redemption proceeds to redeeming shareholders within one business day following a request received in good order by the transfer agent. Receipt of redemption proceeds may take longer for wire transfers and ACH transactions, depending on your bank’s processing times. Receipt of redemption proceeds may also take longer if shares of the Fund are purchased through an intermediary. |
• | A Fund can delay payment of redemption proceeds for up to seven days at any time if it is deemed to be in the best interests of the Fund to do so. |
• | To meet redemption requests, the Funds typically expect to use cash reserves held in a Fund’s portfolio and/or the proceeds from sales of portfolio securities effected shortly |
after the redemption request. A Fund may also meet redemption requests by borrowing under a line of credit or through overdrafts with its custodian. The Funds more likely will employ these additional methods to meet larger redemption requests or during times of market stress. | |
• | The Funds generally pay redemptions in cash, and have filed a notice with the Securities and Exchange Commission of their intent to pay redemptions up to certain amounts in cash; however, the Funds reserve the right to redeem all or a portion of a redemption request with securities or other Fund assets, if it is determined to be in the best interests of the Funds to do so. Although generally unlikely, if a Fund does redeem shares in-kind, you will likely have to pay brokerage commissions to sell the securities or other assets delivered to you as well as any taxes on any capital gains incurred upon sale. In addition, the securities or other assets distributed to you will continue to be subject to market risk until they are sold. |
• | Redemption requests from corporations, executors, administrators, trustees and guardians may require additional documentation and a Medallion signature guarantee. |
• | If the account is worth less than the amount requested, the entire value of the account will be redeemed. |
• | The Funds can suspend redemptions and/or delay payment of redemption proceeds for more than seven days after a redemption request has been received under the following unusual circumstances: (i) for any period (a) during which the NYSE is closed other than customary weekend and holiday closings; or (b) during which trading on the NYSE is restricted; (ii) for any period during which an emergency exists as a result of which (a) disposal by a Fund of securities owned by it is not reasonably practicable; or (b) it is not reasonably practicable for such Fund fairly to determine the value of its net assets; or (iii) for such other periods as the SEC may by order permit for the protection of security holders of the Funds. |
• | The Funds reserve the right to reject or delay a redemption on certain legal grounds. See “Emergency Circumstances.” |
• | Redeeming shares may result in a taxable capital gain or loss. |
• | Due to money movement between Wasatch Funds and the Money Market Fund, requests made on the business day prior to a bank holiday will be processed on the following business day (subject to exception for redemptions of shares of the Money Market Fund during any period there is a temporary suspension of redemptions). This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. |
• | The Funds will deduct a fee of 2.00% from redemption proceeds on Fund shares held 60 days or less, except as noted below. |
• | Exchanges on shares held 60 days or less will, subject to certain exceptions, trigger the redemption fee. Exchanges into or out of the Money Market Fund will not trigger the redemption fee. |
• | The redemption fee is paid directly to a Fund and is designed to offset brokerage commissions, market impact and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading. |
• | If you bought shares on different days, the shares you held longest will be redeemed first for the purpose of determining whether the redemption fee applies. |
• | Shares transferred from one shareholder to another shareholder retain their original purchase date in the hands of the transferee for the application of the redemption fee. |
• | The redemption fee does not apply to shares acquired through reinvestment of dividends and/or capital gains. |
• | The redemption fee does not apply to shares redeemed through a systematic withdrawal plan. |
• | The redemption fee does not apply to shares redeemed from shareholder accounts liquidated for failure to meet the minimum investment requirement. |
• | The redemption fee does not apply to shares redeemed from a shareholder account for which the identity of the shareholder, for purposes of complying with anti-money laundering laws, could not be determined within a reasonable time after the account was opened. |
• | The redemption fee does not apply in the event of any involuntary redemption and/or exchange transactions, including, for example, those required by law or regulation, a regulatory agency, a court order, or as a result of the liquidation of a Fund by its Board of Trustees. |
• | The redemption fee does not apply to shares redeemed through an automatic, non-discretionary rebalancing or asset allocation program. |
• | The redemption fee does not apply to shares redeemed due to a disability as defined by the IRS requirements. |
• | The redemption fee does not apply to shares redeemed due to death for shares transferred from a decedent’s account to a beneficiary’s account. |
• | The redemption fee does not apply in the event of a back office correction made to an account to provide the shareholder with the intended transaction. |
• | The redemption fee does not apply in the event of the following transactions: a distribution from a defined contribution terminated employee account, a plan distribution of non-vested participant balance in a defined contribution account, a distribution from a defined contribution plan to provide a participant with a loan against the account, or an amount contributed to a defined contribution plan exceeding the maximum annual contribution limit. |
• | The redemption fee does not apply to shares gifted from one shareholder account to another shareholder account, assuming the age of the gifted shares is greater than 60 days. |
• | The redemption fee may be waived for certain wrap accounts and for certain omnibus accounts held by financial intermediaries whose systems are unable to assess the redemption fee and certain employer-sponsored retirement accounts (including certain 401(k) and other types of defined contribution or employee benefit plans). |
• | The redemption fee may be waived by Wasatch Funds’ officers in any case where the nature of the transaction or circumstances do not pose the risks that the Board’s policies and procedures to prevent market timing are designed to mitigate. All waivers provided by Wasatch Funds’ officers will be disclosed to the Funds’ Board at its next regularly scheduled quarterly meeting. The Funds reserve the right to modify or eliminate the redemption fee or waivers at any time. |
• | The redemption fee assessed by certain financial intermediaries that have omnibus accounts in the Funds, including employer-sponsored retirement accounts, may be calculated using methodologies that differ from those utilized by Wasatch Funds’ transfer agent. Such differences are typically attributable to system design differences and are unrelated to the investment in the Funds. These system differences are not intended or expected to facilitate market timing or frequent trading. |
• | The Funds’ Investor Class share prices change daily, so the price of shares you wish to purchase or redeem will be determined the next time the Funds’ share prices are calculated after the transfer agent has received your request in good order. |
• | Each Fund’s Investor Class share price, or net asset value (NAV), is calculated by dividing the value of all securities and other assets owned by the Investor Class of the Fund, less the liabilities charged to the Investor Class of the Fund, by the number of Investor Class shares outstanding. |
• | The Funds’ share prices are calculated as of the regular close of trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m. Eastern Time) every day the NYSE is open. |
• | The Funds’ NAV will not be calculated on days the NYSE is closed (scheduled or unscheduled) or on holidays the NYSE observes, including New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The NYSE may close early on the day before each observed holiday and the day after Thanksgiving and Christmas. NYSE holiday schedules are subject to change without notice. |
• | The Funds’ investments are primarily valued using market quotations. Debt securities (other than short-term instruments) are valued at prices furnished by a pricing service, subject to review and possible revision by the Advisor. Debt securities with a remaining maturity of 60 days or less at the time of purchase generally shall be valued by the amortized cost method unless it is determined that the amortized cost method would not |
represent fair value, in which case the securities would be marked to market. To the extent a Fund invests in registered open-end investment companies (other than exchange-traded funds), such investments are valued based on the NAV of such funds. The prospectuses of such funds will explain the circumstances under which these companies will use fair value pricing and the effects of using fair value pricing. | |
• | 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 will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Funds’ Board, in accordance with Board-approved Pricing Policies and Procedures. |
• | A Fund’s investments will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Funds’ Board if the Advisor determines that an event impacting the value of an investment occurred after the close of the security’s primary exchange or market (i.e., a foreign exchange or market) and before the time the Fund’s share price is calculated. In addition, the Funds may adjust the closing prices of certain foreign securities traded on markets that have closed prior to the U.S. equity markets (principally, overseas markets), using fair value factors provided by an independent pricing agent, on any business day a change in the value of the U.S. equity markets (as represented by a benchmark index approved by the Funds’ Board of Trustees) exceeds a certain threshold. The prices will not be adjusted for securities traded on markets that are open at the same time the U.S. equity markets are open, or when a reliable fair value factor is unavailable. |
• | Despite best efforts, there is an inherent risk that the fair value of an investment may be higher or lower than the value a Fund would have received if it had sold the investment. |
• | The Funds may hold portfolio securities, such as those traded on foreign exchanges, that trade on weekends or other days when the Funds’ share prices are not calculated. Therefore, the value of a Fund’s shares may change on days when shareholders will not be able to purchase or redeem shares. |
• | To change your designated bank account or bank address. |
• | To add bank information to an existing account. |
• | To request a redemption (must be made in writing) in excess of $100,000 for any individual or corporate account. |
• | To request a wire or ACH transfer of redemption proceeds to a bank account other than the bank account of record. |
• | Requests for redemption proceeds to be mailed to an address other than the address of record. |
• | Redemptions made within 30 days of an address change. |
• | Certain transactions on accounts involving executors, administrators, trustees or guardians. |
• | On the IRA Transfer Form if transferring your Wasatch Funds IRA to another fund family. |
• | To change registered account holders. |
• | To change the name on an account due to divorce or marriage (or you can provide a certified copy of the legal documents showing the name change). |
• | To add telephone privileges. |
• | Online, the AIP may be referred to as a pre-authorized draft or PAD. |
• | Automatic purchases of Investor Class shares can be made for as little as $50 per month and/or $100 per quarter. The Funds do not currently charge a fee for this service. |
• | You may elect to have your automatic purchase made on the 5th and/or the 20th day of each month. If these dates fall on a weekend or holiday, purchases will be made on the next business day. |
• | Your signed Account Privileges Change Form and an unsigned, voided check or deposit slip must be received at least 14 days prior to your first automatic purchase. |
• | Your financial institution must be a member of the Automated Clearing House (ACH). |
• | When your AIP has been established, the bank or financial institution you designate can begin debiting a preauthorized amount from your account on a specified date to purchase Investor Class shares for your Fund account. |
• | A $20 fee will be assessed if your automatic purchase cannot be made for any reason. |
• | Instructions to change your AIP must be received at least five days prior to your regularly scheduled purchase. |
• | If you redeem an account with an AIP to a zero balance, the plan will be discontinued. |
• | You may arrange to make monthly, quarterly, semi-annual or annual redemptions of $50 or more. There is no charge to shareholders for using this plan. |
• | Your Fund account balance must be at least $5,000 at the time you begin participation in the plan. |
• | You may choose either the 5th and/or the 20th of the month to have systematic withdrawals distributed to you. If the day falls on a weekend or legal holiday, the distribution will be made on the next business day. |
• | You may terminate the SWP at any time without charge or penalty. |
• | The Funds may terminate or modify the plan after 60 days’ written notice to shareholders. |
• | The redemption fee does not apply to shares redeemed through the plan. |
• | If your balance is below the systematic withdrawal amount, the entire balance will be distributed and the plan will be discontinued. |
• | Fund shares may be exchanged for shares of the same class of other Wasatch Funds. Shares of a class held by any shareholder who is eligible to hold shares of another class of the same or another Wasatch Fund may be exchanged upon the shareholder’s request on the basis of the relative NAV of the class held and the class to be purchased. Shares may be exchanged on days the NYSE is open for business. |
• | The price of shares being exchanged will be determined the next time the Funds’ share prices are calculated after the transfer agent has received your exchange request in good order. |
• | Excessive exchanges may result in the termination of a shareholder’s exchange privileges. For more information please see “Policies to Prevent Market Timing.” |
• | Exchanges for shares in Funds closed to new investors may only be made by shareholders with existing accounts in those Funds. |
• | Exchanges may not be made for shares of Funds closed to new investors and existing shareholders. |
• | You may open a new account or purchase additional shares by exchanging shares from an existing Fund account holding the same class of shares. |
• | A new account opened by exchange will have the same registration as the existing account and is subject to the minimum initial investment requirements. |
• | Additional exchanges may be made for $500 or more. |
• | Additional documentation and a Medallion signature guarantee may be required for exchange requests from existing accounts if shares are registered in the name of a corporation, partnership or fiduciary. |
• | To add telephone exchange privileges to an existing corporate account, complete and return the Redemption and Exchange Privileges Form. The Form can be obtained from Wasatch Funds’ website or by calling a shareholder services representative. |
• | Exchanges on shares held 60 days or less will trigger the redemption fee, subject to certain exceptions as noted above. |
• | New accounts automatically have the telephone exchange privilege, unless it has been specifically declined. |
• | Wasatch Funds does not accept exchange requests made via fax or email. |
• | Exchange requests may be subject to other limitations, including those relating to frequency, that Wasatch Funds may establish to ensure that exchanges do not disadvantage shareholders or the Funds. |
• | Exchanging shares between Funds may result in a taxable capital gain or loss. |
• | The Advisor reserves the right to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. |
• | You may exchange all or a portion of your investment in a Fund for Automated Class shares of the Federated Prime Cash Obligations Fund (the Money Market Fund). The Money Market Fund is made available to shareholders of the Wasatch Funds who maintain direct accounts with the Wasatch Funds and who meet the eligibility requirements and investment minimum for the respective class of the Money Market Fund. The Money Market Fund is only available to accounts beneficially owned by natural persons as described in its prospectus. The Money Market Fund is managed by Federated Investment Management Company (and not by Wasatch Advisors), and invests in a diversified portfolio of money market instruments. The Money Market Fund and Federated Investment Management Company are not affiliated with Wasatch Funds or Wasatch Advisors. SHARES OF THE MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS AND THE MONEY MARKET FUND IS NOT OVERSEEN BY THE BOARD OF TRUSTEES OF WASATCH FUNDS. |
• | You should note that the Money Market Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Money Market Fund’s weekly liquid assets were to fall below a designated threshold, if the Money Market Fund’s board determines that such liquidity fees or redemption gates are in the best interest of the Money Market Fund. Any liquidation fee will reduce the amount you receive upon the redemption of your Money Market Fund shares and will decrease the amount of any capital gain or increase the amount of any capital loss you will recognize from such redemption. If redemptions are temporarily suspended, the Money Market Fund will not accept redemptions or exchange orders, including into a Wasatch Fund, until the Money Market Fund has notified its shareholders that the redemption gate has been lifted at which time, a new redemption or exchange request must be submitted. Please refer to the prospectus of the Money Market Fund |
to review the investment strategies, fees and expenses, and risks, including the risk of liquidity fees and redemption gates, of the Money Market Fund before investing in or exchanging into shares of the Money Market Fund. | |
• | Exchanges are subject to the minimum purchase and redemption amounts set forth in the applicable fund’s prospectus unless otherwise noted on the application. |
• | Shareholders may exchange Money Market Fund shares to purchase shares of Funds but not for shares of Wasatch Funds that are closed to new investors and existing shareholders. |
• | The automatic exchange plan allows you to make automatic monthly investments in Investor Class shares of the Wasatch Funds by exchanging shares from your Money Market Fund account. There is no fee for this service. |
• | Any changes to the automatic exchange plan must be made 10 business days prior to the transaction. |
• | Exchange requests will be effective the day the transfer agent receives them in good order by 4:00 p.m. Eastern Time, or market close on days the Funds’ shares are priced, unless it is the business day prior to a bank holiday or the Money Market Fund has temporarily suspended its redemptions as noted below. Requests made on the business day prior to a bank holiday will be processed the following business day. This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. In addition, requests to exchange from the Money Market Fund into a Wasatch Fund made during any period that the Money Market Fund has temporarily suspended redemptions will not be accepted. Shareholders wishing to exchange shares of the Money Market Fund for shares of a Wasatch Fund once the redemption gate is lifted will need to submit a new request. |
• | You will begin accruing income from the Money Market Fund on the first business day following the exchange provided it is not a bank holiday. |
• | Dividends earned in the Money Market Fund are payable at the time of full liquidation or at the end of the month if a balance remains in the account. |
• | Shareholders should read the prospectus for the Money Market Fund prior to exchanging into it. |
• | You may buy or sell shares of the Funds through banks or investment professionals, including brokers, and they may charge you a transaction fee for this service. |
• | Certain features offered by Wasatch Funds, such as Premier Services, minimum initial investment or subsequent investment amounts, may be modified or may not be available through other institutions. |
• | Once you have established an account through an institution or investment professional, any subsequent transactions for, or questions about, that account must be made through them. |
• | Wasatch Funds and/or the Advisor may enter into agreements with various intermediaries pursuant to which such firms may accept orders on behalf of the Funds and provide administrative services with respect to customers who are beneficial owners of Investor Class shares of the Funds. |
• | The Advisor may compensate certain financial intermediaries (which may include broker-dealers, banks, third-party recordkeepers, and other industry professionals) to provide certain recordkeeping services to the Funds and the Funds’ shareholders in lieu of the Funds’ transfer agent (including account maintenance and shareholder servicing; “Sub-TA services”), and for the sale and/or distribution of the Funds’ shares. Depending on the share class, the Funds may reimburse the Advisor for the amounts paid for Sub-TA services. To the extent the Advisor pays for sales or distribution of Fund shares, it does so out of its profits derived from the Advisor’s management fee. The Advisor’s compensation out of its profits is referred to as “revenue sharing.” Examples of revenue sharing payments include, but are not limited to, payment to financial intermediaries for “shelf space” or access to a third party platform or fund offering list or other marketing programs, including but not limited to, inclusion of the Funds on preferred or recommended sales lists, mutual fund “supermarket” platforms and other formal sales programs; granting the Advisor access to the financial intermediary’s sales force; granting the Advisor access to the financial intermediary’s conferences and meetings; and obtaining other forms of marketing support. The level of revenue sharing payments made to financial intermediaries may be a fixed fee or based on one or more of the following factors: gross sales, current assets and/or number of accounts of the Funds attributable to the financial intermediary, or other factors as agreed to by the Advisor and the financial intermediary or any combination thereof. The amount of these revenue sharing payments is determined at the discretion of the Advisor, by agreement with the financial intermediary, from time to time. The revenue sharing payments may be substantial, and may differ among financial intermediaries. Such payments may provide an incentive for the financial intermediary to make shares of the Funds available to its customers and may allow the Funds greater access to the financial intermediary’s customers. The SAI contains additional information about these payments, including the names of firms to which payments are made. |
• | If one mutual fund sponsor provides greater financial assistance than another, your financial advisor may have an incentive to recommend one mutual fund complex |
over another. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by Wasatch Funds and/or the Advisor and by sponsors of other mutual funds he or she may recommend to you. You should also review disclosures made by your financial advisor at the time of purchase. |
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 | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |
Core Growth Fund | ||||||||
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 | — | — | — |
Emerging India Fund | ||||||||
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 Markets Select Fund | ||||||||
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) |
Year ended 9/30/1310 | $10.00 | — 4 | (0.44) | (0.44) | — 4 | — | — | — |
Emerging Markets Small Cap Fund | ||||||||
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) |
Frontier Emerging Small Countries Fund | ||||||||
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 |
Global Opportunities Fund | ||||||||
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) |
Ratios to Average Net Assets | Supplemental Data | ||||||
Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 |
$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% |
$ 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% |
$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% |
$ 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% |
$ 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% |
$ 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% |
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 | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |
International Growth Fund | ||||||||
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 Opportunities Fund | ||||||||
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 | — | — | — |
Global Value Fund (formerly, Large Cap Value Fund) | ||||||||
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) |
Micro Cap Fund | ||||||||
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 | ||||||||
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) |
Ratios to Average Net Assets | Supplemental Data | |||||||
Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |
$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% | |
$ 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% | |
$ 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% | |
$ 8.23 | 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% | |
$ 3.48 | 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% |
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 | Dividends from Net Investment Income | Distributions from Net Realized Gains | Return of Capital Distribution | Total Distributions | |
Small Cap Growth Fund | |||||||||
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 Value Fund | |||||||||
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 | — | — | — | — |
Strategic Income Fund | |||||||||
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 | |||||||||
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) |
World Innovators Fund | |||||||||
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 | — | — | — | — |
Income Fund | |||||||||
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 | |||||||||
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) |
Ratios to Average Net Assets | Supplemental Data | |||||||
Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |
$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% | |
$ 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% | |
$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% | |
$21.81 | 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% | |
$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% | |
$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% | |
$16.32 | (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% |
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%. |
8 | Includes extraordinary expenses of 0.01%. |
10 | Fund inception date was December 13, 2012. |
12 | Investment income per share reflects a large, non-recurring dividend which amounted to $0.17 per share for the Investor Class. Excluding this non-recurring dividend, income (loss) to average net assets would have been as follows: |
Net Investment Income (Loss) Net of Waivers and Reimbursements | Net Investment Income (Loss) Before Waivers and Reimbursements | ||
Core Growth Fund — Investor Class | (0.58)% | (0.58)% |
13 | Investment 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)%. |
14 | Investment 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. |
15 | Investment income per share reflects a large, non-recurring dividend which amounted to $0.05 per share for the Investor Class. 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 | Net Investment Income (Loss) Before Waivers and Reimbursements | ||
Small Cap Value Fund — Investor Class | (0.00)% 16 | (0.00)% 16 |
16 | Amount is less than 0.005%. |
18 | Includes reimbursement by Hoisington Investment Management Co., the Sub-Advisor, for proxy statement expenses which amounted to $0.01 per share. |
19 | Includes a non-recurring offer to reimburse prior period custody and fund accounting out-of-pocket expenses. 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 | 1.21 | 1.21 | |
Emerging India Fund | 1.84 | 1.98 | |
Emerging Markets Select Fund | 1.60 | 2.00 | |
Emerging Markets Small Cap Fund | 1.97 | 2.01 | |
Frontier Emerging Small Countries Fund | 2.25 | 2.39 | |
Global Opportunities Fund | 1.64 | 1.64 | |
International Growth Fund | 1.48 | 1.48 | |
International Opportunities Fund | 2.26 | 2.30 | |
Global Value Fund | 1.10 | 1.17 | |
Micro Cap Fund | 1.92 | 1.92 | |
Micro Cap Value Fund | 1.96 | 2.05 | |
Small Cap Growth Fund | 1.29 | 1.29 | |
Small Cap Value Fund | 1.24 | 1.24 | |
Strategic Income Fund | 0.95 | 1.04 | |
Ultra Growth Fund | 1.34 | 1.34 | |
World Innovators Fund | 1.79 | 1.79 | |
Income Fund | 0.73 | 0.73 | |
U.S. Treasury Fund | 0.69 | 0.73 |
20 | Per share amounts do not correlate to amounts reported in the statement of operations due to timing of share activity. |
• | We will not disclose your personal information to anyone unless it is necessary to provide you with our services, at your direction, or required by law. |
• | We do not allow individuals or companies that provide services to Wasatch Funds to use your personal information for their own marketing purposes. |
• | We maintain contracts with individuals or companies providing services to Wasatch Funds’ shareholders that require them to protect the confidentiality of your personal information. |
• | We afford the same protection of personal information to prospective and former shareholders that we do to current shareholders. |
• | We consider all the information we have about you to be confidential, including the fact that you are a Wasatch Funds shareholder (unless you tell us otherwise). |
• | We restrict access to your personal information to employees who service your accounts. |
• | We maintain physical, electronic and procedural safeguards that comply with federal standards for maintaining the confidentiality of your information. |
• | Account applications. When you open an account the information we collect may include your name, address, phone number, email address and social security number. |
• | Transactions. To manage your account and provide information to you such as account statements, we maintain current and historical records of each of your transactions and accounts with Wasatch Funds. |
• | Website. We collect some information on our website through the use of “cookies.” For example, we may identify the web pages your browser requests or visits. On the website, we can only identify you if you choose to identify yourself, for example, if you open an account or make transactions online. For more information please read our online privacy policy at www.WasatchFunds.com. |
• | To service your account and process your transactions. For example, the transfer agent collects and stores account and transaction data. |
• | To do as you request. For example, you may direct us to send your statements and confirmations to a third party. |
• | To print and mail materials to you. Companies that provide printing and mailing services are prohibited from using your information in any way other than the purpose for which it was provided. |
• | To comply with laws or regulations. We may disclose or report personal information as required by law, for example, to respond to a subpoena, court order or regulatory demand made by the proper authorities. |
• | To the extent permitted by law. For example, the law permits us to respond to a request for information from a consumer reporting agency. |
If you have any questions about Wasatch Funds or would like more information, please contact Wasatch Funds.
P.O. Box 2172
Milwaukee, WI 53201-2172
Table of Contents
2018 Prospectus www.WasatchFunds.com 800.551.1700 You may obtain a free copy of the Funds’ SAI, annual or semi-annual reports, or quarter-end portfolio holdings on the Funds’ website at www.WasatchFunds.com or by contacting Wasatch at the telephone number listed above. You may make inquiries to the Fund via mail at Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172, via email at shareholderservice@wasatchfunds.com or by calling the telephone number listed above. Shareholder representatives are available Monday through Friday 7:00 a.m. to 7:00 p.m. Central Time. The SAI provides more details about the Funds and their policies. The SAI is incorporated into the prospectus by reference and is, therefore, legally part of this prospectus. Additional information about the Funds’ investments is available in the Funds’ annual and semi-annual reports to shareholders. The reports contain discussions of the market conditions and investment strategies that significantly affected the Funds’ performance for the most recent six- or 12-month period, as applicable. You can go to the EDGAR database on the SEC’s website (http://www.sec.gov) to view these and other documents that Wasatch Funds has filed electronically with the SEC. Copies of this information also may be obtained for the cost of duplicating by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-1520 or by electronic request at the following email address: publicinfo@sec.gov. Information about the Funds can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Call the Commission at 202.551.8090 for information. Investment Company Act File Number: 811-4920
Table of Contents
PROSPECTUS |
January 31, 2018
INVESTOR CLASS / Wasatch Long/Short Fund (FMLSX)
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any statement to the contrary is a criminal offense.
Table of Contents
Shareholder Fees (fees paid directly from your investment) | Investor Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Investor Class Shares |
Management Fee | 1.10% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.32% |
Dividend Expense on Short Sales/Interest Expense1 | 0.89% |
Total Annual Fund Operating Expenses2 | 2.31% |
1 | Dividends on short sales are the dividends paid to the lenders of borrowed securities. The expenses related to dividends on short sales are estimated and will vary depending on whether the securities the Fund sells short pay dividends and on the amount of any such dividends. Expenses also include borrowing costs paid to the broker in connection with borrowing the security to be sold short. The rate paid to brokers varies by security. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Investor Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.60% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Long/Short Fund — Investor Class | $234 | $721 | $1,235 | $2,645 |
• | Changes in market participant psychology and circumstances. |
• | Imperfect information. |
• | Forecasts and projections by Wall Street analysts and company representatives that differ from experienced reality. |
• | Have earnings that appear to be reflected in the current stock price. |
• | Are likely to fall short of market expectations. |
• | Are in industries that exhibit weakness. |
• | Have poor management. |
• | Are likely to suffer an event affecting long-term earnings. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g518156img0a24ef491.jpg)
Best — 6/30/2009 | 16.00% |
Worst — 12/31/2008 | -15.94% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | 10 Years |
Wasatch Long/Short Fund — Investor Class | |||
Return Before Taxes | -2.11% | 2.42% | 3.44% |
Return After Taxes on Distributions | -2.11% | 1.54% | 2.88% |
Return After Taxes on Distributions and Sale of Fund Shares | -1.19% | 1.83% | 2.64% |
S&P 500® Index (reflects no deductions for fees, expenses or taxes) | 21.83% | 15.79% | 8.50% |
Citigroup U.S. Domestic 3-Month Treasury Bills Index (reflects no deductions for fees, expenses or taxes) | 0.84% | 0.24% | 0.34% |
David Powers, CFA Lead Portfolio Manager Since October 2017 |
Investment Minimums | Investor Class |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Subsequent Purchases | Investor Class |
Regular Accounts and IRAs | $100 |
Automatic Investment Plan | $50 per month and/or $100 per quarter |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Investor Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Investor Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
• | Potential for significant and sustained revenue and earnings growth. |
• | Experienced, proven management team. |
• | High return on capital. |
• | Sustainable competitive advantage. |
• | Market leadership and/or growing market share. |
• | Ability to capitalize on favorable long-term trends. |
• | Strong financial health. |
• | Reasonable use of debt. |
• | Attractive valuation. |
• | Catalysts for improved earnings growth. |
• | New products or services that may increase revenue growth and market share. |
• | Experienced top management with a substantial stake in the company’s future. |
• | Introduction of valuable new products and services. |
• | Low stock valuation as measured by a variety of ratios, including price-to-earnings, price-to-sales, price-to-book, price-to-cash flow and enterprise value-to-EBITDA. |
• | Potential to generate improved financial performance. |
• | Calculating and reviewing standard ratios, such as price-to-sales, price-to-book, price-to-earnings, enterprise value-to-EBITDA and price/earnings-to-growth. |
• | Modified discounted cash flow models with sensitivity analysis for changes to revenue growth rates, operating margins, outstanding share counts, earnings multiples, and tangible book value. |
• | Changing sector and company specific outlooks due to subjective factors, including globalization of capital, labor and process knowledge, as well as increasing information and price transparency. |
• | Money flow. |
• | Insider activity. |
• | Relative strength. |
• | Variation from moving averages. |
• | The rationale we used to buy the security is no longer valid. |
• | The security becomes overpriced. |
• | We believe another security has better investment potential. |
• | The price of the security sold short has fallen to a point where the Fund will recognize a gain. |
• | The price of the security sold short has risen to a point where we feel capital is unreasonably at risk, regardless of how we evaluate the security. |
Wasatch Fund | Annual Management Fees, Net of Reimbursements | Investor Class Shares Expense Limitations |
Long/Short Fund | 1.10% | 1.60% |
Name of Fund | Portfolio Manager(s) |
Long/Short Fund | David Powers, CFA* |
505 Wakara Way, 3rd Floor
Salt Lake City, UT 84108
801 Pennsylvania Avenue
Kansas City, MO 64105
1290 Broadway, Suite 1100
Denver, CO 80203
235 West Galena Street
Milwaukee, WI 53212
801 Pennsylvania Avenue
Kansas City, MO 64105
and Independent Trustees
111 West Monroe Street
Chicago, IL 60603
1100 Walnut St., Suite 1300
Kansas City, MO 64106
Investment Minimums — Investor Class | |
New Accounts | $2,000 |
New Accounts with an Automatic Investment Plan | $1,000 |
Individual Retirement Accounts (IRAs) | $2,000 |
Coverdell Education Savings Accounts | $1,000 |
Make checks payable to Wasatch Funds |
P.O. Box 2172
Milwaukee, WI 53201-2172
235 West Galena Street
Milwaukee, WI 53212
• | UMB Bank, N.A. |
• | ABA Number 101000695 |
• | Account Number 987-060-9800 |
• | Wasatch (name and Class of Fund) |
• | Your Wasatch account number |
• | Name(s) of investor(s) |
• | Social security or tax ID number |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing (a Medallion signature guarantee is required). |
• | Checks will be mailed to the address on your account. |
• | Redemption requests made within 30 days of an address change must be made in writing and require a Medallion signature guarantee. |
• | Your name |
• | The name and Class of the Fund |
• | Your account number(s) |
• | The dollar amount or number of shares to be redeemed |
• | Your daytime telephone number |
• | Signature(s) of account owners (sign exactly as the account is registered) |
• | Medallion signature guarantee (if required) |
• | If you purchase shares directly from Wasatch Funds, the minimum initial investment for a regular account is $2,000 unless otherwise noted on the application. |
• | The minimum initial investment for Individual Retirement Accounts (IRAs) is $2,000. For regular accounts opened with an automatic investment plan, it is $1,000. |
• | Other than the reinvestment of dividends and capital gains, the minimum for subsequent purchases in regular and IRA accounts is $100. The minimum for subsequent purchases via the automatic investment plan is $50 monthly and/or $100 quarterly. |
• | The Fund reserves the right to waive or lower investment minimums for any reason. |
• | Accounts opened through third parties such as brokers or banks may be subject to different minimums for initial and subsequent purchases. |
• | Individual or Joint Ownership |
• | Gift to Minor |
• | Corporation, Partnership, Trust or Other Entity |
• | Traditional IRA |
• | Rollover IRA |
• | Roth IRA |
• | SEP-IRA |
• | SIMPLE IRA |
• | Section 403(b)(7) Plan |
• | Coverdell Education Savings Account |
• | Use of an exclusive Toll Free number for direct access to an experienced shareholder services team member. |
• | Exemptions for certain account and maintenance fees. |
• | Priority notification of new or reopened Wasatch Funds. |
• | Access to quarterly comments from Wasatch portfolio managers. |
• | Choice of monthly or quarterly statements. |
• | Access to closed funds. |
• | There are no sales charges to purchase Investor Class shares of the Fund. |
• | The purchase price of your Investor Class shares will be determined the next time the Fund’s Investor Class share prices are calculated after the transfer agent has received your request in good order prior to the close of regular trading on a day on which the New York Stock Exchange (NYSE) is open. A purchase request is in “good order” when the Fund’s transfer agent has received all the information and documentation it deems necessary to effect your request, which would typically mean that it has received federal funds, a wire, a check or Automated Clearing House (“ACH”) transaction, together with a completed account application, or, if an existing shareholder, a completed additional investment form (or written or verbal instructions, which include your name, account number, name and class of shares of the Fund and investment amount). Please refer to the Shareholder’s Guide for more detailed instructions on purchasing shares of the Funds. |
• | Purchases must be made in U.S. dollars. |
• | Wasatch Funds does not accept cash, money orders, third party checks, travelers checks, credit card checks, checks drawn on banks outside the U.S. or other checks deemed to be high risk. |
• | Purchase requests may not be made via fax or email. |
• | The Fund reserves the right to stop selling Investor Class shares at any time or to reject specific purchase requests, including purchases by exchange from another Wasatch Fund or the Federated Prime Cash Obligations Fund (Money Market Fund). |
• | Purchase requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the purchase will be delayed until the request has been received in good order by the transfer agent. |
• | Purchase requests made by telephone will only be accepted for accounts that have previously established bank information to allow electronic funds transfer from the Automated Clearing House (ACH). |
• | When you make an initial purchase of shares online, the purchase amount will be withdrawn from your bank after the transfer agent has received your online application in good order. You will receive a reference number for your transaction when you submit your application or subsequent purchase. A verification of your request will also be sent to your email address and we will mail a transaction confirmation to you when we have processed |
your online application. Please double check that the bank information you provide is correct. You will be held liable for losses incurred by the Fund due to incorrect bank information. | |
• | A $20.00 fee will be assessed if your purchase cannot be made for any reason. See also “Insufficient Funds Policy.” |
• | You may request that the Fund redeems all or a portion of your Investor Class shares. |
• | The price of Investor Class shares you redeem will be determined the next time the Fund’s share prices are calculated after the transfer agent has received your request in good order. |
• | Most new accounts automatically have the telephone redemption privilege, unless it is specifically declined. Some accounts such as corporate accounts do not receive the redemption privilege unless they complete and return the Redemption and Exchange Privileges Form. |
• | You may redeem shares in your account in amounts of $500 up to $100,000 (including for corporate accounts) online or by telephone. |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing and a Medallion signature guarantee is required. |
• | Wasatch Funds does not accept redemption requests made via fax or email. |
• | The Fund will mail a check to the address on your account within seven days after the transfer agent has received your request in good order. |
• | Redemption proceeds can also be sent by wire ($15.00 fee) or electronic funds transfer to your preauthorized bank account. The Fund’s transfer agent will increase the redemption request by the additional number of shares or partial shares needed to cover the wire transfer fee and will pay that fee to the processing bank. |
• | Payment may be delayed for up to seven days on redemption requests for recent purchases made by check or electronic funds transfer to ensure that the payment has cleared. |
• | Redemption requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the redemption will be delayed until the request has been received in good order by the transfer agent. |
• | The Fund typically expects to pay redemption proceeds to redeeming shareholders within one business day following a request received in good order by the transfer agent. Receipt of redemption proceeds may take longer for wire transfers and ACH transactions, depending on your bank’s processing times. Receipt of redemption proceeds may also take longer if shares of the Fund are purchased through an intermediary. |
• | The Fund can delay payment of redemption proceeds for up to seven days at any time if it is deemed to be in the best interests of the Fund to do so. |
• | To meet redemption requests, the Fund typically expects to use cash reserves held in the Fund’s portfolio and/or the proceeds from sales of portfolio securities effected |
shortly after the redemption request. The Fund may also meet redemption requests by borrowing under a line of credit or through overdrafts with its custodian. The Fund more likely will employ these additional methods to meet larger redemption requests or during times of market stress. | |
• | The Fund generally pays redemptions in cash, and have filed a notice with the Securities and Exchange Commission of their intent to pay redemptions up to certain amounts in cash; however, the Fund reserves the right to redeem all or a portion of a redemption request with securities or other Fund assets, if it is determined to be in the best interests of the Fund to do so. Although generally unlikely, if the Fund does redeem shares in-kind, you will likely have to pay brokerage commissions to sell the securities or other assets delivered to you as well as any taxes on any capital gains incurred upon sale. In addition, the securities or other assets distributed to you will continue to be subject to market risk until they are sold. |
• | Redemption requests from corporations, executors, administrators, trustees and guardians may require additional documentation and a Medallion signature guarantee. |
• | If the account is worth less than the amount requested, the entire value of the account will be redeemed. |
• | The Fund can suspend redemptions and/or delay payment of redemption proceeds for more than seven days after a redemption request has been received under the following unusual circumstances: (i) for any period (a) during which the NYSE is closed other than customary weekend and holiday closings; or (b) during which trading on the NYSE is restricted; (ii) for any period during which an emergency exists as a result of which (a) disposal by the Fund of securities owned by it is not reasonably practicable; or (b) it is not reasonably practicable for such Fund fairly to determine the value of its net assets; or (iii) for such other periods as the SEC may by order permit for the protection of security holders of the Fund. |
• | The Fund reserves the right to reject or delay a redemption on certain legal grounds. See “Emergency Circumstances.” |
• | Redeeming shares may result in a taxable capital gain or loss. |
• | Due to money movement between Wasatch Funds and the Money Market Fund, requests made on the business day prior to a bank holiday will be processed on the following business day (subject to exception for redemptions of shares of the Money Market Fund during any period there is a temporary suspension of redemptions). This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. |
• | The Fund will deduct a fee of 2.00% from redemption proceeds on Fund shares held 60 days or less, except as noted below. |
• | Exchanges on shares held 60 days or less will, subject to certain exceptions, trigger the redemption fee. Exchanges into or out of the Money Market Fund will not trigger the redemption fee. |
• | The redemption fee is paid directly to the Fund and is designed to offset brokerage commissions, market impact and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading. |
• | If you bought shares on different days, the shares you held longest will be redeemed first for the purpose of determining whether the redemption fee applies. |
• | Shares transferred from one shareholder to another shareholder retain their original purchase date in the hands of the transferee for the application of the redemption fee. |
• | The redemption fee does not apply to shares acquired through reinvestment of dividends and/or capital gains. |
• | The redemption fee does not apply to shares redeemed through a systematic withdrawal plan. |
• | The redemption fee does not apply to shares redeemed from shareholder accounts liquidated for failure to meet the minimum investment requirement. |
• | The redemption fee does not apply to shares redeemed from a shareholder account for which the identity of the shareholder, for purposes of complying with anti-money laundering laws, could not be determined within a reasonable time after the account was opened. |
• | The redemption fee does not apply in the event of any involuntary redemption and/or exchange transactions, including, for example, those required by law or regulation, a regulatory agency, a court order, or as a result of the liquidation of the Fund by its Board of Trustees. |
• | The redemption fee does not apply to shares redeemed through an automatic, non-discretionary rebalancing or asset allocation program. |
• | The redemption fee does not apply to shares redeemed due to a disability as defined by the IRS requirements. |
• | The redemption fee does not apply to shares redeemed due to death for shares transferred from a decedent’s account to a beneficiary’s account. |
• | The redemption fee does not apply in the event of a back office correction made to an account to provide the shareholder with the intended transaction. |
• | The redemption fee does not apply in the event of the following transactions: a distribution from a defined contribution terminated employee account, a plan distribution of non-vested participant balance in a defined contribution account, a distribution from a defined contribution plan to provide a participant with a loan against the account, or an amount contributed to a defined contribution plan exceeding the maximum annual contribution limit. |
• | The redemption fee does not apply to shares gifted from one shareholder account to another shareholder account, assuming the age of the gifted shares is greater than 60 days. |
• | The redemption fee may be waived for certain wrap accounts and for certain omnibus accounts held by financial intermediaries whose systems are unable to assess the redemption fee and certain employer-sponsored retirement accounts (including certain 401(k) and other types of defined contribution or employee benefit plans). |
• | The redemption fee may be waived by Wasatch Funds’ officers in any case where the nature of the transaction or circumstances do not pose the risks that the Board’s policies and procedures to prevent market timing are designed to mitigate. All waivers provided by Wasatch Funds’ officers will be disclosed to the Fund’s Board at its next regularly scheduled quarterly meeting. The Fund reserves the right to modify or eliminate the redemption fee or waivers at any time. |
• | The redemption fee assessed by certain financial intermediaries that have omnibus accounts in the Fund, including employer-sponsored retirement accounts, may be calculated using methodologies that differ from those utilized by Wasatch Funds’ transfer agent. Such differences are typically attributable to system design differences and are unrelated to the investment in the Fund. These system differences are not intended or expected to facilitate market timing or frequent trading. |
• | The Fund’s Investor Class share prices change daily, so the price of shares you wish to purchase or redeem will be determined the next time the Fund’s share price is calculated after the transfer agent has received your request in good order. |
• | The Fund’s Investor Class share price, or net asset value (NAV), is calculated by dividing the value of all securities and other assets owned by the Investor Class of the Fund, less the liabilities charged to the Investor Class of the Fund, by the number of Investor Class shares outstanding. |
• | The Fund’s share price is calculated as of the regular close of trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m. Eastern Time) every day the NYSE is open. |
• | The Fund’s NAV will not be calculated on days the NYSE is closed (scheduled or unscheduled) or on holidays the NYSE observes, including New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The NYSE may close early on the day before each observed holiday and the day after Thanksgiving and Christmas. NYSE holiday schedules are subject to change without notice. |
• | The Fund’s investments are primarily valued using market quotations. Debt securities (other than short-term instruments) are valued at prices furnished by a pricing service, subject to review and possible revision by the |
Advisor. Debt securities with a remaining maturity of 60 days or less at the time of purchase generally shall be valued by the amortized cost method unless it is determined that the amortized cost method would not represent fair value, in which case the securities would be marked to market. To the extent the Fund invests in registered open-end investment companies (other than exchange-traded funds), such investments are valued based on the NAV of such funds. The prospectuses of such funds will explain the circumstances under which these companies will use fair value pricing and the effects of using fair value pricing. | |
• | If market quotations are not readily available for the Fund’s investments in securities such as restricted securities, private placements, securities for which trading has been halted or other illiquid securities, these investments will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Fund’s Board, in accordance with Board-approved Pricing Policies and Procedures. |
• | The Fund’s investments will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Fund’s Board if the Advisor determines that an event impacting the value of an investment occurred after the close of the security’s primary exchange or market (i.e., a foreign exchange or market) and before the time the Fund’s share price is calculated. In addition, the Fund may adjust the closing prices of certain foreign securities traded on markets that have closed prior to the U.S. equity markets (principally, overseas markets), using fair value factors provided by an independent pricing agent, on any business day a change in the value of the U.S. equity markets (as represented by a benchmark index approved by the Fund’s Board of Trustees) exceeds a certain threshold. The prices will not be adjusted for securities traded on markets that are open at the same time the U.S. equity markets are open, or when a reliable fair value factor is unavailable. |
• | Despite best efforts, there is an inherent risk that the fair value of an investment may be higher or lower than the value the Fund would have received if it had sold the investment. |
• | The Fund may hold portfolio securities, such as those traded on foreign exchanges, that trade on weekends or other days when the Fund’s share prices are not calculated. Therefore, the value of the Fund’s shares may change on days when shareholders will not be able to purchase or redeem shares. |
• | To change your designated bank account or bank address. |
• | To add bank information to an existing account. |
• | To request a redemption (must be made in writing) in excess of $100,000 for any individual or corporate account. |
• | To request a wire or ACH transfer of redemption proceeds to a bank account other than the bank account of record. |
• | Requests for redemption proceeds to be mailed to an address other than the address of record. |
• | Redemptions made within 30 days of an address change. |
• | Certain transactions on accounts involving executors, administrators, trustees or guardians. |
• | On the IRA Transfer Form if transferring your Wasatch Funds IRA to another fund family. |
• | To change registered account holders. |
• | To change the name on an account due to divorce or marriage (or you can provide a certified copy of the legal documents showing the name change). |
• | To add telephone privileges. |
• | Online, the AIP may be referred to as a pre-authorized draft or PAD. |
• | Automatic purchases of Investor Class shares can be made for as little as $50 per month and/or $100 per quarter. The Funds do not currently charge a fee for this service. |
• | You may elect to have your automatic purchase made on the 5th and/or the 20th day of each month. If these dates fall on a weekend or holiday, purchases will be made on the next business day. |
• | Your signed Account Privileges Change Form and an unsigned, voided check or deposit slip must be received at least 14 days prior to your first automatic purchase. |
• | Your financial institution must be a member of the Automated Clearing House (ACH). |
• | When your AIP has been established, the bank or financial institution you designate can begin debiting a preauthorized amount from your account on a specified date to purchase Investor Class shares for your Fund account. |
• | A $20 fee will be assessed if your automatic purchase cannot be made for any reason. |
• | Instructions to change your AIP must be received at least five days prior to your regularly scheduled purchase. |
• | If you redeem an account with an AIP to a zero balance, the plan will be discontinued. |
• | You may arrange to make monthly, quarterly, semi-annual or annual redemptions of $50 or more. There is no charge to shareholders for using this plan. |
• | Your Fund account balance must be at least $5,000 at the time you begin participation in the plan. |
• | You may choose either the 5th and/or the 20th of the month to have systematic withdrawals distributed to you. If the day falls on a weekend or legal holiday, the distribution will be made on the next business day. |
• | You may terminate the SWP at any time without charge or penalty. |
• | The Fund may terminate or modify the plan after 60 days’ written notice to shareholders. |
• | The redemption fee does not apply to shares redeemed through the plan. |
• | If your balance is below the systematic withdrawal amount, the entire balance will be distributed and the plan will be discontinued. |
• | Fund shares may be exchanged for shares of the same class of other Wasatch Funds. Shares of a class held by any shareholder who is eligible to hold shares of another class of the same or another Wasatch Fund may be exchanged upon the shareholder’s request on the basis of the relative NAV of the class held and the class to be purchased. Shares may be exchanged on days the NYSE is open for business. |
• | The price of shares being exchanged will be determined the next time the Fund’s share price is calculated after the transfer agent has received your exchange request in good order. |
• | Excessive exchanges may result in the termination of a shareholder’s exchange privileges. For more information please see “Policies to Prevent Market Timing.” |
• | Exchanges for shares in Funds closed to new investors may only be made by shareholders with existing accounts in those Funds. |
• | Exchanges may not be made for shares of Funds closed to new investors and existing shareholders. |
• | You may open a new account or purchase additional shares by exchanging shares from an existing Fund account holding the same class of shares. |
• | A new account opened by exchange will have the same registration as the existing account and is subject to the minimum initial investment requirements. |
• | Additional exchanges may be made for $500 or more. |
• | Additional documentation and a Medallion signature guarantee may be required for exchange requests from existing accounts if shares are registered in the name of a corporation, partnership or fiduciary. |
• | To add telephone exchange privileges to an existing corporate account, complete and return the Redemption and Exchange Privileges Form. The Form can be obtained from Wasatch Funds’ website or by calling a shareholder services representative. |
• | Exchanges on shares held 60 days or less will trigger the redemption fee, subject to certain exceptions as noted above. |
• | New accounts automatically have the telephone exchange privilege, unless it has been specifically declined. |
• | Wasatch Funds does not accept exchange requests made via fax or email. |
• | Exchange requests may be subject to other limitations, including those relating to frequency, that Wasatch Funds may establish to ensure that exchanges do not disadvantage shareholders or the Fund. |
• | Exchanging shares between Funds may result in a taxable capital gain or loss. |
• | The Advisor reserves the right to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. |
• | You may exchange all or a portion of your investment in a Fund for Automated Class shares of the Federated Prime Cash Obligations Fund (the Money Market Fund). The Money Market Fund is made available to shareholders of the Wasatch Funds who maintain direct accounts with the Wasatch Funds and who meet the eligibility requirements and investment minimum for the respective class of the Money Market Fund. The Money Market Fund is only available to accounts beneficially owned by natural persons as described in its prospectus. The Money Market Fund is managed by Federated Investment Management Company (and not by Wasatch Advisors), and invests in a diversified portfolio of money market instruments. The Money Market Fund and Federated Investment Management Company are not affiliated with Wasatch Funds or Wasatch Advisors. SHARES OF THE MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS AND THE MONEY MARKET FUND IS NOT OVERSEEN BY THE BOARD OF TRUSTEES OF WASATCH FUNDS. |
• | You should note that the Money Market Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Money Market Fund’s weekly liquid assets were to fall below a designated threshold, if the Money Market Fund’s board determines that such liquidity fees or redemption gates are in the best interest of the Money Market Fund. Any liquidation fee will reduce the amount you receive upon the redemption of your Money Market Fund shares and will decrease the amount of any capital gain or increase the amount of any capital loss you will recognize from such redemption. If redemptions are temporarily suspended, the Money Market Fund will not accept redemptions or exchange orders, including into a Wasatch Fund, until the Money Market Fund has notified its shareholders that the redemption gate has been lifted at which time, a new redemption or exchange request must be submitted. Please refer to the prospectus of the Money Market Fund |
to review the investment strategies, fees and expenses, and risks, including the risk of liquidity fees and redemption gates, of the Money Market Fund before investing in or exchanging into shares of the Money Market Fund. | |
• | Exchanges are subject to the minimum purchase and redemption amounts set forth in the applicable fund’s prospectus unless otherwise noted on the application. |
• | Shareholders may exchange Money Market Fund shares to purchase shares of the Fund but not for shares of Wasatch Funds that are closed to new investors and existing shareholders. |
• | The automatic exchange plan allows you to make automatic monthly investments in Investor Class shares of the Wasatch Funds by exchanging shares from your Money Market Fund account. There is no fee for this service. |
• | Any changes to the automatic exchange plan must be made 10 business days prior to the transaction. |
• | Exchange requests will be effective the day the transfer agent receives them in good order by 4:00 p.m. Eastern Time, or market close on days the Fund’s shares are priced, unless it is the business day prior to a bank holiday or the Money Market Fund has temporarily suspended its redemptions as noted below. Requests made on the business day prior to a bank holiday will be processed the following business day. This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. In addition, requests to exchange from the Money Market Fund into a Wasatch Fund made during any period that the Money Market Fund has temporarily suspended redemptions will not be accepted. Shareholders wishing to exchange shares of the Money Market Fund for shares of a Wasatch Fund once the redemption gate is lifted will need to submit a new request. |
• | You will begin accruing income from the Money Market Fund on the first business day following the exchange provided it is not a bank holiday. |
• | Dividends earned in the Money Market Fund are payable at the time of full liquidation or at the end of the month if a balance remains in the account. |
• | Shareholders should read the prospectus for the Money Market Fund prior to exchanging into it. |
• | You may buy or sell shares of the Fund through banks or investment professionals, including brokers, and they may charge you a transaction fee for this service. |
• | Certain features offered by Wasatch Funds, such as Premier Services, minimum initial investment or subsequent investment amounts, may be modified or may not be available through other institutions. |
• | Once you have established an account through an institution or investment professional, any subsequent transactions for, or questions about, that account must be made through them. |
• | Wasatch Funds and/or the Advisor may enter into agreements with various intermediaries pursuant to which such firms may accept orders on behalf of the Fund and provide administrative services with respect to customers who are beneficial owners of Investor Class shares of the Fund. |
• | The Advisor may compensate certain financial intermediaries (which may include broker-dealers, banks, third-party recordkeepers, and other industry professionals) to provide certain recordkeeping services to the Fund and the Fund’s shareholders in lieu of the Fund’s transfer agent (including account maintenance and shareholder servicing; “Sub-TA services”), and for the sale and/or distribution of the Fund’s shares. Depending on the share class, the Fund may reimburse the Advisor for the amounts paid for Sub-TA services. To the extent the Advisor pays for sales or distribution of Fund shares, it does so out of its profits derived from the Advisor’s management fee. The Advisor’s compensation out of its profits is referred to as “revenue sharing.” Examples of revenue sharing payments include, but are not limited to, payment to financial intermediaries for “shelf space” or access to a third party platform or fund offering list or other marketing programs, including but not limited to, inclusion of the Fund on preferred or recommended sales lists, mutual fund “supermarket” platforms and other formal sales programs; granting the Advisor access to the financial intermediary’s sales force; granting the Advisor access to the financial intermediary’s conferences and meetings; and obtaining other forms of marketing support. The level of revenue sharing payments made to financial intermediaries may be a fixed fee or based on one or more of the following factors: gross sales, current assets and/or number of accounts of the Fund attributable to the financial intermediary, or other factors as agreed to by the Advisor and the financial intermediary or any combination thereof. The amount of these revenue sharing payments is determined at the discretion of the Advisor, by agreement with the financial intermediary, from time to time. The revenue sharing payments may be substantial, and may differ among financial intermediaries. Such payments may provide an incentive for the financial intermediary to make shares of the Fund available to its customers and may allow the Fund greater access to the financial intermediary’s customers. The SAI contains additional information about these payments, including the names of firms to which payments are made. |
• | If one mutual fund sponsor provides greater financial assistance than another, your financial advisor may have an incentive to recommend one mutual fund complex |
over another. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by Wasatch Funds and/or the Advisor and by sponsors of other mutual funds he or she may recommend to you. You should also review disclosures made by your financial advisor at the time of purchase. |
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 | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |
Long/Short Fund | ||||||||
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) |
Ratios to Average Net Assets | Supplemental Data | |||||||
Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |
$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% |
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. |
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 Reimbursements2 | Expenses Before Waivers and Reimbursements2 | ||
Long/Short Fund — Investor Class | |||
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% |
9 | Includes extraordinary expenses of less than 0.01%. |
19 | Includes a non-recurring offer to reimburse prior period custody and fund accounting out-of-pocket expenses. 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 (%) | ||
Long/Short Fund — Investor Class | 1.83 | 1.83 |
• | We will not disclose your personal information to anyone unless it is necessary to provide you with our services, at your direction, or required by law. |
• | We do not allow individuals or companies that provide services to Wasatch Funds to use your personal information for their own marketing purposes. |
• | We maintain contracts with individuals or companies providing services to Wasatch Funds’ shareholders that require them to protect the confidentiality of your personal information. |
• | We afford the same protection of personal information to prospective and former shareholders that we do to current shareholders. |
• | We consider all the information we have about you to be confidential, including the fact that you are a Wasatch Funds shareholder (unless you tell us otherwise). |
• | We restrict access to your personal information to employees who service your accounts. |
• | We maintain physical, electronic and procedural safeguards that comply with federal standards for maintaining the confidentiality of your information. |
• | Account applications. When you open an account the information we collect may include your name, address, phone number, email address and social security number. |
• | Transactions. To manage your account and provide information to you such as account statements, we maintain current and historical records of each of your transactions and accounts with Wasatch Funds. |
• | Website. We collect some information on our website through the use of “cookies.” For example, we may identify the web pages your browser requests or visits. On the website, we can only identify you if you choose to identify yourself, for example, if you open an account or make transactions online. For more information please read our online privacy policy at www.WasatchFunds.com. |
• | To service your account and process your transactions. For example, the transfer agent collects and stores account and transaction data. |
• | To do as you request. For example, you may direct us to send your statements and confirmations to a third party. |
• | To print and mail materials to you. Companies that provide printing and mailing services are prohibited from using your information in any way other than the purpose for which it was provided. |
• | To comply with laws or regulations. We may disclose or report personal information as required by law, for example, to respond to a subpoena, court order or regulatory demand made by the proper authorities. |
• | To the extent permitted by law. For example, the law permits us to respond to a request for information from a consumer reporting agency. |
If you have any questions about Wasatch Funds or would like more information, please contact Wasatch Funds.
P.O. Box 2172
Milwaukee, WI 53201-2172
Table of Contents
2018 Prospectus
www.WasatchFunds.com • 800.551.1700
You may obtain a free copy of the Funds’ SAI, annual or semi-annual reports, or quarter-end portfolio holdings on the Funds’ website at www.WasatchFunds.com or by contacting Wasatch at the telephone number listed above. You may make inquiries to the Fund via mail at Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172, via email at shareholderservice@wasatchfunds.com or by calling the telephone number listed above. Shareholder representatives are available Monday through Friday 7:00 a.m. to 7:00 p.m. Central Time.
The SAI provides more details about the Funds and their policies. The SAI is incorporated into the prospectus by reference and is, therefore, legally part of this prospectus. Additional information about the Funds’ investments is available in the Funds’ annual and semi-annual reports to shareholders. The reports contain discussions of the market conditions and investment strategies that significantly affected the Funds’ performance for the most recent six- or 12-month period, as applicable. You can go to the EDGAR database on the SEC’s website (http://www.sec.gov) to view these and other documents that Wasatch Funds has filed electronically with the SEC. Copies of this information also may be obtained for the cost of duplicating by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-1520 or by electronic request at the following email address: publicinfo@sec.gov. Information about the Funds can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Call the Commission at 202.551.8090 for information.
Investment Company Act File Number: 811-4920
FSC
www.fsc.org
MIX
Paper from
responsible sources
FSC® C132107
Table of Contents
INSTITUTIONAL CLASS / EQUITY FUNDS / Wasatch Core Growth Fund (WIGRX) • Wasatch Emerging India Fund (WIINX) • Wasatch Emerging Markets Select Fund (WIESX) • Wasatch Emerging Markets Small Cap Fund (WIEMX) • Wasatch Frontier Emerging Small Countries Fund (WIFMX) • Wasatch Global Opportunities Fund (WIGOX) • Wasatch Global Value Fund (WILCX) • Wasatch International Growth Fund (WIIGX) • Wasatch International Opportunities Fund (WIIOX) • Wasatch Small Cap Growth Fund (WIAEX) • Wasatch Small Cap Value Fund (WICVX) • Wasatch World Innovators Fund (WIGTX)
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any statement to the contrary is a criminal offense.
Table of Contents
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.10% |
Total Annual Fund Operating Expenses1 | 1.10% |
Expense Reimbursement | (0.05)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.05% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.05% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Core Growth Fund — Institutional Class | $107 | $345 | $602 | $1,336 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050imgef4b0d191.jpg)
Best — 12/31/2014 | 9.87% |
Worst — 9/30/2015 | -8.14% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (1/31/12) |
Wasatch Core Growth Fund — Institutional Class | |||
Return Before Taxes | 24.48% | 14.66% | 14.52% |
Return After Taxes on Distributions | 22.75% | 13.52% | 13.55% |
Return After Taxes on Distributions and Sale of Fund Shares | 15.28% | 11.63% | 11.66% |
Russell 2000® Index* (reflects no deductions for fees, expenses or taxes) | 14.65% | 14.12% | 13.41% |
Russell 2000® Growth Index* (reflects no deductions for fees, expenses or taxes) | 22.17% | 15.21% | 13.94% |
JB Taylor Lead Portfolio Manager Since 2000 | Paul Lambert Portfolio Manager Since 2005 | Mike Valentine Portfolio Manager Since August 2017 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.25% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.42% |
Total Annual Fund Operating Expenses1 | 1.67% |
Expense Reimbursement | (0.17)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.50% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.50% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Emerging India Fund — Institutional Class | $153 | $511 | $893 | $1,963 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img2ccb8b5b2.jpg)
Best — 3/31/2017 | 22.92% |
Worst — 9/30/2017 | 1.49% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (2/1/16) |
Wasatch Emerging India Fund — Institutional Class | ||
Return Before Taxes | 53.55% | 30.16% |
Return After Taxes on Distributions | 52.19% | 29.38% |
Return After Taxes on Distributions and Sale of Fund Shares | 30.83% | 23.39% |
MSCI IMI (Investable Market Index)* (reflects no deductions for fees, expenses or taxes) | 43.72% | 25.19% |
Ajay Krishnan, CFA Lead Portfolio Manager Since Inception | Matthew Dreith, CFA Associate Portfolio Manager Since January 31, 2016 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.51% |
Interest Expense | 0.01% |
Total Annual Fund Operating Expenses1 | 1.52% |
Expense Reimbursement | (0.31)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.21% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.20% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Emerging Markets Select Fund — Institutional Class | $123 | $450 | $800 | $1,786 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050imgbfb2543f3.jpg)
Best — 3/31/2017 | 14.67% |
Worst — 9/30/2015 | -15.05% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (12/13/12) |
Wasatch Emerging Markets Select Fund — Institutional Class | |||
Return Before Taxes | 37.98% | 2.05% | 2.39% |
Return After Taxes on Distributions | 37.98% | 2.07% | 2.40% |
Return After Taxes on Distributions and Sale of Fund Shares | 21.50% | 1.62% | 1.89% |
MSCI Emerging Markets Index* (reflects no deductions for fees, expenses or taxes) | 37.28% | 4.35% | 4.59% |
Ajay Krishnan, CFA Lead Portfolio Manager Since Inception | Roger Edgley, CFA Portfolio Manager Since Inception | Scott Thomas, CFA, CPA Associate Portfolio Manager Since January 31, 2016 | Matthew Dreith, CFA Associate Portfolio Manager Since January 31, 2018 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.65% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.22% |
Interest Expense | 0.01% |
Total Annual Fund Operating Expenses1 | 1.88% |
Expense Reimbursement | (0.07)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.81% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.80% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Emerging Markets Small Cap Fund — Institutional Class | $184 | $584 | $1,010 | $2,196 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050imgd31516eb4.jpg)
Best — 3/31/2017 | 9.83% |
Worst — 9/30/2017 | 7.14% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (2/1/16) |
Wasatch Emerging Markets Small Cap Fund — Institutional Class | ||
Return Before Taxes | 38.03% | 19.13% |
Return After Taxes on Distributions | 38.03% | 19.13% |
Return After Taxes on Distributions and Sale of Fund Shares | 21.53% | 14.84% |
MSCI Emerging Markets Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 33.84% | 22.90% |
MSCI Emerging Markets Index* (reflects no deductions for fees, expenses or taxes) | 37.28% | 29.14% |
Roger Edgley, CFA Lead Portfolio Manager Since 2007 | Andrey Kutuzov, CFA Associate Portfolio Manager Since January 31, 2014 | Scott Thomas, CFA, CPA Associate Portfolio Manager Since January 31, 2015 | Kevin Unger, CFA Associate Portfolio Manager Since January 31, 2018 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee1 | 1.65% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.39% |
Interest Expense | 0.03% |
Total Annual Fund Operating Expenses1, 2 | 2.07% |
Expense Reimbursement | (0.09)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.98% |
1 | Effective January 31, 2018, the management fee was reduced from 1.75% to 1.65%. The management fee and the total annual fund operating expenses have been restated to reflect the current management fee. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Frontier Emerging Small Countries Fund — Institutional Class | $201 | $640 | $1,105 | $2,393 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img68ad8fab5.jpg)
Best — 6/30/2017 | 7.97% |
Worst — 9/30/2017 | 1.85% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (2/1/16) |
Wasatch Frontier Emerging Small Countries Fund — Institutional Class | ||
Return Before Taxes | 21.49% | 7.06% |
Return After Taxes on Distributions | 21.49% | 7.06% |
Return After Taxes on Distributions and Sale of Fund Shares | 12.16% | 5.42% |
MSCI Frontier Emerging Markets Index* (reflects no deductions for fees, expenses or taxes) | 26.79% | 19.52% |
MSCI Frontier Markets Index* (reflects no deductions for fees, expenses or taxes) | 31.86% | 20.74% |
Roger Edgley, CFA Lead Portfolio Manager Since June 6, 2016 | Jared Whatcott, CFA Portfolio Manager Since January 31, 2016 | Scott Thomas, CFA, CPA Portfolio Manager Since June 6, 2016 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.25% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.67% |
Interest Expense | 0.01% |
Total Annual Fund Operating Expenses1 | 1.93% |
Expense Reimbursement | (0.57)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.36% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.35% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Global Opportunities Fund — Institutional Class | $138 | $550 | $988 | $2,206 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img1a9dcdd66.jpg)
Best — 3/31/2017 | 11.86% |
Worst — 9/30/2017 | 4.74% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (2/1/16) |
Wasatch Global Opportunities Fund — Institutional Class | ||
Return Before Taxes | 38.10% | 21.11% |
Return After Taxes on Distributions | 34.84% | 18.30% |
Return After Taxes on Distributions and Sale of Fund Shares | 24.26% | 16.10% |
MSCI ACWI (All Country World) Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 23.81% | 23.30% |
JB Taylor Lead Portfolio Manager Since 2011 | Ajay Krishnan, CFA Lead Portfolio Manager Since 2012 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 0.90% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 1.41% |
Total Annual Fund Operating Expenses1 | 2.31% |
Expense Reimbursement | (1.36)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 0.95% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 0.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Global Value Fund — Institutional Class | $97 | $591 | $1,112 | $2,541 |
• | Calculating and reviewing standard ratios, such as price-to-sales, price-to-book, price-to-earnings, and price/earnings-to-growth. |
• | Discounted cash flow models with sensitivity analysis for changes to revenue growth rates, operating margins, outstanding share counts, earnings multiples, and tangible book value. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img3a7d58f97.jpg)
Best — 3/31/2013 | 10.93% |
Worst — 9/30/2015 | -8.80% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (1/31/12) |
Wasatch Global Value Fund — Institutional Class | |||
Return Before Taxes | 11.51% | 10.98% | 10.24% |
Return After Taxes on Distributions | 7.58% | 6.30% | 6.24% |
Return After Taxes on Distributions and Sale of Fund Shares | 9.57% | 8.05% | 7.62% |
MSCI ACWI (All Country World Index)*† (reflects no deductions for fees, expenses or taxes) | 23.97% | 10.80% | 10.85% |
Russell 1000® Value Index** (reflects no deductions for fees, expenses or taxes) | 13.66% | 14.04% | 14.09% |
†Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indexes or financial products. This report is not approved or produced by MSCI.
