UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4920
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WASATCH FUNDS, INC.
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(Exact name of registrant as specified in charter)
150 SOCIAL HALL AVENUE
4TH FLOOR
SALT LAKE CITY, UTAH 84111
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(Address of principal executive offices)(Zip code)
(Name and Address of Agent for Service) Copy to:
Samuel S. Stewart, Jr. Michael J. Radmer, Esq.
Wasatch Funds, Inc. Dorsey & Whitney LLP
150 Social Hall Avenue, 4th Floor 50 South Sixth Street, Suite 1500
Salt Lake City, Utah 84111 Minneapolis, Minnesota 55402-1498
Registrant's telephone number, including area code: 801.533.0777
Date of fiscal year end: September 30
Date of reporting period: March 31, 2004
ITEM 1: REPORT OF SHAREHOLDER.
WASATCH FUNDS, INC.
P.O. BOX 2172
MILWAUKEE, WI 53201-2172
WWW.WASATCHFUNDS.COM
800.551.1700
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS .................................................... 2
CORE GROWTH FUND .......................................................... 4
Management Discussion ................................................. 4
Portfolio Summary ..................................................... 5
GLOBAL SCIENCE & TECHNOLOGY FUND .......................................... 6
Management Discussion ................................................. 6
Portfolio Summary ..................................................... 7
INTERNATIONAL GROWTH FUND ................................................. 8
Management Discussion ................................................. 8
Portfolio Summary ..................................................... 9
MICRO CAP FUND ............................................................ 10
Management Discussion ................................................. 10
Portfolio Summary ..................................................... 11
MICRO CAP VALUE FUND ...................................................... 12
Management Discussion ................................................. 12
Portfolio Summary ..................................................... 13
SMALL CAP GROWTH FUND ..................................................... 14
Management Discussion ................................................. 14
Portfolio Summary ..................................................... 15
SMALL CAP VALUE FUND ...................................................... 16
Management Discussion ................................................. 16
Portfolio Summary ..................................................... 17
ULTRA GROWTH FUND ......................................................... 18
Management Discussion ................................................. 18
Portfolio Summary ..................................................... 19
WASATCH-HOISINGTON U.S. TREASURY FUND ..................................... 20
Management Discussion ................................................. 20
Portfolio Summary ..................................................... 21
PORTFOLIO OF INVESTMENTS .................................................. 22
STATEMENTS OF ASSETS AND LIABILITIES ...................................... 62
STATEMENTS OF OPERATIONS .................................................. 66
STATEMENTS OF CHANGES IN NET ASSETS ....................................... 70
FINANCIAL HIGHLIGHTS ...................................................... 74
NOTES TO FINANCIAL STATEMENTS ............................................. 83
DIRECTORS AND OFFICERS .................................................... 91
PROXY VOTING POLICIES AND PROCEDURES ...................................... 91
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS ............................... 92
HOW TO CONTACT WASATCH .................................................... 93
This material must be accompanied or preceded by a prospectus. Please read the
prospectus carefully before you invest.
Wasatch Funds are distributed by ALPS Distributors, Inc.
1
LETTER TO SHAREHOLDERS
[PHOTO OF SAMUEL S. STEWART Jr.]
Samuel S. Stewart, Jr., PhD, CFA
Chairman of Wasatch Funds
FELLOW SHAREHOLDERS:
The challenge in writing this letter to you was to be appropriately
cautious without being overly negative. The last thing I want to do is throw
cold water on the exceptional returns small cap investors garnered last year.
But maybe tempering expectations with a dose of reality is not a bad thing.
The magnitude of returns in the small cap market last year was unusual,
especially since data supporting the strength of the economic recovery were
mixed. Given the dramatic performance of small company stocks in 2003, it is
hard to imagine that the small cap market will clear that high hurdle in 2004.
What we witnessed last year may have been an enthusiastic overreaction to
positive economic news following 2002, a bleak year for stocks and the economy.
In 2003, the behavior of the stock and bond markets sent conflicting
messages. Stock prices were unusually strong, a typical sign of a robust
economic recovery. On the other hand, the Federal Reserve Board (Fed) did not
begin raising interest rates to combat inflation as it usually does during an
economic recovery. The Fed's stance seemed to indicate that inflation was not
heating up and that the economy would recover at a slow pace. How these
seemingly opposing views will resolve themselves in 2004 is hard to say.
Tax cut stimulus, low interest rates and increased productivity bode well
for the economy in 2004. Still, the outlook is clouded by unanswered questions
including: When and by how much will the Fed raise interest rates? Will
companies step up hiring or will this be a truly jobless recovery? Will the
rising cost of fuel hinder economic growth? Were corporate profits being driven
mostly by cost-cutting? What happens to profits when companies have wrung out
all the efficiencies? Will Middle East tensions flare or cool? What will be the
impact of this year's presidential race?
While the economy is growing, this growth is not as strong as some would
like. Stock prices indicate to us that many companies are a little overvalued.
Slower than expected economic growth could cause stocks to trade up or down in a
narrow range, posting neither significant losses nor substantial gains.
If there is one thing I have learned in over 40 years of investing, it is
that things tend to sort themselves out over time. No matter what the economy
does in 2004, I believe there will be opportunities in the stock market for
investors who are willing to dig deep to understand the companies they own.
The Wasatch research team has been on the road a lot lately. In these
unsettled times, we believe it is even more important to get out and kick the
tires of current and prospective investments. The knowledge we gain during our
company visits cannot be found in a report or by studying the big picture. It is
a sense of the energy and enthusiasm that people around the world are pouring
into the businesses they are building. This is the reason we are not overly
negative. It is the source of our optimism despite the many challenges that
exist in the global and U.S. economies.
WASATCH FUNDS
Small company stocks as measured by the performance of the Russell 2000
Index had a record-breaking year in 2003. The Russell 2000 Index posted its best
ever calendar year performance with a return of 47.25% as of December 31, 2003.
The companies that drove the performance of the Russell 2000 Index were
primarily those with market capitalizations less than $500 million. Many of
these companies were also characterized by lack of profits, low return on equity
and stock prices less than $5. These types of companies generally did not meet
the quality standards of our equity Funds. For this reason, Wasatch Funds did
not fully participate in the gains of the small cap market, despite producing
strong positive returns over the past six months.
In general, for the six months ended March 31, 2004, earnings growth for
the companies we held was strong and was supported by solid fundamentals such as
rising profits and healthy balance sheets. These are among the qualities we
prize in long-term investments.
For information about the performance and outlook of the
Wasatch-Hoisington U.S. Treasury Fund, please see the management discussion and
portfolio summary on pages 20 and 21.
2
MARCH 31, 2004
OUTLOOK
Although the Funds produced significant gains over the past six months, on
the whole, we feel that their portfolios of investments are not overvalued and
still offer upside potential.
We will continue to be disciplined in our search for individual companies
that meet our strict investment standards. In this quest, we hope that our
time-tested process of intensive fundamental research that includes visiting
companies and meeting with their management teams serves us well. Our efforts
are completely focused on investing in companies that we believe have the
potential to increase your capital over the long-term.
WORTH NOTING
We are excited to announce the upcoming launch of the Wasatch Heritage
Growth Fund on June 18, 2004. We called the Fund "Heritage Growth" because it
will follow Wasatch's diligent approach to growth investing. The Fund will focus
on investing in growing companies with market capitalizations between $3 billion
and $20 billion. Many of these companies are ones we invested in when they were
small. We believe they are still outstanding investments; they simply outgrew
the market capitalization parameters of our existing Funds. As with all Wasatch
Funds, the Heritage Growth Fund is designed for long-term investors.
Please visit our web site at www.wasatchfunds.com or call 800.551.1700 for
a prospectus containing more information about the Wasatch Heritage Growth Fund.
You should consider the investment objectives, risks, charges and expenses
carefully before investing.
We are grateful for the opportunity to serve your investment needs and
look forward to strengthening our relationship with you in the future. We will
continue to follow a disciplined course for investing your assets, as we believe
this is the best way we can help you achieve your long-term investment
objectives.
Sincerely,
/s/ Samuel S. Stewart, Jr.
- ----------------------------
Samuel S. Stewart, Jr.
Chairman of the Board
3
CORE GROWTH FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF SAMUEL S. STEWART, JR.] [PHOTO OF JB TAYLOR]
SAMUEL S. STEWART, JR., PHD, CFA JB TAYLOR
PORTFOLIO MANAGER PORTFOLIO MANAGER
SIX MONTH REVIEW
The Wasatch Core Growth Fund gained 20.14% in the six months ended March
31, 2004. The Fund's return was slightly less than the 21.69% six month return
of the Russell 2000 Index, a widely used benchmark for the performance of small
company stocks.
Our philosophy is that earnings growth drives stock prices. We believe
that long-term performance will take care of itself if we successfully invest in
companies that consistently produce the earnings growth we seek. We are pleased
to report that in the six-month period the average annual earnings growth of the
Fund's holdings was above our 15% target. Overall, we feel that the companies we
hold are poised to continue this solid growth. Few holdings failed to meet our
growth expectations.
Being careful not to pay too much for stocks is also an important part of
our discipline. We use the Fund's trailing 12-month price-to-earnings (P/E)
ratio, the price of a stock divided by its earnings per share, to help us
measure whether the portfolio is over or undervalued. At the end of the period,
the trailing P/E was 18.5, giving the portfolio a favorable P/E to growth rate
ratio of about 1.
Over the six-month period, the biggest contributor to the Fund's
performance was the financial services sector. We were overweighted in this
sector compared to the Russell 2000 Index and our holdings outperformed those of
the Index. A top contributor to the Fund's performance was AmeriCredit Corp., a
subprime automobile lender. AmeriCredit was one of the Fund's worst performers
a year ago as it encountered a more difficult macro-environment, and continued
to grow faster than its balance sheet would support. The company's management
moved aggressively to restructure, strengthen the balance sheet, cut costs and
improve operations. These bold maneuvers and the improving economy helped
AmeriCredit get back on track.
Fidelity National Financial, Inc. was also a significant contributor to
our performance. The company has broadened its business model from a focus on
title insurance to include providing processing services to banks, a move we
believe will be well received by the market. Fidelity National now handles
mortgage processing for nine of the 10 biggest banks in the U.S. We feel the
company's more diversified business model gives it outstanding long-term growth
potential.
The consumer discretionary sector was the second biggest contributor to
the Fund's six-month return. In this sector, we slightly outperformed the
Russell 2000 Index due to our significant overweighting. Our consumer
discretionary holdings were not up nearly as much as the Index's holdings in
this sector. The biggest contributor to the Fund's performance was Copart, Inc.,
a provider of vehicle salvage services. Copart's stock has risen from depressed
levels as the company emerged from a cyclical downturn and changed to doing
business entirely via the Internet. We expect earnings growth to improve
dramatically. SCP Pool Corp. was another strong performer in the consumer
discretionary sector. The company continues to execute well on its plan to
dominate the pool supply industry. The company is growing by taking market
share, adding new product categories and acquiring smaller distributors. The
biggest detractor in the consumer discretionary sector was Christopher & Banks,
a women's apparel retailer. We sold our holding as we became less convinced of
the uniqueness of the company's products and market positioning.
Health care was the third largest contributor to performance led by
Pediatrix Medical Group Inc., a national network of neonatalogists. Our
substantial overweighting in this sector helped performance versus the Russell
2000 Index. Overall, our health care holdings did not perform quite as well as
those in the Index. First Health Group Corp. and Lincare Holdings Inc. were the
notable detractors from the Fund's performance.
Materials and processing was the worst performing sector in the Fund and
the biggest contributor to the Fund's under-performance of the Index. Our only
holding in this sector, Cabot Microelectronics Corp., a supplier of chemicals to
the semiconductor industry, suffered stock price weakness amid concerns over
increased competition. We remain positive on Cabot's franchise in supplying to
the semiconductor industry and continue to be bullish on the company's long-term
prospects.
As is typical, the Fund was significantly underweighted in technology
compared to the Russell 2000 Index. Our holdings were down slightly, while
companies in the Index, particularly those in industries where we had no
holdings, were up significantly. Our focus on more stable service oriented
technology companies hurt performance relative to the Index, as the more
economically sensitive equipment and semiconductor companies posted the largest
gains.
OUTLOOK
It has been our experience that in times of economic uncertainty,
investors gravitate toward companies with solid earnings growth and strong
fundamentals. They also tend to pay more attention to value. We believe the Core
Growth Fund holds stable companies with the potential to consistently produce
the earnings growth we seek. We also believe that we have not overpaid for
growth. We believe the quality and value of the Core Growth Fund's portfolio of
companies has the potential to help you as you work toward achieving your
long-term investment goals. Thank you for the opportunity to invest your assets.
4
CORE GROWTH FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
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WASATCH CORE GROWTH FUND 63.33% 21.09% 18.79%
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Russell 2000 Index 63.83% 9.66% 10.44%
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PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investments in small cap funds can be more volatile and loss of principal could
be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
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RCII RENT-A-CENTER, INC. 6%
Rent-to-own store operator.
ORLY O'REILLY AUTOMOTIVE, INC. 4%
Automotive parts retailer/distributor.
FNF FIDELITY NATIONAL FINANCIAL, INC. 4%
Services for real estate professionals.
CPRT COPART, INC. 3%
Vehicle salvage services.
ACF AMERICREDIT CORP. 3%
Subprime automobile lender.
PDX PEDIATRIX MEDICAL GROUP, INC. 3%
National network of neonatalogists.
CBH COMMERCE BANCORP, INC. 3%
Commercial banking, corporate trust and
insurance brokerage services.
POOL SCP POOL CORP. 3%
Swimming pool supply distributor.
AGP AMERIGROUP CORP. 2%
Health care services to Medicaid recipients.
AHG APRIA HEALTHCARE GROUP, INC. 2%
Home health care services.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
FINANCIAL SERVICES 34.0%
CONSUMER DISCRETIONARY 29.0%
HEALTH CARE 21.7%
PRODUCER DURABLES 5.7%
TECHNOLOGY 4.2%
CONSUMER STAPLES 1.6%
FINANCIALS 1.5%
UTILITIES 1.0%
MATERIALS & PROCESSING 0.9%
AUTO & TRANSPORTATION 0.4%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch Core Growth Fund Russell 2000 Index
03/31/1994 10,000 10,000
03/31/1995 11,819 10,552
03/31/1996 16,434 13,617
03/31/1997 17,312 14,312
03/31/1998 24,720 20,326
03/31/1999 21,489 17,022
03/31/2000 26,727 23,370
03/31/2001 37,605 19,788
03/31/2002 52,915 22,555
03/31/2003 34,254 16,473
03/31/2004 55,948 26,988
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 IN THE INDEX.
5
GLOBAL SCIENCE & TECHNOLOGY FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF AJAY KRISHNAN]
AJAY KRISHNAN, CFA
PORTFOLIO MANAGER
SIX MONTH REVIEW
In the six months ended March 31, 2004, the Global Science & Technology
Fund gained 11.92% compared to a gain of 10.49% for the Russell 2000 Technology
Index, the component of the Russell 2000 Index that tracks the performance of
technology-related stocks, and a gain of 11.90% for the technology-laden Nasdaq
Composite Index. We added the Lipper Science & Technology Index as a benchmark
for the Fund. Going forward, we plan to drop the Russell 2000 Growth Index. We
believe the Lipper Science & Technology Index is a better benchmark. It is a
composite of mutual funds that invest in science and technology companies and
have investment objectives similar to the Fund. In the past six months, the
Lipper Science & Technology Index outperformed the Fund with a gain of 13.46%.
The stocks of very small technology and biotechnology companies did
extremely well in 2003 and January 2004. This was true of markets around the
world as well as markets in the United States. Investors bought more speculative
stocks indicating their optimistic expectations for the recovery of global
economies.
Stock picking was the biggest driver of the Fund's performance in the six
months ended March 31, 2004. The majority of companies held by the Fund made a
positive contribution to performance. Despite the rise in stock prices, we
believe the value of most of the Fund's holdings remains rational.
The Fund's largest holding and the best contributor was Accredo Health,
Inc., a provider of drug distribution and other services for individuals with
chronic diseases. Accredo recently signed a new partnership agreement and has
benefited from several new distribution contracts for recently approved drugs.
The Fund's health services sector was overweighted compared to the Lipper
Science & Technology Index. Our holdings led by Accredo outperformed those of
the Index.
The most heavily weighted sector in the Fund was electronic technology.
Despite having over 30% of assets invested in this sector, we were underweighted
compared to the hefty 52% weighting of electronic technology in the Lipper
Science & Technology Index. This sector was the biggest contributor to the
Fund's performance led by Monolithic System Technology, Inc., a designer of
RAM-based memory architecture, and O2Micro International Ltd., a maker of
semiconductors that increase power efficiency in electronic devices. However,
our substantial underweighting meant this sector was the biggest contributor to
the Fund's underperformance versus the Index.
The health technology sector was the second biggest contributor to the
Fund's performance. We were significantly overweighted in this sector compared
to the Lipper Science & Technology Index and that helped our performance
relative to the Index. Our health technology holdings were not up as much as
those in the Index. One of the biggest detractors was Cyberonics, a developer of
implantable medical devices. Shifting expectations over approval of its
implantable device for treatment of depression caused Cyberonics' stock price to
decline. In the health technology sector, the strength of our biotechnology
holdings was offset by the weakness of our generic pharmaceuticals holdings.
Cabot Microelectronics Corp., a supplier of chemicals to the semiconductor
industry, was primarily responsible for the Fund's loss in the process
industries sector. Cabot's stock price declined on news of changes in senior
management, lowered earnings estimates and concern over the market position of
the company's leading edge technology. We are closely monitoring our position in
Cabot.
We had fewer than 10% of assets invested in the technology services sector
while this sector made up over 27% of the Lipper Science & Technology Index. Our
technology services holdings made a positive contribution to performance, but
our significant underweighting held back performance relative to the Index.
Over the past six months, initial public offerings (IPOs) and mergers and
acquisitions have increased. We invested on the IPO of Kintera, Inc., a provider
of software services to non-profit organizations. Kintera was one of the Fund's
best performers in the period. When Monolithic System Technology, Inc. announced
that it would be acquired by Synopsys, Inc., we reduced our position and
captured a profit that made a significant contribution to performance.
The Fund was overweighted in the commercial services sector compared to
the Lipper Science & Technology Index and our holdings underperformed those of
the Index. The underperformance can mostly be attributed to Wireless Facilities,
Inc., a provider of services to the telecommunications industry. The company's
stock price came under pressure due to a distribution of shares to venture
capital investors that were subsequently sold in the market. We remain confident
in the company's fundamentals and long-term growth prospects.
OUTLOOK
We feel that going into this new period the Fund's positioning is in
keeping with our efforts to increase shareholders' capital over the long-term.
We believe the valuation of our companies makes sense in light of their
underlying fundamentals and long-term growth prospects. Barring any unforeseen
events or economic setbacks, we expect earnings growth, particularly of the
Fund's largest holdings, to be strong over the next several years. Our health
care holdings have the potential to benefit from increased spending on health
care as the result of an aging global population. However, the positive effect
we expect from increased corporate spending for information technology may be
dampened if interest rates rise. Despite the uncertainties that exist, we
believe our intensive quantitative and qualitative research will lead us to
companies that have the potential to help us achieve the long-term results we
seek. Thank you for investing in the Wasatch Global Science & Technology Fund.
6
GLOBAL SCIENCE & TECHNOLOGY FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL
TOTAL RETURNS
SINCE INCEPTION
1 YEAR 5 YEARS 12/19/00
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WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND 64.88% N/A 6.41%
- ----------------------------------------------------------------------------------------------------------
Lipper Science & Technology Index 53.35% N/A -17.14%
- ----------------------------------------------------------------------------------------------------------
Russell 2000 Technology Index 71.82% N/A -12.25%
- ----------------------------------------------------------------------------------------------------------
Nasdaq Composite Index 49.38% N/A -7.65%
- ----------------------------------------------------------------------------------------------------------
Russell 2000 Growth Index 63.17% N/A 1.09%
- ----------------------------------------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investments in concentrated funds can be more volatile and loss of principal
could be greater than investing in more diversified funds. Investing in foreign
securities entails special risks, such as currency fluctuations and political
uncertainties, which are described in more detail in the prospectus.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
- --------------------------------------------------------------------------
ACDO ACCREDO HEALTH, INC. 6%
Services for individuals with chronic diseases.
WFII WIRELESS FACILITIES, INC. 5%
Telecommunications industry services.
UTSI UTSTARCOM, INC. (China) 4%
Telecommunications network equipment.
CCMP CABOT MICROELECTRONICS CORP. 3%
Chemicals to the semiconductor industry.
OIIM O2MICRO INTERNATIONAL LTD. 3%
(Cayman Islands) Semiconductors to
increase power efficiency.
CSGP COSTAR GROUP, INC. 2%
Information services for commercial real estate.
PLXT PLX TECHNOLOGY, INC. Semiconductors 2%
to accelerate and manage data transfer.
TSM TAIWAN SEMICONDUCTOR
MANUFACTURING CO. LTD. ADR (Taiwan) 2%
Semiconductor contract manufacturer.
CECO CAREER EDUCATION CORP. 2%
Schools for post-secondary education.
ANPI ANGIOTECH PHARMACEUTICALS, INC. 2%
(Canada) Medical device enhancement
pharmaceuticals.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
TECHNOLOGY 38.8%
HEALTH CARE 27.4%
CONSUMER DISCRETIONARY 12.0%
INFORMATION TECHNOLOGY 6.6%
PRODUCER DURABLES 5.6%
MATERIALS & PROCESSING 4.8%
UTILITIES 2.3%
ENERGY 1.2%
TREASURY NOTES & BONDS 0.7%
OTHER 0.6%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Wasatch Global Science Lipper Science Russell 2000 Russell 2000
Date & Technology Fund & Technology Index Nasdaq Composite Index Technology Index Growth Index
12/19/2000 10,000 10,000 10,000 10,000 10,000
03/31/2001 7,990 6,403 7,018 6,990 8,851
03/31/2002 11,020 5,585 7,061 6,739 9,289
03/31/2003 7,439 3,516 5,155 3,789 6,351
03/31/2004 12,265 5,391 7,701 6,509 10,363
+INCEPTION: DECEMBER 19, 2000. THE LIPPER SCIENCE & TECHNOLOGY INDEX is a
composite of mutual funds that invest in science and technology companies and
have investment objectives similar to those of the Fund. THE RUSSELL 2000
TECHNOLOGY INDEX is a capitalization-weighted index of companies that serve the
electronics and computer industries or that manufacture products based on the
latest applied science. THE NASDAQ COMPOSITE INDEX is unmanaged and measures
all Nasdaq domestic and non-U.S. based common stocks listed on The Nasdaq Stock
Market. The Index is market-value weighted. This means each company's security
affects the Index in proportion to its market value. The market value, the last
sale price multiplied by total shares outstanding, is calculated throughout the
trading day, and is related to the total value of the Index. Due to their
number and size, technology stocks tend to dominate the direction of the Index.
THE RUSSELL 2000 GROWTH INDEX 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 IN
THESE INDEXES.
7
INTERNATIONAL GROWTH FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF MIKE GERDING]
MIKE GERDING, CFA
PORTFOLIO MANAGER
SIX MONTH REVIEW
In the six months ended March 31, 2004, the International Growth Fund
gained 22.39% and the MSCI World Ex-U.S. Small-Cap Index, a widely used measure
for the performance of foreign small company stocks, gained 27.96%.
A quick overview of the macro environment shows economic growth around the
globe is accelerating and interest rates are near all time lows. In local
currency terms, earnings growth for companies has been strong and was better
than we expected. The U.S. dollar's fall versus most currencies provided an
added boost to performance.
Optimism over the prospects for improving global economies sparked a round
of enthusiastic buying of stocks that did not meet our quality standards. Part
of the Fund's underperformance versus the Index over the past six months was
that we were not invested in the low quality companies that were among the
Index's best performers.
As of March 31, the Fund was well diversified holding about 88 companies
in 20 countries. The Fund's largest country weights were Japan, Canada, United
Kingdom, Germany and Hong Kong. The Fund was also well diversified across
sectors. Our most heavily weighted sectors were consumer discretionary, health
care and information technology. Every sector made a positive contribution to
the Fund's six-month return. Earnings growth for our holdings was strong and,
despite the rise in stock prices, we still feel comfortable with the Fund's
overall valuation parameters.
Nearly 19% of the Fund's assets were invested in Japan, up from just under
15% on September 30, and we continue working to find growing small Japanese
companies. Japanese holdings made the biggest contribution to the six-month
return of the Fund and the MSCI World Ex-U.S. Small-Cap Index. Our
underweighting in Japan hurt performance relative to the Index. Japan's economy
is the strongest it has been in 10 years and was the world's best performing
developed market in the last six months. One of our best performers in the
period was Park24 Co. Ltd., a Japanese parking lot operator. Parking spaces are
at a premium in large Japanese cities. Park24 developed a unique technology that
allows the company to collect payment for individual parking spaces in a lot or
on the street. We think Park24 has an outstanding growth opportunity by
increasing the number of parking spaces it controls. Another one of our best
performing Japanese companies and also one of our largest holdings was USS Co.
Ltd., a used car auction house. On the downside, En-Japan, Inc., a Japanese
Internet employment company, was one of our worst performers.
Our underweighting versus the Index in the United Kingdom held back
performance relative to the Index. However, the biggest contributor to the
Fund's performance in the last six months was Cairn Energy Plc, an oil and gas
company based in Edinburgh, Scotland that develops projects primarily in India
and Bangladesh. Cairn's stock rose significantly on news of important
discoveries made by the company. The oil and gas industry is not usually
considered a growth industry but we have been able to find a couple of
interesting small oil and gas businesses. We are also invested in Soco
International Plc, a United Kingdom company that develops properties in Vietnam
and Mongolia. We have held Cairn and Soco a long time and know their managements
well. We feel their competitive advantage comes from their ability to operate in
difficult environments, use of new technology and political skill.