**The Russell 1000 Value Index® is a market-capitalization weighted index of those firms in the Russell 1000 with lower price-to-book ratios and lower forecasted growth values. Consistent with the name and strategy change, effective October 31, 2017, the Fund’s primary benchmark index changed from the Russell 1000 Value Index® to the MSCI ACWI Index. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
David Powers, CFA Lead Portfolio Manager Since August 2013 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.25% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.12% |
Total Annual Fund Operating Expenses1 | 1.37% |
Expense Reimbursement | (0.02)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.35% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.35% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
International Growth Fund — Institutional Class | $137 | $432 | $748 | $1,645 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img2601b1598.jpg)
Best — 3/31/2017 | 9.66% |
Worst — 12/31/2017 | 4.51% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (2/1/16) |
Wasatch International Growth Fund — Institutional Class | ||
Return Before Taxes | 33.15% | 14.49% |
Return After Taxes on Distributions | 32.31% | 13.55% |
Return After Taxes on Distributions and Sale of Fund Shares | 19.45% | 11.08% |
MSCI ACWI (All Country World Index) ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.65% | 22.19% |
MSCI World ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.04% | 21.89% |
Roger Edgley, CFA Lead Portfolio Manager Since 2006 | Ken Applegate, CFA, CMT Portfolio Manager Since January 31, 2016 | Linda Lasater, CFA Associate Portfolio Manager Since January 31, 2014 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.75% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.28% |
Interest Expense | 0.01% |
Total Annual Fund Operating Expenses1 | 2.04% |
Expense Reimbursement | (0.08)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.96% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.95% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
International Opportunities Fund — Institutional Class | $199 | $632 | $1,091 | $2,363 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img3ee929739.jpg)
Best — 6/30/2017 | 8.25% |
Worst — 9/30/2017 | 2.64% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (2/1/16) |
Wasatch International Opportunities Fund — Institutional Class | ||
Return Before Taxes | 27.74% | 18.58% |
Return After Taxes on Distributions | 25.75% | 17.61% |
Return After Taxes on Distributions and Sale of Fund Shares | 17.31% | 14.39% |
MSCI ACWI (All Country World Index) ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.65% | 22.19% |
MSCI World ex USA Small Cap Index* (reflects no deductions for fees, expenses or taxes) | 31.04% | 21.89% |
Jared Whatcott, CFA Portfolio Manager Since January 31, 2014 | Linda Lasater, CFA Portfolio Manager Since June 6, 2016 | Allison He, CFA Associate Portfolio Manager Since January 31, 2018 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.11% |
Total Annual Fund Operating Expenses1 | 1.11% |
Expense Reimbursement | (0.06)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.05% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.05% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Small Cap Growth Fund — Institutional Class | $107 | $347 | $606 | $1,347 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img6e35b95410.jpg)
Best — 12/31/2017 | 5.96% |
Worst — 6/30/2017 | 4.28% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (12/13/12) |
Wasatch Small Cap Growth Fund — Institutional Class | ||
Return Before Taxes | 21.96% | 19.54% |
Return After Taxes on Distributions | 18.93% | 16.79% |
Return After Taxes on Distributions and Sale of Fund Shares | 14.93% | 15.00% |
Russell 2000® Growth Index* (reflects no deductions for fees, expenses or taxes) | 22.17% | 24.72% |
Russell 2000® Index* (reflects no deductions for fees, expenses or taxes) | 14.65% | 24.85% |
JB Taylor Lead Portfolio Manager Since 2016 | Ken Korngiebel, CFA Portfolio Manager Since August 2017 | Ryan Snow Portfolio Manager Since August 2017 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.00% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.16% |
Acquired Fund Fees and Expenses1 | 0.20% |
Total Annual Fund Operating Expenses2 | 1.36% |
Expense Reimbursement | (0.11)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.25% |
1 | The Total Annual Fund Operating Expenses may not equal the expense ratio stated in the Fund’s most recent Annual Report and Financial Highlights, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.05% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Small Cap Value Fund — Institutional Class | $127 | $420 | $734 | $1,626 |
• | Undiscovered Gems — Companies with good growth potential that have yet to be broadly discovered by Wall Street analysts, thus leaving them attractively undervalued relative to their expected growth rate. |
• | Fallen Angels — High quality growth companies that have experienced a temporary setback and therefore have appealing valuations relative to their long-term growth potential. |
• | Quality Value — Quality companies with earnings potential that is not fully reflected in their stock prices. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img974e03a511.jpg)
Best — 3/31/2013 | 10.17% |
Worst — 9/30/2015 | -10.35% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (1/31/12) |
Wasatch Small Cap Value Fund — Institutional Class | |||
Return Before Taxes | 19.80% | 16.36% | 15.41% |
Return After Taxes on Distributions | 17.94% | 15.96% | 15.07% |
Return After Taxes on Distributions and Sale of Fund Shares | 12.64% | 13.24% | 12.58% |
Russell 2000® Value Index* (reflects no deductions for fees, expenses or taxes) | 7.84% | 13.01% | 12.82% |
Russell 2000® Index* (reflects no deductions for fees, expenses or taxes) | 14.65% | 14.12% | 13.40% |
Jim Larkins Lead Portfolio Manager Since 1999 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.50% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.72% |
Total Annual Fund Operating Expenses1 | 2.22% |
Expense Reimbursement | (0.67)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.55% |
1 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.55% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
World Innovators Fund — Institutional Class | $158 | $630 | $1,129 | $2,503 |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g817050img9906ab7e12.jpg)
Best — 6/30/2017 | 9.09% |
Worst — 9/30/2017 | 5.78% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | Since Inception (2/1/16) |
Wasatch World Innovators Fund — Institutional Class | ||
Return Before Taxes | 33.35% | 22.22% |
Return After Taxes on Distributions | 29.06% | 19.60% |
Return After Taxes on Distributions and Sale of Fund Shares | 22.32% | 17.14% |
MSCI ACWI (All Country World Index) IMI (Investable Market Index)* (reflects no deductions for fees, expenses or taxes) | 23.95% | 20.56% |
Josh Stewart Lead Portfolio Manager Since January 2016 | Samuel S. Stewart, Jr., PhD, CFA Portfolio Manager Since 2008 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
• | Potential for significant and sustained revenue and earnings growth. |
• | Experienced, proven management team. |
• | High return on capital. |
• | Sustainable competitive advantage. |
• | Market leadership and/or growing market share. |
• | Ability to capitalize on favorable long-term trends. |
• | Strong financial health. |
• | Reasonable use of debt. |
• | Attractive valuation. |
• | Catalysts for improved earnings growth. |
• | New products or services that may increase revenue growth and market share. |
• | Experienced top management with a substantial stake in the company’s future. |
• | Introduction of valuable new products and services. |
• | Low stock valuation as measured by a variety of ratios, including price-to-earnings, price-to-sales, price-to-book, price-to-cash flow and enterprise value-to-EBITDA. |
• | Potential to generate improved financial performance. |
• | The rationale we used to buy the security is no longer valid. |
• | The security becomes overpriced. |
• | We believe another security has better investment potential. |
Wasatch Fund | Annual Management Fees, Net of Reimbursements | Institutional Class Shares Expense Limitations |
Core Growth Fund | 0.95% | 1.05% |
Emerging India Fund | 1.08% | 1.50% |
Emerging Markets Select Fund | 0.69% | 1.20% |
Emerging Markets Small Cap Fund | 1.58% | 1.80% |
Frontier Emerging Small Countries Fund1 | 1.66% | 1.95% |
Wasatch Fund | Annual Management Fees, Net of Reimbursements | Institutional Class Shares Expense Limitations |
Global Opportunities Fund | 0.68% | 1.35% |
Global Value Fund | -0.46% | 0.95% |
International Growth Fund | 1.23% | 1.35% |
International Opportunities Fund | 1.67% | 1.95% |
Small Cap Growth Fund | 0.94% | 1.05% |
Small Cap Value Fund | 0.89% | 1.05% |
World Innovators Fund | 0.83% | 1.55% |
1 | Effective January 31, 2018, the management fee was reduced from 1.75% to 1.65%. The expense cap in effect from January 31, 2018 through January 31, 2019 is ten basis points lower than the temporary cap in effect from January 31, 2017 through January 31, 2018 which had been 2.05%. |
Name of Fund | Portfolio Manager(s) |
Core Growth Fund | JB Taylor, Paul Lambert and Mike Valentine |
Emerging India Fund | Ajay Krishnan, CFA* and Matthew Dreith, CFA |
Emerging Markets Select Fund | Ajay Krishnan, CFA, Roger Edgley, CFA, Scott Thomas, CFA, CPA and Matthew Dreith, CFA |
Emerging Markets Small Cap Fund | Roger Edgley, CFA, Andrey Kutuzov, CFA, Scott Thomas, CFA, CPA and Kevin Unger, CFA |
Frontier Emerging Small Countries Fund | Roger Edgley, CFA, Jared Whatcott, CFA and Scott Thomas, CFA, CPA |
Global Opportunities Fund | JB Taylor and Ajay Krishnan, CFA |
Global Value Fund | David Powers, CFA |
International Growth Fund | Roger Edgley, CFA, Ken Applegate, CFA, CMT and Linda Lasater, CFA |
International Opportunities Fund | Jared Whatcott, CFA, Linda Lasater, CFA and Allison He, CFA |
Small Cap Growth Fund | JB Taylor, Ken Korngiebel, CFA and Ryan Snow |
Name of Fund | Portfolio Manager(s) |
Small Cap Value Fund | Jim Larkins |
World Innovators Fund | Josh Stewart and Samuel S. Stewart, Jr., PhD, CFA |
505 Wakara Way, 3rd Floor
Salt Lake City, UT 84108
801 Pennsylvania Avenue
Kansas City, MO 64105
1290 Broadway, Suite 1100
Denver, CO 80203
235 West Galena Street
Milwaukee, WI 53212
801 Pennsylvania Avenue
Kansas City, MO 64105
and Independent Trustees
111 West Monroe Street
Chicago, IL 60603
1100 Walnut St., Suite 1300
Kansas City, MO 64106
P.O. Box 2172
Milwaukee, WI 53201-2172
235 West Galena Street
Milwaukee, WI 53212
• | UMB Bank, N.A. |
• | ABA Number 101000695 |
• | Account Number 987-060-9800 |
• | Wasatch (name and Class of Fund) |
• | Your Wasatch account number |
• | Name(s) of investor(s) |
• | Social security or tax ID number |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing (a Medallion signature guarantee is required). |
• | Checks will be mailed to the address on your account. |
• | Redemption requests made within 30 days of an address change must be made in writing and require a Medallion signature guarantee. |
• | Your name |
• | The name and Class of the Fund |
• | Your account number(s) |
• | The dollar amount or number of shares to be redeemed |
• | Your daytime telephone number |
• | Signature(s) of account owners (sign exactly as the account is registered) |
• | Medallion signature guarantee (if required) |
• | Wasatch Funds reserves the right to waive or lower investment minimums for any reason. |
• | Accounts opened through third parties such as brokers or banks may be subject to different minimums for initial and subsequent purchases. |
• | Use of an exclusive Toll Free number for direct access to an experienced shareholder services team member. |
• | Exemptions for certain account and maintenance fees. |
• | Priority notification of new or reopened Wasatch Funds. |
• | Access to quarterly comments from Wasatch portfolio managers. |
• | Choice of monthly or quarterly statements. |
• | Access to closed funds. |
• | There are no sales charges to purchase Institutional Class shares of the Funds. |
• | The purchase price of your Institutional Class shares will be determined the next time the Funds' Institutional Class share prices are calculated after the transfer agent has received your request in good order prior to the close of regular trading on a day on which the New York Stock Exchange (NYSE) is open. A purchase request is in “good order” when the Fund’s transfer agent has received all the information and documentation it deems necessary to effect your request, which would typically mean that it has received federal funds, a wire, a check or Automated Clearing House (“ACH”) transaction, together with a completed account application, or, if an existing shareholder, a completed additional investment form (or written or verbal instructions, which include your name, |
account number, name and class of shares of the Fund and investment amount). Please refer to the Shareholder’s Guide for more detailed instructions on purchasing shares of the Funds. | |
• | Purchases must be made in U.S. dollars. |
• | Wasatch Funds does not accept cash, money orders, third party checks, travelers checks, credit card checks, checks drawn on banks outside the U.S. or other checks deemed to be high risk. |
• | Purchase requests may not be made via fax or email. |
• | The Funds reserve the right to stop selling Institutional Class shares at any time or to reject specific purchase requests, including purchases by exchange from another Wasatch Fund or the Federated Prime Cash Obligations Fund (Money Market Fund). |
• | Institutional Class shares are also available for purchase, with no minimum initial investment, by current and former trustees/directors and officers of any Wasatch Fund, and their immediate family members (as defined in the statement of additional information), current officers and current and former directors of the Advisor and its affiliates, and their immediate family members, and full-time and retired employees of the Advisor and its affiliates, and their immediate family members. |
• | Purchase requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the purchase will be delayed until the request has been received in good order by the transfer agent. |
• | Purchase requests made by telephone will only be accepted for accounts that have previously established bank information to allow electronic funds transfer from the Automated Clearing House (ACH). |
• | When you make an initial purchase of shares online, the purchase amount will be withdrawn from your bank after the transfer agent has received your online application in good order. You will receive a reference number for your transaction when you submit your application or subsequent purchase. A verification of your request will also be sent to your email address and we will mail a transaction confirmation to you when we have processed your online application. Please double check that the bank information you provide is correct. You will be held liable for losses incurred by the Funds due to incorrect bank information. |
• | A $20.00 fee will be assessed if your purchase cannot be made for any reason. See also “Insufficient Funds Policy.” |
• | You may request that the Funds redeem all or a portion of your Institutional Class shares. |
• | The price of Institutional Class shares you redeem will be determined the next time the Funds’ share prices are calculated after the transfer agent has received your request in good order. |
• | Most new accounts automatically have the telephone redemption privilege, unless it is specifically declined. |
Some accounts such as corporate accounts do not receive the redemption privilege unless they complete and return the Redemption and Exchange Privileges Form. | |
• | You may redeem shares in your account in amounts of $5,000 up to $100,000 (including for corporate accounts) online or by telephone. |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing and a Medallion signature guarantee is required. |
• | Wasatch Funds does not accept redemption requests made via fax or email. |
• | The Funds will mail a check to the address on your account within seven days after the transfer agent has received your request in good order. |
• | Redemption proceeds can also be sent by wire ($15.00 fee) or electronic funds transfer to your preauthorized bank account. The Funds’ transfer agent will increase the redemption request by the additional number of shares or partial shares needed to cover the wire transfer fee and will pay that fee to the processing bank. |
• | Payment may be delayed for up to seven days on redemption requests for recent purchases made by check or electronic funds transfer to ensure that the payment has cleared. |
• | Redemption requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the redemption will be delayed until the request has been received in good order by the transfer agent. |
• | The Funds typically expect to pay redemption proceeds to redeeming shareholders within one business day following a request received in good order by the transfer agent. Receipt of redemption proceeds may take longer for wire transfers and ACH transactions, depending on your bank’s processing times. Receipt of redemption proceeds may also take longer if shares of the Fund are purchased through an intermediary. |
• | A Fund can delay payment of redemption proceeds for up to seven days at any time if it is deemed to be in the best interests of the Fund to do so. |
• | To meet redemption requests, the Funds typically expect to use cash reserves held in a Fund’s portfolio and/or the proceeds from sales of portfolio securities effected shortly after the redemption request. A Fund may also meet redemption requests by borrowing under a line of credit or through overdrafts with its custodian. The Funds more likely will employ these additional methods to meet larger redemption requests or during times of market stress. |
• | The Funds generally pay redemptions in cash, and have filed a notice with the Securities and Exchange Commission of their intent to pay redemptions up to certain amounts in cash; however, the Funds reserve the right to redeem all or a portion of a redemption request with securities or other Fund assets, if it is determined to be in the best interests of the Funds to do so. Although generally unlikely, if a Fund does redeem shares in-kind, you will likely have to pay brokerage commissions to sell the securities or other assets delivered to you as well as |
any taxes on any capital gains incurred upon sale. In addition, the securities or other assets distributed to you will continue to be subject to market risk until they are sold. | |
• | Redemption requests from corporations, executors, administrators, trustees and guardians may require additional documentation and a Medallion signature guarantee. |
• | If the account is worth less than the amount requested, the entire value of the account will be redeemed. |
• | The Funds can suspend redemptions and/or delay payment of redemption proceeds for more than seven days after a redemption request has been received under the following unusual circumstances: (i) for any period (a) during which the NYSE is closed other than customary weekend and holiday closings; or (b) during which trading on the NYSE is restricted; (ii) for any period during which an emergency exists as a result of which (a) disposal by a Fund of securities owned by it is not reasonably practicable; or (b) it is not reasonably practicable for such Fund fairly to determine the value of its net assets; or (iii) for such other periods as the SEC may by order permit for the protection of security holders of the Funds. |
• | The Funds reserve the right to reject or delay a redemption on certain legal grounds. See “Emergency Circumstances.” |
• | Redeeming shares may result in a taxable capital gain or loss. |
• | Due to money movement between Wasatch Funds and the Money Market Fund, requests made on the business day prior to a bank holiday will be processed on the following business day (subject to exception for redemptions of shares of the Money Market Fund during any period there is a temporary suspension of redemptions). This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. |
• | The Funds will deduct a fee of 2.00% from redemption proceeds on Fund shares held 60 days or less, except as noted below. |
• | Exchanges on shares held 60 days or less will, subject to certain exceptions, trigger the redemption fee. Exchanges into or out of the Money Market Fund will not trigger the redemption fee. |
• | The redemption fee is paid directly to a Fund and is designed to offset brokerage commissions, market impact and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading. |
• | If you bought shares on different days, the shares you held longest will be redeemed first for the purpose of determining whether the redemption fee applies. |
• | Shares transferred from one shareholder to another shareholder retain their original purchase date in the hands of the transferee for the application of the redemption fee. |
• | The redemption fee does not apply to shares acquired through reinvestment of dividends and/or capital gains. |
• | The redemption fee does not apply to shares redeemed through a systematic withdrawal plan. |
• | The redemption fee does not apply to shares redeemed from shareholder accounts liquidated for failure to meet the minimum investment requirement. |
• | The redemption fee does not apply to shares redeemed from a shareholder account for which the identity of the shareholder, for purposes of complying with anti-money laundering laws, could not be determined within a reasonable time after the account was opened. |
• | The redemption fee does not apply in the event of any involuntary redemption and/or exchange transactions, including, for example, those required by law or regulation, a regulatory agency, a court order, or as a result of the liquidation of a Fund by its Board of Trustees. |
• | The redemption fee does not apply to shares redeemed through an automatic, non-discretionary rebalancing or asset allocation program. |
• | The redemption fee does not apply to shares redeemed due to a disability as defined by the IRS requirements. |
• | The redemption fee does not apply to shares redeemed due to death for shares transferred from a decedent’s account to a beneficiary’s account. |
• | The redemption fee does not apply in the event of a back office correction made to an account to provide the shareholder with the intended transaction. |
• | The redemption fee does not apply in the event of the following transactions: a distribution from a defined contribution terminated employee account, a plan distribution of non-vested participant balance in a defined contribution account, a distribution from a defined contribution plan to provide a participant with a loan against the account, or an amount contributed to a defined contribution plan exceeding the maximum annual contribution limit. |
• | The redemption fee does not apply to shares gifted from one shareholder account to another shareholder account, assuming the age of the gifted shares is greater than 60 days. |
• | The redemption fee may be waived for certain wrap accounts and for certain omnibus accounts held by financial intermediaries whose systems are unable to assess the redemption fee and certain employer-sponsored retirement accounts (including certain 401(k) and other types of defined contribution or employee benefit plans). |
• | The redemption fee may be waived by Wasatch Funds’ officers in any case where the nature of the transaction or circumstances do not pose the risks that the Board’s policies and procedures to prevent market timing are designed to mitigate. All waivers provided by Wasatch |
Funds’ officers will be disclosed to the Funds’ Board at its next regularly scheduled quarterly meeting. The Funds reserve the right to modify or eliminate the redemption fee or waivers at any time. | |
• | The redemption fee assessed by certain financial intermediaries that have omnibus accounts in the Funds, including employer-sponsored retirement accounts, may be calculated using methodologies that differ from those utilized by Wasatch Funds’ transfer agent. Such differences are typically attributable to system design differences and are unrelated to the investment in the Funds. These system differences are not intended or expected to facilitate market timing or frequent trading. |
• | The Funds’ Institutional Class share prices change daily, so the price of shares you wish to purchase or redeem will be determined the next time the Funds’ share prices are calculated after the transfer agent has received your request in good order. |
• | Each Fund’s Institutional Class share price, or net asset value (NAV), is calculated by dividing the value of all securities and other assets owned by the Institutional Class of the Fund, less the liabilities charged to the Institutional Class of the Fund, by the number of Institutional Class shares outstanding. |
• | The Funds’ share prices are calculated as of the regular close of trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m. Eastern Time) every day the NYSE is open. |
• | The Funds’ NAV will not be calculated on days the NYSE is closed (scheduled or unscheduled) or on holidays the NYSE observes, including New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The NYSE may close early on the day before each observed holiday and the day after Thanksgiving and Christmas. NYSE holiday schedules are subject to change without notice. |
• | The Funds’ investments are primarily valued using market quotations. Debt securities (other than short-term instruments) are valued at prices furnished by a pricing service, subject to review and possible revision by the Advisor. Debt securities with a remaining maturity of 60 days or less at the time of purchase generally shall be valued by the amortized cost method unless it is determined that the amortized cost method would not represent fair value, in which case the securities would be marked to market. To the extent a Fund invests in registered open-end investment companies (other than exchange-traded funds), such investments are valued based on the NAV of such funds. The prospectuses of such funds will explain the circumstances under which these companies will use fair value pricing and the effects of using fair value pricing. |
• | 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 will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Funds’ Board, in accordance with Board-approved Pricing Policies and Procedures. | |
• | A Fund’s investments will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Funds’ Board if the Advisor determines that an event impacting the value of an investment occurred after the close of the security’s primary exchange or market (i.e., a foreign exchange or market) and before the time the Fund’s share price is calculated. In addition, the Funds may adjust the closing prices of certain foreign securities traded on markets that have closed prior to the U.S. equity markets (principally, overseas markets), using fair value factors provided by an independent pricing agent, on any business day a change in the value of the U.S. equity markets (as represented by a benchmark index approved by the Funds’ Board of Trustees) exceeds a certain threshold. The prices will not be adjusted for securities traded on markets that are open at the same time the U.S. equity markets are open, or when a reliable fair value factor is unavailable. |
• | Despite best efforts, there is an inherent risk that the fair value of an investment may be higher or lower than the value a Fund would have received if it had sold the investment. |
• | The Funds may hold portfolio securities, such as those traded on foreign exchanges, that trade on weekends or other days when the Funds’ share prices are not calculated. Therefore, the value of a Fund’s shares may change on days when shareholders will not be able to purchase or redeem shares. |
• | To change your designated bank account or bank address. |
• | To add bank information to an existing account. |
• | To request a redemption (must be made in writing) in excess of $100,000 for any individual or corporate account. |
• | To request a wire or ACH transfer of redemption proceeds to a bank account other than the bank account of record. |
• | Requests for redemption proceeds to be mailed to an address other than the address of record. |
• | Redemptions made within 30 days of an address change. |
• | Certain transactions on accounts involving executors, administrators, trustees or guardians. |
• | On the IRA Transfer Form if transferring your Wasatch Funds IRA to another fund family. |
• | To change registered account holders. |
• | To change the name on an account due to divorce or marriage (or you can provide a certified copy of the legal documents showing the name change). |
• | To add telephone privileges. |
• | Fund shares may be exchanged for shares of the same class of other Wasatch Funds. Shares of a class held by any shareholder who is eligible to hold shares of another class of the same or another Wasatch Fund may be exchanged upon the shareholder’s request on the basis of the relative NAV of the class held and the class to be purchased. Shares may be exchanged on days the NYSE is open for business. |
• | The price of shares being exchanged will be determined the next time the Funds’ share prices are calculated after the transfer agent has received your exchange request in good order. |
• | Excessive exchanges may result in the termination of a shareholder’s exchange privileges. For more information please see “Policies to Prevent Market Timing.” |
• | Exchanges for shares in Funds closed to new investors may only be made by shareholders with existing accounts in those Funds. |
• | Exchanges may not be made for shares of Funds closed to new investors and existing shareholders. |
• | You may open a new account or purchase additional shares by exchanging shares from an existing Fund account holding the same class of shares. |
• | A new account opened by exchange will have the same registration as the existing account and is subject to the minimum initial investment requirements. |
• | Additional exchanges may be made for $5,000 or more. |
• | Additional documentation and a Medallion signature guarantee may be required for exchange requests from existing accounts if shares are registered in the name of a corporation, partnership or fiduciary. |
• | To add telephone exchange privileges to an existing corporate account, complete and return the Redemption and Exchange Privileges Form. The Form can be obtained from Wasatch Funds’ website or by calling a shareholder services representative. |
• | Exchanges on shares held 60 days or less will trigger the redemption fee, subject to certain exceptions as noted above. |
• | New accounts automatically have the telephone exchange privilege, unless it has been specifically declined. |
• | Wasatch Funds does not accept exchange requests made via fax or email. |
• | Exchange requests may be subject to other limitations, including those relating to frequency, that Wasatch Funds may establish to ensure that exchanges do not disadvantage shareholders or the Funds. |
• | Exchanging shares between Funds may result in a taxable capital gain or loss. |
• | The Advisor reserves the right to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. |
• | You may exchange all or a portion of your investment in a Fund for Automated Class shares of the Federated Prime Cash Obligations Fund (the Money Market Fund). The Money Market Fund is made available to shareholders of the Wasatch Funds who maintain direct accounts with the Wasatch Funds and who meet the eligibility requirements and investment minimum for the respective class of the Money Market Fund. The Money Market Fund is only available to accounts beneficially owned by natural persons as described in its prospectus. The Money Market Fund is managed by Federated Investment Management Company (and not by Wasatch Advisors), and invests in a diversified portfolio of money market instruments. The Money Market Fund and Federated Investment Management Company are not affiliated with Wasatch Funds or Wasatch Advisors. SHARES OF THE MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS AND THE MONEY MARKET FUND IS NOT OVERSEEN BY THE BOARD OF TRUSTEES OF WASATCH FUNDS. |
• | You should note that the Money Market Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Money Market Fund’s weekly liquid assets were to fall below a designated threshold, if the Money Market Fund’s board determines that such liquidity fees or redemption gates are in the best interest of the Money Market Fund. Any liquidation fee will reduce the amount you receive upon the redemption of your Money Market Fund shares and will decrease the amount of any capital gain or increase the amount of any capital loss you will recognize from such redemption. If redemptions are temporarily suspended, the Money Market Fund will not accept redemptions or exchange orders, including into a Wasatch Fund, until the Money Market Fund has notified its shareholders that the redemption gate has been lifted at which time, a new redemption or exchange request must be submitted. Please refer to the prospectus of the Money Market Fund to review the investment strategies, fees and expenses, and |
risks, including the risk of liquidity fees and redemption gates, of the Money Market Fund before investing in or exchanging into shares of the Money Market Fund. | |
• | Exchanges are subject to the minimum purchase and redemption amounts set forth in the applicable fund’s prospectus unless otherwise noted on the application. |
• | Shareholders may exchange Money Market Fund shares to purchase shares of Funds but not for shares of Wasatch Funds that are closed to new investors and existing shareholders. |
• | Exchange requests will be effective the day the transfer agent receives them in good order by 4:00 p.m. Eastern Time, or market close on days the Funds’ shares are priced, unless it is the business day prior to a bank holiday or the Money Market Fund has temporarily suspended its redemptions as noted below. Requests made on the business day prior to a bank holiday will be processed the following business day. This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. In addition, requests to exchange from the Money Market Fund into a Wasatch Fund made during any period that the Money Market Fund has temporarily suspended redemptions will not be accepted. Shareholders wishing to exchange shares of the Money Market Fund for shares of a Wasatch Fund once the redemption gate is lifted will need to submit a new request. |
• | You will begin accruing income from the Money Market Fund on the first business day following the exchange provided it is not a bank holiday. |
• | Dividends earned in the Money Market Fund are payable at the time of full liquidation or at the end of the month if a balance remains in the account. |
• | Shareholders should read the prospectus for the Money Market Fund prior to exchanging into it. |
• | You may buy or sell shares of the Funds through banks or investment professionals, including brokers, and they may charge you a transaction fee for this service. |
• | Certain features offered by Wasatch Funds, such as Premier Services, minimum initial investment or subsequent investment amounts, may be modified or may not be available through other institutions. |
• | Once you have established an account through an institution or investment professional, any subsequent transactions for, or questions about, that account must be made through them. |
• | Wasatch Funds and/or the Advisor may enter into agreements with various intermediaries pursuant to which such firms may accept orders on behalf of the Funds and provide administrative services with respect to customers who are beneficial owners of Institutional Class shares of the Funds. |
• | The Advisor may compensate certain financial intermediaries (which may include broker-dealers, banks, third-party recordkeepers, and other industry professionals) to provide certain recordkeeping services to the Funds and the Funds’ shareholders in lieu of the Funds’ transfer agent (including account maintenance and shareholder servicing; “Sub-TA services”), and for the sale and/or distribution of the Funds’ shares. Depending on the share class, the Funds may reimburse the Advisor for the amounts paid for Sub-TA services. To the extent the Advisor pays for sales or distribution of Fund shares, it does so out of its profits derived from the Advisor’s management fee. The Advisor’s compensation out of its profits is referred to as “revenue sharing.” Examples of revenue sharing payments include, but are not limited to, payment to financial intermediaries for “shelf space” or access to a third party platform or fund offering list or other marketing programs, including but not limited to, inclusion of the Funds on preferred or recommended sales lists, mutual fund “supermarket” platforms and other formal sales programs; granting the Advisor access to the financial intermediary’s sales force; granting the Advisor access to the financial intermediary’s conferences and meetings; and obtaining other forms of marketing support. The level of revenue sharing payments made to financial intermediaries may be a fixed fee or based on one or more of the following factors: gross sales, current assets and/or number of accounts of the Funds attributable to the financial intermediary, or other factors as agreed to by the Advisor and the financial intermediary or any combination thereof. The amount of these revenue sharing payments is determined at the discretion of the Advisor, by agreement with the financial intermediary, from time to time. The revenue sharing payments may be substantial, and may differ among financial intermediaries. Such payments may provide an incentive for the financial intermediary to make shares of the Funds available to its customers and may allow the Funds |
greater access to the financial intermediary’s customers. The SAI contains additional information about these payments, including the names of firms to which payments are made. | |
• | If one mutual fund sponsor provides greater financial assistance than another, your financial advisor may have an incentive to recommend one mutual fund complex over another. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by Wasatch Funds and/or the Advisor and by sponsors of other mutual funds he or she may recommend to you. You should also review disclosures made by your financial advisor at the time of purchase. |
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 | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |
Core Growth Fund | ||||||||
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 | ||||||||
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 | ||||||||
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) |
Year ended 9/30/1311 | $10.00 | (—) 4 | (0.39) | (0.39) | — 4 | — | — | — |
Emerging Markets Small Cap Fund | ||||||||
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 | ||||||||
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 | — | — | — |
Global Opportunities Fund | ||||||||
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 | — | — | — | — |
International Growth Fund | ||||||||
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 | ||||||||
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 | — | — | — |
Global Value Fund (formerly, Large Cap Value Fund) | ||||||||
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) |
Small Cap Growth Fund | ||||||||
Year ended 9/30/17 | $43.58 | (0.17) | 5.99 | 5.82 | — 4 | — | (3.51) | (3.51) |
Year ended 9/30/1617 19 | $37.58 | (0.07) | 6.07 | 6.00 | — 4 | — | — | — |
Small Cap Value Fund | ||||||||
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 | — | — | — |
World Innovators Fund | ||||||||
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 | — | — | — | — |
Ratios to Average Net Assets | Supplemental Data | ||||||
Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 |
$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% |
$ 4.10 | 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% |
$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% |
$ 3.00 | 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% |
$ 2.76 | 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% |
$ 3.76 | 16.92 | 1.36 6 | 1.93 6 | (0.85) | (1.41) | $ 7,149 | 27% |
$ 3.52 | 13.92 | 1.35 5 | 2.32 5 | (0.57) | (1.54) | $ 5,348 | 44% |
$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% |
$ 3.50 | 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% |
$ 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% |
$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% |
$ 7.98 | 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% |
$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% |
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%. |
11 | Institutional class inception date was December 13, 2012. |
12 | Investment income per share reflects a large, non-recurring dividend which amounted to $0.08 per share for the Institutional Class. Excluding this non-recurring dividend, income (loss) to average net assets would have been as follows: |
Net Investment Income (Loss) Net of Waivers and Reimbursements | Net Investment Income (Loss) Before Waivers and Reimbursements | ||
Core Growth Fund | (0.59)% | (0.60)% |
15 | Investment income per share reflects a large, non-recurring dividend which amounted to $0.05 per share for the Institutional Class. 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 | Net Investment Income (Loss) Before Waivers and Reimbursements | ||
Small Cap Value Fund | 0.10% | 0.05% |
17 | Institutional class inception date was February 1, 2016. |
19 | Includes a non-recurring offer to reimburse prior period custody and fund accounting out-of-pocket expenses. 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 | 1.07 | 1.09 | |
Emerging India Fund | 1.56 | 2.06 | |
Emerging Markets Select Fund | 1.33 | 1.63 | |
Emerging Markets Small Cap Fund | 1.82 | 1.83 | |
Frontier Emerging Small Countries Fund | 2.08 | 2.08 | |
Global Opportunities Fund | 1.42 | 2.39 | |
International Growth Fund | 1.36 | 1.37 | |
International Opportunities Fund | 1.97 | 2.06 | |
Global Value Fund | 0.96 | 1.72 | |
Small Cap Growth Fund | 1.05 | 1.11 | |
Small Cap Value Fund | 1.08 | 1.20 | |
World Innovators Fund | 1.63 | 3.77 |
20 | Per share amounts do not correlate to amounts reported in the statement of operations due to timing of share activity. |
• | We will not disclose your personal information to anyone unless it is necessary to provide you with our services, at your direction, or required by law. |
• | We do not allow individuals or companies that provide services to Wasatch Funds to use your personal information for their own marketing purposes. |
• | We maintain contracts with individuals or companies providing services to Wasatch Funds’ shareholders that require them to protect the confidentiality of your personal information. |
• | We afford the same protection of personal information to prospective and former shareholders that we do to current shareholders. |
• | We consider all the information we have about you to be confidential, including the fact that you are a Wasatch Funds shareholder (unless you tell us otherwise). |
• | We restrict access to your personal information to employees who service your accounts. |
• | We maintain physical, electronic and procedural safeguards that comply with federal standards for maintaining the confidentiality of your information. |
• | Account applications. When you open an account the information we collect may include your name, address, phone number, email address and social security number. |
• | Transactions. To manage your account and provide information to you such as account statements, we maintain current and historical records of each of your transactions and accounts with Wasatch Funds. |
• | Website. We collect some information on our website through the use of “cookies.” For example, we may identify the web pages your browser requests or visits. On the website, we can only identify you if you choose to identify yourself, for example, if you open an account or make transactions online. For more information please read our online privacy policy at www.WasatchFunds.com. |
• | To service your account and process your transactions. For example, the transfer agent collects and stores account and transaction data. |
• | To do as you request. For example, you may direct us to send your statements and confirmations to a third party. |
• | To print and mail materials to you. Companies that provide printing and mailing services are prohibited from using your information in any way other than the purpose for which it was provided. |
• | To comply with laws or regulations. We may disclose or report personal information as required by law, for example, to respond to a subpoena, court order or regulatory demand made by the proper authorities. |
• | To the extent permitted by law. For example, the law permits us to respond to a request for information from a consumer reporting agency. |
P.O. Box 2172
Milwaukee, WI 53201-2172
Table of Contents
2018 Prospectus www.WasatchFunds.com 800.551.1700
You may obtain a free copy of the Funds’ SAI, annual or semi-annual reports, or quarter-end portfolio holdings on the Funds’ website at www.WasatchFunds.com or by contacting Wasatch at the telephone number listed above. You may make inquiries to the Fund via mail at Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172, via email at shareholderservice@wasatchfunds.com or by calling the telephone number listed above. Shareholder representatives are available Monday through Friday 7:00 a.m. to 7:00 p.m. Central Time.
The SAI provides more details about the Funds and their policies. The SAI is incorporated into the prospectus by reference and is, therefore, legally part of this prospectus. Additional information about the Funds’ investments is available in the Funds’ annual and semi-annual reports to shareholders. The reports contain discussions of the market conditions and investment strategies that significantly affected the Funds’ performance for the most recent six- or 12-month period, as applicable. You can go to the EDGAR database on the SEC’s website (http://www.sec.gov) to view these and other documents that Wasatch Funds has filed electronically with the SEC. Copies of this information also may be obtained for the cost of duplicating by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-1520 or by electronic request at the following email address: publicinfo@sec.gov. Information about the Funds can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Call the Commission at 202.551.8090 for information.
Investment Company Act File Number: 811-4920
Table of Contents
PROSPECTUS
January 31, 2018
INSTITUTIONAL CLASS / Wasatch Long/Short Fund (WILSX)
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any statement to the contrary is a criminal offense.
Table of Contents
Shareholder Fees (fees paid directly from your investment) | Institutional Class Shares |
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) | None |
Redemption Fee (as a % of amount redeemed on shares held 60 days or less) | 2.00% |
Exchange Fee | None |
Maximum Account Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Institutional Class Shares |
Management Fee | 1.10% |
Distribution/Service (12b-1) Fee | None |
Other Expenses | 0.17% |
Dividend Expense on Short Sales/Interest Expense1 | 0.88% |
Total Annual Fund Operating Expenses2 | 2.15% |
Expense Reimbursement | (0.12)% |
Total Annual Fund Operating Expenses After Expense Reimbursement | 2.03% |
1 | Dividends on short sales are the dividends paid to the lenders of borrowed securities. The expenses related to dividends on short sales are estimated and will vary depending on whether the securities the Fund sells short pay dividends and on the amount of any such dividends. Expenses also include borrowing costs paid to the broker in connection with borrowing the security to be sold short. The rate paid to brokers varies by security. |
2 | Wasatch Advisors, Inc. (Advisor), the Fund’s investment advisor, has contractually agreed to reimburse the Institutional Class shares of the Fund for Total Annual Fund Operating Expenses in excess of 1.15% of average daily net assets until at least January 31, 2019 (excluding interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business). The Board of Trustees is the only party that can terminate the contractual limitation prior to the contract’s expiration. The Advisor can rescind the contractual limitation on expenses at any time after its expiration date. |
1 Year | 3 Years | 5 Years | 10 Years | |
Long/Short Fund — Institutional Class | $206 | $662 | $1,144 | $2,473 |
• | Changes in market participant psychology and circumstances. |
• | Imperfect information. |
• | Forecasts and projections by Wall Street analysts and company representatives that differ from experienced reality. |
• | Have earnings that appear to be reflected in the current stock price. |
• | Are likely to fall short of market expectations. |
• | Are in industries that exhibit weakness. |
• | Have poor management. |
• | Are likely to suffer an event affecting long-term earnings. |
![](https://capedge.com/proxy/N-14A/0001193125-18-229731/g518141imgb5d1d7ff1.jpg)
Best — 3/31/2013 | 9.27% |
Worst — 9/30/2015 | -12.20% |
Average Annual Total Returns — (as of 12/31/17) | 1 Year | 5 Years | Since Inception (12/13/12) |
Wasatch Long/Short Fund — Institutional Class | |||
Return Before Taxes | -1.80% | 2.66% | 2.76% |
Return After Taxes on Distributions | -1.80% | 1.76% | 1.87% |
Return After Taxes on Distributions and Sale of Fund Shares | -1.02% | 2.01% | 2.10% |
S&P 500 Index (reflects no deductions for fees, expenses or taxes) | 21.83% | 15.79% | 15.62% |
Citigroup U.S. Domestic 3-Month Treasury Bills Index (reflects no deductions for fees, expenses or taxes) | 0.84% | 0.24% | 0.24% |
David Powers, CFA Lead Portfolio Manager Since October 2017 |
• | You may purchase, sell (redeem) or exchange Fund shares on any day the New York Stock Exchange is open for business. |
• | To open a new account directly with Wasatch Funds or to purchase shares for an existing account, go online at www.WasatchFunds.com. For a new account, complete and electronically submit the online application. Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions. By telephone, complete the appropriate application and call a shareholder services representative at 800.551.1700 for instructions on how to open or add to an account via wire. To open a new account by mail, complete and mail the application and any other materials (such as a corporate resolution for corporate accounts) and a check. To add to an existing account, complete the additional investment form from your statement or write a note that includes the Fund name and Class of shares (i.e., Institutional Class), name(s) of investor(s) on the account and the account number. Send materials to: Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172 or via overnight delivery to: Wasatch Funds, 235 W. Galena St., Milwaukee, WI 53212. |
• | To sell shares purchased directly from Wasatch Funds, go online at www.WasatchFunds.com, or call a shareholder services representative at 800.551.1700 if you did not decline the telephone redemption privilege when establishing your account. Redemption requests may be sent by mail or overnight delivery to the appropriate address shown above. Include your name, Fund name, Class of shares (i.e., Institutional Class), account number, dollar amount of shares to be sold, your daytime telephone number, signature(s) of account owners (sign exactly as the account is registered) and Medallion signature guarantee (if required). For IRA accounts, please obtain an IRA Distribution Form from www.WasatchFunds.com or by calling a shareholder services representative. |
• | Fund shares may be bought or sold through banks or investment professionals, including brokers. They may charge you a transaction fee for this service. |
• | Potential for significant and sustained revenue and earnings growth. |
• | Experienced, proven management team. |
• | High return on capital. |
• | Sustainable competitive advantage. |
• | Market leadership and/or growing market share. |
• | Ability to capitalize on favorable long-term trends. |
• | Strong financial health. |
• | Reasonable use of debt. |
• | Attractive valuation. |
• | Catalysts for improved earnings growth. |
• | New products or services that may increase revenue growth and market share. |
• | Experienced top management with a substantial stake in the company’s future. |
• | Introduction of valuable new products and services. |
• | Low stock valuation as measured by a variety of ratios, including price-to-earnings, price-to-sales, price-to-book, price-to-cash flow and enterprise value-to-EBITDA. |
• | Potential to generate improved financial performance. |
• | Calculating and reviewing standard ratios, such as price-to-sales, price-to-book, price-to-earnings, enterprise value-to-EBITDA and price/earnings-to-growth. |
• | Modified discounted cash flow models with sensitivity analysis for changes to revenue growth rates, operating margins, outstanding share counts, earnings multiples, and tangible book value. |
• | Changing sector and company specific outlooks due to subjective factors, including globalization of capital, labor and process knowledge, as well as increasing information and price transparency. |
• | Money flow. |
• | Insider activity. |
• | Relative strength. |
• | Variation from moving averages. |
• | The rationale we used to buy the security is no longer valid. |
• | The security becomes overpriced. |
• | We believe another security has better investment potential. |
• | The price of the security sold short has fallen to a point where the Fund will recognize a gain. |
• | The price of the security sold short has risen to a point where we feel capital is unreasonably at risk, regardless of how we evaluate the security. |
Wasatch Fund | Annual Management Fees, Net of Reimbursements | Institutional Class Shares Expense Limitations |
Long/Short Fund | 0.98% | 1.15% |
Name of Fund | Portfolio Manager(s) |
Long/Short Fund | David Powers, CFA* |
505 Wakara Way, 3rd Floor
Salt Lake City, UT 84108
801 Pennsylvania Avenue
Kansas City, MO 64105
1290 Broadway, Suite 1100
Denver, CO 80203
235 West Galena Street
Milwaukee, WI 53212
801 Pennsylvania Avenue
Kansas City, MO 64105
and Independent Trustees
111 West Monroe Street
Chicago, IL 60603
1100 Walnut St., Suite 1300
Kansas City, MO 64106
P.O. Box 2172
Milwaukee, WI 53201-2172
235 West Galena Street
Milwaukee, WI 53212
• | UMB Bank, N.A. |
• | ABA Number 101000695 |
• | Account Number 987-060-9800 |
• | Wasatch (name and Class of Fund) |
• | Your Wasatch account number |
• | Name(s) of investor(s) |
• | Social security or tax ID number |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing (a Medallion signature guarantee is required). |
• | Checks will be mailed to the address on your account. |
• | Redemption requests made within 30 days of an address change must be made in writing and require a Medallion signature guarantee. |
• | Your name |
• | The name and Class of the Fund |
• | Your account number(s) |
• | The dollar amount or number of shares to be redeemed |
• | Your daytime telephone number |
• | Signature(s) of account owners (sign exactly as the account is registered) |
• | Medallion signature guarantee (if required) |
• | Wasatch Funds reserves the right to waive or lower investment minimums for any reason. |
• | Accounts opened through third parties such as brokers or banks may be subject to different minimums for initial and subsequent purchases. |
• | Use of an exclusive Toll Free number for direct access to an experienced shareholder services team member. |
• | Exemptions for certain account and maintenance fees. |
• | Priority notification of new or reopened Wasatch Funds. |
• | Access to quarterly comments from Wasatch portfolio managers. |
• | Choice of monthly or quarterly statements. |
• | Access to closed funds. |
• | There are no sales charges to purchase Institutional Class shares of the Fund. |
• | The purchase price of your Institutional Class shares will be determined the next time the Fund’s Institutional Class share prices are calculated after the transfer agent has received your request in good order prior to the close of regular trading on a day on which the New York Stock Exchange (NYSE) is open. A purchase request is in “good order” when the Fund’s transfer agent has received all the information and documentation it deems necessary to effect your request, which would typically mean that it has received federal funds, a wire, a check or Automated Clearing House (“ACH”) transaction, together with a completed account application, or, if an existing shareholder, a completed additional investment form (or written or verbal instructions, which include your name, |
account number, name and class of shares of the Fund and investment amount). Please refer to the Shareholder’s Guide for more detailed instructions on purchasing shares of the Funds. | |
• | Purchases must be made in U.S. dollars. |
• | Wasatch Funds does not accept cash, money orders, third party checks, travelers checks, credit card checks, checks drawn on banks outside the U.S. or other checks deemed to be high risk. |
• | Purchase requests may not be made via fax or email. |
• | The Fund reserves the right to stop selling Institutional Class shares at any time or to reject specific purchase requests, including purchases by exchange from another Wasatch Fund or the Federated Prime Cash Obligations Fund (Money Market Fund). |
• | Institutional Class shares are also available for purchase, with no minimum initial investment, by current and former trustees/directors and officers of any Wasatch Fund, and their immediate family members (as defined in the statement of additional information), current officers and current and former directors of the Advisor and its affiliates, and their immediate family members, and full-time and retired employees of the Advisor and its affiliates, and their immediate family members. |
• | Purchase requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the purchase will be delayed until the request has been received in good order by the transfer agent. |
• | Purchase requests made by telephone will only be accepted for accounts that have previously established bank information to allow electronic funds transfer from the Automated Clearing House (ACH). |
• | When you make an initial purchase of shares online, the purchase amount will be withdrawn from your bank after the transfer agent has received your online application in good order. You will receive a reference number for your transaction when you submit your application or subsequent purchase. A verification of your request will also be sent to your email address and we will mail a transaction confirmation to you when we have processed your online application. Please double check that the bank information you provide is correct. You will be held liable for losses incurred by the Fund due to incorrect bank information. |
• | A $20.00 fee will be assessed if your purchase cannot be made for any reason. See also “Insufficient Funds Policy.” |
• | You may request that the Fund redeems all or a portion of your Institutional Class shares. |
• | The price of Institutional Class shares you redeem will be determined the next time the Fund’s share prices are calculated after the transfer agent has received your request in good order. |
• | Most new accounts automatically have the telephone redemption privilege, unless it is specifically declined. |
Some accounts such as corporate accounts do not receive the redemption privilege unless they complete and return the Redemption and Exchange Privileges Form. | |
• | You may redeem shares in your account in amounts of $5,000 up to $100,000 (including for corporate accounts) online or by telephone. |
• | Redemption requests for over $100,000 (in individual and corporate accounts) must be made in writing and a Medallion signature guarantee is required. |
• | Wasatch Funds does not accept redemption requests made via fax or email. |
• | The Fund will mail a check to the address on your account within seven days after the transfer agent has received your request in good order. |
• | Redemption proceeds can also be sent by wire ($15.00 fee) or electronic funds transfer to your preauthorized bank account. The Fund’s transfer agent will increase the redemption request by the additional number of shares or partial shares needed to cover the wire transfer fee and will pay that fee to the processing bank. |
• | Payment may be delayed for up to seven days on redemption requests for recent purchases made by check or electronic funds transfer to ensure that the payment has cleared. |
• | Redemption requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the redemption will be delayed until the request has been received in good order by the transfer agent. |
• | The Fund typically expects to pay redemption proceeds to redeeming shareholders within one business day following a request received in good order by the transfer agent. Receipt of redemption proceeds may take longer for wire transfers and ACH transactions, depending on your bank’s processing times. Receipt of redemption proceeds may also take longer if shares of the Fund are purchased through an intermediary. |
• | The Fund can delay payment of redemption proceeds for up to seven days at any time if it is deemed to be in the best interests of the Fund to do so. |
• | To meet redemption requests, the Fund typically expects to use cash reserves held in the Fund’s portfolio and/or the proceeds from sales of portfolio securities effected shortly after the redemption request. The Fund may also meet redemption requests by borrowing under a line of credit or through overdrafts with its custodian. The Fund more likely will employ these additional methods to meet larger redemption requests or during times of market stress. |
• | The Fund generally pays redemptions in cash, and have filed a notice with the Securities and Exchange Commission of their intent to pay redemptions up to certain amounts in cash; however, the Fund reserves the right to redeem all or a portion of a redemption request with securities or other Fund assets, if it is determined to be in the best interests of the Fund to do so. Although generally unlikely, if the Fund does redeem shares in-kind, you will likely have to pay brokerage commissions to sell the securities or other assets delivered to you as |
well as any taxes on any capital gains incurred upon sale. In addition, the securities or other assets distributed to you will continue to be subject to market risk until they are sold. | |
• | Redemption requests from corporations, executors, administrators, trustees and guardians may require additional documentation and a Medallion signature guarantee. |
• | If the account is worth less than the amount requested, the entire value of the account will be redeemed. |
• | The Fund can suspend redemptions and/or delay payment of redemption proceeds for more than seven days after a redemption request has been received under the following unusual circumstances: (i) for any period (a) during which the NYSE is closed other than customary weekend and holiday closings; or (b) during which trading on the NYSE is restricted; (ii) for any period during which an emergency exists as a result of which (a) disposal by the Fund of securities owned by it is not reasonably practicable; or (b) it is not reasonably practicable for such Fund fairly to determine the value of its net assets; or (iii) for such other periods as the SEC may by order permit for the protection of security holders of the Fund. |
• | The Fund reserves the right to reject or delay a redemption on certain legal grounds. See “Emergency Circumstances.” |
• | Redeeming shares may result in a taxable capital gain or loss. |
• | Due to money movement between Wasatch Funds and the Money Market Fund, requests made on the business day prior to a bank holiday will be processed on the following business day (subject to exception for redemptions of shares of the Money Market Fund during any period there is a temporary suspension of redemptions). This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. |
• | The Fund will deduct a fee of 2.00% from redemption proceeds on Fund shares held 60 days or less, except as noted below. |
• | Exchanges on shares held 60 days or less will, subject to certain exceptions, trigger the redemption fee. Exchanges into or out of the Money Market Fund will not trigger the redemption fee. |
• | The redemption fee is paid directly to the Fund and is designed to offset brokerage commissions, market impact and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading. |
• | If you bought shares on different days, the shares you held longest will be redeemed first for the purpose of determining whether the redemption fee applies. |
• | Shares transferred from one shareholder to another shareholder retain their original purchase date in the hands of the transferee for the application of the redemption fee. |
• | The redemption fee does not apply to shares acquired through reinvestment of dividends and/or capital gains. |
• | The redemption fee does not apply to shares redeemed through a systematic withdrawal plan. |
• | The redemption fee does not apply to shares redeemed from shareholder accounts liquidated for failure to meet the minimum investment requirement. |
• | The redemption fee does not apply to shares redeemed from a shareholder account for which the identity of the shareholder, for purposes of complying with anti-money laundering laws, could not be determined within a reasonable time after the account was opened. |
• | The redemption fee does not apply in the event of any involuntary redemption and/or exchange transactions, including, for example, those required by law or regulation, a regulatory agency, a court order, or as a result of the liquidation of the Fund by its Board of Trustees. |
• | The redemption fee does not apply to shares redeemed through an automatic, non-discretionary rebalancing or asset allocation program. |
• | The redemption fee does not apply to shares redeemed due to a disability as defined by the IRS requirements. |
• | The redemption fee does not apply to shares redeemed due to death for shares transferred from a decedent’s account to a beneficiary’s account. |
• | The redemption fee does not apply in the event of a back office correction made to an account to provide the shareholder with the intended transaction. |
• | The redemption fee does not apply in the event of the following transactions: a distribution from a defined contribution terminated employee account, a plan distribution of non-vested participant balance in a defined contribution account, a distribution from a defined contribution plan to provide a participant with a loan against the account, or an amount contributed to a defined contribution plan exceeding the maximum annual contribution limit. |
• | The redemption fee does not apply to shares gifted from one shareholder account to another shareholder account, assuming the age of the gifted shares is greater than 60 days. |
• | The redemption fee may be waived for certain wrap accounts and for certain omnibus accounts held by financial intermediaries whose systems are unable to assess the redemption fee and certain employer-sponsored retirement accounts (including certain 401(k) and other types of defined contribution or employee benefit plans). |
• | The redemption fee may be waived by Wasatch Funds’ officers in any case where the nature of the transaction or circumstances do not pose the risks that the Board’s policies and procedures to prevent market timing are designed to mitigate. All waivers provided by Wasatch |
Funds’ officers will be disclosed to the Fund��s Board at its next regularly scheduled quarterly meeting. The Fund reserves the right to modify or eliminate the redemption fee or waivers at any time. | |
• | The redemption fee assessed by certain financial intermediaries that have omnibus accounts in the Fund, including employer-sponsored retirement accounts, may be calculated using methodologies that differ from those utilized by Wasatch Funds’ transfer agent. Such differences are typically attributable to system design differences and are unrelated to the investment in the Fund. These system differences are not intended or expected to facilitate market timing or frequent trading. |
• | The Fund’s Institutional Class share prices change daily, so the price of shares you wish to purchase or redeem will be determined the next time the Fund’s share price is calculated after the transfer agent has received your request in good order. |
• | The Fund’s Institutional Class share price, or net asset value (NAV), is calculated by dividing the value of all securities and other assets owned by the Institutional Class of the Fund, less the liabilities charged to the Institutional Class of the Fund, by the number of Institutional Class shares outstanding. |
• | The Fund’s share price is calculated as of the regular close of trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m. Eastern Time) every day the NYSE is open. |
• | The Fund’s NAV will not be calculated on days the NYSE is closed (scheduled or unscheduled) or on holidays the NYSE observes, including New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The NYSE may close early on the day before each observed holiday and the day after Thanksgiving and Christmas. NYSE holiday schedules are subject to change without notice. |
• | The Fund’s investments are primarily valued using market quotations. Debt securities (other than short-term instruments) are valued at prices furnished by a pricing service, subject to review and possible revision by the Advisor. Debt securities with a remaining maturity of 60 days or less at the time of purchase generally shall be valued by the amortized cost method unless it is determined that the amortized cost method would not represent fair value, in which case the securities would be marked to market. To the extent the Fund invests in registered open-end investment companies (other than exchange-traded funds), such investments are valued based on the NAV of such funds. The prospectuses of such funds will explain the circumstances under which these companies will use fair value pricing and the effects of using fair value pricing. |
• | If market quotations are not readily available for the Fund’s investments in securities such as restricted securities, private placements, securities for which trading |
has been halted or other illiquid securities, these investments will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Fund’s Board, in accordance with Board-approved Pricing Policies and Procedures. | |
• | The Fund’s investments will be valued at fair value by the Pricing Committee of the Advisor with oversight by the Fund’s Board if the Advisor determines that an event impacting the value of an investment occurred after the close of the security’s primary exchange or market (i.e., a foreign exchange or market) and before the time the Fund’s share price is calculated. In addition, the Fund may adjust the closing prices of certain foreign securities traded on markets that have closed prior to the U.S. equity markets (principally, overseas markets), using fair value factors provided by an independent pricing agent, on any business day a change in the value of the U.S. equity markets (as represented by a benchmark index approved by the Fund’s Board of Trustees) exceeds a certain threshold. The prices will not be adjusted for securities traded on markets that are open at the same time the U.S. equity markets are open, or when a reliable fair value factor is unavailable. |
• | Despite best efforts, there is an inherent risk that the fair value of an investment may be higher or lower than the value the Fund would have received if it had sold the investment. |
• | The Fund may hold portfolio securities, such as those traded on foreign exchanges, that trade on weekends or other days when the Fund’s share prices are not calculated. Therefore, the value of the Fund’s shares may change on days when shareholders will not be able to purchase or redeem shares. |
• | To change your designated bank account or bank address. |
• | To add bank information to an existing account. |
• | To request a redemption (must be made in writing) in excess of $100,000 for any individual or corporate account. |
• | To request a wire or ACH transfer of redemption proceeds to a bank account other than the bank account of record. |
• | Requests for redemption proceeds to be mailed to an address other than the address of record. |
• | Redemptions made within 30 days of an address change. |
• | Certain transactions on accounts involving executors, administrators, trustees or guardians. |
• | On the IRA Transfer Form if transferring your Wasatch Funds IRA to another fund family. |
• | To change registered account holders. |
• | To change the name on an account due to divorce or marriage (or you can provide a certified copy of the legal documents showing the name change). |
• | To add telephone privileges. |
• | Fund shares may be exchanged for shares of the same class of other Wasatch Funds. Shares of a class held by any shareholder who is eligible to hold shares of another class of the same or another Wasatch Fund may be exchanged upon the shareholder’s request on the basis of the relative NAV of the class held and the class to be purchased. Shares may be exchanged on days the NYSE is open for business. |
• | The price of shares being exchanged will be determined the next time the Fund’s share price is calculated after the transfer agent has received your exchange request in good order. |
• | Excessive exchanges may result in the termination of a shareholder’s exchange privileges. For more information please see “Policies to Prevent Market Timing.” |
• | Exchanges for shares in Funds closed to new investors may only be made by shareholders with existing accounts in those Funds. |
• | Exchanges may not be made for shares of Funds closed to new investors and existing shareholders. |
• | You may open a new account or purchase additional shares by exchanging shares from an existing Fund account holding the same class of shares. |
• | A new account opened by exchange will have the same registration as the existing account and is subject to the minimum initial investment requirements. |
• | Additional exchanges may be made for $5,000 or more. |
• | Additional documentation and a Medallion signature guarantee may be required for exchange requests from existing accounts if shares are registered in the name of a corporation, partnership or fiduciary. |
• | To add telephone exchange privileges to an existing corporate account, complete and return the Redemption and Exchange Privileges Form. The Form can be obtained from Wasatch Funds’ website or by calling a shareholder services representative. |
• | Exchanges on shares held 60 days or less will trigger the redemption fee, subject to certain exceptions as noted above. |
• | New accounts automatically have the telephone exchange privilege, unless it has been specifically declined. |
• | Wasatch Funds does not accept exchange requests made via fax or email. |
• | Exchange requests may be subject to other limitations, including those relating to frequency, that Wasatch Funds may establish to ensure that exchanges do not disadvantage shareholders or the Fund. |
• | Exchanging shares between Funds may result in a taxable capital gain or loss. |
• | The Advisor reserves the right to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. |
• | You may exchange all or a portion of your investment in a Fund for Automated Class shares of the Federated Prime Cash Obligations Fund (the Money Market Fund). The Money Market Fund is made available to shareholders of the Wasatch Funds who maintain direct accounts with the Wasatch Funds and who meet the eligibility requirements and investment minimum for the respective class of the Money Market Fund. The Money Market Fund is only available to accounts beneficially owned by natural persons as described in its prospectus. The Money Market Fund is managed by Federated Investment Management Company (and not by Wasatch Advisors), and invests in a diversified portfolio of money market instruments. The Money Market Fund and Federated Investment Management Company are not affiliated with Wasatch Funds or Wasatch Advisors. SHARES OF THE MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS AND THE MONEY MARKET FUND IS NOT OVERSEEN BY THE BOARD OF TRUSTEES OF WASATCH FUNDS. |
• | You should note that the Money Market Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Money Market Fund’s weekly liquid assets were to fall below a designated threshold, if the Money Market Fund’s board determines that such liquidity fees or redemption gates are in the best interest of the Money Market Fund. Any liquidation fee will reduce the amount you receive upon the redemption of your Money Market Fund shares and will decrease the amount of any capital gain or increase the amount of any capital loss you will recognize from such redemption. If redemptions are temporarily suspended, the Money Market Fund will not accept redemptions or exchange orders, including into a Wasatch Fund, until the Money Market Fund has notified its shareholders that the redemption gate has been lifted at which time, a new redemption or exchange request must be submitted. Please refer to the prospectus of the Money Market Fund to review the investment strategies, fees and expenses, and |
risks, including the risk of liquidity fees and redemption gates, of the Money Market Fund before investing in or exchanging into shares of the Money Market Fund. | |
• | Exchanges are subject to the minimum purchase and redemption amounts set forth in the applicable fund’s prospectus unless otherwise noted on the application. |
• | Shareholders may exchange Money Market Fund shares to purchase shares of the Fund but not for shares of Wasatch Funds that are closed to new investors and existing shareholders. |
• | Exchange requests will be effective the day the transfer agent receives them in good order by 4:00 p.m. Eastern Time, or market close on days the Fund’s shares are priced, unless it is the business day prior to a bank holiday or the Money Market Fund has temporarily suspended its redemptions as noted below. Requests made on the business day prior to a bank holiday will be processed the following business day. This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice. In addition, requests to exchange from the Money Market Fund into a Wasatch Fund made during any period that the Money Market Fund has temporarily suspended redemptions will not be accepted. Shareholders wishing to exchange shares of the Money Market Fund for shares of a Wasatch Fund once the redemption gate is lifted will need to submit a new request. |
• | You will begin accruing income from the Money Market Fund on the first business day following the exchange provided it is not a bank holiday. |
• | Dividends earned in the Money Market Fund are payable at the time of full liquidation or at the end of the month if a balance remains in the account. |
• | Shareholders should read the prospectus for the Money Market Fund prior to exchanging into it. |
• | You may buy or sell shares of the Fund through banks or investment professionals, including brokers, and they may charge you a transaction fee for this service. |
• | Certain features offered by Wasatch Funds, such as Premier Services, minimum initial investment or subsequent investment amounts, may be modified or may not be available through other institutions. |
• | Once you have established an account through an institution or investment professional, any subsequent transactions for, or questions about, that account must be made through them. |
• | Wasatch Funds and/or the Advisor may enter into agreements with various intermediaries pursuant to which such firms may accept orders on behalf of the Fund and provide administrative services with respect to customers who are beneficial owners of Institutional Class shares of the Fund. |
• | The Advisor may compensate certain financial intermediaries (which may include broker-dealers, banks, third-party recordkeepers, and other industry professionals) to provide certain recordkeeping services to the Fund and the Fund’s shareholders in lieu of the Fund’s transfer agent (including account maintenance and shareholder servicing; “Sub-TA services”), and for the sale and/or distribution of the Fund’s shares. Depending on the share class, the Fund may reimburse the Advisor for the amounts paid for Sub-TA services. To the extent the Advisor pays for sales or distribution of Fund shares, it does so out of its profits derived from the Advisor’s management fee. The Advisor’s compensation out of its profits is referred to as “revenue sharing.” Examples of revenue sharing payments include, but are not limited to, payment to financial intermediaries for “shelf space” or access to a third party platform or fund offering list or other marketing programs, including but not limited to, inclusion of the Fund on preferred or recommended sales lists, mutual fund “supermarket” platforms and other formal sales programs; granting the Advisor access to the financial intermediary’s sales force; granting the Advisor access to the financial intermediary’s conferences and meetings; and obtaining other forms of marketing support. The level of revenue sharing payments made to financial intermediaries may be a fixed fee or based on one or more of the following factors: gross sales, current assets and/or number of accounts of the Fund attributable to the financial intermediary, or other factors as agreed to by the Advisor and the financial intermediary or any combination thereof. The amount of these revenue sharing payments is determined at the discretion of the Advisor, by agreement with the financial intermediary, from time to time. The revenue sharing payments may be substantial, and may differ among financial intermediaries. Such payments may provide an incentive for the financial intermediary to make shares of the Fund available to its customers and may allow the Fund greater |
access to the financial intermediary’s customers. The SAI contains additional information about these payments, including the names of firms to which payments are made. | |
• | If one mutual fund sponsor provides greater financial assistance than another, your financial advisor may have an incentive to recommend one mutual fund complex over another. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by Wasatch Funds and/or the Advisor and by sponsors of other mutual funds he or she may recommend to you. You should also review disclosures made by your financial advisor at the time of purchase. |
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 | Dividends from Net Investment Income | Distributions from Net Realized Gains | Total Distributions | |
Long/Short Fund | ||||||||
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) |
Ratios to Average Net Assets | Supplemental Data | |||||||
Net Asset Value End of Period | Total Return (%)1 | Expenses Net of Waivers and Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |
$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% |
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. |
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 Reimbursements2 | Expenses Before Waivers and Reimbursements2 | ||
Long/Short Fund — Institutional Class | |||
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% |
11 | Institutional class inception date was December 13, 2012. |
19 | Includes a non-recurring offer to reimburse prior period custody and fund accounting out-of-pocket expenses. 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 (%) | ||
Long/Short Fund — Institutional Class | 1.52 | 1.57 |
• | We will not disclose your personal information to anyone unless it is necessary to provide you with our services, at your direction, or required by law. |
• | We do not allow individuals or companies that provide services to Wasatch Funds to use your personal information for their own marketing purposes. |
• | We maintain contracts with individuals or companies providing services to Wasatch Funds’ shareholders that require them to protect the confidentiality of your personal information. |
• | We afford the same protection of personal information to prospective and former shareholders that we do to current shareholders. |
• | We consider all the information we have about you to be confidential, including the fact that you are a Wasatch Funds shareholder (unless you tell us otherwise). |
• | We restrict access to your personal information to employees who service your accounts. |
• | We maintain physical, electronic and procedural safeguards that comply with federal standards for maintaining the confidentiality of your information. |
• | Account applications. When you open an account the information we collect may include your name, address, phone number, email address and social security number. |
• | Transactions. To manage your account and provide information to you such as account statements, we maintain current and historical records of each of your transactions and accounts with Wasatch Funds. |
• | Website. We collect some information on our website through the use of “cookies.” For example, we may identify the web pages your browser requests or visits. On the website, we can only identify you if you choose to identify yourself, for example, if you open an account or make transactions online. For more information please read our online privacy policy at www.WasatchFunds.com. |
• | To service your account and process your transactions. For example, the transfer agent collects and stores account and transaction data. |
• | To do as you request. For example, you may direct us to send your statements and confirmations to a third party. |
• | To print and mail materials to you. Companies that provide printing and mailing services are prohibited from using your information in any way other than the purpose for which it was provided. |
• | To comply with laws or regulations. We may disclose or report personal information as required by law, for example, to respond to a subpoena, court order or regulatory demand made by the proper authorities. |
• | To the extent permitted by law. For example, the law permits us to respond to a request for information from a consumer reporting agency. |
P.O. Box 2172
Milwaukee, WI 53201-2172
Table of Contents
2018 Prospectus www.WasatchFunds.com 800.551.1700
You may obtain a free copy of the Funds’ SAI, annual or semi-annual reports, or quarter-end portfolio holdings on the Funds’ website at www.WasatchFunds.com or by contacting Wasatch at the telephone number listed above. You may make inquiries to the Fund via mail at Wasatch Funds, P.O. Box 2172, Milwaukee, WI 53201-2172, via email at shareholderservice@wasatchfunds.com or by calling the telephone number listed above. Shareholder representatives are available Monday through Friday 7:00 a.m. to 7:00 p.m. Central Time.
The SAI provides more details about the Funds and their policies. The SAI is incorporated into the prospectus by reference and is, therefore, legally part of this prospectus. Additional information about the Funds’ investments is available in the Funds’ annual and semi-annual reports to shareholders. The reports contain discussions of the market conditions and investment strategies that significantly affected the Funds’ performance for the most recent six- or 12-month period, as applicable. You can go to the EDGAR database on the SEC’s website (http://www.sec.gov) to view these and other documents that Wasatch Funds has filed electronically with the SEC. Copies of this information also may be obtained for the cost of duplicating by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-1520 or by electronic request at the following email address: publicinfo@sec.gov. Information about the Funds can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Call the Commission at 202.551.8090 for information.
Investment Company Act File Number: 811-4920
Table of Contents
2017 Annual Report September 30, 2017 Equity Funds / Wasatch Core 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 International Growth Fund Wasatch International Opportunities Fund Wasatch Large Cap Value 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
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Wasatch Emerging Markets Small Cap Fund® Management Discussion | 10 | |||
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Wasatch Frontier Emerging Small Countries Fund® Management Discussion | 12 | |||
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This material must be accompanied or preceded by a prospectus.
Please read the prospectus carefully before you invest.
Wasatch Funds are distributed by ALPS Distributors, Inc.
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LETTERTO SHAREHOLDERS — THE CALM AMIDSTTHE STORMS | ||
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Samuel S. Stewart, Jr. PhD, CFA President of | DEAR FELLOW SHAREHOLDERS:
Hurricane Harvey came first, pummeling Texas on August 25th. Less than two weeks later, Irma battered the Caribbean and Florida. Jose and Maria soon followed, again striking the Caribbean and disabling much of Puerto Rico’s infrastructure. In less than a month, four storms (two rated Category 4 and two Category 5) left a trail of destruction — estimated in the hundreds of billions of dollars — that will take months, if not years, to repair. Yet the financial markets hardly blinked. Hurricanes weren’t the only storms. There were political storms over health care, the debt ceiling, the National Football League and the Russia investigation. A storm of words raged between North Korea’s supreme leader Kim Jong Un and President Donald Trump. The belated announcement of a data breach at Equifax, potentially affecting nearly one of every two Americans, unleashed a storm of concern about cybersecurity. The Trump Twitter storm was unrelenting. And yet the markets hardly blinked. So far at least, regardless of the perils that have dominated the news day after day, the economy and markets have continued to advance. Truly, it’s been the calm amidst the storms. Which, of course, begs the question: Can it last? Or, from an investor’s point of view, might this be the calm before the storm in the |
financial markets?
As you know from my prior letters, I’ve been cautiously optimistic regarding the market. Generally speaking, financial markets take their cues from the economy. While investors have been quick to complain about the economy’s slow growth rate, it’s that very same measured pace that so far has prevented the economy from developing the excesses that typically lead to recessions and market declines.
With the current economic expansion now in its 100th month, the third-longest run since 1854, it’s important to note that recessions don’t occur in response to a timetable. Rather, they result from problems in the economy, of which there appear to be few.
I’m reluctant to go on record with a letter supporting the continuation of a bull market without also making an argument for the onset of a bear market. My bear-market argument depends on an unexpected event/catalyst, possibly geopolitical in nature. I’m not predicting such an event, and I’m surprised that one of the events cited above didn’t lead to a market correction. Even so, I still regard an event as the likely cause of the next bear market.
MARKETS
Many of my recent letters have commented that stocks — particularly in the U.S. — are expensive. However, I must admit that stocks aren’t as expensive if we consider the level of interest rates. After all, the inverse of the price/earnings (P/E) ratio (the price paid for $1 of earnings) is termed the earnings yield or the return in earnings for $1 of investment in a stock. The interest rate on a bond is the return in cash for $1 invested in the bond. While I won’t argue that the earnings yield on a stock and the interest rate on a bond are equivalent, they are related.
Going back 35 years when interest rates were in double-digit territory, P/E ratios for stocks were in single digits, with the result that the earnings yield on stocks was in double digits. In comparison, stocks today look quite expensive, with multiples close to three times what they were back then. However, that comparison overlooks the fact that bond rates are now only about one-fifth of what they were then, making bonds five times more expensive today than they were 35 years ago.
Avoiding much of the detail about what makes our economy today different from that of 35 years ago (and ignoring the risk premium stocks must offer for providing investors with earnings instead of cash), I could argue that stocks today are inexpensive relative to bonds. So if bonds aren’t overly expensive, then neither are stocks.
This might lead one to ask: Are bonds expensive? Relative to recent history, bonds in the U.S. seem expensive. Bond yields have generally fallen from double-digit territory into low single-digit territory. Ten-year U.S. Treasury bonds currently yield about 2.3%. However, German and Japanese government bonds of the same maturity yield less than 0.5%. Moreover, five-year government bonds in Germany and Japan have negative yields. So U.S. government bonds certainly aren’t expensive on a relative basis.
In a sign that interest rates overseas may remain low, some countries have been issuing 100-year bonds. Austria, for example, recently issued bonds that won’t mature until 2117 and that yield just 2.1%. Other recent issuers of 100-year bonds include Argentina, Ireland and Mexico. Purchased mainly by institutional investors to meet long-term pension and insurance obligations, these bonds indicate that slow economic growth around the world may constrain future investment returns. Why else would an institutional investor tie up money for so long? As for interest rates in the U.S., I have to wonder how much they can rise when rates are so low overseas.
Why are interest rates so low? At the heart of this question are cyclical vs. secular forces. If rates are low because the economy is weak, then the cyclical forces of our strengthening economy should drive rates higher. The fact that this has failed to happen suggests secular forces may be at play. For example, changing demographics may be weighing on interest rates. As people get older, they’re less likely to build new homes. Instead, they’re more likely to be downsizing. The primary concern of most older people is having adequate savings to support themselves in retirement. This global flood of savings is likely playing a major role in keeping interest rates low.
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SEPTEMBER 30, 2017 (UNAUDITED) | ||
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If in fact secular forces are keeping interest rates low, these forces may also be keeping stock prices high. So while valuations are stretched relative to earnings, they may not be as stretched relative to interest rates. For this reason and for the reasons discussed above, I remain cautiously optimistic that the economy and markets, both in the U.S. and abroad, will continue to advance at a slow pace overall.
WASATCH
While U.S. equities are generally more expensive, we’re often finding better valuations and/or greater headroom for growth overseas — both in developed markets and in emerging markets. Indeed, Japan is one of our largest investment allocations to an international developed market and India is one of our largest allocations to an emerging market.
We readily acknowledge that for many years — particularly in the 1990s and 2000s — Japan’s economy was mired in deflation, creating a difficult investment environment. For many investors, the perception remains that it’s tough to make money in Japan. Moreover, it’s true that the Japanese population is shrinking, the country’s overall economic growth is slow, and there’s not much inflation on the horizon. Nonetheless, we think that investors who look no further than these issues are missing out on significant opportunities.
Known as Abenomics, the economic policies introduced by Prime Minister Shinzo Abe in 2012 appear to be taking hold. Over the past few years, based on our investment team’s frequent visits to Japan, we’ve seen the positive results of these policies — from improvements in corporate governance to efforts addressing the country’s labor shortage.
Because Japan is a global leader in innovation, it’s no surprise the country has a vibrant market for small-cap stocks. This indicates Japan has created an entrepreneurial environment that favors investment. Unlike in much of the developed world, there are fewer dominant industry players in Japan. That’s beginning to change, however, and we’re investing in companies that we believe can consolidate their industries and gain market share from competitors.
After investing in the country for over a decade, the members of our investment team are more excited than ever about the investment opportunities they’re finding in India. With its democratic government and strong institutions, India has avoided much of the political turmoil, massive borrowing, debt defaults and runaway inflation that have plagued other emerging-market countries over the past 30 years. India’s population of greater than 1.3 billion is among the youngest in the world. In addition, the country’s growing middle class, increasing urbanization and rapid household formation are driving domestic consumer demand. Moreover, reforms introduced by Prime Minister Narendra Modi are designed to further the country’s growth and development.
With sincere thanks for your continued investment and for your trust,
Sam Stewart
Information in this document regarding market or economic trends, or the factors influencing historical or future performance, reflects the opinions of management as of the date of this document. 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.
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 or Wasatch Funds.
Abenomics refers to the economic policies advocated by Japanese Prime Minister Shinzo Abe after his December 2012 re-election to the post he last held in 2007. His aim was to revive the sluggish economy with “three arrows” — a massive fiscal stimulus, more aggressive monetary easing from the Bank of Japan, and structural reforms to boost Japan’s competitiveness.
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.
A bear market is generally defined as a drop of 20% or more in stock prices over at least a two-month period. Bears are investors who are pessimistic with regard to the stock market’s prospects.
The price/earnings (P/E) ratio, also known as the P/E multiple, is the price of a stock divided by its earnings per share.
Valuation is the process of determining the current worth of an asset or company.
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WASATCH CORE GROWTH FUND (WGROX / WIGRX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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
The Wasatch Core Growth Fund — Investor Class gained 18.69% for the 12 months ended September 30, 2017, lagging the 20.74% return of its benchmark, the Russell 2000 Index, and the 20.98% return of the Russell 2000 Growth Index.
The industrials and consumer-discretionary sectors were two of the strongest contributors to the Fund’s return during the 12-month period, outperforming the benchmark driven by stock selection. In addition, the Fund’s investments in the financials sector contributed significantly to results for the period.
The Fund’s strong showing in the industrials sector, particularly for the three months ended September 30, 2017, was also aided by an overweight position relative to the benchmark. Unlike the post-election “reflation trade” (or “Trump trade”) of the kind we avoided late last year, we recognize that the slow-growth economy is chugging along well enough now to favor a positive turn for the sector, which we believe bodes well for our industrial holdings.
DETAILSOFTHE YEAR
ICON plc, a global contract research organization providing drug development and other services to the pharmaceutical, biotechnology and medical-device industries, was a top contributor to the Fund’s performance for the 12-month period. ICON’s most-recent quarterly financial results were reported in July and showed an increase in net income of 10.7% and a rise in earnings per share of 14.9% compared to the same quarter a year ago. Given the company’s strong backlog of business, we believe ICON can continue to do well.
Another top contributor was online retailer Wayfair, Inc. Wayfair’s stock leapt higher as the company reported strong growth throughout the year. Wayfair’s growth stands in contrast to many traditional retailers that are experiencing a slowdown in business to the point of having to close stores. In fact, more retail store closings have been announced so far in the 2017 calendar year than in all of the previous year. We continue to like Wayfair’s ongoing growth prospects —
namely its focus on expanding share in the online marketplace for home furnishings.
Cornerstone OnDemand, Inc. was the leading detractor from the Fund’s performance for the fiscal year. Despite showing signs of strength midway through the period, management eventually reported numbers that didn’t wow investors, missing expectations on earnings even while reporting stronger sales. In addition, we viewed the company’s mix of new contracts as far from ideal. We see little room for error on management’s part at this point and so we sold our position.
Another leading detractor was MEDNAX, Inc., which struggled over the past several months. MEDNAX operates neonatal intensive care units (NICUs) in partnership with health-care organizations. The company’s net revenue for its most-recently reported quarter increased 9.2% driven largely by contributions from acquisitions completed since April 2016. While management said that operating results for the company’s second quarter were mostly in line with their expectations, trends remained challenging. Overall same-unit revenue fell 0.9% year-over-year due primarily to a decline in the number of days infants spent in NICUs and an increase in services reimbursed through government programs. We have chosen to monitor the challenges MEDNAX faces from the sidelines and have sold our position.
OUTLOOK
The economic scenario of the past year appears to be continuing in the U.S. with regard to sustained moderate growth, low inflation and rising asset prices. Looking forward, we don’t expect valuation tailwinds to continue. Company fundamentals will have to matter more to investors at some point, which we believe would bode well for the Fund. We believe we have a great team that learns from mistakes and the best culture for applying a disciplined investment approach. As valuations right-size to growth rates, we think our discipline will shine.
Fundamentals are certainly of more central importance to investors now than in the period after the presidential election, but there are distractions such as the extraordinary monetary accommodation by the Federal Reserve (Fed). Recently, the Fed announced its intention to start reducing bond holdings acquired during its quantitative-easing program. While it’s not exactly clear how quickly that will unfold, the announcement itself represents a step toward normalcy.
In the Fund, we’re especially focused at present on companies that seem poised to deliver long-term growth by benefiting from world-wide economic strength, industrial-production trends and increased capital expenditure by businesses. Our disciplined approach continues to turn up attractive prospects, such as in the industrials sector mentioned above. Elsewhere, too, we’re finding what we consider to be high-quality companies with outstanding long-term growth prospects. There’s no shortage of opportunities for the Fund’s investment style, although we always have to remain vigilant regarding valuations.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH CORE GROWTH FUND (WGROX / WIGRX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Core Growth (WGROX) — Investor | 18.69% | 13.77% | 8.61% | ||||||||||||
Core Growth (WIGRX) — Institutional | 18.87% | 13.88% | 8.67% | ||||||||||||
Russell 2000® Index | 20.74% | 13.79% | 7.85% | ||||||||||||
Russell 2000® Growth Index | 20.98% | 14.28% | 8.47% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Core Growth Fund are Investor Class: 1.21% / Institutional Class — Gross: 1.09%, 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
ICON plc (Ireland) | 3.2% | |||
Copart, Inc. | 3.1% | |||
Old Dominion Freight Line, Inc. | 2.6% | |||
Trex Co., Inc. | 2.6% | |||
Eagle Bancorp, Inc. | 2.5% |
Company | % of Net Assets | |||
Cimpress N.V. | 2.4% | |||
Tyler Technologies, Inc. | 2.4% | |||
Balchem Corp. | 2.4% | |||
Texas Capital Bancshares, Inc. | 2.4% | |||
Euronet Worldwide, Inc. | 2.3% |
* | As of September 30, 2017, there were 60 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.
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WASATCH EMERGING INDIA FUND (WAINX / WIINX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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 Wasatch Emerging India Fund — Investor Class returned 21.65% during what was an eventful 12 months ended September 30, 2017. The Fund outpaced its benchmark, the |
MSCI India Investable Market Index (IMI), which rose 16.58%.
Soon after the fiscal year’s outset, Prime Minister Narendra Modi rattled investors by banning large-denomination banknotes from circulation in a surprise move designed to root out unaccounted wealth. Though the demonetization initiative fell short of its stated goals, it came to be viewed by many Indians as a victory for the common citizen over corrupt interests. Mr. Modi’s Bharatiya Janata Party (BJP) reaped the benefits in March when it scored landslide gains in elections to the state assembly of Uttar Pradesh, India’s most-populous province. The decisive win left Mr. Modi unchallenged as a national leader and raised optimism for additional reforms aimed at furthering India’s growth and development.
Those hopes were realized in July with the long-awaited replacement of India’s complex jumble of federal, state and interstate taxes. The newly implemented goods-and-services tax (GST) soon began speeding up the flow of goods throughout India by eliminating time-consuming stops at various checkpoints. By easing the burden of double taxation, streamlining compliance and eliminating other inefficiencies, GST is expected to lower the cost of doing business in India.
Fueled in part by an influx of banned currency into the country’s financial system, Indian stock prices rose for most of the past 12 months. The Modi government’s success at advancing its legislative agenda, meanwhile, attracted significant purchases from overseas investors. Trading was choppy during the final two months of the period, as heavy flooding and disruptions related to demonetization and GST appeared to weigh on India’s economy. According to an official report released in late August, India’s year-over-year gross-domestic-product (GDP) growth slowed to 5.7% during the April-to-June quarter from 6.1% growth during the previous quarter.
DETAILSOFTHE YEAR
Performance in the Fund was driven mainly by outsized gains in its consumer and financial stocks. Very low exposure to the poor-performing information-technology sector was another reason the Fund surpassed its benchmark by as much as it did. Underperformance in the materials sector
and lack of exposure to the strong energy sector were the Fund’s primary sources of weakness against the benchmark.
The strongest contributor to Fund performance for the year was Avenue Supermarts Ltd., which benefited from rising profits. The company operates a chain of supermarkets that offer items ranging from food to apparel and general merchandise. With retail distribution in India still largely dominated by small neighborhood stores called kiranas, we think opportunities abound for well-managed operators such as Avenue to formalize their industries and reap significant economies of scale.
Bajaj Finance Ltd. was the second-best contributor. A non-bank financial company, Bajaj offers a broad spectrum of lending services. The company’s stock price reached a 52-week high in September after its qualified institutional placement of equity shares was well-received by investors. Bajaj Finance has also profited from robust demand for credit.
The greatest detractor from Fund performance for the year was Divi’s Laboratories Ltd., a manufacturer of active pharmaceutical ingredients and intermediates. Shares of Divi’s tumbled after management announced that the U.S. Food and Drug Administration had issued an import alert for products manufactured at its Unit II facility in Visakhapatnam, Andhra Pradesh. Paring earlier losses, however, the stock rose sharply when the plant was reinspected in September. We increased the Fund’s position in Divi’s based on our positive assessment of its long-term prospects.
Second-largest detractor Amara Raja Batteries Ltd. makes lead-acid storage batteries for industrial and automotive applications. The company’s shares languished for most of the year as higher prices for lead impacted earnings. Looking forward, we think Amara Raja’s price increases will improve profit margins across its various business segments.
OUTLOOK
We don’t believe the disappointing GDP growth reported near the end of the period is anything to be overly concerned about and certainly don’t believe it signals a prolonged deceleration of India’s economy. We had been expecting India’s economic growth to slow for a few quarters as companies reduced inventories ahead of the July 1st rollout of GST. So, it’s not surprising to see a moderate downtick in growth during the quarter leading up to the GST launch date.
Much has been written about the likely impact on India and other emerging markets as central banks in developed countries prepare to unwind their quantitative-easing programs. Here again, we expect the effects to be limited and short-lived. Current circumstances are very different from 2013, when the prospect of U.S. monetary tightening chased investors out of higher-yielding emerging-market currencies. Recently, in fact, India’s central bank has struggled at times to prevent vast inflows of foreign capital from causing the rupee to appreciate too rapidly.
Longer term, we believe India’s improved political climate will underpin investor confidence as recent reforms work their way through the economy.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH EMERGING INDIA FUND (WAINX / WIINX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | SINCE INCEPTION 4/26/11 | |||||||||||||
Emerging India (WAINX) — Investor | 21.65% | 15.68% | 12.32% | ||||||||||||
Emerging India (WIINX) — Institutional | 21.89% | 15.79% | 12.41% | ||||||||||||
MSCI India IMI | 16.58% | 7.81% | 2.65% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging India Fund are Investor Class — Gross: 1.87%, Net: 1.75% / Institutional Class — Gross: 2.00%, 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Bajaj Finance Ltd. (India) | 5.7% | |||
HDFC Bank Ltd. ADR (India) | 5.0% | |||
Housing Development Finance Corp. Ltd. (India) | 4.8% | |||
Avenue Supermarts Ltd. (India) | 4.7% | |||
MakeMyTrip Ltd. (India) | 3.7% |
Company | % of Net Assets | |||
AU Small Finance Bank Ltd. (India) | 3.6% | |||
Divi’s Laboratories Ltd. (India) | 3.4% | |||
Endurance Technologies Ltd. (India) | 3.0% | |||
Quess Corp. Ltd. (India) | 3.0% | |||
V-Mart Retail Ltd. (India) | 2.9% |
* | As of September 30, 2017, there were 53 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: 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.
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WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
The Wasatch Emerging Markets Select Fund is managed by a team of Wasatch portfolio managers led by Ajay Krishnan, Roger Edgley and Scott Thomas.
Ajay Krishnan, CFA Lead Portfolio Manager |
Roger Edgley, CFA Portfolio Manager |
Scott Thomas, CFA Associate Portfolio |
OVERVIEW
Rich valuations in developed countries and improving fundamentals across a number of emerging economies helped push emerging-market equities higher during the 12 months ended September 30, 2017. The Wasatch Emerging Markets Select Fund — Investor Class returned 13.33% during the period. Outpacing the Fund, the benchmark MSCI Emerging Markets Index rose 22.46%.
Initial strength in the U.S. dollar gave way to a sustained slide that underpinned support for emerging markets for most of the fiscal year. Against a basket of major rivals, the greenback slipped -2.5% during the period. By making assets in other currencies more appealing to international investors, a weaker dollar encourages financial flows into developing nations. In so doing, the weak dollar has loosened global financial conditions by making it easier for governments and companies outside the U.S. to issue securities.
Korea was the largest among several sources of Fund underperformance. Markets reacted negatively when China clamped down on tourism to Korea in retaliation for its deployment of the United States’ Terminal High Altitude Area Defense (THAAD) anti-missile defense system. As investors sought the perceived safety of larger Korean companies, small and mid-cap stocks — such as those held in the Fund — were hurt the most.
The Fund’s substantial weighting in Mexican stocks also impacted performance as equity returns in Mexico lagged stronger gains in other countries. Although the Fund’s Mexican holdings posted a healthy double-digit return, they underperformed the benchmark’s Mexican component.
Bright spots for the Fund included South Africa and the United Arab Emirates, two countries in which the Fund handily outgained its benchmark. Though our underweight exposure to China was a headwind to Fund performance, we significantly increased the Fund’s investments in China as the year progressed.
DETAILSOFTHE YEAR
The strongest contributor to Fund performance for the year was Bajaj Finance Ltd. An Indian non-bank financial company, Bajaj offers a broad spectrum of lending services.
The company’s stock price reached a 52-week high in September after its qualified institutional placement of equity shares was well-received by investors.
The Fund’s second-largest contributor was MercadoLibre, Inc., a Latin American e-commerce company that generates approximately half its sales in Brazil. Originally a provider of auction-type platforms that connect buyers with sellers, MercadoLibre has been increasing its fulfillment capabilities.
Key additions to the Fund included Alibaba Group Holding Ltd. and Tencent Holdings Ltd., two Chinese companies increasingly viewed by international investors as proxies for China’s growing middle class.
The greatest detractor from Fund performance for the year was Divi’s Laboratories Ltd., an Indian manufacturer of active pharmaceutical ingredients and intermediates. Shares of Divi’s tumbled after it announced that the U.S. Food and Drug Administration had issued an import alert for products manufactured at its Unit II facility in Visakhapatnam, Andhra Pradesh. We sold the stock to seek better opportunities elsewhere.
Second-largest detractor GT Capital Holdings, Inc. is based in the Philippines. GT Capital’s interests include lending, car distribution and insurance. The company’s stock came under pressure amid mounting fears that the Duterte government’s overhaul of the country’s vehicle excise tax would depress sales of automobiles. With the stock languishing and sentiment continuing to deteriorate, we moved on.
OUTLOOK
Much has been written about the likely implications for emerging markets as central banks in developed countries prepare to unwind their quantitative-easing programs. For our part, we expect any negative effects to be limited and short-lived. Current circumstances are very different from 2013, when the prospect of U.S. monetary tightening chased investors out of higher-yielding emerging-market currencies. Today, fiscal and current-account balances in most countries are stronger, foreign-exchange reserves are generally higher, and investor sentiment is better.
During the period from December 31, 2015 through September 30, 2017 the Fund returned approximately 24%, while the MSCI Emerging Markets Index climbed about 43% on a total-return basis. Despite its recent strong run, the Index has been essentially flat since its peak in the fall of 2007, and price-to-book ratios in most emerging markets remain below their long-term averages.
Moreover, greater than one-fourth of the 43% move in the Index over the past seven quarters was delivered by just four mega-cap information-technology stocks. We believe large-cap outperformance on that scale is unsustainable, and future gains are likely to be more broadly based. With economic fundamentals in countries such as Mexico, India, Brazil and Russia stabilizing or improving, we think stocks of well-situated small and mid-size companies in emerging markets may begin to close the gap in recent performance compared to larger peers.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | SINCE INCEPTION 12/13/12 | |||||||||||||
Emerging Markets Select (WAESX) — Investor | 13.33% | N/A | 1.03% | ||||||||||||
Emerging Markets Select (WIESX) — Institutional | 13.73% | N/A | 1.37% | ||||||||||||
MSCI Emerging Markets Index | 22.46% | N/A | 3.29% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Select Fund are Investor Class — Gross: 1.88%, 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Bajaj Finance Ltd. (India) | 5.9% | |||
Alibaba Group Holding Ltd. ADR (China) | 5.9% | |||
MercadoLibre, Inc. (Brazil) | 5.8% | |||
Tencent Holdings Ltd. (China) | 5.1% | |||
Ctrip.com International Ltd. ADR (China) | 4.6% |
Company | % of Net Assets | |||
NMC Health plc (United Arab Emirates) | 4.5% | |||
Medytox, Inc. (Korea) | 4.4% | |||
Raia Drogasil S.A. (Brazil) | 4.4% | |||
Naspers Ltd., Class N (South Africa) | 3.8% | |||
BGF Retail Co. Ltd. (Korea) | 3.5% |
* | As of September 30, 2017, there were 37 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.
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WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
The Wasatch Emerging Markets Small Cap Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley, Andrey Kutuzov and Scott Thomas.
Roger Edgley, CFA Lead Portfolio Manager |
Andrey Kutuzov, CFA Associate Portfolio Manager |
Scott Thomas, CFA Associate Portfolio Manager |
OVERVIEW
The Wasatch Emerging Markets Small Cap Fund — Investor Class gained 11.99% for the 12 months ended September 30, 2017 and underperformed the benchmark MSCI Emerging Markets Small Cap Index, which returned 14.89%.
Strong country fundamentals, firming commodity prices and a sagging U.S. dollar underpinned stock markets in developing nations for most of the 12-month period. Emerging markets continued to perform well based on optimism over economic growth and returning investment. Emerging-market currencies appear to have stabilized and are more competitive, current-account balances have improved for the majority of emerging markets and company valuations are still below their long-term averages.
Over the course of the period, we became more constructive on China and increased the Fund’s weight. China was the Fund’s top-contributing country for the 12 months. However, we recognize that challenges unique to the Chinese market remain. As a result, the Fund’s is underweight versus the benchmark in China. One holding in the United Arab Emirates (UAE) drove that country’s outperformance of its benchmark peer. Brazil was also a top-contributing country driven by one of our newer holdings.
The Fund’s substantial exposure to India hurt performance during the period. Indian stocks lost ground after soft economic data appeared to spook international investors. Largely the side effect of recent reforms, the slowdown in our view is short-term in nature. One of these reforms was the long-awaited replacement of India’s previous complex array of federal, state and interstate taxes with a nationwide goods-and-services tax (GST). Initial confusion over certain compliance issues has offset some of GST’s benefits in the short term, especially for small businesses. We think growth in India will pick up again once the reforms have worked their way through the country’s economy. Taiwan was also a significant detractor due primarily to company-specific factors. In Mexico, a significant overweight relative to the benchmark hindered the Fund’s results.
DETAILSOFTHE YEAR
The Fund’s top contributor for the period came from China. Sunny Optical Technology Group Co. Ltd., whose stock is listed in Hong Kong, designs and manufactures optical-related products. Sunny Optical continues to gain business in high-end product lines like multi-cameras in smartphones and cars.
The Fund’s second-best contributor was Magazine Luiza S.A., which operates consumer-electronics stores in Brazil. The company has put in place strong information-technology infrastructure to make the business an e-commerce player using its stores as showrooms and mini distribution centers. In Brazil, we believe the fundamentals of the country are improving as interest rates are coming down, inflation is decreasing, and the current-account situation has improved. Further, company earnings are improving after two years of decline. We are confident in the Fund’s positioning in Brazil.
The third-best contributor was NMC Health plc, the largest private health-care provider in the UAE. Health care has been an investment theme in the Fund, as emerging markets seek to build out their health-care infrastructure. NMC has been benefiting from new insurance rules that remove or reduce certain copayments and restrictions for holders of the UAE’s Thiqa medical-insurance card.
Several holdings in Taiwan were among the Fund’s largest detractors for the year. We sold our positions in PChome Online, Inc., a Chinese language internet company that offers e-commerce, advertising and portal services along with digital content, and Tung Thih Electronic Co. Ltd., which sells sensors to auto manufacturers. PChome was sold due to earnings weakness as we saw better opportunities elsewhere. We sold our shares of Tung Thih as the company’s core products faced increased competition and it was becoming less clear how Tung Thih’s new products would offset the slowing growth of core products. Poya International Co. Ltd. operates retail stores selling cosmetics, fashion accessories and groceries. Poya’s stock was down due to negative same-store-sales growth numbers. In our estimation, Poya is a high-quality business, as demonstrated by stable growth, cash generation and margin expansion.
OUTLOOK
We remain positive on the investment outlook for a majority of the emerging markets in our universe, and we are confident in the Fund’s positioning. In fact, we have been struggling to make space for the attractive new investments we have been finding. Emerging-market macro environments continue to improve, and we are finding numerous growth companies that we consider high quality with outstanding investment potential.
Wasatch is confident on the outlook for emerging markets. We see increasing innovation and significant improvement in the earnings of our portfolio companies and ongoing and sustainable economic development of emerging economies. We think these factors are likely to provide tailwinds for equities of well-positioned, high-quality businesses.
We thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Emerging Markets Small Cap (WAEMX) — Investor | 11.99% | 2.95% | 4.49% | ||||||||||||
Emerging Markets Small Cap (WIEMX) — Institutional | 12.36% | 3.01% | 4.52% | ||||||||||||
MSCI Emerging Markets Small Cap Index | 14.89% | 4.60% | 1.74% | ||||||||||||
MSCI Emerging Markets Index | 22.46% | 3.99% | 1.32% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Small Cap Fund are Investor Class: 1.96% / Institutional Class: 1.81%. 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.
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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Magazine Luiza S.A. (Brazil) | 3.1% | |||
Sunny Optical Technology Group Co. Ltd. (China) | 2.7% | |||
51job, Inc. ADR (China) | 2.6% | |||
China Yongda Automobiles Services Holdings Ltd. (China) | 2.4% | |||
Clicks Group Ltd. (South Africa) | 2.4% |
Company | % of Net Assets | |||
Medytox, Inc. (Korea) | 2.2% | |||
ASPEED Technology, Inc. (Taiwan) | 2.1% | |||
Raia Drogasil S.A. (Brazil) | 2.0% | |||
Silergy Corp. (Taiwan) | 1.9% | |||
NMC Health plc (United Arab Emirates) | 1.8% |
* | As of September 30, 2017, there were 95 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.
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WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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 gained 4.56% for the 12 months ended September 30, 2017 and underperformed its benchmark, the MSCI Frontier Emerging Markets Index, which was up 15.53%.
Performance in frontier markets has been strong, and Wasatch is increasingly optimistic for many frontier and emerging small countries where we see improving macro conditions after a multi-year period of difficult adjustments. Frontier economies have now fiscally adjusted to weaker commodity prices, and depreciating currencies relative to a strong U.S. dollar. What’s more, domestic demand appears to have troughed and many economies appear poised for a continued cyclical recovery.
In the first six months of the period, due to lower oil prices, Nigerian stocks were pressured by economic and currency issues and we opted to sell our holdings and monitor conditions from the sidelines. As a result, the Fund did not participate when the Nigerian equity market subsequently rebounded. Nigeria ended the 12-month period as one of the best-performing markets in the benchmark and as the Fund’s largest detractor on a country basis. During the year, Pakistan faced some significant challenges — which, while not likely to be repeated, resulted in Pakistan being one of the benchmark’s weakest-performing markets. Although the Fund’s overweight position in Pakistan detracted from performance relative to the benchmark, we remain confident in the growth prospects of our holdings. Conversely, Kuwait was one of the benchmark’s best-performing markets; therefore, the Fund’s underweight position was detrimental.
On the positive side, we were well-positioned in Argentina as our stocks outperformed their benchmark counterparts. The Fund also benefited from investments in the United Arab Emirates (UAE), which is not in the benchmark.
DETAILSOFTHE YEAR
The top contributor to the Fund’s performance for the year was NMC Health plc, a hospital operator in the UAE, whose stock is listed on the London Stock Exchange. Since NMC Health’s initial public offering in 2012, the company
has rapidly grown its hospital network and now has nearly 1,600 beds. Further, as the Emirate of Dubai fully rolls out mandatory health insurance, we estimate that the value of the health-care market in Dubai could double.
Transportadora de Gas del Sur S.A., the exclusive pipeline company for the Southern Argentina region, and the largest in Argentina today, was the Fund’s second-best contributor. The company currently transports approximately two-thirds of the country’s natural gas and operates over half the installed natural gas liquids production capacity. We continue to believe tariff reforms will provide a boost to the company’s revenues and profits and put in place the right incentives to spur increased production.
The third-best contributor was MercadoLibre, an online e-commerce company focused on Latin America. Originally a provider of auction-type platforms that connect buyers with sellers, MercadoLibre has been increasing its fulfillment capabilities and recently introduced free shipping to customers in Brazil, Colombia and Chile. While this strategy pressures margins in the short-term, we believe it increases user satisfaction, business scale and further strengthens barriers to entry against would-be competitors.
In addition to the Fund’s Nigerian holdings, which were plagued by currency pressure and sold earlier in the year, our Egyptian holdings were also affected by currency adjustments. Egypt moved to a fully floating foreign exchange policy and the currency depreciated 50% in November 2016. The currency depreciation caused two of our names — Commercial International Bank S.A.E. and Global Telecom Holding S.A.E. — to be significant detractors in U.S. dollar terms for the 12-month period.
Olympic Industries Ltd., Bangladesh’s largest biscuit and confectionery manufacturer, was also a significant detractor. Growth of the company’s main biscuits segment slowed and other new products have yet to make up the difference. In addition, the stock fell from peak levels, reflecting softening of customers’ purchasing power. We expect these conditions to be temporary, and remain confident in Olympic Industries’ management and future business opportunities.
OUTLOOK
We have seen significant improvement in the outlook for our portfolio companies, and we are starting to see a rebound in earnings growth. This accelerating growth combined with reasonable valuations, and low correlations relative to developed and larger emerging markets continue to give us confidence in the Fund’s holdings in frontier and emerging small countries.
We believe that bottom-up analysis and travel to the regions in which we invest is critical, as economic growth, political structures and willingness to reform vary widely in developing markets. We continue to travel extensively and are excited about the future of frontier and emerging small countries and their expanding role in the global economy.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | SINCE INCEPTION 1/31/12 | |||||||||||||
Frontier Emerging Small Countries (WAFMX) — Investor | 4.56% | 3.10% | 6.24% | ||||||||||||
Frontier Emerging Small Countries (WIFMX) — Institutional | 4.55% | 3.17% | 6.31% | ||||||||||||
MSCI Frontier Emerging Markets Index | 15.53% | 4.13% | 5.24% | ||||||||||||
MSCI Frontier Markets Index | 25.47% | 8.73% | 8.68% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Frontier Emerging Small Countries Fund are Investor Class — Gross: 2.39%, Net: 2.25% / Institutional Class: 2.06%. 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
NMC Health plc (United Arab Emirates) | 5.2% | |||
Transportadora de Gas del Sur S.A. ADR (Argentina) | 4.6% | |||
Philippine Seven Corp. (Philippines) | 4.3% | |||
Aramex PJSC (United Arab Emirates) | 4.2% | |||
Vietnam Dairy Products JSC (Vietnam) | 4.1% |
Company | % of Net Assets | |||
MercadoLibre, Inc. (Brazil) | 4.1% | |||
Ayala Land, Inc. (Philippines) | 4.0% | |||
Banco Davivienda S.A. (Colombia) | 3.6% | |||
Credicorp Ltd. (Peru) | 3.4% | |||
Naspers Ltd., Class N (South Africa) | 3.2% |
* | As of September 30, 2017, 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.
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WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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
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Ajay Krishnan, CFA Lead Portfolio Manager
| OVERVIEW
On the strength of stock selection, the health-care, financials and consumer-discretionary sectors made strong contributions as the Wasatch Global Opportunities Fund — Investor Class | ||
gained 16.61% for the 12 months ended September 30, 2017. The Fund also benefited from a significant underweighting versus the benchmark in the real-estate sector. The Fund lagged its benchmark, the MSCI ACWI Small Cap Index, which rose 19.23%. |
Among all countries, the U.S. was the top contributor to the Fund’s performance for the 12-month period driven by strong stock selection. Overseas, India was the leading contributor to the Fund’s absolute performance on a country basis, despite a pullback in the last three months of the period. India’s new goods-and-services tax (GST), introduced in July, resulted in trade disruptions that adversely affected the country’s equity market. We believe the volatility will be short-lived, and that GST will ultimately prove to be beneficial over time, a pattern similar to that which ensued following last year’s demonetization program. We believe India’s economy will continue to improve under the direction of the Modi government, and we remain positive on the outlook for our Indian holdings.
DETAILSOFTHE YEAR
Exact Sciences Corp. was the top contributor to the Fund’s performance for the 12-month period. The molecular-diagnostics company has 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 cells. Shares of Exact Sciences began climbing in late April after accelerating demand for Cologuard produced better-than-expected revenues and earnings.
MercadoLibre, Inc. was also a top contributor to performance for the period. This $10.4 billion market-cap company is engaged in online e-commerce focused on Latin America. The company has benefited both from strong regional growth and from the continuing migration of retail sales from brick-and-mortar stores to the online environment.
Another leading contributor during the period, Trex Co., Inc. is an industrial company that has been benefiting from growth in the housing market. The company has established leadership in composite decking, railing and other outdoor-living products. The firm’s current management team, we believe, is especially strong and able to take advantage of homeowners’ preference for the durability, maintenance and
environmental benefits that composite products provide over wood-based competitors. With mortgage rates still attractive, we expect the company to maintain its strong growth rate and competitive advantage.
Cornerstone OnDemand, Inc. was the leading detractor from the Fund’s performance for the period. Despite showing signs of strength midway through the period, management eventually reported numbers that didn’t wow investors, missing expectations on earnings even while reporting stronger sales. In addition, we viewed the company’s mix of new contracts as far from ideal. We see little room for error on management’s part at this point and so we sold our position.
Another detractor was Gurunavi, Inc., a Japanese company that operates an internet portal for ordering food from restaurants online. We like the company’s dominant market position and its opportunity to offer more services and products to customers. Gurunavi has been investing heavily to grow its business. As a result, the company’s recent financial results missed analysts’ expectations.
Australia’s Domino’s Pizza Enterprises Ltd. also detracted. Domino’s has seen growth slow in 2017 and also had negative press surrounding how some franchises pay their employees. Our investment team was in Australia during September, and we remain impressed with the quality of Domino’s management and their use of data and information technology to make their business better.
OUTLOOK
As the 12-month period drew to a close, Japanese Prime Minister Shinzo Abe called for a general election to be held on October 22nd. For years, many investors have avoided Japan and thus may have little interest in the outcome. But with our substantial commitment to Japanese equities — the country represents one of our largest non-U.S. allocations — we think the vote, which can be viewed as a referendum on Abenomics, is significant.
Prior to Abe’s reforms, Japan’s economy had been stagnating. Today, there are many indications that the country’s economy is improving. For example, Japan’s gross domestic product (GDP) has now expanded in the last six quarters, the longest sustained period of growth since before the global financial crisis. With unemployment at a multi-decade low of 2.8%, we’re starting to see modest wage inflation in some parts of the economy.
One factor contributing to our positive view is that Japanese companies are underfollowed. Nearly half the listed companies in Japan have just two or fewer analysts researching them. With an investment approach that includes frequent company visits, we think we have an advantage over other investors. Japan’s small-cap market, one of the most vibrant we’ve found anywhere, is another factor contributing to the country’s reputation as a leading global innovator.
Although our research focus isn’t macro-oriented, we’re aware of economic and geopolitical issues. Overall, we’re optimistic regarding investment opportunities available around the globe.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | SINCE INCEPTION 11/17/08 | |||||||||||||
Global Opportunities (WAGOX) — Investor | 16.61% | 10.48% | 17.13% | ||||||||||||
Global Opportunities (WIGOX) — Institutional | 16.92% | 10.54% | 17.16% | ||||||||||||
MSCI ACWI Small Cap Index | 19.23% | 11.94% | 15.66% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Global Opportunities Fund are Investor Class: 1.53% / Institutional Class — Gross: 2.32%, 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 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
MercadoLibre, Inc. (Brazil) | 3.1% | |||
Medytox, Inc. (Korea) | 2.9% | |||
Cavium, Inc. | 2.8% | |||
Trex Co., Inc. | 2.7% | |||
HealthEquity, Inc. | 2.5% |
Company | % of Net Assets | |||
MakeMyTrip Ltd. (India) | 2.3% | |||
Knight-Swift Transportation Holdings, Inc. | 2.2% | |||
Copart, Inc. | 2.0% | |||
Somany Ceramics Ltd. (India) | 2.0% | |||
Ollie’s Bargain Outlet Holdings, Inc. | 2.0% |
* | As of September 30, 2017, there were 81 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: 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.
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WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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 12.04% for the 12 months ended September 30, 2017 and underperformed its benchmark, the MSCI ACWI ex USA Small Cap Index, which gained 19.19%.
Late in 2016, value stocks dramatically outperformed growth stocks. High-quality (based on returns on equity) growth stocks were among the weakest performers. That began to change in 2017. Throughout the first nine months of the year, investors in developed markets became refocused on quality and growth stocks. Although the Fund outperformed its benchmark for the first nine months of calendar year 2017, the underperformance that occurred in the last quarter of 2016 hindered the Fund’s results relative to the Index for the 12-month period.
Among developed international markets, European corporate earnings have been recovering after years of underinvestment and economic indicators have continued to improve. In the United Kingdom (U.K.), Brexit still clouds the future. Most of the Fund’s U.K. investments derive a meaningful portion of their revenue from outside the country, and so have been benefiting from increased global economic activity. We have seen signs that Brexit is weakening Britain’s domestic consumers. Since the referendum in June 2016, we have reduced our exposure to U.K. domestic focused companies.
During the last five years we have identified a number of positive changes in Japan, many of which have been sparked by policies introduced by Prime Minister Shinzo Abe. These changes have opened up more interesting and attractive investment opportunities, and we have been increasing our weighting in Japan.
Emerging markets continued to perform well based on optimism over growth and returning investment. India was a strong-performing market for the 12-month period. However, Indian stocks experienced volatility as the Modi government’s reforms, including last year’s demonetization of large-denomination bank notes and the nationwide goods-and-services tax initiated in June, continue to work their way through the economy. Although the Fund’s Indian holdings trailed those in the Index for the period, we continue to like their growth prospects.
DETAILSOFTHE YEAR
The Fund’s top contributor for the 12-month period was Ipsen S.A., a French pharmaceutical company that has transitioned into a global supplier of oncology products and is leveraging its global sales force to sell an increasing number of products.
Nihon M&A Center, Inc., a Japanese company that connects sellers and buyers of small businesses, was the Fund’s second-best contributor. Nihon M&A has been benefiting from the demographic trends of baby boomers retiring and looking to sell their businesses. Management has 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.
Another Japanese holding, Seria Co. Ltd., was the Fund’s third-best contributor. Seria, which operates a chain of 100-yen stores (essentially dollar stores), continued to generate strong earnings growth.
The greatest detractor from performance for the year was also from Japan. Gurunavi, Inc. operates an internet portal for ordering food from restaurants online. We like the company’s dominant market position and its opportunity to offer more services and products to customers. Gurunavi has been investing heavily to grow its business. As a result, the company’s recent financial results missed analysts’ expectations.
NCC Group plc, which provides security software and consulting services, was the Fund’s second-largest detractor. The U.K.-based company issued a second profit warning early in 2017 and the CEO stepped down. Our conviction regarding the company’s long-term prospects waned, and we sold our shares.
Australia’s Domino’s Pizza Enterprises Ltd. was the third-largest detractor. Domino’s has seen growth slow in 2017 and has had negative press surrounding how some franchises pay their employees. Our investment team was in Australia during September, and we nevertheless remain impressed with the quality of Domino’s management.
OUTLOOK
We continue to be upbeat on the investment outlook for Japanese small caps. We believe Japan is an inefficient market and remains misunderstood — providing opportunities for investors like Wasatch who are willing to do the work. Each time we visit Japan, we return incrementally more positive.
In emerging markets, we also like what we’re seeing. Currencies appear to have stabilized and are more competitive, current-account balances have improved for the majority of emerging markets and stock valuations are still below their long-term averages.
We have had a busy travel schedule over the past year. So we will take some time to consolidate our thoughts, update our models, screen the world for new and exciting investment opportunities, and plan our research efforts for 2018. We already have research trips planned to the U.K., Europe and India. We remain excited about the future of investing internationally.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
International Growth (WAIGX) — Investor | 12.04% | 10.21% | 5.65% | ||||||||||||
International Growth (WIIGX) — Institutional | 12.16% | 10.25% | 5.68% | ||||||||||||
MSCI ACWI ex USA Small Cap Index | 19.19% | 9.68% | 3.58% | ||||||||||||
MSCI World ex USA Small Cap Index | 20.42% | 11.16% | 4.04% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Growth Fund are Investor Class: 1.48% / Institutional Class — Gross: 1.36%, 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Seria Co. Ltd. (Japan) | 2.8% | |||
Abcam plc (United Kingdom) | 2.6% | |||
MISUMI Group, Inc. (Japan) | 2.6% | |||
Vitasoy International Holdings Ltd. (China) | 2.5% | |||
Ipsen S.A. (France) | 2.3% |
Company | % of Net Assets | |||
Nihon M&A Center, Inc. (Japan) | 2.2% | |||
Cochlear Ltd. (Australia) | 2.1% | |||
Cosmos Pharmaceutical Corp. (Japan) | 2.0% | |||
SMS Co. Ltd. (Japan) | 2.0% | |||
Clinigen Healthcare plc (United Kingdom) | 1.8% |
* | As of September 30, 2017, there were 89 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.
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WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
The Wasatch International Opportunities Fund is managed by a team of Wasatch portfolio managers led by Jared Whatcott and Linda Lasater.
Jared Whatcott, CFA Portfolio Manager |
Linda Lasater, CFA Portfolio Manager | OVERVIEW
The Wasatch International Opportunities Fund — Investor Class gained 8.10% for the 12 months ended September 30, 2017 and underperformed its benchmark, the |
MSCI ACWI ex USA Small Cap Index, which gained 19.19%.
The latter part of 2016 following the U.S. presidential election was a tough time for international equity markets and especially for emerging markets. In contrast, the U.S. equity markets and cyclical industries that usually track the strength of an economy rallied. In a low-growth reality, investors seemed to pin their hopes on stronger economic growth. In keeping with this apparent mindset, they favored investments in beaten-down, slower-growing companies in sectors like energy, financials, materials and industrials that usually do well when an economy is strengthening. As a result, high-quality (based on returns on equity) growth stocks that are most often found in sectors like consumer discretionary, consumer staples and information technology underperformed. In the last three months of calendar year 2016, the Fund was down more than its benchmark due to its overweighting of these underperforming sectors. It should be noted that the Fund is overweight in sectors where we typically find companies capable of growing whether an economy is expanding or contracting. For the 12-month period, the Fund’s largest sector overweights were consumer staples, consumer discretionary and information technology. While these sectors contributed to the Fund’s absolute performance, they detracted from results versus the benchmark.
Investors’ “risk-on” mindset that began late in calendar year 2016 has been unwinding more recently with high-quality growth stocks outperforming their value counterparts for the first nine months of calendar year 2017.
In Europe, economic growth exceeded expectations in the first three-quarters of 2017 with continued support from the European Central Bank. After two decades of deflation, Japan also benefited from a stronger economy, but is still below the Bank of Japan’s 2% target inflation rate. More importantly, in Japan we observed continued improvement in corporate fundamentals and governance. Companies’ revenues, profitability and dividends generally have been increasing, and Japanese management teams have been investing in their businesses with an eye to spurring growth.
Emerging markets have also been improving, driven by macroeconomic stability and strength in corporate fundamentals. In addition, stabilizing or rising commodity prices have helped many resource-dependent emerging economies.
Although the Fund is underweight in Japan and the United Kingdom (U.K.), our holdings in these countries outperformed for the 12-month period. India and Malaysia are notable emerging markets where our holdings underperformed their benchmark counterparts.
DETAILSOFTHE YEAR
Four of the Fund’s top 10 contributors for the period were from Japan led by Yume No Machi Souzou Iinkai Co. Ltd. and M&A Capital Partners Co. Ltd. Yume No Machi’s market-leading “Demae-can” portal connects eight million customers (20% to 25% are considered “active”) with 13,000 restaurants and takes 5% of the order fee and monthly charges. M&A Capital is an advisory firm poised to benefit from increasing consolidation of small and medium-size enterprises in Japan.
Also among the top contributors was Germany’s Hypoport AG, which operates the largest electronic marketplace for financial products, particularly mortgages. The company’s core business has been gaining market share and generating strong cash flows, which management has been using to expand into adjacent product categories.
Two of the Fund’s largest detractors were from Japan. Dip Corp. operates online job sites focused on part-time and seasonal workers. Over the past nine months, the stock has been weak as growth is slowing and the part-time and temporary market is reaching a cyclical peak. Dip was gaining market share but at the expense of pricing. The company was also investing outside of its core business. We elected to sell the stock. Gurunavi is an online restaurant guide and search site. The company is poised to benefit as more restaurants spend their marketing dollars to advertise online. Gurunavi missed analysts’ expectations given heavy investments to grow its business.
In Malaysia, 7-Eleven Malaysia Holdings Berhad was a notable detractor, but we believe the long-term fundamentals of the company are still intact. 7-Eleven, the largest convenience-store operator in Malaysia, missed expectations due to operational issues by its third-party logistics provider. Furthermore, industry volumes of high-ticket items such as cigarettes and non-alcoholic beverages were down significantly.
OUTLOOK
Global equity markets — from Europe to China to Japan to South America — have continued to benefit from increasing strength of their underlying economies. Of course, this brings up the possibility of the “risk trade” reversing — whether due to eventual interest-rate hikes in developed countries, an economic slowdown in China, a geopolitical event, or some other development — that could set up global markets for a correction. And while trying to forecast which markets will outperform and which will underperform is not something we do, we are confident that our years of experience and our disciplined investment process will continue to lead us to what we believe are the highest-quality companies wherever they might be in the world.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
International Opportunities (WAIOX) — Investor | 8.10% | 12.21% | 5.66% | ||||||||||||
International Opportunities (WIIOX) — Institutional | 8.36% | 12.40% | 5.75% | ||||||||||||
MSCI ACWI ex USA Small Cap Index | 19.19% | 9.68% | 3.58% | ||||||||||||
MSCI World ex USA Small Cap Index | 20.42% | 11.16% | 4.04% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Opportunities Fund are Investor Class: 2.22% / Institutional Class — Gross: 2.04%, Net: 1.95%. 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 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Philippine Seven Corp. (Philippines) | 2.1% | |||
Open Door, Inc. (Japan) | 1.9% | |||
Infomart Corp. (Japan) | 1.9% | |||
Webjet Ltd. (Australia) | 1.9% | |||
AmRest Holdings SE (Poland) | 1.8% | |||
SMS Co. Ltd. (Japan) | 1.7% |
Company | % of Net Assets | |||
Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 1.7% | |||
7-Eleven Malaysia Holdings Berhad, Class B (Malaysia) | 1.6% | |||
Hypoport AG (Germany) | 1.6% | |||
Can Fin Homes Ltd. (India) | 1.5% |
* | As of September 30, 2017, there were 118 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.
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WASATCH LARGE CAP VALUE FUND (FMIEX / WILCX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
The Wasatch Large Cap Value Fund is managed by a team of Wasatch portfolio managers led by David Powers.
David Powers, CFA Lead Portfolio Manager | OVERVIEW
The Wasatch Large Cap Value Fund — Investor Class gained 16.11% and outperformed its benchmark, the Russell 1000 Value Index, which returned 15.12% for the 12-months ended September 30, 2017. Effective October 31, 2017, the Wasatch Large Cap Value Fund will become the Wasatch Global Value Fund. Global equity markets experienced strong positive returns in the 12-month | |
period. Stocks were supported by signs of continued improvement in the U.S. economy, accelerating growth in Europe and Japan, and stabilization of China’s economy. A rebound in commodity prices further improved risk sentiment among investors. The outcome of the November 2016 U.S. election played a notable role in equity returns for the entire 12-month period, as investors anticipated business-friendly policies would be forthcoming with Republicans holding the White House and both houses of Congress. Investors took additional comfort as the Federal Reserve (Fed) continued to exercise patience in moving toward the removal of monetary accommodation. |
The improvement in global growth was reflected in corporate earnings, which experienced a synchronized, world-wide upturn, helping to underpin somewhat elevated stock-market valuations. Within the value-stock universe, performance was led by cyclical areas of the market, such as financials, industrials and materials. Information-technology stocks also did well.
The Fund’s performance relative to the benchmark was aided by stock selection within the energy and financials sectors, while selection within industrials was the leading detractor.
DETAILSOFTHE YEAR
The five top contributors to the Fund’s performance for the period were financial companies, specifically Citigroup, Inc., JPMorgan Chase & Co., PNC Financial Services Group, Inc., Goldman Sachs Group, Inc. and Wells Fargo & Co. Large bank stocks benefited from the outlook for rising interest rates, as well as positive grades on the Fed’s stress tests, raising the prospect of share repurchases and dividend increases. Outside of financials, the Fund’s top contributor was Apple, Inc. Shares of the consumer-technology giant benefited in the run-up to a refresh of the iPhone. A number of energy stocks also contributed to performance for the 12 months, including Suncor Energy, Inc., Chevron Corp. and Royal Dutch Shell plc. Integrated oil and gas companies rebounded off lows in the period as the price of oil stabilized somewhere around the middle of its range over the last few years.
On the downside, the share price of industrial conglomerate General Electric Co. (GE) declined even as the broader market moved higher. Investors have looked askance at the
company’s cash-flow levels relative to stated income. We view GE’s somewhat lumpy cash-flow results as reasonable given the substantial outlays required and the prolonged payment cycle for many of its industrial products such as power-plant turbines. GE reported slower organic growth and orders in the period, primarily due to the power and oil and gas segments, and management guided earnings and cash flow to the lower end of the range analysts had been expecting. We continue to view GE as an ongoing turnaround story, but opted to trim the position as we monitor the actions of GE’s new CEO as he seeks to manage expectations and works to improve margins and cash flow. Medical-device manufacturer Medtronic plc saw its share price decline, in part due to an industry slowdown as the adoption of higher-deductible insurance plans pushed back medical procedures. More to the point, Medtronic experienced systems issues in the third quarter of 2017 that hindered its ability to process business, and also experienced shortages in a key component of its new diabetes treatment. EPR Properties, a real estate investment trust focused on entertainment-related properties including movie theaters, golf courses, casinos and water parks, was another leading detractor. EPR’s shares suffered as investors reacted unfavorably to the issuance of additional equity and lower reported profits from one of the company’s key tenants. We continue to like EPR’s strong, diversified business profile and high dividend in a low interest-rate environment.
OUTLOOK
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. Our cautious stance is based on the view that at this point in the current prolonged U.S. economic cycle, few stocks are attractively valued by our standards.
We are witnessing synchronized growth across economic regions, led by Europe and Japan, which are in earlier stages of the economic cycle than the U.S. That said, U.S. growth will receive a boost from post-hurricane season rebuilding and replacement purchases. Tax reform is currently at the top of the Trump administration’s agenda, following its failed effort to revamp health care. Reduced corporate tax rates would boost earnings results, especially for smaller, U.S.-oriented companies.
Toward the end of the Fund’s fiscal year, the performance divergence seen in recent quarters between value and growth stocks began to show signs of easing or reversing, as investors rotated toward more value-oriented sectors. In addition, we believe large-cap value stocks are better positioned to weather late-cycle dynamics than their growth and momentum counterparts. In any event, we do not believe it makes sense to add risk at this point and expect to maintain a strong focus on higher-quality, better-valued stocks.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH LARGE CAP VALUE FUND (FMIEX / WILCX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Large Cap Value (FMIEX) — Investor | 16.11% | 10.33% | 5.00% | ||||||||||||
Large Cap Value (WILCX) — Institutional | 16.31% | 10.46% | 5.07% | ||||||||||||
Russell 1000® Value Index | 15.12% | 13.20% | 5.92% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Large Cap Value Fund are Investor Class — Gross: 1.17%, Net: 1.10% / Institutional Class — Gross: 1.72%, 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. Loss of principal is a risk of investing.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Pfizer, Inc. | 4.6% | |||
Exelon Corp. | 4.3% | |||
Chevron Corp. | 4.2% | |||
Johnson & Johnson | 4.1% | |||
Cisco Systems, Inc. | 3.8% |
Company | % of Net Assets | |||
Procter & Gamble Co. (The) | 3.7% | |||
Wal-Mart Stores, Inc. | 3.7% | |||
Duke Energy Corp. | 3.6% | |||
Wells Fargo & Co. | 3.3% | |||
Oracle Corp. | 3.2% |
* | As of September 30, 2017, 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. |
† | 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 1000 Value Index measures the performance of Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in these or any indexes.
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WASATCH LONG/SHORT FUND (FMLSX / WILSX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
The Wasatch Long/Short Fund is managed by a team of Wasatch portfolio managers.
OVERVIEW
Global equity markets experienced strong positive returns in the 12-month period. Stocks were supported by signs of continued improvement in the U.S. economy, accelerating growth in Europe and Japan, and stabilization of China’s economy. A rebound in commodity prices further bolstered investors’ risk sentiment. The improvement in global growth was reflected in corporate earnings, which experienced a synchronized upturn across all economic regions, helping to underpin somewhat elevated stock-market valuations. Stock performance for the 12 months was led by cyclical areas of the market, such as financials, industrials and materials. Information-technology stocks also had strong performance over the period.
For the 12 months ended September 30, 2017, the Wasatch Long/Short Fund — Investor Class declined -0.37%, underperforming the 18.61% return of the S&P 500 Index. The Fund’s average net long position of 46% weighed on performance relative to the Index for the period, as did short exposure to momentum stocks and the continued outperformance of growth versus value stocks.
DETAILSOFTHE YEAR
On the long side of the portfolio, performance was led by consumer-electronics icon Apple, Inc. Apple saw its share price rise in anticipation of a product refresh of the iPhone. Stock analysts believe that Apple customers will willingly spend close to $1,000 for the 10th anniversary edition of the iconic device. A position in Citigroup, Inc. was another notable contributor. Large bank stocks benefited in the period from the outlook for rising interest rates, as well as positive grades on the Fed’s stress tests, raising the prospect of share repurchases and dividend increases.
Southwestern Energy Co. was the leading detractor on the long side. Shares of the natural gas exploration and production company suffered in the wake of lower-than-expected cash flow caused by low natural gas prices in the Northeast. We believe the selloff in the stock was overdone and that it should rebound as new pipeline capacity leads to more-normalized pricing in the Northeast. Shares of retailer Macy’s, Inc. weakened throughout the period, as the company’s results disappointed and sentiment with respect to brick-and-mortar retailers continued to deteriorate. We believe Macy’s current stock price fails to recognize the value of its assets, which include a substantial real-estate portfolio.
Positive contributors among short positions for the period included oil-field services provider Helmerich & Payne, Inc. The company’s share price fell as the outlook for utilization and day rates declined with the price of oil in early 2017. A short in Newell Brands, Inc. also worked well. The highly-levered manufacturer of consumer products, with brands that include Rubbermaid, was negatively affected by higher materials prices in the wake of the historic hurricane season.
Shorts in a pair of specialty health-care companies trading at high multiples of earnings — Zeltiq Aesthetics, Inc., a
marketer and licensor of non-invasive fat-reduction procedures, and Inogen, Inc., a developer of oxygen-therapy devices — were notable detractors. A short position within industrials in Caterpillar, Inc. detracted, as the equipment manufacturer’s share price rose on raised guidance with respect to its cyclical earnings power.
Recently added companies included a long position in Alaska Air Group, Inc. We think that its acquisition of Virgin Airlines was transformational in nature. Alaska Air is now the fifth-largest airline in the nation and, with the acquisition, is able to offer potentially lucrative coast-to- coast routes from its San Francisco hub. Alaska Air also makes almost as much money on its credit-card business, which provides flight-related rewards, as it does from its core business. Growing its credit-card loyalty business was a key synergy lever for the Virgin Airlines acquisition.
We initiated a short position in home-furnishings company RH, better known as Restoration Hardware. We expect the company to have difficulty meeting expectations after beating year-over-year results with the aid of a one-time inventory-clearance sale. In addition, RH has added leverage, thus risking rapid multiple compression should earnings miss expectations in the face of a generally challenging environment for retailers.
OUTLOOK
The Fund’s low net exposure versus its history reflects our view that the market currently contains significant downside risk at this late stage of the cycle. The high expectations embedded in current stock prices raise the question of when multiples will revert to more normal levels.
Free cash flow or the absence thereof remains our top criteria for both longs and shorts. This leads to a long-value and short-growth bias in the Fund. As a result, the sustained period of significant outperformance of growth stocks over value stocks has been a headwind on both the long and short sides of the portfolio. Toward the end of the period, the Fund’s performance began to benefit from a market rotation toward sectors with better value characteristics, such as financials and energy.
Following the failed effort to revamp health care, tax reform is now front and center on the Washington agenda. The high free-cash-flow companies favored by our strategy could be particular beneficiaries of any reduction in corporate tax rates, which would encourage repatriation of cash and enable share repurchases.
At a meeting held in November 2017, the Board of Trustees of Wasatch Funds Trust approved the reorganization of the Wasatch Long/Short Fund with and into the Wasatch Global Value Fund. In order for the reorganization to occur, it must be approved by the shareholders of the Long/Short Fund. If approved, it is anticipated the reorganization will be consummated in April, 2018.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH LONG/SHORT FUND (FMLSX / WILSX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Long/Short (FMLSX) — Investor | -0.37% | 2.17% | 3.03% | ||||||||||||
Long/Short (WILSX) — Institutional | -0.05% | 2.36% | 3.13% | ||||||||||||
S&P 500® Index | 18.61% | 14.22% | 7.44% | ||||||||||||
Citigroup U.S. Domestic 3-Month Treasury Bills Index | 0.64% | 0.19% | 0.42% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Long/Short Fund are — Investor Class: 1.83% / Institutional Class — Gross: 1.57%, 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. 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Amgen, Inc. | 6.2% | |||
Apple, Inc. | 5.0% | |||
QUALCOMM, Inc. | 5.0% | |||
McKesson Corp. | 4.6% | |||
Michael Kors Holdings Ltd. | 4.3% |
Company | % of Net Assets | |||
Medtronic plc | 4.3% | |||
Allergan plc | 3.7% | |||
Citigroup, Inc. | 3.4% | |||
Cisco Systems, Inc. | 3.3% | |||
Bill Barrett Corp. | 3.2% |
* | As of September 30, 2017, there were 36 long and 22 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.
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WASATCH MICRO CAP FUND (WMICX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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
In the 12 months ended September 30, 2017, the Wasatch Micro Cap Fund generated a total return of 25.10%. The Fund outgained its benchmark, the Russell Microcap Index, which rose 22.33%. |
After underperforming our benchmark during the first three months of the fiscal year, we considered adding to some of the areas that had driven the benchmark higher after the November elections. As long-term investors, however, we decided against allowing political factors to significantly influence our investment decisions. Our companies had been growing faster, had less debt and had been using capital more efficiently than the average company in the Index. History told us that these characteristics drive stock prices over the long run.
Our stocks performed well as investors’ post-election optimism gave way to a renewed focus on fundamentals. The cooling of enthusiasm was evident in the slowdown of asset flows into exchange-traded funds (ETFs). Net purchases of ETFs — especially sector ETFs in areas such as financials and materials — had spiked dramatically after the elections. Because we base our investment decisions on the business trends and growth prospects of individual companies, we believe a market driven by company fundamentals plays to Wasatch’s strengths.
Consumer-discretionary and health-care stocks were the Fund’s largest sources of outperformance relative to the benchmark. In the consumer-discretionary sector especially, the Fund’s Indian stocks lifted performance. Our companies in India benefited from the country’s continued economic growth and the ongoing development of its middle class.
DETAILSOFTHE YEAR
The strongest contributor to Fund performance for the year was V-Mart Retail Ltd. The company operates department stores in India. Specializing in apparel, V-Mart also sells a wide range of general merchandise and fast-moving consumer goods. Shares of V-Mart began climbing steadily in late January in response to a sharp upturn in its same-store sales. Management cited rising household incomes and favorable weather during India’s marriage season as factors in an improved retail environment.
Second-best contributor Exact Sciences Corp. is a biotechnology 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. Among the positive developments helping to push the company’s stock price
higher was an announcement from a major health insurer that it planned to cover Cologuard in a move expected to add about 30 million covered lives.
The greatest detractor from Fund performance for the fiscal year was Cempra, Inc. The company develops antibiotics for the treatment of bacterial infectious diseases. Shares of Cempra tumbled after the U.S. Food and Drug Administration released briefing documents highlighting concerns about the safety of the company’s lead pneumonia antibiotic, solithromycin. Rather than wait for the outcome of a larger study, we sold the Fund’s remaining shares.
Tandem Diabetes Care, Inc. was the second-largest detractor. The company offers insulin-delivery systems for people with diabetes. A competitor’s introduction of an insulin pump with continuous glucose monitoring (CGM) weighed on Tandem’s stock price. While we are optimistic about the prospects for Tandem’s own CGM pump, we are limiting this holding to a small weighting in the Fund.
OUTLOOK
Earnings of U.S. companies remained on reasonably firm footing after having surprised to the upside for most of the fiscal year. Aside from ever-present international, political and other risks that are difficult to anticipate and quantify, the most likely threats to continued profit growth include a tightening labor market and falling participation rates as baby boomers exit the workforce in large numbers.
While low unemployment is obviously good for people with jobs and for those seeking work, businesses need qualified workers — both to support future growth and to replace those who leave. Luring away employees from competitors with promises of higher wages and benefits drives up employment costs but does not add any new workers to the workforce. Instead, wage increases driven by a scarcity of labor rather than by gains in productivity typically squeeze profit margins and create inflationary pressures. To the extent those pressures force the Fed to raise interest rates more rapidly than expected, a sustained rise in average hourly earnings might ultimately threaten the positive environment that has underpinned recent equity performance and economic growth.
Fortunately, factors opposing such a scenario are significant. As mergers and acquisitions eliminate duplication in the workforce, laid-off workers can help fill the employment needs of other companies. In addition, low energy and commodity prices are generating deflationary forces that would likely offset potential wage increases at least partially, keeping overall inflation in check.
Against that backdrop, we continue to seek high-quality micro caps with the potential to grow into small and medium-size companies over a reasonable period of time. Examples include companies with unique opportunities to serve new markets, undiscovered growers with favorable business trends, as well as disruptive companies whose technologies make them attractive candidates for acquisition by competitors.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH MICRO CAP FUND (WMICX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Micro Cap | 25.10% | 13.90% | 6.32% | ||||||||||||
Russell Microcap® Index | 22.33% | 13.89% | 6.65% |
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 September 1, 2017 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Superior Uniform Group, Inc. | 2.7% | |||
LGI Homes, Inc. | 2.7% | |||
HealthEquity, Inc. | 2.6% | |||
Installed Building Products, Inc. | 2.5% | |||
V-Mart Retail Ltd. (India) | 2.3% |
Company | % of Net Assets | |||
Freshpet, Inc. | 2.1% | |||
Ensign Group, Inc. (The) | 2.0% | |||
Envestnet, Inc. | 2.0% | |||
Trex Co., Inc. | 1.9% | |||
Exact Sciences Corp. | 1.9% |
* | As of September 30, 2017, 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 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.
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WASATCH MICRO CAP VALUE FUND (WAMVX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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
During the 12 months ended September 30, 2017, the Wasatch Micro Cap Value Fund returned 23.29%. The Fund surpassed its benchmark, the Russell Microcap Index, which rose 22.33%. Steady economic growth and benign inflation provided a favorable environment for equities. Though growth in the U.S. has remained sluggish since the end of the last recession, data |
released near the end of the period suggested the economy may be gaining steam. Gross domestic product (GDP) expanded at a seasonally adjusted annual rate of 3.1% during the April-to-June quarter — up from 1.2% during the previous quarter and the strongest growth since the first quarter of 2015.
With the economy seemingly on firm footing, the Federal Reserve (Fed) said it will begin normalizing its massive balance sheet in October. The move will essentially unwind the monetary stimulus the Fed has provided since the global financial crisis. For the most part, investors appeared to view the news as signaling a healthy U.S. economy no longer in need of extraordinary support from the Fed.
Boosted by strength in the Fund’s international holdings, the consumer-staples sector was the largest source of Fund outperformance relative to the benchmark. Nascent consumer economies in emerging markets have created growing demand for packaged foods, bottled beverages and other items that are commonplace in more-developed countries.
Financials were another area in which the Fund outperformed. Improved prospects on the interest-rate, regulatory and housing fronts appeared to help some of the Fund’s bank and mortgage-related holdings. By favoring reasonably valued banks in growing metropolitan statistical areas, we have found that the Fund’s small banks tend to make attractive targets for acquisition by larger competitors.
DETAILSOFTHE YEAR
The strongest contributor to Fund performance for the year was Tower Semiconductor Ltd., a rapidly growing semiconductor manufacturer headquartered in Israel. Shares of Tower surged after management announced an agreement with a Hong Kong-based company for the establishment of a new semiconductor-fabrication facility in Nanjing, China. In addition to the $18 million initial payment Tower has already received, it stands to collect future milestone payments and will be entitled to up to half of the facility’s fabrication capacity.
Kingstone Cos., Inc., another top contributor, offers property and casualty insurance for small businesses and individuals in New York. The decision of large carriers to limit exposure to coastal areas has allowed Kingstone to rapidly gain market share. Recent changes to the company’s underwriting guidelines and claims-handling process have reduced
claims payouts, leading to record quarterly earnings.
The greatest detractor from Fund performance for the year was Cempra, Inc., a clinical-stage biopharmaceutical company developing antibiotics for the treatment of bacterial infectious diseases. Cempra’s stock price tumbled after the U.S. Food and Drug Administration (FDA) released briefing documents highlighting concerns about the safety of Cempra’s lead pneumonia antibiotic, solithromycin. Rather than wait for the outcome of a larger study, we sold the Fund’s remaining shares.
Another weak stock in the Fund was Flotek Industries, Inc., a supplier of drilling and production products to the energy industry. Flotek’s shares languished for most of the period as low energy prices suppressed production of oil and natural gas. In addition, citrus-greening disease and damage from Hurricanes Harvey and Irma created shortages of citrus oils the company uses in its products. Despite the challenges, we think Flotek’s depressed valuation and upside potential justify continuing to own it at a low weight in the Fund.
OUTLOOK
Recent gains in U.S. equity prices have outstripped the earnings growth of the underlying companies, pushing price/earnings multiples higher. Even so, the Fund has significant exposure to small, growing companies yet to be discovered by mainstream investors. These undiscovered growers have seen more-modest increases in their stock prices and offer valuations that are still very attractive in our view.
Higher market valuations for equities bring increased risk for investors. One risk starting to garner attention is the low unemployment rate — or, more specifically, tightness in the labor market. During research visits to companies, management teams have commented to us recently on the difficulties they encounter finding qualified employees to help them grow their businesses.
When a scarcity of labor raises employment expenses, companies must either pass the higher costs along to customers in the form of higher prices, or see their profit margins shrink. While neither inflation nor a downturn in corporate profits would be good for investors, a modest uptick in wages would not be entirely bad. By boosting the purchasing power of U.S. households, a shift toward wages in the division of national income between wages and profits would directly benefit consumer-related businesses. Other companies stand to benefit indirectly through an overall increase in economic activity.
Small banks in particular have faced headwinds in recent years, as sluggish wage growth crimped demand for housing, auto and consumer loans. As a result, the banking industry remains one of more-attractively valued areas of the micro-cap equity market. With Japan just recently having emerged from its decades-long recession, reasonably priced growth opportunities can still be found in Japanese stocks as well. We’ve added several Japanese companies to the Fund this year, and we’re looking to increase the Fund’s holdings in Japan going forward.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH MICRO CAP VALUE FUND (WAMVX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Micro Cap Value | 23.29% | 16.00% | 8.92% | ||||||||||||
Russell Microcap® Index | 22.33% | 13.89% | 6.65% |
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 September 1, 2017 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Tower Semiconductor Ltd. (Israel) | 2.1% | |||
ZAGG, Inc. | 1.6% | |||
NV5 Global, Inc. | 1.6% | |||
Tucows, Inc., Class A | 1.5% | |||
Esquire Financial Holdings, Inc. | 1.5% |
Company | % of Net Assets | |||
USA Technologies, Inc. | 1.5% | |||
BofI Holding, Inc. | 1.4% | |||
Patrick Industries, Inc. | 1.4% | |||
LGI Homes, Inc. | 1.4% | |||
Installed Building Products, Inc. | 1.4% |
* | As of September 30, 2017, there were 105 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.
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WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
The Wasatch Small Cap Growth Fund is managed by a team of Wasatch portfolio managers led by JB Taylor, Jeff Cardon, Ken Korngiebel and Ryan Snow.
JB Taylor Lead Portfolio Manager
Ken Korngiebel, CFA Portfolio Manager |
Jeff Cardon, CFA Portfolio Manager
Ryan Snow Portfolio Manager | OVERVIEW
The Wasatch Small Cap Growth Fund — Investor Class rose 14.29% for the 12 months ended September 30, 2017, trailing the 20.98% return of its benchmark, the Russell 2000 Growth Index, and the 20.74% return of the Russell 2000 Index. Among the Fund’s top contributors to absolute performance for the 12-month period were companies in the financials, health-care and industrials sectors. |
Performance relative to the benchmark benefited from stock selection in the health-care sector. In contrast, the Fund significantly underperformed the benchmark in the information-technology sector as our stocks trailed their benchmark counterparts.
The Fund’s gain for the period was helped by strong returns among our industrial holdings, particularly in the three months ended September 30, 2017. Unlike the post-election “reflation trade” (or “Trump trade”) of the kind we avoided late last year, we recognize that the slow-growth economy is chugging along well enough now to favor a positive turn for the industrials sector. We anticipate maintaining our overweight position in the sector as long as conditions remain favorable and we can continue to find companies with attractive growth prospects.
DETAILSOFTHE YEAR
Transportation and logistics-services provider Knight-Swift Transportation Holdings, Inc. is the product of a recent merger. The newly combined company turned in the leading contribution to Fund performance for the 12-month period. Whereas the former Swift Transportation had been underperforming the market prior to the merger, Knight Transportation, which had been held by the Fund for many years, had enjoyed steady growth and had benefited from a strong management team. Investors viewed the combined entity favorably, believing that management will derive more earnings power from Swift’s assets. Additionally, a new requirement for electronic logging is expected to drive some small competitors out of the trucking market.
Exact Sciences Corp. was the second-best contributor to the Fund’s performance for the year. The molecular-diagnostics company has 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 began climbing in late April after accelerating demand for Cologuard produced better-than-expected revenues and earnings.
Cempra, Inc., a clinical-stage biopharmaceutical company developing antibiotics for the treatment of bacterial infectious diseases, was a notable detractor. Cempra’s stock price tumbled after the U.S. Food and Drug Administration released briefing documents highlighting concerns about the safety of the company’s key treatments. Believing that this development materially changed our investment thesis for Cempra, we elected to sell the position.
Cornerstone OnDemand, Inc. was another leading detractor from performance. Despite showing signs of strength midway through the period, management eventually reported numbers that didn’t wow investors, missing expectations on earnings even while reporting stronger sales. In addition, we viewed the company’s mix of new contracts as far from ideal. We see little room for error on management’s part at this point and have reduced our position.
OUTLOOK
The economic scenario of the past year appears to be continuing in the U.S. with regard to sustained moderate growth, low inflation and rising asset prices. Looking forward, we don’t expect valuation tailwinds to continue. Company fundamentals will have to matter more to investors at some point, which we believe would bode well for the Fund. We believe we have a great team that learns from mistakes and the best culture for applying a disciplined investment approach. As valuations right-size to growth rates, we think our discipline will shine.
Fundamentals are certainly of more central importance to investors now than in the period after the presidential election, but there are distractions such as the extraordinary monetary accommodation by the Federal Reserve (Fed). Recently, the Fed announced its intention to start reducing bond holdings acquired during its quantitative-easing program. While it’s not exactly clear how quickly that will unfold, the announcement itself represents a step toward normalcy.
In the Fund, we’re especially focused at present on companies that seem poised to deliver long-term growth by benefiting from world-wide economic strength, industrial-production trends and increased capital expenditure by businesses. Our disciplined approach continues to turn up attractive prospects, such as in the industrials sector mentioned above. Elsewhere, too, we’re finding what we consider to be high-quality companies with outstanding long-term growth prospects. There’s no shortage of opportunities for the Fund’s investment style, although we always have to remain vigilant regarding valuations.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Small Cap Growth (WAAEX) — Investor | 14.29% | 10.22% | 7.71% | ||||||||||||
Small Cap Growth (WIAEX) — Institutional | 14.54% | 10.29% | 7.75% | ||||||||||||
Russell 2000® Growth Index | 20.98% | 14.28% | 8.47% | ||||||||||||
Russell 2000® Index | 20.74% | 13.79% | 7.85% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Growth Fund are Investor Class: 1.30% / Institutional Class — Gross: 1.12%, Net: 1.06%. 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 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Knight-Swift Transportation Holdings, Inc. | 4.8% | |||
Copart, Inc. | 4.2% | |||
ICON plc (Ireland) | 3.9% | |||
Ultimate Software Group, Inc. (The) | 3.6% | |||
HEICO Corp., Class A | 3.0% |
Company | % of Net Assets | |||
Cavium, Inc. | 2.9% | |||
Metro Bank plc (United Kingdom) | 2.4% | |||
Ollie’s Bargain Outlet Holdings, Inc. | 2.4% | |||
Eagle Bancorp, Inc. | 2.3% | |||
WESCO International, Inc. | 2.3% |
* | As of September 30, 2017, there were 73 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.
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WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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
U.S. equity markets performed well in the 12-month period, with most of the gains coming after the November 2016 election. Investors were cheered by continued acceleration in the U.S. economy, a robust increase in corporate earnings and a shift toward a more business-friendly political environment in the U.S. These factors fueled a series of record highs in the major indexes and led to a gain of 20.55% for the |
Russell 2000 Value Index. The Wasatch Small Cap Value Fund — Investor Class finished just behind the benchmark with a return of 20.20% for the 12-month period. It is worth noting that the Fund has produced an average annual return of 12.29% since its inception in 1997, which compares favorably with 8.73% for the Russell 2000 Value Index in the same interval.
The Fund’s modest shortfall relative to the Index for the annual period is entirely attributable to the weeks immediately following the U.S. election. Stocks spiked higher in the wake of the vote, led by sectors seen as likely to benefit from a Donald Trump presidency. The momentum-driven nature of the move meant that lower-quality, speculative companies generally provided the best returns. That left our bottom-up approach and focus on fundamentals briefly out of step with the market.
The Fund’s relative performance improved in 2017 with the wane of the “Trump Rally.” Many of the deeper-value stocks that surged in the immediate aftermath of the election gave back some of their gains, while faster-growing companies started to show more resilience. Although this trend was a headwind for the small-cap value group as a whole, it proved helpful for the Fund, given our tilt toward “growthier” companies in the category.
DETAILSOFTHE YEAR
As part of our value style, we seek to identify “Fallen Angels,” or companies that have sustainable competitive advantages or long-run opportunities in niche markets, but whose stocks have temporarily fallen out of favor. We are also particularly interested in companies whose compelling long-term outlook has yet to be discovered by Wall Street. The potential benefit of this strategy was apparent in the health-care sector, where Exact Sciences Corp. and LHC Group, Inc. were among the top contributors to performance for the year. Now that Exact Sciences’ colon-cancer test is being reimbursed by insurance companies and health-care systems, the company’s share price has advanced sharply. LHC benefited from the ongoing growth of home health care through its role as a leading provider of this cost-saving service.
Our emphasis on companies with solid growth potential was also evident in the information-technology sector,
where two companies were among the top contributors to performance. Strong revenues and profit margin and free cash flow gains lifted the stock price of Tower Semiconductor Ltd. Stamps.com, Inc., which we think is positioned to ride the wave of e-commerce growth, also delivered a return well above the broader sector.
Another example of the Fund’s balance between stocks with growth and value characteristics can be found in our trucking-industry investments. The Fund owned positions in Knight Transportation, Inc., a solid trucker with steady growth, and Swift Transportation Co., which we see as more of a value play. Knight announced it is buying Swift, a move investors viewed as mutually beneficial. Both stocks performed well in the period, boosting the Fund’s results.
Cempra, Inc., a clinical-stage biopharmaceutical company developing antibiotics for the treatment of bacterial infectious diseases, was the Fund’s largest detractor. Cempra’s stock price tumbled after the U.S. Food and Drug Administration released briefing documents highlighting concerns about the safety of the company’s key treatments. Believing that this development materially changed our investment thesis for Cempra, we sold the position. The share price of WESCO International, Inc., a multinational electronics distribution and services company, slid along with other stocks in its space. We maintained the investment because we believe WESCO is better-positioned than its peers due to its focus on more specialty areas and products, together with its ability to benefit from a turn in the industrial economy.
The Fund’s cash weighting, while modest, was a further headwind to performance in the rising market of the past 12 months.
Our role as “value managers in a growth shop” has long provided us with a unique advantage, as Wasatch’s history of robust research coverage on growth companies has led us to hold a meaningful weighting in value stocks with above-average growth prospects. We believe this aspect of our approach, when combined with our investments in more traditional value companies, has created diversification between the growth and value styles. As a result, the Fund doesn’t necessarily rely on the outperformance of value stocks to drive its returns.
OUTLOOK
Although we continue to see a favorable path for domestic growth trends, we think the risk/reward profile in stocks has become somewhat less attractive with valuations having risen so significantly since the November 2016 election. We have therefore adopted a cautious approach that seeks to own only fundamentally sound, reasonably valued companies and reduce or eliminate those stocks we see as having rich valuations and/or above-average risk. We believe this strategy can help the Fund continue to participate in the expansion of the U.S. economy, while simultaneously managing the possibility of increased market volatility.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Small Cap Value (WMCVX) — Investor | 20.20% | 15.95% | 7.64% | ||||||||||||
Small Cap Value (WICVX) — Institutional | 20.28% | 16.06% | 7.72% | ||||||||||||
Russell 2000® Value Index | 20.55% | 13.27% | 7.14% | ||||||||||||
Russell 2000® Index | 20.74% | 13.79% | 7.85% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Value Fund are Investor Class: 1.45% / Institutional Class — Gross: 1.41%, Net: 1.26%. 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Knight-Swift Transportation Holdings, Inc. | 3.1% | |||
Monro, Inc. | 3.1% | |||
Ensign Group, Inc. (The) | 2.9% | |||
Altra Industrial Motion Corp. | 2.9% | |||
Arbor Realty Trust, Inc. | 2.7% |
Company | % of Net Assets | |||
Select Comfort Corp. | 2.7% | |||
Webster Financial Corp. | 2.7% | |||
First of Long Island Corp. (The) | 2.6% | |||
HEICO Corp., Class A | 2.6% | |||
Tower Semiconductor Ltd. (Israel) | 2.5% |
* | As of September 30, 2017, there were 55 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.
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WASATCH STRATEGIC INCOME FUND (WASIX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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
For the fiscal year ended September 30, 2017, I was pleased with the Wasatch Strategic Income Fund’s 12.09% gain and that it achieved a return between those of its stock and bond benchmarks. Ideally, I like to see at least a high-single-digit annual return, so the Fund exceeded my expectations for the period. Although the Fund lagged the S&P 500 Index’s 18.61% advance, the Fund significantly outpaced the 0.07% return of the Bloomberg Barclays US Aggregate Bond Index. |
DETAILSOFTHE YEAR
For the fiscal year, the only stocks adding more than one percentage point each to the Fund’s return were Comcast Corp., MasterCard, Inc. and Suncor Energy, Inc. Of note, Comcast benefited from a marked improvement in the company’s customer service as it has automated a number of processes, reducing the need for the dreaded “truck roll” as a solution to cable problems. The company has also consistently increased internet speeds for its customers.
Visa, Inc. was another strong contributor during the period. Even as transaction technology changes, both Visa and MasterCard have continued to benefit as the newest technological approaches to payments still rely on this pair of transaction processors to link customers, merchants and banks.
Suncor benefited from the stabilization of oil prices. The company uses a manufacturing-like process to harvest its long-lived oil-sands reserves. Suncor’s cost to produce oil declines as more technology is introduced into the process.
Medallion Financial Corp. was the most significant detractor from performance during the fiscal year, and the only one that subtracted as much as 0.75 of a percentage point from the Fund’s return. Engaged partly in the financing of taxi medallions, the company’s stock price continued to suffer from the rise of Uber and other online ride-sharing companies. While the portion of the company’s loans secured by taxi medallions is declining, the increase in the default rate on those loans led Medallion to eliminate its dividend. The reason the Fund continues to hold a small position in Medallion is that the stock trades at only 20% of the company’s book value.
The next-largest detractor, McKesson Corp., subtracted just 0.35 of a percentage point. Early in the year, McKesson was faced with aggressive competition in the pharmaceuticals-distribution industry, and lost some clients due to merger activity among its customers. In response to these challenges, we trimmed our position in McKesson.
Although I have modestly reduced the Fund’s cash position over the course of the fiscal year, it is still running about 16%. This was not done as an attempt to time the market. Instead, the cash position is intended to dampen the volatility of the portfolio. The Fund’s larger cash position and my
efforts to increase the number of holdings that are willing and able to pay a growing stream of dividends is largely a response to the difficulty we experienced from mid-2015 through mid-2016, which I have discussed in past quarterly commentaries. Dampening the Fund’s volatility is reflected in its beta, which during the fiscal year was less than that of the market. With a lower beta, the Fund will lag in a rising market. Conversely, if the market declines, the Fund should experience less volatility. And with a bull market that has now entered its ninth year, I think maintaining the Fund’s cash position is a prudent approach.
For that same reason — limiting potential volatility — I also chose to sell some of the Fund’s more cyclical holdings, concerned that these stocks might be volatile in a downturn. The companies we sold included Penske Automotive Group, Inc., a leading global car dealer that has produced a string of rising dividends; Altisource Residential Corp., a business in transition from buying troubled mortgage debt to renting low-end homes; and Jones Lang LaSalle, Inc., a global real-estate broker.
The Fund’s primary investment focus continues to be on dividend-paying companies. Over the course of the fiscal year, the Fund’s holdings continued to experience solid dividend growth. On an annualized basis, the dividend growth rate of the portfolio was just over 8% as of September 30, 2017. One of the most-recent additions to the Fund was tool-manufacturer Snap-on, Inc., which has paid a flat or increased dividend every quarter for more than 75 years.
OUTLOOK
While I continue to be concerned about the elevated price level of many stocks, especially in the face of the future monetary tightening being discussed by both the U.S. Federal Reserve and the European Central Bank, the market generally takes its cues from the economy, which has continued to advance at a slow but steady pace. Economists are coming to understand that the slower economic growth we are experiencing tends to avoid the recession-inducing excesses of more-rapid growth. While the downside is that those lacking jobs must wait longer to find employment, they eventually do as reflected in our currently low unemployment rate of 4.2%.
This isn’t to say that the economy and the market will enjoy clear skies forever. Every historic declaration of “permanent prosperity” has proven false. I have no doubt that, as usual, this current episode of prosperity will end in tears. They all have. So I am doing my best to prepare the Fund for what could lie ahead.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH STRATEGIC INCOME FUND (WASIX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Strategic Income | 12.09% | 9.76% | 6.25% | ||||||||||||
S&P 500® Index | 18.61% | 14.22% | 7.44% | ||||||||||||
Bloomberg Barclays US Aggregate Bond Index | 0.07% | 2.06% | 4.27% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Strategic Income Fund are Gross: 1.76%, Net: 1.67%. 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Comcast Corp., Class A | 5.9% | |||
MasterCard, Inc., Class A | 3.9% | |||
Suncor Energy, Inc. (Canada) | 3.9% | |||
Visa, Inc., Class A | 3.9% | |||
Walgreens Boots Alliance, Inc. | 3.8% |
Company | % of Net Assets | |||
Magellan Midstream Partners L.P. | 3.5% | |||
CBS Corp., Class B | 3.5% | |||
CVS Health Corp. | 3.2% | |||
Canadian National Railway Co. (Canada) | 3.0% | |||
Microchip Technology, Inc. | 2.5% |
* | As of September 30, 2017, there were 53 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.
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WASATCH ULTRA GROWTH FUND (WAMCX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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
Rapid swings in investor sentiment marked the 12 months ended September 30, 2017. Political factors had a greater-than-usual impact on financial markets, as investors reacted to the unexpected election and subsequent presidency of Donald Trump. The Wasatch Ultra Growth Fund closed its fiscal year with a return of 22.13%. The Fund outgained its benchmark, the Russell 2000 Growth Index, which rose 20.98%. |
Stocks of the rapidly growing companies on which the Fund focuses significantly underperformed value stocks during the early part of the fiscal year. Many value companies had been struggling with sluggish demand and a lack of pricing power that hampered their profitability. In the weeks after the November election, their stocks rose on hopes for a turnaround driven by new federal infrastructure spending and tax cuts.
Undeterred and confident in our approach, we maintained our growth-oriented investment strategy in the belief that company earnings determine stock prices over the long term. Our patience was rewarded when high-growth stocks found renewed favor with investors as a recalcitrant Congress dashed expectations for rapid passage of Mr. Trump’s proposals.
Consumer-discretionary stocks were the Fund’s largest source of outperformance versus the benchmark, followed by consumer staples. In the consumer-discretionary sector, as well as in financials, the Fund’s Indian stocks significantly boosted performance. Our companies in India benefited from ongoing development of the country’s middle class and banking system.
DETAILSOFTHE YEAR
Reflecting the substantial growth opportunities we’ve found in information technology and health care, those areas continued to account for a majority of the Fund’s assets. Health-care companies Sangamo Therapeutics, Inc. and Exact Sciences Corp., respectively, were the strongest contributors to Fund performance for the year. Sangamo is a biopharmaceutical company specializing in the treatment and cure of single-gene disorders. The company’s stock price jumped in May and again in August on positive developments for SB-525, an investigational gene therapy for the treatment of Hemophilia A.
Exact Sciences is a biotechnology company with an innovative test for colon cancer that avoids the high cost and invasiveness of a colonoscopy. As the benefits of the new test resonated with patients, the company raised its full-year sales guidance to 550,000 tests in 2017, up from 244,000 the previous year.
Consumer-staples company Freshpet, Inc. was the Fund’s third-largest contributor. The company sells fresh, refriger-
ated meals and treats for dogs and cats in the U.S., Canada and the United Kingdom. The prior experience of the company’s recently hired CEO has helped Freshpet improve its products, marketing and distribution.
The greatest detractor from Fund performance for the year was Tandem Diabetes Care, Inc. The company offers insulin-delivery systems for people with diabetes. A competitor’s introduction of an insulin pump with continuous glucose monitoring (CGM) weighed on Tandem’s stock price throughout the period. While we’re optimistic about prospects for Tandem’s own CGM pump, we’re limiting this holding to a small weighting in the Fund.
Second-largest detractor Cempra, Inc. develops antibiotics for the treatment of bacterial infectious diseases. The company’s stock tumbled after the U.S. Food and Drug Administration (FDA) released briefing documents highlighting concerns about the safety of Cempra’s lead pneumonia antibiotic, solithromycin. Rather than wait for the outcome of a larger study, we sold the Fund’s remaining shares.
OUTLOOK
In recent years, advances in modern science have created a revolution in our understanding of human biology and the causes of disease. The resulting progress in our ability to treat disease at a fundamental, curative level has produced functional cures and potential cures for a variety of afflictions.
In evaluating the investment potential of health-care companies seeking to develop new therapies, we consider three main aspects: science, management team and market potential. We want companies with compelling science that addresses an important medical need. We consider the origin of the technology and how the company plans to translate scientific breakthroughs into treatments for humans.
The management team in some ways is more difficult to assess than the science. Because running a public company engaged in health-care research is a complex task even under the best of circumstances, recovery from missteps often proves difficult. In our experience, the best management teams contemplate a wide range of outcomes and develop appropriate contingency plans. We’re always trying to gain a better understanding of our management teams, as their decisions drive the success or failure of our portfolio companies.
The final element is the market potential for a new treatment or cure. Solving an unmet medical need generally creates high barriers to entry for would-be competitors and generates substantial cost savings for the health-care system and society. A growing risk for investors is that biotechnology companies in particular may become “victims of their own success.” That is to say, the variety of ways being developed to treat disease may produce a corresponding variety of competing solutions. While greater competition and fewer unmet medical needs may mean fewer opportunities for investors, the obvious benefits to society would be enormous.
Thank you for the opportunity to manage your assets.
Current and future holdings are subject to risk. |
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WASATCH ULTRA GROWTH FUND (WAMCX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Ultra Growth | 22.13% | 14.29% | 6.86% | ||||||||||||
Russell 2000® Growth Index | 20.98% | 14.28% | 8.47% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Ultra Growth Fund are 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. 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Ultimate Software Group, Inc. (The) | 2.7% | |||
LGI Homes, Inc. | 2.7% | |||
Freshpet, Inc. | 2.6% | |||
Oxford Immunotec Global plc | 2.6% | |||
Waste Connections, Inc. | 2.5% |
Company | % of Net Assets | |||
Paylocity Holding Corp. | 2.5% | |||
Sangamo Therapeutics, Inc. | 2.5% | |||
HubSpot, Inc. | 2.2% | |||
Exact Sciences Corp. | 2.1% | |||
Instructure, Inc. | 2.0% |
* | As of September 30, 2017, there were 77 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.
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WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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 12 months ended September 30, 2017 began with global markets producing mixed results. While U.S. stocks rallied after the presidential election in November, foreign markets, both developed |
and emerging, lost ground partially based on concerns about the future U.S. role in international trade. As the period progressed, however, U.S. markets continued to show strength and overseas markets rebounded. The Wasatch World Innovators Fund — Investor Class rose 22.23% for the 12-month period and outperformed the 18.73% return of the benchmark MSCI ACWI Investable Market Index.
While we’re pleased with the Fund’s performance over the past 12 months, we note that gains in equity prices continued to outpace improvements in earnings and other company fundamentals, pushing valuations to levels that are high by historical standards. This was particularly true in the U.S., where we remain considerably underweight versus the benchmark. Although we reduced the Fund’s cash position somewhat during the period, it remains elevated, reflecting both our caution as well as the relative scarcity of suitably attractive investments.
DETAILSOFTHE YEAR
As a consequence of continually evaluating the potential of companies we’re considering as additions to the Fund as well as each of the companies we already own, we made several noteworthy additions and deletions during the period. We added Kornit Digital Ltd., an Israeli manufacturer of digital inkjet printers used for printing on cloth. Amazon* has seen the potential of these printers to help its retailers produce quick-turn clothing. We exited several long-term holdings, among them Mekonomen AB, a Swedish auto-parts retailer similar to AutoZone* in the U.S. As success for Mekonomen always seemed to be “just around the corner,” we decided to move on. We had also been intrigued by the possibility that Indigo Books & Music, Inc. in Canada could become a new kind of bookstore and succeed in the digital era. However, recent results haven’t been supportive of its ability to transition from an old-school bookstore model.
Over the course of the year, Take-Two Interactive Software, Inc., Bioventix plc, PayPal Holdings, Inc., bioMérieux and WANdisco plc each contributed more than one percentage point to the Fund’s return. Take-Two continues making progress in transforming its business model from plug-in game cartridges to digital games that can be accessed online.
Its most recent results were up almost 100% over the prior period, and management raised guidance for the coming year. Bioventix develops and supplies monoclonal antibodies that are critical in developing diagnostic tests. PayPal continued to gain traction as the dominant online payment provider. bioMérieux, a manufacturer of medical-diagnostics equipment, has been benefiting because accurate diagnoses of health conditions lead to better patient outcomes at less cost. Its most-recent half-year earnings as of June 30, 2017 were up substantially compared to the same period a year ago. Britain’s WANdisco, whose name is an acronym for “wide area network distributed computing,” specializes in providing enterprise customers with real-time access to their computer data anytime and anywhere.