Canada was the third biggest contributor to the Fund's performance. One of
our best performers was Home Capital Group, Inc., a fast growing Canadian
mortgage lender that provides residential mortgages to populations, such as
immigrants and the self-employed, that are not well served by major banks.
Australia was a significant contributor to the Index's performance. We did
not have any holdings in Australia.
Three sectors -- materials, industrials and financials--were the biggest
contributors to the Fund's underperformance of the Index. The underperformance
of these sectors was primarily the result of our dramatic underweighting.
Our largest sector weighting was consumer discretionary. We were
overweighted in this sector compared to the Index, though our holdings
underperformed those in the Index. Strong performance by Puma AG Rudolf Dassler
Sport, a German shoe and apparel company, was offset by poor performance from
Zapf Creation AG, a German doll manufacturer, and Rodriguez Group, a French
yacht builder.
The health care sector made a positive contribution to the Fund's
performance. Compared to the Index, we were overweighted but our holdings
underperformed. Patheon, Inc., a Canadian contract pharmaceutical manufacturer,
was the notable detractor in the Fund's health care sector. Our best performing
health care company was Straumann Holding AG, a Swiss manufacturer of dental
implants.
Our information technology holdings did not do as well as those in the
Index, but our overweighting in this sector helped performance relative to the
Index. We sold two positions that detracted from the Fund's performance. They
were ACG AG, a German semiconductor-trading house, and Komplett ASA, a Norwegian
computer retailer.
OUTLOOK
For the rest of 2004, we expect the Japanese economy to continue to
improve. Europe is likely to remain the world's laggard, with expected economic
growth about half that expected in the U.S. We continue to be positive about the
prospects for emerging markets in Asia and elsewhere.
Our primary concern for the balance of this year is that strong economic
recoveries around the world may lead to sharply higher interest rates, although
the odds of this occurring are low. We believe thorough, in-depth research and a
commitment to pay reasonable prices for stocks will help us build a portfolio of
growing small companies from around the world that has the potential to help you
in your efforts to achieve long-term investment goals. Thank you for investing
in the Wasatch International Growth Fund.
8
INTERNATIONAL GROWTH FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEPTION
1 YEAR 5 YEARS 6/28/02
- ----------------------------------------------------------------------------------------------------------------
WASATCH INTERNATIONAL GROWTH FUND 71.43% N/A 24.77%
- ----------------------------------------------------------------------------------------------------------------
MSCI World Ex-U.S. Small-Cap Index 85.69% N/A 27.79%
- ----------------------------------------------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investing in foreign securities entails special risks, such as currency
fluctuations and political uncertainties, which are described in more detail in
the prospectus. Investments in small cap funds can be more volatile and loss of
principal could be greater than investing in large cap or more diversified
funds.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
- --------------------------------------------------------------------------
PUM GR PUMA AG RUDOLF DASSLER
SPORT (Germany) 3%
Shoe and apparel manufacturer.
4732 JP USS CO. LTD. (Japan)
Used car auctions. 3%
STMN SW STRAUMANN HOLDING AG 2%
(Switzerland) Dental implants.
4666 JP PARK24 CO. LTD. (Japan) 2%
Parking lot operator.
6892 JP CITIZEN ELECTRONICS CO. LTD. 2%
(Japan) Maker of LED lights
CNE LN CAIRN ENERGY PLC 2%
(United Kingdom) Oil and gas developer.
VMS SP VENTURE CORP. LTD. (Singapore) 2%
Electronics contract manufacturer.
HCG/B CN HOME CAPITAL GROUP, INC.,
CLASS B (Canada) Mortgage lender. 2%
330 HK ESPRIT HOLDINGS LTD. (Hong Kong) 2%
Apparel manufacturer/retailer.
CPW LN CARPHONE WAREHOUSE GROUP
PLC (United Kingdom) 2%
Cell phones and telecom services retailer.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
CONSUMER DISCRETIONARY 27.4%
HEALTH CARE 18.7%
INFORMATION TECHNOLOGY 14.8%
INDUSTRIALS 11.6%
OTHER 7.0%
CONSUMER STAPLES 6.2%
TECHNOLOGY 4.3%
ENERGY 3.8%
FINANCIAL SERVICES 3.2%
UTILITIES 3.0%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch International Growth Fund MSCI World Ex.-U.S. Small-Cap Index
06/28/2002 10,000 10,000
06/30/2002 10,000 10,146
09/30/2002 8,850 8,505
12/31/2002 9,430 8,530
03/31/2003 8,610 8,295
06/30/2003 10,510 10,370
09/30/2003 12,060 12,037
12/31/2003 13,670 13,802
03/31/2004 14,760 15,403
+INCEPTION: JUNE 28, 2002. THE MSCI WORLD EX-U.S. SMALL-CAP INDEX is an
unmanaged index that measures the performance of stocks with market
capitalizations between U.S. $200 million and $800 million across 23 developed
markets, excluding the United States. YOU CANNOT INVEST IN THE INDEX.
9
MICRO CAP FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF ROBERT GARDINER] [PHOTO OF DANIEL CHACE]
ROBERT GARDINER, CFA DANIEL CHACE, CFA
PORTFOLIO MANAGER PORTFOLIO MANAGER
SIX MONTH REVIEW
In the six months ended March 31, 2004, the Wasatch Micro Cap Fund gained
18.85% compared to a gain of 21.69% for the Russell 2000 Index, a widely used
measure for the performance of small company stocks.
Although many of the best performing companies in the Russell 2000 Index
fell within micro cap range, we considered them to be largely speculative
investments. We avoid investing in these types of companies because we are
attracted to well-managed, profitable companies that have the potential to
reward shareholders by increasing earnings per share. Over the past six months,
the small cap market's top performers generally lacked the characteristics we
prize.
Financial services was the most heavily weighted sector in the Russell
2000 Index. It was also one of the biggest contributors to the Index's
performance. The financial services sector made a positive contribution to the
Fund's performance but our underweighting in this sector hurt performance
relative to the Index. A big contributor to our performance was Home Capital
Group, Inc., a fast growing Canadian mortgage lender that provides residential
mortgages to populations, such as immigrants and the self-employed, that are not
well served by major banks.
The materials and processing sector was the second biggest contributor to
the Fund's underperformance of the Index. This sector made a significant
positive contribution to the Index's performance but detracted from our
performance. Our underweighting in this sector also contributed to our
underperformance. Cabot Microelectronics Corp., a supplier of chemicals to the
semiconductor industry, was primarily responsible for the Fund's loss in this
sector. Cabot's stock price declined on news of changes in senior management,
lowered earnings estimates and concern over the market position of its leading
edge technology.
The Fund's best performing sector was consumer discretionary. We were
overweighted in this sector compared to the Index and our holdings significantly
outperformed. The Fund's largest holding at March 31 was also our biggest
contributor. The stock price of Big 5 Sporting Goods Corp., a sporting goods
retailer, rose as the economy improved and the company consistently increased
sales and decreased debt.
The second biggest contributor to the Fund's performance was the
technology sector. We were slightly overweighted in this sector versus the
Russell 2000 Index and our holdings significantly outperformed led by O2Micro
International Ltd., a maker of semiconductors that increase power efficiency in
electronic devices, and Monolithic System Technology, Inc., a designer of
RAM-based memory architecture. O2Micro did well in the last three months of 2003
but suffered a stock price decline in the first quarter of 2004 when the company
announced that earnings growth would be below expectations for the period. This
did not affect our long-term view of O2Micro and we increased our position at
low prices. Monolithic's stock price rose significantly on news that it would be
acquired by Synopsys, Inc. and we sold the stock to capture the price gain. The
Fund's technology sector also held one of the biggest detractors from our
performance. Verisity Ltd., a developer of tools for electronic design
automation (EDA), suffered stock price weakness due to sluggish spending on EDA
software. We remain positive on Verisity's long-term growth prospects.
Our dramatic overweighting in the health care sector helped the Fund's
performance relative to the Russell 2000 Index. Health care made a positive
contribution to the Fund's performance but our holdings underperformed those of
the Index. Two holdings were notable detractors. Odyssey HealthCare Inc., a
hospice care provider, suffered a stock price decline due to lowered earnings
estimates and challenges facing the company during its rapid growth. The stock
price of Cyberonics, a developer of implantable medical devices, declined due to
shifting expectations over approval of its implantable device for treatment of
depression.
In addition to Monolithic, we sold two other holdings whose stock prices
rose significantly after the companies announced that they would be acquired.
These were Rainbow Rentals, Inc., a rent-to-own store operator, and Maxwell Shoe
Co., a designer of footwear for women and children. These sales contributed to
the Fund's performance.
In the last six months, as the economic outlook improved we saw a marked
increase in initial public offerings (IPOs). We participated in six IPOs in the
first quarter of 2004 and continue to hold four of them in the Fund.
Throughout the six-month period we found many opportunities to invest in
quality companies at attractive prices. In addition, we took advantage of
opportunities to sell some holdings. We feel these purchases and sales have
upgraded the overall quality and value of the portfolio. During the first
quarter, 22 new names were added to the Fund and 23 positions were sold. Our
purchases allowed us to reduce the Fund's cash position from the high level of
six months ago.
OUTLOOK
We cannot say what challenges the economy or other circumstances may
present to businesses over the next year and in the future. We can say that the
Micro Cap Fund holds a portfolio of companies that have been carefully
researched, and we believe have outstanding long-term growth prospects.
Additionally, we believe their stocks are trading at reasonable prices. In our
opinion, this gives the Fund a favorable profile for reward potential balanced
against the risks of investing. We continue to monitor the companies we hold and
look for new investments that we believe have the potential to aid your efforts
to achieve long-term investment objectives. Thank you for investing in the Micro
Cap Fund.
10
MICRO CAP FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEPTION
1 YEAR 5 YEARS 6/19/95
- ------------------------------------------------------------------------------------------------
WASATCH MICRO CAP FUND 64.92% 32.32% 29.38%
- ------------------------------------------------------------------------------------------------
Russell 2000 Index 63.83% 9.66% 10.21%
- ------------------------------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investments in micro cap funds can be more volatile and loss of principal could
be greater than investing in large cap or more diversified funds. Investing in
foreign securities entails special risks, such as currency fluctuations and
political uncertainties, which are described in more detail in the prospectus.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
- --------------------------------------------------------------------------
BGFV BIG 5 SPORTING GOODS CORP. 4%
Sporting goods retailer.
AMSG AMSURG CORP. 3%
Outpatient surgery centers.
ICUI ICU MEDICAL, INC. 3%
Disposable connectors for intravenous therapy.
OIIM O2MICRO INTERNATIONAL LTD. 3%
Semiconductors to increase power efficiency.
RECN RESOURCES CONNECTION, INC. 3%
Outsourcing of professional business services.
CCMP CABOT MICROELECTRONICS CORP. 2%
Chemicals to the semiconductor industry.
XLTC EXCEL TECHNOLOGY, INC. 2%
Laser systems and electro-optical components.
PLXT PLX TECHNOLOGY, INC. 2%
Semiconductors to accelerate and manage
data transfer.
ODSY ODYSSEY HEALTHCARE, INC. 2%
Hospice care provider.
AHS AMN HEALTHCARE SERVICES, INC. 2%
Health care staffing.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
HEALTH CARE 31.0%
CONSUMER DISCRETIONARY 25.6%
TECHNOLOGY 20.0%
FINANCIAL SERVICES 9.9%
PRODUCER DURABLES 5.2%
MATERIALS & PROCESSING 3.7%
AUTO & TRANSPORTATION 3.0%
INFORMATION TECHNOLOGY 0.9%
ENERGY 0.6%
UTILITIES 0.1%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch Micro Cap Fund Russell 2000 Index
06/19/1995 10,000 10,000
03/31/1996 14,850 11,857
03/31/1997 15,021 12,463
03/31/1998 25,583 17,699
03/31/1999 23,687 14,821
03/31/2000 38,856 20,349
03/31/2001 47,700 17,230
03/31/2002 72,254 19,639
03/31/2003 58,250 14,343
03/31/2004 96,066 23,499
+INCEPTION: JUNE 19, 1995. 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 IN THE INDEX.
11
MICRO CAP VALUE FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF ROBERT GARDINER] [PHOTO OF JOHN MALOOLY] [PHOTO OF BRIAN BYTHROW]
ROBERT GARDINER, CFA JOHN MALOOLY, CFA BRIAN BYTHROW, CFA
PORTFOLIO MANAGER PORTFOLIO MANAGER PORTFOLIO MANAGER
SIX MONTH REVIEW
The Micro Cap Value Fund gained 30.24% in the six months ended March 31,
2004. The Fund's return was better than the 21.69% gain of the Russell 2000
Index, a widely used measure for the performance of small company stocks.
The stocks of small and micro cap companies were the market's best
performers over the past year as investors were attracted to this segment of the
market. Many companies held by the Fund performed even better in the six month
period as they were discovered by investors and enjoyed strong stock price
appreciation.
While we are pleased with the Fund's performance, our outlook has become
more cautious. We believe that investor's willingness to take risks may have
peaked. Over much of the last year, investors were willing to take risks by
investing in the smallest companies with little regard for profitability or
earnings growth. The sentiment favoring these types of investments faded in
February and March. Additionally, while underlying businesses and end markets
improved over the last year, stock price appreciation outstripped this progress.
Investors' expectations for continued earnings growth increases are high. They
are scrutinizing earnings more closely and are likely to sell companies that do
not measure up. This may cause them to gravitate toward better quality companies
with more predictable earnings.
In the last six months, the Fund's performance was driven by our stock
selection as many of our holdings gained a following among investors and
benefited from stock price appreciation. The Fund's strong performance relative
to the Index was in spite of being underweighted in many sectors and while
holding substantial cash. None of our holdings significantly detracted from
performance.
Throughout the six-month period and since the Fund's inception in July, we
bought and sold quite a few stocks as we sought to invest the Fund's assets and
capture profits from companies that had reached our price targets.
Health care was the biggest contributor to the Fund's performance. We were
overweighted in health care compared to the Russell 2000 Index and our holdings
outperformed those of the Index. Medical Technology Systems, Inc., a pill
packaging company with high recurring revenues, made the largest contribution to
our performance. Enpath Medical, Inc., a manufacturer of advanced vascular
delivery products, also made a strong contribution. On the downside, Cyberonics,
a developer of implantable medical devices, suffered a stock price decline.
Our financial services holdings dramatically outperformed those in the
Index. Two holdings were especially noteworthy. Home Capital Group, Inc. is a
fast growing Canadian mortgage lender that provides residential mortgages to
populations, such as immigrants and the self-employed, that are not well served
by major banks. Wilshire State Bank is a regional bank that serves Korean and
Hispanic populations and is enjoying a period of strong earnings growth.
Technology was also a big contributor to the Fund's performance. We were
slightly overweighted in this sector and our holdings significantly outperformed
those of the Index. Monolithic System Technology, Inc., a designer of RAM-based
memory architecture, was the biggest contributor in this sector. Monolithic's
stock price rose significantly on news that it would be acquired at a premium by
Synopsys, Inc., and we sold our position to capture a profit.
The Fund also benefited from the strong performance of our holdings in the
consumer discretionary sector. Most of our retail and business services
companies had solid returns in the period. Big 5 Sporting Goods Corp., a
sporting goods retailer, was the best contributor to performance from this
sector. Big 5's stock price appreciated as the economy improved and the company
consistently increased sales and decreased debt. We sold Rainbow Rentals, Inc.,
a rent-to-own store operator, at a profit after the company announced that it
would be acquired at a premium price. Two of the Fund's worst performers were
Mothers Work, Inc., a maternity wear retailer, and Whitehall Jewellers, Inc., a
fine jewelry retailer. We sold Mothers Work but continue to hold White-hall
Jewellers because we think it is a good value.
The materials and processing sector was the biggest detractor from the
Fund's performance relative to the Index. Our holdings were down slightly while
those of the Index were up significantly.
Micro cap companies in other countries are often better values than
similar U.S. companies. We have found significant opportunities with the help of
Wasatch's international team. Examples are Home Capital Group mentioned earlier,
BW Technologies Ltd., a Canadian maker of handheld gas detectors for commercial
use, and CoolBrands International, Inc., a Canadian ice cream manufacturer that
makes Weight-watchers and Atkins frozen treats. We believe the company's
acquisition of the Whole Fruit, Godiva and Dreamery brands and a portion of
Nestle's distribution network from the Nestle and Dreyer's merger gives
CoolBrands outstanding long-term growth potential.
OUTLOOK
As of March 31, the Fund's cash position was higher than we would like.
Ideally, we want the Fund to be fully invested. This has been a challenge in the
current environment as the good values of last year are not as plentiful and as
our outlook has become more cautious. We are choosing to be patient and invest
the cash in companies we like at lower prices. We believe our hands-on research
process will help us identify undervalued micro cap companies with the potential
to make a positive contribution to your efforts to achieve long-term investment
objectives. We appreciate your investment in the Wasatch Micro Cap Value Fund.
12
MICRO CAP VALUE FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEPTION
1 YEAR 5 YEARS 7/28/03(1)
- ----------------------------------------------------------------------------------------------------------
WASATCH MICRO CAP VALUE FUND N/A N/A 36.10%
- ----------------------------------------------------------------------------------------------------------
Russell 2000 Index N/A N/A 25.53%
- ----------------------------------------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investments in micro cap funds can be more volatile and loss of principal could
be greater than investing in large cap or more diversified funds. Investing in
foreign securities entails special risks, such as currency fluctuations and
political uncertainties, which are described in more detail in the prospectus.
(1)Returns less than a year are not annualized.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
- --------------------------------------------------------------------------
BWT CN BW TECHNOLOGIES LTD. (Canada) 3%
Handheld gas detectors for commercial use.
NPTH ENPATH MEDICAL, INC. 3%
Advanced vascular delivery products.
LGVN LOGICVISION, INC. 3%
Embedded test technology for complex
semiconductors.
WSBK WILSHIRE STATE BANK 2%
Regional bank.
MPP MEDICAL TECHNOLOGY SYSTEMS, INC. 2%
Pill packaging company.
PLXT PLX TECHNOLOGY, INC. 2%
Semiconductors to accelerate and
manage data transfer.
HCG/B CN HOME CAPITAL GROUP, INC.,
CLASS B (Canada) Mortgage lender. 2%
SAXN SAXON CAPITAL, INC. 2%
Subprime mortgage lender.
XMP GR MACROPORE BIOSURGERY, INC. 2%
Bioresorbable polymer implants.
ICUI ICU MEDICAL, INC. 2%
Disposable connectors for intravenous therapy.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
HEALTH CARE 25.3%
FINANCIAL SERVICES 20.4%
TECHNOLOGY 19.1%
CONSUMER DISCRETIONARY 15.7%
PRODUCER DURABLES 9.8%
OTHER 3.1%
INDUSTRIALS 2.1%
AUTO & TRANSPORTATION 2.0%
INFORMATION TECHNOLOGY 1.3%
ENERGY 1.2%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch Micro Cap Value Fund Russell 2000 Index
07/28/2003 10,000 10,000
07/31/2003 10,000 10,049
08/31/2003 10,250 10,510
09/30/2003 10,450 10,316
10/31/2003 11,250 11,182
11/30/2003 11,700 11,579
12/31/2003 12,059 11,814
01/31/2004 13,010 12,327
02/29/2004 13,410 12,437
03/31/2004 13,610 12,553
+INCEPTION: JULY 28, 2003. THE RUSSELL 2000 INDEX is an unmanaged total return
index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by
total market capitalization. The Russell 2000 Index is widely regarded in the
industry as accurately capturing the universe of small company stocks. YOU
CANNOT INVEST IN THE INDEX.
13
SMALL CAP GROWTH FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF JEFF CARDON]
Jeff Cardon, CFA
Portfolio Manager
SIX MONTH REVIEW
The Wasatch Small Cap Growth Fund gained 11.90% in the six months ended
March 31, 2004. Despite generating a positive return, the Fund under-performed
the Russell 2000 Index, a widely used measure for the performance of small
company stocks, which gained 21.69%.
The Fund's underperformance of the Russell 2000 Index over the past six
months was a little surprising to us given that the majority of companies held
by the Fund produced strong earnings growth throughout the year. During the past
four quarters, the earnings growth of the Fund's holdings was over 21%, while
the Russell 2000 Index's weighted median earnings growth was 14.6%. At March 31,
the price-to-earnings (P/E) ratio, which is the price of a stock divided by its
earnings per share, of our portfolio was 27. While our P/E is a little high
compared to history, it is lower than the Russell 2000 Index's P/E of 32. In
addition, lower interest rates and higher than normal earnings growth should
support a slightly higher P/E ratio.
It is worth noting that lower quality stocks drove the performance of the
Russell 2000 Index over the past year. In fact, the Index's best performers
included the smallest companies with market capitalizations of less than $500
million, companies with no profits and companies with stock prices of less than
$5. We typically do not invest in these types of companies because they do not
meet our standards for quality or growth.
Over the past six months, the biggest contributors to the Fund's
underperformance of the Index were the financial services, materials and
processing, and producer durables sectors. Our underweighting in these sectors
held back performance relative to the Russell 2000 Index. However, the financial
services and producer durables sectors made a positive contribution to the
Fund's performance.
The materials and processing sector detracted from the Fund's performance
but made a positive contribution to the Index's performance. Cabot
Microelectronics Corp., a supplier of chemicals to the semiconductor industry,
was primarily responsible for the Fund's loss in this sector. Cabot suffered a
stock price decline due to changes in senior management, lowered earnings
estimates and concern over the market position of the company's next generation
technology. We believe Cabot has an exciting future delivering technology
solutions to the semiconductor industry.
Our health care holdings made the biggest contribution to the Fund's
performance led by Inveresk Research Group, Inc., a contract research
organization that provides pre-clinical and clinical services to pharmaceutical
and biotechnology clients. We were dramatically overweighted in health care
compared to the Index. Despite their positive contribution to the Fund's
performance, our holdings underperformed those of the Index. Our biggest
detractor was Odyssey HealthCare, Inc., a hospice care provider. The company's
stock price has been quite volatile due to worries about Medicare reimbursement
and a reduction in growth expectations in 2004. We still believe Odyssey is a
high quality health care provider with an exciting future.
The Fund was also overweighted compared to the Index in the consumer
discretionary sector. This sector made the second biggest contribution to the
Fund's performance. While our holdings produced a positive return, they were not
up as much as those in the Index. One of the Fund's best performers was
Resources Connection, Inc., an outsource provider of professional business
services. The company has benefited from increasing demand for business
consulting, particularly from publicly traded companies that must comply with
the Sarbanes-Oxley Act. Another strong performer was Chico's FAS, Inc., a
women's apparel retailer that has done well throughout the economic downturn.
Chico's strong performance was somewhat offset by the decline suffered by
Christopher & Banks Corp., which also sells women's clothing. We have sold our
position in Christopher & Banks due to rapid deceleration in customer demand.
A year ago we had an overweight position in technology. During the past 12
months we have decreased our weighting so it is nearly equal to that of the
Index. Our holdings made a positive contribution to performance but were not up
as much as those in the Index. Integrated Circuit Systems, Inc., a maker of
timing devices for electronic systems, and Verisity Ltd., a developer of tools
for electronic design automation, suffered stock price declines that hurt the
performance of the Fund's technology sector. We remain positive on the long-term
growth prospects of these companies.
Over the past few months we have seen an increase in initial public
offerings and mergers and acquisitions. The Fund benefited from several holdings
that are in the process of being acquired. We sold our position in Monolithic
System Technology, Inc., a designer of RAM-based memory architecture, when they
announced they were being taken over by Synopsys, Inc. SICOR was taken over
during the period by Teva Pharmaceuticals, and ILEX Oncology, Inc. is in
discussions to be acquired by Genzyme Corp.
OUTLOOK
The Small Cap Growth Fund's investment philosophy is to invest in high
quality growth companies. Over the past 10 years, we have had a great run of
performance, but in the last six months we faced a period of weaker performance
relative to the small cap market. We are committed to working as hard as we can
to deliver the kind of performance you expect of us. We think the best thing we
can do to meet your expectations is to continue to pursue our long run strategy
of finding and investing in great growth companies. Thank you for investing in
the Wasatch Small Cap Growth Fund. We look forward to helping you meet your
financial goals and appreciate the trust you have put in Wasatch.
14
SMALL CAP GROWTH FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------
WASATCH SMALL CAP GROWTH FUND 48.06% 18.02% 15.44%
- ---------------------------------------------------------------------------
Russell 2000 Index 63.83% 9.66% 10.44%
- ---------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investments in small cap funds can be more volatile and loss of principal could
be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
- ---------------------------------------------------
ORLY O'REILLY AUTOMOTIVE, INC. 5%
Automotive parts
retailer/distributor.
TECH TECHNE CORP. 3%
Complex, disposable research
kits for biotech.
AMSG AMSURG CORP. 3%
Outpatient surgery centers.
CCMP CABOT MICROELECTRONICS CORP. 3%
Chemicals to the semiconductor
industry.
KNGT KNIGHT TRANSPORTATION, INC. 2%
Long haul trucking and logistic
services.
ACDO ACCREDO HEALTH, INC. 2%
Services for individuals with
chronic diseases.
YCC YANKEE CANDLE CO., INC. 2%
Scented candle manufacturer.
TARO TARO PHARMACEUTICALS INDUSTRIES 2%
LTD.
Topical corticosteroids and
antifungal creams.
DLTR DOLLAR TREE STORES, INC. 2%
Dollar discount store operator.