Just three stocks subtracted more than half a percentage point — and none more than 0.8% — from the Fund’s 12-month return: Performance Sports Group Ltd., LivaNova plc and AO World plc. We sold Performance Sports Group, a manufacturer of sports equipment and apparel, when the company sought approval from bankruptcy courts in the U.S. and Canada to be jointly acquired by two of its creditors. Medical-technology company LivaNova experienced disappointing sales, and we initially trimmed our position. Continued weakness led us to eventually exit the position entirely. AO World also experienced weak sales late in 2016. Based in the United Kingdom, AO World is an online retailer of appliances such as washing machines, dishwashers, refrigerators and ovens. We believe AO World’s focus on customer service, which includes removal of old appliances and installation of new ones, continues to give it the potential to successfully grow its business.
OUTLOOK
We note that the current market environment has made pursuing long-duration, compound-growth opportunities in equities a bit like chasing ghosts. Under normal circumstances, the price/earnings multiple of a high-quality growth stock evolves fairly slowly over time. This characteristic typically enables a growth investor to “capture” the company’s earnings growth at a relatively stable multiple, generating price appreciation in the stock that’s roughly in line with the growth in earnings.
Recently, however, we’ve seen earnings multiples of stocks we’ve owned expand more rapidly as investors have driven their prices beyond what we considered fair value. Leaving us with uninspiring prospects for future appreciation, the higher prices have triggered our sell discipline. As a result, what we thought were long-term growth opportunities have quickly vanished into thin air.
While history suggests that periods of liquidity-driven speculation tend to last longer than most people expect, we believe high valuations in the U.S. and elsewhere continue to dictate a cautious approach to world equity markets.
Thank you for the opportunity to manage your assets.
* | As of September 30, 2017, the Wasatch World Innovators Fund held 0.39% of its net assets in Amazon.com, Inc. and was not invested in AutoZone, Inc. |
Current | and future holdings are subject to risk. |
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WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
World Innovators (WAGTX) — Investor | 22.23% | 11.36% | 7.03% | ||||||||||||
World Innovators (WIGTX) — Institutional | 22.55% | 11.46% | 7.08% | ||||||||||||
MSCI ACWI IMI | 18.73% | 10.42% | 4.18% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch World Innovators Fund are Investor Class: 1.78% / Institutional Class — Gross: 3.69%, 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.
TOP 10 EQUITY HOLDINGS*
Company | % of Net Assets | |||
Costco Wholesale Corp. | 3.0% | |||
Majestic Wine plc (United Kingdom) | 2.5% | |||
SodaStream International Ltd. (Israel) | 2.5% | |||
New York Times Co. (The) | 2.4% | |||
Computer Programs and Systems, Inc. | 2.3% |
Company | % of Net Assets | |||
Nintendo Co. Ltd. (Japan) | 2.2% | |||
Gamma Communications plc (United Kingdom) | 2.0% | |||
PayPal Holdings, Inc. | 2.0% | |||
Comcast Corp., Class A | 1.9% | |||
DiaSorin S.p.A. (Italy) | 1.6% |
* | As of September 30, 2017, there were 130 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.
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WASATCH-1ST SOURCE INCOME FUND (FMEQX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
Paul Gifford, CFA Lead Portfolio Manager |
Erik Clapsaddle, CFA Associate Portfolio Manager | OVERVIEW
For the 12 months ended September 30, 2017, the Wasatch-1st Source Income Fund returned 0.68%, while its benchmark, the Bloomberg Barclays US Intermediate Govern- |
ment/Credit Index, returned 0.23%. The Federal Reserve (Fed) has increased the federal-funds target rate three times during the past 12 months. The entire yield curve moved higher over the year as long-term rates shifted up almost immediately following the U.S. presidential election in November.
DETAILSOFTHE YEAR
Short-term interest rates gradually increased over the past 12 months on the back of Fed rate increases. Despite the parallel shift of interest rates during the aforementioned 12-month period through September 30, 2017, the yield curve had flattened for nine out of 10 quarters. On September 29, 2017, the three-month LIBOR, the global rate for lending, reached its highest level in U.S. dollar terms since January 2009. At their most-recent meeting, Fed officials seemed fairly convinced that they would increase the target rate one more time before December 31st.
Center stage this past year was the Fed’s internal conundrum — lack of inflation in the United States despite full employment, steady economic growth and fairly accommodative monetary policy. The lack of inflation has caused disagreement within the Fed as to the appropriate path for raising interest rates. Chair Janet Yellen believes that lower inflation readings are “transitory” and that the Fed needs to get ahead of the inflation that will likely occur in 2018. Contrarily, Lael Brainard, a voting member on the Fed’s monetary policy committee, in September 2017, said, “We should be cautious about tightening policy further until we are confident inflation is on track to achieve our target.” She went on to say that the Fed should feel comfortable allowing prices to rise above its 2% target inflation rate before raising interest rates.
The Federal Reserve’s favorite inflation gauge, the core Personal Consumption Expenditure (PCE) price index, showed a year-over-year change in August of 1.3%, which was well below the Fed’s base 2% target inflation rate and was the PCE’s smallest change since October 2015. The core PCE has not breached 2% since April 2012, though the core Consumer Price Index (CPI), which excludes volatile food and energy prices, did exceed 2% for 17-months between late 2015 and early 2017. The most recent reading of the core CPI showed a year-over-year change of 1.7%. The change in CPI (including food and energy prices) is what determines the principal value of U.S. Treasury Inflation-Protected
Securities (TIPS). The Fund has a small allocation to TIPS, as we believe there is some value relative to fixed-rate Treasurys.
The Fund’s effective duration declined over the past 12 months from 3.22 years on September 30, 2016 to 2.60 years on September 30, 2017. We reduced the Fund’s duration by adding corporate floating-rate senior unsecured debt, securities with an approximate duration of 0.05 to 0.25 years, and fix-to-floating rate securities that are currently floating or are within three-years of floating. These additions to the Fund increased its allocation to corporate credit. We markedly reduced our allocation to mortgage-backed securities over the past 12 months.
Asset-backed securities (ABS) continue to be an integral part of the Fund. By investing in ABS, we believe we can find value and increase yield while still maintaining or improving credit quality and owning securitized cash flows. Over the past year, the Fund��s ABS allocation increased from 9.2% to 15.7%.
OUTLOOK
The end of Janet Yellen’s term as Federal Reserve Chair on February 3, 2018 will likely be the most important factor in interest rate and monetary policy changes in 2018. In addition to questions as to whether Yellen will continue as Chair or be replaced, there will be multiple openings at the Fed, starting with replacing Stanley Fischer, who resigned his positions as Vice Chair and Regulatory Vice Chair — though President Donald Trump’s nomination to replace Fischer, will likely be appointed.
By February 3rd, President Trump will have the chance to fill five of the seven seats on the Board of Governors of the Federal Reserve System. We suspect Fed appointees will maintain the status quo — some may like less regulation, but most will likely continue to favor lower interest rates. And like the remaining Board members and voting members, we expect they will be mostly moderate on monetary policy. Expectation is one thing, but certainly a definitive outcome is another. Given the current administration, we would not be surprised if one or more outsiders are appointed to the Federal Reserve Board. Any significant surprise could cause both the fixed-income and equity markets to tremble.
We expect 2018 to be a year of tepid returns in the fixed-income markets, although they could be better than those in 2017. We expect returns for fixed-income securities to have the potential to continue improving in 2019 and beyond as interest rates slowly increase and the Fed gets closer to its terminal rate.
Thank you for entrusting us to manage your assets.
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WASATCH-1ST SOURCE INCOME FUND (FMEQX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
Income | 0.68% | 1.13% | 2.80% | ||||||||||||
Bloomberg Barclays US Intermediate Government/Credit Index | 0.23% | 1.61% | 3.64% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Income Fund are 0.73%. 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”). 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.
TOP 10 FIXED INCOME HOLDINGS*
Holding | Maturity Date | % of Net Assets | ||||||
U.S. Treasury Note, 3.625% | 8/15/19 | 2.7% | ||||||
Hewlett Packard Enterprise Co., 3.600% | 10/15/20 | 2.1% | ||||||
Federal National Mortgage Assoc., Series AL4936, 3.000% | 3/1/29 | 1.9% | ||||||
Goldman Sachs Group, Inc. (The), MTN, 3.064% | 10/28/27 | 1.8% | ||||||
General Electric Co., MTN, 4.650% | 10/17/21 | 1.8% |
Holding | Maturity Date | % of Net Assets | ||||||
World Financial Network Credit Card Master Trust, Series 2012-A, Class A, 3.140% | 1/17/23 | 1.7% | ||||||
U.S. Treasury Note, 3.625% | 2/15/20 | 1.6% | ||||||
BP Capital Markets plc, 3.245% | 5/6/22 | 1.6% | ||||||
Wendys Funding LLC, Series 2015-1A, Class A2I, 3.371% | 6/15/45 | 1.6% | ||||||
Federal Home Loan Mortgage Corp., Series G18637, 3.500% | 2/1/32 | 1.5% |
* | As of September 30, 2017, there were 82 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 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.
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WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Discussion
Van Hoisington Lead Portfolio Manager |
Van R. Hoisington, Jr. Portfolio Manager |
David Hoisington Portfolio Manager |
OVERVIEW
Although bond yields were volatile during the 12 months ended September 30, 2017, the period saw little net movement overall. The 30-year U.S. Treasury bond yield began the 12-month period at 2.31% and closed the period at 2.86% on September 30, 2017, an increase of just 0.55 of a percentage point. For the first nine months of 2017, it has fallen 0.21 of a percentage point. Since late 2015, when the Federal Reserve (Fed) began raising rates, the 30-year Treasury bond yield has declined slightly, albeit with large swings up and down over that time. The combined four Fed increases since December 2015 have brought the federal-funds rate into a range of 1.00% to 1.25%. With the 30-year bond yield declining, a flattening of the yield curve has resulted.
DETAILSOFTHE YEAR
Over the 12-month period, the consumer sector continued to experience paltry income growth and a low and falling saving rate. In the past five years, real disposable personal income (DPI) growth has averaged a disappointing 2%. Real DPI has been flat over the last three months and has risen only 1.2% over the past year. On a per-capita basis over the past year, the growth rate was one-half of 1%, which is one-quarter of the historic growth rate.
In an effort to maintain their standard of living in the face of slowing income growth, consumers stepped up their borrowing and significantly reduced their savings. For the month of August, personal saving was $523 billion, or 3.6% of income. That is about three-fifths less than the 8.5% saving rate level that has existed since 1900. As recently as five years ago, the saving rate was 7.6%.
These constraints on consumer spending, as well as increasingly restrictive Fed policy, have served to push the prices of discretionary goods and services downward. Both the core Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) price index decelerated in the latest 12 months. In the latest six months, all items in the CPI except the essentials of food, shelter and housing fell at a 0.5% annual rate, the largest six-month decline since the beginning of this data in 1967.
For the past six and 12 months, the Wasatch-Hoisington U.S. Treasury Fund returned 5.48% and -8.86%, respectively, while the benchmark Bloomberg Barclays US Aggregate Bond Index returned 2.31% and 0.07%, respectively. The weak 12-month performance reflected a sharp rise in
Treasury bond yields immediately after the presidential election in early November. The Fund maintained its outperformance over the Index for the three-, five- and 10-year periods ended September 30, 2017.
OUTLOOK
With monetary restraint continuing to weigh on economic growth for the remainder of 2017 and 2018, inflation, which receded sharply this year (the PCE was up 1.2% year-to-date through September 30, 2017 and 1.4% year-over-year), will continue on a downward path. Coupled with extreme over-indebtedness, these are the dominant factors causing both cyclical and secular growth to weaken. Additionally, these negative impulses are presently being reinforced by the problems of poor demographics and productivity. Population growth in 2016 was the slowest since 1936–37 — roughly half of the post-war average. The fertility rate in 2016 was the lowest on record. These trends have contributed to the declining growth of household formation, which is now less than one-half the rate of increase that had been experienced since 1960. Productivity in the eight years of this expansion was the lowest for any eight-year period since the end of World War II.
These circumstances indicate that a Fed policy of quantitative tightening (QT) and an indicated December hike in the federal-funds rate will put upward pressure on short-term interest rates. At the same time, lower inflation and the resultant decline in inflationary expectations will place downward pressure on the yields of long-term Treasury bonds (maturities longer than 20 years), thus causing the yield curve to flatten further. Continuation of QT deep into 2018 would probably cause the yield curve to invert. Short-term interest rates are determined by the intersection of the demand and supply of credit that the Fed largely controls by shifting the monetary base and interest rates. Changes in long-term Treasury bond yields are primarily determined by inflationary expectations. Inflationary expectations will ratchet downward in this environment, pushing long-term Treasury bond yields lower.
Thank you for the opportunity to manage your assets.
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WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | SEPTEMBER 30, 2017 (UNAUDITED) | |
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AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | 10 YEARS | |||||||||||||
U.S. Treasury | -8.86% | 2.58% | 7.73% | ||||||||||||
Bloomberg Barclays US Aggregate Bond Index | 0.07% | 2.06% | 4.27% |
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 September 1, 2017 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-Hoisington U.S. Treasury Fund are 0.69%. 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.
TOP U.S. TREASURY HOLDINGS*
Holding | Maturity Date | % of Net Assets | ||||||
U.S. Treasury Bond, 2.250% | 8/15/46 | 35.7% | ||||||
U.S. Treasury Strip, principal only | 8/15/45 | 21.5% | ||||||
U.S. Treasury Bond, 2.500% | 2/15/45 | 17.2% | ||||||
U.S. Treasury Strip, principal only | 5/15/44 | 10.4% | ||||||
U.S. Treasury Strip, principal only | 8/15/40 | 5.7% |
Holding | Maturity Date | % of Net Assets | ||||||
U.S. Treasury Bond, 3.750% | 11/15/43 | 4.6% | ||||||
U.S. Treasury Bond, 3.125% | 8/15/44 | 2.3% | ||||||
U.S. Treasury Bond, 2.500% | 5/15/46 | 2.1% |
* | As of September 30, 2017, there were 8 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.
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WASATCH FUNDS MANAGEMENT DISCUSSIONS | ||
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Definitions of Financial Terms
Abenomics refers to the economic policies advocated by Japanese Prime Minister Shinzo Abe after his December 2012 re-election to the post he last held in 2007. His aim was to revive the sluggish economy with “three arrows” — a massive fiscal stimulus, more aggressive monetary easing from the Bank of Japan, and structural reforms to boost Japan’s competitiveness.
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.
Book value is the value of a security or asset as entered in a company’s books.
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.
The Consumer Price Index (CPI), also called the cost-of-living index, is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly. The headline CPI includes volatile food and energy prices, while the core CPI excludes food and energy.
A corporate bond is a debt security issued by a corporation for the purpose of raising money to expand its business. 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. A corporation can borrow money by issuing bonds or getting a bank loan. Both are different forms of debt.
Correlation, in the financial world, is a statistical measure of how asset classes, securities, markets, or countries move in relation to each other.
Earnings growth is a measure of growth in a company’s net income over a specific period, often one year.
Earnings-per-share or EPS is the portion of a company’s profit allocated to each outstanding share of common stock. EPS growth rates help investors identify companies that are increasing or decreasing in profitability.
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.
Fixed-to-floating securities (preferred shares and bonds) offer a steady yield for several years, then switch to a floating rate that keeps pace with market interest rates.
A floating exchange rate is a regime where a currency’s price is set by the foreign exchange market based on supply and demand compared with other currencies. In contrast, a fixed exchange rate is one that is predominantly determined by a country’s government. The currencies of most of the world’s major economies are allowed to float freely.
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.
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.
An initial public offering (IPO) is a company’s first sale of stock to the public.
LIBOR or ICE LIBOR stands for IntercontinentalExchange 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.
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.
The Personal Consumption Expenditure (PCE) price index, also referred to as the PCE deflator, is a United States-wide indicator of the average increase in prices for all domestic personal consumption using a variety of data including U.S. Consumer Price Index and Producer Price Index prices. It is derived from personal consumption expenditures, the largest component of Gross Domestic Product in the National Income and Product Accounts of the Bureau of Economic Analysis (BEA). The less volatile measure of the PCE price index is the core PCE price index, which excludes the more volatile and seasonal food and energy prices.
The price-to-book ratio is used to compare a company’s book value to its current market price.
The price/earnings (P/E) multiple, also known as the P/E ratio, is the price of a stock divided by its earnings per share.
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SEPTEMBER 30, 2017 (UNAUDITED) | ||
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Quantitative easing is a government monetary policy used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.
Quantitative tightening is the opposite of quantitative easing. It is the plan of Federal Reserve officials to reduce the Fed’s massive balance sheet by letting the bonds it has bought mature, receiving the cash and not buying new ones.
Return on equity (ROE) measures a company’s efficiency at generating profits from shareholders’ equity.
“Risk-on” is when investors are seeking the potentially higher returns of riskier assets and put money back in the market willing to risk the money, thus risk on.
The terminal rate is the federal-funds rate at which the economy is in balance.
U.S. Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.
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 indexes. 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 September 30, 2017.
ACTUAL EXPENSES
The first line of the table below provides information about actual account values and actual expenses, based upon the actual total return of the fund during the most recent six-month period ended September 30, 2017. 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 Long/Short Fund — Investor Class and the Income Fund have no contractual limitation on expenses.
44
Table of Contents
SEPTEMBER 30, 2017 (UNAUDITED) | ||
| ||
|
Account Value | Expenses | Annualized | ||||||||||||||
Fund/Class and Return | Beginning of Period April 1, 2017 | End of Period September 30, 2017 | Paid During Period* | Expense Ratio* | ||||||||||||
Core Growth Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,107.80 | $6.39 | 1.21% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.00 | $6.12 | 1.21% | ||||||||||||
Core Growth Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,108.60 | $5.55 | 1.05% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.80 | $5.32 | 1.05% | ||||||||||||
Emerging India Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,108.70 | $9.09 | 1.72% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.44 | $8.69 | 1.72% | ||||||||||||
Emerging India Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,108.10 | $7.93 | 1.50% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.55 | $7.59 | 1.50% | ||||||||||||
Emerging Markets Select Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,137.00 | $8.09 | 1.51% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.50 | $7.64 | 1.51% | ||||||||||||
Emerging Markets Select Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,139.80 | $6.49 | 1.21% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.00 | $6.12 | 1.21% | ||||||||||||
Emerging Markets Small Cap Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,163.40 | $10.63 | 1.96% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.24 | $9.90 | 1.96% | ||||||||||||
Emerging Markets Small Cap Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,167.30 | $9.83 | 1.81% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.99 | $9.15 | 1.81% | ||||||||||||
Frontier Emerging Small Countries Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,100.00 | $11.95 | 2.27% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.69 | $11.46 | 2.27% | ||||||||||||
Frontier Emerging Small Countries Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,099.60 | $10.90 | 2.07% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,014.69 | $10.45 | 2.07% | ||||||||||||
Global Opportunities Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,136.00 | $8.25 | 1.54% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.35 | $7.79 | 1.54% | ||||||||||||
Global Opportunities Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,139.40 | $7.29 | 1.36% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.25 | $6.88 | 1.36% | ||||||||||||
International Growth Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,161.20 | $7.80 | 1.44% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.85 | $7.28 | 1.44% | ||||||||||||
International Growth Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,161.80 | $7.32 | 1.35% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.30 | $6.83 | 1.35% | ||||||||||||
International Opportunities Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,108.60 | $11.68 | 2.21% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.99 | $11.16 | 2.21% | ||||||||||||
International Opportunities Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,111.10 | $10.37 | 1.96% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.24 | $9.90 | 1.96% | ||||||||||||
Large Cap Value Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,046.40 | $5.64 | 1.10% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.55 | $5.57 | 1.10% | ||||||||||||
Large Cap Value Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,048.40 | $4.88 | 0.95% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.31 | $4.81 | 0.95% |
45
Table of Contents
WASATCH FUNDS | SEPTEMBER 30, 2017 (UNAUDITED) | |
| ||
|
Operating Expenses (continued)
Account Value | Expenses Paid | Annualized Expense | ||||||||||||||
Fund/Class and Return | Beginning of Period April 1, 2017 | End of Period September 30, 2017 | ||||||||||||||
Long/Short Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $967.70 | $11.64 | 2.36% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.24 | $11.91 | 2.36% | ||||||||||||
Long/Short Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $969.40 | $10.71 | 2.17% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,014.19 | $10.96 | 2.17% | ||||||||||||
Micro Cap Fund | ||||||||||||||||
Actual | $1,000.00 | $1,185.90 | $9.15 | 1.67% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.70 | $8.44 | 1.67% | ||||||||||||
Micro Cap Value Fund | ||||||||||||||||
Actual | $1,000.00 | $1,137.30 | $9.59 | 1.79% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.09 | $9.05 | 1.79% | ||||||||||||
Small Cap Growth Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,090.90 | $6.39 | 1.22% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.95 | $6.17 | 1.22% | ||||||||||||
Small Cap Growth Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,091.80 | $5.51 | 1.05% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.80 | $5.32 | 1.05% | ||||||||||||
Small Cap Value Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,093.70 | $6.35 | 1.21% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.00 | $6.12 | 1.21% | ||||||||||||
Small Cap Value Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,094.70 | $5.51 | 1.05% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.80 | $5.32 | 1.05% | ||||||||||||
Strategic Income Fund | ||||||||||||||||
Actual | $1,000.00 | $1,057.50 | $4.90 | 0.95% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.31 | $4.81 | 0.95% | ||||||||||||
Ultra Growth Fund | ||||||||||||||||
Actual | $1,000.00 | $1,161.30 | $6.99 | 1.29% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.60 | $6.53 | 1.29% | ||||||||||||
World Innovators Fund — Investor Class | ||||||||||||||||
Actual | $1,000.00 | $1,152.50 | $9.87 | 1.83% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.89 | $9.25 | 1.83% | ||||||||||||
World Innovators Fund — Institutional Class | ||||||||||||||||
Actual | $1,000.00 | $1,154.00 | $8.37 | 1.55% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,017.30 | $7.84 | 1.55% | ||||||||||||
Income Fund | ||||||||||||||||
Actual | $1,000.00 | $1,014.50 | $3.84 | 0.76% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,021.26 | $3.85 | 0.76% | ||||||||||||
U.S. Treasury Fund | ||||||||||||||||
Actual | $1,000.00 | $1,054.80 | $3.55 | 0.69% | ||||||||||||
Hypothetical (5% before expenses) | $1,000.00 | $1,021.61 | $3.50 | 0.69% |
*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 (183/365).
46
Table of Contents
WASATCH CORE GROWTH FUND (WGROX / WIGRX) | SEPTEMBER 30, 2017 | |
| ||
|
Shares | Value | |||||||
COMMON STOCKS 97.4% | ||||||||
Airlines 2.7% | ||||||||
185,476 | Allegiant Travel Co. | $ | 24,427,189 | |||||
570,425 | Spirit Airlines, Inc.* | 19,057,899 | ||||||
|
| |||||||
43,485,088 | ||||||||
|
| |||||||
Application Software 7.0% | ||||||||
436,556 | Guidewire Software, Inc.* | 33,990,250 | ||||||
215,318 | Tyler Technologies, Inc.* | 37,534,234 | ||||||
144,176 | Ultimate Software Group, Inc. (The)* | 27,335,769 | ||||||
414,724 | Zendesk, Inc.* | 12,072,616 | ||||||
|
| |||||||
110,932,869 | ||||||||
|
| |||||||
Asset Management & Custody Banks 2.0% | ||||||||
365,191 | Hamilton Lane, Inc., Class A | 9,805,378 | ||||||
368,969 | SEI Investments Co. | 22,529,247 | ||||||
|
| |||||||
32,334,625 | ||||||||
|
| |||||||
Automotive Retail 2.3% | ||||||||
651,578 | Monro, Inc. | 36,520,947 | ||||||
|
| |||||||
Biotechnology 3.7% | ||||||||
1,908,420 | Abcam plc (United Kingdom) | 26,084,273 | ||||||
1,006,772 | Sangamo Therapeutics Inc.* | 15,101,580 | ||||||
311,800 | Seattle Genetics, Inc.* | 16,965,038 | ||||||
|
| |||||||
58,150,891 | ||||||||
|
| |||||||
Building Products 2.6% | ||||||||
452,234 | Trex Co., Inc.* | 40,732,716 | ||||||
|
| |||||||
Consumer Finance 2.0% | ||||||||
112,207 | Credit Acceptance Corp.* | 31,437,035 | ||||||
|
| |||||||
Data Processing & Outsourced Services 2.3% | ||||||||
390,466 | Euronet Worldwide, Inc.* | 37,012,272 | ||||||
|
| |||||||
Distributors 1.1% | ||||||||
163,176 | Pool Corp. | 17,650,748 | ||||||
|
| |||||||
Diversified Banks 2.1% | ||||||||
7,321,641 | City Union Bank Ltd. (India) | 18,382,565 | ||||||
2,917,620 | Yes Bank Ltd. (India) | 15,602,031 | ||||||
|
| |||||||
33,984,596 | ||||||||
|
| |||||||
Diversified Support Services 5.2% | ||||||||
1,452,924 | Copart, Inc.* | 49,936,998 | ||||||
606,047 | Healthcare Services Group, Inc. | 32,708,356 | ||||||
|
| |||||||
82,645,354 | ||||||||
|
| |||||||
Environmental & Facilities Services 1.9% | ||||||||
429,742 | Waste Connections, Inc. | 30,064,750 | ||||||
|
| |||||||
General Merchandise Stores 1.7% | ||||||||
581,194 | Ollie’s Bargain Outlet Holdings, Inc.* | 26,967,402 | ||||||
|
| |||||||
Health Care Equipment 0.9% | ||||||||
153,145 | Cantel Medical Corp. | 14,421,665 | ||||||
|
| |||||||
Health Care Facilities 2.1% | ||||||||
1,489,903 | Ensign Group, Inc. (The) | 33,656,909 | ||||||
|
| |||||||
Health Care REITs 1.6% | ||||||||
1,301,097 | CareTrust REIT, Inc. | 24,772,887 | ||||||
|
| |||||||
Health Care Supplies 0.1% | ||||||||
23,248 | Neogen Corp.* | 1,800,790 | ||||||
|
| |||||||
Homebuilding 1.4% | ||||||||
333,585 | Installed Building Products, Inc.* | 21,616,308 | ||||||
|
|
Shares | Value | |||||||
Industrial Machinery 6.1% | ||||||||
334,551 | Altra Industrial Motion Corp. | $ | 16,091,903 | |||||
493,598 | Barnes Group, Inc. | 34,769,043 | ||||||
284,169 | RBC Bearings, Inc.* | 35,563,751 | ||||||
204,450 | Sun Hydraulics Corp. | 11,040,300 | ||||||
|
| |||||||
97,464,997 | ||||||||
|
| |||||||
Internet & Direct Marketing Retail 2.2% | ||||||||
508,640 | MakeMyTrip Ltd.* (India) | 14,623,400 | ||||||
294,885 | Wayfair, Inc., Class A* | 19,875,249 | ||||||
|
| |||||||
34,498,649 | ||||||||
|
| |||||||
Internet Software & Services 3.8% | ||||||||
397,730 | Cimpress N.V.* | 38,842,312 | ||||||
429,592 | Envestnet, Inc.* | 21,909,192 | ||||||
|
| |||||||
60,751,504 | ||||||||
|
| |||||||
IT Consulting & Other Services 4.3% | ||||||||
319,418 | EPAM Systems, Inc.* | 28,086,425 | ||||||
444,522 | InterXion Holding N.V.* (Netherlands) | 22,639,505 | ||||||
377,986 | Luxoft Holding, Inc.* (Switzerland) | 18,067,731 | ||||||
|
| |||||||
68,793,661 | ||||||||
|
| |||||||
Leisure Facilities 1.8% | ||||||||
1,086,506 | Planet Fitness, Inc., Class A | 29,313,932 | ||||||
|
| |||||||
Life Sciences Tools & Services 3.2% | ||||||||
452,985 | ICON plc* (Ireland) | 51,585,932 | ||||||
|
| |||||||
Managed Health Care 1.4% | ||||||||
439,385 | HealthEquity, Inc.* | 22,224,093 | ||||||
|
| |||||||
Personal Products 1.1% | ||||||||
283,139 | Nu Skin Enterprises, Inc., Class A | 17,407,386 | ||||||
|
| |||||||
Real Estate Services 1.6% | ||||||||
660,390 | HFF, Inc., Class A | 26,125,028 | ||||||
|
| |||||||
Regional Banks 12.1% | ||||||||
602,244 | Eagle Bancorp, Inc.* | 40,380,460 | ||||||
340,636 | Independent Bank Corp. | 25,428,477 | ||||||
727,101 | Metro Bank plc* (United Kingdom) | 32,931,843 | ||||||
305,049 | South State Corp. | 27,469,663 | ||||||
436,026 | Texas Capital Bancshares, Inc.* | 37,411,031 | ||||||
564,573 | Webster Financial Corp. | 29,668,311 | ||||||
|
| |||||||
193,289,785 | ||||||||
|
| |||||||
Restaurants 0.8% | ||||||||
681,753 | Fiesta Restaurant Group, Inc.* | 12,953,307 | ||||||
|
| |||||||
Semiconductors 3.2% | ||||||||
396,940 | Cavium, Inc.* | 26,174,223 | ||||||
237,314 | Monolithic Power Systems, Inc. | 25,285,807 | ||||||
|
| |||||||
51,460,030 | ||||||||
|
| |||||||
Specialty Chemicals 2.4% | ||||||||
461,056 | Balchem Corp. | 37,479,242 | ||||||
|
| |||||||
Specialty Stores 1.4% | ||||||||
406,157 | Five Below, Inc.* | 22,289,896 | ||||||
|
| |||||||
Systems Software 2.5% | ||||||||
642,523 | Fortinet, Inc.* | 23,028,024 | ||||||
188,794 | Proofpoint, Inc.* | 16,466,613 | ||||||
|
| |||||||
39,494,637 | ||||||||
|
| |||||||
Trading Companies & Distributors 2.2% | ||||||||
605,434 | WESCO International, Inc.* | 35,266,531 | ||||||
|
|
47
Table of Contents
WASATCH CORE GROWTH FUND (WGROX / WIGRX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Shares | Value | |||||||
Trucking 4.6% | ||||||||
778,810 | Knight-Swift Transportation Holdings, Inc.* | $ | 32,359,556 | |||||
375,268 | Old Dominion Freight Line, Inc. | 41,320,759 | ||||||
|
| |||||||
73,680,315 | ||||||||
|
| |||||||
Total Common Stocks (cost $967,086,219) | 1,552,266,777 | |||||||
|
| |||||||
PREFERRED STOCKS 0.2% | ||||||||
Systems Software 0.2% | ||||||||
209,500 | DocuSign, Inc., Series F Pfd.* *** † | 4,024,495 | ||||||
|
| |||||||
Total Preferred Stocks (cost $4,000,004) | 4,024,495 | |||||||
|
| |||||||
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 1.9% | ||||||||
Repurchase Agreement 1.9% | ||||||||
$30,607,602 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $30,750,000 of United States Treasury Notes 2.250% due 11/15/24; value: $31,220,906; repurchase proceeds: $30,607,908 (cost $30,607,602) | $ | 30,607,602 | |||||
|
| |||||||
Total Short-Term Investments (cost $30,607,602) | 30,607,602 | |||||||
|
| |||||||
Total Investments (cost $1,001,693,825) 99.5% | 1,586,898,874 | |||||||
Other Assets less Liabilities 0.5% | 7,348,717 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 1,594,247,591 | ||||||
|
| |||||||
*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).
REIT Real Estate Investment Trust. See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Core Growth Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
India | 3.1 | |||
Ireland | 3.3 | |||
Netherlands | 1.5 | |||
Switzerland | 1.2 | |||
United Kingdom | 3.8 | |||
United States | 87.1 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
48
Table of Contents
WASATCH EMERGING INDIA FUND (WAINX / WIINX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 99.5% | ||||||||
Apparel, Accessories & Luxury Goods 1.9% | ||||||||
15,776 | Page Industries Ltd. (India) | $ | 4,468,096 | |||||
|
| |||||||
Auto Parts & Equipment 4.5% | ||||||||
4,993 | Bosch Ltd. (India) | 1,567,001 | ||||||
462,509 | Endurance Technologies Ltd. (India) | 7,045,261 | ||||||
20,185 | WABCO India Ltd. (India) | 1,854,103 | ||||||
|
| |||||||
10,466,365 | ||||||||
|
| |||||||
Building Products 4.1% | ||||||||
484,837 | Kajaria Ceramics Ltd. (India) | 5,265,514 | ||||||
332,780 | Somany Ceramics Ltd. (India) | 4,335,514 | ||||||
|
| |||||||
9,601,028 | ||||||||
|
| |||||||
Commodity Chemicals 4.9% | ||||||||
1,377,194 | Berger Paints India Ltd. (India) | 5,165,532 | ||||||
524,752 | Gulf Oil Lubricants India Ltd. (India) | 6,185,839 | ||||||
|
| |||||||
11,351,371 | ||||||||
|
| |||||||
Consumer Finance 10.4% | ||||||||
955,558 | AU Small Finance Bank Ltd.* (India) | 8,294,571 | ||||||
467,386 | Bajaj Finance Ltd. (India) | 13,137,897 | ||||||
275,056 | Repco Home Finance Ltd. (India) | 2,652,867 | ||||||
|
| |||||||
24,085,335 | ||||||||
|
| |||||||
Department Stores 2.9% | ||||||||
304,497 | V-Mart Retail Ltd. (India) | 6,712,732 | ||||||
|
| |||||||
Diversified Banks 7.4% | ||||||||
120,231 | HDFC Bank Ltd. ADR (India) | 11,586,661 | ||||||
138,349 | IndusInd Bank Ltd. (India) | 3,548,741 | ||||||
125,025 | Kotak Mahindra Bank Ltd. (India) | 1,916,144 | ||||||
|
| |||||||
17,051,546 | ||||||||
|
| |||||||
Diversified Chemicals 1.8% | ||||||||
346,066 | Pidilite Industries Ltd. (India) | 4,214,832 | ||||||
|
| |||||||
Electrical Components & Equipment 1.5% | ||||||||
316,646 | Amara Raja Batteries Ltd. (India) | 3,434,775 | ||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 1.9% | ||||||||
16,155 | Bayer CropScience Ltd. (India) | 964,551 | ||||||
291,385 | UPL Ltd. (India) | 3,471,015 | ||||||
|
| |||||||
4,435,566 | ||||||||
|
| |||||||
Financial Exchanges & Data 1.4% | ||||||||
116,122 | CRISIL Ltd. (India) | 3,235,310 | ||||||
|
| |||||||
Food Retail 4.7% | ||||||||
655,442 | Avenue Supermarts Ltd.* (India) | 10,897,275 | ||||||
|
| |||||||
Health Care Services 2.5% | ||||||||
466,591 | Dr. Lal PathLabs Ltd. (India) | 5,679,167 | ||||||
|
| |||||||
Hotels, Resorts & Cruise Lines 1.9% | ||||||||
1,671,385 | Byke Hospitality Ltd. (The) (India) | 4,415,148 | ||||||
|
| |||||||
Housewares & Specialties 1.6% | ||||||||
487,269 | LA Opala RG Ltd. (India) | 3,670,183 | ||||||
|
| |||||||
Human Resource & Employment Services 3.0% | ||||||||
548,447 | Quess Corp. Ltd.* (India) | 7,027,712 | ||||||
|
| |||||||
Industrial Machinery 2.1% | ||||||||
51,833 | AIA Engineering Ltd. (India) | 1,055,387 | ||||||
569,687 | Elgi Equipments Ltd. (India) | 1,866,396 | ||||||
93,174 | Vesuvius India Ltd. (India) | 1,896,074 | ||||||
|
| |||||||
4,817,857 | ||||||||
|
|
Shares | Value | |||||||
Internet & Direct Marketing Retail 3.7% | ||||||||
297,873 | MakeMyTrip Ltd.* (India) | $ | 8,563,849 | |||||
|
| |||||||
Life & Health Insurance 2.9% | ||||||||
642,669 | ICICI Prudential Life Insurance Co. Ltd. (India) | 3,823,349 | ||||||
308,210 | Max Financial Services Ltd.* (India) | 2,788,612 | ||||||
|
| |||||||
6,611,961 | ||||||||
|
| |||||||
Life Sciences Tools & Services 3.4% | ||||||||
593,786 | Divi’s Laboratories Ltd. (India) | 7,841,848 | ||||||
|
| |||||||
Office Services & Supplies 1.6% | ||||||||
16,805 | 3M India Ltd.* (India) | 3,704,728 | ||||||
|
| |||||||
Packaged Foods & Meats 3.4% | ||||||||
52,930 | Britannia Industries Ltd. (India) | 3,520,834 | ||||||
345,540 | Manpasand Beverages Ltd. (India) | 2,499,504 | ||||||
968,967 | Prabhat Dairy Ltd. (India) | 1,878,004 | ||||||
|
| |||||||
7,898,342 | ||||||||
|
| |||||||
Personal Products 5.2% | ||||||||
171,985 | Colgate-Palmolive India Ltd. (India) | 2,778,169 | ||||||
326,592 | Cupid Ltd. (India) | 1,371,716 | ||||||
405,357 | Dabur India Ltd. (India) | 1,894,293 | ||||||
234,225 | Godrej Consumer Products Ltd. (India) | 3,286,393 | ||||||
21,109 | Procter & Gamble Hygiene & Health Care Ltd. (India) | 2,751,732 | ||||||
|
| |||||||
12,082,303 | ||||||||
|
| |||||||
Pharmaceuticals 2.7% | ||||||||
142,978 | Amrutanjan Health Care Ltd. (India) | 1,287,065 | ||||||
406,949 | Natco Pharma Ltd. (India) | 4,903,075 | ||||||
|
| |||||||
6,190,140 | ||||||||
|
| |||||||
Property & Casualty Insurance 1.0% | ||||||||
151,294 | ICICI Lombard General Insurance Co. Ltd.* *** † (India) | 1,521,247 | ||||||
73,677 | ICICI Lombard General Insurance Co. Ltd.* (India) | 768,127 | ||||||
|
| |||||||
2,289,374 | ||||||||
|
| |||||||
Soft Drinks 2.1% | ||||||||
628,668 | Varun Beverages Ltd. (India) | 4,910,867 | ||||||
|
| |||||||
Specialty Chemicals 3.2% | ||||||||
312,472 | Asian Paints Ltd. (India) | 5,410,616 | ||||||
540,619 | SH Kelkar & Co. Ltd. (India) | 2,071,187 | ||||||
|
| |||||||
7,481,803 | ||||||||
|
| |||||||
Textiles 1.5% | ||||||||
3,303,763 | Welspun India Ltd. (India) | 3,436,784 | ||||||
|
| |||||||
Thrifts & Mortgage Finance 10.3% | ||||||||
320,256 | GRUH Finance Ltd. (India) | 2,387,702 | ||||||
422,889 | Housing Development Finance Corp. Ltd. (India) | 11,201,832 | ||||||
207,160 | Indiabulls Housing Finance Ltd. (India) | 3,793,070 | ||||||
295,733 | PNB Housing Finance Ltd. (India) | 6,592,872 | ||||||
|
| |||||||
23,975,476 | ||||||||
|
| |||||||
Total Common Stocks (cost $178,037,715) | 230,551,773 | |||||||
|
|
49
Table of Contents
WASATCH EMERGING INDIA FUND (WAINX / WIINX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 1.4% | ||||||||
Repurchase Agreement 1.4% | ||||||||
$3,284,123 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $3,300,000 of United States Treasury Notes 2.250% due 11/15/24; value: $3,350,536; repurchase proceeds: $3,284,156 (cost $3,284,123) | $ | 3,284,123 | |||||
|
| |||||||
Total Short-Term Investments (cost $3,284,123) | 3,284,123 | |||||||
|
| |||||||
Total Investments (cost $181,321,838) 100.9% | 233,835,896 | |||||||
Liabilities less Other Assets (0.9%) | (2,147,397 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 231,688,499 | ||||||
|
| |||||||
*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).
ADR American Depositary Receipt.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Emerging India Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
India | 100.0 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
50
Table of Contents
WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 98.2% | ||||||||
Airport Services 4.4% | ||||||||
108,569 | Grupo Aeroportuario del Pacifico S.A.B. de C.V., Class B (Mexico) | $ | 1,111,923 | |||||
44,506 | Grupo Aeroportuario del Sureste S.A.B. de C.V., Class B (Mexico) | 848,816 | ||||||
|
| |||||||
1,960,739 | ||||||||
|
| |||||||
Biotechnology 4.4% | ||||||||
4,498 | Medytox, Inc. (Korea) | 1,941,992 | ||||||
|
| |||||||
Cable & Satellite 3.8% | ||||||||
7,757 | Naspers Ltd., Class N (South Africa) | 1,673,008 | ||||||
|
| |||||||
Commercial Printing 0.0% | ||||||||
2,683 | Novus Holdings Ltd. (South Africa) | 1,294 | ||||||
|
| |||||||
Commodity Chemicals 1.9% | ||||||||
225,646 | Berger Paints India Ltd. (India) | 846,345 | ||||||
|
| |||||||
Consumer Finance 5.9% | ||||||||
93,236 | Bajaj Finance Ltd. (India) | 2,620,799 | ||||||
|
| |||||||
Diversified Banks 8.4% | ||||||||
50,817 | HDFC Bank Ltd. (India) | 1,400,385 | ||||||
194,576 | Kasikornbank Public Co. Ltd. (Thailand) | 1,248,554 | ||||||
690,889 | PT Bank Central Asia Tbk (Indonesia) | 1,041,283 | ||||||
|
| |||||||
3,690,222 | ||||||||
|
| |||||||
Drug Retail 4.4% | ||||||||
81,558 | Raia Drogasil S.A. (Brazil) | 1,931,342 | ||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 1.8% | ||||||||
65,970 | UPL Ltd. (India) | 785,843 | ||||||
|
| |||||||
Food Retail 3.4% | ||||||||
21,067 | BGF Retail Co. Ltd. (Korea) | 1,526,661 | ||||||
|
| |||||||
Health Care Facilities 5.5% | ||||||||
725,737 | Bangkok Dusit Medical Services Public Co. Ltd., Class F (Thailand) | 446,105 | ||||||
53,268 | NMC Health plc (United Arab Emirates) | 1,963,639 | ||||||
|
| |||||||
2,409,744 | ||||||||
|
| |||||||
Highways & Railtracks 1.3% | ||||||||
55,237 | Promotora y Operadora de Infraestructura S.A.B. de C.V. (Mexico) | 583,189 | ||||||
|
| |||||||
Home Furnishings 2.2% | ||||||||
97,000 | Nien Made Enterprise Co. Ltd. (Taiwan) | 994,823 | ||||||
|
| |||||||
Industrial Machinery 1.6% | ||||||||
105,135 | Weg S.A. (Brazil) | 710,383 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 7.9% | ||||||||
38,708 | Ctrip.com International Ltd., ADR* (China) | 2,041,460 | ||||||
49,653 | MakeMyTrip Ltd.* (India) | 1,427,524 | ||||||
|
| |||||||
3,468,984 | ||||||||
|
| |||||||
Internet Software & Services 16.8% | ||||||||
15,042 | Alibaba Group Holding Ltd., ADR* (China) | 2,597,904 | ||||||
9,954 | MercadoLibre, Inc. (Brazil) | 2,577,389 | ||||||
51,825 | Tencent Holdings Ltd. (China) | 2,230,473 | ||||||
|
| |||||||
7,405,766 | ||||||||
|
| |||||||
Life & Health Insurance 4.3% | ||||||||
76,914 | Discovery Ltd. (South Africa) | 799,093 | ||||||
182,568 | ICICI Prudential Life Insurance Co. Ltd. (India) | 1,086,129 | ||||||
|
| |||||||
1,885,222 | ||||||||
|
|
Shares | Value | |||||||
Marine Ports & Services 1.9% | ||||||||
404,100 | International Container Terminal Services, Inc. (Philippines) | $ | 827,299 | |||||
|
| |||||||
Packaged Foods & Meats 4.8% | ||||||||
12,233 | Britannia Industries Ltd. (India) | 813,723 | ||||||
29,600 | M Dias Branco S.A. (Brazil) | 464,493 | ||||||
369,651 | Vitasoy International Holdings Ltd. (China) | 823,382 | ||||||
|
| |||||||
2,101,598 | ||||||||
|
| |||||||
Personal Products 2.9% | ||||||||
39,921 | Godrej Consumer Products Ltd. (India) | 560,129 | ||||||
908 | LG Household & Health Care Ltd. (Korea) | 742,033 | ||||||
|
| |||||||
1,302,162 | ||||||||
|
| |||||||
Regional Banks 2.3% | ||||||||
170,103 | Grupo Financiero Interacciones S.A. de C.V., Class O (Mexico) | 1,015,387 | ||||||
|
| |||||||
Restaurants 1.8% | ||||||||
215,370 | Alsea S.A.B. de C.V. (Mexico) | 794,539 | ||||||
|
| |||||||
Specialty Chemicals 2.4% | ||||||||
60,148 | Asian Paints Ltd. (India) | 1,041,494 | ||||||
|
| |||||||
Textiles 1.1% | ||||||||
471,810 | Welspun India Ltd. (India) | 490,807 | ||||||
|
| |||||||
Thrifts & Mortgage Finance 3.0% | ||||||||
60,026 | PNB Housing Finance Ltd. (India) | 1,338,179 | ||||||
|
| |||||||
Total Common Stocks (cost $32,877,142) | 43,347,821 | |||||||
|
| |||||||
PREFERRED STOCKS 2.3% | ||||||||
Diversified Banks 2.3% | ||||||||
88,613 | Banco Davivienda S.A., 2.86% (Colombia) | 1,003,628 | ||||||
|
| |||||||
Total Preferred Stocks (cost $824,234) | 1,003,628 | |||||||
|
| |||||||
Total Investments (cost $33,701,376) 100.5% | 44,351,449 | |||||||
Liabilities less Other Assets (0.5%) | (209,814 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 44,141,635 | ||||||
|
| |||||||
*Non-income producing.
ADR American Depositary Receipt.
See Notes to Financial Statements. |
51
Table of Contents
WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
At September 30, 2017, Wasatch Emerging Markets Select Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Brazil | 12.8 | |||
China | 17.3 | |||
Colombia | 2.3 | |||
India | 28.0 | |||
Indonesia | 2.4 | |||
Korea | 9.5 | |||
Mexico | 9.8 | |||
Philippines | 1.9 | |||
South Africa | 5.6 | |||
Taiwan | 2.2 | |||
Thailand | 3.8 | |||
United Arab Emirates | 4.4 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
52
Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 98.4% | ||||||||
Air Freight & Logistics 0.9% | ||||||||
4,059,900 | Aramex PJSC (United Arab Emirates) | $ | 5,505,174 | |||||
|
| |||||||
Airport Services 2.5% | ||||||||
1,832,412 | Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (Mexico) | 10,136,126 | ||||||
318,747 | Grupo Aeroportuario del Sureste S.A.B. de C.V., Class B (Mexico) | 6,079,123 | ||||||
|
| |||||||
16,215,249 | ||||||||
|
| |||||||
Application Software 0.5% | ||||||||
553,000 | Linx S.A. (Brazil) | 3,415,272 | ||||||
|
| |||||||
Asset Management & Custody Banks 0.6% | ||||||||
1,831,330 | Peregrine Holdings Ltd. (South Africa) | 3,961,936 | ||||||
|
| |||||||
Auto Parts & Equipment 2.9% | ||||||||
327,894 | Cub Elecparts, Inc. (Taiwan) | 3,854,841 | ||||||
672,615 | Hu Lane Associate, Inc. (Taiwan) | 3,770,761 | ||||||
2,113,768 | Minth Group Ltd. (China) | 11,067,273 | ||||||
|
| |||||||
18,692,875 | ||||||||
|
| |||||||
Automobile Manufacturers 0.7% | ||||||||
297,465 | Indus Motor Co. Ltd. (Pakistan) | 4,821,544 | ||||||
|
| |||||||
Automotive Retail 3.7% | ||||||||
11,639,124 | China Yongda Automobiles Services Holdings Ltd. (China) | 15,644,785 | ||||||
3,646,735 | Zhongsheng Group Holdings Ltd. (China) | 7,898,863 | ||||||
|
| |||||||
23,543,648 | ||||||||
|
| |||||||
Biotechnology 2.9% | ||||||||
50,919 | China Biologic Products Holdings, Inc.* (China) | 4,698,296 | ||||||
32,508 | Medytox, Inc. (Korea) | 14,035,191 | ||||||
|
| |||||||
18,733,487 | ||||||||
|
| |||||||
Building Products 1.7% | ||||||||
1,032,420 | Kajaria Ceramics Ltd. (India) | 11,212,473 | ||||||
|
| |||||||
Commodity Chemicals 1.1% | ||||||||
1,819,448 | Berger Paints India Ltd. (India) | 6,824,323 | ||||||
|
| |||||||
Communications Equipment 0.5% | ||||||||
212,237 | Advanced Ceramic X Corp. (Taiwan) | 2,953,569 | ||||||
|
| |||||||
Consumer Finance 8.7% | ||||||||
591,675 | AU Small Finance Bank Ltd.* (India) | 5,135,942 | ||||||
298,908 | Bajaj Finance Ltd. (India) | 8,402,097 | ||||||
1,617,161 | Credito Real S.A.B. de C.V. SOFOM ER (Mexico) | 2,742,336 | ||||||
111,121 | KRUK S.A. (Poland) | 8,936,272 | ||||||
4,667,275 | Muangthai Leasing Public Co. Ltd. (Thailand) | 4,933,177 | ||||||
396,449 | Repco Home Finance Ltd. (India) | 3,823,681 | ||||||
6,155,249 | Srisawad Corp. Public Co. Ltd. (Thailand) | 11,073,911 | ||||||
3,345,494 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 11,215,948 | ||||||
|
| |||||||
56,263,364 | ||||||||
|
| |||||||
Data Processing & Outsourced Services 0.5% | ||||||||
6,061,727 | My EG Services Berhad (Malaysia) | 2,942,934 | ||||||
|
| |||||||
Department Stores 0.9% | ||||||||
495,946 | Poya International Co. Ltd. (Taiwan) | 5,920,474 | ||||||
|
| |||||||
Diversified Banks 3.2% | ||||||||
1,151,467 | Moneta Money Bank AS (Czech Republic) | 4,054,231 | ||||||
1,525,814 | Security Bank Corp. (Philippines) | 7,304,756 | ||||||
546,819 | TCS Group Holding plc GDR (Russia) | 8,995,172 | ||||||
|
| |||||||
20,354,159 | ||||||||
|
|
Shares | Value | |||||||
Diversified Chemicals 1.0% | ||||||||
508,408 | Pidilite Industries Ltd. (India) | $ | 6,192,039 | |||||
|
| |||||||
Drug Retail 4.4% | ||||||||
1,306,802 | Clicks Group Ltd. (South Africa) | 15,253,544 | ||||||
549,807 | Raia Drogasil S.A. (Brazil) | 13,019,758 | ||||||
|
| |||||||
28,273,302 | ||||||||
|
| |||||||
Electrical Components & Equipment 3.4% | ||||||||
363,924 | Amara Raja Batteries Ltd. (India) | 3,947,617 | ||||||
713,580 | Bizlink Holding, Inc. (Taiwan) | 6,518,324 | ||||||
647,021 | Voltronic Power Technology Corp. (Taiwan) | 11,607,289 | ||||||
|
| |||||||
22,073,230 | ||||||||
|
| |||||||
Electronic Components 4.1% | ||||||||
72,340 | Chunghwa Precision Test Tech Co. Ltd. (Taiwan) | 2,850,755 | ||||||
1,083,851 | Sunny Optical Technology Group Co. Ltd. (China) | 17,232,615 | ||||||
23,765,232 | Tongda Group Holdings Ltd. (China) | 6,358,407 | ||||||
|
| |||||||
26,441,777 | ||||||||
|
| |||||||
Electronic Equipment & Instruments 2.1% | ||||||||
1,968,676 | Chroma ATE, Inc. (Taiwan) | 6,946,588 | ||||||
185,016 | SFA Engineering Corp. (Korea) | 6,679,540 | ||||||
|
| |||||||
13,626,128 | ||||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 1.4% | ||||||||
66,187 | Bayer CropScience Ltd. (India) | 3,951,765 | ||||||
439,447 | UPL Ltd. (India) | 5,234,748 | ||||||
|
| |||||||
9,186,513 | ||||||||
|
| |||||||
Food Retail 1.1% | ||||||||
95,231 | BGF Retail Co. Ltd. (Korea) | 6,901,098 | ||||||
|
| |||||||
Footwear 1.0% | ||||||||
86,909 | CCC S.A. (Poland) | 6,573,550 | ||||||
|
| |||||||
General Merchandise Stores 3.1% | ||||||||
847,032 | Magazine Luiza S.A. (Brazil) | 19,846,943 | ||||||
|
| |||||||
Health Care Equipment 1.1% | ||||||||
177,258 | DIO Corp.* (Korea) | 4,697,062 | ||||||
89,506 | Value Added Technologies Co. Ltd. (Korea) | 2,133,421 | ||||||
|
| |||||||
6,830,483 | ||||||||
|
| |||||||
Health Care Facilities 1.8% | ||||||||
316,886 | NMC Health plc (United Arab Emirates) | 11,681,490 | ||||||
|
| |||||||
Health Care Services 0.4% | ||||||||
215,205 | Dr. Lal PathLabs Ltd. (India) | 2,619,393 | ||||||
|
| |||||||
Health Care Supplies 0.3% | ||||||||
4,262,899 | Yestar Healthcare Holdings Co. Ltd. (China) | 1,882,713 | ||||||
|
| |||||||
Highways & Railtracks 2.5% | ||||||||
2,553,850 | EcoRodovias Infraestrutura e Logistica S.A. (Brazil) | 9,200,521 | ||||||
9,084,875 | Yuexiu Transport Infrastructure Ltd. (China) | 6,826,798 | ||||||
|
| |||||||
16,027,319 | ||||||||
|
| |||||||
Home Furnishings 3.2% | ||||||||
34,653 | Hanssem Co. Ltd. (Korea) | 4,583,690 | ||||||
12,293,522 | Man Wah Holdings Ltd. (China) | 11,016,265 | ||||||
502,878 | Nien Made Enterprise Co. Ltd. (Taiwan) | 5,157,468 | ||||||
|
| |||||||
20,757,423 | ||||||||
|
|
53
Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | ||
| ||
|
Schedule of Investments (continued)
Shares | Value | |||||||
Hotels, Resorts & Cruise Lines 2.4% | ||||||||
53,756 | China Lodging Group Ltd., ADR* (China) | $ | 6,387,288 | |||||
7,594,791 | Minor International Public Co. Ltd. (Thailand) | 9,279,992 | ||||||
|
| |||||||
15,667,280 | ||||||||
|
| |||||||
Human Resource & Employment Services 2.6% | ||||||||
276,732 | 51job, Inc. ADR* (China) | 16,772,726 | ||||||
|
| |||||||
Industrial Conglomerates 0.7% | ||||||||
7,460,260 | KAP Industrial Holdings Ltd. (South Africa) | 4,667,226 | ||||||
|
| |||||||
Industrial Machinery 1.5% | ||||||||
724,583 | Airtac International Group (Taiwan) | 9,987,986 | ||||||
|
| |||||||
Insurance Brokers 0.4% | ||||||||
497,348 | Wiz Solucoes e Corretagem de Seguros S.A. (Brazil) | 2,700,973 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 0.8% | ||||||||
185,337 | MakeMyTrip Ltd.* (India) | 5,328,439 | ||||||
|
| |||||||
Life & Health Insurance 0.6% | ||||||||
416,054 | Max Financial Services Ltd.* (India) | 3,764,359 | ||||||
|
| |||||||
Marine 0.4% | ||||||||
2,734,597 | SITC International Holdings Co. Ltd. (Hong Kong) | 2,478,487 | ||||||
|
| |||||||
Marine Ports & Services 1.2% | ||||||||
3,685,175 | International Container Terminal Services, Inc. (Philippines) | 7,544,527 | ||||||
|
| |||||||
Movies & Entertainment 1.2% | ||||||||
99,700 | Loen Entertainment, Inc. (Korea) | 7,607,963 | ||||||
|
| |||||||
Office Services & Supplies 1.1% | ||||||||
31,519 | 3M India Ltd.* (India) | 6,948,487 | ||||||
|
| |||||||
Oil & Gas Exploration & Production 0.6% | ||||||||
337,340 | Parex Resources, Inc.* (Colombia) | 4,068,898 | ||||||
|
| |||||||
Other Diversified Financial Services 0.4% | ||||||||
138,625 | PSG Group Ltd. (South Africa) | 2,397,082 | ||||||
|
| |||||||
Packaged Foods & Meats 4.8% | ||||||||
106,442 | Britannia Industries Ltd. (India) | 7,080,381 | ||||||
584,740 | Manpasand Beverages Ltd. (India) | 4,229,786 | ||||||
1,234,149 | Ulker Biskuvi Sanayi A.S. (Turkey) | 6,702,531 | ||||||
4,429,243 | Vitasoy International Holdings Ltd. (China) | 9,865,947 | ||||||
2,965,470 | Zhou Hei Ya International Holdings Co. Ltd. (China) | 2,869,957 | ||||||
|
| |||||||
30,748,602 | ||||||||
|
| |||||||
Pharmaceuticals 1.7% | ||||||||
13,017,213 | China Animal Healthcare Ltd.* *** (China) | 16,664 | ||||||
10,931 | Hanmi Pharm Co. Ltd.* (Korea) | 4,337,661 | ||||||
533,024 | Natco Pharma Ltd. (India) | 6,422,074 | ||||||
|
| |||||||
10,776,399 | ||||||||
|
| |||||||
Real Estate Operating Companies 0.8% | ||||||||
1,767,055 | Parque Arauco S.A. (Chile) | 4,886,630 | ||||||
|
|
Shares | Value | |||||||
Regional Banks 1.6% | ||||||||
666,928 | Banregio Grupo Financiero S.A.B. de C.V. (Mexico) | $ | 3,971,902 | |||||
28,484,160 | PT Bank Tabungan Negara Tbk (Indonesia) | 6,661,601 | ||||||
|
| |||||||
10,633,503 | ||||||||
|
| |||||||
Research & Consulting Services 0.0% | ||||||||
1 | Sporton International, Inc. (Taiwan) | 5 | ||||||
|
| |||||||
Restaurants 2.2% | ||||||||
1,695,008 | Alsea S.A.B. de C.V. (Mexico) | 6,253,192 | ||||||
745,984 | Gourmet Master Co. Ltd. (Taiwan) | 7,933,645 | ||||||
|
| |||||||
14,186,837 | ||||||||
|
| |||||||
Semiconductor Equipment 1.4% | ||||||||
149,266 | Koh Young Technology, Inc. (Korea) | 8,731,673 | ||||||
|
| |||||||
Semiconductors 5.1% | ||||||||
579,645 | ASPEED Technology, Inc. (Taiwan) | 13,399,655 | ||||||
276,982 | eMemory Technology, Inc. (Taiwan) | 3,548,592 | ||||||
521,352 | Silergy Corp. (Taiwan) | 11,948,940 | ||||||
581,760 | Win Semiconductors Corp. (Taiwan) | 3,721,852 | ||||||
|
| |||||||
32,619,039 | ||||||||
|
| |||||||
Specialty Chemicals 2.2% | ||||||||
21,276,024 | D&L Industries, Inc. (Philippines) | 4,230,117 | ||||||
128,961 | Frutarom Industries Ltd. (Israel) | 9,919,697 | ||||||
|
| |||||||
14,149,814 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals 1.7% | ||||||||
776,158 | Ennoconn Corp. (Taiwan) | 11,134,043 | ||||||
|
| |||||||
Thrifts & Mortgage Finance 0.8% | ||||||||
246,667 | PNB Housing Finance Ltd. (India) | 5,499,028 | ||||||
|
| |||||||
Total Common Stocks (cost $430,563,512) | 633,573,888 | |||||||
|
| |||||||
PREFERRED STOCKS 1.3% | ||||||||
Personal Products 1.3% | ||||||||
11,718 | Amorepacific Corp., 1.02% (Korea) | 1,596,026 | ||||||
13,024 | LG Household & Health Care Ltd., 1.26% (Korea) | 6,799,975 | ||||||
|
| |||||||
8,396,001 | ||||||||
|
| |||||||
Total Preferred Stocks (cost $7,842,127) | 8,396,001 | |||||||
|
| |||||||
WARRANTS 0.1% | ||||||||
Consumer Finance 0.1% | ||||||||
475,530 | Srisawad Corp. Public Co. Ltd., expiring 05/29/20* (Thailand) | 169,680 | ||||||
|
| |||||||
Total Warrants (cost $0) | 169,680 | |||||||
|
|
54
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 0.0% | ||||||||
Repurchase Agreement 0.0% | ||||||||
$114,452 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $120,000 of United States Treasury Notes 2.250% due 2/15/27; value: $119,792; repurchase proceeds: $114,454 (cost $114,452) | $ | 114,452 | |||||
|
| |||||||
Total Short-Term Investments (cost $114,452) | 114,452 | |||||||
|
| |||||||
Total Investments (cost $438,520,091) 99.8%§ | 642,254,021 | |||||||
Other Assets less Liabilities 0.2% | 1,471,871 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 643,725,892 | ||||||
|
| |||||||
*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 1.54%.
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Emerging Markets Small Cap Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Brazil | 7.5 | |||
Chile | 0.8 | |||
China | 18.5 | |||
Colombia | 0.6 | |||
Czech Republic | 0.6 | |||
Hong Kong | 0.4 | |||
India | 15.0 | |||
Indonesia | 1.0 | |||
Israel | 1.5 | |||
Korea | 10.6 | |||
Malaysia | 0.5 | |||
Mexico | 6.3 | |||
Pakistan | 0.8 | |||
Philippines | 3.0 | |||
Poland | 2.4 | |||
Russia | 1.4 | |||
South Africa | 4.1 | |||
Taiwan | 17.3 | |||
Thailand | 4.0 | |||
Turkey | 1.0 | |||
United Arab Emirates | 2.7 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
55
Table of Contents
WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | ||
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 94.0% | ||||||||
Aerospace & Defense 1.3% | ||||||||
354,038 | Aselsan Elektronik Sanayi Ve Ticaret A.S. (Turkey) | $ | 2,613,340 | |||||
|
| |||||||
Air Freight & Logistics 4.2% | ||||||||
6,065,527 | Aramex PJSC (United Arab Emirates) | 8,224,779 | ||||||
|
| |||||||
Apparel, Accessories & Luxury Goods 0.9% | ||||||||
340,000 | Phu Nhuan Jewelry JSC (Vietnam) | 1,702,506 | ||||||
|
| |||||||
Automobile Manufacturers 3.0% | ||||||||
531,618 | Honda Atlas Cars Pakistan Ltd. (Pakistan) | 2,721,783 | ||||||
198,970 | Indus Motor Co. Ltd. (Pakistan) | 3,225,061 | ||||||
|
| |||||||
5,946,844 | ||||||||
|
| |||||||
Cable & Satellite 3.2% | ||||||||
29,713 | Naspers Ltd., Class N (South Africa) | 6,408,417 | ||||||
|
| |||||||
Commercial Printing 0.0% | ||||||||
10,277 | Novus Holdings Ltd. (South Africa) | 4,957 | ||||||
|
| |||||||
Commodity Chemicals 1.2% | ||||||||
91,365 | Berger Paints Bangladesh Ltd. (Bangladesh) | 2,338,409 | ||||||
|
| |||||||
Construction Materials 2.2% | ||||||||
1,127,500 | DG Khan Cement Co. Ltd. (Pakistan) | 1,571,385 | ||||||
507,092 | Lucky Cement Ltd. (Pakistan) | 2,718,927 | ||||||
|
| |||||||
4,290,312 | ||||||||
|
| |||||||
Consumer Finance 3.5% | ||||||||
2,245,200 | Srisawad Corp. Public Co. Ltd. (Thailand) | 4,039,340 | ||||||
884,500 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 2,965,334 | ||||||
|
| |||||||
7,004,674 | ||||||||
|
| |||||||
Diversified Banks 19.0% | ||||||||
3,239,524 | Banca Transilvania S.A. (Romania) | 1,850,823 | ||||||
30,559 | Banco Macro S.A., ADR (Argentina) | 3,586,099 | ||||||
446,190 | Bank for Foreign Trade of Vietnam JSC (Vietnam) | 738,202 | ||||||
1,929,879 | CIMB Group Holdings Berhad (Malaysia) | 2,879,393 | ||||||
658,651 | Commercial International Bank S.A.E (Egypt) | 3,043,229 | ||||||
32,472 | Credicorp Ltd. (Peru) | 6,657,410 | ||||||
80,473 | Grupo Financiero Galicia S.A., ADR (Argentina) | 4,147,578 | ||||||
206,025 | Grupo Supervielle S.A., ADR (Argentina) | 5,086,757 | ||||||
2,137,182 | National Bank of Kuwait SAK (Kuwait) | 5,387,199 | ||||||
155,482 | TBC Bank Group plc (Georgia) | 3,458,540 | ||||||
387,794 | United Bank Ltd. (Pakistan) | 691,865 | ||||||
|
| |||||||
37,527,095 | ||||||||
|
| |||||||
Diversified Real Estate Activities 5.0% | ||||||||
9,340,826 | Ayala Land, Inc. (Philippines) | 7,998,621 | ||||||
824,787 | Consultatio S.A. (Argentina) | 1,858,165 | ||||||
|
| |||||||
9,856,786 | ||||||||
|
| |||||||
Electric Utilities 3.2% | ||||||||
97,708 | Pampa Energia S.A., ADR* (Argentina) | 6,360,791 | ||||||
|
| |||||||
Food Retail 5.7% | ||||||||
129,432 | BIM Birlesik Magazalar A.S. (Turkey) | 2,697,295 | ||||||
2,559,716 | Philippine Seven Corp. (Philippines) | 8,566,063 | ||||||
|
| |||||||
11,263,358 | ||||||||
|
|
Shares | Value | |||||||
Health Care Facilities 5.2% | ||||||||
281,273 | NMC Health plc (United Arab Emirates) | $ | 10,368,674 | |||||
|
| |||||||
Industrial Conglomerates 1.6% | ||||||||
187,205 | SM Investments Corp. (Philippines) | 3,254,009 | ||||||
|
| |||||||
Internet Software & Services 4.1% | ||||||||
31,273 | MercadoLibre, Inc. (Brazil) | 8,097,518 | ||||||
|
| |||||||
Marine Ports & Services 0.3% | ||||||||
29,225 | DP World Ltd. (United Arab Emirates) | 656,393 | ||||||
|
| |||||||
Multi-Sector Holdings 2.7% | ||||||||
278,030 | Ayala Corp. (Philippines) | 5,308,893 | ||||||
|
| |||||||
Oil & Gas Storage & Transportation 4.6% | ||||||||
450,422 | Transportadora de Gas del Sur S.A., ADR* (Argentina) | 9,148,071 | ||||||
|
| |||||||
Packaged Foods & Meats 6.2% | ||||||||
1,691,959 | Century Pacific Food, Inc. (Philippines) | 562,881 | ||||||
1,038,503 | Olympic Industries Ltd. (Bangladesh) | 3,452,086 | ||||||
1,247,805 | Vietnam Dairy Products JSC (Vietnam) | 8,191,869 | ||||||
|
| |||||||
12,206,836 | ||||||||
|
| |||||||
Pharmaceuticals 6.6% | ||||||||
273,310 | Abbott Laboratories Pakistan Ltd. (Pakistan) | 2,049,015 | ||||||
1,576,262 | Beximco Pharmaceuticals Ltd. (Bangladesh) | 2,057,497 | ||||||
651,499 | DHG Pharmaceutical JSC (Vietnam) | 3,053,028 | ||||||
539,700 | Searle Company Ltd. (The) (Pakistan) | 2,068,760 | ||||||
1,027,785 | Square Pharmaceuticals Ltd. (Bangladesh) | 3,831,803 | ||||||
|
| |||||||
13,060,103 | ||||||||
|
| |||||||
Real Estate Operating Companies 1.1% | ||||||||
3,209,109 | SM Prime Holdings, Inc. (Philippines) | 2,176,277 | ||||||
|
| |||||||
Restaurants 1.9% | ||||||||
37,684 | AmRest Holdings SE* (Poland) | 3,748,778 | ||||||
|
| |||||||
Technology Distributors 3.0% | ||||||||
2,777,400 | FPT Corp. (Vietnam) | 5,957,726 | ||||||
|
| |||||||
Wireless Telecommunication Services 4.3% | ||||||||
475,885 | GrameenPhone Ltd. (Bangladesh) | 2,406,145 | ||||||
24,842,338 | Safaricom Ltd. (Kenya) | 6,020,925 | ||||||
|
| |||||||
8,427,070 | ||||||||
|
| |||||||
Total Common Stocks (cost $133,612,402) | 185,952,616 | |||||||
|
| |||||||
PREFERRED STOCKS 3.6% | ||||||||
Diversified Banks 3.6% | ||||||||
622,344 | Banco Davivienda S.A., 2.86% (Colombia) | 7,048,647 | ||||||
|
| |||||||
Total Preferred Stocks (cost $6,268,387) | 7,048,647 | |||||||
|
|
56
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 1.3% | ||||||||
Repurchase Agreement 1.3% | ||||||||
$2,545,919 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $2,625,000 of United States Treasury Notes 2.000% due 2/15/25; value: $2,600,640; Repurchase proceeds: $2,545,944 (cost $2,545,919) | $ | 2,545,919 | |||||
|
| |||||||
Total Short-Term Investments (cost $2,545,919) | 2,545,919 | |||||||
|
| |||||||
Total Investments (cost $142,426,708) 98.9%§ | 195,547,182 | |||||||
Other Assets less Liabilities 1.1% | 2,217,051 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 197,764,233 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 2.96%.
ADR American Depositary Receipt.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Frontier Emerging Small Countries Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Argentina | 15.6 | |||
Bangladesh | 7.3 | |||
Brazil | 4.2 | |||
Colombia | 3.7 | |||
Egypt | 1.6 | |||
Georgia | 1.8 | |||
Kenya | 3.1 | |||
Kuwait | 2.8 | |||
Malaysia | 1.5 | |||
Mexico | 1.5 | |||
Pakistan | 7.8 | |||
Peru | 3.4 | |||
Philippines | 14.4 | |||
Poland | 1.9 | |||
Romania | 1.0 | |||
South Africa | 3.3 | |||
Thailand | 2.1 | |||
Turkey | 2.8 | |||
United Arab Emirates | 10.0 | |||
Vietnam | 10.2 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
57
Table of Contents
WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | ||
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 100.1% | ||||||||
Airlines 2.0% | ||||||||
9,983 | Allegiant Travel Co. | $ | 1,314,761 | |||||
21,275 | Spirit Airlines, Inc.* | 710,798 | ||||||
|
| |||||||
2,025,559 | ||||||||
|
| |||||||
Apparel, Accessories & Luxury Goods 1.0% | ||||||||
29,892 | Ted Baker plc (United Kingdom) | 1,061,464 | ||||||
|
| |||||||
Application Software 8.4% | ||||||||
15,655 | AVEVA Group plc (United Kingdom) | 510,807 | ||||||
55,866 | Callidus Software, Inc.* | 1,377,097 | ||||||
23,050 | Globant S.A.* (Argentina) | 923,614 | ||||||
21,942 | HubSpot, Inc.* | 1,844,225 | ||||||
5,915 | Tyler Technologies, Inc.* | 1,031,103 | ||||||
9,492 | Ultimate Software Group, Inc. (The)* | 1,799,683 | ||||||
41,520 | Zendesk, Inc.* | 1,208,647 | ||||||
|
| |||||||
8,695,176 | ||||||||
|
| |||||||
Automotive Retail 1.2% | ||||||||
22,526 | Monro, Inc. | 1,262,582 | ||||||
|
| |||||||
Biotechnology 7.5% | ||||||||
69,937 | Abcam plc (United Kingdom) | 955,898 | ||||||
28,921 | Exact Sciences Corp.* | 1,362,758 | ||||||
6,985 | Medytox, Inc. (Korea) | 3,015,744 | ||||||
83,126 | Sangamo Therapeutics Inc.* | 1,246,890 | ||||||
20,561 | Seattle Genetics, Inc.* | 1,118,724 | ||||||
|
| |||||||
7,700,014 | ||||||||
|
| |||||||
Building Products 4.7% | ||||||||
159,589 | Somany Ceramics Ltd. (India) | 2,079,152 | ||||||
31,121 | Trex Co., Inc.* | 2,803,069 | ||||||
|
| |||||||
4,882,221 | ||||||||
|
| |||||||
Consumer Finance 5.4% | ||||||||
39,021 | Bajaj Finance Ltd. (India) | 1,096,854 | ||||||
4,453 | Credit Acceptance Corp.* | 1,247,597 | ||||||
784,083 | Srisawad Corp. Public Co. Ltd. (Thailand) | 1,410,644 | ||||||
524,800 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 1,759,420 | ||||||
|
| |||||||
5,514,515 | ||||||||
|
| |||||||
Data Processing & Outsourced Services 0.5% | ||||||||
7,700 | GMO Payment Gateway, Inc. (Japan) | 481,742 | ||||||
|
| |||||||
Diversified Chemicals 1.0% | ||||||||
85,230 | Pidilite Industries Ltd. (India) | 1,038,039 | ||||||
|
| |||||||
Diversified Real Estate Activities 1.0% | ||||||||
50,234 | Patrizia Immobilien AG* (Germany) | 1,046,721 | ||||||
|
| |||||||
Diversified Support Services 2.0% | ||||||||
60,851 | Copart, Inc.* | 2,091,449 | ||||||
|
| |||||||
Drug Retail 1.1% | ||||||||
6,290 | Ain Holdings, Inc. (Japan) | 433,774 | ||||||
3,070 | Cosmos Pharmaceutical Corp. (Japan) | 685,344 | ||||||
|
| |||||||
1,119,118 | ||||||||
|
| |||||||
Electrical Components & Equipment 1.1% | ||||||||
60,841 | Voltronic Power Technology Corp. (Taiwan) | 1,091,462 | ||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 0.7% | ||||||||
64,363 | UPL Ltd. (India) | 766,700 | ||||||
|
| |||||||
Food Retail 0.0% | ||||||||
2,654 | Avenue Supermarts Ltd.* (India) | 44,125 | ||||||
|
|
Shares | Value | |||||||
General Merchandise Stores 3.4% | ||||||||
44,239 | Ollie’s Bargain Outlet Holdings, Inc.* | $ | 2,052,690 | |||||
25,584 | Seria Co. Ltd. (Japan) | 1,421,017 | ||||||
|
| |||||||
3,473,707 | ||||||||
|
| |||||||
Health Care Equipment 2.3% | ||||||||
5,171 | Cantel Medical Corp. | 486,953 | ||||||
8,992 | Cochlear Ltd. (Australia) | 1,122,960 | ||||||
28,191 | DIO Corp.* (Korea) | 747,018 | ||||||
|
| |||||||
2,356,931 | ||||||||
|
| |||||||
Health Care Facilities 1.9% | ||||||||
88,521 | Ensign Group, Inc. (The) | 1,999,689 | ||||||
|
| |||||||
Health Care Services 0.7% | ||||||||
57,395 | Dr. Lal PathLabs Ltd. (India) | 698,590 | ||||||
|
| |||||||
Health Care Supplies 0.9% | ||||||||
13,926 | Sartorius Stedim Biotech (France) | 964,506 | ||||||
|
| |||||||
Health Care Technology 0.5% | ||||||||
19,180 | M3, Inc. (Japan) | 546,296 | ||||||
|
| |||||||
Highways & Railtracks 1.6% | ||||||||
450,000 | EcoRodovias Infraestrutura e Logistica S.A. (Brazil) | 1,621,174 | ||||||
|
| |||||||
Homebuilding 3.1% | ||||||||
21,242 | Installed Building Products, Inc.* | 1,376,482 | ||||||
36,711 | LGI Homes, Inc.* | 1,783,053 | ||||||
|
| |||||||
3,159,535 | ||||||||
|
| |||||||
Industrial Machinery 1.3% | ||||||||
392,767 | Rotork plc (United Kingdom) | 1,370,505 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 4.1% | ||||||||
81,407 | MakeMyTrip Ltd.* (India) | 2,340,451 | ||||||
19,724 | Wayfair, Inc., Class A* | 1,329,398 | ||||||
33,975 | Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 518,117 | ||||||
|
| |||||||
4,187,966 | ||||||||
|
| |||||||
Internet Software & Services 9.2% | ||||||||
12,978 | Cimpress N.V.* | 1,267,431 | ||||||
40,057 | Envestnet, Inc.* | 2,042,907 | ||||||
39,898 | Gurunavi, Inc. (Japan) | 577,949 | ||||||
12,260 | MercadoLibre, Inc. (Brazil) | 3,174,482 | ||||||
8,872 | Rightmove plc (United Kingdom) | 480,889 | ||||||
27,115 | SMS Co. Ltd. (Japan) | 863,873 | ||||||
3,249 | XING SE (Germany) | 1,017,599 | ||||||
|
| |||||||
9,425,130 | ||||||||
|
| |||||||
IT Consulting & Other Services 1.1% | ||||||||
23,619 | Luxoft Holding, Inc.* (Switzerland) | 1,128,988 | ||||||
|
| |||||||
Life & Health Insurance 1.7% | ||||||||
295,966 | ICICI Prudential Life Insurance Co. Ltd. (India) | 1,760,753 | ||||||
|
| |||||||
Managed Health Care 2.5% | ||||||||
50,842 | HealthEquity, Inc.* | 2,571,588 | ||||||
|
| |||||||
Movies & Entertainment 0.9% | ||||||||
12,437 | Loen Entertainment, Inc. (Korea) | 949,049 | ||||||
|
| |||||||
Office Services & Supplies 1.9% | ||||||||
4,899 | 3M India Ltd.* (India) | 1,080,004 | ||||||
216,710 | IWG plc (United Kingdom) | 898,761 | ||||||
|
| |||||||
1,978,765 | ||||||||
|
| |||||||
Packaged Foods & Meats 1.5% | ||||||||
209,800 | Manpasand Beverages Ltd. (India) | 1,517,613 | ||||||
|
|
58
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Shares | Value | |||||||
Pharmaceuticals 2.5% | ||||||||
13,782 | Intra-Cellular Therapies, Inc.* | $ | 217,480 | |||||
11,565 | Ipsen S.A. (France) | 1,537,043 | ||||||
70,167 | Natco Pharma Ltd. (India) | 845,398 | ||||||
|
| |||||||
2,599,921 | ||||||||
|
| |||||||
Regional Banks 5.7% | ||||||||
17,755 | Eagle Bancorp, Inc.* | 1,190,473 | ||||||
37,319 | Metro Bank plc* (United Kingdom) | 1,690,251 | ||||||
10,552 | Signature Bank* | 1,351,078 | ||||||
18,626 | Texas Capital Bancshares, Inc.* | 1,598,111 | ||||||
|
| |||||||
5,829,913 | ||||||||
|
| |||||||
Research & Consulting Services 1.7% | ||||||||
36,600 | Nihon M&A Center, Inc. (Japan) | 1,788,936 | ||||||
|
| |||||||
Restaurants 0.9% | ||||||||
25,170 | Domino’s Pizza Enterprises Ltd. (Australia) | 904,640 | ||||||
|
| |||||||
Semiconductors 4.0% | ||||||||
44,090 | Cavium, Inc.* | 2,907,294 | ||||||
12,052 | Melexis N.V. (Belgium) | 1,165,181 | ||||||
|
| |||||||
4,072,475 | ||||||||
|
| |||||||
Specialized Finance 1.0% | ||||||||
19,146 | Banca IFIS S.p.A. (Italy) | 1,046,802 | ||||||
|
| |||||||
Specialty Chemicals 2.3% | ||||||||
18,124 | Frutarom Industries Ltd. (Israel) | 1,394,100 | ||||||
91,925 | Hexpol AB (Sweden) | 967,228 | ||||||
|
| |||||||
2,361,328 | ||||||||
|
| |||||||
Specialty Stores 1.7% | ||||||||
19,748 | Five Below, Inc.* | 1,083,770 | ||||||
58,449 | XXL ASA (Norway) | 636,632 | ||||||
|
| |||||||
1,720,402 | ||||||||
|
| |||||||
Trading Companies & Distributors 1.9% | ||||||||
33,000 | MISUMI Group, Inc. (Japan) | 868,953 | ||||||
39,400 | MonotaRO Co. Ltd. (Japan) | 1,053,935 | ||||||
|
| |||||||
1,922,888 | ||||||||
|
| |||||||
Trucking 2.2% | ||||||||
55,475 | Knight-Swift Transportation Holdings, Inc.* | 2,304,986 | ||||||
|
| |||||||
Total Common Stocks (cost $65,507,888) | 103,083,963 | |||||||
|
| |||||||
WARRANTS 0.0% | ||||||||
Consumer Finance 0.0% | ||||||||
89,968 | Srisawad Corp. Public Co. Ltd., expiring 05/29/20* (Thailand) | 32,103 | ||||||
|
| |||||||
Total Warrants (cost $0) | 32,103 | |||||||
|
|
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 0.2% | ||||||||
Repurchase Agreement 0.2% | ||||||||
$170,608 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $175,000 of United States Treasury Notes 2.250% due 2/15/27; value: $174,697; repurchase proceeds: $170,610 (cost $170,608) | $ | 170,608 | |||||
|
| |||||||
Total Short-Term Investments (cost $170,608) | 170,608 | |||||||
|
| |||||||
Total Investments (cost $65,678,496) 100.3%§ | 103,286,674 | |||||||
Liabilities less Other Assets (0.3%) | (289,977 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 102,996,697 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 1.35%.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Global Opportunities Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Argentina | 0.9 | |||
Australia | 2.0 | |||
Belgium | 1.1 | |||
Brazil | 4.6 | |||
France | 2.4 | |||
Germany | 2.0 | |||
India | 12.9 | |||
Israel | 1.3 | |||
Italy | 1.0 | |||
Japan | 9.0 | |||
Korea | 4.6 | |||
Mexico | 1.7 | |||
Norway | 0.6 | |||
Sweden | 0.9 | |||
Switzerland | 1.1 | |||
Taiwan | 1.1 | |||
Thailand | 1.4 | |||
United Kingdom | 6.8 | |||
United States | 44.6 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
59
Table of Contents
WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | ||
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 97.5% | ||||||||
Airport Services 0.7% | ||||||||
1,725,872 | Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (Mexico) | $ | 9,546,792 | |||||
|
| |||||||
Apparel Retail 0.3% | ||||||||
93,960 | Tokyo Base Co. Ltd.* (Japan) | 4,525,778 | ||||||
|
| |||||||
Apparel, Accessories & Luxury Goods 2.7% | ||||||||
727,130 | Moncler S.p.A. (Italy) | 20,986,431 | ||||||
504,171 | Ted Baker plc (United Kingdom) | 17,903,104 | ||||||
|
| |||||||
38,889,535 | ||||||||
|
| |||||||
Application Software 2.8% | ||||||||
461,347 | Aveva Group plc (United Kingdom) | 15,053,284 | ||||||
1,290,333 | Computer Modelling Group Ltd. (Canada) | 9,472,611 | ||||||
45,170 | Nemetschek SE (Germany) | 3,671,386 | ||||||
3,397,119 | Technology One Ltd. (Australia) | 13,376,792 | ||||||
14,913 | WiseTech Global Ltd. (Australia) | 101,771 | ||||||
|
| |||||||
41,675,844 | ||||||||
|
| |||||||
Asset Management & Custody Banks 0.6% | ||||||||
636,452 | Burford Capital Ltd. (United Kingdom) | 8,826,949 | ||||||
|
| |||||||
Biotechnology 4.2% | ||||||||
2,824,168 | Abcam plc (United Kingdom) | 38,600,710 | ||||||
53,686 | Medytox, Inc. (Korea) | 23,178,703 | ||||||
|
| |||||||
61,779,413 | ||||||||
|
| |||||||
Data Processing & Outsourced Services 0.7% | ||||||||
169,200 | GMO Payment Gateway, Inc. (Japan) | 10,585,808 | ||||||
|
| |||||||
Diversified Real Estate Activities 1.6% | ||||||||
1,141,752 | Patrizia Immobilien AG* (Germany) | 23,790,576 | ||||||
|
| |||||||
Drug Retail 5.3% | ||||||||
181,828 | Ain Holdings, Inc. (Japan) | 12,539,305 | ||||||
1,338,623 | Clicks Group Ltd. (South Africa) | 15,624,972 | ||||||
128,537 | Cosmos Pharmaceutical Corp. (Japan) | 28,694,507 | ||||||
871,900 | Raia Drogasil S.A. (Brazil) | 20,647,112 | ||||||
|
| |||||||
77,505,896 | ||||||||
|
| |||||||
Electric Utilities 0.4% | ||||||||
111,864 | Direct Energie (France) | 6,325,027 | ||||||
|
| |||||||
Electrical Components & Equipment 1.6% | ||||||||
891,448 | Amara Raja Batteries Ltd. (India) | 9,669,863 | ||||||
804,364 | Voltronic Power Technology Corp. (Taiwan) | 14,429,957 | ||||||
|
| |||||||
24,099,820 | ||||||||
|
| |||||||
Electronic Equipment & Instruments 2.4% | ||||||||
814,212 | Ai Holdings Corp. (Japan) | 20,332,688 | ||||||
1,028,147 | Halma plc (United Kingdom) | 15,430,423 | ||||||
|
| |||||||
35,763,111 | ||||||||
|
| |||||||
Electronic Manufacturing Services 1.3% | ||||||||
1,449,500 | Venture Corp. Ltd. (Singapore) | 18,850,072 | ||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 1.0% | ||||||||
1,285,377 | UPL Ltd. (India) | 15,311,571 | ||||||
|
| |||||||
General Merchandise Stores 3.5% | ||||||||
2,162,575 | B&M European Value Retail S.A. (United Kingdom) | 11,232,063 | ||||||
722,926 | Seria Co. Ltd. (Japan) | 40,153,633 | ||||||
|
| |||||||
51,385,696 | ||||||||
|
|
Shares | Value | |||||||
Health Care Distributors 1.2% | ||||||||
344,200 | Japan Lifeline Co. Ltd. (Japan) | $ | 17,007,350 | |||||
|
| |||||||
Health Care Equipment 2.1% | ||||||||
247,855 | Cochlear Ltd. (Australia) | 30,953,198 | ||||||
|
| |||||||
Health Care Services 0.5% | ||||||||
563,871 | Dr. Lal PathLabs Ltd. (India) | 6,863,222 | ||||||
|
| |||||||
Health Care Supplies 1.4% | ||||||||
2,653,565 | Nanosonics Ltd.* (Australia) | 5,432,600 | ||||||
209,341 | Sartorius Stedim Biotech (France) | 14,498,824 | ||||||
|
| |||||||
19,931,424 | ||||||||
|
| |||||||
Health Care Technology 1.1% | ||||||||
464,160 | M3, Inc. (Japan) | 13,220,465 | ||||||
120,240 | RaySearch Laboratories AB* (Sweden) | 2,561,313 | ||||||
|
| |||||||
15,781,778 | ||||||||
|
| |||||||
Home Furnishings 0.8% | ||||||||
1,159,774 | Nien Made Enterprise Co. Ltd. (Taiwan) | 11,894,530 | ||||||
|
| |||||||
Home Furnishing Retail 0.9% | ||||||||
286,108 | Maisons du Monde S.A. (France) | 12,577,532 | ||||||
|
| |||||||
Hotels, Resorts & Cruise Lines 2.4% | ||||||||
810,447 | Corporate Travel Management Ltd. (Australia) | 13,896,719 | ||||||
17,421,713 | Minor International Public Co. Ltd. (Thailand) | 21,287,401 | ||||||
|
| |||||||
35,184,120 | ||||||||
|
| |||||||
Household Products 0.6% | ||||||||
258,284 | Pigeon Corp. (Japan) | 8,825,612 | ||||||
|
| |||||||
Human Resource & Employment Services 2.2% | ||||||||
254,273 | 51job, Inc. ADR* (China) | 15,411,486 | ||||||
449,000 | en-japan, Inc. (Japan) | 16,459,676 | ||||||
|
| |||||||
31,871,162 | ||||||||
|
| |||||||
Industrial Machinery 2.3% | ||||||||
6,476,553 | Rotork plc (United Kingdom) | 22,599,015 | ||||||
127,811 | Stabilus S.A. (Germany) | 11,599,887 | ||||||
|
| |||||||
34,198,902 | ||||||||
|
| |||||||
Internet & Direct Marketing Retail 1.9% | ||||||||
119,567 | ASOS plc* (United Kingdom) | 9,541,084 | ||||||
1,286,551 | Trade Me Group Ltd. (New Zealand) | 4,246,791 | ||||||
306,725 | Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 4,677,539 | ||||||
58,819 | zooplus AG* (Germany) | 9,906,343 | ||||||
|
| |||||||
28,371,757 | ||||||||
|
| |||||||
Internet Software & Services 7.7% | ||||||||
619,826 | Gurunavi, Inc. (Japan) | 8,978,595 | ||||||
1,454,500 | Infomart Corp. (Japan) | 10,444,221 | ||||||
184,568 | Rightmove plc (United Kingdom) | 10,004,135 | ||||||
426,126 | Scout24 AG (Germany) | 17,425,891 | ||||||
899,255 | SMS Co. Ltd. (Japan) | 28,649,892 | ||||||
83,977 | XING SE (Germany) | 26,301,899 | ||||||
2,105,806 | ZPG plc (United Kingdom) | 10,206,374 | ||||||
|
| |||||||
112,011,007 | ||||||||
|
| |||||||
IT Consulting & Other Services 1.0% | ||||||||
798,691 | Altran Technologies S.A. (France) | 14,688,223 | ||||||
|
| |||||||
Leisure Products 0.0% | ||||||||
8,488 | Yonex Co. Ltd. (Japan) | 63,288 | ||||||
|
| |||||||
Life & Health Insurance 1.1% | ||||||||
1,815,561 | Max Financial Services Ltd.* (India) | 16,426,769 | ||||||
|
|
60
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Shares | Value | |||||||
Life Sciences Tools & Services 2.7% | ||||||||
1,885,473 | Clinigen Group plc (United Kingdom) | $ | 26,932,838 | |||||
58,466 | Tecan Group AG (Switzerland) | 12,099,537 | ||||||
|
| |||||||
39,032,375 | ||||||||
|
| |||||||
Movies & Entertainment 1.7% | ||||||||
566,699 | CTS Eventim AG & Co KGaA (Germany) | 24,735,040 | ||||||
|
| |||||||
Office Services & Supplies 1.4% | ||||||||
4,903,752 | IWG plc (United Kingdom) | 20,337,321 | ||||||
|
| |||||||
Oil & Gas Equipment & Services 2.4% | ||||||||
650,859 | Pason Systems, Inc. (Canada) | 9,796,139 | ||||||
433,061 | ShawCor Ltd. (Canada) | 9,582,700 | ||||||
634,740 | TGS-NOPEC Geophysical Co. ASA (Norway) | 15,102,421 | ||||||
|
| |||||||
34,481,260 | ||||||||
|
| |||||||
Other Diversified Financial Services 0.6% | ||||||||
48,965 | Hypoport AG* (Germany) | 8,614,210 | ||||||
|
| |||||||
Packaged Foods & Meats 2.6% | ||||||||
44,034 | Kotobuki Spirits Co. Ltd. (Japan) | 1,571,175 | ||||||
16,225,449 | Vitasoy International Holdings Ltd. (China) | 36,141,484 | ||||||
|
| |||||||
37,712,659 | ||||||||
|
| |||||||
Pharmaceuticals 2.3% | ||||||||
251,667 | Ipsen S.A. (France) | 33,447,727 | ||||||
|
| |||||||
Property & Casualty Insurance 0.3% | ||||||||
2,829,506 | Qualitas Controladora S.A.B. de C.V. (Mexico) | 4,649,029 | ||||||
|
| |||||||
Regional Banks 2.8% | ||||||||
680,283 | Canadian Western Bank (Canada) | 18,378,954 | ||||||
487,069 | Metro Bank plc* (United Kingdom) | 22,060,319 | ||||||
|
| |||||||
40,439,273 | ||||||||
|
| |||||||
Research & Consulting Services 2.2% | ||||||||
664,064 | Nihon M&A Center, Inc. (Japan) | 32,458,138 | ||||||
|
| |||||||
Restaurants 0.8% | ||||||||
328,842 | Domino’s Pizza Enterprises Ltd. (Australia) | 11,818,977 | ||||||
|
| |||||||
Semiconductor Equipment 0.7% | ||||||||
389,900 | Japan Material Co. Ltd. (Japan) | 10,277,213 | ||||||
|
| |||||||
Semiconductors 2.8% | ||||||||
200,671 | Melexis N.V. (Belgium) | 19,400,762 | ||||||
934,999 | Silergy Corp. (Taiwan) | 21,429,373 | ||||||
|
| |||||||
40,830,135 | ||||||||
|
| |||||||
Soft Drinks 1.3% | ||||||||
625,111 | Fevertree Drinks plc (United Kingdom) | 18,319,370 | ||||||
|
| |||||||
Specialized Finance 1.2% | ||||||||
327,680 | Banca IFIS S.p.A. (Italy) | 17,915,809 | ||||||
|
| |||||||
Specialty Chemicals 4.6% | ||||||||
305,629 | Chr. Hansen Holding A/S (Denmark) | 26,212,374 | ||||||
273,331 | Frutarom Industries Ltd. (Israel) | 21,024,656 | ||||||
1,873,405 | Hexpol AB (Sweden) | 19,711,821 | ||||||
|
| |||||||
66,948,851 | ||||||||
|
| |||||||
Specialty Stores 1.0% | ||||||||
1,287,977 | XXL ASA (Norway) | 14,028,753 | ||||||
|
| |||||||
Systems Software 1.0% | ||||||||
246,740 | Kinaxis, Inc.* (Canada) | 14,574,024 | ||||||
|
| |||||||
Technology Hardware, Storage & Peripherals 0.8% | ||||||||
843,305 | Ennoconn Corp. (Taiwan) | 12,097,272 | ||||||
|
|
Shares | Value | |||||||
Thrifts & Mortgage Finance 1.8% | ||||||||
1,159,427 | PNB Housing Finance Ltd. (India) | $ | 25,847,483 | |||||
|
| |||||||
Trading Companies & Distributors 6.2% | ||||||||
1,084,318 | Diploma plc (United Kingdom) | 15,459,765 | ||||||
1,428,715 | MISUMI Group, Inc. (Japan) | 37,620,818 | ||||||
752,212 | MonotaRO Co. Ltd. (Japan) | 20,121,379 | ||||||
706,946 | Richelieu Hardware Ltd. (Canada) | 17,779,175 | ||||||
|
| |||||||
90,981,137 | ||||||||
|
| |||||||
Total Common Stocks (cost $933,021,945) | 1,425,057,818 | |||||||
|
| |||||||
Total Investments (cost $933,021,945) 97.5%§ | 1,425,057,818 | |||||||
Other Assets less Liabilities 2.5% | 36,415,104 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 1,461,472,922 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 1.44%.
ADR American Depositary Receipt.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch International Growth Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Australia | 5.3 | |||
Belgium | 1.4 | |||
Brazil | 1.5 | |||
Canada | 5.6 | |||
China | 3.6 | |||
Denmark | 1.8 | |||
France | 5.7 | |||
Germany | 8.8 | |||
India | 5.2 | |||
Israel | 1.5 | |||
Italy | 2.7 | |||
Japan | 23.0 | |||
Korea | 1.6 | |||
Mexico | 1.0 | |||
New Zealand | 0.3 | |||
Norway | 2.0 | |||
Singapore | 1.3 | |||
South Africa | 1.1 | |||
Sweden | 1.6 | |||
Switzerland | 0.9 | |||
Taiwan | 4.2 | |||
Thailand | 1.5 | |||
United Kingdom | 18.4 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
61
Table of Contents
WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | ||
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 97.4% | ||||||||
Advertising 1.2% | ||||||||
14,646,600 | Plan B Media Public Co. Ltd. (Thailand) | $ | 2,657,030 | |||||
242,000 | Vector, Inc. (Japan) | 3,445,314 | ||||||
|
| |||||||
6,102,344 | ||||||||
|
| |||||||
Aerospace & Defense 0.5% | ||||||||
183,082 | Avon Rubber plc (United Kingdom) | 2,299,967 | ||||||
|
| |||||||
Air Freight & Logistics 2.8% | ||||||||
1,258,273 | Allcargo Logistics Ltd. (India) | 3,282,451 | ||||||
1,027,553 | Freightways Ltd. (New Zealand) | 5,774,329 | ||||||
26,512 | ID Logistics Group* (France) | 4,731,516 | ||||||
|
| |||||||
13,788,296 | ||||||||
|
| |||||||
Apparel Retail 1.1% | ||||||||
114,740 | Tokyo Base Co. Ltd.* (Japan) | 5,526,690 | ||||||
|
| |||||||
Apparel, Accessories & Luxury Goods 0.2% | ||||||||
316,991 | Bon Fame Co. Ltd. (Taiwan) | 842,550 | ||||||
|
| |||||||
Application Software 5.7% | ||||||||
424,134 | Computer Modelling Group Ltd. (Canada) | 3,113,659 | ||||||
65,760 | Esker S.A. (France) | 3,781,164 | ||||||
759,306 | Fortnox AB (Sweden) | 3,691,699 | ||||||
814,938 | GB Group plc (United Kingdom) | 4,018,620 | ||||||
80,342 | Lectra (France) | 2,522,038 | ||||||
460,135 | Linx S.A. (Brazil) | 2,841,748 | ||||||
351,387 | Logo Yazilim Sanayi Ve Ticaret A.S.* (Turkey) | 5,355,201 | ||||||
134,300 | Systena Corp. (Japan) | 3,348,996 | ||||||
|
| |||||||
28,673,125 | ||||||||
|
| |||||||
Asset Management & Custody Banks 2.0% | ||||||||
1,778,200 | Peregrine Holdings Ltd. (South Africa) | 3,846,993 | ||||||
565,900 | Sanne Group plc (United Kingdom) | 6,032,322 | ||||||
|
| |||||||
9,879,315 | ||||||||
|
| |||||||
Auto Parts & Equipment 1.9% | ||||||||
1,023,000 | Hota Industrial Manufacturing Co. Ltd. (Taiwan) | 4,824,198 | ||||||
818,609 | Hu Lane Associate, Inc. (Taiwan) | 4,589,221 | ||||||
|
| |||||||
9,413,419 | ||||||||
|
| |||||||
Automobile Manufacturers 0.5% | ||||||||
626,200 | PAK Suzuki Motor Co. Ltd. (Pakistan) | 2,721,704 | ||||||
|
| |||||||
Automotive Retail 1.2% | ||||||||
3,864,000 | China Meidong Auto Holdings Ltd. (China) | 1,429,535 | ||||||
1,764,500 | Hascol Petroleum Ltd. (Pakistan) | 4,696,961 | ||||||
|
| |||||||
6,126,496 | ||||||||
|
| |||||||
Brewers 3.1% | ||||||||
685,845 | Carlsberg Brewery Malaysia Berhad, Class B (Malaysia) | 2,410,406 | ||||||
183,082 | Kopparbergs Bryggeri AB, Class B (Sweden) | 4,900,229 | ||||||
50,645 | Olvi Oyj, Class A (Finland) | 1,735,863 | ||||||
117,246 | Royal Unibrew A/S (Denmark) | 6,424,439 | ||||||
|
| |||||||
15,470,937 | ||||||||
|
| |||||||
Building Products 0.8% | ||||||||
2,828,760 | Concepcion Industrial Corp. (Philippines) | 3,833,899 | ||||||
|
| |||||||
Commodity Chemicals 2.7% | ||||||||
980,135 | Berger Paints India Ltd. (India) | 3,676,257 | ||||||
420,387 | Gulf Oil Lubricants India Ltd. (India) | 4,955,572 | ||||||
288,077 | Supreme Industries Ltd. (India) | 4,890,076 | ||||||
|
| |||||||
13,521,905 | ||||||||
|
|
Shares | Value | |||||||
Communications Equipment 1.3% | ||||||||
455,000 | Advanced Ceramic X Corp. (Taiwan) | $ | 6,331,948 | |||||
|
| |||||||
Consumer Finance 2.0% | ||||||||
44,428 | Ferratum Oyj (Germany) | 1,404,628 | ||||||
157,228 | Gruppo MutuiOnline S.p.A. (Italy) | 2,465,936 | ||||||
1,816,862 | Unifin Financiera S.A.B. de C.V. SOFOM ENR (Mexico) | 6,091,127 | ||||||
|
| |||||||
9,961,691 | ||||||||
|
| |||||||
Department Stores 0.4% | ||||||||
184,908 | Poya International Co. Ltd. (Taiwan) | 2,207,383 | ||||||
|
| |||||||
Diversified Banks 1.4% | ||||||||
6,834,169 | BRAC Bank Ltd. (Bangladesh) | 7,163,175 | ||||||
|
| |||||||
Diversified Support Services 2.1% | ||||||||
876,708 | Clipper Logistics plc (United Kingdom) | 4,728,522 | ||||||
585,900 | Prestige International, Inc. (Japan) | 5,847,285 | ||||||
|
| |||||||
10,575,807 | ||||||||
|
| |||||||
Drug Retail 1.1% | ||||||||
1,150,435 | Green Cross Health Ltd. (New Zealand) | 1,786,563 | ||||||
65,900 | Kusuri no Aoki Holdings Co. Ltd. (Japan) | 3,912,126 | ||||||
|
| |||||||
5,698,689 | ||||||||
|
| |||||||
Electrical Components & Equipment 2.8% | ||||||||
252,355 | Amara Raja Batteries Ltd. (India) | 2,737,387 | ||||||
2,638,500 | Pak Elektron Ltd. (Pakistan) | 1,901,723 | ||||||
8,124,000 | Ten Pao Group Holdings Ltd. (Hong Kong) | 2,943,177 | ||||||
350,627 | Voltronic Power Technology Corp. (Taiwan) | 6,290,103 | ||||||
|
| |||||||
13,872,390 | ||||||||
|
| |||||||
Electronic Equipment & Instruments 2.4% | ||||||||
27,696 | Isra Vision AG (Germany) | 5,229,243 | ||||||
743,876 | Smart Metering Systems plc (United Kingdom) | 6,927,714 | ||||||
|
| |||||||
12,156,957 | ||||||||
|
| |||||||
Financial Exchanges & Data 0.6% | ||||||||
912,529 | Morningstar Japan KK (Japan) | 2,765,362 | ||||||
|
| |||||||
Food Retail 5.1% | ||||||||
22,250,161 | 7-Eleven Malaysia Holdings Berhad, Class B (Malaysia) | 8,220,308 | ||||||
3,163,203 | Philippine Seven Corp. (Philippines) | 10,585,626 | ||||||
79,639 | Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (Israel) | 4,072,621 | ||||||
3,661,600 | Sheng Siong Group Ltd. (Singapore) | 2,483,447 | ||||||
|
| |||||||
25,362,002 | ||||||||
|
| |||||||
General Merchandise Stores 1.2% | ||||||||
106,144 | Seria Co. Ltd. (Japan) | 5,895,579 | ||||||
|
| |||||||
Health Care Equipment 1.1% | ||||||||
74,735 | DIO Corp.* (Korea) | 1,980,362 | ||||||
9,231 | STRATEC Biomedical AG (Germany) | 552,270 | ||||||
80,358 | Vieworks Co. Ltd. (Korea) | 2,746,772 | ||||||
|
| |||||||
5,279,404 | ||||||||
|
| |||||||
Health Care Facilities 0.7% | ||||||||
2,150,712 | Cleopatra Hospital* (Egypt) | 3,311,468 | ||||||
|
| |||||||
Health Care Supplies 1.4% | ||||||||
1,033,987 | Advanced Medical Solutions Group plc (United Kingdom) | 4,014,608 | ||||||
1,472,451 | Nanosonics Ltd.* (Australia) | 3,014,525 | ||||||
|
| |||||||
7,029,133 | ||||||||
|
|
62
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Shares | Value | |||||||
Health Care Technology 1.4% | ||||||||
80,043 | Nexus AG (Germany) | $ | 2,506,975 | |||||
348,700 | Onyx Healthcare, Inc. (Taiwan) | 2,156,089 | ||||||
33,070 | Pro Medicus Ltd. (Australia) | 153,047 | ||||||
102,402 | RaySearch Laboratories AB* (Sweden) | 2,181,334 | ||||||
|
| |||||||
6,997,445 | ||||||||
|
| |||||||
Home Improvement Retail 2.6% | ||||||||
459,160 | Byggmax Group AB (Sweden) | 3,861,614 | ||||||
3,688,989 | Italtile Ltd. (South Africa) | 3,583,064 | ||||||
59,630,900 | PT Ace Hardware Indonesia Tbk (Indonesia) | 5,379,133 | ||||||
|
| |||||||
12,823,811 | ||||||||
|
| |||||||
Hotels, Resorts & Cruise Lines 0.4% | ||||||||
835,773 | Byke Hospitality Ltd. (The) (India) | 2,207,787 | ||||||
|
| |||||||
Human Resource & Employment Services 1.0% | ||||||||
134,588 | en-japan, Inc. (Japan) | 4,933,797 | ||||||
|
| |||||||
Industrial Machinery 1.2% | ||||||||
34,573 | Aumann AG* (Germany) | 3,489,601 | ||||||
91,204 | va-Q-tec AG* (Germany) | 2,455,010 | ||||||
|
| |||||||
5,944,611 | ||||||||
|
| |||||||
Insurance Brokers 1.3% | ||||||||
1,220,966 | Wiz Solucoes e Corretagem de Seguros S.A. (Brazil) | 6,630,761 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 7.3% | ||||||||
156,915 | Evolable Asia Corp. (Japan) | 3,288,208 | ||||||
488,500 | On the Beach Group plc (United Kingdom) | 2,585,629 | ||||||
236,400 | Open Door, Inc.* (Japan) | 9,621,968 | ||||||
952,421 | Trade Me Group Ltd. (New Zealand) | 3,143,858 | ||||||
1,092,560 | Webjet Ltd. (Australia) | 9,238,502 | ||||||
561,889 | Yume No Machi Souzou Iinkai Co. Ltd. (Japan) | 8,568,776 | ||||||
|
| |||||||
36,446,941 | ||||||||
|
| |||||||
Internet Software & Services 6.9% | ||||||||
227,961 | Gurunavi, Inc. (Japan) | 3,302,168 | ||||||
1,288,600 | Infomart Corp. (Japan) | 9,252,955 | ||||||
72,800 | Itokuro, Inc.* (Japan) | 3,179,844 | ||||||
232,093 | Rakus Co. Ltd. (Japan) | 4,269,562 | ||||||
273,731 | SMS Co. Ltd. (Japan) | 8,720,957 | ||||||
18,123 | XING SE (Germany) | 5,676,189 | ||||||
|
| |||||||
34,401,675 | ||||||||
|
| |||||||
Investment Banking & Brokerage 1.2% | ||||||||
125,183 | M&A Capital Partners Co. Ltd.* (Japan) | 6,218,822 | ||||||
|
| |||||||
IT Consulting & Other Services 1.3% | ||||||||
50,681 | CANCOM SE (Germany) | 3,803,643 | ||||||
212,496 | eWork Group AB (Sweden) | 2,778,527 | ||||||
|
| |||||||
6,582,170 | ||||||||
|
| |||||||
Life Sciences Tools & Services 1.0% | ||||||||
1,599,141 | Horizon Discovery Group plc* (United Kingdom) | 4,864,265 | ||||||
|
| |||||||
Office Services & Supplies 0.5% | ||||||||
3,371,300 | Riverstone Holdings Ltd. (Singapore) | 2,597,227 | ||||||
|
| |||||||
Oil & Gas Refining & Marketing 0.3% | ||||||||
5,156 | Hankook Shell Oil Co. Ltd. (Korea) | 1,755,656 | ||||||
|
| |||||||
Other Diversified Financial Services 1.6% | ||||||||
45,573 | Hypoport AG* (Germany) | 8,017,470 | ||||||
|
|
Shares | Value | |||||||
Packaged Foods & Meats 4.3% | ||||||||
257,500 | Dutch Lady Milk Industries Berhad (Malaysia) | $ | 3,680,924 | |||||
175,000 | Kotobuki Spirits Co. Ltd. (Japan) | 6,244,168 | ||||||
166,215 | Nestlé Lanka plc (Sri Lanka) | 1,845,868 | ||||||
29,364,454 | PT Nippon Indosari Corpindo Tbk (Indonesia) | 2,746,990 | ||||||
2,263,120 | Vitasoy International Holdings Ltd. (China) | 5,041,002 | ||||||
2,383,000 | Yihai International Holding Ltd. (China) | 1,909,670 | ||||||
|
| |||||||
21,468,622 | ||||||||
|
| |||||||
Personal Products 2.6% | ||||||||
8,954,830 | Karex Berhad (Malaysia) | 3,202,319 | ||||||
283,604 | Sarantis S.A. (Greece) | 4,153,025 | ||||||
935,521 | TCI Co. Ltd. (Taiwan) | 5,892,511 | ||||||
|
| |||||||
13,247,855 | ||||||||
|
| |||||||
Pharmaceuticals 0.9% | ||||||||
22,330,405 | PT Kimia Farma Persero Tbk (Indonesia) | 4,542,677 | ||||||
|
| |||||||
Real Estate Operating Companies 0.6% | ||||||||
215,000 | Japan Property Management Center Co. Ltd. (Japan) | 2,936,725 | ||||||
|
| |||||||
Real Estate Services 0.5% | ||||||||
452,993 | Purplebricks Group plc* (United Kingdom) | 2,352,165 | ||||||
|
| |||||||
Regional Banks 1.0% | ||||||||
826,926 | Banregio Grupo Financiero S.A.B. de C.V. (Mexico) | 4,924,773 | ||||||
|
| |||||||
Research & Consulting Services 0.5% | ||||||||
45,703 | Akka Technologies (France) | 2,665,709 | ||||||
|
| |||||||
Restaurants 4.9% | ||||||||
90,266 | AmRest Holdings SE* (Poland) | 8,979,599 | ||||||
212,200 | Arcland Service Holdings Co. Ltd. (Japan) | 4,459,925 | ||||||
63,900 | Kura Corp. (Japan) | 2,856,405 | ||||||
548,434 | Patisserie Holdings plc (United Kingdom) | 2,535,409 | ||||||
1,199,613 | Restaurant Brands New Zealand Ltd. (New Zealand) | 5,909,398 | ||||||
|
| |||||||
24,740,736 | ||||||||
|
| |||||||
Semiconductor Equipment 0.9% | ||||||||
180,200 | Japan Material Co. Ltd. (Japan) | 4,749,817 | ||||||
|
| |||||||
Soft Drinks 0.6% | ||||||||
54,337,320 | Pepsi-Cola Products Philippines, Inc. (Philippines) | 3,187,536 | ||||||
|
| |||||||
Specialty Chemicals 2.5% | ||||||||
726,174 | DuluxGroup Ltd. (Australia) | 3,987,275 | ||||||
647,743 | Scapa Group plc (United Kingdom) | 3,836,451 | ||||||
1,174,929 | SH Kelkar & Co. Ltd. (India) | 4,501,316 | ||||||
|
| |||||||
12,325,042 | ||||||||
|
| |||||||
Specialty Stores 0.2% | ||||||||
109,726 | Gear4Music Holdings plc* (United Kingdom) | 1,238,751 | ||||||
|
| |||||||
Technology Hardware, Storage & Peripherals 0.3% | ||||||||
24,211 | MGI Digital Graphic Technology* (France) | 1,522,317 | ||||||
|
| |||||||
Thrifts & Mortgage Finance 2.3% | ||||||||
184,027 | Can Fin Homes Ltd. (India) | 7,474,336 | ||||||
88,892 | Equitable Group, Inc. (Canada) | 3,989,543 | ||||||
|
| |||||||
11,463,879 | ||||||||
|
| |||||||
Total Common Stocks (cost $373,980,301) | 487,600,677 | |||||||
|
|
63
Table of Contents
WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 1.4% | ||||||||
Repurchase Agreement 1.4% | ||||||||
$6,840,234 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $6,875,000 of United States Treasury Notes 2.250% due 11/15/24; value: $6,980,284; repurchase proceeds: $6,840,302 (cost $6,840,234) | $ | 6,840,234 | |||||
|
| |||||||
Total Short-Term Investments (cost $6,840,234) | 6,840,234 | |||||||
|
| |||||||
Total Investments (cost $380,820,535) 98.8% | 494,440,911 | |||||||
Other Assets less Liabilities 1.2% | 6,233,193 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 500,674,104 | ||||||
|
| |||||||
*Non-income producing.
§The aggregate amount of foreign securities fair valued pursuant to a systematic valuation model as a percent of net assets was 1.47%.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch International Opportunities Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Australia | 3.4 | |||
Bangladesh | 1.5 | |||
Brazil | 1.9 | |||
Canada | 1.5 | |||
China | 1.7 | |||
Denmark | 1.3 | |||
Egypt | 0.7 | |||
Finland | 0.4 | |||
France | 3.1 | |||
Germany | 6.8 | |||
Greece | 0.9 | |||
Hong Kong | 0.6 | |||
India | 6.9 | |||
Indonesia | 2.6 | |||
Israel | 0.8 | |||
Italy | 0.5 | |||
Japan | 23.3 | |||
Korea | 1.3 | |||
Malaysia | 3.6 | |||
Mexico | 2.3 | |||
New Zealand | 3.4 | |||
Pakistan | 1.9 | |||
Philippines | 3.6 | |||
Poland | 1.8 | |||
Singapore | 1.0 | |||
South Africa | 1.5 | |||
Sri Lanka | 0.4 | |||
Sweden | 3.6 | |||
Taiwan | 6.8 | |||
Thailand | 0.5 | |||
Turkey | 1.1 | |||
United Kingdom | 9.3 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
64
Table of Contents
WASATCH LARGE CAP VALUE FUND (FMIEX / WILCX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 97.5% | ||||||||
Communications Equipment 3.8% | ||||||||
205,925 | Cisco Systems, Inc. | $ | 6,925,258 | |||||
|
| |||||||
Diversified Banks 16.9% | ||||||||
77,794 | Citigroup, Inc. | 5,658,736 | ||||||
224,461 | ING Groep N.V., ADR (Netherlands) | 4,134,572 | ||||||
56,774 | JPMorgan Chase & Co. | 5,422,485 | ||||||
347,300 | Nordea Bank AB (Sweden) | 4,707,476 | ||||||
85,428 | US Bancorp | 4,578,086 | ||||||
109,275 | Wells Fargo & Co. | 6,026,516 | ||||||
|
| |||||||
30,527,871 | ||||||||
|
| |||||||
Diversified REITs 1.1% | ||||||||
86,527 | Select Income REIT | 2,026,462 | ||||||
|
| |||||||
Drug Retail 3.0% | ||||||||
66,993 | CVS Health Corp. | 5,447,871 | ||||||
|
| |||||||
Electric Utilities 7.9% | ||||||||
77,613 | Duke Energy Corp. | 6,513,283 | ||||||
206,709 | Exelon Corp. | 7,786,728 | ||||||
|
| |||||||
14,300,011 | ||||||||
|
| |||||||
Electrical Components & Equipment 2.3% | ||||||||
53,734 | Eaton Corp. plc | 4,126,234 | ||||||
|
| |||||||
Health Care Equipment 2.4% | ||||||||
54,793 | Medtronic plc | 4,261,252 | ||||||
|
| |||||||
Health Care REITs 1.6% | ||||||||
133,259 | Sabra Health Care REIT, Inc. | 2,923,702 | ||||||
|
| |||||||
Household Products 3.7% | ||||||||
72,782 | Procter & Gamble Co. (The) | 6,621,706 | ||||||
|
| |||||||
Hypermarkets & Super Centers 3.6% | ||||||||
84,168 | Wal-Mart Stores, Inc. | 6,576,888 | ||||||
|
| |||||||
Industrial Conglomerates 2.1% | ||||||||
157,736 | General Electric Co. | 3,814,056 | ||||||
|
| |||||||
Integrated Oil & Gas 10.4% | ||||||||
64,234 | Chevron Corp. | 7,547,495 | ||||||
95,546 | Royal Dutch Shell plc ADR (Netherlands) | 5,788,177 | ||||||
152,221 | Suncor Energy, Inc. (Canada) | 5,332,301 | ||||||
|
| |||||||
18,667,973 | ||||||||
|
| |||||||
Integrated Telecommunication Services 1.5% | ||||||||
54,476 | Verizon Communications, Inc. | 2,696,017 | ||||||
|
| |||||||
Oil & Gas Equipment & Services 3.2% | ||||||||
81,957 | Schlumberger Ltd. | 5,717,320 | ||||||
|
| |||||||
Pharmaceuticals 12.0% | ||||||||
206,600 | Astellas Pharma, Inc. (Japan) | 2,628,286 | ||||||
56,304 | Johnson & Johnson | 7,320,083 | ||||||
39,455 | Novartis AG (Switzerland) | 3,377,724 | ||||||
230,941 | Pfizer, Inc. | 8,244,594 | ||||||
|
| |||||||
21,570,687 | ||||||||
|
| |||||||
Property & Casualty Insurance 2.2% | ||||||||
68,073 | Axis Capital Holdings Ltd. | 3,901,264 | ||||||
|
| |||||||
Regional Banks 2.1% | ||||||||
27,743 | PNC Financial Services Group, Inc. (The) | 3,738,924 | ||||||
|
| |||||||
Reinsurance 2.5% | ||||||||
20,750 | Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Germany) | 4,436,470 | ||||||
|
| |||||||
Specialized REITs 2.3% | ||||||||
58,254 | EPR Properties | 4,062,634 | ||||||
|
|
Shares | Value | |||||||
Systems Software 3.2% | ||||||||
120,109 | Oracle Corp. | $ | 5,807,270 | |||||
|
| |||||||
Technology Hardware, Storage & Peripherals 2.1% | ||||||||
24,301 | Apple, Inc. | 3,745,270 | ||||||
|
| |||||||
Tobacco 1.0% | ||||||||
20,000 | KT&G Corp. (Korea) | 1,842,232 | ||||||
|
| |||||||
Water Utilities 1.5% | ||||||||
1,950,000 | Guangdong Investment Ltd. (China) | 2,780,864 | ||||||
|
| |||||||
Wireless Telecommunication Services 5.1% | ||||||||
485,500 | China Mobile Ltd. (China) | 4,919,264 | ||||||
190,000 | NTT DOCOMO, Inc. (Japan) | 4,340,325 | ||||||
|
| |||||||
9,259,589 | ||||||||
|
| |||||||
Total Common Stocks (cost $146,135,164) | 175,777,825 | |||||||
|
| |||||||
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 3.0% | ||||||||
Repurchase Agreement 3.0% | ||||||||
$5,442,486 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $5,565,000 of United States Treasury Notes 2.250% due 2/15/27; value: $5,555,367; repurchase proceeds: $5,442,540 (cost $5,442,486) | $ | 5,442,486 | |||||
|
| |||||||
Total Short-Term Investments (cost $5,442,486) | 5,442,486 | |||||||
|
| |||||||
Total Investments (cost $151,577,650) 100.5% | 181,220,311 | |||||||
Liabilities less Other Assets (0.5%) | (896,850 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 180,323,461 | ||||||
|
| |||||||
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Large Cap Value Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Canada | 3.0 | |||
China | 4.4 | |||
Germany | 2.5 | |||
Japan | 4.0 | |||
Korea | 1.1 | |||
Netherlands | 5.6 | |||
Sweden | 2.7 | |||
Switzerland | 1.9 | |||
United States | 74.8 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
65
Table of Contents
WASATCH LONG/SHORT FUND (FMLSX / WILSX) | ||
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 89.9% | ||||||||
Airlines 0.5% | ||||||||
6,985 | Alaska Air Group, Inc. | $ | 532,746 | |||||
|
| |||||||
Apparel, Accessories & Luxury Goods 4.3% | ||||||||
95,862 | Michael Kors Holdings Ltd.* | 4,586,997 | ||||||
|
| |||||||
Automobile Manufacturers 2.5% | ||||||||
66,020 | General Motors Co.†† | 2,665,888 | ||||||
|
| |||||||
Biotechnology 6.2% | ||||||||
35,048 | Amgen, Inc. | 6,534,699 | ||||||
|
| |||||||
Communications Equipment 3.3% | ||||||||
103,011 | Cisco Systems, Inc.†† | 3,464,260 | ||||||
|
| |||||||
Department Stores 1.3% | ||||||||
65,007 | Macy’s, Inc.†† | 1,418,453 | ||||||
|
| |||||||
Diversified Banks 3.4% | ||||||||
49,016 | Citigroup, Inc.†† | 3,565,424 | ||||||
|
| |||||||
Electrical Components & Equipment 1.1% | ||||||||
18,023 | Emerson Electric Co.†† | 1,132,565 | ||||||
|
| |||||||
Electronic Manufacturing Services 2.1% | ||||||||
59,785 | Fabrinet* | 2,215,632 | ||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 1.6% | ||||||||
79,995 | Mosaic Co. (The)†† | 1,727,092 | ||||||
|
| |||||||
Food Retail 2.7% | ||||||||
142,869 | Kroger Co. (The)†† | 2,865,952 | ||||||
|
| |||||||
Health Care Distributors 4.5% | ||||||||
31,351 | McKesson Corp.†† | 4,815,827 | ||||||
|
| |||||||
Health Care Equipment 4.3% | ||||||||
58,100 | Medtronic plc | 4,518,437 | ||||||
|
| |||||||
Hotels, Resorts & Cruise Lines 1.9% | ||||||||
98,255 | Extended Stay America, Inc.** †† | 1,965,100 | ||||||
|
| |||||||
Integrated Telecommunication Services 1.2% | ||||||||
26,665 | Verizon Communications, Inc.†† | 1,319,651 | ||||||
|
| |||||||
Internet Software & Services 1.9% | ||||||||
40,670 | Akamai Technologies, Inc.* †† | 1,981,442 | ||||||
|
| |||||||
Oil & Gas Exploration & Production 7.0% | ||||||||
47,896 | Anadarko Petroleum Corp.†† | 2,339,720 | ||||||
797,863 | Bill Barrett Corp.* †† | 3,422,832 | ||||||
269,169 | Southwestern Energy Co.* †† | 1,644,622 | ||||||
|
| |||||||
7,407,174 | ||||||||
|
| |||||||
Pharmaceuticals 10.1% | ||||||||
19,231 | Allergan plc†† | 3,941,393 | ||||||
25,948 | Johnson & Johnson†† | 3,373,500 | ||||||
39,273 | Novartis AG ADR (Switzerland) | 3,371,587 | ||||||
|
| |||||||
10,686,480 | ||||||||
|
| |||||||
Regional Banks 2.8% | ||||||||
100,728 | KeyCorp†† | 1,895,701 | ||||||
8,349 | PNC Financial Services Group, Inc. (The)†† | 1,125,195 | ||||||
|
| |||||||
3,020,896 | ||||||||
|
| |||||||
Semiconductors 10.2% | ||||||||
56,567 | Mellanox Technologies Ltd.* | 2,667,134 | ||||||
101,495 | QUALCOMM, Inc.†† | 5,261,501 | ||||||
93,891 | Tower Semiconductor Ltd.* (Israel) | 2,887,148 | ||||||
|
| |||||||
10,815,783 | ||||||||
|
|
Shares | Value | |||||||
Specialized REITs 3.0% | ||||||||
28,731 | Iron Mountain, Inc.†† | $ | 1,117,636 | |||||
81,746 | Outfront Media, Inc.†† | 2,058,364 | ||||||
|
| |||||||
3,176,000 | ||||||||
|
| |||||||
Steel 2.9% | ||||||||
87,891 | Steel Dynamics, Inc.†† | 3,029,603 | ||||||
|
| |||||||
Systems Software 4.1% | ||||||||
76,267 | Barracuda Networks, Inc.* †† | 1,847,949 | ||||||
38,062 | Oracle Corp.†† | 1,840,298 | ||||||
5,906 | VMware, Inc., Class A* †† | 644,876 | ||||||
|
| |||||||
4,333,123 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals 5.0% | ||||||||
34,256 | Apple, Inc.†† | 5,279,535 | ||||||
|
| |||||||
Thrifts & Mortgage Finance 2.0% | ||||||||
74,446 | BofI Holding, Inc.* †† | 2,119,478 | ||||||
|
| |||||||
Total Common Stocks (cost $93,009,851) | 95,178,237 | |||||||
|
| |||||||
LIMITED PARTNERSHIP INTEREST 2.5% | ||||||||
Asset Management & Custody Banks 2.5% | ||||||||
80,892 | Blackstone Group L.P. (The)†† | 2,699,366 | ||||||
|
| |||||||
Total Limited Partnership Interest (cost $2,453,448) | 2,699,366 | |||||||
|
| |||||||
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 33.2% | ||||||||
Repurchase Agreement 33.2% | ||||||||
$35,132,336 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $36,155,000 of United States Treasury Notes 2.000% due 2/15/25; value: $23,851,584; United States Treasury Notes 2.000% due 11/15/26; value: $4,802,649; United States Treasury Notes 2.250% due 2/15/27; value: $7,182,545; repurchase proceeds: $35,132,687 (cost $35,132,336) | $ | 35,132,336 | |||||
|
| |||||||
Total Short-Term Investments (cost $35,132,336) | 35,132,336 | |||||||
|
| |||||||
Total Investments (cost $130,595,635) 125.6% | 133,009,939 | |||||||
Liabilities less Other Assets (25.6%) | (27,091,330 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 105,918,609 | ||||||
|
|
66
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Shares | Value | |||||||
SECURITIES SOLD SHORT 48.5% | ||||||||
Apparel, Accessories & Luxury Goods 2.6% | ||||||||
68,534 | Coach, Inc. | $ | 2,760,549 | |||||
|
| |||||||
Application Software 3.4% | ||||||||
47,717 | Paycom Software, Inc.* | 3,576,866 | ||||||
|
| |||||||
Automotive Retail 2.5% | ||||||||
35,121 | CarMax, Inc.* | 2,662,523 | ||||||
|
| |||||||
Construction Machinery & Heavy Trucks 3.7% | ||||||||
31,075 | Caterpillar, Inc. | 3,875,363 | ||||||
|
| |||||||
Copper 2.0% | ||||||||
154,362 | Freeport-McMoRan, Inc.* | 2,167,242 | ||||||
|
| |||||||
Diversified Support Services 2.6% | ||||||||
51,147 | Healthcare Services Group, Inc. | 2,760,404 | ||||||
|
| |||||||
Food Distributors 2.6% | ||||||||
50,218 | Sysco Corp. | 2,709,261 | ||||||
|
| |||||||
Health Care Equipment 3.5% | ||||||||
38,836 | Inogen, Inc.* | 3,693,304 | ||||||
|
| |||||||
Health Care Technology 3.0% | ||||||||
56,991 | Veeva Systems, Inc., Class A* | 3,214,862 | ||||||
|
| |||||||
Home Furnishing Retail 0.5% | ||||||||
7,399 | RH* | 520,298 | ||||||
|
| |||||||
Hotels, Resorts & Cruise Lines 1.1% | ||||||||
18,120 | Choice Hotels International, Inc. | 1,157,868 | ||||||
|
| |||||||
Housewares & Specialties 0.9% | ||||||||
23,380 | Newell Brands, Inc. | 997,625 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 1.1% | ||||||||
20,200 | Nutrisystem, Inc. | 1,129,180 | ||||||
|
| |||||||
Internet Software & Services 1.1% | ||||||||
26,878 | Criteo S.A., ADR* (France) | 1,115,437 | ||||||
|
| |||||||
Oil & Gas Drilling 2.2% | ||||||||
45,106 | Helmerich & Payne, Inc. | 2,350,474 | ||||||
|
| |||||||
Packaged Foods & Meats 2.8% | ||||||||
104,598 | Blue Buffalo Pet Products, Inc.* | 2,965,353 | ||||||
|
| |||||||
Personal Products 3.5% | ||||||||
33,993 | Estee Lauder Cos., Inc. (The), Class A | 3,665,805 | ||||||
|
| |||||||
Pharmaceuticals 2.6% | ||||||||
55,232 | Prestige Brands Holdings, Inc.* | 2,766,571 | ||||||
|
| |||||||
Property & Casualty Insurance 2.6% | ||||||||
56,226 | First American Financial Corp. | 2,809,613 | ||||||
|
| |||||||
Restaurants 2.4% | ||||||||
40,352 | Restaurant Brands International, Inc. (Canada) | 2,577,686 | ||||||
|
| |||||||
Semiconductors 1.2% | ||||||||
33,339 | Synaptics, Inc.* | 1,306,222 | ||||||
|
|
Shares | Value | |||||||
Specialty Stores 0.6% | ||||||||
2,612 | Ulta Beauty, Inc.* | $ | 590,469 | |||||
|
| |||||||
Total Securities Sold Short (proceeds $39,530,978) | 51,372,975 | |||||||
|
| |||||||
*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 September 30, 2017, Wasatch Long/Short Fund’s investments, excluding short-term investments and securities sold short, were in the following countries (unaudited):
Country | % | |||
Israel | 3.0 | |||
Switzerland | 3.4 | |||
United States | 93.6 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
67
Table of Contents
WASATCH MICRO CAP FUND (WMICX) | ||
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 97.7% | ||||||||
Apparel, Accessories & Luxury Goods 2.7% | ||||||||
368,245 | Superior Uniform Group, Inc. | $ | 8,432,810 | |||||
|
| |||||||
Application Software 11.0% | ||||||||
219,207 | Callidus Software, Inc.* | 5,403,453 | ||||||
26,063 | Ellie Mae, Inc.* | 2,140,554 | ||||||
47,000 | Esker S.A. (France) | 2,702,474 | ||||||
204,716 | Exa Corp.* | 4,950,033 | ||||||
427,000 | Fortnox AB (Sweden) | 2,076,048 | ||||||
133,954 | Globant S.A.* (Argentina) | 5,367,537 | ||||||
39,549 | HubSpot, Inc.* | 3,324,093 | ||||||
24,720 | Tyler Technologies, Inc.* | 4,309,190 | ||||||
189,897 | Upland Software, Inc.* | 4,018,221 | ||||||
|
| |||||||
34,291,603 | ||||||||
|
| |||||||
Asset Management & Custody Banks 1.1% | ||||||||
15,534 | Diamond Hill Investment Group, Inc. | 3,298,645 | ||||||
|
| |||||||
Automotive Retail 0.7% | ||||||||
41,597 | Monro, Inc. | 2,331,512 | ||||||
|
| |||||||
Biotechnology 8.6% | ||||||||
278,787 | Abcam plc (United Kingdom) | 3,810,459 | ||||||
229,798 | ChemoCentryx, Inc.* | 1,705,101 | ||||||
60,913 | Cytokinetics, Inc.* | 883,239 | ||||||
62,154 | Esperion Therapeutics, Inc.* | 3,115,158 | ||||||
123,353 | Exact Sciences Corp.* | 5,812,393 | ||||||
99,748 | Flexion Therapeutics, Inc.* | 2,411,907 | ||||||
214,683 | Inovio Pharmaceuticals, Inc.* | 1,361,090 | ||||||
384,705 | Sangamo Therapeutics Inc.* | 5,770,575 | ||||||
97,782 | Selecta Biosciences, Inc.* | 1,784,522 | ||||||
|
| |||||||
26,654,444 | ||||||||
|
| |||||||
Building Products 1.9% | ||||||||
64,889 | Trex Co., Inc.* | 5,844,552 | ||||||
|
| |||||||
Construction & Engineering 1.2% | ||||||||
66,255 | NV5 Global, Inc.* | 3,620,836 | ||||||
|
| |||||||
Consumer Electronics 1.3% | ||||||||
257,317 | ZAGG, Inc.* | 4,052,743 | ||||||
|
| |||||||
Department Stores 2.2% | ||||||||
317,634 | V-Mart Retail Ltd. (India) | 7,002,342 | ||||||
|
| |||||||
Diversified Banks 1.2% | ||||||||
1,461,736 | City Union Bank Ltd. (India) | 3,670,005 | ||||||
|
| |||||||
Electronic Equipment & Instruments 2.6% | ||||||||
34,211 | Mesa Laboratories, Inc. | 5,108,387 | ||||||
314,049 | Napco Security Technologies, Inc.* | 3,046,275 | ||||||
|
| |||||||
8,154,662 | ||||||||
|
| |||||||
Electronic Manufacturing Services 1.0% | ||||||||
88,036 | Fabrinet* | 3,262,614 | ||||||
|
| |||||||
Environmental & Facilities Services 1.1% | ||||||||
157,734 | Heritage-Crystal Clean, Inc.* | 3,430,714 | ||||||
|
| |||||||
Food Distributors 1.3% | ||||||||
217,154 | Chefs’ Warehouse, Inc. (The)* | 4,191,072 | ||||||
|
| |||||||
General Merchandise Stores 1.5% | ||||||||
101,901 | Ollie’s Bargain Outlet Holdings, Inc.* | 4,728,206 | ||||||
|
| |||||||
Health Care Distributors 1.3% | ||||||||
148,698 | PetIQ, Inc.* | 4,026,742 | ||||||
|
|
Shares | Value | |||||||
Health Care Equipment 3.3% | ||||||||
209,478 | AtriCure, Inc.* | $ | 4,686,023 | |||||
88,199 | Entellus Medical, Inc.* | 1,628,154 | ||||||
185,814 | Oxford Immunotec Global plc* | 3,121,675 | ||||||
1,017,822 | Tandem Diabetes Care, Inc.* | 743,010 | ||||||
|
| |||||||
10,178,862 | ||||||||
|
| |||||||
Health Care Facilities 2.0% | ||||||||
282,081 | Ensign Group, Inc. (The) | 6,372,210 | ||||||
|
| |||||||
Health Care REITs 1.8% | ||||||||
156,482 | CareTrust REIT, Inc. | 2,979,418 | ||||||
213,551 | MedEquities Realty Trust, Inc. | 2,509,224 | ||||||
|
| |||||||
5,488,642 | ||||||||
|
| |||||||
Health Care Technology 2.2% | ||||||||
53,733 | Omnicell, Inc.* | 2,743,070 | ||||||
149,929 | Tabula Rasa HealthCare, Inc.* | 4,009,101 | ||||||
|
| |||||||
6,752,171 | ||||||||
| �� | |||||||
Heavy Electrical Equipment 2.2% | ||||||||
216,292 | TPI Composites, Inc.* | 4,831,963 | ||||||
1,000,000 | Triveni Turbine Ltd. (India) | 1,980,251 | ||||||
|
| |||||||
6,812,214 | ||||||||
|
| |||||||
Homebuilding 5.2% | ||||||||
121,664 | Installed Building Products, Inc.* | 7,883,827 | ||||||
170,875 | LGI Homes, Inc.* | 8,299,399 | ||||||
|
| |||||||
16,183,226 | ||||||||
|
| |||||||
Human Resource & Employment Services 1.0% | ||||||||
154,100 | UT Group Co., Ltd.* (Japan) | 3,012,842 | ||||||
|
| |||||||
Industrial Machinery 3.0% | ||||||||
63,012 | Altra Industrial Motion Corp. | 3,030,877 | ||||||
210,591 | Kornit Digital Ltd.* (Israel) | 3,222,042 | ||||||
111,977 | va-Q-tec AG* (Germany) | 3,014,173 | ||||||
|
| |||||||
9,267,092 | ||||||||
|
| |||||||
Industrial REITs 1.0% | ||||||||
187,585 | Monmouth Real Estate Investment Corp. | 3,037,001 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 0.8% | ||||||||
120,832 | Duluth Holdings, Inc.* | 2,451,681 | ||||||
|
| |||||||
Internet Software & Services 8.1% | ||||||||
119,769 | Envestnet, Inc.* | 6,108,219 | ||||||
180,548 | Five9, Inc.* | 4,315,097 | ||||||
128,170 | Instructure, Inc.* | 4,248,836 | ||||||
112,000 | SMS Co. Ltd. (Japan) | 3,568,274 | ||||||
202,057 | TrueCar, Inc.* | 3,190,480 | ||||||
66,788 | Tucows, Inc., Class A* | 3,910,437 | ||||||
|
| |||||||
25,341,343 | ||||||||
|
| |||||||
Leisure Products 1.1% | ||||||||
164,909 | MCBC Holdings, Inc.* | 3,360,845 | ||||||
|
| |||||||
Life Sciences Tools & Services 1.0% | ||||||||
27,884 | ICON plc* (Ireland) | 3,175,430 | ||||||
|
| |||||||
Managed Health Care 2.6% | ||||||||
161,084 | HealthEquity, Inc.* | 8,147,629 | ||||||
|
| |||||||
Oil & Gas Equipment & Services 1.0% | ||||||||
197,618 | Pason Systems, Inc. (Canada) | 2,974,367 | ||||||
|
| |||||||
Oil & Gas Exploration & Production 0.4% | ||||||||
624,030 | Abraxas Petroleum Corp.* | 1,173,176 | ||||||
|
|
68
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Shares | Value | |||||||
Packaged Foods & Meats 3.0% | ||||||||
415,274 | Freshpet, Inc.* | $ | 6,499,038 | |||||
1,500,000 | Prabhat Dairy Ltd. (India) | 2,907,226 | ||||||
|
| |||||||
9,406,264 | ||||||||
|
| |||||||
Pharmaceuticals 1.8% | ||||||||
197,037 | Intra-Cellular Therapies, Inc.* | 3,109,244 | ||||||
209,945 | Natco Pharma Ltd. (India) | 2,529,496 | ||||||
|
| |||||||
5,638,740 | ||||||||
|
| |||||||
Real Estate Services 0.8% | ||||||||
63,723 | HFF, Inc., Class A | 2,520,882 | ||||||
|
| |||||||
Regional Banks 2.5% | ||||||||
78,590 | Customers Bancorp, Inc.* | 2,563,606 | ||||||
161,075 | People’s Utah Bancorp | 5,226,884 | ||||||
|
| |||||||
7,790,490 | ||||||||
|
| |||||||
Restaurants 2.3% | ||||||||
153,485 | Chuy’s Holdings, Inc.* | 3,230,859 | ||||||
210,615 | Fiesta Restaurant Group, Inc.* | 4,001,685 | ||||||
|
| |||||||
7,232,544 | ||||||||
|
| |||||||
Semiconductors 2.1% | ||||||||
78,164 | Impinj, Inc.* | 3,252,404 | ||||||
42,129 | NVE Corp. | 3,326,927 | ||||||
|
| |||||||
6,579,331 | ||||||||
|
| |||||||
Systems Software 0.9% | ||||||||
71,862 | CyberArk Software Ltd.* (Israel) | 2,946,342 | ||||||
|
| |||||||
Technology Hardware, Storage & Peripherals 1.5% | ||||||||
742,732 | USA Technologies, Inc.* | 4,642,075 | ||||||
|
| |||||||
Textiles 0.8% | ||||||||
2,406,652 | Welspun India Ltd. (India) | 2,503,552 | ||||||
|
| |||||||
Thrifts & Mortgage Finance 4.6% | ||||||||
78,507 | Equitable Group, Inc. (Canada) | 3,523,456 | ||||||
676,404 | GRUH Finance Ltd. (India) | 5,043,000 | ||||||
23,703 | LendingTree, Inc.* | 5,794,198 | ||||||
|
| |||||||
14,360,654 | ||||||||
|
| |||||||
Total Common Stocks (cost $181,184,148) | 304,343,107 | |||||||
|
|
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 0.3% | ||||||||
Repurchase Agreement 0.3% | ||||||||
$1,061,240 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $1,070,000 of United States Treasury Notes 2.250% due 11/15/24; value: $1,086,386; repurchase proceeds: $1,061,251 (cost $1,061,240) | $ | 1,061,240 | |||||
|
| |||||||
Total Short-Term Investments (cost $1,061,240) | 1,061,240 | |||||||
|
| |||||||
Total Investments (cost $182,245,388) 98.0% | 305,404,347 | |||||||
Other Assets less Liabilities 2.0% | 6,178,903 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 311,583,250 | ||||||
|
| |||||||
*Non-income producing.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Micro Cap Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Argentina | 1.8 | |||
Canada | 2.1 | |||
France | 0.9 | |||
Germany | 1.0 | |||
India | 8.4 | |||
Ireland | 1.0 | |||
Israel | 2.0 | |||
Japan | 2.2 | |||
Sweden | 0.7 | |||
United Kingdom | 1.3 | |||
United States | 78.6 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
69
Table of Contents
WASATCH MICRO CAP VALUE FUND (WAMVX) | ||
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 92.8% | ||||||||
Air Freight & Logistics 1.8% | ||||||||
500,000 | Allcargo Logistics Ltd. (India) | $ | 1,304,348 | |||||
500,000 | Radiant Logistics, Inc.* | 2,655,000 | ||||||
|
| |||||||
3,959,348 | ||||||||
|
| |||||||
Alternative Carriers 0.9% | ||||||||
187,000 | ORBCOMM, Inc.* | 1,957,890 | ||||||
|
| |||||||
Apparel, Accessories & Luxury Goods 1.0% | ||||||||
95,000 | Superior Uniform Group, Inc. | 2,175,500 | ||||||
|
| |||||||
Application Software 3.7% | ||||||||
37,000 | Ebix, Inc. | 2,414,250 | ||||||
24,000 | ESI Group* (France) | 1,133,206 | ||||||
97,000 | Everbridge, Inc.* | 2,562,740 | ||||||
46,000 | Globant S.A.* (Argentina) | 1,843,220 | ||||||
|
| |||||||
7,953,416 | ||||||||
|
| |||||||
Asset Management & Custody Banks 1.1% | ||||||||
92,000 | Hamilton Lane, Inc., Class A | 2,470,200 | ||||||
|
| |||||||
Auto Parts & Equipment 1.2% | ||||||||
87,000 | Horizon Global Corp.* | 1,534,680 | ||||||
128,000 | Unique Fabricating, Inc. | 1,081,600 | ||||||
|
| |||||||
2,616,280 | ||||||||
|
| |||||||
Biotechnology 0.9% | ||||||||
39,000 | Exact Sciences Corp.* | 1,837,680 | ||||||
|
| |||||||
Brewers 1.0% | ||||||||
700,000 | Turk Tuborg Bira ve Malt Sanayii A.S. (Turkey) | 2,117,908 | ||||||
|
| |||||||
Building Products 1.4% | ||||||||
36,000 | Patrick Industries, Inc.* | 3,027,600 | ||||||
|
| |||||||
Construction & Engineering 1.6% | ||||||||
64,000 | NV5 Global, Inc.* | 3,497,600 | ||||||
|
| |||||||
Construction Materials 0.6% | ||||||||
1,200,000 | Low & Bonar plc (United Kingdom) | 1,274,339 | ||||||
|
| |||||||
Consumer Electronics 1.6% | ||||||||
225,000 | ZAGG, Inc.* | 3,543,750 | ||||||
|
| |||||||
Diversified Banks 1.8% | ||||||||
780,000 | City Union Bank Ltd. (India) | 1,958,359 | ||||||
3,100,000 | East West Banking Corp. (Philippines) | 1,980,236 | ||||||
|
| |||||||
3,938,595 | ||||||||
|
| |||||||
Diversified Metals & Mining 1.0% | ||||||||
160,000 | Ferroglobe plc (United Kingdom) | 2,105,600 | ||||||
|
| |||||||
Diversified Support Services 1.1% | ||||||||
1,150,000 | Johnson Service Group plc (United Kingdom) | 2,272,974 | ||||||
|
| |||||||
Education Services 0.7% | ||||||||
200,000 | AcadeMedia AB* (Sweden) | 1,596,091 | ||||||
|
| |||||||
Electronic Equipment & Instruments 2.1% | ||||||||
255,000 | Napco Security Technologies, Inc.* | 2,473,500 | ||||||
58,000 | Optex Group Co., Ltd. (Japan) | 2,170,007 | ||||||
|
| |||||||
4,643,507 | ||||||||
|
| |||||||
Electronic Manufacturing Services 1.2% | ||||||||
68,000 | Fabrinet* | 2,520,080 | ||||||
|
| |||||||
Environmental & Facilities Services 0.5% | ||||||||
133,000 | Hudson Technologies, Inc.* | 1,038,730 | ||||||
|
|
Shares | Value | |||||||
Food Retail 0.9% | ||||||||
390,000 | Majestic Wine plc (United Kingdom) | $ | 1,846,084 | |||||
|
| |||||||
General Merchandise Stores 1.7% | ||||||||
36,000 | Ollie’s Bargain Outlet Holdings, Inc.* | 1,670,400 | ||||||
36,000 | Seria Co. Ltd. (Japan) | 1,999,556 | ||||||
|
| |||||||
3,669,956 | ||||||||
|
| |||||||
Health Care Distributors 1.3% | ||||||||
100,761 | PetIQ, Inc.* | 2,728,608 | ||||||
|
| |||||||
Health Care Equipment 3.3% | ||||||||
100,000 | Accuray, Inc.* | 400,000 | ||||||
90,000 | AtriCure, Inc.* | 2,013,300 | ||||||
142,000 | Oxford Immunotec Global plc* | 2,385,600 | ||||||
60,000 | Tactile Systems Technology, Inc.* | 1,857,000 | ||||||
782,646 | Tandem Diabetes Care, Inc.* | 571,332 | ||||||
|
| |||||||
7,227,232 | ||||||||
|
| |||||||
Health Care Facilities 1.4% | ||||||||
70,000 | Ensign Group, Inc. (The) | 1,581,300 | ||||||
70,000 | Japan Animal Referral Medical Center Co. Ltd.* (Japan) | 1,380,404 | ||||||
|
| |||||||
2,961,704 | ||||||||
|
| |||||||
Health Care Services 2.4% | ||||||||
40,000 | LHC Group, Inc.* | 2,836,800 | ||||||
63,000 | National Research Corp., Class A | 2,375,100 | ||||||
|
| |||||||
5,211,900 | ||||||||
|
| |||||||
Health Care Technology 2.3% | ||||||||
90,000 | Nexus AG (Germany) | 2,818,832 | ||||||
41,000 | Omnicell, Inc.* | 2,093,050 | ||||||
|
| |||||||
4,911,882 | ||||||||
|
| |||||||
Heavy Electrical Equipment 1.1% | ||||||||
107,000 | TPI Composites, Inc.* | 2,390,380 | ||||||
|
| |||||||
Homebuilding 2.7% | ||||||||
45,000 | Installed Building Products, Inc.* | 2,916,000 | ||||||
62,000 | LGI Homes, Inc.* | 3,011,340 | ||||||
|
| |||||||
5,927,340 | ||||||||
|
| |||||||
Home Furnishing Retail 1.2% | ||||||||
85,000 | Select Comfort Corp.* | 2,639,250 | ||||||
|
| |||||||
Hotels, Resorts & Cruise Lines 1.5% | ||||||||
400,000 | Byke Hospitality Ltd. (The) (India) | 1,056,644 | ||||||
242,600 | Red Lion Hotels Corp.* | 2,098,490 | ||||||
|
| |||||||
3,155,134 | ||||||||
|
| |||||||
Housewares & Specialties 0.1% | ||||||||
79,137 | OurPet’s Co.* | 142,447 | ||||||
|
| |||||||
Human Resource & Employment Services 0.8% | ||||||||
105,034 | BG Staffing, Inc. | 1,738,313 | ||||||
|
| |||||||
Industrial Machinery 3.2% | ||||||||
24,000 | John Bean Technologies Corp. | 2,426,400 | ||||||
85,000 | Kornit Digital Ltd.* (Israel) | 1,300,500 | ||||||
60,456 | Taylor Devices, Inc.* | 707,940 | ||||||
96,000 | va-Q-tec AG* (Germany) | 2,584,107 | ||||||
|
| |||||||
7,018,947 | ||||||||
|
| |||||||
Industrial REITs 1.0% | ||||||||
132,489 | Monmouth Real Estate Investment Corp. | 2,144,997 | ||||||
|
| |||||||
Integrated Telecommunication Services 1.1% | ||||||||
220,000 | Ooma, Inc.* | 2,321,000 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 0.6% | ||||||||
334,166 | ePrice S.p.A. (Italy) | 1,212,499 | ||||||
|
|
70
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Shares | Value | |||||||
Internet Software & Services 3.0% | ||||||||
89,000 | Rakus Co. Ltd. (Japan) | $ | 1,637,236 | |||||
86,000 | Reis, Inc. | 1,548,000 | ||||||
55,000 | Tucows, Inc., Class A* | 3,220,250 | ||||||
|
| |||||||
6,405,486 | ||||||||
|
| |||||||
Leisure Products 0.9% | ||||||||
110,000 | Nautilus, Inc.* | 1,859,000 | ||||||
|
| |||||||
Life & Health Insurance 1.0% | ||||||||
42,000 | Kansas City Life Insurance Co. | 2,069,970 | ||||||
|
| |||||||
Life Sciences Tools & Services 0.8% | ||||||||
555,000 | Horizon Discovery Group plc* (United Kingdom) | 1,688,198 | ||||||
|
| |||||||
Mortgage REITs 1.0% | ||||||||
260,000 | Arbor Realty Trust, Inc. | 2,132,000 | ||||||
|
| |||||||
Oil & Gas Exploration & Production 0.8% | ||||||||
148,000 | Earthstone Energy, Inc., Class A* | 1,626,520 | ||||||
|
| |||||||
Packaged Foods & Meats 3.5% | ||||||||
85,000 | Bombay Burmah Trading Co. (India) | 1,659,140 | ||||||
152,000 | Freshpet, Inc.* | 2,378,800 | ||||||
1,800,000 | Kawan Food BHD (Malaysia) | 1,453,641 | ||||||
2,700,000 | Yihai International Holding Ltd. (China) | 2,163,705 | ||||||
|
| |||||||
7,655,286 | ||||||||
|
| |||||||
Personal Products 0.8% | ||||||||
120,000 | Sarantis S.A. (Greece) | 1,757,249 | ||||||
|
| |||||||
Pharmaceuticals 1.0% | ||||||||
140,000 | Intra-Cellular Therapies, Inc.* | 2,209,200 | ||||||
|
| |||||||
Property & Casualty Insurance 2.5% | ||||||||
150,000 | Atlas Financial Holdings, Inc.* | 2,835,000 | ||||||
158,000 | Kingstone Cos., Inc. | 2,575,400 | ||||||
|
| |||||||
5,410,400 | ||||||||
|
| |||||||
Real Estate Operating Companies 0.8% | ||||||||
133,000 | Japan Property Management Center Co. Ltd. (Japan) | 1,816,672 | ||||||
|
| |||||||
Regional Banks 11.6% | ||||||||
69,000 | Bankwell Financial Group, Inc. | 2,548,860 | ||||||
111,000 | Blue Hills Bancorp, Inc. | 2,131,200 | ||||||
80,839 | Capstar Financial Holdings, Inc.* | 1,582,827 | ||||||
45,000 | Customers Bancorp, Inc.* | 1,467,900 | ||||||
200,000 | Esquire Financial Holdings, Inc.* | 3,218,000 | ||||||
85,000 | First of Long Island Corp. (The) | 2,588,250 | ||||||
92,911 | Investar Holding Corp. | 2,239,155 | ||||||
76,000 | People’s Utah Bancorp | 2,466,200 | ||||||
99,000 | SmartFinancial, Inc.* | 2,381,940 | ||||||
71,713 | Sound Financial Bancorp, Inc. | 2,398,800 | ||||||
90,000 | Sunshine Bancorp, Inc.* | 2,091,600 | ||||||
|
| |||||||
25,114,732 | ||||||||
|
| |||||||
Restaurants 0.6% | ||||||||
300,000 | Collins Foods Ltd. (Australia) | 1,376,622 | ||||||
|
| |||||||
Semiconductor Equipment 0.7% | ||||||||
103,000 | PDF Solutions, Inc.* | 1,595,470 | ||||||
|
| |||||||
Semiconductors 2.1% | ||||||||
145,000 | Tower Semiconductor Ltd.* (Israel) | 4,458,750 | ||||||
|
| |||||||
Specialty Chemicals 1.5% | ||||||||
115,000 | Ferro Corp.* | 2,564,500 | ||||||
150,000 | Flotek Industries, Inc.* | 697,500 | ||||||
|
| |||||||
3,262,000 | ||||||||
|
| |||||||
Systems Software 0.2% | ||||||||
80,000 | Attunity Ltd.* (Israel) | 540,800 | ||||||
|
|
Shares | Value | |||||||
Technology Hardware, Storage & Peripherals 2.2% | ||||||||
25,000 | MGI Digital Graphic Technology* (France) | $ | 1,571,927 | |||||
510,000 | USA Technologies, Inc.* | 3,187,500 | ||||||
|
| |||||||
4,759,427 | ||||||||
|
| |||||||
Textiles 1.1% | ||||||||
2,100,000 | Best Pacific International Holdings Ltd. (China) | 1,182,856 | ||||||
1,200,000 | Welspun India Ltd. (India) | 1,248,316 | ||||||
|
| |||||||
2,431,172 | ||||||||
|
| |||||||
Thrifts & Mortgage Finance 3.6% | ||||||||
131,000 | Beneficial Bancorp, Inc. | 2,174,600 | ||||||
109,000 | BofI Holding, Inc.* | 3,103,230 | ||||||
2,343 | Entegra Financial Corp.* | 58,458 | ||||||
360,000 | Mortgage Advice Bureau Holdings Ltd. (United Kingdom) | 2,460,239 | ||||||
|
| |||||||
7,796,527 | ||||||||
|
| |||||||
Trading Companies & Distributors 1.3% | ||||||||
48,000 | SiteOne Landscape Supply, Inc.* | 2,788,800 | ||||||
|
| |||||||
Total Common Stocks (cost $133,133,365) | 200,549,042 | |||||||
|
| |||||||
CONVERTIBLE PREFERRED STOCKS 0.7% | ||||||||
Oil & Gas Refining & Marketing 0.7% | ||||||||
563,807 | Vertex Energy, Inc., Pfd., 6.00% PIK Series B*** † | 1,460,260 | ||||||
|
| |||||||
Total Convertible Preferred Stocks (cost $1,652,801) | 1,460,260 | |||||||
|
| |||||||
RIGHTS 0.2% | ||||||||
Health Care Supplies 0.0% | ||||||||
375,000 | Synergetics USA, Inc.* *** † | 18,750 | ||||||
|
| |||||||
Pharmaceuticals 0.2% | ||||||||
1 | Acetylon Pharmaceuticals, Inc.* *** † | 326,356 | ||||||
1 | Acetylon Pharmaceuticals, Inc.* *** † | — | ||||||
|
| |||||||
326,356 | ||||||||
|
| |||||||
Total Rights (cost $71,250) | 345,106 | |||||||
|
| |||||||
LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST 0.0% | ||||||||
Pharmaceuticals 0.0% | ||||||||
50,528 | Regenacy Pharmaceuticals, LLC* *** † | 51,476 | ||||||
|
| |||||||
Total Limited Liability Company Membership Interest (cost $30,001) | 51,476 | |||||||
|
| |||||||
WARRANTS 0.0% | ||||||||
Oil & Gas Refining & Marketing 0.0% | ||||||||
250,000 | Vertex Energy, Inc., expiring 12/24/2020* *** † | 2,500 | ||||||
|
| |||||||
Total Warrants (cost $95,000) | 2,500 | |||||||
|
|
71
Table of Contents
WASATCH MICRO CAP VALUE FUND (WAMVX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 6.7% | ||||||||
Repurchase Agreement 6.7% | ||||||||
$14,565,031 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $14,635,000 of United States Treasury Notes 2.250% due 11/15/24; value: $14,859,120; repurchase proceeds: $14,565,177 (cost $14,565,031) | $ | 14,565,031 | |||||
|
| |||||||
Total Short-Term Investments (cost $14,565,031) | 14,565,031 | |||||||
|
| |||||||
Total Investments (cost $149,547,448) 100.4% | 216,973,415 | |||||||
Liabilities less Other Assets (0.4%) | (886,191 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 216,087,224 | ||||||
|
| |||||||
*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).