IRGI INVERESK RESEARCH GROUP, INC. 2%
Drug development research
services.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
HEALTH CARE 32.0%
CONSUMER DISCRETIONARY 27.5%
TECHNOLOGY 16.6%
FINANCIAL SERVICES 8.2%
AUTO & TRANSPORTATION 4.4%
MATERIALS & PROCESSING 3.7%
PRODUCER DURABLES 3.6%
UTILITIES 2.3%
INDUSTRIALS 1.0%
OTHER 0.7%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch Small Cap Growth Fund Russell 2000 Index
03/31/1994 10,000 10,000
03/31/1995 11,325 10,552
03/31/1996 14,260 13,617
03/31/1997 13,521 14,312
03/31/1998 19,347 20,326
03/31/1999 18,348 17,022
03/31/2000 27,545 23,370
03/31/2001 28,240 19,788
03/31/2002 37,766 22,555
03/31/2003 28,378 16,473
03/31/2004 42,016 26,988
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 IN THE INDEX.
15
SMALL CAP VALUE FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF JIM LARKINS]
Jim Larkins, MBA
Portfolio Manager
[PHOTO OF JOHN MAZANEC]
John Mazanec, MBA
Portfolio Manager
SIX MONTH REVIEW
The Small Cap Value Fund gained 27.09% in the six months ended March 31,
2004 and outperformed the Russell 2000 Value Index, a widely used measure for
the performance of value-oriented small company stocks, which gained 24.42%.
We are pleased with the Fund's results over the past six months but would
caution that these returns are unusual given how rapidly stock prices reflected
optimistic expectations for the economic recovery. While we are not negative on
the prospects for the economy and do not foresee any impending disasters, we do
not see an environment that can sustain gains of this magnitude.
In February and March, investors seemed to take a more realistic view of
the value of certain small companies. They abandoned speculative investments in
very small, profitless companies and stock prices generally declined before
finishing the period on a strong note. In the last three months of 2003, the
Small Cap Value Fund's performance was slightly weaker than that of the Index.
However, our performance was significantly stronger than that of the Index in
the first three months of 2004 when very small, fundamentally weak companies
suffered a sell off and undervalued companies with solid fundamentals like those
in which the Fund invests saw their stock prices rise.
The Fund's performance over the past six months was broad based but also
benefited from careful stock picking, particularly in the financial services
sector. This sector was by far the biggest contributor to the Fund's
performance. Overall, our financial services holdings dramatically outperformed
those of the Russell 2000 Value Index. Four out of our top five contributors
were financial services companies. Real estate investment trusts (REITs) and
mortgage lenders did especially well. We were gratified to be rewarded for our
years of research into these types of businesses.
The Fund's biggest contributor was Saxon Capital, Inc., a subprime mortgage
lender, which is converting to a REIT structure. We think this is a sound
strategic move as it will significantly improve Saxon's earnings stability and
provide a dividend to shareholders. Also among the Fund's top contributors were
Friedman, Billings, Ramsey Group, Inc., a mortgage REIT with an investment
banking subsidiary, Commercial Capital Bancorp, Inc., a regional bank focused on
multi-family lending, and Accredited Home Lenders Holding Co., a subprime
mortgage lender similar to Saxon.
The consumer discretionary sector was the next biggest contributor to the
Fund's performance. We were overweight in this sector compared to the Russell
2000 Value Index. However, despite their positive contribution to the Fund's
performance, our holdings did not do as well as those of the Index. The biggest
detractors in this sector were two jewelry retailers, Whitehall Jewellers, Inc.
and Friedman's, Inc., and Action Performance Companies, Inc., a producer of
motor-sports collectibles and consumer products. The stock price of Action
Performance declined due to inventory and production issues. We are closely
monitoring the company's progress toward resolving these issues. We have sold
Friedman's but remain positive on the long-term outlook for Whitehall.
Two of the Fund's retail holdings performed well. As consumers became more
optimistic about the economy, business picked up at Big 5 Sporting Goods Corp.,
a sporting goods retailer, and MarineMax, Inc. a boating retailer. We have been
taking profits by reducing our positions in these names.
In the consumer staples sector, the Fund's weighting was nearly equal to
that of the Russell 2000 Value Index. The Fund outperformed the Index on the
strength of NBTY, Inc., a distributor of nutritional supplements. NBTY recently
acquired Rexall gaining a strong position in the wholesale market along with
prominent shelf space. We think NBTY has growth potential as competitors are
struggling and vitamin consumption is increasing with the aging of the American
population.
The Fund was overweight in the health care sector compared to the Index.
Our holdings outperformed those of the Index led by Chattem, Inc., a maker of
health-related consumer products. We invested in Chattem as a "fallen angel,"
which we define as a company with a history of solid growth that has "hit a bump
in the road." Chattem's bump was increased competition and legal issues
involving a dieting product. We felt the company's good cash flow and stable
products merited trying to understand the risks and potential rewards of
investing. Since we initiated a position, the company has benefited from
developing new products, resolving legal issues and restructuring debt.
The materials and processing sector was the biggest detractor to the Fund's
performance versus the Index due to our underweight position and the
underperformance of our holdings. The stock that detracted the most was Mobile
Mini, Inc., a company that leases portable offices and storage containers.
Mobile Mini struggled due to the slow recovery of the commercial construction
market and cost overruns for refurbished containers.
OUTLOOK
While it may be quite some time before we see returns similar to those
achieved over the past six months, we are confident that we will find many
opportunities to invest in undervalued small companies. We think our knowledge
of the small cap market puts us in a good position to recognize companies that
have stumbled due to short-term issues. With careful research we think we can
identify fallen angels that have the potential to be rewarding long-term
investments. We look forward to working with you as you strive to achieve your
long-term investment objectives. Thank you for investing in the Wasatch Small
Cap Value Fund.
16
SMALL CAP VALUE FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEPTION
1 YEAR 5 YEARS 12/17/97
- --------------------------------------------------------------------------------
WASATCH SMALL CAP VALUE FUND 79.02% 28.74% 21.75%
- --------------------------------------------------------------------------------
Russell 2000 Value Index 64.48% 16.14% 10.03%
- --------------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investments in small cap funds can be more volatile and loss of principal could
be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
- ---------------------------------------------------------------
SAXN SAXON CAPITAL, INC. 3%
Subprime mortgage lender.
NTY NBTY, INC. 3%
Nutritional supplements
manufacturer/retailer.
GISX GLOBAL IMAGING SYSTEMS, INC. 2%
Office imaging equipment sales
and service.
NCT NEWCASTLE INVESTMENT CORP. 2%
Real estate REIT.
HBG HUB INTERNATIONAL LTD. 2%
Insurance brokerage services.
LAD LITHIA MOTORS, INC., CLASS A 2%
Automotive franchiser/retailer.
MINI MOBILE MINI, INC. 2%
Leases portable office and storage
units.
KEYS KEYSTONE AUTOMOTIVE INDUSTRIES, INC. 2%
Aftermarket auto replacement parts.
ACF AMERICREDIT CORP. 2%
Subprime automobile lender.
CMRG CASUAL MALE RETAIL GROUP, INC. 2%
Big and tall clothing retailer.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
FINANCIAL SERVICES 36.6%
CONSUMER DISCRETIONARY 30.5%
HEALTH CARE 7.3%
PRODUCER DURABLES 6.4%
AUTO & TRANSPORTATION 5.5%
TECHNOLOGY 3.9%
MATERIALS & PROCESSING 3.0%
CONSUMER STAPLES 2.8%
OTHER 2.5%
ENERGY 1.5%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch Small Cap Value Fund Russell 2000 Value Index
12/17/1997 10,000 10,000
03/31/1998 11,650 11,076
03/31/1999 9,750 8,636
03/31/2000 15,986 9,780
03/31/2001 19,331 11,683
03/31/2002 27,539 14,457
03/31/2003 19,260 11,092
03/31/2004 34,479 18,244
+INCEPTION: DECEMBER 17, 1997. 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 IN THE INDEX.
17
ULTRA GROWTH FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF KAREY BARKER]
Karey Barker, CFA
Portfolio Manager
[PHOTO OF AJAY KRISHNAN]
Ajay Krishnan, CFA
Portfolio Manager
SIX MONTH REVIEW
The Ultra Growth Fund gained 12.28% in the six months ended March 31, 2004.
Over the same period, the Russell 2000 Growth Index, a widely used measure for
the performance of growth-oriented small company stocks, gained 18.97%.
Despite the Fund's positive returns over the past six months, it
underperformed the Russell 2000 Growth Index. In late 2003, we moved to a more
conservative stance by reducing our exposure to technology and increasing our
exposure to health care. The best performing companies in the Russell 2000
Growth Index we considered to be speculative issues. The Fund was not invested
in these types of companies because they lack earnings and the quality
characteristics we demand.
In the last six months, the consumer discretionary, materials and
processing, producer durables and financial services sectors were the biggest
contributors to the Fund's underperformance versus the Russell 2000 Growth
Index. As is typical, the Fund was underweighted in most of these sectors and
overweighted in the health care and technology sectors.
Our consumer discretionary sector made a positive contribution to
performance, but was the biggest detractor to performance versus the Index. We
were underweighted in this sector and our holdings underperformed. Christopher &
Banks Corp., a women's apparel retailer, was the biggest detractor in this
sector. We sold our position over concerns about declining sales. Wireless
Facilities, Inc., a provider of services to the telecommunications industry,
suffered a stock price decline. The company's fundamentals support our positive
long-term growth outlook and we have been adding to our position at attractive
prices. On the positive side, Career Education Corp., an operator of schools for
post-secondary education, made a strong contribution to performance.
The materials and processing sector was the second biggest contributor to
the Fund's underperformance of the Index. We were slightly overweighted and,
while this sector made a positive contribution to the Index's performance, it
detracted from the Fund's performance. Cabot Microelectronics Corp., a supplier
of chemicals to the semiconductor industry, was primarily responsible for our
underperformance. Cabot's stock price declined on news of changes in senior
management, lowered earnings estimates and concern over the market position of
the company's leading edge technology. We will be closely monitoring our
position in Cabot.
The Fund was substantially overweighted in health care compared to the
Index. This sector was the biggest positive contributor to the Fund's
performance. Overall, our health care holdings were not as strong as those in
the Index, but a couple of large holdings did well. Our largest holding, Accredo
Health, Inc., a provider of drug distribution and other services for individuals
with chronic diseases, made the best contribution to performance. Accredo signed
a new partnership agreement and has benefited from several new distribution
contracts for recently approved drugs. We have been selling some shares to keep
our position at a reasonable size. Odyssey HealthCare, Inc. was the biggest
detractor to the Fund's performance. The hospice care provider's stock price
declined due to lowered earnings estimates and concerns over future Medicare
reimbursement.
Technology was the second biggest contributor to our performance. Usually,
we are substantially overweighted in technology compared to the Russell 2000
Growth Index. Over the past six months, however, we were only slightly
overweighted as we had reduced our holdings due to the rise in technology stock
prices during 2003. Overall, our technology holdings did not do as well as those
in the Index. Verisity Ltd., a developer of tools for electronic design
automation (EDA), hurt performance as the company suffered a stock price decline
due to sluggish spending on EDA software. We remain positive on Verisity's
long-term growth prospects. UTStarcom, Inc., a provider of communications
equipment to operators of telecommunications networks primarily in China, fell
victim to concerns regarding China's economy, the company's current wireless
business and their ability to compete in the next generation of wireless
technologies. We believe UTStarcom is well positioned in its current markets and
is actively developing new technology to compete in upcoming years. The
company's stock appears inexpensive compared to its long-term growth potential
and we have been using the price weakness to increase our position.
Initial public offerings (IPOs) and mergers and acquisitions increased over
the past six months. We invested on the IPO of Kintera, Inc., a provider of
software services to nonprofit organizations. Shortly thereafter, we were
rewarded as Kintera was a big contributor to performance in the period. We sold
Monolithic System Technology, Inc., a designer of RAM-based memory architecture,
at a nice profit when the company announced its pending acquisition by Synopsys,
Inc. The Fund also profited by selling ILEX Oncology, Inc. when they announced
plans to be acquired by Genzyme Corp.
OUTLOOK
Although technology stock prices are still above historical norms, they
seem more rational to us since their decline in February and March. The earnings
growth of technology companies is also improving. We continue to see interesting
opportunities in health care at reasonable prices. We think there will be
opportunities for stock pickers who are willing to work hard to understand
companies. We believe Wasatch has such a team of stock pickers. We continually
strive to invest in fast growing companies that we believe have the potential to
help you as you work toward your long-term investment objectives. We appreciate
your investment in the Wasatch Ultra Growth Fund.
18
ULTRA GROWTH FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------
WASATCH ULTRA GROWTH FUND 58.98% 17.74% 17.05%
- ---------------------------------------------------------------------------
Russell 2000 Growth Index 63.17% 2.31% 6.45%
- ---------------------------------------------------------------------------
Russell 2500 Growth Index 59.47% 5.17% 8.94%
- ---------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
Investments in small cap funds can be more volatile and loss of principal could
be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
TICKER COMPANY % OF FUND
- ---------------------------------------------------------------------
ACDO ACCREDO HEALTH, INC. 9%
Services for individuals with chronic
diseases.
CECO CAREER EDUCATION CORP. 5%
Schools for post-secondary education.
UTSI UTSTARCOM, INC. 4%
Telecommunications network equipment.
WFII WIRELESS FACILITIES, INC. 4%
Telecommunications industry services.
CCMP CABOT MICROELECTRONICS CORP. 3%
Chemicals to the semiconductor industry.
USPI UNITED SURGICAL PARTNERS INTERNATIONAL, LTD. 3%
Short-stay surgical centers.
OIIM O2MICRO INTERNATIONAL LTD. 3%
Semiconductors to increase power efficiency.
ODSY ODYSSEY HEALTHCARE, INC. 3%
Hospice care provider.
AMHC AMERICAN HEALTHWAYS, INC. 3%
Disease management services.
AMSG AMSURG CORP. 2%
Outpatient surgery centers.
*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.
SECTOR BREAKDOWN**
[PIE CHART]
HEALTH CARE 35.9%
TECHNOLOGY 24.3%
CONSUMER DISCRETIONARY 23.2%
FINANCIAL SERVICES 6.0%
MATERIALS & PROCESSING 5.1%
UTILITIES 2.1%
PRODUCER DURABLES 1.9%
TREASURY NOTES & BONDS 0.9%
AUTO & TRANSPORTATION 0.5%
OTHER 0.1%
**Excludes short-term investments.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch Ultra Growth Fund Russell 2000 Growth Index Russell 2500 Growth Index
03/31/1994 10,000 10,000 10,000
03/31/1995 13,149 10,729 11,031
03/31/1996 18,166 14,095 14,533
03/31/1997 15,843 13,275 14,379
03/31/1998 20,747 18,740 19,935
03/31/1999 21,330 16,671 18,297
03/31/2000 28,185 26,515 33,106
03/31/2001 27,721 15,959 19,321
03/31/2002 40,360 16,749 20,876
03/31/2003 30,355 11,452 14,765
03/31/2004 48,258 18,685 23,545
THE RUSSELL 2000 GROWTH INDEX 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. THE RUSSELL 2500
GROWTH INDEX measures the performance of those Russell 2500 Index companies with
higher price-to-book ratios and higher forecasted growth values. YOU CANNOT
INVEST IN THESE INDEXES.
19
U.S. TREASURY FUND -- MANAGEMENT DISCUSSION MARCH 31, 2004
[PHOTO OF VAN R. HOISINGTON]
Van R. Hoisington
Portfolio Manager
SIX MONTH REVIEW
In the six months ended March 31, 2004, the Fund returned 5.11%,
substantially outpacing the Lehman Brothers Aggregate Bond Index, which returned
2.98%. The Fund's return was achieved utilizing the highest quality debt
instrument -- U.S. Treasury securities.
The key to the Fund's performance was that we invested in long dated
Treasury securities (maturities longer than 20 years) to take advantage of the
decline in inflation that has occurred. Our discipline calls for us to invest in
long dated Treasury bonds when the multi-year trend in inflation is downward.
When the multi-year trend in inflation moves upward, we would expect to position
the Fund in Treasury bills and/or other short dated Treasury securities
(maturities less than five years).
The following economic statistics support our view that the multi-year
trend is one of declining inflation. The core personal consumption expenditures
deflator, the most widely preferred measure of inflation, rose just 1.1% over
the past 12 months, down 0.4% from a year earlier and virtually the smallest
increase since 1955. At the same time, the core consumer price index increased
just 1.2%, 0.5% lower than a year ago and about the slowest pace since 1966. Not
surprisingly, on March 31, 2004 the 30-year Treasury bond yield was 4.77%,
versus 4.81% at the end of September, and well down from the 4.88% yield at the
end of March 2003. The drop in long Treasury yields meant that bond values
appreciated and contributed to the Fund's return over the past six months.
OUTLOOK
Although 59 of 60 economists in a Wall Street Journal poll expect interest
rates to be higher at the end of 2004, we believe that interest rates will
remain low and work irregularly lower over the next several years. Eight
considerations support this view. First, a large amount of the economy's
resources are unused and considerable time will be needed to put these resources
to work. Capacity utilization is a depressed 76% in the U.S., and similar unused
capacity is evident around the globe. In the U.S., 8.35 million people are
officially unemployed, but the degree of unemployment and underemployment is
even greater. There are 514,000 workers so discouraged with job opportunities
that they have quit looking for work, the highest number since 1994. Another 4.7
million people are working part time because full time work is not available.
Unemployment rates of 9% to 10% in Europe, and higher elsewhere, suggest
unutilized resources around the world are high as well.
Second, debt levels are so high that any increase in interest rates would
knock the economy back on its heels and delay the time needed to put to work the
substantial idle plant and labor capacity. In fact, total private debt was a
near record $1.63 for each dollar of gross domestic product (GDP) in the final
quarter of 2003. Total debt of the U.S. economy reached a record $3.04 for every
dollar of GDP, exceeding the previous high of $3 set in 1933 -- a seven-decade
record. Rising interest rates would make this debt burden difficult to repay.
Third, increasing market interest rates would constrict money growth when
it is already depressed. Money, as measured by M2 money supply -- overnight
repurchase agreements issued by commercial banks, overnight Eurodollars, savings
accounts, time deposits under $100,000 and money market mutual fund shares --
expanded only 4.3% in the last 12 months, close to a seven-year low.
Simultaneously, the monetary base grew 4.8% over the past year -- the slowest
since the recession year of 2001.
Fourth, monetary policy needs to take up the slack from diminishing fiscal
stimulus. The Federal deficit, as a percent of GDP, fell slightly to 4% in the
final quarter of 2003. By year-end 2004, the deficit will have shrunk to around
3% to 3.5% of GDP. The reduced fiscal stimulus will bear directly on household
budgets. Since the start of 2001, real wage and salary income was up by less
than 1%, but real after tax personal income moved ahead 9.8% as a result of the
tax cuts. However, no further tax cuts are scheduled for 2004 or 2005. The
reduced fiscal stimulus will affect the corporate sector as well because
substantial corporate tax cuts expire this year.
Fifth, raising interest rates would reinforce the negative effects of
higher energy prices. In the latest month, consumer fuel expenditures were about
7.9% of wage and salary income, up 1.8% from the low reached in 2001. The
increase in the energy share of the consumer budget over this span was similar
to the jump that preceded the start of the 2000 recession. Such fuel increases
typically serve to depress economic activity. Since rising fuel prices preceded
each of the last four recessions, increasing interest rates combined with the
current jump in energy prices would be difficult for the economy to absorb.
Sixth, the motor vehicle market is becoming saturated, and with few
exceptions the demand for housing is all but nonexistent. Even though sales
incentives increased nearly $1,000 per motor vehicle, sales fell by nearly 12%
annually in the first quarter of 2004. Any rise in market interest rates would
undermine vehicle and home sales. Seventh, an increase in market interest rates
would push the dollar higher, reinforcing the rise that has already occurred
this year. This would work against any reduction in the trade deficit. Finally,
rising rates would put downward pressure on the already low inflation rate.
For these reasons, we continue to have the Fund invested in long-dated U.S.
Treasury securities. We feel this is the appropriate position for the Fund as we
strive to help you in your efforts to achieve long-term investment objectives.
Thank you for investing in the Wasatch-Hoisington U.S. Treasury Fund.
20
U.S. TREASURY FUND -- PORTFOLIO SUMMARY MARCH 31, 2004
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
WASATCH-HOISINGTON U.S. TREASURY FUND 7.07% 8.08% 8.41%
- ------------------------------------------------------------------------------
Lehman Bros. Aggregate Bond Index 5.40% 7.29% 7.54%
- ------------------------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE QUOTED. YOU SHOULD REALIZE THAT PRINCIPAL VALUE AND INVESTMENT
RETURN WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE TABLE ABOVE DOES NOT REFLECT THE DEDUCTION OF TAXES
THAT YOU WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE
ADVISOR HAS ABSORBED, CURRENTLY OR IN THE PAST, CERTAIN FUND EXPENSES, WITHOUT
WHICH TOTAL RETURNS WOULD HAVE BEEN LOWER. TO OBTAIN THE MOST RECENT MONTH-END
PERFORMANCE, PLEASE CALL 800.551.1700 OR VISIT WWW.WASATCHFUNDS.COM.
TOP 10 HOLDINGS*
MATURITY % OF
HOLDING DATE FUND
- --------------------------------------------------------------
U.S. TREASURY STRIP, PRINCIPAL ONLY 11/15/21 23%
U.S. TREASURY BOND, 7.50% 11/15/24 14%
U.S. TREASURY STRIP, PRINCIPAL ONLY 11/15/27 13%
U.S. TREASURY BOND, 5.375% 2/15/31 10%
U.S. TREASURY BOND, 6.125% 11/15/27 10%
U.S. TREASURY BOND, 6.875% 8/15/25 7%
U.S. TREASURY STRIP, PRINCIPAL ONLY 8/15/25 6%
U.S. TREASURY BOND, 6.75% 8/15/26 4%
U.S. TREASURY BOND, 5.50% 8/15/28 4%
U.S. TREASURY BOND, 6.625% 2/15/27 4%
*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.
INVESTMENTS & CASH
[PIE CHART]
TREASURY NOTES & BONDS 97.9%
SHORT-TERM INVESTMENTS 2.1%
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH]
Date Wasatch-Hoisington U.S. Treasury Fund Lehman Bothers Aggregate Bond Index
03/31/1994 10,000 10,000
03/31/1995 10,562 10,499
03/31/1996 11,352 11,631
03/31/1997 11,700 12,203
03/31/1998 14,275 13,665
03/31/1999 15,204 14,552
03/31/2000 15,599 14,825
03/31/2001 17,339 16,682
03/31/2002 17,277 17,574
03/31/2003 20,939 19,628
03/31/2004 22,419 20,689
THE LEHMAN BROTHERS AGGREGATE BOND INDEX covers the U.S. investment grade fixed
rate bond market, including government and corporate securities, agency mortgage
pass-through securities, and asset-backed securities. To be included in the
index the security must meet the following criteria: must have at least one year
to final maturity, regardless of call features; must have at least $100 million
par amount outstanding; must be rated investment grade or better by Moody's
Investors Service, Standard & Poor's, or Fitch Investor's Service; must be fixed
rate, although it can carry a coupon that steps up or changes to a predetermined
schedule; must be dollar-denominated and must be nonconvertible. All corporate
and asset-backed securities must be registered with the SEC; and must be
publicly issued. YOU CANNOT INVEST IN THE INDEX.