PIK Payment in kind.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Micro Cap Value Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Argentina | 0.9 | |||
Australia | 0.7 | |||
China | 1.6 | |||
France | 1.3 | |||
Germany | 2.7 | |||
Greece | 0.9 | |||
India | 3.6 | |||
Israel | 3.1 | |||
Italy | 0.6 | |||
Japan | 4.4 | |||
Malaysia | 0.7 | |||
Philippines | 1.0 | |||
Sweden | 0.8 | |||
Turkey | 1.0 | |||
United Kingdom | 5.8 | |||
United States | 70.9 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
72
Table of Contents
WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 94.8% | ||||||||
Aerospace & Defense 3.0% | ||||||||
671,835 | HEICO Corp., Class A | $ | 51,193,827 | |||||
|
| |||||||
Air Freight & Logistics 1.9% | ||||||||
23,918,023 | Aramex PJSC (United Arab Emirates) | 32,432,542 | ||||||
|
| |||||||
Airlines 2.2% | ||||||||
140,778 | Allegiant Travel Co. | 18,540,462 | ||||||
584,085 | Spirit Airlines, Inc.* | 19,514,280 | ||||||
|
| |||||||
38,054,742 | ||||||||
|
| |||||||
Application Software 10.8% | ||||||||
1,501,652 | Callidus Software, Inc.* | 37,015,722 | ||||||
344,774 | Globant S.A.* (Argentina) | 13,815,094 | ||||||
286,302 | HubSpot, Inc.* | 24,063,683 | ||||||
420,349 | Paylocity Holding Corp.* | 20,521,438 | ||||||
316,789 | Ultimate Software Group, Inc. (The)* | 60,063,194 | ||||||
936,169 | Zendesk, Inc.* | 27,251,880 | ||||||
|
| |||||||
182,731,011 | ||||||||
|
| |||||||
Automotive Retail 2.2% | ||||||||
656,134 | Monro, Inc. | 36,776,311 | ||||||
|
| |||||||
Biotechnology 9.8% | ||||||||
2,124,073 | Abcam plc (United Kingdom) | 29,031,817 | ||||||
1,086,829 | ChemoCentryx, Inc.* | 8,064,271 | ||||||
299,624 | Cytokinetics, Inc.* | 4,344,548 | ||||||
339,894 | Esperion Therapeutics, Inc.* | 17,035,487 | ||||||
596,206 | Exact Sciences Corp.* | 28,093,227 | ||||||
477,149 | Flexion Therapeutics, Inc.* | 11,537,463 | ||||||
1,218,886 | Inovio Pharmaceuticals, Inc.* | 7,727,737 | ||||||
346,891 | Juno Therapeutics, Inc.* | 15,561,530 | ||||||
546,626 | MacroGenics, Inc.* | 10,101,649 | ||||||
1,463,102 | Sangamo Therapeutics Inc.* | 21,946,530 | ||||||
227,469 | Seattle Genetics, Inc.* | 12,376,588 | ||||||
|
| |||||||
165,820,847 | ||||||||
|
| |||||||
Building Products 1.1% | ||||||||
518,240 | AAON, Inc. | 17,866,324 | ||||||
|
| |||||||
Diversified Banks 1.2% | ||||||||
3,778,620 | Yes Bank Ltd. (India) | 20,206,246 | ||||||
|
| |||||||
Diversified Support Services 4.1% | ||||||||
2,040,848 | Copart, Inc.* | 70,143,946 | ||||||
|
| |||||||
Drug Retail 1.6% | ||||||||
119,229 | Cosmos Pharmaceutical Corp. (Japan) | 26,616,596 | ||||||
|
| |||||||
Food Distributors 1.1% | ||||||||
944,388 | Chefs’ Warehouse, Inc. (The)* | 18,226,688 | ||||||
|
| |||||||
General Merchandise Stores 2.4% | ||||||||
861,512 | Ollie’s Bargain Outlet Holdings, Inc.* | 39,974,157 | ||||||
|
| |||||||
Health Care Equipment 0.9% | ||||||||
161,783 | Cantel Medical Corp. | 15,235,105 | ||||||
|
| |||||||
Health Care Facilities 2.0% | ||||||||
1,533,765 | Ensign Group, Inc. (The) | 34,647,751 | ||||||
|
| |||||||
Health Care Supplies 0.2% | ||||||||
49,843 | Neogen Corp.* | 3,860,839 | ||||||
|
| |||||||
Industrial Machinery 3.8% | ||||||||
242,595 | Barnes Group, Inc. | 17,088,392 | ||||||
278,819 | RBC Bearings, Inc.* | 34,894,198 | ||||||
214,721 | Sun Hydraulics Corp. | 11,594,934 | ||||||
|
| |||||||
63,577,524 | ||||||||
|
|
Shares | Value | |||||||
Internet & Direct Marketing Retail 3.1% | ||||||||
504,651 | MakeMyTrip Ltd.* (India) | $ | 14,508,716 | |||||
344,121 | Wayfair, Inc., Class A* | 23,193,756 | ||||||
86,482 | zooplus AG* (Germany) | 14,565,368 | ||||||
|
| |||||||
52,267,840 | ||||||||
|
| |||||||
Internet Software & Services 4.5% | ||||||||
763,021 | Cornerstone OnDemand, Inc.* | 30,986,283 | ||||||
514,655 | Envestnet, Inc.* | 26,247,405 | ||||||
1,183,084 | TrueCar, Inc.* | 18,680,896 | ||||||
|
| |||||||
75,914,584 | ||||||||
|
| |||||||
IT Consulting & Other Services 1.3% | ||||||||
462,364 | Luxoft Holding, Inc.* (Switzerland) | 22,100,999 | ||||||
|
| |||||||
Life Sciences Tools & Services 3.9% | ||||||||
576,523 | ICON plc* (Ireland) | 65,654,439 | ||||||
|
| |||||||
Managed Health Care 2.0% | ||||||||
654,195 | HealthEquity, Inc.* | 33,089,183 | ||||||
|
| |||||||
Personal Products 0.5% | ||||||||
546,807 | Colgate-Palmolive India Ltd. (India) | 8,832,875 | ||||||
|
| |||||||
Pharmaceuticals 0.7% | ||||||||
792,780 | Intra-Cellular Therapies, Inc.* | 12,510,068 | ||||||
|
| |||||||
Real Estate Services 1.4% | ||||||||
581,081 | HFF, Inc., Class A | 22,987,564 | ||||||
|
| |||||||
Regional Banks 8.5% | ||||||||
585,554 | Eagle Bancorp, Inc.* | 39,261,396 | ||||||
887,886 | Metro Bank plc* (United Kingdom) | 40,214,114 | ||||||
512,849 | Pinnacle Financial Partners, Inc. | 34,335,241 | ||||||
357,628 | Texas Capital Bancshares, Inc.* | 30,684,482 | ||||||
|
| |||||||
144,495,233 | ||||||||
|
| |||||||
Restaurants 1.9% | ||||||||
608,786 | Chuy’s Holdings, Inc.* | 12,814,945 | ||||||
986,342 | Fiesta Restaurant Group, Inc.* | 18,740,498 | ||||||
|
| |||||||
31,555,443 | ||||||||
|
| |||||||
Semiconductors 4.8% | ||||||||
744,289 | Cavium, Inc.* | 49,078,417 | ||||||
307,942 | Monolithic Power Systems, Inc. | 32,811,220 | ||||||
|
| |||||||
81,889,637 | ||||||||
|
| |||||||
Specialty Stores 1.9% | ||||||||
571,541 | Five Below, Inc.* | 31,366,170 | ||||||
|
| |||||||
Systems Software 4.9% | ||||||||
457,258 | CyberArk Software Ltd.* (Israel) | 18,747,578 | ||||||
659,966 | Fortinet, Inc.* | 23,653,181 | ||||||
261,834 | Proofpoint, Inc.* | 22,837,162 | ||||||
1,016,263 | Rapid7, Inc.* | 17,886,229 | ||||||
|
| |||||||
83,124,150 | ||||||||
|
| |||||||
Trading Companies & Distributors 2.3% | ||||||||
666,218 | WESCO International, Inc.* | 38,807,199 | ||||||
|
| |||||||
Trucking 4.8% | ||||||||
1,962,710 | Knight-Swift Transportation Holdings, Inc.* | 81,550,601 | ||||||
|
| |||||||
Total Common Stocks (cost $983,230,458) | 1,603,510,441 | |||||||
|
|
73
Table of Contents
WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Shares | Value | |||||||
PREFERRED STOCKS 2.7% | ||||||||
Biotechnology 0.1% | ||||||||
677,966 | Nanosys, Inc., Series D Pfd.* *** † | $ | 1,275,390 | |||||
161,519 | Nanosys, Inc., Series E Pfd.* *** † | 204,305 | ||||||
|
| |||||||
1,479,695 | ||||||||
|
| |||||||
Oil & Gas Equipment & Services 0.7% | ||||||||
5,818,582 | Drilling Info Holdings, Inc., 0.64%, Series B Pfd.*** † | 11,697,096 | ||||||
|
| |||||||
Systems Software 1.9% | ||||||||
1,114,610 | DataStax, Inc., Series E Pfd.* *** † | 6,397,861 | ||||||
33,296 | DocuSign, Inc., Series B Pfd.* *** † | 639,616 | ||||||
9,974 | DocuSign, Inc., Series B-1 Pfd.* *** † | 191,601 | ||||||
23,905 | DocuSign, Inc., Series D Pfd.* *** † | 459,215 | ||||||
618,152 | DocuSign, Inc., Series E Pfd.* *** † | 11,874,700 | ||||||
157,124 | DocuSign, Inc., Series F Pfd.* *** † | 3,018,352 | ||||||
505,604 | ForeScout Technologies, Inc., Series G* *** † | 9,116,040 | ||||||
|
| |||||||
31,697,385 | ||||||||
|
| |||||||
Total Preferred Stocks (cost $40,472,297) | 44,874,176 | |||||||
|
| |||||||
LIMITED PARTNERSHIP INTEREST 0.2% | ||||||||
Asset Management & Custody Banks 0.2% | ||||||||
Greenspring Global Partners II-B, L.P.* *** † | 2,155,108 | |||||||
Greenspring Global Partners III-B, L.P.* *** † | 1,090,237 | |||||||
|
| |||||||
3,245,345 | ||||||||
|
| |||||||
Total Limited Partnership Interest (cost $2,891,579) | 3,245,345 | |||||||
|
| |||||||
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 2.1% | ||||||||
Repurchase Agreement 2.1% | ||||||||
$35,091,465 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $35,505,000 of United States Treasury Notes 2.000% due 2/15/25; value: $10,258,906; United States Treasury Notes 2.250% due 11/15/24; value: $25,535,147; repurchase proceeds: $35,091,816 (cost $35,091,465) | $ | 35,091,465 | |||||
|
| |||||||
Total Short-Term Investments (cost $35,091,465) | 35,091,465 | |||||||
|
| |||||||
Total Investments (cost $1,061,685,799) 99.8% | 1,686,721,427 | |||||||
Other Assets less Liabilities 0.2% | 4,223,621 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 1,690,945,048 | ||||||
|
| |||||||
*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).
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Small Cap Growth Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Argentina | 0.8 | |||
Germany | 0.9 | |||
India | 2.6 | |||
Ireland | 4.0 | |||
Israel | 1.1 | |||
Japan | 1.6 | |||
Switzerland | 1.4 | |||
United Arab Emirates | 2.0 | |||
United Kingdom | 4.2 | |||
United States | 81.4 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
74
Table of Contents
WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 98.0% | ||||||||
Aerospace & Defense 2.6% | ||||||||
124,277 | HEICO Corp., Class A | $ | 9,469,907 | |||||
|
| |||||||
Airlines 2.7% | ||||||||
45,167 | Allegiant Travel Co. | 5,948,494 | ||||||
115,438 | Spirit Airlines, Inc.* | 3,856,783 | ||||||
|
| |||||||
9,805,277 | ||||||||
|
| |||||||
Application Software 3.5% | ||||||||
135,797 | Ebix, Inc. | 8,860,754 | ||||||
98,749 | Globant S.A.* (Argentina) | 3,956,873 | ||||||
|
| |||||||
12,817,627 | ||||||||
|
| |||||||
Asset Management & Custody Banks 2.5% | ||||||||
115,573 | Artisan Partners Asset Management, Inc., Class A | 3,767,680 | ||||||
205,593 | Hamilton Lane, Inc., Class A | 5,520,172 | ||||||
|
| |||||||
9,287,852 | ||||||||
|
| |||||||
Auto Parts & Equipment 1.4% | ||||||||
70,448 | Dorman Products, Inc.* | 5,045,486 | ||||||
|
| |||||||
Automotive Retail 4.0% | ||||||||
30,745 | Lithia Motors, Inc., Class A | 3,698,931 | ||||||
201,392 | Monro, Inc. | 11,288,022 | ||||||
|
| |||||||
14,986,953 | ||||||||
|
| |||||||
Biotechnology 1.2% | ||||||||
94,666 | Exact Sciences Corp.* | 4,460,662 | ||||||
|
| |||||||
Consumer Electronics 2.1% | ||||||||
492,928 | ZAGG, Inc.* | 7,763,616 | ||||||
|
| |||||||
Consumer Finance 1.9% | ||||||||
14,307 | Credit Acceptance Corp.* | 4,008,392 | ||||||
101,095 | PRA Group, Inc.* | 2,896,372 | ||||||
|
| |||||||
6,904,764 | ||||||||
|
| |||||||
Data Processing & Outsourced Services 2.0% | ||||||||
78,970 | Euronet Worldwide, Inc.* | 7,485,566 | ||||||
|
| |||||||
Diversified Banks 2.1% | ||||||||
1,624,218 | City Union Bank Ltd. (India) | 4,077,951 | ||||||
697,790 | Yes Bank Ltd. (India) | 3,731,446 | ||||||
|
| |||||||
7,809,397 | ||||||||
|
| |||||||
Diversified Support Services 1.7% | ||||||||
184,588 | Copart, Inc.* | 6,344,290 | ||||||
|
| |||||||
Electronic Manufacturing Services 2.0% | ||||||||
202,593 | Fabrinet* | 7,508,097 | ||||||
|
| |||||||
Health Care Facilities 2.9% | ||||||||
480,203 | Ensign Group, Inc. (The) | 10,847,786 | ||||||
|
| |||||||
Health Care REITs 4.0% | ||||||||
332,891 | CareTrust REIT, Inc. | 6,338,244 | ||||||
387,286 | Sabra Health Care REIT, Inc. | 8,497,055 | ||||||
|
| |||||||
14,835,299 | ||||||||
|
| |||||||
Health Care Services 2.0% | ||||||||
104,253 | LHC Group, Inc.* | 7,393,623 | ||||||
|
| |||||||
Homebuilding 2.3% | ||||||||
178,826 | LGI Homes, Inc.* | 8,685,579 | ||||||
|
| |||||||
Home Furnishing Retail 2.7% | ||||||||
327,126 | Select Comfort Corp.* | 10,157,262 | ||||||
|
| |||||||
Hotel & Resort REITs 1.7% | ||||||||
400,251 | Summit Hotel Properties, Inc. | 6,400,014 | ||||||
|
|
Shares | Value | |||||||
Industrial Machinery 2.9% | ||||||||
222,571 | Altra Industrial Motion Corp. | $ | 10,705,665 | |||||
|
| |||||||
Industrial REITs 2.0% | ||||||||
454,227 | Monmouth Real Estate Investment Corp. | 7,353,935 | ||||||
|
| |||||||
Internet Software & Services 3.7% | ||||||||
74,398 | Cimpress N.V.* | 7,265,709 | ||||||
30,827 | Stamps.com, Inc.* | 6,247,091 | ||||||
|
| |||||||
13,512,800 | ||||||||
|
| |||||||
IT Consulting & Other Services 2.2% | ||||||||
285,068 | Hackett Group, Inc. (The) | 4,330,183 | ||||||
79,137 | Luxoft Holding, Inc.* (Switzerland) | 3,782,749 | ||||||
|
| |||||||
8,112,932 | ||||||||
|
| |||||||
Life Sciences Tools & Services 1.9% | ||||||||
60,141 | ICON plc* (Ireland) | 6,848,857 | ||||||
|
| |||||||
Mortgage REITs 4.7% | ||||||||
1,239,847 | Arbor Realty Trust, Inc. | 10,166,745 | ||||||
845,058 | MFA Financial, Inc. | 7,402,708 | ||||||
|
| |||||||
17,569,453 | ||||||||
|
| |||||||
Oil & Gas Exploration & Production 2.3% | ||||||||
414,117 | Earthstone Energy, Inc., Class A* | 4,551,146 | ||||||
1,767,994 | Gran Tierra Energy, Inc.* (Colombia) | 4,031,026 | ||||||
|
| |||||||
8,582,172 | ||||||||
|
| |||||||
Oil & Gas Refining & Marketing 0.8% | ||||||||
90,640 | World Fuel Services Corp. | 3,073,602 | ||||||
|
| |||||||
Personal Products 1.4% | ||||||||
81,129 | Nu Skin Enterprises, Inc., Class A | 4,987,811 | ||||||
|
| |||||||
Property & Casualty Insurance 1.9% | ||||||||
378,038 | Atlas Financial Holdings, Inc.* | 7,144,918 | ||||||
|
| |||||||
Regional Banks 12.2% | ||||||||
186,498 | Customers Bancorp, Inc.* | 6,083,565 | ||||||
311,769 | First of Long Island Corp. (The) | 9,493,366 | ||||||
127,452 | Pinnacle Financial Partners, Inc. | 8,532,911 | ||||||
101,509 | Prosperity Bancshares, Inc. | 6,672,187 | ||||||
162,517 | State Bank Financial Corp. | 4,656,112 | ||||||
187,319 | Webster Financial Corp. | 9,843,613 | ||||||
|
| |||||||
45,281,754 | ||||||||
|
| |||||||
Restaurants 1.4% | ||||||||
265,299 | Fiesta Restaurant Group, Inc.* | 5,040,681 | ||||||
|
| |||||||
Semiconductors 4.4% | ||||||||
103,921 | Cavium, Inc.* | 6,852,551 | ||||||
306,448 | Tower Semiconductor Ltd.* (Israel) | 9,423,276 | ||||||
|
| |||||||
16,275,827 | ||||||||
|
| |||||||
Specialty Chemicals 2.0% | ||||||||
121,929 | Innospec, Inc. | 7,516,923 | ||||||
|
| |||||||
Thrifts & Mortgage Finance 2.1% | ||||||||
274,749 | BofI Holding, Inc.* | 7,822,104 | ||||||
|
| |||||||
Trading Companies & Distributors 2.3% | ||||||||
149,128 | WESCO International, Inc.* | 8,686,706 | ||||||
|
| |||||||
Trucking 4.5% | ||||||||
277,370 | Knight-Swift Transportation Holdings, Inc.* | 11,524,723 | ||||||
46,705 | Old Dominion Freight Line, Inc. | 5,142,688 | ||||||
|
| |||||||
16,667,411 | ||||||||
|
| |||||||
Total Common Stocks (cost $269,890,643) | 363,192,608 | |||||||
|
|
75
Table of Contents
WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Shares | Value | |||||||
LIMITED PARTNERSHIP INTEREST 1.4% | ||||||||
Oil & Gas Storage & Transportation 1.4% | ||||||||
167,821 | Delek Logistics Partners L.P. | $ | 5,244,406 | |||||
|
| |||||||
Total Limited Partnership Interest (cost $5,983,651) | 5,244,406 | |||||||
|
| |||||||
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 0.8% | ||||||||
Repurchase Agreement 0.8% | ||||||||
$3,047,345 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $3,065,000 of United States Treasury Notes 2.250% due 11/15/24; value: $3,111,937; repurchase proceeds: $3,047,376 (cost $3,047,345) | $ | 3,047,345 | |||||
|
| |||||||
Total Short-Term Investments (cost $3,047,345) | 3,047,345 | |||||||
|
| |||||||
Total Investments (cost $278,921,639) 100.2% | 371,484,359 | |||||||
Liabilities less Other Assets (0.2%) | (834,911 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 370,649,448 | ||||||
|
| |||||||
*Non-income producing.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Small Cap Value Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Argentina | 1.1 | |||
Colombia | 1.1 | |||
India | 2.1 | |||
Ireland | 1.9 | |||
Israel | 2.5 | |||
Switzerland | 1.0 | |||
United States | 90.3 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
76
Table of Contents
WASATCH STRATEGIC INCOME FUND (WASIX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 75.3% | ||||||||
Air Freight & Logistics 1.0% | ||||||||
2,000 | FedEx Corp. | $ | 451,160 | |||||
|
| |||||||
Apparel Retail 0.7% | ||||||||
4,905 | Ross Stores, Inc. | 316,716 | ||||||
|
| |||||||
Asset Management & Custody Banks 6.4% | ||||||||
34,124 | Alcentra Capital Corp. | 365,468 | ||||||
3,964 | Ameriprise Financial, Inc. | 588,694 | ||||||
64,528 | Ares Capital Corp. | 1,057,614 | ||||||
3,413 | Hercules Capital, Inc. | 44,028 | ||||||
92,913 | Medallion Financial Corp. | 201,621 | ||||||
31,859 | Medley Capital Corp. | 190,198 | ||||||
30,134 | Triangle Capital Corp. | 430,313 | ||||||
|
| |||||||
2,877,936 | ||||||||
|
| |||||||
Broadcasting 3.5% | ||||||||
26,860 | CBS Corp., Class B | 1,557,880 | ||||||
|
| |||||||
Cable & Satellite 5.8% | ||||||||
68,476 | Comcast Corp., Class A | 2,634,956 | ||||||
|
| |||||||
Consumer Finance 2.5% | ||||||||
4,900 | American Express Co. | 443,254 | ||||||
10,289 | Discover Financial Services | 663,435 | ||||||
|
| |||||||
1,106,689 | ||||||||
|
| |||||||
Data Processing & Outsourced Services 7.8% | ||||||||
12,485 | MasterCard, Inc., Class A | 1,762,882 | ||||||
16,525 | Visa, Inc., Class A | 1,739,091 | ||||||
|
| |||||||
3,501,973 | ||||||||
|
| |||||||
Diversified REITs 3.0% | ||||||||
35,540 | Colony NorthStar, Inc., Class A | 446,382 | ||||||
100 | Spirit Realty Capital, Inc. | 857 | ||||||
355,714 | Star Asia Capital Corp Ltd.* *** † | 885,728 | ||||||
|
| |||||||
1,332,967 | ||||||||
|
| |||||||
Drug Retail 7.0% | ||||||||
17,772 | CVS Health Corp. | 1,445,219 | ||||||
22,029 | Walgreens Boots Alliance, Inc. | 1,701,079 | ||||||
|
| |||||||
3,146,298 | ||||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 2.0% | ||||||||
7,579 | Monsanto Co. | 908,116 | ||||||
|
| |||||||
Financial Exchanges & Data 0.3% | ||||||||
1,091 | MSCI, Inc., Class A | 127,538 | ||||||
300 | OTC Markets Group, Inc. | 8,850 | ||||||
|
| |||||||
136,388 | ||||||||
|
| |||||||
General Merchandise Stores 0.0% | ||||||||
100 | Dollarama, Inc. (Canada) | 10,942 | ||||||
|
| |||||||
Health Care Distributors 1.1% | ||||||||
3,347 | McKesson Corp. | 514,133 | ||||||
|
| |||||||
Home Improvement Retail 2.4% | ||||||||
6,500 | Home Depot, Inc. (The) | 1,063,140 | ||||||
|
| |||||||
Hotels, Resorts & Cruise Lines 1.5% | ||||||||
33,600 | Extended Stay America, Inc.** | 672,000 | ||||||
|
| |||||||
Industrial Conglomerates 0.1% | ||||||||
436 | Siemens AG (Germany) | 61,425 | ||||||
|
| |||||||
Industrial Machinery 0.5% | ||||||||
1,500 | Snap-on, Inc. | 223,515 | ||||||
|
|
Shares | Value | |||||||
Integrated Oil & Gas 3.9% | ||||||||
50,023 | Suncor Energy, Inc. (Canada) | $ | 1,753,160 | |||||
|
| |||||||
IT Consulting & Other Services 1.1% | ||||||||
7,000 | Cognizant Technology Solutions Corp., Class A | 507,780 | ||||||
|
| |||||||
Managed Health Care 0.5% | ||||||||
1,165 | UnitedHealth Group, Inc. | 228,165 | ||||||
|
| |||||||
Mortgage REITs 8.8% | ||||||||
109,990 | Arbor Realty Trust, Inc. | 901,918 | ||||||
28,250 | Blackstone Mortgage Trust, Inc., Class A | 876,315 | ||||||
61,400 | Great Ajax Corp. | 865,126 | ||||||
41,092 | Resource Capital Corp. | 442,972 | ||||||
40,300 | Starwood Property Trust, Inc. | 875,316 | ||||||
|
| |||||||
3,961,647 | ||||||||
|
| |||||||
Movies & Entertainment 0.5% | ||||||||
2,250 | Walt Disney Co. (The) | 221,782 | ||||||
|
| |||||||
Personal Products 4.0% | ||||||||
14,761 | Herbalife Ltd.* | 1,001,239 | ||||||
13,271 | Nu Skin Enterprises, Inc., Class A | 815,901 | ||||||
|
| |||||||
1,817,140 | ||||||||
|
| |||||||
Railroads 3.0% | ||||||||
16,167 | Canadian National Railway Co. (Canada) | 1,339,487 | ||||||
|
| |||||||
Retail REITs 1.0% | ||||||||
2,785 | Simon Property Group, Inc. | 448,413 | ||||||
|
| |||||||
Semiconductors 2.5% | ||||||||
12,600 | Microchip Technology, Inc. | 1,131,228 | ||||||
|
| |||||||
Soft Drinks 1.9% | ||||||||
9,592 | Dr Pepper Snapple Group, Inc. | 848,604 | ||||||
|
| |||||||
Specialty Stores 1.2% | ||||||||
8,400 | Tractor Supply Co. | 531,636 | ||||||
|
| |||||||
Technology Hardware, Storage & Peripherals 0.0% | ||||||||
81 | Apple, Inc. | 12,484 | ||||||
|
| |||||||
Trading Companies & Distributors 1.3% | ||||||||
4,530 | MSC Industrial Direct Co., Inc., Class A | 342,332 | ||||||
1,449 | W.W. Grainger, Inc. | 260,458 | ||||||
|
| |||||||
602,790 | ||||||||
|
| |||||||
Total Common Stocks (cost $27,002,414) | 33,920,550 | |||||||
|
| |||||||
LIMITED PARTNERSHIP INTEREST 8.6% | ||||||||
Asset Management & Custody Banks 4.1% | ||||||||
26,720 | Blackstone Group L.P. (The) | 891,646 | ||||||
45,394 | KKR & Co. L.P. | 922,860 | ||||||
|
| |||||||
1,814,506 | ||||||||
|
| |||||||
Oil & Gas Storage & Transportation 4.5% | ||||||||
19,800 | Golar LNG Partners L.P. | 459,954 | ||||||
21,971 | Magellan Midstream Partners L.P. | 1,561,259 | ||||||
|
| |||||||
2,021,213 | ||||||||
|
| |||||||
Total Limited Partnership Interest (cost $3,552,104) | 3,835,719 | |||||||
|
|
77
Table of Contents
WASATCH STRATEGIC INCOME FUND (WASIX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Shares | Value | |||||||
LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST 0.0% | ||||||||
Asset Management & Custody Banks 0.0% | ||||||||
100 | Ellington Financial, LLC | $ | 1,579 | |||||
|
| |||||||
Total Limited Liability Company Membership Interest (cost $1,601) | 1,579 | |||||||
|
| |||||||
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 15.9% | ||||||||
Repurchase Agreement 15.9% | ||||||||
$7,174,334 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $7,335,000 of United States Treasury Notes 2.250% due 2/15/27; value: $7,322,303; repurchase proceeds: $7,174,405 (cost $7,174,334) | $ | 7,174,334 | |||||
|
| |||||||
Total Short-Term Investments (cost $7,174,334) | 7,174,334 | |||||||
|
| |||||||
Total Investments (cost $37,730,453) 99.8% | 44,932,182 | |||||||
Other Assets less Liabilities 0.2% | 112,520 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 45,044,702 | ||||||
|
| |||||||
*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).
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Strategic Income Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Canada | 8.2 | |||
Germany | 0.2 | |||
United States | 91.6 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
78
Table of Contents
WASATCH ULTRA GROWTH FUND (WAMCX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 92.4% | ||||||||
Application Software 8.7% | ||||||||
28,694 | HubSpot, Inc.* | $ | 2,411,731 | |||||
56,605 | Paylocity Holding Corp.* | 2,763,456 | ||||||
15,627 | Ultimate Software Group, Inc. (The)* | 2,962,879 | ||||||
55,090 | Zendesk, Inc.* | 1,603,670 | ||||||
|
| |||||||
9,741,736 | ||||||||
|
| |||||||
Automotive Retail 1.5% | ||||||||
30,012 | Monro, Inc. | 1,682,173 | ||||||
|
| |||||||
Biotechnology 11.9% | ||||||||
513,577 | Argos Therapeutics, Inc.* | 92,187 | ||||||
101,022 | ChemoCentryx, Inc.* | 749,583 | ||||||
68,922 | Cytokinetics, Inc.* | 999,369 | ||||||
19,667 | Esperion Therapeutics, Inc.* | 985,710 | ||||||
49,879 | Exact Sciences Corp.* | 2,350,299 | ||||||
23,588 | Flexion Therapeutics, Inc.* | 570,358 | ||||||
181,199 | Inovio Pharmaceuticals, Inc.* | 1,148,802 | ||||||
14,709 | Juno Therapeutics, Inc.* | 659,846 | ||||||
30,665 | MacroGenics, Inc.* | 566,689 | ||||||
185,224 | MEI Pharma, Inc.* | 496,400 | ||||||
183,949 | Sangamo Therapeutics Inc.* | 2,759,235 | ||||||
28,756 | Seattle Genetics, Inc.* | 1,564,614 | ||||||
19,388 | Selecta Biosciences, Inc.* | 353,831 | ||||||
|
| |||||||
13,296,923 | ||||||||
|
| |||||||
Building Products 1.7% | ||||||||
21,260 | Trex Co., Inc.* | 1,914,888 | ||||||
|
| |||||||
Communications Equipment 1.2% | ||||||||
9,105 | Palo Alto Networks, Inc.* | 1,312,030 | ||||||
|
| |||||||
Department Stores 1.6% | ||||||||
82,194 | V-Mart Retail Ltd. (India) | 1,811,993 | ||||||
|
| |||||||
Diversified Banks 2.7% | ||||||||
599,262 | City Union Bank Ltd. (India) | 1,504,577 | ||||||
271,285 | Yes Bank Ltd. (India) | 1,450,702 | ||||||
|
| |||||||
2,955,279 | ||||||||
|
| |||||||
Electronic Manufacturing Services 1.8% | ||||||||
10,930 | IPG Photonics Corp.* | 2,022,706 | ||||||
|
| |||||||
Environmental & Facilities Services 2.5% | ||||||||
40,156 | Waste Connections, Inc. | 2,809,314 | ||||||
|
| |||||||
General Merchandise Stores 0.9% | ||||||||
20,491 | Ollie’s Bargain Outlet Holdings, Inc.* | 950,782 | ||||||
|
| |||||||
Health Care Equipment 7.2% | ||||||||
83,474 | AtriCure, Inc.* | 1,867,313 | ||||||
104,009 | Entellus Medical, Inc.* | 1,920,006 | ||||||
72,201 | Obalon Therapeutics, Inc.* | 688,076 | ||||||
171,035 | Oxford Immunotec Global plc* | 2,873,388 | ||||||
906,398 | Tandem Diabetes Care, Inc.* | 661,671 | ||||||
|
| |||||||
8,010,454 | ||||||||
|
| |||||||
Health Care Services 0.4% | ||||||||
37,343 | Dr. Lal PathLabs Ltd. (India) | 454,525 | ||||||
|
| |||||||
Health Care Technology 1.5% | ||||||||
20,780 | Medidata Solutions, Inc.* | 1,622,087 | ||||||
|
| |||||||
Homebuilding 4.1% | ||||||||
24,796 | Installed Building Products, Inc.* | 1,606,781 | ||||||
60,927 | LGI Homes, Inc.* | 2,959,224 | ||||||
|
| |||||||
4,566,005 | ||||||||
|
|
Shares | Value | |||||||
Industrial Machinery 3.7% | ||||||||
11,428 | Barnes Group, Inc. | $ | 804,989 | |||||
98,864 | Kornit Digital Ltd.* (Israel) | 1,512,619 | ||||||
22,587 | Proto Labs, Inc.* | 1,813,736 | ||||||
|
| |||||||
4,131,344 | ||||||||
|
| |||||||
Industrial REITs 1.6% | ||||||||
109,047 | Monmouth Real Estate Investment Corp. | 1,765,471 | ||||||
|
| |||||||
Internet & Direct Marketing Retail 3.7% | ||||||||
50,030 | MakeMyTrip Ltd.* (India) | 1,438,363 | ||||||
19,595 | Wayfair, Inc., Class A* | 1,320,703 | ||||||
8,021 | zooplus AG* (Germany) | 1,350,903 | ||||||
|
| |||||||
4,109,969 | ||||||||
|
| |||||||
Internet Software & Services 5.8% | ||||||||
52,675 | Cornerstone OnDemand, Inc.* | 2,139,132 | ||||||
66,649 | Instructure, Inc.* | 2,209,414 | ||||||
49,913 | Reis, Inc. | 898,434 | ||||||
22,213 | SPS Commerce, Inc.* | 1,259,699 | ||||||
|
| |||||||
6,506,679 | ||||||||
|
| |||||||
IT Consulting & Other Services 1.3% | ||||||||
30,259 | Luxoft Holding, Inc.* (Switzerland) | 1,446,380 | ||||||
|
| |||||||
Life Sciences Tools & Services 0.7% | ||||||||
251,025 | Horizon Discovery Group plc* (United Kingdom) | 763,567 | ||||||
|
| |||||||
Managed Health Care 1.7% | ||||||||
38,383 | HealthEquity, Inc.* | 1,941,412 | ||||||
|
| |||||||
Packaged Foods & Meats 2.6% | ||||||||
184,070 | Freshpet, Inc.* | 2,880,695 | ||||||
|
| |||||||
Pharmaceuticals 1.6% | ||||||||
87,835 | Auris Medical Holding AG* (Switzerland) | 72,025 | ||||||
107,381 | Egalet Corp.* | 137,448 | ||||||
97,685 | Intra-Cellular Therapies, Inc.* | 1,541,469 | ||||||
|
| |||||||
1,750,942 | ||||||||
|
| |||||||
Regional Banks 6.2% | ||||||||
23,704 | Bank of the Ozarks, Inc. | 1,138,977 | ||||||
24,264 | Customers Bancorp, Inc.* | 791,492 | ||||||
18,489 | Eagle Bancorp, Inc.* | 1,239,687 | ||||||
40,996 | Metro Bank plc* (United Kingdom) | 1,856,790 | ||||||
27,338 | Pinnacle Financial Partners, Inc. | 1,830,279 | ||||||
|
| |||||||
6,857,225 | ||||||||
|
| |||||||
Restaurants 2.7% | ||||||||
49,638 | Chuy’s Holdings, Inc.* | 1,044,880 | ||||||
81,337 | Habit Restaurants, Inc. (The)* | 1,061,448 | ||||||
69,679 | Zoe’s Kitchen, Inc.* | 880,045 | ||||||
|
| |||||||
2,986,373 | ||||||||
|
| |||||||
Semiconductor Equipment 1.8% | ||||||||
132,481 | PDF Solutions, Inc.* | 2,052,131 | ||||||
|
| |||||||
Semiconductors 5.4% | ||||||||
25,599 | Cavium, Inc.* | 1,687,998 | ||||||
18,107 | Monolithic Power Systems, Inc. | 1,929,301 | ||||||
13,668 | NVE Corp. | 1,079,362 | ||||||
18,426 | Power Integrations, Inc. | 1,348,783 | ||||||
|
| |||||||
6,045,444 | ||||||||
|
| |||||||
Specialty Chemicals 2.1% | ||||||||
19,176 | Balchem Corp. | 1,558,817 | ||||||
411,433 | EcoSynthetix, Inc.* (Canada) | 745,212 | ||||||
|
| |||||||
2,304,029 | ||||||||
|
|
79
Table of Contents
WASATCH ULTRA GROWTH FUND (WAMCX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Shares | Value | |||||||
Specialty Stores 1.1% | ||||||||
22,232 | Five Below, Inc.* | $ | 1,220,092 | |||||
|
| |||||||
Systems Software 1.5% | ||||||||
32,734 | Qualys, Inc.* | 1,695,621 | ||||||
|
| |||||||
Trucking 1.2% | ||||||||
31,152 | Knight-Swift Transportation Holdings, Inc.* | 1,294,366 | ||||||
|
| |||||||
Total Common Stocks (cost $68,616,894) | 102,902,635 | |||||||
|
| |||||||
LIMITED PARTNERSHIP INTEREST 2.7% | ||||||||
Asset Management & Custody Banks 2.7% | ||||||||
Greenspring Global Partners II-B, L.P.* *** † | 1,939,589 | |||||||
Greenspring Global Partners III-B, L.P.* *** † | 1,090,237 | |||||||
|
| |||||||
3,029,826 | ||||||||
|
| |||||||
Total Limited Partnership Interest (cost $2,683,719) | 3,029,826 | |||||||
|
| |||||||
PREFERRED STOCKS 1.4% | ||||||||
Biotechnology 0.3% | ||||||||
169,492 | Nanosys, Inc., Series D Pfd.* *** † | 318,848 | ||||||
40,380 | Nanosys, Inc., Series E Pfd.* *** † | 51,077 | ||||||
|
| |||||||
369,925 | ||||||||
|
| |||||||
Health Care Technology 0.3% | ||||||||
253,064 | Data Sciences International, Inc., 5.05%, Series B Pfd.*** † | 265,717 | ||||||
|
| |||||||
Oil & Gas Equipment & Services 0.8% | ||||||||
435,920 | Drilling Info Holdings, Inc., 0.64%, Series B Pfd.*** † | 876,330 | ||||||
|
| |||||||
Total Preferred Stocks (cost $1,866,600) | 1,511,972 | |||||||
|
|
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 0.7% | ||||||||
Repurchase Agreement 0.7% | ||||||||
$807,568 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $815,000 of United States Treasury Notes 2.250% due 11/15/24; value: $827,481; repurchase proceeds: $807,576 (cost $807,568) | $ | 807,568 | |||||
|
| |||||||
Total Short-Term Investments (cost $807,568) | 807,568 | |||||||
|
| |||||||
Total Investments (cost $73,974,781) 97.2% | 108,252,001 | |||||||
Other Assets less Liabilities 2.8% | 3,113,622 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 111,365,623 | ||||||
|
| |||||||
*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).
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch Ultra Growth Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Canada | 0.7 | |||
Germany | 1.3 | |||
India | 6.2 | |||
Israel | 1.4 | |||
Switzerland | 1.4 | |||
United Kingdom | 2.4 | |||
United States | 86.6 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
80
Table of Contents
WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Shares | Value | |||||||
COMMON STOCKS 85.0% | ||||||||
Advertising 0.1% | ||||||||
4,500 | Interpublic Group of Cos., Inc. (The) | $ | 93,555 | |||||
|
| |||||||
Aerospace & Defense 0.9% | ||||||||
135,599 | Avon Rubber plc (United Kingdom) | 1,703,462 | ||||||
|
| |||||||
Agricultural Products 0.9% | ||||||||
35,000 | Kaneko Seeds Co. Ltd. (Japan) | 483,359 | ||||||
47,000 | Sakata Seed Corp. (Japan) | 1,336,592 | ||||||
|
| |||||||
1,819,951 | ||||||||
|
| |||||||
Air Freight & Logistics 0.5% | ||||||||
4,726 | FedEx Corp. | 1,066,091 | ||||||
|
| |||||||
Alternative Carriers 2.0% | ||||||||
480,416 | Gamma Communications plc (United Kingdom) | 3,830,355 | ||||||
|
| |||||||
Application Software 0.8% | ||||||||
4,100 | Splunk, Inc.* | 272,363 | ||||||
235,000 | Tracsis plc (United Kingdom) | 1,377,687 | ||||||
|
| |||||||
1,650,050 | ||||||||
|
| |||||||
Asset Management & Custody Banks 0.2% | ||||||||
710 | BlackRock, Inc. | 317,434 | ||||||
117,800 | Tarpon Investimentos S.A. (Brazil) | 149,521 | ||||||
|
| |||||||
466,955 | ||||||||
|
| |||||||
Auto Parts & Equipment 0.5% | ||||||||
59,060 | Brembo S.p.A. (Italy) | 999,579 | ||||||
|
| |||||||
Automotive Retail 0.3% | ||||||||
11,232 | Penske Automotive Group, Inc. | 534,306 | ||||||
|
| |||||||
Biotechnology 1.8% | ||||||||
59,382 | Abcam plc (United Kingdom) | 811,633 | ||||||
53,244 | Bioventix plc (United Kingdom) | 1,953,122 | ||||||
77,228 | MDxHealth* (Belgium) | 431,735 | ||||||
6,600 | Myriad Genetics, Inc.* | 238,788 | ||||||
2,000 | PeptiDream, Inc.* (Japan) | 61,675 | ||||||
|
| |||||||
3,496,953 | ||||||||
|
| |||||||
Broadcasting 1.0% | ||||||||
29,841 | CBS Corp., Class B | 1,730,778 | ||||||
11,462 | Discovery Communications, Inc., Class A* | 244,026 | ||||||
|
| |||||||
1,974,804 | ||||||||
|
| |||||||
Cable & Satellite 1.9% | ||||||||
94,168 | Comcast Corp., Class A | 3,623,585 | ||||||
|
| |||||||
Construction Machinery & Heavy Trucks 0.3% | ||||||||
31,900 | Morita Holdings Corp. (Japan) | 495,828 | ||||||
|
| |||||||
Consumer Electronics 2.3% | ||||||||
85,300 | Sony Corp. (Japan) | 3,173,213 | ||||||
486,318 | Sprue Aegis plc (United Kingdom) | 1,352,207 | ||||||
|
| |||||||
4,525,420 | ||||||||
|
| |||||||
Consumer Finance 1.7% | ||||||||
6,063 | Discover Financial Services | 390,942 | ||||||
17,985 | Encore Capital Group, Inc.* | 796,736 | ||||||
24,452 | PRA Group, Inc.* | 700,550 | ||||||
132,300 | SLM Corp.* | 1,517,481 | ||||||
|
| |||||||
3,405,709 | ||||||||
|
| |||||||
Data Processing & Outsourced Services 4.1% | ||||||||
12,200 | MasterCard, Inc., Class A | 1,722,640 | ||||||
59,376 | PayPal Holdings, Inc.* | 3,801,845 | ||||||
15,775 | Visa, Inc., Class A | 1,660,161 | ||||||
7,742 | Wirecard AG (Germany) | 708,323 | ||||||
|
| |||||||
7,892,969 | ||||||||
|
|
Shares | Value | |||||||
Diversified Banks 0.1% | ||||||||
8,000 | HDFC Bank Ltd. (India) | $ | 220,459 | |||||
|
| |||||||
Drug Retail 1.0% | ||||||||
26,225 | Walgreens Boots Alliance, Inc. | 2,025,095 | ||||||
|
| |||||||
Education Services 1.1% | ||||||||
173,400 | Kroton Educacional S.A. (Brazil) | 1,097,728 | ||||||
31,283 | TAL Education Group ADR (China) | 1,054,550 | ||||||
|
| |||||||
2,152,278 | ||||||||
|
| |||||||
Electrical Components & Equipment 0.6% | ||||||||
753,789 | Enphase Energy, Inc.* | 1,145,759 | ||||||
|
| |||||||
Electronic Equipment & Instruments 3.6% | ||||||||
15,019 | Barco N.V. (Belgium) | 1,620,485 | ||||||
895,907 | Catapult Group International Ltd.* (Australia) | 913,574 | ||||||
840,000 | Eroad Ltd.* (New Zealand) | 1,334,811 | ||||||
110,767 | Evertz Technologies Ltd. (Canada) | 1,545,545 | ||||||
842 | GEA (France) | 88,300 | ||||||
2,900 | KEYENCE Corp. (Japan) | 1,539,880 | ||||||
|
| |||||||
7,042,595 | ||||||||
|
| |||||||
Fertilizers & Agricultural Chemicals 0.5% | ||||||||
8,500 | Monsanto Co. | 1,018,470 | ||||||
|
| |||||||
Food Retail 2.5% | ||||||||
1,044,704 | Majestic Wine plc (United Kingdom) | 4,945,156 | ||||||
|
| |||||||
Health Care Distributors 0.3% | ||||||||
3,573 | McKesson Corp. | 548,849 | ||||||
|
| |||||||
Health Care Equipment 3.6% | ||||||||
175,500 | Accuray, Inc.* | 702,000 | ||||||
27,426 | bioMérieux (France) | 2,232,407 | ||||||
35,760 | DiaSorin S.p.A. (Italy) | 3,188,876 | ||||||
40,400 | Nihon Kohden Corp. (Japan) | 873,164 | ||||||
|
| |||||||
6,996,447 | ||||||||
|
| |||||||
Health Care Facilities 0.8% | ||||||||
74,000 | Japan Animal Referral Medical Center Co. Ltd.* (Japan) | 1,459,285 | ||||||
|
| |||||||
Health Care Services 0.8% | ||||||||
63,816 | BML, Inc. (Japan) | 1,365,076 | ||||||
5,111 | MEDNAX, Inc.* | 220,386 | ||||||
|
| |||||||
1,585,462 | ||||||||
|
| |||||||
Health Care Supplies 5.2% | ||||||||
614,279 | Advanced Medical Solutions Group plc (United Kingdom) | 2,385,029 | ||||||
29,673 | Guerbet (France) | 2,763,558 | ||||||
74,700 | Menicon Co. Ltd. (Japan) | 2,954,144 | ||||||
976,000 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 690,931 | ||||||
378,467 | Tristel plc (United Kingdom) | 1,331,257 | ||||||
|
| |||||||
10,124,919 | ||||||||
|
| |||||||
Health Care Technology 4.8% | ||||||||
148,186 | Computer Programs and Systems, Inc. | 4,378,896 | ||||||
96,612 | Nexus AG (Germany) | 3,025,923 | ||||||
43,980 | RaySearch Laboratories AB* (Sweden) | 936,848 | ||||||
23,570 | Software Service, Inc. (Japan) | 1,049,417 | ||||||
|
| |||||||
9,391,084 | ||||||||
|
| |||||||
Home Entertainment Software 3.9% | ||||||||
9,000 | Electronic Arts, Inc.* | 1,062,540 | ||||||
11,700 | Nintendo Co. Ltd. (Japan) | 4,321,280 | ||||||
22,079 | Take-Two Interactive Software, Inc.* | 2,257,136 | ||||||
|
| |||||||
7,640,956 | ||||||||
|
|
81
Table of Contents
WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | ||
| ||
|
Schedule of Investments (continued)
Shares | Value | |||||||
Home Improvement Retail 1.5% | ||||||||
94,400 | Arcland Sakamoto Co. Ltd. (Japan) | $ | 1,421,977 | |||||
6,046 | Home Depot, Inc. (The) | 988,884 | ||||||
6,439,800 | PT Ace Hardware Indonesia Tbk (Indonesia) | 580,916 | ||||||
|
| |||||||
2,991,777 | ||||||||
|
| |||||||
Household Appliances 2.5% | ||||||||
74,000 | SodaStream International Ltd.* (Israel) | 4,917,300 | ||||||
|
| |||||||
Housewares & Specialties 0.0% | ||||||||
47,522 | OurPet’s Co.* | 85,540 | ||||||
|
| |||||||
Hypermarkets & Super Centers 3.0% | ||||||||
36,075 | Costco Wholesale Corp. | 5,926,762 | ||||||
|
| |||||||
Industrial Machinery 3.1% | ||||||||
26,000 | Iwaki Co. Ltd. (Japan) | 688,327 | ||||||
132,518 | Kornit Digital Ltd.* (Israel) | 2,027,525 | ||||||
165,898 | Porvair plc (United Kingdom) | 1,067,056 | ||||||
1,005,392 | Skellerup Holdings Ltd. (New Zealand) | 1,227,269 | ||||||
9,000 | SLM Solutions Group AG* (Germany) | 378,681 | ||||||
27,000 | va-Q-tec AG* (Germany) | 726,780 | ||||||
|
| |||||||
6,115,638 | ||||||||
|
| |||||||
Internet & Direct Marketing Retail 3.2% | ||||||||
792 | Amazon.com, Inc.* | 761,389 | ||||||
461,655 | AO World plc* (United Kingdom) | 689,759 | ||||||
187,582 | ePrice S.p.A. (Italy) | 680,629 | ||||||
160,000 | Kogan.com Ltd. (Australia) | 483,190 | ||||||
4,290 | Netflix, Inc.* | 777,992 | ||||||
171,261 | Ocado Group plc* (United Kingdom) | 671,716 | ||||||
780 | Priceline Group, Inc. (The)* | 1,428,040 | ||||||
37,642 | Sportamore AB* (Sweden) | 657,414 | ||||||
100 | Vipshop Holdings Ltd. ADR* (China) | 879 | ||||||
|
| |||||||
6,151,008 | ||||||||
|
| |||||||
Internet Software & Services 3.5% | ||||||||
11,238 | Alibaba Group Holding Ltd., ADR* (China) | 1,940,915 | ||||||
2,538 | Alphabet, Inc., Class A* | 2,471,301 | ||||||
8,218 | Facebook, Inc.* | 1,404,210 | ||||||
1,400,000 | nearmap Ltd.* (Australia) | 719,295 | ||||||
4,600 | Tencent Holdings Ltd. (China) | 197,977 | ||||||
|
| |||||||
6,733,698 | ||||||||
|
| |||||||
IT Consulting & Other Services 1.6% | ||||||||
43,086 | Cognizant Technology Solutions Corp., Class A | 3,125,458 | ||||||
|
| |||||||
Leisure Facilities 0.4% | ||||||||
587,500 | Goals Soccer Centres plc* (United Kingdom) | 755,760 | ||||||
|
| |||||||
Leisure Products 3.7% | ||||||||
63,000 | Bandai Namco Holdings, Inc. (Japan) | 2,161,120 | ||||||
150,000 | KMC Kuei Meng International, Inc. (Taiwan) | 648,002 | ||||||
1,281,224 | Photo-Me International plc (United Kingdom) | 2,987,300 | ||||||
10,000 | Shimano, Inc. (Japan) | 1,332,148 | ||||||
|
| |||||||
7,128,570 | ||||||||
|
| |||||||
Life Sciences Tools & Services 0.8% | ||||||||
497,724 | Horizon Discovery Group plc* (United Kingdom) | 1,513,976 | ||||||
|
|
Shares | Value | |||||||
Movies & Entertainment 3.1% | ||||||||
82,577 | AFC Ajax N.V.* (Netherlands) | $ | 1,005,257 | |||||
168,000 | Borussia Dortmund GmbH & Co. KGaA (Germany) | 1,628,186 | ||||||
3,300 | Celtic plc* (United Kingdom) | 5,793 | ||||||
1,200,000 | Juventus Football Club S.p.A.* (Italy) | 1,121,860 | ||||||
8,000 | Toei Co. Ltd. (Japan) | 887,980 | ||||||
26,000 | Toho Co. Ltd. (Japan) | 906,910 | ||||||
5,233 | Walt Disney Co. (The) | 515,817 | ||||||
|
| |||||||
6,071,803 | ||||||||
|
| |||||||
Multi-Utilities 1.1% | ||||||||
142,009 | Telecom Plus plc (United Kingdom) | 2,066,571 | ||||||
|
| |||||||
Oil & Gas Refining & Marketing 0.1% | ||||||||
3,454 | World Fuel Services Corp. | 117,125 | ||||||
|
| |||||||
Personal Products 0.7% | ||||||||
19,023 | Herbalife Ltd.* | 1,290,330 | ||||||
1,000 | USANA Health Sciences, Inc.* | 57,700 | ||||||
|
| |||||||
1,348,030 | ||||||||
|
| |||||||
Pharmaceuticals 0.2% | ||||||||
10,047 | Novo Nordisk A/S, Class B (Denmark) | 480,309 | ||||||
|
| |||||||
Publishing 2.4% | ||||||||
235,609 | New York Times Co. (The) | 4,617,936 | ||||||
|
| |||||||
Real Estate Services 0.0% | ||||||||
128 | Jones Lang LaSalle, Inc. | 15,808 | ||||||
|
| |||||||
Regional Banks 0.0% | ||||||||
100 | Metro Bank plc* (United Kingdom) | 4,529 | ||||||
|
| |||||||
Restaurants 1.0% | ||||||||
60,000 | Shake Shack, Inc., Class A* | 1,993,800 | ||||||
|
| |||||||
Semiconductors 1.4% | ||||||||
11,941 | Microchip Technology, Inc. | 1,072,063 | ||||||
238,000 | Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) | 1,699,215 | ||||||
|
| |||||||
2,771,278 | ||||||||
|
| |||||||
Soft Drinks 0.1% | ||||||||
62,352 | Reed’s, Inc.* | 137,174 | ||||||
|
| |||||||
Specialized Consumer Services 0.4% | ||||||||
22,000 | Asante, Inc. (Japan) | 387,700 | ||||||
10,000 | San Holdings, Inc. (Japan) | 242,613 | ||||||
21,900 | Tear Corp. (Japan) | 166,987 | ||||||
|
| |||||||
797,300 | ||||||||
|
| |||||||
Specialized Finance 0.2% | ||||||||
7,500 | Zenkoku Hosho Co. Ltd. (Japan) | 314,930 | ||||||
|
| |||||||
Specialty Chemicals 0.1% | ||||||||
150,371 | Polygiene AB* (Sweden) | 212,313 | ||||||
|
| |||||||
Specialty Stores 0.8% | ||||||||
40,000 | Asahi Co. Ltd. (Japan) | 473,495 | ||||||
10,468 | Fenix Outdoor International AG (Switzerland) | 1,052,596 | ||||||
|
| |||||||
1,526,091 | ||||||||
|
| |||||||
Systems Software 1.1% | ||||||||
12,892 | Check Point Software Technologies Ltd.* (Israel) | 1,469,946 | ||||||
68,000 | WANdisco plc* (United Kingdom) | 733,516 | ||||||
|
| |||||||
2,203,462 | ||||||||
|
|
82
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Shares | Value | |||||||
Technology Hardware, Storage & Peripherals 0.7% | ||||||||
241,619 | Xaar plc (United Kingdom) | $ | 1,442,392 | |||||
|
| |||||||
Thrifts & Mortgage Finance 0.1% | ||||||||
9,900 | Housing Development Finance Corp. Ltd. (India) | 262,239 | ||||||
|
| |||||||
Trading Companies & Distributors 0.1% | ||||||||
2,500 | Air Lease Corp. | 106,550 | ||||||
|
| |||||||
Total Common Stocks (cost $130,335,006) | 165,811,513 | |||||||
|
| |||||||
LIMITED PARTNERSHIP INTEREST 0.1% | ||||||||
Asset Management & Custody Banks 0.1% | ||||||||
Greenspring Global Partners II-B, L.P.* *** † | 215,512 | |||||||
|
| |||||||
Total Limited Partnership Interest (cost $211,184) | 215,512 | |||||||
|
| |||||||
EXCHANGE-TRADED FUNDS 0.1% | ||||||||
Asset Management & Custody Banks 0.1% | ||||||||
1,500 | PowerShares Dynamic Pharmaceuticals Portfolio | 98,025 | ||||||
|
| |||||||
Total Exchange-Traded Funds (cost $89,935) | 98,025 | |||||||
|
| |||||||
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 15.4% | ||||||||
Repurchase Agreement 15.4% | ||||||||
$29,928,007 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $30,580,000 of United States Treasury Notes 2.250% due 2/15/27; value: $30,527,066; repurchase proceeds: $29,928,306 (cost $29,928,007) | $ | 29,928,007 | |||||
|
| |||||||
Total Short-Term Investments (cost $29,928,007) | 29,928,007 | |||||||
|
| |||||||
Total Investments (cost $160,564,132) 100.6% | 196,053,057 | |||||||
|
| |||||||
Liabilities less Other Assets (0.6%) | (1,196,503 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 194,856,554 | ||||||
|
| |||||||
*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).
ADR American Depositary Receipt.
See Notes to Financial Statements. |
|
At September 30, 2017, Wasatch World Innovators Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Australia | 1.3 | |||
Belgium | 1.2 | |||
Brazil | 0.8 | |||
Canada | 0.9 | |||
China | 2.3 | |||
Denmark | 0.3 | |||
France | 3.1 | |||
Germany | 3.9 | |||
India | 0.3 | |||
Indonesia | 0.4 | |||
Israel | 5.1 | |||
Italy | 3.6 | |||
Japan | 16.9 | |||
Netherlands | 0.6 | |||
New Zealand | 1.5 | |||
Sweden | 1.1 | |||
Switzerland | 0.6 | |||
Taiwan | 1.4 | |||
United Kingdom | 19.0 | |||
United States | 35.7 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
83
Table of Contents
WASATCH-1ST SOURCE INCOME FUND (FMEQX) | ||
| ||
|
Schedule of Investments
Principal Amount | Value | |||||||
CORPORATE BONDS 53.3% | ||||||||
Automobile Manufacturers 1.4% | ||||||||
$1,250,000 | Ford Motor Credit Co., LLC, 5.75%, 2/1/21 | $ | 1,370,734 | |||||
|
| |||||||
Beverages-Non-Alcoholic 0.8% | ||||||||
750,000 | PepsiCo, Inc., 5.00%, 6/1/18 | 767,136 | ||||||
|
| |||||||
Biotechnology 1.0% | ||||||||
1,000,000 | Roche Holdings, Inc., 2.25%, 9/30/19† | 1,006,220 | ||||||
|
| |||||||
Computer Services 3.5% | ||||||||
1,350,000 | Apple, Inc., 1.70%, 2/22/19 | 1,353,240 | ||||||
2,000,000 | Hewlett Packard Enterprise Co., 3.60%, 10/15/20 | 2,073,091 | ||||||
|
| |||||||
3,426,331 | ||||||||
|
| |||||||
Construction Machinery & Heavy Trucks 1.1% | ||||||||
1,000,000 | John Deere Capital Corp., 2.25%, 4/17/19 | 1,009,219 | ||||||
|
| |||||||
Consumer Finance 1.0% | ||||||||
1,000,000 | American Express Credit Corp., 2.25%, 8/15/19 MTN | 1,008,305 | ||||||
|
| |||||||
Diversified Banks 8.1% | ||||||||
1,000,000 | Bank of America Corp., 4.00%, 4/1/24 MTN | 1,056,453 | ||||||
1,200,000 | Citigroup, Inc., 3-month LIBOR + 0.55%, 1.867%, 8/25/36††† | 999,000 | ||||||
1,000,000 | Fulton Financial Corp., 3.60%, 3/16/22 | 1,010,609 | ||||||
1,000,000 | HSBC Holdings plc, 3-month LIBOR + 2.24%, 3.557%, 3/8/21††† (United Kingdom) | 1,052,350 | ||||||
1,250,000 | PNC Bank NA, 3.80%, 7/25/23 | 1,318,471 | ||||||
1,250,000 | Royal Bank of Canada, 2.20%, 9/23/19 (Canada) | 1,256,357 | ||||||
1,125,000 | US Bancorp, 3.00%, 3/15/22 MTN | 1,159,449 | ||||||
|
| |||||||
7,852,689 | ||||||||
|
| |||||||
Diversified Financial Services 4.0% | ||||||||
1,600,000 | General Electric Co., 4.65%, 10/17/21 MTN | 1,752,106 | ||||||
1,250,000 | General Electric Co., 3-month LIBOR + 3.33%, 5.00%, 1/21/21, Series D††† §§§ | 1,322,125 | ||||||
750,000 | New York Life Global Funding, 2.15%, 6/18/19† | 752,794 | ||||||
|
| |||||||
3,827,025 | ||||||||
|
| |||||||
E-Commerce/Products 1.3% | ||||||||
1,250,000 | Alibaba Group Holding Ltd., 3.125%, 11/28/21 (Cayman Islands) | 1,277,781 | ||||||
|
| |||||||
Enterprise Software & Services 1.2% | ||||||||
1,100,000 | CA, Inc., 3.60%, 8/15/22 | 1,127,480 | ||||||
|
| |||||||
Insurance 5.2% | ||||||||
1,000,000 | Allstate Corp. (The), 3-month LIBOR + 1.935%, 3.25%, 5/15/67††† | 985,000 | ||||||
1,100,000 | Aspen Insurance Holdings Ltd., 4.65%, 11/15/23 (Bermuda) | 1,177,204 | ||||||
1,200,000 | Athene Global Funding, 4.00%, 1/25/22† | 1,249,319 | ||||||
560,000 | Jackson National Life Global Funding, 4.70%, 6/1/18† | 570,833 | ||||||
1,175,000 | Lincoln National Corp., 3-month LIBOR + 2.358%, 3.672%, 5/17/66††† | 1,092,750 | ||||||
|
| |||||||
5,075,106 | ||||||||
|
| |||||||
Integrated Telecommunication Services 3.9% | ||||||||
1,250,000 | AT&T, Inc., 5.20%, 3/15/20 | 1,338,314 | ||||||
1,000,000 | Crown Castle Towers, LLC, 4.883%, 8/15/40† | 1,059,273 | ||||||
1,250,000 | Verizon Communications, Inc., 5.15%, 9/15/23 | 1,401,209 | ||||||
|
| |||||||
3,798,796 | ||||||||
|
|
Principal Amount | Value | |||||||
Investment Banking & Brokerage 7.9% | ||||||||
$ 1,700,000 | Goldman Sachs Group, Inc. (The), 3-month LIBOR + 1.75%, 3.064%, 10/28/27 MTN††† | $ | 1,769,547 | |||||
1,250,000 | JPMorgan Chase & Co., 3-month LIBOR + 1.23%, 2.543%, 10/24/23††† | 1,277,092 | ||||||
1,000,000 | JPMorgan Chase & Co., 3.25%, 9/23/22 | 1,033,821 | ||||||
1,000,000 | JPMorgan Chase & Co., 3-month LIBOR + 3.47%, 7.90%, 4/30/18, Series 1††† §§§ | 1,030,000 | ||||||
1,250,000 | Morgan Stanley, 3-month LIBOR + 1.40%, 2.713%, 10/24/23 MTN††† | 1,278,413 | ||||||
1,200,000 | Morgan Stanley, 4.875%, 11/1/22 | 1,300,525 | ||||||
|
| |||||||
7,689,398 | ||||||||
|
| |||||||
Multimedia 0.9% | ||||||||
800,000 | NBCUniversal Media, LLC , 5.15%, 4/30/20 | 864,734 | ||||||
|
| |||||||
Oil Companies—Integrated 1.6% | ||||||||
1,500,000 | BP Capital Markets plc, 3.245%, 5/6/22 (United Kingdom) | 1,553,854 | ||||||
|
| |||||||
Pharmaceuticals 0.8% | ||||||||
575,000 | Pharmacia, LLC, 6.75%, 12/15/27 | 732,612 | ||||||
|
| |||||||
Pipelines 1.0% | ||||||||
1,000,000 | Enterprise Products Operating, LLC, 3-month LIBOR + 2.778%, 4.093%, 6/1/67††† | 970,591 | ||||||
|
| |||||||
Property & Casualty Insurance 0.9% | ||||||||
1,000,000 | XLIT Ltd., 3-month LIBOR + 2.458%, 3.761%, 10/30/17, Series E††† §§§ (Cayman Islands) | 911,670 | ||||||
|
| |||||||
Residential REITs 2.5% | ||||||||
1,200,000 | AvalonBay Communities, Inc., 4.20%, 12/15/23 MTN | 1,288,448 | ||||||
1,000,000 | EPR Properties, 5.75%, 8/15/22 | 1,106,780 | ||||||
|
| |||||||
2,395,228 | ||||||||
|
| |||||||
Semiconductor Equipment 1.1% | ||||||||
1,000,000 | Applied Materials, Inc., 4.30%, 6/15/21 | 1,072,897 | ||||||
|
| |||||||
Semiconductors 1.5% | ||||||||
1,400,000 | QUALCOMM, Inc., 3-month LIBOR + 0.73%, 2.041%, 1/30/23††† | 1,407,027 | ||||||
|
| |||||||
Super-Regional Banks—U.S. 1.4% | ||||||||
1,250,000 | Wells Fargo & Co., 4.125%, 8/15/23 | 1,323,292 | ||||||
|
| |||||||
Trucking & Leasing 1.2% | ||||||||
1,000,000 | Aviation Capital Group Corp., 6.75%, 4/6/21† | 1,130,328 | ||||||
|
| |||||||
Total Corporate Bonds (cost $51,058,721) | 51,598,453 | |||||||
|
|
84
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
Principal Amount | Value | |||||||
ASSET-BACKED SECURITIES 15.7% | ||||||||
$ 913,223 | 2010 U-Haul S Fleet, LLC, 4.899%, 10/25/23, Series 2010-BT1A, Class 1† | $ | 913,566 | |||||
1,000,000 | Avis Budget Rental Car Funding AESOP, LLC, 2.50%, 7/20/21, Series 2015-1A, Class A† | 998,505 | ||||||
1,000,000 | Citibank Credit Card Issuance Trust, 1-month LIBOR + 0.77%, 2.007%, 5/14/29, Series 2017-A6, Class A6††† | 1,010,101 | ||||||
854,373 | DT Auto Owner Trust 2016-2, 2.92%, 5/15/20, Series 2016-2A, Class B† | 855,662 | ||||||
825,000 | Exeter Automobile Receivables Trust, 3.59%, 8/16/21, Series 2015-3A, Class B† | 831,256 | ||||||
1,290,361 | Fairway Outdoor Funding, LLC, 4.212%, 10/15/42, Series 2012-1A, Class A2† | 1,310,181 | ||||||
963,986 | Global SC Finance IV Ltd., 3.85%, 4/15/37, Series 2017-1A, Class A† | 977,054 | ||||||
1,000,000 | Hertz Vehicle Financing, LLC 2016-2, 2.95%, 3/25/22, Series 2016-2A, Class A† | 997,048 | ||||||
965,000 | HOA Funding, LLC, 5.50%, 8/20/44, Series 2015-1A, Class A2† | 958,506 | ||||||
1,000,000 | Scala Funding Co., LLC, 3.91%, 2/15/21, Series 2016-1, Class A*** † | 1,009,375 | ||||||
1,197,770 | Shenton Aircraft Investment I Ltd., 4.75%, 10/15/42, Series 2015-1A, Class A† (Cayman Islands) | 1,254,174 | ||||||
888,280 | Spirit Master Funding, LLC, 5.05%, 7/20/40, Series 2014-1A, Class A1† | 912,997 | ||||||
1,519,000 | Wendys Funding, LLC, 3.371%, 6/15/45, Series 2015-1A, Class A2I† | 1,532,625 | ||||||
1,610,000 | World Financial Network Credit Card Master Trust, 3.14%, 1/17/23, Series 2012-A, Class A | 1,639,547 | ||||||
|
| |||||||
Total Asset-Backed Securities (cost $15,204,019) | 15,200,597 | |||||||
|
| |||||||
MORTGAGE-BACKED SECURITIES 12.5% | ||||||||
1,039,475 | Federal Home Loan Mortgage Corp., 12-month LIBOR + 1.820%, 2.714%, 1/1/43, Series 840522††† | 1,077,186 | ||||||
1,384,384 | Federal Home Loan Mortgage Corp., 3.50%, 2/1/32, Series G18637 | 1,447,861 | ||||||
1,000,000 | Federal National Mortgage Assoc., 2.42%, 4/1/22, Series AM8263 | 1,003,352 | ||||||
976,320 | Federal National Mortgage Assoc., 12-month LIBOR + 1.599%, 2.45%, 7/1/44, Series AL9645††† | 1,005,779 | ||||||
1,026,618 | Federal National Mortgage Assoc., 12-month LIBOR + 1.496%, 2.669%, 4/1/44, Series AL9804††† | 1,059,942 | ||||||
1,775,841 | Federal National Mortgage Assoc., 3.00%, 3/1/29, Series AL4936 | 1,831,205 | ||||||
1,190,358 | Federal National Mortgage Assoc., 12-month LIBOR + 1.60%, 3.118%, 5/1/47, Series BH0393††† | 1,215,087 | ||||||
1,018,760 | Federal National Mortgage Assoc., 3.50%, 6/1/32, Series AL2525 | 1,070,102 | ||||||
1,118,669 | Federal National Mortgage Assoc., 3.50%, 9/1/32, Series AP8284 | 1,165,592 | ||||||
1,175,270 | Government National Mortgage Assoc., 3.87%, 10/15/36, Series AO0029 | 1,251,446 | ||||||
|
| |||||||
Total Mortgage-Backed Securities (cost $12,138,543) | 12,127,552 | |||||||
|
|
Principal Amount | Value | |||||||
U.S. TREASURY NOTES 6.7% | ||||||||
$ 1,200,000 | U.S. Treasury Note, 2.25%, 7/31/18 | $ | 1,208,813 | |||||
1,100,000 | U.S. Treasury Note, 2.625%, 8/15/20 | 1,131,238 | ||||||
2,500,000 | U.S. Treasury Note, 3.625%, 8/15/19 | 2,599,707 | ||||||
1,500,000 | U.S. Treasury Note, 3.625%, 2/15/20 | 1,572,773 | ||||||
|
| |||||||
Total U.S. Treasury Notes (cost $6,523,361) | 6,512,531 | |||||||
|
| |||||||
U.S. GOVERNMENT AGENCY SECURITIES 4.4% | ||||||||
1,050,000 | Federal Farm Credit Banks, 2.60%, 10/6/22 | 1,075,881 | ||||||
1,000,000 | Federal Farm Credit Banks, 4.95%, 12/16/19 | 1,071,090 | ||||||
1,000,000 | Tennessee Valley Authority, 3.875%, 2/15/21 | 1,066,156 | ||||||
1,000,000 | Tennessee Valley Authority, 6.25%, 12/15/17, Series E | 1,010,209 | ||||||
|
| |||||||
Total U.S. Government Agency Securities (cost $4,232,150) | 4,223,336 | |||||||
|
| |||||||
MUNICIPAL BONDS 4.0% | ||||||||
730,000 | City of Dublin, Ohio, 5.00%, 12/1/22, Series B | 806,176 | ||||||
500,000 | Iowa Student Loan Liquidity Corp., 2.86%, 12/1/22, Series A-2 | 499,655 | ||||||
1,325,000 | Municipal Electric Authority of Georgia, 4.03%, 1/1/20, Series A | 1,352,480 | ||||||
1,200,000 | State of New York Mortgage Agency, 3.653%, 4/1/23, Series 172 | 1,238,424 | ||||||
|
| |||||||
Total Municipal Bonds (cost $3,896,904) | 3,896,735 | |||||||
|
| |||||||
U.S. TREASURY INFLATION-PROTECTED SECURITIES 2.1% | ||||||||
894,179 | Treasury Inflation-Protected Security, 2.00%, 1/15/26 | 1,005,618 | ||||||
969,136 | Treasury Inflation-Protected Security, 2.125%, 1/15/19 | 999,308 | ||||||
|
| |||||||
Total U.S. Treasury Inflation-Protected Securities (cost $2,011,215) | 2,004,926 | |||||||
|
|
85
Table of Contents
WASATCH-1ST SOURCE INCOME FUND (FMEQX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments (continued)
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 0.8% | ||||||||
Repurchase Agreement 0.8% | ||||||||
$ 779,866 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $800,000 of United States Treasury Notes 2.250% due 2/15/27; value: $798,615; repurchase proceeds: $779,874 (cost $779,866) | $ | 779,866 | |||||
|
| |||||||
Total Short-Term Investments (cost $779,866) | 779,866 | |||||||
|
| |||||||
Total Investments (cost $95,844,779) 99.5% | 96,343,996 | |||||||
Other Assets less Liabilities 0.5% | 522,562 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 96,866,558 | ||||||
|
| |||||||
†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 September 30, 2017, Wasatch-1st Source Income Fund’s investments, excluding short-term investments, were in the following countries (unaudited):
Country | % | |||
Bermuda | 1.3 | |||
Canada | 1.3 | |||
Cayman Islands | 3.6 | |||
United Kingdom | 2.7 | |||
United States | 91.1 | |||
|
| |||
TOTAL | 100.0 | % | ||
|
|
86
Table of Contents
WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | SEPTEMBER 30, 2017 | |
| ||
|
Schedule of Investments
Principal Amount | Value | |||||||
U.S. GOVERNMENT OBLIGATIONS 99.4% | ||||||||
$146,300,000 | U.S. Treasury Bond, 2.25%, 8/15/46 | $ | 128,635,417 | |||||
66,500,000 | U.S. Treasury Bond, 2.50%, 2/15/45 | 62,021,641 | ||||||
8,200,000 | U.S. Treasury Bond, 2.50%, 5/15/46 | 7,619,594 | ||||||
8,000,000 | U.S. Treasury Bond, 3.125%, 8/15/44 | 8,439,687 | ||||||
14,100,000 | U.S. Treasury Bond, 3.75%, 11/15/43 | 16,527,844 | ||||||
39,000,000 | U.S. Treasury Strip, principal only, 8/15/40 | 20,387,677 | ||||||
81,000,000 | U.S. Treasury Strip, principal only, 5/15/44 | 37,398,422 | ||||||
175,700,000 | U.S. Treasury Strip, principal only, 8/15/45 | 77,642,176 | ||||||
|
| |||||||
Total U.S. Government Obligations (cost $376,059,411) | 358,672,458 | |||||||
|
|
Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS 0.5% | ||||||||
Repurchase Agreement 0.5% | ||||||||
$ 1,803,381 | Repurchase Agreement dated 9/29/17, 0.12% due 10/2/17 with Fixed Income Clearing Corp. collateralized by $1,815,000 of United States Treasury Notes 2.250% due 11/15/24; value $1,842,795; repurchase proceeds: $1,803,399 (cost $1,803,381) | $ | 1,803,381 | |||||
|
| |||||||
Total Short-Term Investments (cost $1,803,381) | 1,803,381 | |||||||
|
| |||||||
Total Investments (cost $377,862,792) 99.9% | 360,475,839 | |||||||
Other Assets less Liabilities 0.1% | 389,925 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 360,865,764 | ||||||
|
| |||||||
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 | $ | 971,086,223 | $ | 178,037,715 | $ | 33,701,376 | ||||||
Repurchase agreements | 30,607,602 | 3,284,123 | — | |||||||||
|
|
|
|
|
| |||||||
$ | 1,001,693,825 | $ | 181,321,838 | $ | 33,701,376 | |||||||
|
|
|
|
|
| |||||||
Investments, at market value |
| |||||||||||
Unaffiliated issuers | $ | 1,556,291,272 | $ | 230,551,773 | $ | 44,351,449 | ||||||
Repurchase agreements | 30,607,602 | 3,284,123 | — | |||||||||
|
|
|
|
|
| |||||||
1,586,898,874 | 233,835,896 | 44,351,449 | ||||||||||
Cash | — | — | 21,267 | |||||||||
Foreign currency on deposit (cost of $2, $85,527, $0, $205,307, $136,379, | 2 | 85,081 | — | |||||||||
Receivable for investment securities sold | 9,212,274 | — | — | |||||||||
Capital shares receivable | 701,015 | 846,550 | 29,496 | |||||||||
Interest and dividends receivable | 517,568 | 99,301 | 24,003 | |||||||||
Prepaid expenses and other assets | 64,052 | 30,310 | 8,150 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 1,597,393,785 | 234,897,138 | 44,434,365 | |||||||||
|
|
|
|
|
| |||||||
Liabilities: |
| |||||||||||
Payable for securities purchased | 685,542 | — | 25,235 | |||||||||
Capital shares payable | 674,752 | 296,686 | — | |||||||||
Payable to Trustees | 2,698 | 259 | 72 | |||||||||
Payable to Advisor | 1,232,078 | 240,197 | 26,492 | |||||||||
Accrued fund administration fees | 22,503 | 2,882 | 40 | |||||||||
Accrued expenses and other liabilities | 382,659 | 126,315 | 63,127 | |||||||||
Foreign capital gains taxes payable | 145,962 | 2,542,300 | 177,764 | |||||||||
Line of credit payable | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 3,146,194 | 3,208,639 | 292,730 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 1,594,247,591 | $ | 231,688,499 | $ | 44,141,635 | ||||||
|
|
|
|
|
| |||||||
Net Assets Consist of: |
| |||||||||||
Capital stock | $ | 236,089 | $ | 567,817 | $ | 41,841 | ||||||
Paid-in-capital in excess of par | 941,428,642 | 183,735,483 | 43,072,219 | |||||||||
Undistributed net investment loss | (8,181,295 | ) | (2,249,623 | ) | (169,551 | ) | ||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | 75,705,068 | (334,530 | ) | (9,275,269 | ) | |||||||
Unrealized appreciation (depreciation) on: | ||||||||||||
Investments | 585,059,087 | 49,971,758 | 10,472,309 | |||||||||
Foreign currency translations | — | (2,406 | ) | 86 | ||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 1,594,247,591 | $ | 231,688,499 | $ | 44,141,635 | ||||||
|
|
|
|
|
| |||||||
Net Assets |
| |||||||||||
Investor Class | 1,211,088,872 | 207,949,077 | 15,273,263 | |||||||||
Institutional Class | 383,158,719 | 23,739,422 | 28,868,372 | |||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, | ||||||||||||
Investor Class | 17,958,623 | 50,986,675 | 1,459,645 | |||||||||
Institutional Class | 5,650,304 | 5,795,065 | 2,724,422 | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING PRICE PER SHARE | ||||||||||||
Investor Class | $ | 67.44 | $ | 4.08 | $ | 10.46 | ||||||
|
|
|
|
|
| |||||||
Institutional Class | $ | 67.81 | $ | 4.10 | $ | 10.60 | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
88
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
EMERGING MARKETS SMALL CAP FUND | FRONTIER EMERGING SMALL COUNTRIES FUND | GLOBAL OPPORTUNITIES FUND | INTERNATIONAL GROWTH FUND | INTERNATIONAL OPPORTUNITIES FUND | ||||||||||||||
$ | 438,405,639 | $ | 139,880,789 | $ | 65,507,888 | $ | 933,021,945 | $ | 373,980,301 | |||||||||
114,452 | 2,545,919 | 170,608 | — | 6,840,234 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 438,520,091 | $ | 142,426,708 | $ | 65,678,496 | $ | 933,021,945 | $ | 380,820,535 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 642,139,569 | $ | 193,001,263 | $ | 103,116,066 | $ | 1,425,057,818 | $ | 487,600,677 | |||||||||
114,452 | 2,545,919 | 170,608 | — | 6,840,234 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
642,254,021 | 195,547,182 | 103,286,674 | 1,425,057,818 | 494,440,911 | ||||||||||||||
— | 3,386,853 | — | — | — | ||||||||||||||
| 204,374 | 136,622 | — | 825,011 | 317,256 | |||||||||||||
2,061,346 | 1,064,091 | — | 75,583,869 | 6,968,228 | ||||||||||||||
255,254 | 11,436 | 1,437 | 261,955 | 274,801 | ||||||||||||||
818,231 | 430,154 | 84,559 | 1,799,749 | 580,404 | ||||||||||||||
36,394 | 20,273 | 17,130 | 48,106 | 22,402 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
645,629,620 | 200,596,611 | 103,389,800 | 1,503,576,508 | 502,604,002 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
961 | 5,535 | — | 866,101 | 160,740 | ||||||||||||||
549,097 | 503,757 | 740 | 234,437 | 214,131 | ||||||||||||||
1,266 | 621 | 210 | 2,554 | 1,060 | ||||||||||||||
897,733 | 388,443 | 103,366 | 1,535,382 | 717,203 | ||||||||||||||
12,007 | 4,437 | 1,160 | 24,907 | 7,085 | ||||||||||||||
248,660 | 237,313 | 75,990 | 334,341 | 221,672 | ||||||||||||||
194,004 | 1,692,272 | 211,637 | 399,631 | 608,007 | ||||||||||||||
— | — | — | 38,706,233 | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,903,728 | 2,832,378 | 393,103 | 42,103,586 | 1,929,898 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 643,725,892 | $ | 197,764,233 | $ | 102,996,697 | $ | 1,461,472,922 | $ | 500,674,104 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 2,149,596 | $ | 718,713 | $ | 274,160 | $ | 431,647 | $ | 1,437,149 | |||||||||
458,776,588 | 300,171,384 | 56,869,006 | 946,357,956 | 361,894,975 | ||||||||||||||
(5,165,459 | ) | (3,973,043 | ) | (963,398 | ) | (857,139 | ) | (3,176,874 | ) | |||||||||
(15,576,774 | ) | (151,657,544 | ) | 9,419,032 | 23,854,576 | 27,512,252 | ||||||||||||
203,539,926 | 52,507,102 | 37,396,541 | 491,636,242 | 113,012,369 | ||||||||||||||
2,015 | (2,379 | ) | 1,356 | 49,640 | (5,767 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 643,725,892 | $ | 197,764,233 | $ | 102,996,697 | $ | 1,461,472,922 | $ | 500,674,104 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
390,903,365 | 155,758,242 | 95,847,331 | 804,612,910 | 265,879,437 | ||||||||||||||
252,822,527 | 42,005,991 | 7,149,366 | 656,860,012 | 234,794,667 | ||||||||||||||
130,654,192 | 56,667,223 | 25,513,094 | 23,775,853 | 76,626,747 | ||||||||||||||
84,305,436 | 15,204,057 | 1,902,876 | 19,388,877 | 67,088,109 | ||||||||||||||
$ | 2.99 | $ | 2.75 | $ | 3.76 | $ | 33.84 | $ | 3.47 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 3.00 | $ | 2.76 | $ | 3.76 | $ | 33.88 | $ | 3.50 | |||||||||
|
|
|
|
|
|
|
|
|
|
89
Table of Contents
WASATCH FUNDS | ||
| ||
|
Statements of Assets and Liabilities (continued)
LARGE CAP VALUE FUND | LONG/SHORT FUND | MICRO CAP FUND | ||||||||||
Assets: | ||||||||||||
Investments, at cost | ||||||||||||
Unaffiliated issuers | $ | 146,135,164 | $ | 95,463,299 | $ | 181,184,148 | ||||||
Repurchase agreements | 5,442,486 | 35,132,336 | 1,061,240 | |||||||||
|
|
|
|
|
| |||||||
$ | 151,577,650 | $ | 130,595,635 | $ | 182,245,388 | |||||||
|
|
|
|
|
| |||||||
Investments, at market value | ||||||||||||
Unaffiliated issuers | $ | 175,777,825 | $ | 97,877,603 | $ | 304,343,107 | ||||||
Repurchase agreements | 5,442,486 | 35,132,336 | 1,061,240 | |||||||||
|
|
|
|
|
| |||||||
181,220,311 | 133,009,939 | 305,404,347 | ||||||||||
Cash | — | — | — | |||||||||
Foreign currency on deposit (cost of $0, $0, $323,568, $0, $0, $0, $16 and $0, respectively) | — | — | 323,491 | |||||||||
Receivable for investment securities sold | — | 528,595 | 6,701,459 | |||||||||
Receivable from broker for securities sold short | — | 24,238,309 | — | |||||||||
Capital shares receivable | 2,212 | 2,363 | 162,524 | |||||||||
Interest and dividends receivable | 266,641 | 513,331 | 54,666 | |||||||||
Prepaid expenses and other assets | 12,394 | 11,499 | 14,557 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 181,501,558 | 158,304,036 | 312,661,044 | |||||||||
|
|
|
|
|
| |||||||
Liabilities: | ||||||||||||
Securities sold short, at value (proceeds of $0, $39,530,978, $0, $0, $0, $0, $0 and $0, respectively) | — | 51,372,975 | — | |||||||||
Payable for securities purchased | 612,223 | 528,695 | 434,025 | |||||||||
Capital shares payable | 286,657 | 258,769 | 187,486 | |||||||||
Dividends payable to shareholders | 7,742 | — | — | |||||||||
Payable to Trustees | 350 | 324 | 518 | |||||||||
Payable to Advisor | 110,788 | 87,887 | 368,952 | |||||||||
Accrued fund administration fees | 3,029 | 6,979 | 4,069 | |||||||||
Accrued expenses and other liabilities | 157,308 | 94,702 | 82,744 | |||||||||
Foreign capital gains taxes payable | — | — | — | |||||||||
Dividends payable on securities sold short | — | 35,096 | — | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 1,178,097 | 52,385,427 | 1,077,794 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 180,323,461 | $ | 105,918,609 | $ | 311,583,250 | ||||||
|
|
|
|
|
| |||||||
Net Assets Consist of: | ||||||||||||
Capital stock | $ | 181,597 | $ | 84,062 | $ | 378,616 | ||||||
Paid-in-capital in excess of par | 129,990,606 | 269,576,440 | 156,943,289 | |||||||||
Undistributed net investment loss | (7,742 | ) | (455,640 | ) | (2,607,368 | ) | ||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | 20,515,564 | (153,858,560 | ) | 33,709,860 | ||||||||
Unrealized appreciation (depreciation) on: | ||||||||||||
Investments | 29,642,661 | 2,414,304 | 123,158,959 | |||||||||
Securities sold short | — | (11,841,997 | ) | — | ||||||||
Foreign currency translations | 775 | — | (106 | ) | ||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 180,323,461 | $ | 105,918,609 | $ | 311,583,250 | ||||||
|
|
|
|
|
| |||||||
Net Assets | ||||||||||||
Investor Class | 175,729,806 | 79,840,934 | 311,583,250 | |||||||||
Institutional Class | 4,593,655 | 26,077,675 | — | |||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, $0.01 par value) | ||||||||||||
Investor Class | 17,696,551 | 6,346,189 | 37,861,629 | |||||||||
Institutional Class | 463,161 | 2,059,982 | — | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING PRICE PER SHARE | ||||||||||||
Investor Class | $ | 9.93 | $ | 12.58 | $ | 8.23 | ||||||
|
|
|
|
|
| |||||||
Institutional Class | $ | 9.92 | $ | 12.66 | $ | — | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
90
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
MICRO CAP VALUE FUND | SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | ULTRA GROWTH FUND | ||||||||||||||
$ | 134,982,417 | $ | 1,026,594,334 | $ | 275,874,294 | $ | 30,556,119 | $ | 73,167,213 | |||||||||
14,565,031 | 35,091,465 | 3,047,345 | 7,174,334 | 807,568 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 149,547,448 | $ | 1,061,685,799 | $ | 278,921,639 | $ | 37,730,453 | $ | 73,974,781 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 202,408,384 | $ | 1,651,629,962 | $ | 368,437,014 | $ | 37,757,848 | $ | 107,444,433 | |||||||||
14,565,031 | 35,091,465 | 3,047,345 | 7,174,334 | 807,568 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
216,973,415 | 1,686,721,427 | 371,484,359 | 44,932,182 | 108,252,001 | ||||||||||||||
— | — | — | 4,672 | — | ||||||||||||||
— | — | — | 20 | — | ||||||||||||||
548,641 | 7,225,798 | 3,576,973 | 89,450 | 3,387,676 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
261,410 | 377,034 | 97,550 | 189 | 8,925 | ||||||||||||||
89,118 | 156,955 | 302,621 | 109,121 | 3,626 | ||||||||||||||
112,190 | 52,479 | 19,288 | 7,163 | 10,343 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
217,984,774 | 1,694,533,693 | 375,480,791 | 45,142,797 | 111,662,571 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
| — | — | — | — | — | |||||||||||||
1,398,391 | 678,926 | 4,199,033 | — | 111,484 | ||||||||||||||
101,841 | 1,056,821 | 226,537 | 29,682 | 24,973 | ||||||||||||||
— | — | — | 1,336 | — | ||||||||||||||
353 | 3,251 | 621 | 92 | 187 | ||||||||||||||
254,551 | 1,319,408 | 284,149 | 17,046 | 88,458 | ||||||||||||||
2,529 | 26,750 | 4,836 | 38 | 948 | ||||||||||||||
98,070 | 503,489 | 116,167 | 49,901 | 70,898 | ||||||||||||||
41,815 | — | — | — | — | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,897,550 | 3,588,645 | 4,831,343 | 98,095 | 296,948 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 216,087,224 | $ | 1,690,945,048 | $ | 370,649,448 | $ | 45,044,702 | $ | 111,365,623 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 621,029 | $ | 369,421 | $ | 466,483 | $ | 38,233 | $ | 51,055 | |||||||||
133,859,058 | 926,908,268 | 263,832,369 | 43,609,145 | 69,079,343 | ||||||||||||||
(1,095,632 | ) | (9,822,810 | ) | (127,730 | ) | (69,552 | ) | (903,987 | ) | |||||||||
15,318,328 | 152,006,179 | 13,915,606 | (5,734,891 | ) | 12,127,740 | |||||||||||||
67,384,152 | 621,483,352 | 92,562,720 | 7,201,729 | 31,011,472 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
289 | 638 | — | 38 | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 216,087,224 | $ | 1,690,945,048 | $ | 370,649,448 | $ | 45,044,702 | $ | 111,365,623 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
216,087,224 | 1,182,572,507 | 320,978,066 | 45,044,702 | 111,365,623 | ||||||||||||||
— | 508,372,541 | 49,671,382 | — | — | ||||||||||||||
| | |||||||||||||||||
62,102,919 | 25,864,169 | 40,426,435 | 3,823,302 | 5,105,548 | ||||||||||||||
— | 11,077,901 | 6,221,882 | — | — | ||||||||||||||
$ | 3.48 | $ | 45.72 | $ | 7.94 | $ | 11.78 | $ | 21.81 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | — | $ | 45.89 | $ | 7.98 | $ | — | $ | — | |||||||||
|
|
|
|
|
|
|
|
|
|
91
Table of Contents
WASATCH FUNDS | SEPTEMBER 30, 2017 | |
| ||
|
Statements of Assets and Liabilities (continued)
WORLD INNOVATORS FUND | INCOME FUND | U.S. TREASURY FUND | ||||||||||
Assets: | ||||||||||||
Investments, at cost | ||||||||||||
Unaffiliated issuers | $ | 130,636,125 | $ | 95,064,913 | $ | 376,059,411 | ||||||
Repurchase agreements | 29,928,007 | 779,866 | 1,803,381 | |||||||||
|
|
|
|
|
| |||||||
$ | 160,564,132 | $ | 95,844,779 | $ | 377,862,792 | |||||||
|
|
|
|
|
| |||||||
Investments, at market value |
| |||||||||||
Unaffiliated issuers | $ | 166,125,050 | $ | 95,564,130 | $ | 358,672,458 | ||||||
Repurchase agreements | 29,928,007 | 779,866 | 1,803,381 | |||||||||
|
|
|
|
|
| |||||||
196,053,057 | 96,343,996 | 360,475,839 | ||||||||||
Cash | — | — | 3,081,974 | |||||||||
Foreign currency on deposit (cost of $714,263, $0 and $0, respectively) | 714,722 | — | — | |||||||||
Receivable for investment securities sold | 1,835,086 | 1,288,113 | — | |||||||||
Capital shares receivable | 29,124 | 170,118 | 239,408 | |||||||||
Interest and dividends receivable | 217,404 | 709,790 | 941,835 | |||||||||
Prepaid expenses and other assets | 13,354 | 6,628 | 21,545 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 198,862,747 | 98,518,645 | 364,760,601 | |||||||||
|
|
|
|
|
| |||||||
Liabilities: |
| |||||||||||
Payable for securities purchased | 3,621,750 | 1,462,936 | 3,081,974 | |||||||||
Capital shares payable | 28,221 | 31,503 | 450,511 | |||||||||
Dividends payable to shareholders | — | 49,078 | 103,269 | |||||||||
Payable to Trustees | 345 | 183 | 643 | |||||||||
Payable to Advisor | 233,013 | 43,734 | 150,503 | |||||||||
Accrued fund administration fees | 2,691 | 876 | 5,113 | |||||||||
Accrued expenses and other liabilities | 120,173 | 63,777 | 102,824 | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 4,006,193 | 1,652,087 | 3,894,837 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 194,856,554 | $ | 96,866,558 | $ | 360,865,764 | ||||||
|
|
|
|
|
| |||||||
Net Assets Consist of: |
| |||||||||||
Capital stock | $ | 85,638 | $ | 95,696 | $ | 221,097 | ||||||
Paid-in-capital in excess of par | 142,306,955 | 96,396,119 | 393,379,144 | |||||||||
Undistributed net investment income (loss) | (41,744 | ) | 4,835 | 36,338 | ||||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | 17,297,868 | (129,309 | ) | (15,383,862 | ) | |||||||
Unrealized appreciation (depreciation) on: | ||||||||||||
Investments | 35,205,722 | 499,217 | (17,386,953 | ) | ||||||||
Foreign currency translations | 2,115 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 194,856,554 | $ | 96,866,558 | $ | 360,865,764 | ||||||
|
|
|
|
|
| |||||||
Net Assets |
| |||||||||||
Investor Class | 191,020,527 | 96,866,558 | 360,865,764 | |||||||||
Institutional Class | 3,836,027 | — | — | |||||||||
Capital Stock Issued and Outstanding (Unlimited number of shares authorized, | ||||||||||||
Investor Class | 8,396,024 | 9,569,601 | 22,109,744 | |||||||||
Institutional Class | 167,768 | — | — | |||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING PRICE PER SHARE |
| |||||||||||
Investor Class | $ | 22.75 | $ | 10.12 | $ | 16.32 | ||||||
|
|
|
|
|
| |||||||
Institutional Class | $ | 22.87 | $ | — | $ | — | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
92
Table of Contents
(This page intentionally left blank.)
93
Table of Contents
WASATCH FUNDS | ||
| ||
|
CORE GROWTH FUND | EMERGING INDIA FUND | EMERGING MARKETS SELECT FUND | ||||||||||
Investment Income: |
| |||||||||||
Interest | $ | 36,762 | $ | 5,980 | 1 | $ | 494 | |||||
Dividends2 | ||||||||||||
Unaffiliated issuers | 6,123,883 | 1,138,240 | 439,605 | |||||||||
|
|
|
|
|
| |||||||
Total investment income | 6,160,645 | 1,144,220 | 440,099 | |||||||||
|
|
|
|
|
| |||||||
Expenses: |
| |||||||||||
Investment advisory fees | 14,488,481 | 1,790,300 | 389,827 | |||||||||
Shareholder servicing fees — Investor Class | 1,395,864 | 225,456 | 38,513 | |||||||||
Shareholder servicing fees — Institutional Class | 6,999 | 2,032 | 3,286 | |||||||||
Fund administration fees | 246,657 | 24,406 | 6,633 | |||||||||
Fund accounting fees | 147,063 | 37,398 | 22,843 | |||||||||
Reports to shareholders — Investor Class | 150,955 | 31,127 | 9,655 | |||||||||
Reports to shareholders — Institutional Class | 48,537 | 4,600 | 4,714 | |||||||||
Custody fees | 80,819 | 204,718 | 57,053 | |||||||||
Federal and state registration fees — Investor Class | 50,316 | 26,850 | 14,073 | |||||||||
Federal and state registration fees — Institutional Class | 29,726 | 17,551 | 16,399 | |||||||||
Legal fees | 114,881 | 10,706 | 3,486 | |||||||||
Trustees’ fees | 207,541 | 14,818 | 5,527 | |||||||||
Interest | 45,488 | 4,461 | 4,642 | |||||||||
Audit fees | 38,781 | 33,403 | 34,674 | |||||||||
Other expenses | 70,554 | 37,999 | 27,856 | |||||||||
|
|
|
|
|
| |||||||
Total expenses before reimbursement | 17,122,662 | 2,465,825 | 639,181 | |||||||||
Reimbursement of expenses by Advisor | (136,395 | ) | (30,597 | ) | (128,774 | ) | ||||||
|
|
|
|
|
| |||||||
Net Expenses | 16,986,267 | 2,435,228 | 510,407 | |||||||||
|
|
|
|
|
| |||||||
Net Investment Loss | (10,825,622 | ) | (1,291,008 | ) | (70,308 | ) | ||||||
|
|
|
|
|
| |||||||
Realized Gain (Loss): |
| |||||||||||
Investments sold | 76,987,749 | 601,850 | (538,785 | ) | ||||||||
Foreign currency forward exchange contracts | — | — | — | |||||||||
Foreign currency transactions | (15,586 | ) | (263,963 | ) | (30,520 | ) | ||||||
Foreign capital gains taxes | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Net realized gain (loss) | 76,972,163 | 337,887 | (569,305 | ) | ||||||||
|
|
|
|
|
| |||||||
Change in Unrealized Appreciation (Depreciation): |
| |||||||||||
Investments | 186,614,227 | 27,864,822 | 5,620,261 | |||||||||
Foreign currency translations | — | (14,940 | ) | 1,595 | ||||||||
Deferred foreign capital gains taxes | (145,962 | ) | (1,385,595 | ) | 45,211 | |||||||
|
|
|
|
|
| |||||||
Net change in unrealized appreciation (depreciation) | 186,468,265 | 26,464,287 | 5,667,067 | |||||||||
|
|
|
|
|
| |||||||
Net gain (loss) on investments | 263,440,428 | 26,802,174 | 5,097,762 | |||||||||
|
|
|
|
|
| |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 252,614,806 | $ | 25,511,166 | $ | 5,027,454 | ||||||
|
|
|
|
|
|
1 | Net of $34, $4, $1,586, and $1 in foreign withholding taxes, respectively. |
2 | Net of $38,943, $2,329, $39,195, $850,501, $645,664, $31,792, $1,779,998 and $1,021,480 in foreign withholding taxes, respectively. |
See Notes to Financial Statements.
94
Table of Contents
FOR THE YEAR ENDED SEPTEMBER 30, 2017 | ||
| ||
|
EMERGING MARKETS SMALL CAP FUND | FRONTIER EMERGING SMALL COUNTRIES FUND | GLOBAL OPPORTUNITIES FUND | INTERNATIONAL GROWTH FUND | INTERNATIONAL OPPORTUNITIES FUND | ||||||||||||||
$ | 4,157 | 1 | $ | 141,725 | 1 | $ | 472 | $ | 9,194 | 1 | $ | — | ||||||
10,475,655 | 5,683,722 | 559,482 | 16,402,749 | 8,084,882 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
10,479,812 | 5,825,447 | 559,954 | 16,411,943 | 8,084,882 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
11,169,632 | 5,710,221 | 1,401,649 | 17,177,482 | 9,872,954 | ||||||||||||||
778,659 | 857,713 | 124,527 | 883,930 | 1,067,642 | ||||||||||||||
4,770 | 2,353 | 1,754 | 3,269 | 140,081 | ||||||||||||||
115,046 | 55,337 | 19,039 | 233,773 | 95,911 | ||||||||||||||
90,913 | 54,190 | 33,343 | 152,540 | 83,622 | ||||||||||||||
62,137 | 74,393 | 16,933 | 86,912 | 86,445 | ||||||||||||||
10,695 | 8,606 | 5,135 | 99,287 | 48,211 | ||||||||||||||
720,646 | 690,838 | 47,946 | 405,754 | 485,820 | ||||||||||||||
33,268 | 52,217 | 20,099 | 36,816 | 38,560 | ||||||||||||||
21,535 | 31,392 | 16,621 | 36,507 | 25,342 | ||||||||||||||
54,716 | 29,572 | 8,616 | 114,461 | 69,860 | ||||||||||||||
110,032 | 65,291 | 19,075 | 203,855 | 94,136 | ||||||||||||||
56,281 | 84,931 | 17,888 | 51,897 | 43,459 | ||||||||||||||
61,274 | 50,089 | 34,482 | 34,578 | 40,956 | ||||||||||||||
136,644 | 86,796 | 34,766 | 92,778 | 67,040 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
13,426,248 | 7,853,939 | 1,801,873 | 19,613,839 | 12,260,039 | ||||||||||||||
(452,003 | ) | (555,297 | ) | (33,503 | ) | (95,402 | ) | (142,523 | ) | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
12,974,245 | 7,298,642 | 1,768,370 | 19,518,437 | 12,117,516 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(2,494,433 | ) | (1,473,195 | ) | (1,208,416 | ) | (3,106,494 | ) | (4,032,634 | ) | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
73,026,817 | (3,028,046 | ) | 10,630,585 | 32,736,843 | 78,102,933 | |||||||||||||
— | 35 | — | — | — | ||||||||||||||
(342,025 | ) | (801,051 | ) | (76,203 | ) | (458,056 | ) | (762,093 | ) | |||||||||
(1,414,073 | ) | (4,286,656 | ) | (43,042 | ) | — | (798,441 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
71,270,719 | (8,115,718 | ) | 10,511,340 | 32,278,787 | 76,542,399 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(11,347,996 | ) | 142,118 | 3,143,510 | 127,075,087 | (41,579,884 | ) | ||||||||||||
(7,969 | ) | 11,574 | (5,114 | ) | 60,450 | (9,765 | ) | |||||||||||
2,003,504 | 2,633,664 | 299,943 | (225,107 | ) | 451,702 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(9,352,461 | ) | 2,787,356 | 3,438,339 | 126,910,430 | (41,137,947 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
61,918,258 | (5,328,362 | ) | 13,949,679 | 159,189,217 | 35,404,452 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 59,423,825 | $ | (6,801,557 | ) | $ | 12,741,263 | $ | 156,082,723 | $ | 31,371,818 | ||||||||
|
|
|
|
|
|
|
|
|
|
95
Table of Contents
WASATCH FUNDS | ||
| ||
|
Statements of Operations (continued)
LARGE CAP VALUE FUND | LONG/SHORT FUND | MICRO CAP FUND | ||||||||||
Investment Income: | ||||||||||||
Interest | $ | 2,858 | $ | — | $ | 3,051 | ||||||
Dividends2 | ||||||||||||
Unaffiliated issuers | 5,662,303 | 2,717,613 | 883,108 | |||||||||
Non-cash dividends | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total investment income | 5,665,161 | 2,717,613 | 886,159 | |||||||||
|
|
|
|
|
| |||||||
Expenses: | ||||||||||||
Investment advisory fees | 1,682,721 | 1,875,518 | 4,397,861 | |||||||||
Shareholder servicing fees — Investor Class | 280,393 | 217,335 | 163,545 | |||||||||
Shareholder servicing fees — Institutional Class | 1,535 | 3,996 | — | |||||||||
Fund administration fees | 31,816 | 28,972 | 47,340 | |||||||||
Fund accounting fees | 29,173 | 26,805 | 41,410 | |||||||||
Reports to shareholders — Investor Class | 41,139 | 23,934 | 24,217 | |||||||||
Reports to shareholders — Institutional Class | 10,979 | 8,950 | — | |||||||||
Custody fees | 10,021 | 13,310 | 37,564 | |||||||||
Federal and state registration fees — Investor Class | 20,974 | 27,742 | 21,045 | |||||||||
Federal and state registration fees — Institutional Class | 11,696 | 17,756 | — | |||||||||
Legal fees | 40,797 | 17,794 | 20,615 | |||||||||
Trustees’ fees | 28,601 | 31,205 | 40,934 | |||||||||
Dividends on securities sold short | — | 1,020,089 | — | |||||||||
Interest | 5,771 | 487,198 | 9,164 | |||||||||
Audit fees | 33,403 | 33,403 | 31,960 | |||||||||
Other expenses | 27,776 | 20,497 | 26,731 | |||||||||
|
|
|
|
|
| |||||||
Total expenses before reimbursement | 2,256,795 | 3,854,504 | 4,862,386 | |||||||||
Reimbursement of expenses by Advisor | (199,214 | ) | (60,547 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net Expenses | 2,057,581 | 3,793,957 | 4,862,386 | |||||||||
|
|
|
|
|
| |||||||
Net Investment Income (Loss) | 3,607,580 | (1,076,344 | ) | (3,976,227 | ) | |||||||
|
|
|
|
|
| |||||||
Realized Gain (Loss): | ||||||||||||
Investments sold | 25,169,764 | 23,313,928 | 39,189,501 | |||||||||
Affiliated issuers | — | — | — | |||||||||
Foreign currency transactions | 271 | — | (15,790 | ) | ||||||||
Options written | 99,363 | — | — | |||||||||
Short positions | — | (18,701,895 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Net realized gain | 25,269,398 | 4,612,033 | 39,173,711 | |||||||||
|
|
|
|
|
| |||||||
Change in Unrealized Appreciation (Depreciation): | ||||||||||||
Investments | (811,691 | ) | (2,651,163 | ) | 28,515,825 | |||||||
Affiliated issuers | — | — | — | |||||||||
Foreign currency translations | 775 | — | (190 | ) | ||||||||
Short positions | — | (502,851 | ) | — | ||||||||
Deferred foreign capital gains taxes | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Net change in unrealized appreciation (depreciation) | (810,916 | ) | (3,154,014 | ) | 28,515,635 | |||||||
|
|
|
|
|
| |||||||
Net gain on investments | 24,458,482 | 1,458,019 | 67,689,346 | |||||||||
|
|
|
|
|
| |||||||
Net Increase in Net Assets Resulting from Operations | $ | 28,066,062 | $ | 381,675 | $ | 63,713,119 | ||||||
|
|
|
|
|
|
2 | Net of $153,387, $31,085, $22,632, $42,311, $0, $0, $11,467 and $3,636 in foreign withholding taxes, respectively. |
See Notes to Financial Statements.
96
Table of Contents
FOR THE YEAR ENDED SEPTEMBER 30, 2017 | ||
| ||
|
MICRO CAP VALUE FUND | SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | ULTRA GROWTH FUND | ||||||||||||||
$ | 21,216 | $ | 15,941 | $ | 6,643 | $ | 6,104 | $ | 13,305 | |||||||||
1,958,490 | 6,775,148 | 4,189,916 | 1,011,227 | 230,926 | ||||||||||||||
— | — | — | 171,765 | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
1,979,706 | 6,791,089 | 4,196,559 | 1,189,096 | 244,231 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
2,999,126 | 17,365,396 | 3,335,640 | 343,567 | 1,006,432 | ||||||||||||||
217,495 | 2,220,633 | 333,402 | 83,779 | 137,077 | ||||||||||||||
— | 12,799 | 2,661 | — | — | ||||||||||||||
32,323 | 295,261 | 56,801 | 8,348 | 17,127 | ||||||||||||||
38,236 | 177,231 | 45,121 | 16,252 | 25,655 | ||||||||||||||
31,022 | 162,275 | 34,686 | 12,203 | 16,549 | ||||||||||||||
— | 63,117 | 7,089 | — | — | ||||||||||||||
40,628 | 313,526 | 21,505 | 3,589 | 10,144 | ||||||||||||||
20,889 | 56,052 | 30,208 | 19,572 | 18,618 | ||||||||||||||
— | 26,156 | 14,624 | — | — | ||||||||||||||
14,041 | 139,686 | 25,629 | 3,660 | 7,439 | ||||||||||||||
27,419 | 270,313 | 47,311 | 7,813 | 14,772 | ||||||||||||||
— | — | — | — | — | ||||||||||||||
5,943 | 83,159 | 10,901 | 1,485 | 3,522 | ||||||||||||||
58,304 | 54,354 | 34,460 | 30,903 | 34,621 | ||||||||||||||
35,828 | 96,517 | 27,526 | 6,630 | 17,272 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
3,521,254 | 21,336,475 | 4,027,564 | 537,801 | 1,309,228 | ||||||||||||||
— | (233,805 | ) | (40,673 | ) | (70,046 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
3,521,254 | 21,102,670 | 3,986,891 | 467,755 | 1,309,228 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(1,541,548 | ) | (14,311,581 | ) | 209,668 | 721,341 | (1,064,997 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
19,903,205 | 172,290,112 | 27,354,516 | 2,718,988 | 11,888,435 | ||||||||||||||
— | (24,952,162 | ) | — | — | — | |||||||||||||
(12,201 | ) | (58,798 | ) | 3,999 | 523 | 4,037 | ||||||||||||
— | — | — | — | — | ||||||||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
19,891,004 | 147,279,152 | 27,358,515 | 2,719,511 | 11,892,472 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
22,199,503 | 66,430,493 | 33,444,338 | 2,097,274 | 9,619,456 | ||||||||||||||
— | 30,950,488 | — | — | — | ||||||||||||||
93 | 6,868 | (12 | ) | 56 | (9 | ) | ||||||||||||
— | — | — | — | — | ||||||||||||||
(41,815 | ) | — | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
22,157,781 | 97,387,849 | 33,444,326 | 2,097,330 | 9,619,447 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
42,048,785 | 244,667,001 | 60,802,841 | 4,816,841 | 21,511,919 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 40,507,237 | $ | 230,355,420 | $ | 61,012,509 | $ | 5,538,182 | $ | 20,446,922 | |||||||||
|
|
|
|
|
|
|
|
|
|
97
Table of Contents
WASATCH FUNDS | FOR THE YEAR ENDED SEPTEMBER 30, 2017 | |
| ||
|
Statements of Operations (continued)
WORLD INNOVATORS FUND | INCOME FUND | U.S. TREASURY FUND | ||||||||||
Investment Income: | ||||||||||||
Interest | $ | 19,551 | $ | 2,489,228 | 1 | $ | 9,534,563 | |||||
Dividends2 | ||||||||||||
Unaffiliated issuers | 2,188,360 | 43,140 | — | |||||||||
Non-cash dividends | 130,345 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total investment income | 2,338,256 | 2,532,368 | 9,534,563 | |||||||||
|
|
|
|
|
| |||||||
Expenses: | ||||||||||||
Investment advisory fees | 2,774,058 | 539,755 | 1,727,013 | |||||||||
Shareholder servicing fees — Investor Class | 323,101 | 34,447 | 399,689 | |||||||||
Shareholder servicing fees — Institutional Class | 1,506 | — | — | |||||||||
Fund administration fees | 31,458 | 16,700 | 58,667 | |||||||||
Fund accounting fees | 44,299 | 33,136 | 35,828 | |||||||||
Reports to shareholders — Investor Class | 28,279 | 10,133 | 39,013 | |||||||||
Reports to shareholders — Institutional Class | 5,559 | — | — | |||||||||
Custody fees | 54,007 | 14,022 | 10,552 | |||||||||
Federal and state registration fees — Investor Class | 23,718 | 19,331 | 67,504 | |||||||||
Federal and state registration fees — Institutional Class | 16,587 | — | — | |||||||||
Legal fees | 13,829 | 7,276 | 25,921 | |||||||||
Trustees’ fees | 28,086 | 14,846 | 56,922 | |||||||||
Interest | 5,817 | 3,063 | 11,277 | |||||||||
Audit fees | 34,014 | 37,703 | 30,903 | |||||||||
Other expenses | 21,143 | 8,099 | 20,050 | |||||||||
|
|
|
|
|
| |||||||
Total expenses before reimbursement | 3,405,461 | 738,511 | 2,483,339 | |||||||||
Reimbursement of expenses by Advisor | (32,700 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net Expenses | 3,372,761 | 738,511 | 2,483,339 | |||||||||
|
|
|
|
|
| |||||||
Net Investment Income (Loss) | (1,034,505 | ) | 1,793,857 | 7,051,224 | ||||||||
|
|
|
|
|
| |||||||
Realized Gain (Loss): | ||||||||||||
Investments sold | 21,262,458 | (98,032 | ) | (15,383,863 | ) | |||||||
Foreign currency forward exchange contracts | 624,745 | — | — | |||||||||
Foreign currency transactions | (68,106 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net realized gain (loss) | 21,819,097 | (98,032 | ) | (15,383,863 | ) | |||||||
|
|
|
|
|
| |||||||
Change in Unrealized Appreciation (Depreciation): | ||||||||||||
Investments | 15,295,625 | (999,732 | ) | (39,287,510 | ) | |||||||
Foreign currency forward exchange contracts | 113,367 | — | — | |||||||||
Foreign currency translations | 6,132 | — | — | |||||||||
|
|
|
|
|
| |||||||
Net change in unrealized appreciation (depreciation) | 15,415,124 | (999,732 | ) | (39,287,510 | ) | |||||||
|
|
|
|
|
| |||||||
Net gain (loss) on investments | 37,234,221 | (1,097,764 | ) | (54,671,373 | ) | |||||||
|
|
|
|
|
| |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 36,199,716 | $ | 696,093 | $ | (47,620,149 | ) | |||||
|
|
|
|
|
|
1 | Net of $457 in foreign withholding taxes. |
2 | Net of $148,488, $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 | |||||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 2016 | Year Ended September 30, 2017 | Year Ended September 30, 20161 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (10,825,622 | ) | $ | (7,219,134 | ) | $ | (1,291,008 | ) | $ | (780,023 | ) | ||||
Net realized gain (loss) on investments, foreign | 76,972,163 | 6,560,806 | 337,887 | 75,863 | ||||||||||||
Change in unrealized appreciation (depreciation) on | 186,468,265 | 127,845,697 | 26,464,287 | 9,007,373 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 252,614,806 | 127,187,369 | 25,511,166 | 8,303,213 | ||||||||||||
Dividends paid from: | ||||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gains | (1,693,023 | ) | (119,772,338 | ) | (681,183 | ) | (958,580 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
(1,693,023 | ) | (119,772,338 | ) | (681,183 | ) | (958,580 | ) | |||||||||
Institutional Class | ||||||||||||||||
Net investment income | (131,773 | ) | — | — | — | |||||||||||
Net realized gains | (427,998 | ) | (18,740,216 | ) | (138,465 | ) | — | |||||||||
|
|
|
|
|
|
|
| |||||||||
(559,771 | ) | (18,740,216 | ) | (138,465 | ) | — | ||||||||||
Capital share transactions: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 158,213,538 | 235,595,333 | 173,266,065 | 29,211,166 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 1,656,949 | 117,452,918 | 675,573 | 881,647 | ||||||||||||
Shares redeemed | (224,407,684 | ) | (270,607,879 | ) | (58,350,522 | ) | (27,875,778 | ) | ||||||||
Redemption fees | 18,973 | 57,589 | 197,218 | 16,274 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | (64,518,224 | ) | 82,497,961 | 115,788,334 | 2,233,309 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 136,598,360 | 102,256,296 | 21,762,904 | 8,344,245 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 533,314 | 17,489,140 | 63,166 | — | ||||||||||||
Shares redeemed | (62,595,979 | ) | (22,196,227 | ) | (12,400,532 | ) | — | |||||||||
Redemption fees | 7,603 | 9,043 | 11,033 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 74,543,298 | 97,558,252 | 9,436,571 | 8,344,245 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 260,387,086 | 168,731,028 | 149,916,423 | 17,922,187 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 1,333,860,505 | 1,165,129,477 | 81,772,076 | 63,849,889 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 1,594,247,591 | $ | 1,333,860,505 | $ | 231,688,499 | $ | 81,772,076 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment loss included | $ | (8,181,295 | ) | $ | (5,575,059 | ) | $ | (2,249,623 | ) | $ | (1,649,540 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 2,604,740 | 4,389,841 | 45,211,975 | 9,619,706 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 28,319 | 2,179,898 | 229,008 | 291,936 | ||||||||||||
Shares redeemed | (3,700,842 | ) | (5,086,949 | ) | (15,673,561 | ) | (9,479,876 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | (1,067,783 | ) | 1,482,790 | 29,767,422 | 431,766 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 2,250,747 | 1,883,923 | 5,981,814 | 2,879,575 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 9,075 | 323,513 | 21,340 | — | ||||||||||||
Shares redeemed | (1,003,821 | ) | (410,462 | ) | (3,087,664 | ) | — | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 1,256,001 | 1,796,974 | 2,915,490 | 2,879,575 | ||||||||||||
|
|
|
|
|
|
|
|
1 | Institutional class inception date was February 1, 2016. |
See Notes to Financial Statements.
100
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
EMERGING MARKETS SELECT FUND | EMERGING MARKETS SMALL CAP FUND | FRONTIER EMERGING SMALL COUNTRIES FUND | ||||||||||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 2016 | Year Ended September 30, 2017 | Year Ended September 30, 20161 | Year Ended September 30, 2017 | Year Ended September 30, 20161 | |||||||||||||||||
$ | (70,308 | ) | $ | 39,611 | $ | (2,494,433 | ) | $ | (5,703,812 | ) | $ | (1,473,195 | ) | $ | 3,750,574 | |||||||
| (569,305 | ) | (1,295,442 | ) | 71,270,719 | (57,152,827 | ) | (8,115,718 | ) | (122,596,395 | ) | |||||||||||
| 5,667,067 |
| 5,180,985 | (9,352,461 | ) | 150,259,510 | 2,787,356 | 71,170,573 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| 5,027,454 |
| 3,925,154 | 59,423,825 | 87,402,871 | (6,801,557 | ) | (47,675,248 | ) | |||||||||||||
— | — | — | (132,483 | ) | — | (1,618,755 | ) | |||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
— | — | — | (132,483 | ) | — | (1,618,755 | ) | |||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
— | — | — | — | — | — | |||||||||||||||||
5,170,460 | 5,021,512 | 71,727,934 | 135,426,837 | 50,572,101 | 256,042,228 | |||||||||||||||||
— | — | — | 117,400 | — | 1,545,813 | |||||||||||||||||
(3,358,306 | ) | (13,057,233 | ) | (390,658,618 | ) | (508,099,796 | ) | (329,333,843 | ) | (796,859,735 | ) | |||||||||||
4,694 | 1,244 | 14,789 | 6,249 | 8,464 | 47,252 | |||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
| |||||||||||
1,816,848 | (8,034,477 | ) | (318,915,895 | ) | (372,549,310 | ) | (278,753,278 | ) | (539,224,442 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
4,104,118 | 6,298,780 | 148,425,692 | 163,579,317 | 17,267,589 | 156,914,661 | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
(5,462,642 | ) | (1,330,793 | ) | (80,570,428 | ) | (24,306,522 | ) | (111,498,183 | ) | (18,521,165 | ) | |||||||||||
1,073 | — | 1,856 | 242 | 712 | 839 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(1,357,451 | ) | 4,967,987 | 67,857,120 | �� | 139,273,037 | (94,229,882 | ) | 138,394,335 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
5,486,851 | 858,664 | (191,634,950 | ) | (146,005,885 | ) | (379,784,717 | ) | (450,124,110 | ) | |||||||||||||
38,654,784 | 37,796,120 | 835,360,842 | 981,366,727 | 577,548,950 | 1,027,673,060 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 44,141,635 | $ | 38,654,784 | $ | 643,725,892 | $ | 835,360,842 | $ | 197,764,233 | $ | 577,548,950 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | (169,551 | ) | $ | (157,877 | ) | $ | (5,165,459 | ) | $ | (7,177,380 | ) | $ | (3,973,043 | ) | $ | (5,926,809 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
533,891 | 607,896 | 27,967,821 | 55,771,862 | 20,091,652 | 96,401,830 | |||||||||||||||||
— | — | — | 48,512 | — | 574,652 | |||||||||||||||||
(363,175 | ) | (1,537,017 | ) | (150,247,286 | ) | (213,187,447 | ) | (130,050,975 | ) | (300,906,259 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
170,716 | (929,121 | ) | (122,279,465 | ) | (157,367,073 | ) | (109,959,323 | ) | (203,929,777 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
414,375 | 735,711 | 53,895,941 | 69,868,540 | 6,898,616 | 60,003,922 | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
(561,923 | ) | (154,025 | ) | (29,814,247 | ) | (9,644,798 | ) | (44,682,757 | ) | (7,015,724 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(147,548 | ) | 581,686 | 24,081,694 | 60,223,742 | (37,784,141 | ) | 52,988,198 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
101
Table of Contents
WASATCH FUNDS | ||
| ||
|
Statements of Changes in Net Assets (continued)
GLOBAL OPPORTUNITIES FUND | INTERNATIONAL GROWTH FUND | |||||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 20161 | Year Ended September 30, 2017 | Year Ended September 30, 20161 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (1,208,416 | ) | $ | (1,517,910 | ) | $ | (3,106,494 | ) | $ | (4,748,463 | ) | ||||
Net realized gain (loss) on investments, foreign currency translations and foreign capital gains taxes | 10,511,340 | 8,430,816 | 32,278,787 | 55,136,808 | ||||||||||||
Net realized gain on options written | — | — | — | — | ||||||||||||
Net realized loss on short positions | — | — | — | — | ||||||||||||
Change in unrealized appreciation (depreciation) on | 3,438,339 | 14,070,421 | 126,910,430 | 116,091,330 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase in net assets resulting from operations | 12,741,263 | 20,983,327 | 156,082,723 | 166,479,675 | ||||||||||||
Dividends paid from: | ||||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | (141,725 | ) | (427,375 | ) | — | — | ||||||||||
Net realized gains | (7,610,212 | ) | (19,259,921 | ) | (29,626,224 | ) | — | |||||||||
|
|
|
|
|
|
|
| |||||||||
(7,751,937 | ) | (19,687,296 | ) | (29,626,224 | ) | — | ||||||||||
Institutional Class | ||||||||||||||||
Net investment income | (20,477 | ) | — | (393,058 | ) | — | ||||||||||
Net realized gains | (396,985 | ) | — | (17,283,293 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
(417,462 | ) | — | (17,676,351 | ) | — | |||||||||||
Capital share transactions: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 9,564,866 | 21,166,046 | 106,544,800 | 222,578,093 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 7,688,280 | 19,452,688 | 28,617,516 | — | ||||||||||||
Shares redeemed | (76,357,387 | ) | (46,667,870 | ) | (330,404,896 | ) | (726,095,437 | ) | ||||||||
Redemption fees | 3,721 | 12,452 | 16,380 | 11,556 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (59,100,520 | ) | (6,036,684 | ) | (195,226,200 | ) | (503,505,788 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 1,731,118 | 5,065,715 | 219,622,439 | 483,795,090 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 338,803 | — | 16,749,716 | — | ||||||||||||
Shares redeemed | (837,522 | ) | — | (142,642,997 | ) | (8,682,445 | ) | |||||||||
Redemption fees | — | — | 5,704 | 2,492 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | 1,232,399 | 5,065,715 | 93,734,862 | 475,115,137 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | (53,296,257 | ) | 325,062 | 7,288,810 | 138,089,024 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 156,292,954 | 155,967,892 | 1,454,184,112 | 1,316,095,088 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 102,996,697 | $ | 156,292,954 | $ | 1,461,472,922 | $ | 1,454,184,112 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment loss included | $ | (963,398 | ) | $ | (1,429,652 | ) | $ | (857,139 | ) | $ | (1,771,842 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 2,822,944 | 6,694,423 | 3,614,830 | 7,681,730 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 2,606,197 | 5,704,601 | 1,081,948 | — | ||||||||||||
Shares redeemed | (22,787,072 | ) | (13,949,592 | ) | (10,993,871 | ) | (24,818,248 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease in shares outstanding | (17,357,931 | ) | (1,550,568 | ) | (6,297,093 | ) | (17,136,518 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | 515,951 | 1,518,647 | 7,190,613 | 16,466,250 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 114,848 | — | 633,020 | — | ||||||||||||
Shares redeemed | (246,570 | ) | — | (4,615,613 | ) | (285,393 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 384,229 | 1,518,647 | 3,208,020 | 16,180,857 | ||||||||||||
|
|
|
|
|
|
|
|
1 | Institutional class inception date was February 1, 2016. |
See Notes to Financial Statements.
102
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
INTERNATIONAL OPPORTUNITIES FUND | LARGE CAP VALUE FUND | LONG/SHORT FUND | ||||||||||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 20161 | Year Ended September 30, 2017 | Year Ended September 30, 2016 | Year Ended September 30, 2017 | Year Ended September 30, 2016 | |||||||||||||||||
$ | (4,032,634 | ) | $ | (1,149,686 | ) | $ | 3,607,580 | $ | 3,669,068 | $ | (1,076,344 | ) | $ | 45,073 | ||||||||
| 76,542,399 | (6,218,080 | ) | 25,170,035 | 5,613,690 | 23,313,928 | (125,012,468 | ) | ||||||||||||||
— | — | 99,363 | 132,873 | — | — | |||||||||||||||||
— | — | — | — | (18,701,895 | ) | (24,738,165 | ) | |||||||||||||||
(41,137,947 | ) | | 123,227,456 | (810,916 | ) | 19,112,212 | (3,154,014 | ) | 196,133,025 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
31,371,818 | 115,859,690 | 28,066,062 | 28,527,843 | 381,675 | 46,427,465 | |||||||||||||||||
— | — | (3,557,468 | ) | (3,733,214 | ) | — | (364,125 | ) | ||||||||||||||
— | (22,512,072 | ) | (6,413,391 | ) | (20,730,247 | ) | (42,943 | ) | (49,332,592 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
— | (22,512,072 | ) | (9,970,859 | ) | (24,463,461 | ) | (42,943 | ) | (49,696,717 | ) | ||||||||||||
— | — | (75,697 | ) | (60,085 | ) | — | (479,596 | ) | ||||||||||||||
— | — | (63,659 | ) | (252,053 | ) | (18,132 | ) | (22,243,655 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
— | — | (139,356 | ) | (312,138 | ) | (18,132 | ) | (22,723,251 | ) | |||||||||||||
244,935,438 | 151,939,973 | 7,997,702 | 9,656,161 | 14,964,816 | 64,920,986 | |||||||||||||||||
— | 22,015,075 | 9,870,606 | 24,129,587 | 42,349 | 49,262,675 | |||||||||||||||||
(503,406,532 | ) | (184,742,350 | ) | (49,536,033 | ) | (91,876,593 | ) | (119,778,795 | ) | (527,803,631 | ) | |||||||||||
13,213 | 18,842 | 1,840 | 1,216 | 4,131 | 15,132 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(258,457,881 | ) | (10,768,460 | ) | (31,665,885 | ) | (58,089,629 | ) | (104,767,499 | ) | (413,604,838 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
81,335,149 | 153,515,811 | 4,408,174 | 3,327,996 | 31,752,233 | 41,876,317 | |||||||||||||||||
— | — | 137,747 | 309,072 | 18,116 | 22,325,848 | |||||||||||||||||
(33,966,318 | ) | (9,205,095 | ) | (3,793,616 | ) | (1,601,692 | ) | (69,587,600 | ) | (401,523,032 | ) | |||||||||||
3,525 | 2,811 | 1,100 | 1,120 | 15,367 | 101,712 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
47,372,356 | 144,313,527 | 753,405 | 2,036,496 | (37,801,884 | ) | (337,219,155 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(179,713,707 | ) | 226,892,685 | (12,956,633 | ) | (52,300,889 | ) | (142,248,783 | ) | (776,816,496 | ) | ||||||||||||
680,387,811 | 453,495,126 | 193,280,094 | 245,580,983 | 248,167,392 | 1,024,983,888 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 500,674,104 | $ | 680,387,811 | $ | 180,323,461 | $ | 193,280,094 | $ | 105,918,609 | $ | 248,167,392 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | (3,176,874 | ) | $ | (237,268 | ) | $ | (7,742 | ) | $ | (3,731 | ) | $ | (455,640 | ) | $ | (145,368 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
78,958,491 | 52,855,854 | 843,060 | 1,120,728 | 1,146,753 | 5,339,083 | |||||||||||||||||
— | 7,862,527 | 1,045,628 | 2,807,480 | 3,177 | 4,332,689 | |||||||||||||||||
(161,991,381 | ) | (66,779,782 | ) | (5,213,402 | ) | (10,503,774 | ) | (9,381,896 | ) | (44,954,538 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(83,032,890 | ) | (6,061,401 | ) | (3,324,714 | ) | (6,575,566 | ) | (8,231,966 | ) | (35,282,766 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
25,860,622 | 55,197,121 | 460,307 | 365,881 | 2,406,680 | 3,395,227 | |||||||||||||||||
— | — | 14,478 | 35,987 | 1,353 | 1,961,850 | |||||||||||||||||
(10,875,848 | ) | (3,093,786 | ) | (409,841 | ) | (176,253 | ) | (5,398,348 | ) | (33,338,059 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
14,984,774 | 52,103,335 | 64,944 | 225,615 | (2,990,315 | ) | (27,980,982 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
103
Table of Contents
WASATCH FUNDS | ||
| ||
|
Statements of Changes in Net Assets (continued)
MICRO CAP FUND | MICRO CAP VALUE FUND | |||||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 2016 | Year Ended September 30, 2017 | Year Ended September 30, 2016 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (3,976,227 | ) | $ | (3,020,820 | ) | $ | (1,541,548 | ) | $ | (987,743 | ) | ||||
Net realized gain (loss) on investments, foreign | 39,173,711 | 17,504,026 | 19,891,004 | 2,306,799 | ||||||||||||
Change in unrealized appreciation on | 28,515,635 | 25,086,105 | 22,157,781 | 18,406,751 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase in net assets resulting from operations | 63,713,119 | 39,569,311 | 40,507,237 | 19,725,807 | ||||||||||||
Dividends paid from: | ||||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | (194,392 | ) | — | (119,575 | ) | — | ||||||||||
Net realized gains | (22,635,465 | ) | (40,544,074 | ) | (2,945,428 | ) | (17,904,955 | ) | ||||||||
Return of capital | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
(22,829,857 | ) | (40,544,074 | ) | (3,065,003 | ) | (17,904,955 | ) | |||||||||
Institutional Class | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gains | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | |||||||||||||
Capital share transactions: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 8,493,440 | 6,546,097 | 29,303,153 | 36,255,073 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 21,444,591 | 38,421,674 | 3,005,231 | 17,528,757 | ||||||||||||
Shares redeemed | (36,929,156 | ) | (39,615,512 | ) | (32,783,681 | ) | (30,678,179 | ) | ||||||||
Redemption fees | 190 | 2,584 | 3,915 | 21,005 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | (6,990,935 | ) | 5,354,843 | (471,382 | ) | 23,126,656 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | — | — | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | — | — | ||||||||||||
Shares redeemed | — | — | — | — | ||||||||||||
Redemption fees | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 33,892,327 | 4,380,080 | 36,970,852 | 24,947,508 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 277,690,923 | 273,310,843 | 179,116,372 | 154,168,864 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 311,583,250 | $ | 277,690,923 | $ | 216,087,224 | $ | 179,116,372 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment income (loss) included | $ | (2,607,368 | ) | $ | (1,971,779 | ) | $ | (1,095,632 | ) | $ | (689,111 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 1,187,956 | 973,225 | 9,461,106 | 13,603,287 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 3,309,350 | 5,777,695 | 1,029,189 | 6,565,078 | ||||||||||||
Shares redeemed | (5,256,054 | ) | (6,040,054 | ) | (10,751,970 | ) | (11,446,018 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | (758,748 | ) | 710,866 | (261,675 | ) | 8,722,347 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | — | — | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | — | — | ||||||||||||
Shares redeemed | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase in shares outstanding | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
1 | Institutional class inception date was February 1, 2016. |
See Notes to Financial Statements.
104
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | ||||||||||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 20161 | Year Ended September 30, 2017 | Year Ended September 30, 2016 | Year Ended September 30, 2017 | Year Ended September 30, 2016 | |||||||||||||||||
$ | (14,311,581 | ) | $ | (14,924,154 | ) | $ | 209,668 | $ | 682,252 | $ | 721,341 | $ | 1,690,915 | |||||||||
| 147,279,152 | 162,637,861 | 27,358,515 | 16,775,143 | 2,719,511 | (7,539,689 | ) | |||||||||||||||
| 97,387,849 |
| 67,189,440 | 33,444,326 | 18,262,012 | 2,097,330 | 9,420,214 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
230,355,420 | 214,903,147 | 61,012,509 | 35,719,407 | 5,538,182 | 3,571,440 | |||||||||||||||||
— | — | (204,563 | ) | (1,366,134 | ) | (516,716 | ) | (1,501,048 | ) | |||||||||||||
(114,348,061 | ) | (322,361,340 | ) | — | — | — | (2,658,712 | ) | ||||||||||||||
— | — | — | — | — | (287,336 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(114,348,061 | ) | (322,361,340 | ) | (204,563 | ) | (1,366,134 | ) | (516,716 | ) | (4,447,096 | ) | |||||||||||
— | — | (86,356 | ) | (98,715 | ) | — | — | |||||||||||||||
(29,795,156 | ) | — | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(29,795,156 | ) | — | (86,356 | ) | (98,715 | ) | — | — | ||||||||||||||
101,783,116 | 209,117,699 | 58,194,449 | 35,656,524 | 3,250,647 | 5,689,341 | |||||||||||||||||
111,807,878 | 309,835,993 | 197,942 | 1,301,422 | 509,614 | 4,380,286 | |||||||||||||||||
(631,140,322 | ) | (844,914,263 | ) | (61,034,771 | ) | (56,085,285 | ) | (18,849,418 | ) | (42,746,118 | ) | |||||||||||
21,451 | 67,941 | 8,744 | 1,743 | 561 | 3,056 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(417,527,877 | ) | (325,892,630 | ) | (2,633,636 | ) | (19,125,596 | ) | (15,088,596 | ) | (32,673,435 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
231,976,705 | 334,206,662 | 25,348,797 | 5,124,166 | — | — | |||||||||||||||||
27,104,939 | — | 85,869 | 98,258 | — | — | |||||||||||||||||
(119,228,883 | ) | (19,042,923 | ) | (6,422,594 | ) | (3,397,604 | ) | — | — | |||||||||||||
7,043 | 369 | 299 | 79 | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
139,859,804 | 315,164,108 | 19,012,371 | 1,824,899 | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(191,455,870 | ) | (118,186,715 | ) | 77,100,325 | 16,953,861 | (10,067,130 | ) | (33,549,091 | ) | |||||||||||||
1,882,400,918 | 2,000,587,633 | 293,549,123 | 276,595,262 | 55,111,832 | 88,660,923 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 1,690,945,048 | $ | 1,882,400,918 | $ | 370,649,448 | $ | 293,549,123 | $ | 45,044,702 | $ | 55,111,832 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | (9,822,810 | ) | $ | (10,697,296 | ) | $ | (127,730 | ) | $ | 223,317 | $ | (69,552 | ) | $ | (159,843 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
2,390,725 | 5,131,888 | 8,126,959 | 6,099,737 | 289,909 | 548,323 | |||||||||||||||||
2,797,995 | 7,380,562 | 27,919 | 216,904 | 46,032 | 425,080 | |||||||||||||||||
(14,822,528 | ) | (20,536,916 | ) | (8,511,232 | ) | (9,526,792 | ) | (1,699,886 | ) | (4,239,042 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(9,633,808 | ) | (8,024,466 | ) | (356,354 | ) | (3,210,151 | ) | (1,363,945 | ) | (3,265,639 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
5,418,588 | 8,204,969 | 3,512,510 | 902,562 | — | — | |||||||||||||||||
676,777 | — | 12,060 | 16,322 | — | — | |||||||||||||||||
(2,764,509 | ) | (457,924 | ) | (886,905 | ) | (553,403 | ) | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
3,330,856 | 7,747,045 | 2,637,665 | 365,481 | — | — | |||||||||||||||||
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|
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|
105
Table of Contents
WASATCH FUNDS | ||
| ||
|
Statements of Changes in Net Assets (continued)
ULTRA GROWTH FUND | WORLD INNOVATORS FUND | |||||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 2016 | Year Ended September 30, 2017 | Year Ended September 30, 20161 | |||||||||||||
Operations: |
| |||||||||||||||
Net investment income (loss) | $ | (1,064,997 | ) | $ | (982,316 | ) | $ | (1,034,505 | ) | $ | (1,240,640 | ) | ||||
Net realized gain (loss) on investments, foreign currency translations and foreign capital gains taxes | 11,892,472 | 7,330,801 | 21,819,097 | 11,692,010 | ||||||||||||
Change in unrealized appreciation (depreciation) on investments, foreign currency translations and deferred capital gains taxes | 9,619,447 | 11,054,954 | 15,415,124 | 6,110,487 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 20,446,922 | 17,403,439 | 36,199,716 | 16,561,857 | ||||||||||||
Dividends paid from: |
| |||||||||||||||
Investor Class | ||||||||||||||||
Net investment income | (520,867 | ) | — | — | — | |||||||||||
Net realized gains | (9,189,783 | ) | (8,679,065 | ) | (6,256,560 | ) | (24,130,023 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
(9,710,650 | ) | (8,679,065 | ) | (6,256,560 | ) | (24,130,023 | ) | |||||||||
Institutional Class | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gains | — | — | (128,118 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | — | (128,118 | ) | — | ||||||||||||
Capital share transactions: |
| |||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 4,951,716 | 4,877,275 | 18,432,994 | 59,829,188 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 9,435,416 | 8,403,349 | 6,041,921 | 22,861,112 | ||||||||||||
Shares redeemed | (15,159,900 | ) | (16,619,659 | ) | (56,466,951 | ) | (67,566,485 | ) | ||||||||
Redemption fees | 215 | 1,273 | 2,501 | 1,953 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | (772,553 | ) | (3,337,762 | ) | (31,989,535 | ) | 15,125,768 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | 5,854,133 | 5,998,939 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | 128,118 | — | ||||||||||||
Shares redeemed | — | — | (8,754,213 | ) | (25,551 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) | — | — | (2,771,962 | ) | 5,973,388 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) in net assets | 9,963,719 | 5,386,612 | (4,946,459 | ) | 13,530,990 | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of period | 101,401,904 | 96,015,292 | 199,803,013 | 186,272,023 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 111,365,623 | $ | 101,401,904 | $ | 194,856,554 | $ | 199,803,013 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Undistributed net investment income (loss) included in net assets at end of period | $ | (903,987 | ) | $ | (1,199,720 | ) | $ | (41,744 | ) | $ | (456,077 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions — shares: | ||||||||||||||||
Investor Class | ||||||||||||||||
Shares sold | 254,111 | 273,554 | 909,168 | 3,189,238 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 538,244 | 459,702 | 326,414 | 1,198,171 | ||||||||||||
Shares redeemed | (784,313 | ) | (952,369 | ) | (2,869,552 | ) | (3,591,062 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | 8,042 | (219,113 | ) | (1,633,970 | ) | 796,347 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Shares sold | — | — | 299,276 | 309,990 | ||||||||||||
Shares issued to holders in reinvestment of dividends | — | — | 6,903 | — | ||||||||||||
Shares redeemed | — | — | (447,088 | ) | (1,313 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in shares outstanding | — | — | (140,909 | ) | 308,677 | |||||||||||
|
|
|
|
|
|
|
|
1 | Institutional class inception date was February 1, 2016. |
See Notes to Financial Statements.
106
Table of Contents
SEPTEMBER 30, 2017 | ||
| ||
|
INCOME FUND | U.S. TREASURY FUND | |||||||||||||
Year Ended September 30, 2017 | Year Ended September 30, 2016 | Year Ended September 30, 2017 | Year Ended September 30, 2016 | |||||||||||
$ | 1,793,857 | $ | 1,951,379 | $ | 7,051,224 | $ | 7,963,623 | |||||||
| (98,032 | ) | 125,294 | (15,383,863 | ) | 23,928,544 | ||||||||
| (999,732 | ) | 544,033 | (39,287,510 | ) | 24,193,265 | ||||||||
|
|
|
|
|
|
|
| |||||||
| 696,093 |
| 2,620,706 | (47,620,149 | ) | 56,085,432 | ||||||||
(1,793,675 | ) | (1,963,364 | ) | (7,013,012 | ) | (7,944,602 | ) | |||||||
(124,947 | ) | — | (23,928,558 | ) | (15,905,989 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||
(1,918,622 | ) | (1,963,364 | ) | (30,941,570 | ) | (23,850,591 | ) | |||||||
— | — | — | — | |||||||||||
— | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
— | — | — | — | |||||||||||
19,939,924 | 27,381,821 | 172,273,407 | 288,787,957 | |||||||||||
1,297,779 | 1,491,903 | 29,434,378 | 22,804,737 | |||||||||||
(22,860,288 | ) | (38,794,414 | ) | (251,422,062 | ) | (182,878,814 | ) | |||||||
5,601 | 10,533 | 130,945 | 201,177 | |||||||||||
|
|
|
|
|
|
|
| |||||||
(1,616,984 | ) | (9,910,157 | ) | (49,583,332 | ) | 128,915,057 | ||||||||
|
|
|
|
|
|
|
| |||||||
— | — | — | — | |||||||||||
— | — | — | — | |||||||||||
— | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
— | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
(2,839,513 | ) | (9,252,815 | ) | (128,145,051 | ) | 161,149,898 | ||||||||
99,706,071 | 108,958,886 | 489,010,815 | 327,860,917 | |||||||||||
|
|
|
|
|
|
|
| |||||||
$ | 96,866,558 | $ | 99,706,071 | $ | 360,865,764 | $ | 489,010,815 | |||||||
|
|
|
|
|
|
|
| |||||||
$ | 4,835 |
| $ | 10,454 | $ | 36,338 | $ | (1,860 | ) | |||||
|
|
|
|
|
|
|
| |||||||
1,972,799 | 2,685,166 | 10,519,433 | 15,149,367 | |||||||||||
128,472 | 146,414 | 1,897,444 | 1,296,239 | |||||||||||
(2,260,040 | ) | (3,804,979 | ) | (14,924,367 | ) | (9,625,892 | ) | |||||||
|
|
|
|
|
|
|
| |||||||
(158,769 | ) | (973,399 | ) | (2,507,490 | ) | 6,819,714 | ||||||||
|
|
|
|
|
|
|
| |||||||
— | — | — | — | |||||||||||
— | — | — | — | |||||||||||
— | — | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||
— | — | — | — | |||||||||||
|
|
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|
|
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|
107
Table of Contents
WASATCH FUNDS | ||
| ||
|
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 | ) | |||||||||||||||||||
Year ended 9/30/1310 | $ | 10.00 | — | 4 | (0.44 | ) | (0.44 | ) | — | 4 | — | — | — | |||||||||||||||||||
Emerging Markets Select Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
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 | ) | |||||||||||||||||||
Year ended 9/30/1311 | $ | 10.00 | (— | )4 | (0.39 | ) | (0.39 | ) | — | 4 | — | — | — | |||||||||||||||||||
Emerging Markets Small Cap Fund — Investor Class |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 | — | — | — | ||||||||||||||||||||||
Global Opportunities Fund — Investor Class |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 | — | — | — | — |
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 Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |||||||||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 4.08 | 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% | ||||||||||||||||
$ | 4.10 | 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% | |||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 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% | ||||||||||||||||
$ | 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% | |||||||||||||||||||
$ | 3.00 | 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% | |||||||||||||||||
$ | 2.75 | 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% | |||||||||||||||||||
$ | 2.76 | 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% | |||||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 3.76 | 16.92 | 1.36 | 6 | 1.93 | 6 | (0.85 | ) | (1.41 | ) | $ | 7,149 | 27% | |||||||||||||||||
$ | 3.52 | 13.92 | 1.35 | 5 | 2.32 | 5 | (0.57 | ) | (1.54 | ) | $ | 5,348 | 44% |
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 | |||||||||||||||||||||||||
International Growth Fund — Investor Class |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 | — | — | — | ||||||||||||||||||||||
Large Cap Value Fund — Investor Class |
| |||||||||||||||||||||||||||||||
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 | ) | |||||||||||||||||||
Large Cap Value Fund — Institutional Class |
| |||||||||||||||||||||||||||||||
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 | ) | |||||||||||||||||||
Long/Short Fund — Investor Class |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 | ) | |||||||||||||||||||
Micro Cap Fund |
| |||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||
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 | ) |
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 Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |||||||||||||||||||||||
$ | 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% | |||||||||||||||||||
$ | 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% | |||||||||||||||||||
$ | 3.47 | 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% | |||||||||||||||||
$ | 3.50 | 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% | |||||||||||||||||||
$ | 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% | |||||||||||||||||||
$ | 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% | |||||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 12.66 | (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% | |||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 3.48 | 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% |
111
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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 | ||||||||||||||||||||||||||||
Small Cap Growth Fund — Investor Class |
| |||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||
Year ended 9/30/17 | $ | 43.58 | (0.17 | ) | 5.99 | 5.82 | — | 4 | — | (3.51 | ) | — | (3.51 | ) | ||||||||||||||||||||||
Year ended 9/30/1617 19 | $ | 37.58 | (0.07 | ) | 6.07 | 6.00 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Small Cap Value Fund — Investor Class |
| |||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||
World Innovators Fund — Investor Class |
| |||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||
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 |
| |||||||||||||||||||||||||||||||||||
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.
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(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 Reimbursements (%)2 | Expenses Before Waivers and Reimbursements (%)2 | Net Investment Income Net of Waivers and Reimbursements (%)2 | Net Investment Income Before Waivers and Reimbursements (%)2 | Net Assets End of Period (000s) | Portfolio Turnover Rate1 3 | |||||||||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 7.94 | 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% | |||||||||||||||||
$ | 7.98 | 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% | |||||||||||||||||
$ | 11.78 | 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% | |||||||||||||||||||
$ | 21.81 | 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% | |||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 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% | |||||||||||||||||
$ | 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% | ||||||||||||||||||||
$ | 16.32 | (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% |
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WASATCH FUNDS | ||
| ||
|
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 Reimbursements2 | Expenses Before Waivers and Reimbursements2 | |||||||||||
Long/Short Fund — Investor Class | ||||||||||||
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 | ||||||||||||
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).
9Includes extraordinary expenses of less than 0.01% (see Note 7).
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, income (loss) to average net assets would have been as follows:
| ||||||||||||
Net Investment Income (Loss) Net of Waivers and Reimbursements | Net Investment Income (Loss) Before Waivers and Reimbursements | |||||||||||
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 | Net Investment Income (Loss) Before Waivers and Reimbursements | |||||||||||
Small Cap Value Fund — Investor Class | (0.00 | )%16 | (0.00 | )%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. |
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SEPTEMBER 30, 2017 | ||
| ||
|
19Includes a non-recurring offer to reimburse prior period custody and fund accounting out-of-pocket expenses (see Note 7 “Custodian Out-of-Pocket Expense Reimbursement”). 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 | ||||||||||
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 | ||||||||||
Large Cap Value Fund — Investor Class | 1.10 | 1.17 | ||||||||||
Large Cap Value Fund — Institutional Class | 0.96 | 1.72 | ||||||||||
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 |
20 | Per share amounts do not correlate to amounts reported in the statement of operations due to timing of share activity. |
See Notes to Financial Statements.
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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, International Growth Fund, International Opportunities Fund, Large Cap Value 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, Large Cap 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, International Growth, International Opportunities, Large Cap Value, 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 September 30, 2017. 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.
New Accounting Pronouncements — In October 2016, the Securities and Exchange Commission (“SEC”) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements filed with the SEC on or after August 1, 2017. The adoption had no effect on the Funds’ net assets or results of operations but additional disclosures were required.
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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.
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 (e.g., Saudi Arabia). 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
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Notes to Financial Statements (continued)
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.
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 year ended September 30, 2017 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 | $ | 425,970,892 | $ | 148,995,622 | $ | 22,708,188 | $ | 392,297,126 | $ | 184,516,757 | $ | 30,382,593 | ||||||||||||
Sales | 355,502,608 | 24,170,331 | 21,380,037 | 654,564,667 | 527,683,286 | 94,034,620 | ||||||||||||||||||
International Growth Fund | International Opportunities Fund | Large Cap Value Fund | Long/Short Fund | Micro Cap Fund | Micro Cap Value Fund | |||||||||||||||||||
Purchases | $ | 422,608,328 | $ | 330,112,306 | $ | 80,424,246 | $ | 59,365,577 | $ | 84,319,890 | $ | 102,994,323 | ||||||||||||
Sales | 585,624,794 | 538,260,811 | 115,140,965 | 192,856,970 | 112,595,280 | 106,891,388 | ||||||||||||||||||
Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | Ultra Growth Fund | World Innovators Fund | Income Fund | |||||||||||||||||||
Purchases | $ | 323,840,058 | $ | 156,361,320 | $ | 13,807,923 | $ | 34,264,977 | $ | 145,003,475 | $ | 54,968,232 | ||||||||||||
Sales | 748,947,573 | 120,232,192 | 24,625,064 | 44,069,203 | 175,211,034 | 57,280,148 |
Purchases and sales of U.S. government securities in the Income Fund were $16,827,236 and $15,650,916, respectively. Purchases and sales of U.S. government securities in the U.S. Treasury Fund were $68,678,611 and $145,019,366, 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 September 30, 2017, 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 | International Growth Fund | ||||||||||||||||||||||
Cost | $ | 1,001,872,245 | $ | 183,366,115 | $ | 34,110,114 | $ | 446,534,266 | $ | 142,534,926 | $ | 65,829,298 | $ | 933,639,077 | ||||||||||||||
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Gross appreciation | $ | 606,999,092 | $ | 52,368,691 | $ | 10,937,667 | $ | 215,033,819 | $ | 55,070,630 | $ | 39,214,711 | $ | 520,205,749 | ||||||||||||||
Gross (depreciation) | (21,972,463 | ) | (1,898,910 | ) | (696,332 | ) | (19,314,064 | ) | (2,058,374 | ) | (1,757,335 | ) | (28,787,008 | ) | ||||||||||||||
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Net appreciation | $ | 585,026,629 | $ | 50,469,781 | $ | 10,241,335 | $ | 195,719,755 | $ | 53,012,256 | $ | 37,457,376 | $ | 491,418,741 | ||||||||||||||
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International Opportunities Fund | Large Cap Value Fund | Long/Short Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | ||||||||||||||||||||||
Cost | $ | 381,689,145 | $ | 153,312,083 | $ | 91,018,495 | $ | 183,868,106 | $ | 150,382,151 | $ | 1,061,222,573 | $ | 279,228,973 | ||||||||||||||
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Gross appreciation | $ | 126,404,221 | $ | 29,560,285 | $ | 19,389,841 | $ | 128,746,806 | $ | 69,959,303 | $ | 682,616,031 | $ | 100,706,110 | ||||||||||||||
Gross (depreciation) | (13,652,455 | ) | (1,652,057 | ) | (28,771,372 | ) | (6,609,355 | ) | (3,368,039 | ) | (57,117,176 | ) | (8,450,724 | ) | ||||||||||||||
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Net appreciation (depreciation) | $ | 112,751,766 | $ | 27,908,228 | $ | (9,381,531 | ) | $ | 122,137,451 | $ | 66,591,264 | $ | 625,498,855 | $ | 92,255,386 | |||||||||||||
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Strategic Income Fund | Ultra Growth Fund | World Innovators Fund | Income Fund | U.S. Treasury Fund | ||||||||||||||||||||||||
Cost | $ | 38,708,014 | $ | 73,636,519 | $ | 161,516,712 | $ | 95,882,918 | $ | 379,030,354 | ||||||||||||||||||
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Gross appreciation | $ | 7,101,941 | $ | 43,836,268 | $ | 37,419,019 | $ | 673,104 | $ | 2,697,229 | ||||||||||||||||||
Gross (depreciation) | (877,773 | ) | (9,220,786 | ) | (2,882,673 | ) | (212,026 | ) | (21,251,744 | ) | ||||||||||||||||||
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Net appreciation (depreciation) | $ | 6,224,168 | $ | 34,615,482 | $ | 34,536,346 | $ | 461,078 | $ | (18,554,515 | ) | |||||||||||||||||
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The difference between book-basis and tax-basis unrealized gains are primarily attributable to the tax deferral of losses on wash sales, unrealized appreciation on passive foreign investment companies (PFICs), partnership adjustments and other temporary tax adjustments.