21
CORE GROWTH FUND -- PORTFOLIO OF INVESTMENTS
SHARES VALUE
- --------------------------------------------------------------------------------------------
COMMON STOCKS 97.7%
AIR TRANSPORT 0.4%
157,900 Expeditors International of Washington, Inc. $ 6,235,471
-----------
BANKS 1.0%
910,850 HDFC Bank Ltd. 7,949,714
2,355,925 UTI Bank Ltd. 7,975,363
-----------
15,925,077
-----------
BANKS -- OUTSIDE NEW YORK CITY 5.1%
607,370 Commerce Bancorp, Inc. 40,013,535
879,425 Doral Financial Corp. 30,955,760
194,750 TCF Financial Corp. 9,945,883
-----------
80,915,178
-----------
CHEMICALS 0.9%
338,565 Cabot Microelectronics Corp.* 14,300,986
-----------
COMMUNICATIONS TECHNOLOGY 1.5%
846,625 UTStarcom, Inc.* 24,348,935
-----------
COMPUTER SERVICES SOFTWARE AND SYSTEMS 1.5%
183,375 CACI International, Inc., Class A* 7,885,125
91,349 Cognizant Technology Solutions Corp.* 4,133,542
334,375 SRA International, Inc., Class A* 12,351,813
-----------
24,370,480
-----------
DIVERSIFIED FINANCIAL SERVICES 1.3%
829,550 U.S.I. Holdings Corp.* 12,269,044
514,750 Housing Development Finance Corporation Ltd. 7,648,223
-----------
19,917,267
-----------
EDUCATION SERVICES 0.5%
159,275 Bright Horizons Family Solutions, Inc.* 7,511,409
-----------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 1.0%
632,200 Integrated Circuit Systems, Inc.* 15,823,966
-----------
ENTERTAINMENT 0.9%
767,085 Movie Gallery, Inc. 15,027,195
-----------
FINANCE COMPANIES 2.7%
425,050 Accredited Home Lenders Holding Co.* 16,746,970
942,725 Saxon Capital, Inc.* 26,782,817
-----------
43,529,787
-----------
FINANCE -- SMALL LOAN 3.0%
2,760,781 AmeriCredit Corp.* 47,016,100
-----------
FINANCIAL -- MISCELLANEOUS 5.4%
517,225 Brown & Brown, Inc. 20,047,641
1,484,356 Fidelity National Financial, Inc. 58,780,498
126,700 Triad Guaranty, Inc.* 6,683,425
-----------
85,511,564
-----------
FINANCIAL DATA PROCESSING SERVICES AND SYSTEMS 0.6%
274,000 Fair Isaac Corp. 9,885,920
-----------
FOOD AND DRUG RETAILING 0.4%
250,000 Shoppers Drug Mart Corp.* 5,960,681
-----------
22
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- --------------------------------------------------------------------------------------------
FOODS 1.2%
489,775 NBTY, Inc.* $ 18,209,834
------------
HEALTH CARE FACILITIES 4.3%
202,400 Laboratory Corporation of America Holdings* 7,944,200
725,900 Pharmaceutical Product Development, Inc.* 21,624,561
483,100 Renal Care Group, Inc.* 22,106,656
270,390 Sunrise Senior Living, Inc.* 9,693,482
224,450 United Surgical Partners International, Inc.* 7,617,833
------------
68,986,732
------------
HEALTH CARE MANAGEMENT SERVICES 7.3%
791,700 AMERIGROUP Corp.* 36,180,690
1,372,220 First Health Group Corp.* 29,996,729
994,761 Orthodontic Centers Of America, Inc.* 7,858,612
651,925 Pediatrix Medical Group, Inc.* 41,071,275
------------
115,107,306
------------
HEALTH CARE SERVICES 6.9%
692,350 Accredo Health, Inc.* 26,378,535
1,132,950 Apria Healthcare Group, Inc.* 33,920,523
338,249 Express Scripts, Inc.* 25,229,993
562,575 Inveresk Research Group, Inc.* 15,988,381
249,000 Lincare Holdings Inc.* 7,823,580
------------
109,341,012
------------
HOME BUILDING 5.6%
928,550 D.R. Horton, Inc. 32,898,527
461,233 M.D.C. Holdings, Inc. 32,470,817
49,493 NVR, Inc.* 22,766,780
------------
88,136,124
------------
HOUSEHOLD FURNISHINGS 0.2%
109,100 Select Comfort Corp.* 3,010,069
------------
INVESTMENT MANAGEMENT COMPANIES 2.0%
1,069,800 MCG Capital Corp. 21,599,262
319,175 SEI Investments Company 10,532,775
------------
32,132,037
------------
LEISURE TIME 2.5%
1,068,080 SCP Pool Corp.* 39,796,661
------------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES 2.1%
571,713 ICU Medical, Inc.* 17,362,924
95,450 Kinetic Concepts, Inc.* 4,280,933
999,450 PSS World Medical, Inc.* 11,183,845
------------
32,827,702
------------
MEDICAL SERVICES 0.6%
273,615 Covance, Inc.* 9,423,301
------------
23
CORE GROWTH FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- ---------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REIT) 13.1%
36,675 American Financial Realty Trust*** + $ 609,208
808,850 American Financial Realty Trust 13,710,008
608,525 Annaly Mortgage Management, Inc. 11,896,664
1,693,925 Anworth Mortgage Asset Corp. 23,647,193
1,251,075 Bimini Mortgage Management, Inc.*** +++ 18,766,125
485,425 Capital Automotive 17,140,357
883,025 Fieldstone Investment Corp.* *** + 16,998,231
694,925 Friedman, Billings, Ramsey Group, Inc., Class A 18,756,026
569,975 iStar Financial, Inc. 24,109,942
602,700 MFA Mortgage Investments, Inc. 6,087,270
261,050 Novastar Financial, Inc. 17,216,247
88,150 Redwood Trust, Inc. 5,480,286
1,057,050 Thornburg Mortgage, Inc. 32,874,255
--------------
207,291,812
--------------
RENTAL AND LEASING SERVICES -- CONSUMER 6.1%
2,951,895 Rent-A-Center, Inc.* 97,383,016
--------------
RETAIL 12.4%
806,595 Dollar Tree Stores, Inc.* 24,915,720
420,600 Global Imaging Systems, Inc.* 13,972,332
914,625 Group 1 Automotive, Inc.* 33,109,425
321,820 Men's Wearhouse, Inc. (The)* 8,550,757
447,425 Michaels Stores, Inc. 21,753,804
1,681,980 O'Reilly Automotive, Inc.* 67,346,479
669,695 Sonic Automotive, Inc. 16,775,860
13,076,000 Texwinca Holdings Ltd. 10,067,690
--------------
196,492,067
--------------
SAVINGS AND LOANS 0.5%
358,066 Commercial Capital Bancorp, Inc.* 8,206,873
--------------
SERVICES -- COMMERCIAL 5.7%
2,304,671 Copart, Inc.* 50,080,501
594,175 Waste Connections, Inc.* 23,648,165
661,020 West Corp.* 16,459,398
--------------
90,188,064
--------------
UTILITIES -- TELECOMMUNICATIONS 1.0%
1,189,525 Nextel Partners, Inc., Class A* 15,059,386
--------------
TOTAL COMMON STOCKS (COST $1,157,570,948) 1,547,872,012
--------------
24
MARCH 31, 2004 (UNAUDITED)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 2.2%
REPURCHASE AGREEMENT 2.2%
$34,129,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04 with State
Street Bank and Trust Co. collateralized by $32,495,000 of United States
Treasury Bonds 5.25% due 11/15/28; value: $34,812,608; repurchase proceeds:
$34,129,474 (cost $ 34,129,000) $ 34,129,000
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $ 34,129,000) 34,129,000
---------------
TOTAL INVESTMENTS (COST $1,191,699,948) 99.9% 1,582,001,012
OTHER ASSETS LESS LIABILITIES 0.1% 1,444,885
---------------
NET ASSETS 100.0% $ 1,583,445,897
===============
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors.
+Security purchased in a private placement transaction or under Rule 144A of the
Securities Act of 1933 (See Note 10).
++Affiliated company (see Note 9).
See notes to financial statements.
25
GLOBAL SCIENCE & TECHNOLOGY FUND -- PORTFOLIO OF INVESTMENTS
SHARES VALUE
- -----------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 94.0%
BIOTECHNOLOGY RESEARCH AND PRODUCTION 2.3%
9,200 Ciphergen Biosystems, Inc.* $ 76,636
2,675 Corgentech, Inc.* 50,290
80,725 ISTA Pharmaceuticals, Inc.* 1,038,931
19,425 Neurochem, Inc.* (Canada) 415,501
29,175 QIAGEN N.V.* (Netherlands) 384,235
----------
1,965,593
----------
CASINOS AND GAMBLING 0.5%
9,050 Shuffle Master, Inc.* 420,734
----------
CHEMICALS 3.0%
60,575 Cabot Microelectronics Corp.* 2,558,688
----------
COMMUNICATIONS EQUIPMENT 0.4%
10,725 Funkwerk AG (Germany) 344,472
----------
COMMUNICATIONS TECHNOLOGY 4.7%
28,800 CIENA Corp.* 143,136
48,250 JDS Uniphase Corp.* 196,378
58,275 Remec, Inc.* 442,890
114,355 UTStarcom, Inc.* (China) 3,288,850
6,528 Xtera Communications, Inc.* *** + 7,076
----------
4,078,330
----------
COMPUTER SERVICES SOFTWARE AND SYSTEMS 10.9%
28,050 Cognizant Technology Solutions Corp.* 1,269,262
29,575 Concord Communications, Inc.* 426,176
54,017 EPIQ Systems, Inc.* 884,798
85,800 iPass, Inc.* 937,794
81,950 Kintera, Inc.* 1,366,107
67,200 LivePerson, Inc.* 356,160
10,000 Macrovision Corp.* 186,800
20,475 Manhattan Associates, Inc.* 569,205
77,220 Nassda Corp.* 535,907
32,550 Opnet Technologies, Inc.* 485,321
36,375 PDF Solutions, Inc.* 418,676
25,425 QLogic Corp.* 839,279
13,975 SRA International, Inc., Class A* 516,237
60,300 Verisity Ltd.* (Israel) 558,378
----------
9,350,100
----------
COMPUTER TECHNOLOGY 0.2%
15,750 Dot Hill Systems Corp.* 157,815
----------
DRUGS AND PHARMACEUTICALS 5.0%
25,400 Able Laboratories, Inc.* 496,062
64,950 Angiotech Pharmaceuticals, Inc.* (Canada) 1,585,429
11,775 Atrix Laboratories, Inc.* 300,263
37,125 Connetics Corp.* 823,061
14,050 ILEX Oncology, Inc.* 336,076
7,000 Northwest Biotherapeutics, Inc.* 917
12,250 Taro Pharmaceutical Industries Ltd.* (Israel) 710,377
----------
4,252,185
----------
EDUCATION SERVICES 2.0%
30,125 Career Education Corp.* 1,706,280
----------
26
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- ------------------------------------------------------------------------------------
ELECTRICAL AND ELECTRONICS 0.6%
18,475 Plexus Corp.* $ 328,670
6,100 Power Integrations, Inc.* 178,913
-----------
507,583
-----------
ELECTRICAL EQUIPMENT AND COMPONENTS 2.9%
41,575 BW Technologies Ltd.* (Canada) 880,699
10,300 Cherokee International Corp.* 148,320
10,175 Flextronics International Ltd.* (Singapore) 175,213
1,505,000 Unisteel Technology Ltd. (Singapore) 1,303,458
-----------
2,507,690
-----------
ELECTRONIC EQUIPMENT AND INSTRUMENTS 2.9%
1,165,000 Innovalues Precision Ltd. (Singapore) 1,029,865
2,000 Samsung Electronics Co., Ltd. (Korea) 495,000
124,350 Vanguard Response Systems, Inc. PIPE* *** + (Canada) 293,696
61,000 Venture Corp. Ltd. (Singapore) 703,201
-----------
2,521,762
-----------
ELECTRONICS 0.6%
46,450 Sanmina-SCI Corp.* 511,415
-----------
ELECTRONICS -- INSTRUMENTS, GAUGES AND METERS 1.1%
186,500 Computer Access Technology Corp.* 904,525
-----------
ELECTRONICS -- MEDICAL SYSTEMS 1.4%
39,075 CTI Molecular Imaging, Inc.* 570,104
57,425 Endocardial Solutions, Inc.* 498,449
4,550 EPIX Medical, Inc.* 94,413
-----------
1,162,966
-----------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 12.8%
84,125 Advanced Power Technology, Inc.* 770,585
7,850 Altera Corp.* 160,533
22,075 AMIS Holdings, Inc.* 358,277
19,875 ASE Test Ltd.* (Taiwan) 218,625
34,850 Cree, Inc.* 777,155
31,775 Integrated Circuit Systems, Inc.* 795,328
25,600 Micrel, Inc.* 341,760
64,475 Monolithic System Technology, Inc.* 863,320
143,250 O2Micro International Ltd.* (Cayman Islands) 2,468,198
30,500 OmniVision Technologies, Inc.* 832,955
169,875 PLX Technology, Inc.* 1,829,554
8,900 PMC-Sierra, Inc.* 151,033
20,100 PSi Technologies Holdings, Inc. ADR* (Philippines) 98,691
198,250 Sirenza Microdevices, Inc.* 880,230
42,750 SiRF Technology Holdings, Inc., Series H* *** + 277,875
4,950 Xilinx, Inc.* 188,100
-----------
11,012,219
-----------
ELECTRONICS -- TECHNOLOGY 0.4%
77,350 EFJ, Inc.* 359,677
-----------
FINANCIAL -- MISCELLANEOUS 0.1%
7,300 Encore Capital Group, Inc.* 121,253
-----------
FOOD AND DRUG RETAILING 0.5%
5,000 Sugi Pharmacy Co. Ltd. Bonus Shares* (Japan) 201,851
5,000 Sugi Pharmacy Co. Ltd. (Japan) 205,207
-----------
407,058
-----------
27
GLOBAL SCIENCE & TECHNOLOGY FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- ------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT AND SUPPLIES 1.0%
5,125 Straumann Holding AG (Switzerland) $ 886,517
----------
HEALTH CARE FACILITIES 1.9%
46,700 American Healthways, Inc.* 1,140,414
16,900 Pharmaceutical Product Development, Inc.* 503,451
----------
1,643,865
----------
HEALTH CARE MANAGEMENT SERVICES 0.3%
13,600 Computer Programs & Systems, Inc. 258,400
----------
HEALTH CARE SERVICES 6.6%
130,443 Accredo Health, Inc.* 4,969,878
15,500 Icon Plc ADR* (Ireland) 547,615
6,400 Inveresk Research Group, Inc.* 181,888
----------
5,699,381
----------
IT CONSULTING AND SERVICE 0.9%
6,525 Infosys Technologies Ltd. (India) 743,286
----------
MACHINERY -- SPECIALTY 0.2%
10,450 ASML Holding N.V.* (Netherlands) 191,549
----------
MEDIA 0.6%
408,500 Astro All Asia Networks Plc* (United Kingdom) 531,050
----------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES 6.3%
14,900 Biosite, Inc.* 476,353
48,725 Cyberonics, Inc.* 1,167,451
92,425 Enpath Medical, Inc.* 1,293,950
49,600 ICU Medical, Inc.* 1,506,352
17,775 Molecular Devices Corp.* 334,881
12,925 Techne Corp.* 527,469
6,225 Thoratec Corp.* 77,750
----------
5,384,206
----------
MISCELLANEOUS MATERIALS AND COMMODITIES 1.6%
46,550 Symyx Technologies, Inc.* 1,333,192
----------
MISCELLANEOUS TECHNOLOGY 0.3%
11,025 RADWARE Ltd.* (Israel) 292,824
----------
PHARMACEUTICALS 1.2%
12,025 Docpharma N.V.* (Belgium) 452,078
8,700 Dr. Reddy's Laboratories Ltd. ADR (India) 208,365
118,497 United Drug Plc (Ireland) 368,930
----------
1,029,373
----------
PRODUCTION TECHNOLOGY EQUIPMENT 6.1%
17,850 August Technology Corp.* 267,750
165,900 Genus, Inc.* 627,102
62,850 InTEST Corp.* 367,672
35,750 Intevac, Inc.* 368,225
275,075 LogicVision, Inc.* 1,152,564
3,150 Nova Measuring Instruments Ltd.* (Israel) 18,837
39,850 Rudolph Technologies, Inc.* 746,391
18,525 SEZ Holding AG* (Switzerland) 649,666
57,500 Tessera Technologies, Inc.* 1,052,250
----------
5,250,457
----------
28
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- --------------------------------------------------------------------------------
RETAIL 1.1%
43,000 Pason Systems, Inc. (Canada) $ 966,587
-----------
SCIENTIFIC EQUIPMENT AND SUPPLIERS 1.1%
43,200 Biacore International AB ADR* (Sweden) 972,000
-----------
SEMICONDUCTOR EQUIPMENT AND PRODUCTS 2.0%
165,720 Taiwan Semiconductor Manufacturing Co. Ltd. ADR* (Taiwan) 1,730,117
-----------
SERVICES -- COMMERCIAL 8.3%
56,725 CoStar Group, Inc.* 2,092,585
21,300 Kroll, Inc.* 571,905
154,900 Management Network Group, Inc.* 587,071
352,601 Wireless Facilities, Inc.* 3,882,137
-----------
7,133,698
-----------
TELECOMMUNICATIONS EQUIPMENT 0.2%
1,850 Vimpel-Communications ADR* (Russia) 192,382
-----------
UTILITIES -- TELECOMMUNICATIONS 2.0%
39,900 Nextel Communications, Inc., Class A* 986,727
57,400 Nextel Partners, Inc., Class A* 726,684
-----------
1,713,411
-----------
TOTAL COMMON AND PREFERRED STOCKS (COST $ 73,023,394) 80,802,640
-----------
LIMITED PARTNERSHIP INTEREST 0.1%
OTHER 0.1%
Montagu Newhall Global Partners II-B, L.P.* *** + 50,000
-----------
TOTAL LIMITED PARTNERSHIP INTEREST (COST $ 50,000) 50,000
-----------
RIGHTS 0.0%
PRODUCTION TECHNOLOGY EQUIPMENT 0.0%
18,525 SEZ Holding AG* *** + (Switzerland) --
-----------
TOTAL RIGHTS (COST $ 0) --
-----------
WARRANTS 0.0%
ELECTRONIC EQUIPMENT AND INSTRUMENTS 0.0%
62,175 Vanguard Response Systems, Inc.* *** + (Canada) --
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 0.0%
4,275 SiRF Technology Holdings, Inc.* *** + --
-----------
TOTAL WARRANTS (COST $0) --
-----------
29
GLOBAL SCIENCE & TECHNOLOGY FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS 0.6%
$ 503,000 U.S. Treasury Bond, 5.25%, 11/15/28+++ $ 531,058
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $ 500,823) 531,058
------------
SHORT-TERM INVESTMENTS 2.8%
REPURCHASE AGREEMENT 2.8%
2,430,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04 with State
Street Bank and Trust Co. collateralized by $ 2,315,000 of United States
Treasury Bonds 5.25% due 11/15/28; value: $2,480,110; repurchase proceeds:
$2,430,034 (cost $ 2,430,000) 2,430,000
------------
TOTAL SHORT-TERM INVESTMENTS (COST $ 2,430,000) 2,430,000
------------
TOTAL INVESTMENTS (COST $76,004,217) 97.5% 83,813,698
------------
OTHER ASSETS LESS LIABILITIES 2.5% 2,148,724
------------
NET ASSETS 100.0% $ 85,962,422
============
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors.
+Security purchased in a private placement transaction or under Rule 144A of the
Securities Act of 1933 (See Note 10).
+++All or a portion of this security has been designated as collateral for open
short positions, written options or purchase commitments.
ADR American Depositary Receipt.
See notes to financial statements.
30
MARCH 31, 2004 (UNAUDITED)
At March 31, 2004, Wasatch Global Science & Technology Fund's investments,
excluding short-term investments, were in the following countries:
COUNTRY %
- ------------------------------------------------
Belgium 0.6
Canada 5.1
Cayman Islands 3.0
China 4.0
Germany 0.4
India 1.2
Ireland 1.1
Israel 1.9
Japan 0.5
Korea 0.6
Netherlands 0.7
Philippines 0.1
Russia 0.2
Singapore 3.9
Sweden 1.2
Switzerland 1.9
Taiwan 2.4
United Kingdom 0.7
United States 70.5
-----
TOTAL 100.0%
=====
31
INTERNATIONAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS
SHARES VALUE
- --------------------------------------------------------------------------
COMMON STOCKS 92.4%
AIRLINES 1.7%
125,400 WestJet Airlines Ltd.* (Canada) $ 2,508,287
-----------
BANKS 0.8%
146,100 HDFC Bank Ltd. (India) 1,275,131
-----------
BANKS -- OUTSIDE NEW YORK CITY 1.1%
45,700 Doral Financial Corp. (Puerto Rico) 1,608,640
3,475 Equitable Group, Inc.* (Canada) 61,379
-----------
1,670,019
-----------
BEVERAGES 0.8%
27,140 Baron de Ley* (Spain) 1,188,986
-----------
BIOTECHNOLOGY 3.2%
16,010 Actelion Ltd.* (Switzerland) 1,732,451
102,400 Angiotech Pharmaceuticals, Inc.* (Canada) 2,496,895
250,000 Ark Therapeutics Group Plc* (United Kingdom) 587,695
-----------
4,817,041
-----------
BIOTECHNOLOGY RESEARCH AND PRODUCTION 1.4%
28,400 Neurochem, Inc.* (Canada) 607,476
118,425 QIAGEN N.V.* (Netherlands) 1,559,657
-----------
2,167,133
-----------
COMMERCIAL SERVICES AND SUPPLIES 7.0%
3,070,000 Accord Customer Care Solutions Ltd.* (Singapore) 1,586,160
2,000,000 Asiatravel.com Holdings Ltd. (Singapore) 657,030
475 En-Japan, Inc. (Japan) 1,316,345
6,163,000 Linmark Group Ltd. (Hong Kong) 2,372,559
104,600 Park24 Co. Ltd. (Japan) 3,350,089
64,825 Techem AG* (Germany) 1,380,084
-----------
10,662,267
-----------
COMMUNICATIONS EQUIPMENT 0.7%
33,675 Funkwerk AG (Germany) 1,081,595
-----------
COMMUNICATIONS TECHNOLOGY 1.3%
67,890 UTStarcom, Inc.* (China) 1,952,516
-----------
COMPUTERS AND PERIPHERALS 1.9%
23,400 Logitech International SA* (Switzerland) 1,061,830
3,022,000 TPV Technology Ltd. (Hong Kong) 1,822,619
-----------
2,884,449
-----------
DIVERSIFIED FINANCIALS 0.9%
41,000 AWD Holding AG (Germany) 1,345,623
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES 1.0%
124,600 Colt Telecom Group Plc ADR* (United Kingdom) 859,740
295,000 Zyxel Communications Corp. (Taiwan) 626,707
-----------
1,486,447
-----------
DRUGS AND PHARMACEUTICALS 1.0%
24,825 Taro Pharmaceutical Industries Ltd.* (Israel) 1,439,602
-----------
ELECTRIC UTILITIES 1.1%
100,000 Red Electrica de Espana (Spain) 1,692,074
-----------
32
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 1.0%
3,250 SAIA-Burgess Electronics AG (Switzerland) $ 1,478,615
-----------
ELECTRICAL EQUIPMENT AND COMPONENTS 1.6%
42,500 BW Technologies Ltd.* (Canada) 900,293
1,781,700 Unisteel Technology Ltd. (Singapore) 1,543,104
-----------
2,443,397
-----------
ELECTRONIC EQUIPMENT AND INSTRUMENTS 2.8%
505,000 Advantech Co. Ltd. (Taiwan) 1,011,533
103,300 Vanguard Response Systems, Inc. PIPE* *** + (Canada) 243,979
257,280 Venture Corp. Ltd. (Singapore) 2,965,897
-----------
4,221,409
-----------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 1.6%
98,400 ASE Test Ltd.* (Taiwan) 1,082,400
74,750 O2Micro International Ltd.* (Cayman Islands) 1,287,942
-----------
2,370,342
-----------
FINANCIAL -- MISCELLANEOUS 1.9%
150,050 Home Capital Group, Inc., Class B (Canada) 2,858,422
-----------
FOOD AND DRUG RETAILING 3.2%
90,500 Shoppers Drug Mart Corp.* (Canada) 2,157,767
17,300 Sugi Pharmacy Co. Ltd. (Japan) 710,016
17,300 Sugi Pharmacy Co. Ltd. Bonus Shares* (Japan) 698,403
879,000 Wumart Stores, Inc.* (China) 1,319,710
-----------
4,885,896
-----------
HEALTH CARE EQUIPMENT AND SUPPLIES 4.4%
127,750 Elekta AB, Class B* (Sweden) 2,405,583
19,925 Straumann Holding AG (Switzerland) 3,446,606
211,125 Trinity Biotech Plc ADR* (Ireland) 802,275
-----------
6,654,464
-----------
HEALTH CARE PROVIDERS AND SERVICES 1.9%
430 EPS Co., Ltd. (Japan) 1,434,914
62,225 MEDIDEP SA* (France) 1,393,648
-----------
2,828,562
-----------
HEALTH CARE SERVICES 1.1%
47,475 Icon Plc ADR* (Ireland) 1,677,292
-----------
HOTELS, RESTAURANTS AND LEISURE 1.0%
60,675 Fairmont Hotels & Resorts, Inc. (Canada) 1,527,567
-----------
HOUSEHOLD DURABLES 3.6%
52,200 Citizen Electronics Co. Ltd. (Japan) 3,228,556
697,000 TechTronic Industries Co. Ltd. (Hong Kong) 2,249,440
-----------
5,477,996
-----------
IT CONSULTING AND SERVICE 2.4%
149,415 Indra Sistemas, S.A. (Spain) 1,952,700
310 Works Applications Co. Ltd.* (Japan) 1,679,532
-----------
3,632,232
-----------
33
INTERNATIONAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- -----------------------------------------------------------------------------------
LEISURE EQUIPMENT AND PRODUCTS 3.5%
327,200 Bloomsbury Publishing Plc (United Kingdom) $ 1,574,547
85,000 Mega Bloks, Inc.* (Canada) 1,292,147
33,055 Rodriguez Group (France) 1,829,266
24,350 Zapf Creation AG (Germany) 590,313
-----------
5,286,273
-----------
MACHINERY 1.1%
79,650 Singulus Technologies* (Germany) 1,690,798
-----------
MEDIA 3.9%
87,300 Alliance Atlantis Communications, Inc., Class B* (Canada) 1,656,395
281,375 HIT Entertainment Plc (United Kingdom) 1,595,264
61,575 JC Decaux SA* (France) 1,378,332
892 SKY Perfect Communications, Inc.* (Japan) 1,342,897
-----------
5,972,888
-----------
MULTILINE RETAIL 1.2%
715 Can Do Co. Ltd. (Japan) 1,837,465
-----------
OFFICE ELECTRONICS 2.3%
34,050 Neopost SA (France) 1,836,142
240 TELEWAVE, Inc. (Japan) 1,716,834
-----------
3,552,976
-----------
OIL AND GAS 3.5%
191,520 Cairn Energy Plc* (United Kingdom) 3,100,349
380,200 Soco International Plc* (United Kingdom) 2,253,694
-----------
5,354,043
-----------
PERSONAL PRODUCTS 0.9%
52,700 Milbon Co. Ltd. (Japan) 1,377,068
-----------
PHARMACEUTICALS 4.9%
40,550 Dr. Reddy's Laboratories Ltd. ADR (India) 971,172
98,500 Patheon, Inc.* (Canada) 838,378
45,600 Sawai Pharmaceutical Co. Ltd (Japan) 1,635,365
800,000 SkyePharma Plc* (United Kingdom) 866,562
26,675 Stada Arzneimittel AG (Germany) 1,358,022
586,837 United Drug Plc (Ireland) 1,827,068
-----------
7,496,567
-----------
PRODUCTION TECHNOLOGY EQUIPMENT 0.8%
36,095 SEZ Holding AG* (Switzerland) 1,265,841
-----------
REAL ESTATE 0.9%
12,335 Unibail (Union du Credit-Bail Immobilier) (France) 1,291,012
-----------
RETAIL 1.4%
25,640 Bijou Brigitte AG (Germany) 1,306,277
12,400 GiFi (France) 869,788
-----------
2,176,065
-----------
SCIENTIFIC EQUIPMENT AND SUPPLIES 0.3%
22,827 Biacore International AB ADR* (Sweden) 513,607
-----------
SEMICONDUCTOR EQUIPMENT AND PRODUCTS 2.5%
54,400 ASM International NV* (Netherlands) 1,202,240
100,000 CSR Plc* (United Kingdom) 436,969
41,600 Disco Corp. (Japan) 2,213,933
-----------
3,853,142
-----------
34
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- -------------------------------------------------------------------------
SOFTWARE 1.0%
302,350 Autonomy Corp. Plc* (United Kingdom) $ 1,475,869
-----------
SPECIALTY RETAIL 8.3%
76,600 Carpetright Plc (United Kingdom) 1,419,374
935,315 Carphone Warehouse Group Plc (United Kingdom) 2,543,618
965,025 Convenience Retail Asia Ltd. (Hong Kong) 321,970
625,000 Esprit Holdings Ltd. (Hong Kong) 2,614,576
19,150 Gulliver International Co. Ltd. (Japan) 1,808,769
45,730 USS Co. Ltd. (Japan) 3,797,495
-----------
12,505,802
-----------
TELECOMMUNICATIONS EQUIPMENT 0.6%
8,900 Vimpel-Communications ADR* (Russia) 925,511
-----------
TEXTILES, APPAREL AND LUXURY GOODS 2.7%
18,450 Puma AG Rudolf Dassler Sport (Germany) 4,070,928
-----------
WATER UTILITIES 1.0%
1,757,750 Hyflux Ltd. (Singapore) 1,585,356
-----------
WIRELESS TELECOMMUNICATION SERVICES 1.2%
28,260 Mobistar SA* (Belgium) 1,857,078
-----------
TOTAL COMMON STOCKS (COST $ 116,315,202) 140,315,653
-----------
RIGHTS 0.0%
PRODUCTION TECHNOLOGY EQUIPMENT 0.0%
36,095 SEZ Holding AG* *** + (Switzerland) --
-----------
TOTAL RIGHTS (COST $ 0) --
-----------
WARRANTS 0.0%
ELECTRONIC EQUIPMENT AND INSTRUMENTS 0.0%
51,650 Vanguard Response Systems, Inc.* *** + (Canada) --
TOTAL WARRANTS (COST $0) --
-----------
35
INTERNATIONAL GROWTH FUND -- PORTFOLIO OF MARCH 31, 2004 (UNAUDITED)
INVESTMENTS (CONTINUED)
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 8.1%
REPURCHASE AGREEMENT 8.1%
$ 12,259,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04 with State
Street Bank and Trust Co. collateralized by $ 11,675,000 of United States
Treasury Bonds 5.25% due 11/15/28; value: $12,507,684; repurchase proceeds:
$12,259,170 (cost $ 12,259,000) $ 12,259,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $ 12,259,000) 12,259,000
-------------
TOTAL INVESTMENTS (COST $128,574,202) 100.5% 152,574,653
LIABILITIES LESS OTHER ASSETS (0.5)% (822,594)
-------------
NET ASSETS 100.0% $ 151,752,059
=============
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors.