The components of accumulated earnings on a tax basis as of September 30, 2017 were as follows:
Core Growth Fund | Emerging India Fund | Emerging Markets Select Fund | Emerging Markets Small Cap Fund | Frontier Emerging Small Countries Fund | ||||||||||||||||
Undistributed capital gains | $ | 75,883,488 | $ | 787,257 | $ | — | $ | — | $ | — | ||||||||||
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Accumulated earnings | 75,883,488 | 787,257 | — | — | — | |||||||||||||||
Accumulated capital and other losses | (8,181,295 | ) | (1,275,315 | ) | (8,972,241 | ) | (12,728,970 | ) | (155,473,065 | ) | ||||||||||
Other undistributed ordinary losses | — | (51,818 | ) | (63,841 | ) | — | (49,304 | ) | ||||||||||||
Net unrealized appreciation (depreciation) | 584,880,667 | 47,925,075 | 10,063,657 | 195,528,680 | 52,396,505 | |||||||||||||||
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Total accumulated earnings | $ | 652,582,860 | $ | 47,385,199 | $ | 1,027,575 | $ | 182,799,710 | $ | (103,125,864 | ) | |||||||||
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Global Opportunities Fund | International Growth Fund | International Opportunities Fund | Large Cap Value Fund | Long/Short Fund | ||||||||||||||||
Undistributed ordinary income | $ | — | $ | — | $ | — | $ | 1,830,955 | $ | — | ||||||||||
Undistributed capital gains | 9,603,116 | 24,471,708 | 28,380,862 | 20,419,042 | — | |||||||||||||||
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Accumulated earnings | 9,603,116 | 24,471,708 | 28,380,862 | 22,249,997 | — | |||||||||||||||
Accumulated capital and other losses | (991,409 | ) | (879,707 | ) | (3,171,871 | ) | — | (154,360,362 | ) | |||||||||||
Other undistributed ordinary losses | (5,271 | ) | — | (5,332 | ) | (7,742 | ) | — | ||||||||||||
Net unrealized appreciation (depreciation) | 37,247,095 | 491,091,318 | 112,138,321 | 27,909,003 | (9,381,531 | ) | ||||||||||||||
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Total accumulated earnings | $ | 45,853,531 | $ | 514,683,319 | $ | 137,341,980 | $ | 50,151,258 | $ | (163,741,893 | ) | |||||||||
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Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | ||||||||||||||||
Undistributed capital gains | $ | 34,731,157 | $ | 16,153,031 | $ | 147,990,677 | $ | 14,222,940 | $ | — | ||||||||||
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Accumulated earnings | 34,731,157 | 16,153,031 | 147,990,677 | 14,222,940 | — | |||||||||||||||
Accumulated capital and other losses | (2,607,368 | ) | (1,095,632 | ) | (9,822,810 | ) | (127,730 | ) | (4,821,855 | ) | ||||||||||
Other undistributed ordinary losses | — | — | — | — | (5,027 | ) | ||||||||||||||
Net unrealized appreciation (depreciation) | 122,137,556 | 66,549,739 | 625,499,492 | 92,255,386 | 6,224,206 | |||||||||||||||
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Total accumulated earnings | $ | 154,261,345 | $ | 81,607,138 | $ | 763,667,359 | $ | 106,350,596 | $ | 1,397,324 | ||||||||||
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Ultra Growth Fund | World Innovators Fund | Income Fund | U.S. Treasury Fund | |||||||||||||||||
Undistributed ordinary income | $ | — | $ | 2,192,392 | $ | 53,913 | $ | 139,607 | ||||||||||||
Undistributed capital gains | 8,610,144 | 15,733,299 | — | — | ||||||||||||||||
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Accumulated earnings | 8,610,144 | 17,925,691 | 53,913 | 139,607 | ||||||||||||||||
Accumulated capital and other losses | (990,401 | ) | — | (91,170 | ) | (14,216,300 | ) | |||||||||||||
Other undistributed ordinary losses | — | — | (49,078 | ) | (103,269 | ) | ||||||||||||||
Net unrealized appreciation (depreciation) | 34,615,482 | 34,538,270 | 461,078 | (18,554,515 | ) | |||||||||||||||
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Total accumulated earnings | $ | 42,235,225 | $ | 52,463,961 | $ | 374,743 | $ | (32,734,477 | ) | |||||||||||
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Notes to Financial Statements (continued)
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 declares and pays dividends monthly. The Large Cap Value, Strategic Income and U.S. Treasury Funds declare and pay dividends quarterly. The amount of dividends and distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from 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 and foreign currency translations. The reclassifications generally relate to the tax treatment of net operating losses, the netting of net operating loss to short-term gains, investments in REITs and partnerships, redemptions in-kind, distribution reclassifications, foreign capital gain taxes, Section 988 currency gains and losses, PFICs, paydown gains and losses, non-REIT return of capital dividends and equalization. These reclassifications have no impact on the net asset values of the Funds.
Accordingly, at September 30, 2017, reclassifications were recorded as follows:
Core Growth Fund | Emerging India Fund | Emerging Markets Select Fund | Emerging Markets Small Cap Fund | Frontier Emerging Small Countries Fund | ||||||||||||||||
Increase (decrease) paid-in-capital in excess of par | $ | (7,299,325 | ) | $ | (866,285 | ) | $ | (89,154 | ) | $ | (2,613,712 | ) | $ | (8,514,633 | ) | |||||
Increase (decrease) undistributed net investment income | 8,351,159 | 690,925 | 58,634 | 4,506,354 | 3,426,961 | |||||||||||||||
Increase (decrease) undistributed net realized gain (loss) | (1,051,834 | ) | 175,360 | 30,520 | (1,892,642 | ) | 5,087,672 | |||||||||||||
Global Opportunities Fund | International Growth Fund | International Opportunities Fund | Large Cap Value Fund | Long/Short Fund | ||||||||||||||||
Increase (decrease) paid-in-capital in excess of par | $ | (1,447,975 | ) | $ | (4,479,253 | ) | $ | 42,056,842 | $ | 1,635,086 | $ | (890,511 | ) | |||||||
Increase (decrease) undistributed net investment income | 1,836,872 | 4,414,255 | 1,093,028 | 21,574 | 766,072 | |||||||||||||||
Increase (decrease) undistributed net realized gain (loss) | (388,897 | ) | 64,998 | (43,149,870 | ) | (1,656,660 | ) | 124,439 | ||||||||||||
Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | ||||||||||||||||
Increase (decrease) paid-in-capital in excess of par | $ | (3,356,428 | ) | $ | (987,490 | ) | $ | (15,301,417 | ) | $ | (23 | ) | $ | 38,056 | ||||||
Increase (decrease) undistributed net investment income | 3,535,030 | 1,254,602 | 15,186,067 | (269,796 | ) | (114,334 | ) | |||||||||||||
Increase (decrease) undistributed net realized gain (loss) | (178,602 | ) | (267,112 | ) | 1,550,820 | 269,819 | 76,278 | |||||||||||||
Ultra Growth Fund | World Innovators Fund | Income Fund | U.S. Treasury Fund | |||||||||||||||||
Increase (decrease) paid-in-capital in excess of par | $ | (637,853 | ) | $ | 1 | $ | 1 | $ | (1 | ) | ||||||||||
Increase (decrease) undistributed net investment income | 1,881,597 | 1,448,838 | (5,801 | ) | (14 | ) | ||||||||||||||
Increase (decrease) undistributed net realized gain (loss) | 112,301 | (1,372,750 | ) | 5,800 | 15 |
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, a Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Post-enactment losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
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 |
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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 |
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 |
The tax character of distributions paid during the year ended September 30, 2017 was as follows:
2017 | Core Growth Fund | Emerging India Fund | Emerging Markets Select Fund | Emerging Markets Small Cap Fund | Frontier Emerging Small Countries Fund | |||||||||||||||
Ordinary Income | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Capital Gain | 2,252,794 | 819,648 | — | — | — | |||||||||||||||
|
| |||||||||||||||||||
Total | $ | 2,252,794 | $ | 819,648 | $ | — | $ | — | $ | — | ||||||||||
|
| |||||||||||||||||||
2017 | Global Opportunities Fund | International Growth Fund | International Opportunities Fund | Large Cap Value Fund | Long/Short Fund | |||||||||||||||
Ordinary Income | $ | — | $ | — | $ | — | $ | 3,653,028 | $ | — | ||||||||||
Capital Gain | 8,169,399 | 47,302,575 | — | 6,457,187 | 61,075 | |||||||||||||||
|
| |||||||||||||||||||
Total | $ | 8,169,399 | $ | 47,302,575 | $ | — | $ | 10,110,215 | $ | 61,075 | ||||||||||
|
| |||||||||||||||||||
2017 | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | |||||||||||||||
Ordinary Income | $ | — | $ | — | $ | — | $ | 225,614 | $ | 516,716 | ||||||||||
Capital Gain | 22,829,857 | 3,065,003 | 144,143,218 | 65,305 | — | |||||||||||||||
|
| |||||||||||||||||||
Total | $ | 22,829,857 | $ | 3,065,003 | $ | 144,143,218 | $ | 290,919 | $ | 516,716 | ||||||||||
|
| |||||||||||||||||||
2017 | Ultra Growth Fund | World Innovators Fund | Income Fund | U.S. Treasury Fund | ||||||||||||||||
Ordinary Income | $ | — | $ | — | $ | 1,793,676 | $ | 7,013,026 | ||||||||||||
Capital Gain | 9,710,650 | 6,384,678 | 124,946 | 23,928,544 | ||||||||||||||||
|
| |||||||||||||||||||
Total | $ | 9,710,650 | $ | 6,384,678 | $ | 1,918,622 | $ | 30,941,570 | ||||||||||||
|
|
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|
Notes to Financial Statements (continued)
The tax character of distributions paid during the year ended September 30, 2016 was as follows:
2016 | Core Growth Fund | Emerging India Fund | Emerging Markets Select Fund | Emerging Markets Small Cap Fund | Frontier Emerging Small Countries Fund | |||||||||||||||
Ordinary Income | $ | — | $ | — | $ | — | $ | 132,483 | $ | 1,618,755 | ||||||||||
Capital Gains | 138,512,554 | 958,580 | — | — | — | |||||||||||||||
|
| |||||||||||||||||||
Total | $ | 138,512,554 | $ | 958,580 | $ | — | $ | 132,483 | $ | 1,618,755 | ||||||||||
|
| |||||||||||||||||||
2016 | Global Opportunities Fund | International Growth Fund | International Opportunities Fund | Large Cap Value Fund | Long/Short Fund | |||||||||||||||
Ordinary Income | $ | — | $ | — | $ | — | $ | 3,793,299 | $ | 2,216,991 | ||||||||||
Capital Gains | 19,687,296 | — | 22,512,072 | 20,982,300 | 70,202,977 | |||||||||||||||
|
| |||||||||||||||||||
Total | $ | 19,687,296 | $ | — | $ | 22,512,072 | $ | 24,775,599 | $ | 72,419,968 | ||||||||||
|
| |||||||||||||||||||
2016 | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | |||||||||||||||
Ordinary Income | $ | — | $ | 2,417,065 | $ | — | $ | 1,464,849 | $ | 1,474,213 | ||||||||||
Capital Gains | 40,544,074 | 15,487,890 | 322,361,340 | — | 2,685,547 | |||||||||||||||
Return of Capital | — | — | — | — | 287,336 | |||||||||||||||
|
| |||||||||||||||||||
Total | $ | 40,544,074 | $ | 17,904,955 | $ | 322,361,340 | $ | 1,464,849 | $ | 4,447,096 | ||||||||||
|
| |||||||||||||||||||
2016 | Ultra Growth Fund | World Innovators Fund | Income Fund | U.S. Treasury Fund | ||||||||||||||||
Ordinary Income | $ | — | $ | — | $ | 1,963,364 | $ | 7,944,602 | ||||||||||||
Capital Gains | 8,679,065 | 24,130,023 | — | 15,905,989 | ||||||||||||||||
|
| |||||||||||||||||||
Total | $ | 8,679,065 | $ | 24,130,023 | $ | 1,963,364 | $ | 23,850,591 | ||||||||||||
|
|
The tax character of distributions paid may differ from that shown in the Statements of Changes in Net Assets due to short-term gains being treated as ordinary income for tax purposes.
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, International Growth Fund, International Opportunities Fund, Large Cap Value 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. 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). 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 Large Cap 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
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|
determined that the amount should be written off as an extraordinary expense and posted to other expenses. The balance for the Large Cap 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. Investment advisory fees and fees waived, if any, for the year ended September 30, 2017 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 | $ | 136,395 | ||||||||||||||
Emerging India Fund | 1.25% | 1.75% | 1.50% | 1/31/2019 | 30,597 | |||||||||||||||
Emerging Markets Select Fund | 1.00% | 1.50% | 1.20% | 1/31/2019 | 128,774 | |||||||||||||||
Emerging Markets Small Cap Fund | 1.65% | 1.95% | 1.80% | 1/31/2019 | 452,003 | |||||||||||||||
Frontier Emerging Small Countries Fund | 1.75% | 2.25% | 2.05% | 1/31/2019 | 555,297 | |||||||||||||||
Global Opportunities Fund | 1.25% | 1.75% | 1.35% | 1/31/2019 | 33,503 | |||||||||||||||
International Growth Fund | 1.25% | 1.75% | 1.35% | 1/31/2019 | 95,402 | |||||||||||||||
International Opportunities Fund | 1.75% | 2.25% | 1.95% | 1/31/2019 | 162,344 | |||||||||||||||
Large Cap Value Fund | 0.90% | 1.10% | 0.95% | 1/31/2019 | 165,537 | |||||||||||||||
Long/Short Fund | 1.10% | 1.60% | 1.15% | 1/31/2019 | 60,547 | |||||||||||||||
Micro Cap Fund1 | 1.50% | 1.95% | N/A | 1/31/2019 | — | |||||||||||||||
Micro Cap Value Fund1 | 1.50% | 1.95% | N/A | 1/31/2019 | — | |||||||||||||||
Small Cap Growth Fund | 1.00% | 1.50% | 1.05% | 1/31/2019 | 233,805 | |||||||||||||||
Small Cap Value Fund | 1.00% | 1.50% | 1.05% | 1/31/2019 | 40,673 | |||||||||||||||
Strategic Income Fund | 0.70% | 0.95% | N/A | 1/31/2019 | 70,046 | |||||||||||||||
Ultra Growth Fund | 1.00% | 1.50% | N/A | 1/31/2019 | — | |||||||||||||||
World Innovators Fund | 1.50% | 1.95% | 1.55% | 1/31/2019 | 32,700 | |||||||||||||||
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 | — |
1 | Effective January 31, 2017, the management fee was reduced from 1.75% to 1.50%. |
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 year ended September 30, 2017, the Funds below engaged in purchases or sales of securities pursuant to Rule 17a-7 of the 1940 Act.
Fund | Purchases | Sales | ||||||
Emerging Markets Small Cap Fund | $ | — | $ | 2,985,676 | ||||
International Opportunities Fund | 2,985,676 | — |
In-Kind Transaction — In April 2017, the Wasatch International Opportunities Fund had a large in-kind redemption with an affiliated person. The transaction was effected consistent with the Funds’ Procedures for Effecting In-Kind Redemptions and was approved in advance by the independent trustees of the Wasatch Funds Trust.
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. The 2017 calendar year compensation is an increase of approximately 15% from the previous calendar year.
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, Large Cap 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.
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Notes to Financial Statements (continued)
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 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 September 30, 2017 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 September 30, 2017, 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 | 50.49 | % | |||||
Emerging India Fund | 2 | 69.56 | % | |||||
Emerging Markets Select Fund | 2 | 61.32 | % | |||||
Emerging Markets Small Cap Fund | 3 | 62.64 | % | |||||
Frontier Emerging Small Countries Fund | 2 | 71.97 | % | |||||
Global Opportunities Fund | 3 | 51.73 | % | |||||
International Growth Fund | 2 | 58.67 | % | |||||
International Opportunities Fund | 3 | 67.30 | % | |||||
Large Cap Value Fund | 2 | 77.53 | % | |||||
Long/Short Fund | 2 | 65.25 | % | |||||
Micro Cap Fund | 2 | 26.16 | % | |||||
Micro Cap Value Fund | 2 | 52.38 | % | |||||
Small Cap Growth Fund | 2 | 51.08 | % | |||||
Small Cap Value Fund | 2 | 43.66 | % | |||||
Strategic Income Fund | 3 | 52.93 | % | |||||
Ultra Growth Fund | 2 | 29.35 | % | |||||
World Innovators Fund | 3 | 56.87 | % | |||||
Income Fund | 1 | 87.47 | % | |||||
U.S. Treasury Fund | 3 | 59.53 | % |
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SEPTEMBER 30, 2017 | ||
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|
Affiliated Interests — As of September 30, 2017, 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:
Number of Accounts* | Percent of Shares Outstanding | |||||||
Core Growth Fund | 18 | 1.08 | % | |||||
Emerging India Fund | 26 | 10.72 | % | |||||
Emerging Markets Select Fund | 15 | 20.97 | % | |||||
Emerging Markets Small Cap Fund | 16 | 1.51 | % | |||||
Frontier Emerging Small Countries Fund | 17 | 0.67 | % | |||||
Global Opportunities Fund | 18 | 11.05 | % | |||||
International Growth Fund | 16 | 0.85 | % | |||||
International Opportunities Fund | 19 | 2.37 | % | |||||
Large Cap Value Fund | 11 | 2.73 | % | |||||
Long/Short Fund | 5 | 0.60 | % | |||||
Micro Cap Fund | 10 | 1.05 | % | |||||
Micro Cap Value Fund | 10 | 2.33 | % | |||||
Small Cap Growth Fund | 18 | 3.09 | % | |||||
Small Cap Value Fund | 9 | 1.65 | % | |||||
Strategic Income Fund | 6 | 23.23 | % | |||||
Ultra Growth Fund | 7 | 3.27 | % | |||||
World Innovators Fund | 9 | 2.37 | % | |||||
Income Fund | 3 | 0.02 | % | |||||
U.S. Treasury Fund | 10 | 0.98 | % |
* | 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 year ended September 30, 2017 with an “affiliated company” as so defined:
Share Activity | Dividends period ended | Gain (Loss) period ended | Change in period ended | |||||||||||||||||||||||||
Balance 9/30/2016 | Purchases/ Additions | Sales/ Reductions | Balance 9/30/2017 | |||||||||||||||||||||||||
Small Cap Growth Fund |
| |||||||||||||||||||||||||||
Blue Nile, Inc.* | 828,553 | — | 828,553 | — | $ | — | $ | 4,523,310 | $ | 392,806 | ||||||||||||||||||
Chefs’ Warehouse, Inc. (The)* | 1,897,093 | — | 952,705 | 944,388 | — | (8,229,386 | ) | 18,678,752 | ||||||||||||||||||||
Papa Murphy’s Holdings, Inc.* | 1,042,768 | — | 1,042,768 | — | — | (11,753,461 | ) | 9,395,266 | ||||||||||||||||||||
Zumiez, Inc.* | 1,265,079 | — | 1,265,079 | — | — | (9,492,625 | ) | 2,483,664 |
* | This security was deemed to no longer meet the criteria of an affiliated company at the reporting date. For financial statement purposes, the total amount of the gain (loss) realized on sale of shares and the total change in unrealized appreciation for the period ended September 30, 2017 is included in the Statement of Operations even though the securities were not affiliated companies as of year end. |
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 September 30, 2017, the Funds held the following restricted securities:
Security Type | Acquisition Date | Cost | Fair Value | Value as a Percent of Net Assets | ||||||||||||||
Core Growth Fund | ||||||||||||||||||
DocuSign, Inc., Series F Pfd. | Preferred Stock | 4/30/15 | $ | 4,000,004 | $ | 4,024,495 | 0.25 | % | ||||||||||
| ||||||||||||||||||
Emerging India Fund | ||||||||||||||||||
ICICI Lombard General Insurance Co. Ltd. | Common Stock | 9/14/17 | $ | 1,560,450 | $ | 1,521,247 | 0.66 | % | ||||||||||
|
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Notes to Financial Statements (continued)
Security Type | Acquisition Date | Cost | Fair Value | Value as a Percent of Net Assets | ||||||||||||||
Micro Cap Value Fund | ||||||||||||||||||
Acetylon Pharmaceuticals, Inc. | Right | 12/21/16 | $ | — | $ | 326,356 | 0.15 | % | ||||||||||
Acetylon Pharmaceuticals, Inc. | Right | 12/21/16 | — | — | 0.00 | % | ||||||||||||
Regenacy Pharmaceuticals, LLC | LLC Membership Interest | 12/21/16 | 30,001 | 51,476 | 0.02 | % | ||||||||||||
Synergetics USA, Inc. | Right | 10/14/15 | 71,250 | 18,750 | 0.01 | % | ||||||||||||
Vertex Energy, Inc. | Warrants | 6/22/15 | 95,000 | 2,500 | 0.00 | % | ||||||||||||
Vertex Energy, Inc., Pfd. Series B | Convertible Preferred Stock | 6/22/15 - 7/10/17 | 1,652,801 | 1,460,260 | 0.68 | % | ||||||||||||
$ | 1,849,052 | $ | 1,859,342 | 0.86 | % | |||||||||||||
| ||||||||||||||||||
Small Cap Growth Fund | ||||||||||||||||||
DataStax, Inc., Series E Pfd. | Preferred Stock | 8/12/14 | $ | 8,000,002 | $ | 6,397,861 | 0.38 | % | ||||||||||
DocuSign, Inc., Series B Pfd. | Preferred Stock | 3/3/14 | 437,257 | 639,616 | 0.04 | % | ||||||||||||
DocuSign, Inc., Series B-1 Pfd. | Preferred Stock | 3/3/14 | 130,983 | 191,601 | 0.01 | % | ||||||||||||
DocuSign, Inc., Series D Pfd. | Preferred Stock | 3/3/14 | 313,930 | 459,215 | 0.03 | % | ||||||||||||
DocuSign, Inc., Series E Pfd. | Preferred Stock | 3/3/14 | 8,117,819 | 11,874,700 | 0.70 | % | ||||||||||||
DocuSign, Inc., Series F Pfd. | Preferred Stock | 4/30/15 | 2,999,984 | 3,018,352 | 0.18 | % | ||||||||||||
Drilling Info Holdings, Inc., Series B Pfd. | Preferred Stock | 9/5/13 | 12,287,381 | 11,697,096 | 0.69 | % | ||||||||||||
ForeScout Technologies, Inc., Series G | Preferred Stock | 11/25/15 | 6,000,003 | 9,116,040 | 0.54 | % | ||||||||||||
Greenspring Global Partners II-B, L.P. | LP Interest | 10/10/03 - 3/31/17 | 2,109,731 | 2,155,108 | 0.13 | % | ||||||||||||
Greenspring Global Partners III-B, L.P. | LP Interest | 3/16/06 - 6/29/17 | 781,848 | 1,090,237 | 0.06 | % | ||||||||||||
Nanosys, Inc., Series D Pfd. | Preferred Stock | 11/8/05 | 2,000,000 | 1,275,390 | 0.08 | % | ||||||||||||
Nanosys, Inc., Series E Pfd. | Preferred Stock | 8/13/10 | 184,939 | 204,305 | 0.01 | % | ||||||||||||
$ | 43,363,877 | $ | 48,119,521 | 2.85 | % | |||||||||||||
| ||||||||||||||||||
Strategic Income Fund | ||||||||||||||||||
Star Asia Capital Corp Ltd. | Common Stock | 2/22/07 - 5/11/15 | $ | 572,598 | $ | 885,728 | 1.97 | % | ||||||||||
| ||||||||||||||||||
Ultra Growth Fund | ||||||||||||||||||
Data Sciences International, Inc., Series B Pfd. | Preferred Stock | 1/20/06 | $ | 399,811 | $ | 265,717 | 0.24 | % | ||||||||||
Drilling Info Holdings, Inc., Series B Pfd. | Preferred Stock | 9/5/13 | 920,553 | 876,330 | 0.79 | % | ||||||||||||
Greenspring Global Partners II-B, L.P. | LP Interest | 10/10/03 - 3/31/17 | 1,900,859 | 1,939,589 | 1.74 | % | ||||||||||||
Greenspring Global Partners III-B, L.P. | LP Interest | 3/16/06 - 6/29/17 | 782,860 | 1,090,237 | 0.98 | % | ||||||||||||
Nanosys, Inc., Series D Pfd. | Preferred Stock | 11/8/05 | 500,001 | 318,848 | 0.29 | % | ||||||||||||
Nanosys, Inc., Series E Pfd. | Preferred Stock | 8/13/10 | 46,235 | 51,077 | 0.04 | % | ||||||||||||
$ | 4,550,319 | $ | 4,541,798 | 4.08 | % | |||||||||||||
| ||||||||||||||||||
World Innovators Fund | ||||||||||||||||||
Greenspring Global Partners II-B, L.P. | LP Interest | 10/10/13 - 3/31/17 | $ | 211,184 | $ | 215,512 | 0.11 | % | ||||||||||
|
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 federal-funds rate in effect on the date of borrowing, plus a margin, or (b) the overnight 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.
For the year ended September 30, 2017, 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 9/30/2017 | |||||||||||||||
Emerging India Fund | $ | 598,372 | 11 | $ | 391 | 2.14 | % | $ | — | |||||||||||
Emerging Markets Select Fund | 637,492 | 100 | 3,619 | 2.04 | % | — | ||||||||||||||
Emerging Markets Small Cap Fund | 4,683,122 | 122 | 35,030 | 2.21 | % | — | ||||||||||||||
Frontier Emerging Small Countries Fund | 7,937,905 | 170 | 75,908 | 2.03 | % | — | ||||||||||||||
Global Opportunities Fund | 2,214,538 | 118 | 14,376 | 1.98 | % | — | ||||||||||||||
International Growth Fund | 11,287,079 | 12 | 9,209 | 2.45 | % | 38,706,233 | ||||||||||||||
International Opportunities Fund | 9,553,479 | 29 | 16,705 | 2.17 | % | — |
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Funds Utilizing the Line of Credit (continued) | Average Daily Borrowings | Number of Days Outstanding | Interest Expense | Weighted Average Annualized Interest Rate | Balance at 9/30/2017 | |||||||||||||||
Micro Cap Fund | $ | 527,905 | 19 | $ | 670 | 2.41 | % | $ | — | |||||||||||
Small Cap Growth Fund | 7,924,502 | 64 | 28,313 | 2.01 | % | — | ||||||||||||||
Small Cap Value Fund | 2,587,257 | 3 | 474 | 2.20 | % | — | ||||||||||||||
Ultra Growth Fund | 683,058 | 8 | 373 | 2.46 | % | — | ||||||||||||||
Income Fund | 284,968 | 1 | 18 | 2.24 | % | — |
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 decline 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, after the date of this report, 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 has 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 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
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Notes to Financial Statements (continued)
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 the 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 NASDAQ exchange, such securities are valued using the NASDAQ Official Closing Price (“NOCP”) or the 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 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
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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.
The following is a summary of the fair valuations according to the inputs used as of September 30, 2017 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 9/30/2017 | |||||||||||||
Core Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 1,552,266,777 | $ | — | $ | — | $ | 1,552,266,777 | ||||||||||
Preferred Stocks | — | — | 4,024,495 | 4,024,495 | ||||||||||||||
Short-Term Investments | — | 30,607,602 | — | 30,607,602 | ||||||||||||||
|
| |||||||||||||||||
$ | 1,552,266,777 | $ | 30,607,602 | $ | 4,024,495 | $ | 1,586,898,874 | |||||||||||
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Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 9/30/2017 | |||||||||||||
Emerging India Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Property & Casualty Insurance | $ | 768,127 | $ | — | $ | 1,521,247 | $ | 2,289,374 | |||||||||
Other | 228,262,399 | — | — | 228,262,399 | ||||||||||||||
Short-Term Investments | — | 3,284,123 | — | 3,284,123 | ||||||||||||||
|
| |||||||||||||||||
$ | 229,030,526 | $ | 3,284,123 | $ | 1,521,247 | $ | 233,835,896 | |||||||||||
|
| |||||||||||||||||
Emerging Markets Select Fund | ||||||||||||||||||
Assets |
| |||||||||||||||||
Common Stocks | Health Care Facilities | $ | 1,963,639 | $ | 446,105 | $ | — | $ | 2,409,744 | |||||||||
Other | 40,938,077 | — | — | 40,938,077 | ||||||||||||||
Preferred Stocks | 1,003,628 | — | — | 1,003,628 | ||||||||||||||
|
| |||||||||||||||||
$ | 43,905,344 | $ | 446,105 | $ | — | $ | 44,351,449 | |||||||||||
|
| |||||||||||||||||
Emerging Markets Small Cap Fund | ||||||||||||||||||
Assets |
| |||||||||||||||||
Common Stocks | Consumer Finance | $ | 40,256,276 | $ | 16,007,088 | $ | — | $ | 56,263,364 | |||||||||
Hotels, Resorts & Cruise Lines | 6,387,288 | 9,279,992 | — | 15,667,280 | ||||||||||||||
Pharmaceuticals | 10,759,735 | — | 16,664 | 10,776,399 | ||||||||||||||
Specialty Chemicals | 4,230,117 | 9,919,697 | — | 14,149,814 | ||||||||||||||
Other | 536,717,031 | — | — | 536,717,031 | ||||||||||||||
Preferred Stocks | 8,396,001 | — | — | 8,396,001 | ||||||||||||||
Warrants | 169,680 | — | — | 169,680 | ||||||||||||||
Short-Term Investments | — | 114,452 | — | 114,452 | ||||||||||||||
|
| |||||||||||||||||
$ | 606,916,128 | $ | 35,321,229 | $ | 16,664 | $ | 642,254,021 | |||||||||||
|
| |||||||||||||||||
Frontier Emerging Small Countries Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Consumer Finance | $ | 2,965,334 | $ | 4,039,340 | $ | — | $ | 7,004,674 | |||||||||
Packaged Foods & Meats | 8,754,750 | 3,452,086 | — | 12,206,836 | ||||||||||||||
Wireless Telecommunication Services | 6,020,925 | 2,406,145 | — | 8,427,070 | ||||||||||||||
Other | 158,314,036 | — | — | 158,314,036 | ||||||||||||||
Preferred Stocks | 7,048,647 | — | — | 7,048,647 | ||||||||||||||
Short-Term Investments | — | 2,545,919 | — | 2,545,919 | ||||||||||||||
|
| |||||||||||||||||
$ | 183,103,692 | $ | 12,443,490 | $ | — | $ | 195,547,182 | |||||||||||
|
| |||||||||||||||||
Global Opportunities Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Consumer Finance | $ | 4,103,871 | $ | 1,410,644 | $ | — | $ | 5,514,515 | |||||||||
Specialty Chemicals | 967,228 | 1,394,100 | — | 2,361,328 | ||||||||||||||
Other | 95,208,120 | — | — | 95,208,120 | ||||||||||||||
Warrants | 32,103 | — | — | 32,103 | ||||||||||||||
Short-Term Investments | — | 170,608 | — | 170,608 | ||||||||||||||
|
| |||||||||||||||||
$ | 100,311,322 | $ | 2,975,352 | $ | — | $ | 103,286,674 | |||||||||||
|
| |||||||||||||||||
International Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Hotels, Resorts & Cruise Lines | $ | 13,896,719 | $ | 21,287,401 | $ | — | $ | 35,184,120 | |||||||||
Specialty Chemicals | 45,924,195 | 21,024,656 | — | 66,948,851 | ||||||||||||||
Other | 1,322,924,847 | — | — | 1,322,924,847 | ||||||||||||||
|
| |||||||||||||||||
$ | 1,382,745,761 | $ | 42,312,057 | $ | — | $ | 1,425,057,818 | |||||||||||
|
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Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 9/30/2017 | |||||||||||||
International Opportunities Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Advertising | $ | 3,445,314 | $ | 2,657,030 | $ | — | $ | 6,102,344 | |||||||||
Food Retail | 21,289,381 | 4,072,621 | — | 25,362,002 | ||||||||||||||
Health Care Facilities | — | 3,311,468 | — | 3,311,468 | ||||||||||||||
Other | 452,824,863 | — | — | 452,824,863 | ||||||||||||||
Short-Term Investments | — | 6,840,234 | — | 6,840,234 | ||||||||||||||
|
| |||||||||||||||||
$ | 477,559,558 | $ | 16,881,353 | $ | — | $ | 494,440,911 | |||||||||||
|
| |||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 175,777,825 | $ | — | $ | — | $ | 175,777,825 | ||||||||||
Short-Term Investments | — | 5,442,486 | — | 5,442,486 | ||||||||||||||
|
| |||||||||||||||||
$ | 175,777,825 | $ | 5,442,486 | $ | — | $ | 181,220,311 | |||||||||||
|
| |||||||||||||||||
Long/Short Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 95,178,237 | $ | — | $ | — | $ | 95,178,237 | ||||||||||
Limited Partnership Interest | 2,699,366 | — | — | 2,699,366 | ||||||||||||||
Short-Term Investments | — | 35,132,336 | — | 35,132,336 | ||||||||||||||
|
| |||||||||||||||||
$ | 97,877,603 | $ | 35,132,336 | $ | — | $ | 133,009,939 | |||||||||||
|
| |||||||||||||||||
Liabilities | ||||||||||||||||||
Securities Sold Short | $ | (51,372,975 | ) | $ | — | $ | — | $ | (51,372,975 | ) | ||||||||
|
| |||||||||||||||||
$ | (51,372,975 | ) | $ | — | $ | — | $ | (51,372,975 | ) | |||||||||
|
| |||||||||||||||||
Micro Cap Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 304,343,107 | $ | — | $ | — | $ | 304,343,107 | ||||||||||
Short-Term Investments | — | 1,061,240 | — | 1,061,240 | ||||||||||||||
|
| |||||||||||||||||
$ | 304,343,107 | $ | 1,061,240 | $ | — | $ | 305,404,347 | |||||||||||
|
| |||||||||||||||||
Micro Cap Value Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 200,549,042 | $ | — | $ | — | $ | 200,549,042 | ||||||||||
Convertible Preferred Stocks | — | — | 1,460,260 | 1,460,260 | ||||||||||||||
Rights | — | — | 345,106 | 345,106 | ||||||||||||||
Limited Liability Company Membership Interest | — | — | 51,476 | 51,476 | ||||||||||||||
Warrants | — | — | 2,500 | 2,500 | ||||||||||||||
Short-Term Investments | — | 14,565,031 | — | 14,565,031 | ||||||||||||||
|
| |||||||||||||||||
$ | 200,549,042 | $ | 14,565,031 | $ | 1,859,342 | $ | 216,973,415 | |||||||||||
|
| |||||||||||||||||
Small Cap Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 1,603,510,441 | $ | — | $ | — | $ | 1,603,510,441 | ||||||||||
Preferred Stocks | — | — | 44,874,176 | 44,874,176 | ||||||||||||||
Limited Partnership Interest1 | — | — | — | 3,245,345 | ||||||||||||||
Short-Term Investments | — | 35,091,465 | — | 35,091,465 | ||||||||||||||
|
| |||||||||||||||||
$ | 1,603,510,441 | $ | 35,091,465 | $ | 44,874,176 | $ | 1,686,721,427 | |||||||||||
|
| |||||||||||||||||
Small Cap Value Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 363,192,608 | $ | — | $ | — | $ | 363,192,608 | ||||||||||
Limited Partnership Interest | 5,244,406 | — | — | 5,244,406 | ||||||||||||||
Short-Term Investments | — | 3,047,345 | — | 3,047,345 | ||||||||||||||
|
| |||||||||||||||||
$ | 368,437,014 | $ | 3,047,345 | $ | — | $ | 371,484,359 | |||||||||||
|
|
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. |
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Notes to Financial Statements (continued)
Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 9/30/2017 | |||||||||||||
Strategic Income Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | Diversified REITs | $ | 447,239 | $ | — | $ | 885,728 | $ | 1,332,967 | |||||||||
Other | 32,587,583 | — | — | 32,587,583 | ||||||||||||||
Limited Partnership Interest | 3,835,719 | — | — | 3,835,719 | ||||||||||||||
Limited Liability Company Membership Interest | 1,579 | — | — | 1,579 | ||||||||||||||
Short-Term Investments | — | 7,174,334 | — | 7,174,334 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
$ | 36,872,120 | $ | 7,174,334 | $ | 885,728 | $ | 44,932,182 | |||||||||||
|
| |||||||||||||||||
Ultra Growth Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 102,902,635 | $ | — | $ | — | $ | 102,902,635 | ||||||||||
Preferred Stocks | — | — | 1,511,972 | 1,511,972 | ||||||||||||||
Limited Partnership Interest1 | — | — | — | 3,029,826 | ||||||||||||||
Short-Term Investments | — | 807,568 | — | 807,568 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
$ | 102,902,635 | $ | 807,568 | $ | 1,511,972 | $ | 108,252,001 | |||||||||||
|
| |||||||||||||||||
World Innovators Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Common Stocks | $ | 165,811,513 | $ | — | $ | — | $ | 165,811,513 | ||||||||||
Limited Partnership Interest1 | — | — | — | 215,512 | ||||||||||||||
Exchange-Traded Funds | 98,025 | — | — | 98,025 | ||||||||||||||
Short-Term Investments | — | 29,928,007 | — | 29,928,007 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
$ | 165,909,538 | $ | 29,928,007 | — | $ | 196,053,057 | ||||||||||||
|
| |||||||||||||||||
Income Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
Corporate Bonds | $ | — | $ | 51,598,453 | $ | — | $ | 51,598,453 | ||||||||||
Asset-Backed Securities | — | 14,191,222 | 1,009,375 | 15,200,597 | ||||||||||||||
Mortgage-Backed Securities | — | 12,127,552 | — | 12,127,552 | ||||||||||||||
U.S. Treasury Notes | — | 6,512,531 | — | 6,512,531 | ||||||||||||||
U.S. Government Agency Securities | — | 4,223,336 | — | 4,223,336 | ||||||||||||||
Municipal Bonds | — | 3,896,735 | — | 3,896,735 | ||||||||||||||
U.S. Treasury Inflation-Protected Securities | — | 2,004,926 | — | 2,004,926 | ||||||||||||||
Short-Term Investments | — | 779,866 | — | 779,866 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
$ | — | $ | 95,334,621 | $ | 1,009,375 | $ | 96,343,996 | |||||||||||
|
| |||||||||||||||||
U.S. Treasury Fund | ||||||||||||||||||
Assets | ||||||||||||||||||
U.S. Government Obligations | $ | — | $ | 358,672,458 | $ | — | $ | 358,672,458 | ||||||||||
Short-Term Investments | — | 1,803,381 | — | 1,803,381 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
$ | — | $ | 360,475,839 | $ | — | $ | 360,475,839 | |||||||||||
|
|
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. |
Fund | Fair Value at 9/30/2017 | Unfunded Commitments | Redemption (if currently | Redemption Notice Period | ||||||||||||
Small Cap Growth Fund | ||||||||||||||||
Limited Partnership Interests1 | $ | 3,245,345 | $ | — | — | — | ||||||||||
Ultra Growth Fund | ||||||||||||||||
Limited Partnership Interests1 | $ | 3,029,826 | $ | — | — | — | ||||||||||
World Innovators Fund | ||||||||||||||||
Limited Partnership Interests1 | $ | 215,512 | $ | — | — | — |
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. The final purchase commitments were made on March 31, 2017 for Greenspring Global Partners II-B, L.P. and June 29, 2017 for Greenspring Global Partners III-B, L.P. |
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SEPTEMBER 30, 2017 | ||
| ||
|
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 year ended September 30, 2017 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 | ||||||
Frontier Emerging Small Countries Fund | $ | 3,452,086 | $ | 3,452,086 | ||||
Fund | Transfers Out Of Level 2 at Market Value | Transfers Into Level 1 at Market Value | ||||||
Frontier Emerging Small Countries Fund | $ | 13,325,506 | $ | 13,325,506 | ||||
International Opportunities Fund | 7,163,175 | 7,163,175 | ||||||
Small Cap Growth Fund | 32,432,542 | 32,432,542 |
There were transfers of $670,810 in the Emerging India Fund and $1,124,558 in the Global Opportunities 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 Prudential Life 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.
There were transfers of $572,597 in the Strategic Income Fund from Level 1 to Level 3 due to a reincorporation. This transfer amount represents the value for Star Asia Capital Corp Ltd., which transferred to Level 3 during the period in order to properly represent the activity on the Level 3 Rollforward presented below.
There were transfers out of Level 3 of $3,635,554 in the Small Cap Growth Fund, $3,388,501 in the Ultra Growth Fund and $247,043 in the World Innovators Fund due to a change that eliminates the requirement to categorize within the fair value hierarchy investments whose fair values are measured at net asset value per share (or its equivalent) using the practical expedient. This transfer amount represents the beginning of the period value for Greenspring Global Partners II-B, L.P. and Greenspring Global Partners III-B, L.P, which transferred during the period in order to properly represent the activity on the Level 3 Rollforward presented below.
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Funds during the year ended September 30, 2017:
Fund | Market Value Beginning Balance 9/30/2016 | 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 9/30/2017 | Net Change in Unrealized Appreciation (Depreciation) on Investments Held at 9/30/2017 | ||||||||||||||||||||||||||||||
Core Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Preferred Stocks | $ | 3,257,725 | $ | — | $ | — | $ | — | $ | — | $ | 766,770 | $ | — | $ | — | $ | 4,024,495 | $ | 766,770 | ||||||||||||||||||||
Warrants | 193,457 | — | (1,463 | ) | — | 1,463 | (193,457 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
3,451,182 | — | (1,463 | ) | — | 1,463 | 573,313 | — | — | 4,024,495 | 766,770 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Emerging India Fund | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | 670,810 | 1,560,450 | — | — | — | (39,203 | ) | — | (670,810 | ) | 1,521,247 | (39,203 | ) | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
670,810 | 1,560,450 | — | — | — | (39,203 | ) | — | (670,810 | ) | 1,521,247 | (39,203 | ) | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Emerging Markets Small Cap Fund | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | 16,783 | — | — | — | — | (119 | ) | — | — | 16,664 | (119 | ) | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
16,783 | — | — | — | — | (119 | ) | — | — | 16,664 | (119 | ) | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Global Opportunities Fund | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | 1,124,588 | — | — | — | — | — | — | (1,124,588 | ) | — | — | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
1,124,588 | — | — | — | — | — | — | (1,124,588 | ) | — | — | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Micro Cap Fund | ||||||||||||||||||||||||||||||||||||||||
Warrants | 16,031 | — | (169 | ) | — | (1,941 | ) | (13,921 | ) | — | — | — | — | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
16,031 | — | (169 | ) | — | (1,941 | ) | (13,921 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
|
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WASATCH FUNDS | ||
| ||
|
Notes to Financial Statements (continued)
Fund | Market Value Beginning Balance 9/30/2016 | 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 9/30/2017 | Net Change in Unrealized Appreciation (Depreciation) on Investments Held at 9/30/2017 | ||||||||||||||||||||||||||||||
Micro Cap Value Fund | ||||||||||||||||||||||||||||||||||||||||
Convertible Preferred Stocks | $ | 1,387,781 | $ | 101,057 | $ | — | $ | — | $ | — | $ | (28,578 | ) | $ | — | $ | — | $ | 1,460,260 | $ | (28,578 | ) | ||||||||||||||||||
Rights | 37,500 | — | — | — | — | 307,606 | — | — | 345,106 | 307,606 | ||||||||||||||||||||||||||||||
Limited Liability Company Membership Interest | — | 30,001 | — | — | — | 21,475 | — | — | 51,476 | 21,475 | ||||||||||||||||||||||||||||||
Preferred Stocks | 1,379,998 | — | (809,588 | ) | — | 309,589 | (879,999 | ) | — | — | — | (879,999 | ) | |||||||||||||||||||||||||||
Warrants | 25,000 | — | — | — | — | (22,500 | ) | — | — | 2,500 | (22,500 | ) | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
2,830,279 | 131,058 | (809,588 | ) | — | 309,589 | (601,996 | ) | — | — | 1,859,342 | (601,996 | ) | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Small Cap Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Preferred Stocks | 37,948,338 | — | (3,062,620 | ) | — | — | 9,988,458 | — | — | 44,874,176 | 9,988,458 | |||||||||||||||||||||||||||||
Limited Partnership Interest | 3,635,554 | — | — | — | — | — | — | (3,635,554 | ) | — | — | |||||||||||||||||||||||||||||
Warrants | 484,816 | — | (3,833 | ) | — | (3,545 | ) | (477,438 | ) | — | — | — | — | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
42,068,708 | — | (3,066,453 | ) | — | (3,545 | ) | 9,511,020 | — | (3,635,554 | ) | 44,874,176 | 9,988,458 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Small Cap Value Fund | ||||||||||||||||||||||||||||||||||||||||
Warrants | 108,300 | — | (819 | ) | — | 819 | (108,300 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
108,300 | — | (819 | ) | — | 819 | (108,300 | ) | — | — | — | — | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Strategic Income Fund | ||||||||||||||||||||||||||||||||||||||||
Common Stocks | — | — | — | — | — | 313,131 | 572,597 | — | 885,728 | 313,130 | ||||||||||||||||||||||||||||||
Corporate Bonds | 314 | — | (340 | ) | — | (151,652 | ) | 151,678 | — | — | — | — | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
314 | — | (340 | ) | — | (151,652 | ) | 464,809 | 572,597 | — | 885,728 | 313,130 | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Ultra Growth Fund | ||||||||||||||||||||||||||||||||||||||||
Preferred Stocks | 1,251,300 | — | (229,447 | ) | — | — | 490,119 | — | — | 1,511,972 | 490,119 | |||||||||||||||||||||||||||||
Limited Partnership Interest | 3,388,501 | — | — | — | — | — | — | (3,388,501 | ) | — | — | |||||||||||||||||||||||||||||
Warrants | 20,924 | — | (181 | ) | — | (845 | ) | (19,898 | ) | — | — | — | — | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
4,660,725 | — | (229,628 | ) | — | (845 | ) | 470,221 | — | (3,388,501 | ) | 1,511,972 | 490,119 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
World Innovators Fund | ||||||||||||||||||||||||||||||||||||||||
Limited Partnership Interest | 247,043 | — | — | — | — | — | — | (247,043 | ) | — | — | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
247,043 | — | — | — | — | — | — | (247,043 | ) | — | — | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Income Fund | ||||||||||||||||||||||||||||||||||||||||
Asset-Backed Securities | — | 1,000,000 | — | — | — | 9,375 | — | — | 1,009,375 | 9,375 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
— | 1,000,000 | — | — | — | 9,375 | — | — | 1,009,375 | 9,375 | |||||||||||||||||||||||||||||||
|
|
QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
Fund | Description | Fair Value at 9/30/2017 | Valuation Technique | Unobservable Input | Range (Average) | |||||||||
Core Growth Fund | Direct Venture Capital Investments: Systems Software | $ | 4,024,495 | Market comparable companies | EV/R* multiple
Discount for lack of marketability | | 6.1 - 10.0 (8.3) 20% |
| ||||||
Emerging India Fund | Common Stock: Property & Casualty Insurance | $ | 1,521,247 | Discount to market | 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 | $ | 1,460,260 | Bond model with call option | Bond model with call option | 100% | ||||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Biotechnology | $ | 1,479,695 | Market comparable companies | EV/R* multiple
Discount for lack of marketability | | 1.1 - 12.1 (5.3) 20% |
| ||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Computer Services Software & Systems | $ | 6,397,861 | Liquidation preference | Probability weighting | 80% |
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SEPTEMBER 30, 2017 | ||
| ||
|
Fund | Description | Fair Value at 9/30/2017 | Valuation Technique | Unobservable Input | Range (Average) | |||||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Oil & Gas Equipment & Services | $ | 11,697,096 | Market comparable companies | EV/R* multiple
Discount for lack of marketability | | 1.4 - 9.2 (5.7) 20% |
| ||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Systems Software | $ | 16,183,484 | Market comparable companies | EV/R* multiple
Discount for lack of marketability | | 6.1 - 10.0 (8.3) 20% |
| ||||||
Small Cap Growth Fund | Direct Venture Capital Investments: Systems Software | $ | 9,116,040 | Market comparable companies | EV/R* multiple
Discount for lack of marketability | | 3.7 - 7.9 (5.9) 20% |
| ||||||
Strategic Income Fund | Common Stock: Diversified REITs | $ | 885,728 | Last trade | Last trade | 100% | ||||||||
Ultra Growth Fund | Direct Venture Capital Investments: Biotechnology | $ | 369,925 | Market comparable companies | EV/R* multiple
Discount for lack of marketability | | 1.1 - 12.1 (5.3) 20% |
| ||||||
Ultra Growth Fund | Direct Venture Capital Investments: Health Care Technology | $ | 265,717 | Probability of completion of repurchase | Discount to repurchase amount | 20% | ||||||||
Ultra Growth Fund | Direct Venture Capital Investments: Oil & Gas Equipment & Services | $ | 876,330 | Market comparable companies | EV/R* multiple
Discount for lack of marketability | | 1.4 - 9.2 (5.7) 20% |
| ||||||
Income Fund | Asset-Backed Security | $ | 1,009,375 | Broker bid | Broker bid | 100% |
* | 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. |
Changes in EV/R multiples may change 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 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.
The following tables present information about financial instruments that were subject to enforceable netting arrangements as of September 30, 2017:
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. | $ | 30,607,602 | $ | — | $ | (30,607,602 | ) | $ | — | ||||||||
Emerging India Fund | Fixed Income Clearing Corp. | 3,284,123 | — | (3,284,123 | ) | — | ||||||||||||
Emerging Markets Small Cap Fund | Fixed Income Clearing Corp. | 114,452 | — | (114,452 | ) | — | ||||||||||||
Frontier Emerging Small Countries Fund | Fixed Income Clearing Corp. | 2,545,919 | — | (2,545,919 | ) | — | ||||||||||||
Global Opportunities Fund | Fixed Income Clearing Corp. | 170,608 | — | (170,608 | ) | — | ||||||||||||
International Opportunities Fund | Fixed Income Clearing Corp. | 6,840,234 | — | (6,840,234 | ) | — | ||||||||||||
Large Cap Value Fund | Fixed Income Clearing Corp. | 5,442,486 | — | (5,442,486 | ) | — | ||||||||||||
Long/Short Fund | Fixed Income Clearing Corp. | 35,132,336 | — | (35,132,336 | ) | — | ||||||||||||
Micro Cap Fund | Fixed Income Clearing Corp. | 1,061,240 | — | (1,061,240 | ) | — | ||||||||||||
Micro Cap Value Fund | Fixed Income Clearing Corp. | 14,565,031 | — | (14,565,031 | ) | — | ||||||||||||
Small Cap Growth Fund | Fixed Income Clearing Corp. | 35,091,465 | — | (35,091,465 | ) | — | ||||||||||||
Small Cap Value Fund | Fixed Income Clearing Corp. | 3,047,345 | — | (3,047,345 | ) | — | ||||||||||||
Strategic Income Fund | Fixed Income Clearing Corp. | 7,174,334 | — | (7,174,334 | ) | — | ||||||||||||
Ultra Growth Fund | Fixed Income Clearing Corp. | 807,568 | — | (807,568 | ) | — | ||||||||||||
World Innovators Fund | Fixed Income Clearing Corp. | 29,928,007 | — | (29,928,007 | ) | — | ||||||||||||
Income Fund | Fixed Income Clearing Corp. | 779,866 | — | (779,866 | ) | — | ||||||||||||
U.S. Treasury Fund | Fixed Income Clearing Corp. | 1,803,381 | — | (1,803,381 | ) | — |
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. |
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WASATCH FUNDS | ||
| ||
|
Notes to Financial Statements (continued)
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 | $ | 51,372,975 | $ | — | $ | (51,372,975 | ) | $ | — |
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*
The following is a summary of the fair valuations of the Funds’ derivative instruments categorized by risk exposure:
WASATCH LARGE CAP VALUE FUND
The Effect of Derivative Instruments on the Statement of Operations for the year ended September 30, 2017:
Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||||||||
Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||||||||
Realized Gain on Derivatives Recognized in Income | ||||||||||||||||||||||||
Realized gain options written | $ | — | $ | — | $ | — | $ | 99,363 | $ | — | $ | 99,363 | ||||||||||||
|
|
WASATCH WORLD INNOVATORS FUND
The Effect of Derivative Instruments on the Statement of Operations for the period ended September 30, 2017:
Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||||||||
Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||||||||
Realized Gain on Derivatives Recognized in Income | ||||||||||||||||||||||||
Realized gain foreign currency forward exchange contracts | $ | — | $ | 624,745 | $ | — | $ | — | $ | — | $ | 624,745 | ||||||||||||
|
| |||||||||||||||||||||||
Net Change in Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||
Change in unrealized appreciation (depreciation) | $ | — | $ | 113,367 | $ | — | $ | — | $ | — | $ | 113,367 | ||||||||||||
|
|
For the year ended September 30, 2017, the average monthly balance of outstanding derivative financial instruments was as follows:
Large Cap Value Fund | ||||
Option contracts: | ||||
Average number of call contracts written | 25 | |||
Average value of call contracts written | $ | 7,896 | ||
World Innovators Fund | ||||
Forward currency contracts: | ||||
Average number of contracts — U.S. dollars purchased | — | 1 | ||
Average U.S. dollar amounts | $ | 337,949 | ||
Average number of contracts — U.S. dollars sold | 1 | |||
Average U.S. dollar amounts sold | $ | 7,758,933 |
* | See Note 4 — Financial Derivative Instruments for additional information. |
1 | Amount represents less than 0.5. |
15. SUBSEQUENT EVENTS
To provide the Wasatch Large Cap Value Fund with greater flexibility to invest in foreign securities in order to take advantage of investment opportunities that may arise in the larger global investment universe, the Funds’ Board of Trustees approved a change to the Fund’s name and to certain investment strategies of the Fund. The name of the Fund changed from Wasatch Large Cap
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SEPTEMBER 30, 2017 (UNAUDITED) | ||
| ||
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Value Fund to Wasatch Global Value Fund effective October 31, 2017. Additionally, the Fund’s Board of Trustees approved a change to certain of the Fund’s principal investment strategies; The Fund’s investment strategy changed from “under normal market conditions, we will invest at least 80% of the Fund’s net assets (plus borrowings for investment purposes) in the equity securities of companies with market capitalizations of over $5 billion at the time of purchase” to “under normal market conditions, we will invest the Fund’s net assets primarily in the equity securities of foreign and domestic companies of all market capitalizations.” In addition, the Fund’s previous investment strategy provided that the Fund may invest up to 20% of its total assets at the time of purchase in securities issued by foreign companies in developed or emerging markets. Under the new investment strategy, the Fund will typically invest in securities issued by companies domiciled in at least three countries, including the United States. Furthermore, the Fund may now invest a significant portion of its total assets in companies domiciled in foreign countries (under normal market conditions, we expect at least 40% of its assets to be invested outside the United States, or if conditions are not favorable, 30% of its assets to be invested outside the United States). The Fund may also invest a significant amount of its total assets (5% to 50%) under normal market conditions at the time of purchase in securities issued by companies domiciled in emerging and frontier markets.
At a meeting held on November 7-8, 2017, the Board of Trustees of Wasatch Funds Trust (the “Trust”) 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 “Reorganization”). In order for the Reorganization to occur, it must be approved by the shareholders of the Long/Short Fund. The Board of Trustees of the Trust (the “Board”) therefore called for a special meeting of the Shareholders of the Long/Short Fund (“Meeting”) to vote on the Reorganization. The Meeting is expected to be held in March 2018, and, if approved, it is anticipated that the Reorganization will be consummated approximately one month after the Meeting. More information about the proposed Reorganization and Meeting will be provided in the proxy solicitation materials for the Reorganization.
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WASATCH FUNDS | SEPTEMBER 30, 2017 | |
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of
Wasatch Funds Trust and Shareholders of
Wasatch Core Growth Fund® | Wasatch Micro Cap Fund® | |
Wasatch Emerging India Fund® | Wasatch Micro Cap Value Fund® | |
Wasatch Emerging Markets Select Fund® | Wasatch Small Cap Growth Fund® | |
Wasatch Emerging Markets Small Cap Fund® | Wasatch Small Cap Value Fund® | |
Wasatch Frontier Emerging Small Countries Fund® | Wasatch Strategic Income Fund® | |
Wasatch Global Opportunities Fund® | Wasatch Ultra Growth Fund® | |
Wasatch International Growth Fund® | Wasatch World Innovators Fund® | |
Wasatch International Opportunities Fund® | Wasatch-1st Source Income Fund® | |
Wasatch Large Cap Value Fund® | Wasatch-Hoisington U.S. Treasury Fund® | |
Wasatch Long/Short Fund® |
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of 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 International Growth Fund®, Wasatch International Opportunities Fund®, Wasatch Large Cap Value 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®, Wasatch-1st Source Income Fund®, and Wasatch-Hoisington U.S. Treasury Fund® (constituting the Wasatch Funds Trust, hereafter referred to as the “Funds”) at September 30, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of September 30, 2017 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
November 22, 2017
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WASATCH FUNDS | SEPTEMBER 30, 2017 (UNAUDITED) | |
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Management Information. The business affairs of Wasatch Funds are overseen by its Board of Trustees. The Board consists of five Independent Trustees and one Interested Trustee. Three of the Independent Trustees and the Interested Trustee 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 | 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; Co-Founder and Chairman of the Board of Intelisum, Inc. (a company pursuing computer and measurement technology and products) 2001 - 2008; Consultant on corporate growth and technology transfer since 2004; Vice President, Corporate Development, Legal Affairs and General Counsel, and Secretary, NPS Pharmaceuticals, Inc. from 1991 to 2004. | 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 (30 portfolios) since 2012. | |||||||
D. James Croft, Ph.D. 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 75 | Trustee and Chairman of the Governance and Nominating Committee | Indefinite Served as Trustee since 2005 | Consultant to the mortgage industry on issues of mortgage quality, identification of mortgage fraud, strategic planning and client development since 2004; Founder & Executive Director, Mortgage Asset Research Institute, from 1990 to 2004. | 19 | None. | |||||||
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, MBA, Ph.D. 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 65 | Trustee | 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. | 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 - 2012; Chairman and CEO, ABN AMRO, Inc. and U.S. Country Representative, ABN AMRO Bank, NV from 2002 - 2004. | 19 | Director, Youth Sports Alliance since 2015; Trustee, Woodlands Commercial Bank (a/k/a Lehman Brothers Commercial Bank) 2009 - 2012; Director Utah Symphony/Utah Opera since 2005. | |||||||
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WASATCH FUNDS | ||
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Supplemental Information (continued)
Name, Address and Age | Position(s) Held with Wasatch Funds | Term of Office1 and Length of | 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 | |||||||
Interested Trustee | ||||||||||||
Samuel S. Stewart, Jr.3 Ph.D. CFA 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 75 | President and Trustee | Indefinite Served as President and Trustee since 1986 | Chairman of the Board for the Advisor since 1975; Chief Investment Officer of the Advisor from 2004 to June 2009; Director of Research of the Advisor from 1975 to 2004; Chairman of the Board of Wasatch Funds from 1986 to 2004. | 19 | None. | |||||||
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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. |
2 | Directorships are those held by a Trustee in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of the Securities Exchange Act or any company registered as an investment company under the 1940 Act. |
3 | Dr. Stewart is an Interested Trustee because he serves as the Chairman of the Board of the Advisor and is an employee of the Advisor. |
Name, Address and Age | Position(s) Held with Trust | Term of Office and Length of Time Served | Principal Occupation(s) during Past 5 Years | |||
Officers | ||||||
Russell L. Biles 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 49 | 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. | |||
Cindy B. Firestone, CPA 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 59 | Treasurer | Indefinite Served as Treasurer since May 2009 | Treasurer for Wasatch Funds since May 2009; Assistant Treasurer for Wasatch Funds from November 2008 to May 2009; Internal Auditor for the Advisor from December 2002 to August 2011. | |||
David Corbett 505 Wakara Way 3rd Floor Salt Lake City, UT 84108 Age 44 | 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. | |||
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Additional information about the Funds’ trustees is provided in the Statement of Additional Information and is available without charge, upon request, by calling 800.551.1700.
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SEPTEMBER 30, 2017 (UNAUDITED) | ||
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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 | |||
International Growth Fund | 47,302,575 | |||
Large Cap Value Fund | 7,957,722 | |||
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 |
For the fiscal year ended September 30, 2017, certain dividends paid by each Fund may be subject to a maximum tax rate of 20% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. To the extent dividends are paid during the calendar year 2017, complete information will be reported on shareholders’ 2017 Form 1099-DIV.
The amount designated as qualified dividend income for the year ended September 30, 2016 will be at the highest amount permitted by law.
Corporate shareholders should note for the year ended September 30, 2017, the percentage of the Funds’ investment income (i.e., net investment income plus short-term capital gains) that qualified for the corporate dividends received deductions are as follows:
Fund | Percentage | |||
Large Cap Value Fund | 69 | % | ||
Small Cap Value Fund | 78 | % | ||
Strategic Income Fund | 72 | % | ||
Income Fund | 2 | % |
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 Washington, D.C. (information on the operation of the Public Reference room may be obtained by calling 800.SEC.0330).
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WASATCH FUNDS | SEPTEMBER 30, 2017 (UNAUDITED) | |
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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 | ||
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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
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2017 Annual Report www.WasatchFunds.com 800.551.700 Mix Paper from responsible FSC C132107
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
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WASATCH FUNDS
Salt Lake City, Utah
www.WasatchFunds.com
800.551.1700
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Wasatch Emerging Markets Small Cap Fund® Management Discussion | 10 | |||
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Board Considerations for Advisory and Sub-Advisory Agreements of the Wasatch Funds | 146 | |||
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This material must be accompanied or preceded by a prospectus.
Please read the prospectus carefully before you invest.
Wasatch Funds are distributed by ALPS Distributors, Inc.
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LETTERTO SHAREHOLDERS — DRIP, DRIP, DRIP | ||
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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%.
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MARCH 31, 2018 (UNAUDITED) | ||
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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.
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WASATCH CORE GROWTH FUND (WGROX / WIGRX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH CORE GROWTH FUND (WGROX / WIGRX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH EMERGING INDIA FUND (WAINX / WIINX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH EMERGING INDIA FUND (WAINX / WIINX) | MARCH 31, 2018 (UNAUDITED) | |
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|
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.
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WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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Table of Contents
WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) | MARCH 31, 2018 (UNAUDITED) | |
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|
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.
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Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX / WIEMX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX / WIFMX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | MARCH 31, 2018 (UNAUDITED) | |
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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
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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. |
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WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX / WIGOX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH GLOBAL VALUE FUND (FMIEX / WILCX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH GLOBAL VALUE FUND (FMIEX / WILCX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH INTERNATIONAL GROWTH FUND (WAIGX / WIIGX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX / WIIOX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH LONG/SHORT FUND (FMLSX / WILSX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH LONG/SHORT FUND (FMLSX / WILSX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH MICRO CAP FUND (WMICX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH MICRO CAP FUND (WMICX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH MICRO CAP VALUE FUND (WAMVX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH MICRO CAP VALUE FUND (WAMVX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH SMALL CAP GROWTH FUND (WAAEX / WIAEX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH STRATEGIC INCOME FUND (WASIX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH STRATEGIC INCOME FUND (WASIX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH ULTRA GROWTH FUND (WAMCX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH ULTRA GROWTH FUND (WAMCX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | MARCH 31, 2018 (UNAUDITED) | |
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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. |
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WASATCH WORLD INNOVATORS FUND (WAGTX / WIGTX) | MARCH 31,��2018 (UNAUDITED) | |
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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.
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WASATCH-1ST SOURCE INCOME FUND (FMEQX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH-1ST SOURCE INCOME FUND (FMEQX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) | MARCH 31, 2018 (UNAUDITED) | |
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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.
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WASATCH FUNDS MANAGEMENT DISCUSSIONS | ||
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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.
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MARCH 31, 2018 (UNAUDITED) | ||
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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.
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WASATCH FUNDS | ||
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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.
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MARCH 31, 2018 (UNAUDITED) | ||
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 |
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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 | ) | ||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
— | — | — | — | — | — | |||||||||||||||||
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 | ) | |||||||||||||||
|
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|
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|
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 | — | — | |||||||||||||||||
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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 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||
— | — | — | — | |||||||||||
— | — | — | — | |||||||||||
— | — | — | — | |||||||||||
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|
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|
|
|
|
| |||||||
— | — | — | — | |||||||||||
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|
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% |
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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.
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(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
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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. |
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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.
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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.
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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.
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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 | ||||||||||||||
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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 | ) | ||||||||||||||
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Net appreciation | $ | 668,015,216 | $ | 55,690,865 | $ | 11,862,563 | $ | 209,270,425 | $ | 40,514,687 | $ | 41,117,038 | $ | 12,207,720 | ||||||||||||||
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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 | ||||||||||||||
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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 | ) | ||||||||||||||
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Net appreciation (depreciation) | $ | 555,500,147 | $ | 150,968,557 | $ | (1,356,852 | ) | $ | 115,017,685 | $ | 66,824,767 | $ | 628,120,158 | $ | 82,004,159 | |||||||||||||
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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 | ||||||||||||||||||
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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 | ) | ||||||||||||||||||
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Net appreciation (depreciation) | $ | 5,322,160 | $ | 36,421,362 | $ | 20,923,342 | $ | (820,976 | ) | $ | (24,686,176 | ) | ||||||||||||||||
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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 |
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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.
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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
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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 | % |
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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 | % | ||||||||||
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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.
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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
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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
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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.
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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 | ||||||||||||||
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| |||||||||||||||||
$ | 1,627,776,065 | $ | 112,582,408 | $ | 5,721,445 | $ | 1,746,079,918 | |||||||||||
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| |||||||||||||||||
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 | ||||||||||||||
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| |||||||||||||||||
$ | 23,696,192 | $ | 24,946,144 | $ | — | $ | 48,642,336 | |||||||||||
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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 | |||||||||||
|
|
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WASATCH FUNDS | ||
| ||
|
Notes to Financial Statements (continued)
Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 3/31/2018 | |||||||||||||
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 | |||||||||||
|
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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 | |||||||||||
|
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WASATCH FUNDS | ||
| ||
|
Notes to Financial Statements (continued)
Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 3/31/2018 | |||||||||||||
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 | ) | |||||||||
|
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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. |
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| ||
|
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 | |||||||||||
|
|
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| ||
|
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. |
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| ||
|
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.
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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 | ) | |||||||||||||||||||||||||||||
|
|
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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.
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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 | ||||||||||||
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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 | ||||||||||||
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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)
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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.
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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. | |||||||
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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. |
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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. | |||
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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
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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,
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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
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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
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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.
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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
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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
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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.
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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.
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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.
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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.
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WASATCH FUNDS | MARCH 31, 2018 (UNAUDITED) | |
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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 | ||
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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
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2018 Semi-Annual Report
www.WasatchFunds.com 800.551.1700
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PART C
Wasatch Funds Trust
Item 15. | Indemnification |
Under Section 9.2 of Wasatch Funds Trust’s (the “Trust” or the “Registrant”) Declaration of Trust, no person who is or has been a Trustee, officer, or employee of the Registrant shall be subject to any personal liability whatsoever to any party, including natural persons, corporations, partnerships, limited partnerships, business trusts, limited liability partnerships, statutory trusts, limited liability companies, trusts, associations, joint ventures, estates, nominees and any other entity in its own or any representative capacity, whether or not legal entities, and governments and agencies and political subdivisions thereof, in each case whether domestic or foreign, (“Person”) other than the Registrant or its shareholders, in connection with the affairs of the Registrant; and all Persons shall look solely to the property of the Registrant or of a series for satisfaction of claims of any nature arising in connection with the affairs of the Registrant or such series.
The Declaration of Trust provides that every note, bond, contract, instrument, certificate, share or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Registrant or the Trustees or any of them in connection with the Registrant shall be conclusively deemed to have been executed or done only in or with respect to their or his capacity as Trustees or Trustee and neither such Trustees or Trustee nor the Registrant’s shareholders shall be personally liable thereon.
The Declaration of Trust provides that all Persons extending credit to, contracting with or having any claim against the Registrant or a series shall look only to the assets of the property of the Registrant or such series for payment under such credit, contract or claim; and neither the Trustees, nor any of the Registrant’s officers or employees, whether past, present or future, shall be personally liable therefor.
The Declaration of Trust provides that no person who is or has been a Trustee, officer or employee of the Registrant shall be liable to the Registrant or to any shareholder for any action or failure to act except for his or her own bad faith, willful misfeasance, gross negligence or reckless disregard of his or her duties involved in the conduct of the individual’s office, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law.
Furthermore, the Declaration of Trust provides that without limiting the foregoing limitations of liability contained in Section 9.2, a Trustee shall not be responsible for or liable in any event for any neglect or wrongdoing of any officer, employee, investment adviser, sub-adviser, principal underwriter, custodian or other agent of the Registrant or a series, nor shall any Trustee be responsible or liable for the act or omission of any other Trustee (or for the failure to compel in any way any former or acting Trustee to redress any breach of trust), except in the case of such Trustee’s own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.
Section 9.5 of the Registrant’s Declaration of Trust provides that subject to certain exceptions and limitations, every person who is, or has been, a Trustee, officer, or employee of the Registrant, including persons who serve at the request of the Registrant as directors, trustees, officers, employees or agents of another organization in which the Registrant has an interest as a shareholder, creditor or otherwise, shall be indemnified by the Registrant or applicable series to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
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jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 16. | Exhibits | |||||
(1) | (a) | Declaration of Trust of the Registrant dated November 6, 2009 is incorporated herein by reference to Post-Effective Amendment No. 50 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on March 31, 2010. | ||||
(b) | Amendment to Declaration of Trust of the Registrant dated December 30, 2009 is incorporated herein by reference to Post-Effective Amendment No. 50 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on March 31, 2010. | |||||
(c) | Amended and Restated Designation of Series of Shares Certificate dated January 28, 2011 is incorporated herein by reference to Post-Effective Amendment No. 64 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on August 22, 2012. | |||||
(d) | Designation of Classes Certificate is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on November 17, 2011. | |||||
(e) | Amended and Restated Designation of Series of Shares Certificate is incorporated herein by reference to Post-Effective Amendment No. 61 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on November 17, 2011. | |||||
(f) | Amended and Restated Designation of Series of Shares Certificate dated August 16, 2012 is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on October 2, 2012. | |||||
(g) | Amended and Restated Designation of Classes of Shares effective August 15, 2012 is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on October 2, 2012. | |||||
(h) | Amended and Restated Designation of Classes of Shares effective as of April 30, 2015 is incorporated herein by reference to Post-Effective Amendment No. 90 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on January 28, 2016. | |||||
(i) | Amended and Restated Designation of Series of Shares dated May 6, 2015 is incorporated herein by reference to Post-Effective Amendment No. 90 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on January 28, 2016. | |||||
(j) | Amended and Restated Designation of Series of Shares dated October 31, 2017 is incorporated herein by reference to the Registrant’s Registration Statement on Form N-14 filed with the Commission on December 29, 2017. | |||||
(k) | Amended and Restated Designation of Classes of Shares dated October 31, 2017 is incorporated herein by reference to the Registrant’s Registration Statement on Form N-14 filed with the Commission on December 29, 2017. | |||||
(2) | Bylaws of the Registrant dated November 6, 2009 is incorporated herein by reference to Post-Effective Amendment No. 50 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on March 31, 2010. | |||||
(3) | Not Applicable. |
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(4) | Form of Agreement and Plan of Reorganization filed herewith as Appendix A to the Proxy Statement/Prospectus. | |||||
(5) | Not Applicable. | |||||
(6) | (a) | Advisory and Service Contract by and between the Registrant and Wasatch Advisors, Inc. (the “Advisor”) is incorporated herein by reference to Post-Effective Amendment No. 51 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on December 2, 2010. | ||||
(b) | Exhibit A to Advisory and Service Contract dated January 31, 2016 by and between the Registrant and the Advisor is incorporated herein by reference to Post-Effective Amendment No. 90 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on January 28, 2016. | |||||
(c) | Exhibit A to Advisory and Service Contract dated January 31, 2017 is incorporated herein by reference to Post-Effective Amendment No. 92 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on January 28, 2017. | |||||
(7) | Distribution Agreement by and between the Registrant and ALPS Distributors, Inc. is incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-14 filed with the Commission on July 23, 2018. | |||||
(8) | Not Applicable. | |||||
(9) | (a) | Custodian Agreement by and between the Registrant and State Street Bank and Trust Company (“State Street”) is incorporated herein by reference to Post-Effective Amendment No. 51 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on December 2, 2010. | ||||
(b) | Notice to Custodian Agreement by and between the Registrant and State Street incorporated herein by reference to Post-Effective Amendment No. 53 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on April 12, 2011. | |||||
(c) | Notice to Custodian Agreement by and between the Registrant and State Street on behalf of Wasatch Frontier Emerging Small Countries Fund is incorporated herein by reference to Post-Effective Amendment No. 62 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on January 27, 2012. | |||||
(d) | Notice to Custodian Agreement by and between the Registrant and State Street on behalf of Wasatch Emerging Markets Select Fund is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant’s Registration Statement on Form N-1A filed with the Commission on October 2, 2012. | |||||
(10) | Not Applicable. | |||||
(11) | (a) | Opinion and consent of Chapman and Cutler LLP regarding legality of issuance of shares and other matters is incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-14 filed with the Commission on July 23, 2018. | ||||
(b) | Opinion and consent of Morgan, Lewis & Bockius LLP regarding the legality of shares incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-14 filed with the Commission on July 23, 2018. | |||||
(c) | Consent of Chapman and Cutler LLP is filed herewith. | |||||
(d) | Consent of Morgan, Lewis, Bockius LLP is filed herewith. | |||||
(12) | Form of opinion of Chapman and Cutler LLP regarding tax matters is incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-14 filed with the Commission on July 23, 2018. |
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(13) | Not Applicable. | |||||
(14) | Consent of PricewaterhouseCoopers LLP is filed herewith. | |||||
(15) | Not Applicable. | |||||
(16) | Powers of Attorney are incorporated herein by reference to the Registrant’s Registration Statement on Form N-14 filed with the Commission on December 29, 2017. | |||||
(17) | Form of Proxy Card is filed herewith. |
| Item 17. Undertakings | |||||
(1) | The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as amended, the reoffering prospectus will contain the information called for by the applicable registration form for re-offerings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. | |||||
(2) | The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, as amended, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. | |||||
(3) | The undersigned Registrant agrees to file in a Post-Effective Amendment to this Registration Statement a final tax opinion upon the closing of the transaction. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed on behalf of the registrant, in the City of Salt Lake City, and the State of Utah on the 27th day of July, 2018.
WASATCH FUNDS TRUST
By /s/ Eric S. Bergeson
Eric S. Bergeson.,
President
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the date indicated.
Signature | Title | Date | ||
/s/ Eric S. Bergeson Eric S. Bergeson | President and Trustee (principal executive officer) | July 27, 2018 | ||
/s/ Michael K. Yeates Michael K. Yeates | Treasurer (principal financial and accounting officer) | July 27, 2018 | ||
James U. Jensen* James U. Jensen, Esquire | Trustee | July 27, 2018 | ||
Miriam M. Allison* Miriam M. Allison | Trustee | July 27, 2018 | ||
Heikki Rinne* Heikki Rinne | Trustee | July 27, 2018 | ||
Kristen M. Fletcher* Kristen M. Fletcher | Trustee | July 27, 2018 |
*/s/ Russell L. Biles
Russell L. Biles
Attorney-in-Fact
July 27, 2018
*Signed pursuant to powers of attorney incorporated herein by reference to the Registrant’s Registration Statement on Form N-14 filed with the Commission on December 29, 2017.
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EXHIBIT LIST
EXHIBITS | EXHIBIT NO. | |
Consent of Chapman and Cutler LLP | EX-99.11(c) | |
Consent of Morgan, Lewis & Bockius LLP | EX-99.11(d) | |
Consent of PricewaterhouseCoopers LLP | EX-99.14 | |
Form of Proxy Card | EX-99.17 |