+Security purchased in a private placement transaction or under Rule 144A of the
Securities Act of 1933 (See Note 10).
ADR American Depositary Receipt.
See notes to financial statements.
At March 31, 2004, Wasatch International Growth Fund's investments, excluding
short-term investments, were in the following countries:
COUNTRY %
- -------------------------------------------------
Belgium 1.3
Canada 12.2
Cayman Islands 0.9
China 2.3
France 6.1
Germany 9.1
Hong Kong 6.7
India 1.6
Ireland 3.1
Israel 1.0
Japan 20.1
Netherlands 2.0
Puerto Rico 1.1
Russia 0.7
Singapore 6.0
Spain 3.5
Sweden 2.1
Switzerland 6.4
Taiwan 1.9
United Kingdom 11.9
-----
TOTAL 100.0%
=====
36
MICRO CAP FUND -- PORTFOLIO OF INVESTMENTS MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- ----------------------------------------------------------------------
COMMON STOCKS 99.5%
AEROSPACE 0.3%
59,125 MTC Technologies, Inc.* $ 1,484,629
-----------
AUTO PARTS -- AFTER MARKET 1.2%
196,575 Aftermarket Technology Corp.* 2,887,687
215,000 IMPCO Technologies, Inc. PIPE* *** + 1,141,392
111,200 IMPCO Technologies, Inc.* 590,338
94,000 Keystone Automotive Industries, Inc.* 2,571,840
-----------
7,191,257
-----------
BANKS -- NEW YORK CITY 0.3%
69,475 Signature Bank* 1,452,028
-----------
BANKS -- OUTSIDE NEW YORK CITY 1.6%
56,900 Bancorp Bank (The)* 1,024,200
92,000 Canadian Western Bank 2,982,893
13,875 Equitable Group, Inc.* 245,074
79,000 First State Bancorporation 2,437,940
150,900 Franklin Bank Corp.* 2,805,231
-----------
9,495,338
-----------
BIOTECHNOLOGY RESEARCH AND PRODUCTION 0.8%
281,800 ISTA Pharmaceuticals, Inc.* 3,626,766
94,400 United-Guardian, Inc. 722,160
-----------
4,348,926
-----------
CHEMICALS 2.4%
334,675 Cabot Microelectronics Corp.* 14,136,672
-----------
COMPUTER SERVICES SOFTWARE AND SYSTEMS 3.3%
49,600 EPIQ Systems, Inc.* 812,448
424,650 iPass, Inc.* 4,641,424
242,925 Kintera, Inc.* 4,049,560
755,744 Nassda Corp.* 5,244,863
440,825 Verisity Ltd.* 4,082,040
-----------
18,830,335
-----------
COMPUTER TECHNOLOGY 1.3%
543,425 FARGO Electronics, Inc.* 6,140,702
294,950 Qualstar Corp.* 1,722,508
-----------
7,863,210
-----------
CONSUMER PRODUCTS 1.0%
128,975 CoolBrands International, Inc.* 2,246,633
119,550 Yankee Candle Co., Inc.* 3,297,189
-----------
5,543,822
-----------
COSMETICS 0.1%
102,125 CCA Industries, Inc. 822,106
-----------
DIVERSIFIED FINANCIAL SERVICES 1.1%
318,225 Rewards Network, Inc.* 3,182,250
202,000 U.S.I. Holdings Corp.* 2,987,580
-----------
6,169,830
-----------
EDUCATION SERVICES 0.2%
43,725 Concorde Career College, Inc.* 1,049,400
-----------
37
MICRO CAP FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- ----------------------------------------------------------------------------
ELECTRICAL EQUIPMENT AND COMPONENTS 1.6%
298,175 BW Technologies Ltd.* $ 6,316,352
34,225 Cohu, Inc. 638,296
2,462,000 Unisteel Technology Ltd. 2,132,302
-----------
9,086,950
-----------
ELECTRONIC EQUIPMENT AND INSTRUMENTS 0.9%
4,297,750 MFS Technology Ltd. 3,054,786
829,050 Vanguard Response Systems, Inc. PIPE* *** + 1,958,091
-----------
5,012,877
-----------
ELECTRONICS 1.3%
353,550 NU Horizons Electronics Corp.* 3,719,346
219,200 Supertex, Inc.* 3,656,256
-----------
7,375,602
-----------
ELECTRONICS -- INSTRUMENTS, GAUGES AND METERS 1.1%
1,335,620 Computer Access Technology Corp.* 6,477,757
-----------
ELECTRONICS -- MEDICAL SYSTEMS 3.3%
182,300 CTI Molecular Imaging, Inc.* 2,659,757
451,291 Endocardial Solutions, Inc.* 3,917,206
90,300 EPIX Medical, Inc.* 1,873,725
649,025 IRIDEX Corp.* 5,185,710
198,717 Possis Medical, Inc.* 5,589,909
-----------
19,226,307
-----------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 10.0%
583,550 Advanced Power Technology, Inc.*++ 5,345,318
411,025 Excel Technology, Inc.* 12,926,736
283,975 Micrel, Inc.* 3,791,066
1,072,450 O2Micro International Ltd.* 18,478,314
1,147,400 PLX Technology, Inc.* 12,357,498
1,001,445 PSi Technologies Holdings, Inc. ADR* 4,917,095
-----------
57,816,027
-----------
ELECTRONICS -- TECHNOLOGY 0.6%
782,275 EFJ, Inc.* 3,637,579
-----------
FINANCE COMPANIES 1.9%
131,200 Saxon Capital, Inc.* 3,727,392
204,775 United PanAm Financial Corp.* 3,274,352
219,450 World Acceptance Corp.* 4,281,470
-----------
11,283,214
-----------
FINANCIAL -- MISCELLANEOUS 3.8%
95,475 Asset Acceptance Capital Corp.* 1,775,835
283,500 Encore Capital Group, Inc.* 4,708,935
33,900 First Cash Financial Services, Inc.* 1,140,057
566,000 Home Capital Group Inc., Class B 10,782,185
123,050 Portfolio Recovery Associates, Inc.* 3,314,967
-----------
21,721,979
-----------
HEALTH CARE FACILITIES 1.6%
252,750 American Healthways, Inc.* 6,172,155
469,125 Capital Senior Living Corp.* 2,903,884
-----------
9,076,039
-----------
38
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- ----------------------------------------------------------------------------
HEALTH CARE MANAGEMENT SERVICES 9.2%
81,300 America Service Group, Inc.* $ 2,788,590
81,825 AMERIGROUP Corp.* 3,739,403
835,725 AmSurg Corp.* 18,979,315
114,575 Centene Corp.* 3,504,849
165,000 Computer Programs & Systems, Inc. 3,135,000
303,106 CorVel Corp.* 10,972,437
126,150 IMPAC Medical Systems, Inc.* 2,838,375
176,300 Molina Healthcare, Inc.* 5,169,116
494,239 VitalWorks, Inc.* 1,853,396
-----------
52,980,481
-----------
HEALTH CARE SERVICES 6.5%
185,850 Accredo Health, Inc.* 7,080,885
948,500 Covalent Group, Inc.*++ 3,234,385
258,225 Icon Plc ADR* 9,123,089
209,150 Inveresk Research Group, Inc.* 5,944,043
644,725 Odyssey HealthCare, Inc.* 12,153,066
-----------
37,535,468
-----------
HOME BUILDING 0.7%
58,300 Meritage Corp.* 4,328,775
-----------
HOUSEHOLD FURNISHINGS 0.5%
132,900 Hooker Furniture Corp. 3,088,596
-----------
LEISURE TIME 1.5%
205,300 Action Performance Companies, Inc. 3,134,931
147,350 SCP Pool Corp.* 5,490,261
-----------
8,625,192
-----------
MACHINERY -- OIL WELL EQUIPMENT AND SERVICES 0.6%
180,800 Gulf Island Fabrication, Inc. 3,677,472
-----------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES 8.4%
129,300 American Medical Systems Holdings, Inc.* 3,426,450
129,350 Biosite, Inc.* 4,135,319
234,150 Cyberonics, Inc.* 5,610,234
407,075 Encision, Inc.*++ 1,624,229
97,950 Enpath Medical, Inc.* 1,371,300
62,750 Exactech, Inc.* 1,154,600
619,165 ICU Medical, Inc.* 18,804,041
399,925 Molecular Devices Corp.* 7,534,587
135,550 Young Innovations, Inc. 4,756,450
-----------
48,417,210
-----------
MEDICAL SERVICES 0.7%
302,312 U.S. Physical Therapy, Inc.* 4,171,905
-----------
METALS FABRICATING 0.3%
61,175 Intermagnetics General Corp.* 1,621,138
-----------
MISCELLANEOUS MATERIALS AND COMMODITIES 1.0%
194,025 Symyx Technologies, Inc.* 5,556,876
-----------
PHARMACEUTICALS 0.5%
80,925 Docpharma N.V.* 3,042,361
-----------
39
MICRO CAP FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- -----------------------------------------------------------------------
PRODUCTION TECHNOLOGY EQUIPMENT 3.9%
140,775 August Technology Corp.* $ 2,111,625
627,200 Genus, Inc.* 2,370,816
489,575 inTEST Corp.*++ 2,864,014
782,400 LogicVision, Inc.* 3,278,256
199,750 Nanometrics, Inc.* 3,058,172
105,425 Nova Measuring Instruments Ltd.* 630,441
239,100 Rudolph Technologies, Inc.* 4,478,343
42,853 SEZ Holding AG* 1,502,842
123,475 Tessera Technologies, Inc.* 2,259,593
-----------
22,554,102
-----------
REAL ESTATE INVESTMENT TRUSTS (REIT) 0.6%
174,075 Fieldstone Investment Corp.* *** + 3,350,944
-----------
RECREATIONAL VEHICLES AND BOATS 0.2%
88,725 National R.V. Holdings, Inc.* 1,401,855
-----------
RENTAL AND LEASING SERVICES -- CONSUMER 0.4%
11,725 Easyhome Ltd.* 109,446
147,150 Rainbow Rentals, Inc.* 2,324,970
-----------
2,434,416
-----------
RETAIL 13.2%
99,125 AC Moore Arts & Crafts, Inc.* 2,676,375
936,725 Big 5 Sporting Goods Corp.* 23,652,306
106,975 Bijou Brigitte AG 5,450,036
105,475 Cato Corp. (The), Class A 2,117,938
45,600 GiFi 3,198,574
141,650 Global Imaging Systems, Inc.* 4,705,613
233,525 Guitar Center, Inc.* 8,673,119
166,162 Hibbett Sporting Goods, Inc.* 6,337,419
122,125 Lithia Motors, Inc., Class A 3,376,756
73,675 MarineMax, Inc.* 1,957,545
271,525 O'Reilly Automotive, Inc.* 10,871,861
96,950 School Specialty, Inc.* 3,448,512
-----------
76,466,054
-----------
SAVINGS AND LOANS 0.6%
131,182 Commercial Capital Bancorp, Inc.* 3,006,691
18,200 Harbor Florida Bancshares, Inc. 526,708
-----------
3,533,399
-----------
SCIENTIFIC EQUIPMENT AND SUPPLIERS 0.9%
241,073 Biacore International AB ADR* 5,424,143
-----------
SERVICES -- COMMERCIAL 8.3%
640,985 AMN Healthcare Services, Inc.* 11,762,075
315,000 Charles River Associates, Inc.* 10,327,590
163,575 Management Network Group, Inc.* 619,949
122,700 Providence Service Corp.* 2,186,514
321,100 Resources Connection, Inc.* 14,166,611
818,725 SM&A* 9,014,162
-----------
48,076,901
-----------
SPECIALTY RETAIL 0.2%
3,591,175 Convenience Retail Asia Ltd. 1,198,157
-----------
40
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- -------------------------------------------------------------------
TRUCKERS 1.5%
134,200 Knight Transportation, Inc.* $ 3,218,116
75,675 PAM Transportation Services* 1,309,177
426,600 USA Truck, Inc.* 4,120,956
------------
8,648,249
------------
UTILITIES -- CABLE TV AND RADIO 0.1%
116,950 Knology, Inc.* 805,785
------------
TOTAL COMMON STOCKS (COST $ 391,517,281) 576,041,363
------------
RIGHTS 0.0%
PRODUCTION TECHNOLOGY EQUIPMENT 0.0%
42,853 SEZ Holding AG* *** + --
------------
TOTAL RIGHTS (COST $ 0) --
------------
WARRANTS 0.0%
ELECTRONIC EQUIPMENT AND INSTRUMENTS 0.0%
414,525 Vanguard Response Systems, Inc.* *** + --
------------
TOTAL WARRANTS (COST $ 0) --
------------
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 0.5%
REPURCHASE AGREEMENT 0.5%
$ 2,697,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04 with State
Street Bank and Trust Co. collateralized by $ 2,570,000 of United States
Treasury Bonds 5.25% due 11/15/28; value: $2,753,298; repurchase proceeds:
$2,697,037 (cost $ 2,697,000) $ 2,697,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $ 2,697,000) 2,697,000
-------------
TOTAL INVESTMENTS (COST $394,214,281) 100.0% 578,738,363
OTHER ASSETS LESS LIABILITIES 0% 72,311
-------------
NET ASSETS 100.0% $ 578,810,674
=============
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors.
+ Security purchased in a private placement transaction or under Rule 144A of
the Securities Act of 1933 (See Note 10).
Affiliated company (see Note 9).
ADR American Depositary Receipt.
See notes to financial statements.
41
MICRO CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS 89.4%
AEROSPACE AND DEFENSE 0.8%
300,000 Magellan Aerospace Corp.* (Canada) $ 761,230
---------
AIRLINES 1.1%
80,000 Transat A.T., Inc.* (Canada) 960,110
---------
AUTO PARTS -- AFTER MARKET 0.8%
132,775 IMPCO Technologies, Inc.* 704,876
---------
BANKS -- OUTSIDE NEW YORK CITY 5.9%
25,000 CoBiz, Inc. 510,750
40,000 CommerceWest Bank* 760,000
2,200 Equitable Group, Inc.* (Canada) 38,858
39,500 Franklin Bank Corp.* 734,305
60,500 Franklin Bank Corp.* *** + 1,102,201
92,250 Wilshire State Bank* 2,210,292
---------
5,356,406
---------
BIOTECHNOLOGY RESEARCH AND PRODUCTION 2.1%
107,700 ISTA Pharmaceuticals, Inc.* 1,386,099
74,100 United-Guardian, Inc. 566,865
---------
1,952,964
---------
COMMERCIAL SERVICES AND SUPPLIES 0.6%
12,000 Acadomia Group* (France) 543,433
---------
COMPUTER SERVICES SOFTWARE AND SYSTEMS 4.4%
100,000 BakBone Software* (Canada) 270,000
30,000 Concord Communications, Inc.* 432,300
666,667 CorVu Corp. PIPE* *** + 619,400
96,825 iPass, Inc.* 1,058,297
80,000 Komplett ASA (Norway) 869,045
113,142 Nassda Corp.* 785,205
---------
4,034,247
---------
COMPUTER TECHNOLOGY 1.0%
50,000 FARGO Electronics, Inc.* 565,000
60,000 Qualstar Corp.* 350,400
---------
915,400
---------
CONSUMER PRODUCTS 0.6%
30,000 CoolBrands International, Inc.* (Canada) 522,574
---------
COSMETICS 0.7%
84,000 CCA Industries, Inc. 676,200
---------
DIVERSIFIED FINANCIAL SERVICES 0.7%
60,000 Rewards Network, Inc.* 600,000
---------
EDUCATION SERVICES 1.5%
25,000 Concorde Career College, Inc.* 600,000
93,025 Princeton Review, Inc. (The)* 803,736
---------
1,403,736
---------
ELECTRICAL EQUIPMENT AND COMPONENTS 4.5%
145,000 BW Technologies Ltd.* (Canada) 3,071,589
1,200,000 Unisteel Technology Ltd. (Singapore) 1,039,302
---------
4,110,891
---------
42
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- --------------------------------------------------------------------------
ELECTRONIC EQUIPMENT AND INSTRUMENTS 1.0%
350,000 Vanguard Response Systems, Inc.* (Canada) $ 949,442
---------
ELECTRONICS 0.7%
60,000 Nu Horizons Electronics Corp.* 631,200
---------
ELECTRONICS -- INSTRUMENTS, GAUGES AND METERS 1.3%
257,000 Computer Access Technology Corp.* 1,246,450
---------
ELECTRONICS -- MEDICAL SYSTEMS 3.0%
150,000 Endocardial Solutions, Inc.* 1,302,000
180,600 IRIDEX Corp.* 1,442,994
---------
2,744,994
---------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 5.9%
158,850 Advanced Power Technology, Inc.* 1,455,066
15,000 Excel Technology, Inc.* 471,750
106,700 Peak International Ltd.* (Bermuda) 746,900
40,000 Pericom Semiconductor Corp.* 459,200
170,950 PLX Technology, Inc.* 1,841,132
50,000 White Electronic Designs Corp.* 382,500
---------
5,356,548
---------
ELECTRONICS -- TECHNOLOGY 1.1%
94,750 EFJ, Inc.* 440,588
130,000 Iteris Holdings, Inc.* 520,000
---------
960,588
---------
FINANCE COMPANIES 2.5%
60,000 Saxon Capital, Inc.* 1,704,600
34,675 United PanAm Financial Corp.* 554,453
---------
2,259,053
---------
FINANCIAL -- MISCELLANEOUS 3.9%
50,000 Encore Capital Group, Inc.* 830,500
30,000 First Cash Financial Services, Inc.* 1,008,900
90,000 Home Capital Group Inc., Class B (Canada) 1,714,482
---------
3,553,882
---------
HEALTH CARE FACILITIES 0.5%
70,150 Capital Senior Living Corp.* 434,229
---------
HEALTH CARE MANAGEMENT SERVICES 1.8%
20,000 America Service Group, Inc.* 686,000
50,000 Computer Programs & Systems, Inc. 950,000
---------
1,636,000
---------
HEALTH CARE SERVICES 2.5%
350,000 Covalent Group, Inc.* 1,193,500
67,500 Healthcare Services Group 1,110,375
---------
2,303,875
---------
HOUSEHOLD FURNISHINGS 0.7%
40,000 Chromcraft Revington, Inc.* 596,000
---------
HOUSEHOLD PRODUCTS 0.7%
900,000 HTL International Holdings Ltd. (Singapore) 639,709
---------
INSURANCE -- PROPERTY AND CASUALTY 0.8%
50,000 American Safety Insurance Holdings Ltd.* (Bermuda) 728,000
---------
43
MICRO CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- --------- ----------
INVESTMENT MANAGEMENT COMPANIES 0.8%
50,000 Technology Investment Capital Corp. $ 729,500
-----------
MACHINERY -- OIL WELL EQUIPMENT AND SERVICES 0.9%
40,000 Gulf Island Fabrication, Inc. 813,600
-----------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES 12.7%
20,000 Biosite, Inc.* 639,400
30,000 Bovie Medical Corp.* 87,000
55,200 Cyberonics, Inc.* 1,322,592
149,734 Encision, Inc.* 597,439
206,600 Enpath Medical, Inc.* 2,892,400
52,175 ICU Medical, Inc.* 1,584,554
404,690 MacroPore Biosurgery, Inc.* 1,618,537
154,300 Medical Technology Systems, Inc.* 1,921,035
250,000 Patient Infosystems, Inc. PIPE* *** + 482,775
178,200 Pro-Dex, Inc.* 479,358
-----------
11,625,090
-----------
METAL MINING 0.9%
2,000,000 EuroZinc Mining Corp. PIPE* *** + (Canada) 858,481
-----------
MISCELLANEOUS MATERIALS AND COMMODITIES 0.5%
100,000 Sterling Construction Company, Inc.* 463,000
-----------
PRODUCTION TECHNOLOGY EQUIPMENT 6.5%
297,300 Genus, Inc.* 1,123,794
186,925 inTEST Corp.* 1,093,511
575,000 LogicVision, Inc.* 2,409,250
27,000 Nanometrics, Inc.* 413,370
7,300 Nova Measuring Instruments Ltd.* (Israel) 43,654
47,225 Rudolph Technologies, Inc.* 884,524
-----------
5,968,103
-----------
REAL ESTATE INVESTMENT TRUSTS (REIT) 2.9%
71,600 Bimini Mortgage Management, Inc.*** + 1,074,000
20,375 Capital Lease Funding, Inc.* 261,208
48,425 Fieldstone Investment Corp.* *** + 932,181
36,250 Medical Properties Trust, Inc.* *** + 362,500
-----------
2,629,889
-----------
RECREATIONAL VEHICLES AND BOATS 0.5%
29,650 National R.V. Holdings, Inc.* 468,470
-----------
RENTAL AND LEASING SERVICES -- CONSUMER 0.6%
17,325 Easyhome Ltd.* (Canada) 161,718
24,875 Rainbow Rentals, Inc.* 393,025
-----------
554,743
-----------
RETAIL 5.1%
50,000 Big 5 Sporting Goods Corp.* 1,262,500
25,000 Bijou Brigitte AG (Germany) 1,273,671
50,000 Casual Male Retail Group, Inc.* 517,000
14,000 GiFi (France) 982,018
5,500 Pason Systems, Inc. (Canada) 123,633
50,000 Whitehall Jewellers, Inc.* 457,000
-----------
4,615,822
-----------
SAVINGS AND LOANS 0.9%
60,000 Pacific Premier Bancorp, Inc.* 803,940
-----------
44
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- --------- ----------
SERVICES -- COMMERCIAL 4.6%
25,000 4Kids Entertainment, Inc.* $ 559,250
30,000 AMN Healthcare Services, Inc.* 550,500
15,000 Charles River Associates, Inc.* 491,790
155,000 Management Network Group, Inc.* 587,450
35,000 Monro Muffler, Inc.* 874,650
100,000 SM&A* 1,101,000
-----------
4,164,640
-----------
SOFTWARE 0.1%
85,000 ACD Systems International, Inc.* (Canada) 110,756
-----------
TELECOMMUNICATIONS EQUIPMENT 0.4%
70,000 Airspan Networks, Inc.* 408,800
-----------
TRUCKERS 0.5%
50,000 USA Truck, Inc.* 483,000
-----------
UTILITIES -- TELECOMMUNICATIONS 0.4%
35,000 Yak Communications USA, Inc.* 374,850
-----------
TOTAL COMMON STOCKS (COST $ 65,027,462) 81,654,721
-----------
CONTRACTS VALUE
- --------- -----------
PUT OPTIONS PURCHASED 0.0%
10,000 iShares Russell 2000 Growth Index Fund expiring 4/17/04,
exercise price $ 60.00 $ 5,500
-----------
TOTAL PUT OPTIONS PURCHASED (PREMIUM $24,750) 5,500
-----------
SHARES VALUE
- --------- -----------
WARRANTS 0.1%
COMPUTER SERVICES SOFTWARE AND SYSTEMS 0.0%
200,000 CorVu Corp.* *** + $ --
-----------
METAL MINING 0.1%
1,000,000 EuroZinc Mining Corp.* *** + (Canada) 83,079
-----------
TOTAL WARRANTS (COST $0) 83,079
-----------
45
MICRO CAP VALUE FUND -- PORTFOLIO OF MARCH 31, 2004 (UNAUDITED)
INVESTMENTS (CONTINUED)
PRINCIPAL AMOUNT VALUE
- ---------------- -------------
SHORT-TERM INVESTMENTS 11.7%
REPURCHASE AGREEMENT 11.7%
$10,660,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04 with
State Street Bank and Trust Co. collateralized by
$10,150,000 of United States Treasury Bonds 5.25% due
11/15/28; value: $10,873,918; repurchase proceeds:
$10,660,148+++ (cost $10,660,000) $ 10,660,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $10,660,000) 10,660,000
-------------
TOTAL INVESTMENTS (COST $75,712,212) 101.2% 92,403,300
LIABILITIES LESS OTHER ASSETS (1.2)% (1,109,899)
-------------
NET ASSETS 100.0% $ 91,293,401
=============
Share Value
----- -------------
SECURITIES SOLD SHORT
30,000 iShares Russell 2000 Growth Index Fund (proceeds $1,853,779) $ 1,875,000
=============
*Non-income producing.
***Security was fair valued under procedures adopted by
the Board of Directors.
+Security purchased in a private placement transaction or
under Rule 144A of the Securities Act of 1933 (See Note 10).
+++All or a portion of this security has been committed as
collateral for open short positions, written options or
purchase commitments.
See notes to financial statements.
At March 31, 2004, Wasatch Micro Cap Value Fund's
investments, excluding securities sold short and
short-term investments, were in the following countries:
COUNTRY %
- ------- -----
Bermuda 1.8
Canada 11.8
France 1.9
Germany 1.5
Israel 0.1
Norway 1.1
Singapore 2.0
United States 79.8
-----
TOTAL 100.0%
=====
46
SMALL CAP GROWTH FUND -- PORTFOLIO OF INVESTMENTS MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- ------- -----------
COMMON AND PREFERRED STOCKS 96.0%
AIR TRANSPORT 0.7%
219,655 Expeditors International of Washington, Inc. $ 8,674,176
-----------
AIRLINES 0.9%
593,100 WestJet Airlines Ltd.* 11,863,356
-----------
BANKS -- OUTSIDE NEW YORK CITY 2.1%
269,400 Doral Financial Corp. 9,482,880
288,600 Prosperity Bancshares, Inc. 6,799,416
195,975 TCF Financial Corp. 10,008,443
-----------
26,290,739
-----------
BEVERAGE -- SOFT DRINKS 0.2%
122,950 Peet's Coffee & Tea, Inc.* 2,618,835
-----------
BIOTECHNOLOGY RESEARCH AND PRODUCTION 3.1%
330,125 Charles River Laboratories International, Inc.* 14,145,856
56,900 Corgentech, Inc.* 1,069,720
884,375 Myriad Genetics, Inc.* 14,344,562
8,500 Neurochem, Inc.* 181,815
753,400 QIAGEN N.V.* 9,922,278
-----------
39,664,231
-----------
CHEMICALS 2.6%
783,075 Cabot Microelectronics Corp.* 33,077,088
-----------
COMMUNICATIONS TECHNOLOGY 0.8%
367,800 UTStarcom, Inc.* 10,577,928
-----------
COMPUTER SERVICES SOFTWARE AND SYSTEMS 6.9%
189,650 CACI International, Inc., Class A* 8,154,950
263,373 Cognizant Technology Solutions Corp.* 11,917,628
876,000 iPass, Inc.* 9,574,680
315,675 Macrovision Corp.* 5,896,809
395,125 Manhattan Associates, Inc.* 10,984,475
889,350 Nassda Corp.* 6,172,089
365,773 PEC Solutions, Inc.* 4,835,519
327,375 SRA International, Inc., Class A* 12,093,233
272,900 Verint Systems, Inc.* 8,432,610
967,600 Verisity Ltd.* 8,959,976
-----------
87,021,969
-----------
CONSUMER PRODUCTS 2.1%
984,875 Yankee Candle Co., Inc.* 27,162,852
-----------
DRUGS AND PHARMACEUTICALS 5.5%
719,598 ILEX Oncology, Inc.* 17,212,784
350,675 Medicis Pharmaceutical Corp., Class A 14,027,000
102,525 NeoPharm, Inc.* 1,923,369
287,355 Priority Healthcare Corp.* 6,117,788
106,600 Medicines Company (The)* 3,433,586
461,925 Taro Pharmaceutical Industries Ltd.* 26,787,031
-----------
69,501,558
-----------
EDUCATION SERVICES 0.3%
142,150 Renaissance Learning, Inc. 3,745,653
-----------
47
SMALL CAP GROWTH FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- --------- -----------
ELECTRONICS 1.4%
292,233 Flir Systems, Inc.* $11,139,922
293,575 Semtech Corp.* 6,702,317
-----------
17,842,239
-----------
ELECTRONICS -- MEDICAL SYSTEMS 0.9%
781,275 CTI Molecular Imaging, Inc.* 11,398,802
-----------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 5.7%
273,850 Cree, Inc.* 6,106,855
855,830 Integrated Circuit Systems, Inc.* 21,421,425
1,446,300 Micrel, Inc.* 19,308,105
1,315,525 O2Micro International Ltd.* 22,666,496
402,480 SiRF Technology Holdings, Inc., Series H* *** + 2,616,120
-----------
72,119,001
-----------
ELECTRONICS -- TECHNOLOGY 0.5%
260,200 Digital Theater Systems, Inc.* 6,668,926
-----------
ENTERTAINMENT 0.9%
574,775 Movie Gallery, Inc. 11,259,842
-----------
FINANCIAL INFORMATION SERVICES 1.1%
337,900 Factset Research Systems, Inc. 14,381,024
-----------
FINANCIAL -- MISCELLANEOUS 1.4%
455,350 Brown & Brown, Inc. 17,649,366
-----------
HEALTH CARE FACILITIES 3.3%
794,575 American Healthways, Inc.* 19,403,521
425,400 Pharmaceutical Product Development, Inc.* 12,672,666
288,725 United Surgical Partners International, Inc.* 9,799,327
-----------
41,875,514
-----------
HEALTH CARE MANAGEMENT SERVICES 5.7%
534,400 AMERIGROUP Corp.* 24,422,080
1,517,488 AmSurg Corp.* ++ 34,462,164
207,875 Pediatrix Medical Group, Inc.* 13,096,125
-----------
71,980,369
-----------
HEALTH CARE SERVICES 7.1%
728,050 Accredo Health, Inc.* 27,738,705
476,050 Icon Plc ADR* 16,818,847
891,017 Inveresk Research Group, Inc.* 25,322,703
1,096,518 Odyssey HealthCare, Inc.* 20,669,364
-----------
90,549,619
-----------
HOME BUILDING 3.5%
218,600 Meritage Corp.* 16,231,050
39,635 NVR, Inc.* 18,232,100
217,400 Toll Brothers, Inc.* 9,876,482
-----------
44,339,632
-----------
INSURANCE -- MULTI-LINE 0.5%
165,875 Hilb Rogal & Hamilton Co. 6,319,838
-----------
48
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
--------- ------------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES 5.2%
220,551 American Medical Systems Holdings, Inc.* $ 5,844,601
191,250 Cyberonics, Inc.* 4,582,350
557,265 ICU Medical, Inc.* 16,924,138
81,725 Kinetic Concepts, Inc.* 3,665,366
857,113 Techne Corp.* 34,978,782
------------
65,995,237
------------
MISCELLANEOUS MATERIALS AND COMMODITIES 1.0%
421,939 Symyx Technologies, Inc.* 12,084,333
------------
PRODUCTION TECHNOLOGY EQUIPMENT 0.7%
507,725 Tessera Technologies, Inc.* 9,291,367
------------
REAL ESTATE INVESTMENT TRUSTS (REIT) 2.3%
348,650 American Financial Realty Trust 5,909,617
649,425 Capital Automotive 22,931,197
------------
28,840,814
------------
RENTAL AND LEASING SERVICES -- CONSUMER 0.7%
268,812 Rent-A-Center, Inc.* 8,868,108
------------
RETAIL 13.5%
278,914 99 Cents Only Stores* 6,811,080
605,425 Big 5 Sporting Goods Corp.* 15,286,982
450,598 Chico's FAS, Inc.* 20,907,747
848,644 Dollar Tree Stores, Inc.* 26,214,613
377,800 Fred's, Inc. 9,169,206
388,116 Hibbett Sporting Goods, Inc.* 14,802,744
91,325 Jos. A. Bank Clothiers, Inc.* 3,287,700
1,582,372 O'Reilly Automotive, Inc.* 63,358,175
318,300 Tuesday Morning Corp.* 10,968,618
------------
170,806,865
------------
SAVINGS AND LOANS 0.6%
242,968 Harbor Florida Bancshares, Inc. 7,031,494
------------
SERVICES -- COMMERCIAL 8.6%
285,275 AMN Healthcare Services, Inc.* 5,234,796
409,369 Charles River Associates, Inc.* 13,421,572
951,550 Copart, Inc.* 20,677,181
234,200 CoStar Group, Inc.* 8,639,638
362,800 Kroll, Inc.* 9,741,180
273,050 LECG Corp.* 5,310,823
558,705 Resources Connection, Inc.* 24,649,506
869,100 West Corp.* 21,640,590
------------
109,315,286
------------
TEXTILES -- APPAREL MANUFACTURERS 0.4%
156,125 Carter's, Inc.* 4,463,614
------------
TRANSPORTATION -- MISCELLANEOUS 0.6%
190,725 C.H. Robinson Worldwide, Inc. 7,915,088
------------
TRUCKERS 3.0%
1,236,962 Knight Transportation, Inc.* 29,662,349
464,500 Swift Transportation Co., Inc.* 7,975,465
------------
37,637,814
------------
49
SMALL CAP GROWTH FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- --------- ---------------
UTILITIES -- CABLE TV AND RADIO 0.7%
263,675 Knology, Inc.* $ 1,816,721
833,818 Mediacom Communications Corp.* 6,687,220
---------------
8,503,941
---------------
UTILITIES -- TELECOMMUNICATIONS 1.5%
1,524,375 Nextel Partners, Inc., Class A* 19,298,587
---------------
TOTAL COMMON AND PREFERRED STOCKS (COST $922,760,889) 1,216,635,105
---------------
LIMITED PARTNERSHIP INTEREST 0.0%
OTHER 0.0%
Montagu Newhall Global Partners II-B, L.P.* *** + 500,000
---------------
TOTAL LIMITED PARTNERSHIP INTEREST (COST $500,000) 500,000
---------------
WARRANTS 0.0%
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 0.0%
40,248 SiRF Technology Holdings, Inc.* *** + --
TOTAL WARRANTS (COST $0) --
---------------
50
MARCH 31, 2004 (UNAUDITED)
PRINCIPAL AMOUNT VALUE
- ---------------- ---------------
U.S. GOVERNMENT OBLIGATIONS 0.4%
$ 5,027,000 U.S. Treasury Bond, 5.25%, 11/15/28+++ $ 5,307,411
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $5,005,240) 5,307,411
---------------
SHORT-TERM INVESTMENTS 3.9%
REPURCHASE AGREEMENT 3.9%
49,108,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04
with State Street Bank and Trust Co. collateralized
by $46,760,000 of United States Treasury Bonds 5.25%
due 11/15/28; value: $50,095,017; repurchase
proceeds: $49,108,682 (cost $49,108,000) 49,108,000
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $49,108,000) 49,108,000
---------------
TOTAL INVESTMENTS (COST $977,374,129) 100.3% 1,271,550,516
LIABILITIES LESS OTHER ASSETS (0.3)% (4,292,150)
---------------
NET ASSETS 100.0% $ 1,267,258,366
===============
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors.
+Security purchased in a private placement transaction or under Rule 144A of the
Securities Act of 1933 (See Note 10).
++ Affiliated company (see Note 9).
+++All or a portion of this security has been designated as collateral for open
short positions, written options or purchase commitments.
ADR American Depositary Receipt.
See notes to financial statements.
51
SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
SHARES VALUE
- --------- -----------
COMMON STOCKS 96.0%
AEROSPACE 1.0%
684,918 HEICO Corp., Class A+++ $ 8,431,341
-----------
AUTO AND TRUCK PARTS 0.1%
76,250 Supreme Industries, Inc., Class A 527,650
-----------
AUTO PARTS -- AFTER MARKET 3.3%
848,139 Aftermarket Technology Corp.* 12,459,162
534,709 Keystone Automotive Industries, Inc.* 14,629,638
-----------
27,088,800
-----------
BANKS 0.5%
1,238,722 UTI Bank Limited 4,193,367
-----------
BANKS -- OUTSIDE NEW YORK CITY 3.8%
242,425 Doral Financial Corp. 8,533,360
50,005 First State Bancorporation 1,543,154
429,650 Franklin Bank Corp.* 7,987,194
193,350 Nara Bancorp, Inc. 5,727,027
132,675 TCF Financial Corp. 6,775,712
-----------
30,566,447
-----------
COMMERCIAL INFORMATION SERVICES 0.3%
223,975 Integrated Alarm Services Group, Inc.* 2,130,002
-----------
COMPUTER SERVICES SOFTWARE AND SYSTEMS 0.3%
150,775 SPSS, Inc.* 2,759,183
-----------
CONSUMER PRODUCTS 1.7%
227,800 CoolBrands International, Inc.* 3,968,079
167,775 Jarden Corp.* 5,957,690
145,175 RC2 Corp.* 3,992,312
-----------
13,918,081
-----------
CONTAINERS AND PACKAGING -- METAL AND GLASS 1.8%
850,062 Mobile Mini, Inc.* ++ 14,706,073
-----------
DIVERSIFIED FINANCIALS 1.2%
272,850 Housing Development Finance Corp. Ltd. 4,054,041
599,750 Rewards Network, Inc.* 5,997,500
-----------
10,051,541
-----------
DRUGS AND PHARMACEUTICALS 1.0%
323,553 Chattem, Inc.* 8,386,494
-----------
ELECTRONIC EQUIPMENT AND INSTRUMENTS 0.1%
376,900 Vanguard Response Systems, Inc. PIPE* *** + 890,181
-----------
ELECTRONICS 1.8%
488,550 Nu Horizons Electronics Corp.* 5,139,546
560,925 Supertex, Inc.* 9,356,229
-----------
14,495,775
-----------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 1.6%
207,700 Excel Technology, Inc.* 6,532,165
143,475 LSI Logic Corp.* 1,340,057
343,275 Peak International Ltd.* 2,402,925
267,750 Pericom Semiconductor Corp.* 3,073,770
-----------
13,348,917
-----------
52
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- ------- -----------
ENTERTAINMENT 1.3%
518,000 Movie Gallery, Inc. $10,147,620
-----------
FINANCE COMPANIES 5.6%
287,325 Accredited Home Lenders Holding Co.* 11,320,605
826,800 Saxon Capital, Inc.* 23,489,388
493,500 United PanAm Financial Corp.* 7,891,065
131,461 World Acceptance Corp.* 2,564,804
-----------
45,265,862
-----------
FINANCE -- SMALL LOAN 1.7%
828,400 AmeriCredit Corp.* +++ 14,107,652
-----------
FINANCIAL -- MISCELLANEOUS 1.5%
314,979 Fidelity National Financial, Inc. 12,473,168
-----------
FOODS 2.7%
593,306 NBTY, Inc.* 22,059,117
-----------
HEALTH CARE FACILITIES 0.5%
624,925 Capital Senior Living Corp.* 3,868,286
-----------
HEALTH CARE MANAGEMENT SERVICES 2.8%
119,365 America Service Group, Inc.* 4,094,220
206,950 Centene Corp.* 6,330,600
201,675 Molina Healthcare, Inc.* 5,913,111
172,925 Pacificare Health Systems* 6,839,184
-----------
23,177,115
-----------
HEALTH CARE SERVICES 1.0%
262,625 Apria Healthcare Group, Inc.* 7,862,992
-----------
HOME BUILDING 4.5%
34,504 Beazer Homes USA, Inc. 3,654,319
100,292 M.D.C. Holdings, Inc. 7,060,592
146,000 Meritage Corp.* 10,840,500
18,500 NVR, Inc.* 8,510,000
142,400 Toll Brothers, Inc.* 6,469,232
-----------
36,534,643
-----------
HOTEL/MOTEL 0.9%
422,525 Orient-Express Hotels Ltd., Class A 7,558,972
-----------
HOUSEHOLD FURNISHINGS 0.4%
148,450 Hooker Furniture Corp. 3,449,978
-----------
INSURANCE -- LIFE 0.5%
183,600 Scottish Re Group Ltd. 4,441,284
-----------
INSURANCE -- MULTI-LINE 1.9%
843,875 Hub International Ltd. 15,485,106
-----------
INSURANCE -- PROPERTY AND CASUALTY 1.3%
300,875 Direct General Corp. 10,891,675
-----------
INVESTMENT MANAGEMENT COMPANIES 1.8%
564,400 MCG Capital Corp. 11,395,236
229,825 Technology Investment Capital Corp. 3,353,147
-----------
14,748,383
-----------
53
SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- ------- -------------
LEISURE TIME 1.3%
606,375 Action Performance Companies, Inc. $ 9,259,346
164,800 Bally Total Fitness Holding Corp.* +++ 965,728
-------------
10,225,074
-------------
MACHINERY -- OIL WELL EQUIPMENT AND SERVICES 1.0%
372,450 Core Laboratories N.V.* 7,895,940
-------------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES 1.0%
352,600 Sola International, Inc.* 8,197,950
-------------
MEDICAL SERVICES 0.7%
392,650 U.S. Physical Therapy, Inc.* 5,418,570
-------------
OIL -- CRUDE PRODUCERS 0.4%
195,300 Plains Exploration & Production Co.* 3,640,392
-------------
PRODUCTION TECHNOLOGY EQUIPMENT 0.6%
320,550 Nanometrics Inc.* 4,907,621
-------------
REAL ESTATE 1.0%
158,725 LNR Property Corp. 8,496,549
-------------
REAL ESTATE INVESTMENT TRUSTS (REIT) 14.6%
595,450 American Financial Realty Trust*** + 9,891,020
264,675 American Home Mortgage Investment Corp. 7,622,640
281,100 Anworth Mortgage Asset Corp. 3,924,156
75,025 Arbor Realty Trust, Inc.** *** + 6,833,277
642,325 Bimini Mortgage Management, Inc.*** + ++ 9,634,875
235,775 Capital Automotive 8,325,215
179,350 Capital Lease Funding, Inc.* 2,299,267
397,325 Falcon Financial Investment Trust* 3,691,149
443,050 Fieldstone Investment Corp.* *** + 8,528,713
437,336 Friedman, Billings, Ramsey Group, Inc., Class A 11,803,699
141,775 Hanover Capital Mortgage Holdings, Inc. 2,204,601
407,875 Luminent Mortgage Capital, Inc. 5,771,431
325,500 Medical Properties Trust, Inc.* *** + 3,255,000
474,200 MFA Mortgage Investments, Inc. 4,789,420
494,800 Newcastle Investment Corp. 16,674,760
216,875 Redwood Trust, Inc. 13,483,119
-------------
118,732,342
-------------
RECREATIONAL VEHICLES AND BOATS 0.5%
123,725 National R.V. Holdings, Inc.* 1,954,855
65,750 Thor Industries, Inc. 1,766,045
-------------
3,720,900
-------------
RENTAL AND LEASING SERVICES -- COMMERCIAL 0.2%
480,398 MicroFinancial, Inc.* 1,513,254
-------------
RENTAL AND LEASING SERVICES -- CONSUMER 1.7%
94,425 Rainbow Rentals, Inc.* 1,491,915
373,962 Rent-A-Center, Inc.* 12,337,006
-------------
13,828,921
-------------
RESTAURANTS 0.7%
329,350 O'Charley's, Inc.* 6,010,638
-------------
54
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- --------- ------------
RETAIL 14.4%
507,750 Big 5 Sporting Goods Corp.* $ 12,820,687
1,358,700 Casual Male Retail Group, Inc.* 14,048,958
431,650 Cato Corp. (The), Class A 8,667,532
532,375 Global Imaging Systems, Inc.* 17,685,498
250,075 Group 1 Automotive, Inc.* 9,052,715
538,375 Lithia Motors, Inc., Class A 14,886,069
207,700 MarineMax, Inc.* 5,518,589
167,675 O'Reilly Automotive, Inc.* 6,713,707
292,500 School Specialty, Inc.* 10,404,225
416,442 Sonic Automotive, Inc. 10,431,872
805,568 Whitehall Jewellers, Inc.* ++ 7,362,891
------------
117,592,743
------------
SAVINGS AND LOANS 1.6%
552,457 Commercial Capital Bancorp, Inc.* 12,662,314
------------
SERVICES -- COMMERCIAL 6.7%
284,050 Administaff, Inc.* 4,950,991
689,027 AMN Healthcare Services, Inc.* 12,643,645
218,026 Coinstar, Inc.* 3,460,073
191,087 Monro Muffler, Inc.* 4,775,264
701,960 Navigant International, Inc.* 12,635,280
194,650 RemedyTemp, Inc., Class A* 2,579,112
606,650 SM&A* 6,679,217
181,175 World Fuel Services Corp. 6,654,558
------------
54,378,140
------------
TRUCKERS 1.4%
315,487 Transport Corporation of America, Inc.* 2,239,958
472,250 USA Truck, Inc.* ++ 4,561,935
317,650 Vitran Corp., Inc.* 4,605,925
------------
11,407,818
------------
UTILITIES -- TELECOMMUNICATIONS 1.3%
828,500 Nextel Partners, Inc., Class A* 10,488,810
------------
TOTAL COMMON STOCKS (COST $556,443,781) 782,683,681
------------
WARRANTS 0.0%
ELECTRONIC EQUIPMENT AND INSTRUMENTS 0.0%
188,450 Vanguard Response Systems, Inc.* *** + --
------------
TOTAL WARRANTS (COST $0) --
------------
55
SMALL CAP VALUE FUND -- PORTFOLIO OF MARCH 31, 2004 (UNAUDITED)
INVESTMENTS (CONTINUED)
PRINCIPAL AMOUNT VALUE
- ---------------- ---------------
SHORT-TERM INVESTMENTS 3.9%
REPURCHASE AGREEMENT 3.9%
$31,470,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04
with State Street Bank and Trust Co. collateralized by
$23,925,000 of United States Treasury Bonds 7.50% due
11/15/16; value: $32,103,067; repurchase proceeds:
$31,470,437 (cost $31,470,000) $ 31,470,000
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $31,470,000) 31,470,000
---------------
TOTAL INVESTMENTS (COST $587,913,781) 99.9% 814,153,681
OTHER ASSETS LESS LIABILITIES 0.1% 917,985
---------------
NET ASSETS 100.0% $ 815,071,666
===============
SHARES VALUE
------ ---------------
SECURITIES SOLD SHORT
100,000 HEICO Corp. (proceeds $778,691) $ 1,569,000
===============
*Non-income producing.
**Each unit consists of five shares of common stock and one warrant.
***Security was fair valued under procedures adopted by the Board of Directors.
+Security purchased in a private placement transaction or under Rule 144A of the
Securities Act of 1933 (See Note 10).
++ Affiliated company (see Note 9).
+++All or a portion of this security has been designated as collateral for open
short positions, written options or purchase commitments.
See notes to financial statements.
56
ULTRA GROWTH FUND -- PORTFOLIO OF INVESTMENTS MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- ------- -----------
COMMON AND PREFERRED STOCKS 97.3%
AUTO PARTS -- AFTER MARKET 0.2%
230,000 IMPCO Technologies, Inc. PIPE* *** + $ 1,221,024
-----------
AUTO PARTS -- ORIGINAL EQUIPMENT 0.3%
188,000 Quantum Fuel Systems Technologies Worldwide, Inc.* 1,490,840
-----------
BANKS -- OUTSIDE NEW YORK CITY 2.2%
64,825 Commerce Bancorp, Inc. 4,270,671
146,787 Doral Financial Corp. 5,166,902
112,700 Wilshire State Bank* 2,700,269
-----------
12,137,842
-----------
BIOTECHNOLOGY RESEARCH AND PRODUCTION 0.5%
18,800 Corgentech, Inc.* 353,440
76,400 Neurochem, Inc.* 1,634,196
82,675 Xcyte Therapies, Inc.* 619,236
-----------
2,606,872
-----------
CASINOS AND GAMBLING 0.2%
29,850 Shuffle Master, Inc.* 1,387,727
-----------
CHEMICALS 3.5%
459,150 Cabot Microelectronics Corp.* 19,394,496
-----------
COMMUNICATIONS TECHNOLOGY 4.8%
410,325 Remec, Inc.* 3,118,470
828,775 UTStarcom, Inc.* 23,835,569
91,388 Xtera Communications, Inc.* *** + 99,065
-----------
27,053,104
-----------
COMPUTER SERVICES SOFTWARE AND SYSTEMS 10.7%
229,080 Cognizant Technology Solutions Corp.* 10,365,870
115,720 Concord Communications, Inc.* 1,667,525
582,754 EPIQ Systems, Inc.* 9,545,511
180,150 iPass, Inc.* 1,969,039
616,446 Kintera, Inc.* 10,276,155
202,425 Manhattan Associates, Inc.* 5,627,415
629,678 Nassda Corp.* 4,369,965
174,100 Opnet Technologies, Inc.* 2,595,831
220,100 PDF Solutions, Inc.* 2,533,351
81,885 PEC Solutions, Inc.* 1,082,520
136,459 SRA International, Inc., Class A* 5,040,795
594,334 Verisity Ltd.* 5,503,533
-----------
60,577,510
-----------
DRUGS AND PHARMACEUTICALS 2.5%
67,800 Angiotech Pharmaceuticals, Inc.* 1,654,998
73,250 Atrix Laboratories, Inc.* 1,867,875
61,392 Connetics Corp.* 1,361,061
49,600 NeoPharm, Inc.* 930,496
29,000 Northwest Biotherapeutics, Inc.* 3,799
141,100 Taro Pharmaceutical Industries Ltd.* 8,182,389
-----------
14,000,618
-----------
EDUCATION SERVICES 6.2%
507,308 Career Education Corp.* 28,733,925
143,250 Corinthian Colleges, Inc.* 4,735,845
171,550 Princeton Review, Inc. (The)* 1,482,192
-----------
34,951,962
-----------
57
ULTRA GROWTH FUND -- PORTFOLIO OF INVESTMENTS (CONTINUED)
SHARES VALUE
- --------- -----------
ELECTRICAL AND ELECTRONICS 0.2%
74,525 Plexus Corp.* $ 1,325,800
-----------
ELECTRICAL EQUIPMENT AND COMPONENTS 0.9%
134,000 BW Technologies Ltd.* 2,838,572
35,650 Cherokee International Corp.* 513,360
99,375 Flextronics International Ltd.* 1,711,237
-----------
5,063,169
-----------
ELECTRONICS 0.4%
54,850 Flir Systems, Inc.* 2,090,882
-----------
ELECTRONICS -- MEDICAL SYSTEMS 0.5%
144,075 EPIX Medical, Inc.* 2,989,556
-----------
ELECTRONICS -- SEMICONDUCTORS/COMPONENTS 5.8%
64,200 Cree, Inc.* 1,431,660
118,675 Integrated Circuit Systems, Inc.* 2,970,435
284,725 Micrel, Inc.* 3,801,079
1,073,900 O2Micro International Ltd.* 18,503,297
1,188,275 Sirenza Microdevices, Inc.* 5,275,941
124,000 SiRF Technology Holdings, Inc., Series H* *** + 806,000
-----------
32,788,412
-----------
FINANCIAL DATA PROCESSING SERVICES AND SYSTEMS 1.1%
29,125 Affiliated Computer Services, Inc.* 1,511,588
137,675 iPayment Holdings, Inc.* 4,579,070
-----------
6,090,658
-----------
FINANCIAL -- MISCELLANEOUS 1.3%
293,950 Encore Capital Group, Inc.* 4,882,509
97,050 Portfolio Recovery Associates, Inc.* 2,614,527
-----------
7,497,036
-----------
HEALTH CARE FACILITIES 6.7%
593,116 American Healthways, Inc.* 14,483,893
144,600 Pharmaceutical Product Development, Inc.* 4,307,634
562,475 United Surgical Partners International, Inc.* 19,090,401
-----------
37,881,928
-----------
HEALTH CARE MANAGEMENT SERVICES 5.3%
524,754 AmSurg Corp.* 11,917,163
195,600 Centene Corp.* 5,983,404
184,625 Pediatrix Medical Group, Inc.* 11,631,375
-----------
29,531,942
-----------
HEALTH CARE SERVICES 16.0%
1,374,470 Accredo Health, Inc.* 52,367,307
152,025 Express Scripts, Inc.* 11,339,544
105,975 Icon Plc ADR* 3,744,097
153,250 Inveresk Research Group, Inc.* 4,355,365
950,287 Odyssey HealthCare, Inc.* 17,912,910
-----------
89,719,223
-----------
HOUSEHOLD FURNISHINGS 1.0%
201,450 Select Comfort Corp.* 5,558,006
-----------
INSURANCE -- MULTI-LINE 0.5%
140,150 Hub International Ltd. 2,571,753
-----------
58
MARCH 31, 2004 (UNAUDITED)
SHARES VALUE
- --------- -----------
INSURANCE--PROPERTY AND CASUALTY 0.2%
29,350 Direct General Corp. $ 1,062,470
-----------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES 2.4%
108,175 Biosite, Inc.* 3,458,355
124,450 Cyberonics, Inc.* 2,981,822
38,750 Kinetic Concepts, Inc.* 1,737,937
134,775 Molecular Devices Corp.* 2,539,161
70,675 Techne Corp.* 2,884,247
-----------
13,601,522
-----------
MISCELLANEOUS MATERIALS AND COMMODITIES 1.5%
299,200 Symyx Technologies, Inc.* 8,569,088
-----------
PRODUCTION TECHNOLOGY EQUIPMENT 1.7%
292,075 LogicVision, Inc.* 1,223,794
308,000 Rudolph Technologies, Inc.* 5,768,840
149,625 Tessera Technologies, Inc.* 2,738,138
-----------
9,730,772
-----------
RETAIL 4.0%
139,350 99 Cents Only Stores* 3,402,927
283,174 Dollar Tree Stores, Inc.* 8,747,245
43,900 Jos. A. Bank Clothiers, Inc.* 1,580,400
211,000 O'Reilly Automotive, Inc.* 8,448,440
-----------
22,179,012
-----------
SAVINGS AND LOANS 0.7%
178,700 Commercial Capital Bancorp, Inc.* 4,095,804
-----------
SCIENTIFIC EQUIPMENT AND SUPPLIERS 1.1%
283,575 Biacore International AB ADR* 6,380,438
-----------
SERVICES--COMMERCIAL 12.9%
226,025 Advisory Board Co. (The)* 8,261,214
523,030 AMN Healthcare Services, Inc.* 9,597,601
65,900 Corporate Executive Board Co. 3,097,300
260,325 CoStar Group, Inc.* 9,603,389
44,000 IQ4HIRE, Inc.* *** + 440
221,650 Kroll, Inc.* 5,951,303
268,175 LECG Corp.* 5,216,004
896,569 Management Network Group, Inc.* 3,397,996
88,200 Resources Connection, Inc.* 3,891,296
339,750 SM&A* 3,740,647
1,790,049 Wireless Facilities, Inc.* 19,708,439
-----------
72,465,629
-----------
UTILITIES--TELECOMMUNICATIONS 2.0%
554,625 Nextel Partners, Inc., Class A* 7,021,552
527,219 Primus Telecommunications Group, Inc.* 4,433,912
-----------
11,455,464
-----------
TOTAL COMMON AND PREFERRED STOCKS (COST $448,983,801) 547,470,559
-----------
59
ULTRA GROWTH FUND -- PORTFOLIO OF MARCH 31, 2004 (UNAUDITED)
INVESTMENTS (CONTINUED)
SHARES VALUE
- ------- -------------
LIMITED PARTNERSHIP INTEREST 0.1%
OTHER 0.1%
Montagu Newhall Global Partners II-B, L.P.* *** + $ 450,000
-------------
TOTAL LIMITED PARTNERSHIP INTEREST (COST $450,000) 450,000
-------------
WARRANTS 0.0%
ELECTRONICS--SEMICONDUCTORS/COMPONENTS 0.0%
12,400 SiRF Technology Holdings, Inc.* *** + --
-------------
TOTAL WARRANTS (COST $0) --
-------------
PRINCIPAL AMOUNT VALUE
- ---------------- -------------
U.S. GOVERNMENT OBLIGATIONS 0.8%
$ 4,525,000 U.S. Treasury Bond, 5.25%, 11/15/28+++ $ 4,777,409
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $4,505,413) 4,777,409
-------------
SHORT-TERM INVESTMENTS 0.4%
REPURCHASE AGREEMENT 0.4%
2,320,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04 with State
Street Bank and Trust Co. collateralized by $2,210,000 of United States
Treasury Bonds 5.25% due 11/15/28; value: $2,367,622; repurchase proceeds:
$2,320,032 (cost $2,320,000) 2,320,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,320,000) 2,320,000
-------------
TOTAL INVESTMENTS (COST $456,259,214) 98.6% 555,017,968
OTHER ASSETS LESS LIABILITIES 1.4% 7,834,667
-------------
NET ASSETS 100.0% $ 562,852,635
=============
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors.
+Security purchased in a private placement transaction or under Rule 144A of the
Securities Act of 1933 (See Note 10).
+++All or a portion of this security has been designated as collateral for open
short positions, written options or purchase commitments.
ADR American Depositary Receipt.
See notes to financial statements.
60
U.S. TREASURY FUND -- PORTFOLIO OF INVESTMENTS MARCH 31, 2004 (UNAUDITED)
PRINCIPAL AMOUNT VALUE
- ---------------- -----------
U.S. GOVERNMENT OBLIGATIONS 97.9%
$ 5,050,000 U.S. Treasury Bond, 5.375%, 2/15/31 $ 5,504,500
2,000,000 U.S. Treasury Bond, 5.50%, 8/15/28 2,181,484
4,300,000 U.S. Treasury Bond, 6.125%, 11/15/27 5,072,994
800,000 U.S. Treasury Bond, 6.375%, 8/15/27 971,500
540,000 U.S. Treasury Bond, 6.50%, 11/15/26 664,326
1,470,000 U.S. Treasury Bond, 6.625%, 2/15/27 1,834,916
1,750,000 U.S. Treasury Bond, 6.75%, 8/15/26 2,212,656
2,755,000 U.S. Treasury Bond, 6.875%, 8/15/25 3,519,405
5,430,000 U.S. Treasury Bond, 7.50%, 11/15/24 7,382,465
30,100,000 U.S. Treasury Strip, principal only, 11/15/21 12,370,829
22,915,000 U.S. Treasury Strip, principal only, 11/15/27 6,752,570
10,100,000 U.S. Treasury Strip, principal only, 8/15/25 3,350,574
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $45,878,005) 51,818,219
-----------
SHORT-TERM INVESTMENTS 1.7%
REPURCHASE AGREEMENT 1.7%
905,000 Repurchase Agreement dated 3/31/04, 0.50% due 4/1/04 with State
Street Bank and Trust Co. collateralized by $865,000 of United States
Treasury Bonds 5.25% due 11/15/28; value: $926,694; repurchase proceeds:
$905,013 (cost $905,000) 905,000
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $905,000) 905,000
-----------
TOTAL INVESTMENTS (COST $46,783,005) 99.6% 52,723,219
OTHER ASSETS LESS LIABILITIES 0.4% 229,378
-----------
NET ASSETS 100.0% $52,952,597
===========
See notes to financial statements.
61
WASATCH FUNDS -- STATEMENTS OF ASSETS AND LIABILITIES
CORE
GROWTH
FUND
---------------
ASSETS:
Investments, at cost
Nonaffiliated issuers $ 1,138,804,823
Affiliated issuers 18,766,125
Repurchase agreements 34,129,000
---------------
$ 1,191,699,948
===============
Investments, at market value
Nonaffiliated issuers $ 1,529,105,887
Affiliated issuers 18,766,125
Repurchase agreements 34,129,000
Cash 1,040,308
Foreign currency on deposit (cost of $0, $0, $466,227,
$185,388 and $86,100, respectively) --
Receivable for investment securities sold 2,789,732
Receivable from broker for securities sold short --
Capital shares receivable 1,010,196
Interest and dividends receivable 1,520,767
Unrealized appreciation on foreign currency contracts --
Prepaid expenses and other assets 25,608
---------------
Total Assets 1,588,387,623
---------------
LIABILITIES:
Securities sold short, at value (proceeds of $0, $0, $0, $0
and $1,853,779, respectively) --
Payable for securities purchased 2,275,058
Capital shares payable 841,439
Accrued advisory fee 1,322,432
Accrued administration fee 42,043
Unrealized depreciation on foreign currency contracts --
Accrued expenses 460,754
---------------
Total Liabilities 4,941,726
---------------
NET ASSETS $ 1,583,445,897
===============
NET ASSETS CONSIST OF:
Capital stock $ 393,213
Paid-in capital in excess of par 1,228,837,056
Undistributed net investment income (loss) 701,894
Undistributed net realized gain (loss) on investments
and foreign currency translations (36,787,330)
Net unrealized appreciation on investments
and foreign currency translations 390,301,064
---------------
Net Assets $ 1,583,445,897
===============
CAPITAL STOCK, $.01 PAR VALUE:
Authorized 10,000,000,000
Issued and outstanding 39,321,291
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 40.27
===============
See notes to financial statements.
62
MARCH 31, 2004 (UNAUDITED)
GLOBAL SCIENCE INTERNATIONAL MICRO MICRO CAP
& TECHNOLOGY GROWTH CAP VALUE
FUND FUND FUND FUND
- --------------- --------------- --------------- ---------------
$ 73,574,217 $ 116,315,202 $ 365,373,462 $ 65,052,212
-- -- 26,143,819 --
2,430,000 12,259,000 2,697,000 10,660,000
- --------------- --------------- --------------- ---------------
$ 76,004,217 $ 128,574,202 $ 394,214,281 $ 75,712,212
=============== =============== =============== ===============
$ 81,383,698 $ 140,315,653 $ 546,392,855 $ 81,743,300
-- -- 29,648,508 --
2,430,000 12,259,000 2,697,000 10,660,000
838 562 31 873
-- 470,346 185,021 86,381
2,595,604 727,213 6,253,931 798,084
-- -- -- 2,735,673
90,461 574,623 40,085 --
10,492 65,612 20,683 44,970
-- 1,472 -- 588
13,599 14,051 14,145 9,256
- --------------- --------------- --------------- ---------------
86,524,692 154,428,532 585,252,259 96,079,125
- --------------- --------------- --------------- ---------------
-- -- -- 1,875,000
379,583 2,381,042 5,251,490 2,751,951
18,142 44,159 50,746 --
104,729 181,982 970,477 104,151
2,311 3,855 15,446 2,438
-- 715 -- 708
57,505 64,720 153,426 51,476
- --------------- --------------- --------------- ---------------
562,270 2,676,473 6,441,585 4,785,724
- --------------- --------------- --------------- ---------------
$ 85,962,422 $ 151,752,059 $ 578,810,674 $ 91,293,401
=============== =============== =============== ===============
$ 71,504 $ 102,833 $ 759,411 $ 336,138
79,314,482 128,403,795 349,837,478 66,778,845
(683,308) (768,460) (5,693,472) (830,376)
(549,753) 13,277 49,386,391 8,338,667
7,809,497 24,000,614 184,520,866 16,670,127
- --------------- --------------- --------------- ---------------
$ 85,962,422 $ 151,752,059 $ 578,810,674 $ 91,293,401
=============== =============== =============== ===============
10,000,000,000 10,000,000,000 10,000,000,000 10,000,000,000
7,150,366 10,283,334 75,941,069 33,613,774
$ 12.02 $ 14.76 $ 7.62 $ 2.72
=============== =============== =============== ===============
63
WASATCH FUNDS -- STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
SMALL CAP
GROWTH
FUND
---------------
ASSETS:
Investments, at cost
Nonaffiliated issuers $ 910,348,653
Affiliated issuers 17,917,476
Repurchase agreements 49,108,000
---------------
$ 977,374,129
===============
Investments, at market value
Nonaffiliated issuers $ 1,187,980,352
Affiliated issuers 34,462,164
Repurchase agreements 49,108,000
Cash 1,973,904
Receivable for investment securities sold --
Receivable from broker for securities sold short --
Capital shares receivable 577,717
Interest and dividends receivable 241,410
Unrealized appreciation on foreign currency contracts --
Prepaid expenses and other assets 21,022
---------------
Total Assets 1,274,364,569
---------------
LIABILITIES:
Securities sold short, at value (proceeds of $0, $778,691, $0
and $0, respectively) --
Payable for securities purchased 4,651,329
Capital shares payable 973,367
Accrued advisory fee 1,068,260
Accrued administration fee 33,978
Accrued expenses 379,269
---------------
Total Liabilities 7,106,203
---------------
NET ASSETS $ 1,267,258,366
===============
NET ASSETS CONSIST OF:
Capital stock $ 350,913
Paid-in capital in excess of par 966,686,890
Undistributed net investment income (loss) (5,692,685)
Undistributed net realized gain (loss) on investments
and foreign currency translations 11,736,861
Net unrealized appreciation on investments
and foreign currency translations 294,176,387
---------------
Net Assets $ 1,267,258,366
===============
CAPITAL STOCK, $.01 PAR VALUE:
Authorized 10,000,000,000
Issued and outstanding 35,091,309
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 36.11
===============
See notes to financial statements.
64
MARCH 31, 2004 (UNAUDITED)
SMALL CAP ULTRA U.S.
VALUE GROWTH TREASURY
FUND FUND FUND
- --------------- --------------- ---------------
$ 519,089,930 $ 453,939,214 $ 45,878,005
37,353,851 -- --
31,470,000 2,320,000 905,000
- --------------- --------------- ---------------
$ 587,913,781 $ 456,259,214 $ 46,783,005
=============== =============== ===============
$ 746,417,907 $ 552,697,968 $ 51,818,219
36,265,774 -- --
31,470,000 2,320,000 905,000
225,751 248 452
11,974,911 9,441,260 --
902,436 -- --
249,031 118,915 35,761
880,792 102,409 373,387
600 -- --
31,384 17,622 13,255
- --------------- --------------- ---------------
828,418,586 564,698,422 53,146,074
- --------------- --------------- ---------------
1,569,000 -- --
10,061,008 458,170 --
398,802 532,676 129,384
1,022,097 598,612 15,625
21,664 15,253 1,410
274,349 241,076 47,058
- --------------- --------------- ---------------
13,346,920 1,845,787 193,477
- --------------- --------------- ---------------
$ 815,071,666 $ 562,852,635 $ 52,952,597
=============== =============== ===============
$ 1,389,577 $ 199,038 $ 38,887
530,481,528 434,019,928 53,484,201
(840,719) (4,176,755) 553,652
58,595,369 34,051,670 (7,064,357)
225,445,911 98,758,754 5,940,214
- --------------- --------------- ---------------
$ 815,071,666 $ 562,852,635 $ 52,952,597
=============== =============== ===============
10,000,000,000 10,000,000,000 10,000,000,000
138,957,683 19,903,843 3,888,677
$ 5.87 $ 28.28 $ 13.62
=============== =============== ===============
65
WASATCH FUNDS -- STATEMENTS OF OPERATIONS
CORE
GROWTH
FUND
-------------
INVESTMENT INCOME:
Interest $ 171,426
Dividends(1)+ 10,319,970
-------------
10,491,396
-------------
EXPENSES:
Investment advisory fee 7,351,024
Shareholder servicing fees 950,824
Fund administration and accounting fees 318,703
Reports to shareholders 135,058
Legal fees 56,003
Custody fees 55,640
Federal and state registration fees 22,034
Directors' fees 12,481
Audit fees 10,476
Other 27,609
-------------
Total expenses before reimbursement 8,939,852
Reimbursement of expenses by Advisor --
-------------
Net expenses 8,939,852
-------------
NET INVESTMENT INCOME (LOSS) 1,551,544
-------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments + 48,774,255
Net realized loss on short posit ion --
Change in unrealized appreciation (depreciation) on investments
and foreign currency translations 215,071,928
-------------
Net gain on investments 263,846,183
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 265,397,727
=============
(1) Net of $14,973, $32, $10,555, $8,586 and $2,730 in foreign withholding
taxes, respectively.
(+) See Note 9 for information on affiliated issuers.
See notes to financial statements.
66
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
GLOBAL SCIENCE INTERNATIONAL MICRO MICRO CAP
& TECHNOLOGY GROWTH CAP VALUE
FUND FUND FUND FUND
- -------------- ------------- ------------ -----------
$ 36,983 $ 24,740 $ 90,172 $ 34,060
8,260 180,439 416,437 104,334
------------ ------------- ------------ -----------
45,243 205,179 506,609 138,394
------------ ------------- ------------ -----------
559,938 750,212 5,649,338 824,877
104,552 115,612 304,232 78,960
21,518 26,283 128,320 22,827
11,177 5,756 40,095 10,138
2,448 2,307 20,925 24,937
8,596 42,145 18,422 17,830
11,504 16,962 12,684 10,994
450 377 4,904 647
10,476 10,529 10,476 12,405
1,218 1,185 10,685 1,421
------------ ------------- ------------ -----------
731,877 971,368 6,200,081 1,005,036
(3,958) -- -- (58,163)
------------ ------------- ------------ -----------
727,919 971,368 6,200,081 946,873
------------ ------------- ------------ -----------
(682,676) (766,189) (5,693,472) (808,479)
------------ ------------- ------------ -----------
1,668,392 1,516,244 51,526,287 8,410,438
(96,963) -- -- (12,699)
4,835,384 16,651,313 49,675,813 13,450,938
------------ ------------- ------------ -----------
6,406,813 18,167,557 101,202,100 21,848,677
------------ ------------- ------------ -----------
$ 5,724,137 $ 17,401,368 $ 95,508,628 $21,040,198
============ ============= ============ ===========
67
WASATCH FUNDS -- STATEMENTS OF OPERATIONS (CONTINUED)
SMALL CAP
GROWTH
FUND
------------
INVESTMENT INCOME:
Interest $ 335,390
Dividends(1)+ 1,607,689
------------
1,943,079
------------
EXPENSES:
Investment advisory fee 6,323,290
Shareholder servicing fees 765,049
Fund administration and accounting fees 275,685
Reports to shareholders 132,501
Legal fees 52,024
Custody fees 23,989
Federal and state registration fees 18,439
Directors' fees 10,795
Audit fees 10,477
Other 23,515
------------
Total expenses before reimbursement 7,635,764
Reimbursement of expenses by Advisor --
------------
Net expenses 7,635,764
------------
NET INVESTMENT INCOME (LOSS) (5,692,685)
------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments+ 15,488,068
Net realized loss on short positions --
Change in unrealized appreciation (depreciation) on investments
and foreign currency translations 125,000,547
------------
Net gain on investments 140,488,615
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $134,795,930
============
(1) Net of $6,466, $4,162, $3,345 and $0 in foreign withholding taxes,
respectively.
(+) See Note 9 for information on affiliated issuers.
See notes to financial statements.
68
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
SMALL CAP ULTRA U.S.
VALUE GROWTH TREASURY
FUND FUND FUND
- ----------------------------------------------------------------------------
$ 51,935 $ 183,598 $1,469,656
5,611,871 82,935 --
- ------------ ----------- ----------
5,663,806 266,533 1,469,656
- ------------ ----------- ----------
5,610,864 3,691,460 141,486
525,470 451,955 77,134
165,659 131,869 14,263
98,170 90,266 10,645
29,012 23,608 4,650
25,144 13,690 2,385
20,108 13,658 9,013
6,179 5,117 686
10,476 10,476 10,179
13,443 11,189 1,725
- ------------ ----------- ----------
6,504,525 4,443,288 272,166
-- -- (59,937)
- ------------ ----------- ----------
6,504,525 4,443,288 212,229
- ------------ ----------- ----------
(840,719) (4,176,755) 1,257,427
- ------------ ----------- ----------
58,697,430 42,078,480 83,677
(25,139) -- --
117,256,466 28,224,218 766,661
- ------------ ----------- ----------
175,928,757 70,302,698 850,338
- ------------ ----------- ----------
$175,088,038 $66,125,943 $2,107,765
============ =========== ==========
69
WASATCH FUNDS -- STATEMENTS OF CHANGES IN NET ASSETS
CORE GROWTH FUND GLOBAL SCIENCE & TECHNOLOGY FUND
SIX MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 2004 YEAR ENDED MARCH 31, 2004 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2003 (UNAUDITED) SEPTEMBER 30, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 1,551,544 $ (228,591) $ (682,676) $ (612,626)
Net realized gain (loss) on investments 48,774,255 (76,727,660) 1,668,392 82,567
Net realized gain (loss) on
short positions -- -- (96,963) 11,415
Change in unrealized appreciation
(depreciation) on investments
and foreign currency translations 215,071,928 385,705,494 4,835,384 15,374,035
--------------- --------------- --------------- ---------------
Net increase in net assets
resulting from operations 265,397,727 308,749,243 5,724,137 14,855,391
DIVIDENDS PAID FROM:
Net investment income (849,650) -- -- --
Net realized gains -- -- -- --
--------------- ---------------- --------------- ---------------
(849,650) -- -- --
CAPITAL SHARE TRANSACTIONS:
Shares sold 121,048,328 294,903,790 40,798,595 31,899,054
Shares issued to holders in
reinvestment of dividends 794,356 -- -- --
Shares redeemed (121,292,763) (348,335,931) (12,110,889) (16,089,720)
Redemption fees 6,486 79,906 33,511 41,099
--------------- --------------- --------------- ---------------
Net increase (decrease) 556,407 (53,352,235) 28,721,217 15,850,433
--------------- --------------- --------------- ---------------
TOTAL INCREASE IN NET ASSETS 265,104,484 255,397,008 34,445,354 30,705,824
NET ASSETS:
Beginning of period 1,318,341,413 1,062,944,405 51,517,068 20,811,244
--------------- --------------- --------------- ---------------
End of period $ 1,583,445,897 $ 1,318,341,413 $ 85,962,422 $ 51,517,068
=============== =============== =============== ===============
Undistributed net investment
income (loss) included in net
assets at end of period $ 701,894 -- $ (683,308) $ (632)
=============== =============== =============== ===============
*Inception date of the Fund was July 28, 2003.
See notes to financial statements.
70
MARCH 31, 2004 (UNAUDITED)
INTERNATIONAL GROWTH FUND MICRO CAP FUND MICRO CAP VALUE FUND
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 2004 YEAR ENDED MARCH 31, 2004 YEAR ENDED MARCH 31, 2004 PERIOD ENDED
(UNAUDITED) SEPTEMBER 30, 2003 (UNAUDITED) SEPTEMBER 30, 2003 (UNAUDITED) SEPTEMBER 30, 2003*
- ------------------------------------------------------------------------------------------------------------------------------------
$ (766,189) $ (250,286) $ (5,693,472) $ (8,716,570) $ (808,479) $ (238,749)
1,516,244 (1,299,298) 51,526,287 51,800,078 8,410,438 192,165
-- -- -- -- (12,699) --
16,651,313 9,025,174 49,675,813 120,439,212 13,450,938 3,219,189
------------- ------------- ------------- ------------- ------------- -------------
17,401,368 7,475,590 95,508,628 163,522,720 21,040,198 3,172,605
-- -- -- -- -- --
-- -- (43,612,163) (22,295,887) (59,072) --
------------- ------------- ------------- ------------- ------------- -------------
-- -- (43,612,163) (22,295,887) (59,072) --
97,181,728 29,443,047 8,893,900 97,787,052 1,085,642 67,827,227
-- -- 41,226,751 21,092,296 57,934 --
(7,340,859) (10,538,025) (40,388,145) (70,506,908) (1,537,361) (294,977)
27,953 13,571 2,555 32,043 82 1,123
------------- ------------- ------------- ------------- ------------- -------------
89,868,822 18,918,593 9,735,061 48,404,483 (393,703) 67,533,373
------------- ------------- ------------- ------------- ------------- -------------
107,270,190 26,394,183 61,631,526 189,631,316 20,587,423 70,705,978
44,481,869 18,087,686 517,179,148 327,547,832 70,705,978 --
------------- ------------- ------------- ------------- ------------- -------------
$ 151,752,059 $ 44,481,869 $ 578,810,674 $ 517,179,148 $ 91,293,401 $ 70,705,978
============= ============= ============= ============= ============= =============
$ (768,460) $ (2,271) $ (5,693,472) -- $ (830,376) $ (21,897)
============= ============= ============= ============= ============= =============
71
WASATCH FUNDS -- STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SMALL CAP GROWTH FUND
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2004 (UNAUDITED) SEPTEMBER 30, 2003
- ------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (5,692,685) $ (9,713,510)
Net realized gain on investments 15,488,068 16,297,720
Net realized gain on options written -- --
Net realized gain (loss) on
short positions -- --
Change in unrealized appreciation
(depreciation) on investments
and foreign currency translations 125,000,547 268,022,826
--------------- ---------------
Net increase in net assets
resulting from operations 134,795,930 274,607,036
DIVIDENDS PAID FROM:
Net investment income -- --
Net realized gains (5,914,731) (34,010)
--------------- ---------------
(5,914,731) (34,010)
CAPITAL SHARE TRANSACTIONS:
Shares sold 115,997,018 305,478,301
Shares issued to holders in
reinvestment of dividends 5,653,645 32,547
Shares redeemed (117,674,852) (181,150,831)
Redemption fees 3,440 48,034
--------------- ---------------
Net increase (decrease) 3,979,251 124,408,051
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 132,860,450 398,981,077
NET ASSETS:
Beginning of period 1,134,397,916 735,416,839
--------------- ---------------
End of period $ 1,267,258,366 $ 1,134,397,916
=============== ===============
Undistributed net investment
income (loss) included in net
assets at end of period $ (5,692,685) --
=============== ===============
See notes to financial statements.
72
MARCH 31, 2004 (UNAUDITED)
SMALL CAP VALUE FUND ULTRA GROWTH FUND U.S. TREASURY FUND
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 2004 YEAR ENDED MARCH 31, 2004 YEAR ENDED MARCH 31, 2004 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2003 (UNAUDITED) SEPTEMBER 30, 2003 (UNAUDITED) SEPTEMBER 30, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
$ (840,719) $ (2,202,960) $ (4,176,755) $ (6,162,984) $ 1,257,427 $ 3,471,870
58,697,430 1,455,467 42,078,480 7,732,983 83,677 628,994
-- 304,716 -- -- -- --
(25,139) -- -- 113,726 -- --
117,256,466 189,122,055 28,224,218 161,519,635 766,661 (3,356,730)
- ------------- ------------- ------------- ------------- ------------- -------------
175,088,038 188,679,278 66,125,943 163,203,360 2,107,765 744,134
-- -- -- -- (3,207,497) (3,484,505)
(221,338) -- (5,447,072) -- -- --
- ------------- ------------- ------------- ------------- ------------- -------------
(221,338) -- (5,447,072) -- (3,207,497) (3,484,505)
51,079,343 192,079,847 39,286,749 221,989,430 8,171,010 47,192,794
210,972 -- 5,113,841 -- 3,120,826 3,362,861
(62,353,689) (157,672,444) (81,171,031) (123,834,632) (24,379,950) (64,698,707)
7,485 91,867 4,899 177,068 6,623 138,699
- ------------- ------------- ------------- ------------- ------------- -------------
(11,055,889) 34,499,270 (36,765,542) 98,331,866 (13,081,491) (14,004,353)
- ------------- ------------- ------------- ------------- ------------- -------------
163,810,811 223,178,548 23,913,329 261,535,226 (14,181,223) (16,744,724)
651,260,855 428,082,307 538,939,306 277,404,080 67,133,820 83,878,544
- ------------- ------------- ------------- ------------- ------------- -------------
$ 815,071,666 $ 651,260,855 $ 562,852,635 $ 538,939,306 $ 52,952,597 $ 67,133,820
============= ============= ============= ============= ============= =============
$ (840,719) -- $ (4,176,755) -- $ 553,652 $ 2,503,722
============= ============= ============= ============= ============= =============
73
CORE GROWTH FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 33.54 $ 25.46 $ 31.57 $ 28.08 $ 20.62 $ 17.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 (0.01) (0.01) (0.15) (0.18) (0.21)
Net realized and unrealized gains (losses)
on securities+ 6.71 8.09 (3.96) 5.96 8.12 4.55
----------- ----------- ---------- ---------- --------- ----------
TOTAL FROM INVESTMENT OPERATIONS 6.75 8.08 (3.97) 5.81 7.94 4.34
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) -- -- -- -- --
Distributions from net realized gains -- -- (2.14) (2.32) (0.48) (0.72)
----------- ----------- ---------- ---------- --------- ----------
TOTAL DISTRIBUTIONS (0.02) -- (2.14) (2.32) (0.48) (0.72)
----------- ----------- ---------- ---------- --------- ----------
NET ASSET VALUE, END OF PERIOD $ 40.27 $ 33.54 $ 25.46 $ 31.57 $ 28.08 $ 20.62
=========== =========== ========== ========== ========= ==========
TOTAL RETURN(1) 20.14% 31.68% (13.73)% 22.63% 39.50% 27.28%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $ 1,583,446 $ 1,318,341 $1,062,944 $ 992,935 $ 290,705 $ 173,118
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.22%(2) 1.25% 1.29% 1.32% 1.38% 1.44%
Expenses, before waivers and reimbursements 1.22%(2) 1.25% 1.29% 1.32% 1.38% 1.44%
Net investment income (loss),
net of waivers and reimbursements 0.21%(2) (0.02)% (0.02)% (0.66)% (0.86)% (1.07)%
Net investment income (loss),
before waivers and reimbursements 0.21%(2) (0.02)% (0.02)% (0.66)% (0.86)% (1.07)%
Portfolio turnover rate(1) 19% 47% 76% 51% 75% 79%
+ For 2002 and 2001, includes $0.01 and $0.01 in redemption fees, respectively
(see Note 2).
(1) Not annualized for periods less than a year.
(2) Annualized.
See notes to financial statements.
74
GLOBAL SCIENCE & TECHNOLOGY FUND -- MARCH 31,2004 (UNAUDITED)
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002 2001(1)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.73 $ 6.38 $ 8.02 $ 10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.10) (0.13) (0.15) (0.07)
Net realized and unrealized gains (losses)
on securities+ 1.39 4.48 (1.31) (1.91)
------------- -------- -------- ----------
TOTAL FROM INVESTMENT OPERATIONS 1.29 4.35 (1.46) (1.98)
LESS DISTRIBUTIONS:
Distributions from net realized gains -- -- (0.18) --
------------- -------- -------- ----------
TOTAL DISTRIBUTIONS -- -- (0.18) --
------------- -------- -------- ----------
NET ASSET VALUE, END OF PERIOD $ 12.02 $ 10.73 $ 6.38 $ 8.02
============= ======== ======== ==========
TOTAL RETURN(2) 11.92% 68.34% (18.83)% (19.80)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $ 85,962 $ 51,517 $ 20,811 $ 10,648
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.95%(3) 1.95% 1.95% 1.95%(3)
Expenses, before waivers and reimbursements 1.96%(3) 2.13% 2.42% 3.58%(3)
Net investment loss, net of waivers and
reimbursements (1.83)%(3) (1.87)% (1.90)% (1.50)%(3)
Net investment loss, before waivers and
reimbursements (1.84)%(3) (2.05)% (2.37)% (3.13)%(3)
Portfolio turnover rate(2) 22% 88% 95% 94%
+ For 2004, 2003, 2002 and 2001, includes $0.01, $0.01, $0.03 and $0.02 in
redemption fees, respectively (see Note 2).
(1) Inception date of the Fund was December 19, 2000.
(2) Not annualized for periods less than a year.
(3) Annualized.
See notes to financial statements.
75
INTERNATIONAL GROWTH FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002(1)
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.06 $ 8.85 $ 10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.07) (0.07) (0.03)
Net realized and unrealized gains (losses)
on securities+ 2.77 3.28 (1.12)
-------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 2.70 3.21 (1.15)
LESS DISTRIBUTIONS:
Distributions from net realized gains -- -- --
-------------- ------------- -------------
TOTAL DISTRIBUTIONS -- -- --
-------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD $ 14.76 $ 12.06 $ 8.85
============== ============= =============
TOTAL RETURN(2) 22.39% 36.27% (11.50)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $ 151,752 $ 44,482 $ 18,088
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.94%(3) 1.95% 1.95%(3)
Expenses, before waivers and reimbursements 1.94%(3) 2.30% 4.26%(3)
Net investment loss, net of waivers and
reimbursements (1.53)%(3) (1.12)% (1.39)%(3)
Net investment loss, before waivers and
reimbursements (1.53)%(3) (1.47)% (3.70)%(3)
Portfolio turnover rate(2) 15% 62% 3%
+ For 2002, includes $0.01 in redemption fees (see Note 2).
(1) Inception date of the Fund was June 28, 2002.
(2) Not annualized for periods less than a year.
(3) Annualized.
See notes to financial statements.
76
MICRO CAP FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.98 $ 5.01 $ 5.64 $ 6.53 $ 4.41 $ 3.59
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.07) (0.12) (0.14) (0.08) (0.09) (0.09)
Net realized and unrealized gains
on securities 1.30 2.43 0.11 0.74 2.63 1.27
------------ --------- --------- -------- --------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.23 2.31 (0.03) 0.66 2.54 1.18
LESS DISTRIBUTIONS:
Distributions from net realized gains (0.59) (0.34) (0.60) (1.55) (0.42) (0.36)
------------ --------- --------- -------- --------- --------
TOTAL DISTRIBUTIONS (0.59) (0.34) (0.60) (1.55) (0.42) (0.36)
------------ --------- --------- -------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 7.62 $ 6.98 $ 5.01 $ 5.64 $ 6.53 $ 4.41
============ ========= ========= ======== ========= ========
TOTAL RETURN(1) 18.85% 50.28% (1.41)% 16.32% 63.88% 37.73%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $ 578,811 $ 517,179 $ 327,548 $323,540 $ 244,444 $144,875
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 2.19%(2) 2.24% 2.28% 2.32% 2.38% 2.46%
Expenses, before waivers and reimbursements 2.19%(2) 2.24% 2.28% 2.32% 2.38% 2.46%
Net investment loss, net of waivers and
reimbursements (2.02)%(2) (2.13)% (2.21)% (1.76)% (1.76)% (2.22)%
Net investment loss, before waivers and
reimbursements (2.02)%(2) (2.13)% (2.21)% (1.76)% (1.76)% (2.22)%
Portfolio turnover rate(1) 28% 50% 62% 58% 69% 57%
(1)Not annualized for periods less than a year.
(2)Annualized.
See notes to financial statements.
77
MICRO CAP VALUE FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED PERIOD ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003(1)
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 2.09 $ 2.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.02) (0.01)
Net realized and unrealized gains
on securities 0.65 0.10
------------- ------------
TOTAL FROM INVESTMENT OPERATIONS 0.63 0.09
LESS DISTRIBUTIONS:
Distributions from net realized gains --(2) --
------------- ------------
TOTAL DISTRIBUTIONS -- --
------------- ------------
NET ASSET VALUE, END OF PERIOD $ 2.72 $ 2.09
============= ============
TOTAL RETURN(3) 30.24% 4.50%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $ 91,293 $ 70,706
Ratio to average net assets of:
Expenses, net of waivers and reimbursements(4) (5) 2.30% 2.50%
Expenses, before waivers and reimbursements(4) 2.44% 2.73%
Net investment loss, net of waivers and
reimbursements(4) (1.96)% (1.97)%
Net investment loss, before waivers and
reimbursements(4) (2.10)% (2.20)%
Portfolio turnover rate(3) 56% 4%
(1) Inception date of the Fund was July 28, 2003.
(2) Less than $0.005.
(3) Not annualized for periods less than a year.
(4) Annualized.
(5) Prior to February 1, 2004, the Advisor had agreed to limit the total
expenses of the Fund to 2.50% of average daily net assets. Beginning
February 1, 2004, the Advisor has agreed to limit the total expenses to
2.25% of average daily net assets. As a result, the effective expense ratio
net of waivers and reimbursements for the six months ended March 31, 2004
was 2.30%.
See notes to financial statements.
78
SMALL CAP GROWTH FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 32.43 $ 23.83 $ 26.18 $ 34.89 $ 26.01 $ 20.79
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.16) (0.28) (0.35) (0.15) (0.23) (0.20)
Net realized and unrealized gains (losses)
on securities+ 4.01 8.88 (1.55) (2.71) 11.82 8.49
---------- ---------- -------- -------- --------- --------
TOTAL FROM INVESTMENT OPERATIONS 3.85 8.60 (1.90) (2.86) 11.59 8.29
LESS DISTRIBUTIONS:
Distributions from net realized gains (0.17) --(1) (0.45) (5.85) (2.71) (3.07)
---------- ---------- -------- -------- --------- --------
TOTAL DISTRIBUTIONS (0.17) -- (0.45) (5.85) (2.71) (3.07)
---------- ---------- -------- -------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 36.11 $ 32.43 $ 23.83 $ 26.18 $ 34.89 $ 26.01
========== ========== ======== ======== ========= ========
TOTAL RETURN(2) 11.90% 36.15% (7.53)% (8.61)% 49.63% 48.96%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $1,267,258 $1,134,398 $735,417 $553,416 $ 237,812 $145,915
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.21%(3) 1.25% 1.31% 1.36% 1.38% 1.44%
Expenses, before waivers and reimbursements 1.21%(3) 1.25% 1.31% 1.36% 1.38% 1.44%
Net investment loss, net of waivers and
reimbursements (0.90)%(3) (1.08)% (1.25)% (0.83)% (0.84)% (0.79)%
Net investment loss, before waivers and
reimbursements (0.90)%(3) (1.08)% (1.25)% (0.83)% (0.84)% (0.79)%
Portfolio turnover rate(2) 16% 63% 51% 40% 72% 46%
+ For 2001, includes $0.02 in redemption fees (see Note 2).
(1) Less than $0.005.
(2) Not annualized for periods less than a year.
(3) Annualized.
See notes to financial statements.
79
SMALL CAP VALUE FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 4.62 $ 3.21 $ 3.76 $ 3.51 $ 2.43 $ 1.80
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.01) (0.02) (0.02) -- (0.02) (0.04)
Net realized and unrealized gains (losses)
on securities 1.26 1.43 (0.43) 0.56 1.19 0.67
-------- ---------- -------- -------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 1.25 1.41 (0.45) 0.56 1.17 0.63
LESS DISTRIBUTIONS:
Distributions from net realized gains --(1) -- (0.10) (0.31) (0.09) --
-------- ---------- -------- -------- ------- -------
TOTAL DISTRIBUTIONS -- -- (0.10) (0.31) (0.09) --
-------- ---------- -------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 5.87 $ 4.62 $ 3.21 $ 3.76 $ 3.51 $ 2.43
======== ========== ======== ======== ======= =======
TOTAL RETURN(2) 27.09% 43.93% (12.35)% 18.04% 49.94% 35.00%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $815,072 $ 651,261 $428,082 $487,095 $46,470 $16,770
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.74%(3) 1.78% 1.81% 1.92% 1.95% 1.95%
Expenses, before waivers and reimbursements 1.74%(3) 1.78% 1.81% 1.92% 2.09% 2.18%
Net investment loss, net of waivers and
reimbursements (0.22)%(3) (0.43)% (0.44)% (0.31)% (1.02)% (1.54)%
Net investment loss, before waivers and
reimbursements (0.22)%(3) (0.43)% (0.44)% (0.31)% (1.16)% (1.77)%
Portfolio turnover rate(2) 27% 69% 69% 41% 67% 106%
(1) Less than $0.005.
(2) Not annualized for periods less than a year.
(3) Annualized.
See notes to financial statements.
80
ULTRA GROWTH FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002 2001 2000 1999
--------- -------- --------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.43 $ 16.52 $ 19.15 $ 27.17 $ 20.02 $ 15.10
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.21) (0.29) (0.25) (0.21) (0.25) (0.34)
Net realized and unrealized gains (losses)
on securities+ 3.32 9.20 (1.46) (2.42) 8.87 6.00
-------- -------- -------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 3.11 8.91 (1.71) (2.63) 8.62 5.66
LESS DISTRIBUTIONS:
Distributions from net realized gains (0.26) -- (0.92) (5.39) (1.47) (0.74)
-------- -------- -------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.26) -- (0.92) (5.39) (1.47) (0.74)
-------- -------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 28.28 $ 25.43 $ 16.52 $ 19.15 $ 27.17 $ 20.02
======== ======== ======== ======= ======= =======
TOTAL RETURN(1) 12.28% 53.93% (9.74)% (10.89)% 46.66% 39.86%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $562,853 $538,939 $277,404 $86,097 $56,282 $41,205
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.50%(2) 1.57% 1.71% 1.75% 1.75% 1.75%
Expenses, before waivers and reimbursements 1.50%(2) 1.57% 1.71% 1.79% 1.82% 1.78%
Net investment loss, net of
waivers and reimbursements (1.41)%(2) (1.50)% (1.67)% (1.39)% (1.19)% (1.49)%
Net investment loss, before
waivers and reimbursements (1.41)%(2) (1.50)% (1.67)% (1.43)% (1.26)% (1.52)%
Portfolio turnover rate(1) 34% 76% 78% 123% 135% 77%
+ For 2003, 2002 and 2001, includes $0.01, $0.02 and $0.07
in redemption fees, respectively (see Note 2).
(1)Not annualized for periods less than a year.
(2)Annualized.
See notes to financial statements.
81
U.S. TREASURY FUND -- FINANCIAL HIGHLIGHTS MARCH 31, 2004 (UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
MARCH 31 (UNAUDITED) SEPTEMBER 30
2004 2003 2002 2001 2000 1999
--------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.68 $ 14.04 $ 12.97 $ 12.00 $ 11.68 $ 13.42
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.36 0.72 0.66 0.65 0.66 0.61
Net realized and unrealized gains (losses)
on securities+ 0.31 (0.45) 1.18 0.88 0.39 (2.01)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 0.67 0.27 1.84 1.53 1.05 (1.40)
LESS DISTRIBUTIONS:
Dividends from net investment income (0.73) (0.63) (0.77) (0.56) (0.73) (0.28)
Distributions from net realized gains -- -- -- -- -- (0.06)
------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.73) (0.63) (0.77) (0.56) (0.73) (0.34)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 13.62 $ 13.68 $ 14.04 $ 12.97 $ 12.00 $ 11.68
======= ======= ======= ======= ======= =======
TOTAL RETURN(1) 5.11% 2.17% 15.38% 12.89% 9.84% (10.65)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $52,953 $67,134 $83,879 $66,195 $58,198 $76,999
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 0.75%(2) 0.75% 0.75% 0.75% 0.75% 0.75%
Expenses, before waivers and reimbursements 0.96%(2) 0.91% 0.98% 0.95% 0.97% 0.95%
Net investment income, net of
waivers and reimbursements 4.44%(2) 4.67% 5.51% 5.34% 5.35% 4.96%
Net investment income, before
waivers and reimbursements 4.23%(2) 4.51% 5.28% 5.14% 5.13% 4.76%
Portfolio turnover rate(1) 4% 37% 22% 41% 16% 39%
+ For 2003, 2002 and 2001, includes $0.03, $0.01 and $0.01 in redemption fees,
respectively (see Note 2).
(1)Not annualized for periods less than a year.
(2)Annualized.
See notes to financial statements.
82
WASATCH FUNDS -- NOTES TO FINANCIAL STATEMENTS MARCH 31, 2004 (UNAUDITED)
1.ORGANIZATION
Wasatch Funds, Inc. (the "Funds") is an open-end, registered management
investment company under the Investment Company Act of 1940. The Core Growth,
Global Science & Technology, International Growth, Micro Cap, Micro Cap Value,
Small Cap Growth, Small Cap Value and Ultra Growth Funds (collectively the
"Equity Funds") are non-diversified portfolios and the Wasatch-Hoisington U.S.
Treasury ("U.S. Treasury") Fund is a diversified portfolio of Wasatch Funds.
Each of the Funds maintains its own investment objective. The Funds have entered
into an investment advisory agreement with Wasatch Advisors, Inc. (the
"Advisor") as investment advisor.
2.SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America. The following is
a summary of the more significant of such policies.
VALUATION OF SECURITIES - Securities are valued as of the close of the New
York Stock Exchange (generally 4:00 p.m. Eastern Time) on the valuation date.
Equity securities are valued at the latest quoted sales price or official
closing price taken from the primary market in which each security trades.
Securities for which there were no transactions are valued at the closing bid
price. Debt securities (other than short-term instruments) are valued at current
market value by a commercial pricing service, or by using the last sale or bid
price. Short-term securities, which mature in 60 days or less, are valued at
amortized cost, which approximates market value. Fair value is determined by a
designated Pricing Committee under the supervision of the Board of Directors, in
accordance with pricing procedures approved by the Board for restricted
securities, private placements, other illiquid securities and other securities
for which market value quotations are not readily available. Fair value is
defined as the amount the owner of a security might reasonably expect to receive
upon a current sale. For each applicable investment that is fair valued, the
Pricing Committee considers, to the extent applicable, various factors
including, but not limited to, the financial condition of the company or limited
partnership, operating results, prices paid in follow-on rounds, comparable
companies in the public market, the nature and duration of the restrictions for
holding the securities, and other relevant factors.
Additionally, a Fund's investments will be 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 would
determine the fair value of affected securities considering factors including,
but not limited to: index options and futures traded subsequent to the close;
ADRs, GDRs or other related receipts; currency spot or forward markets that
trade after pricing of foreign exchange; other derivative securities traded
after the close such as WEBs and SPDRs; and alternative market quotes on the
affected securities.
FOREIGN CURRENCY TRANSLATIONS - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the current exchange
rate. Purchases and sales of investments and dividend income are translated into
U.S. dollars using the current exchange rate prevailing on the respective dates
of such transactions. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a component of
such gains or losses. Transactions in foreign denominated assets may involve
greater risks than domestic transactions, including currency, political,
economic, regulatory and market risks.
INVESTMENT IN SECURITIES - 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 premium are amortized using the interest method. To the extent
dividends received from REIT securities include return of capital distributions,
such distributions are recorded as a reduction in cost basis. Returns of capital
in excess of cost basis, if any, are recorded as capital gains.
SHORT SALES - To a limited extent, the Equity Funds may make short sales
of securities. A short sale means a Fund sells a security it does not own in
anticipation of a decline in the stock's price. The Fund must borrow the
security to deliver to the buyer upon settlement of the short sale. The Fund is
then obligated to replace the borrowed security by purchasing it at a later
date. The Fund will 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. All short sales must be fully collateralized. The Funds designate
collateral consisting of cash, U.S. government securities or other liquid assets
sufficient to collateralize the market value of short positions.
OPTION TRANSACTIONS - The Equity Funds may buy and sell put and call
options, write covered put and call options, including over-the-counter options,
on portfolio securities where the completion of the obligation is dependent upon
the credit standing of another party. The risk in writing a call option is that
a Fund gives up the opportunity for profit if the market price of the security
increases. The risk in writing a put option is that a Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that a Fund pays a premium whether or not the option is
exercised. A Fund also has the additional risk of not being able to enter into a
closing transaction if a liquid secondary market does not exist.
Option contracts are valued daily and unrealized appreciation or
depreciation is recorded. A Fund will realize a gain or loss upon expiration or
closing of the option transaction.
83
WASATCH FUNDS -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
REPURCHASE AGREEMENTS -- The Funds may enter into repurchase agreements
with recognized financial institutions and in all instances hold underlying
securities as collateral with a value at least equal to the total repurchase
price such financial institutions have agreed to pay.
FEDERAL INCOME TAXES - It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all taxable income to shareholders.
Accordingly, no provision for federal income taxes has been made.
EXPENSES - The Funds are charged for expenses that are directly
attributable to them, such as advisory and custodian fees. Expenses that are not
directly attributable to a Fund are generally allocated among the Funds in
proportion to their respective net assets.
USE OF MANAGEMENT ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America 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.
REDEMPTION FEES - The Funds will deduct a fee of 2.00% from redemption
proceeds on shares of the Funds held two months or less. The redemption fee is
treated as additional paid-in capital.
3.DISTRIBUTIONS
Dividends from net investment income are declared and paid at least
annually. Distributions of net realized gains, if any, will be declared and paid
at least annually. 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 generally accepted accounting principles.
The Funds may utilize earnings and profits distributed to shareholders on
redemption of shares as part of the dividend-paid deduction.
To the extent these book and tax differences are permanent in nature, such
amounts are reclassified among paid-in capital in excess of par value,
undistributed net investment income and undistributed net realized gain (loss)
on investments.
4.CAPITAL STOCK
Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED MARCH 31, 2004
CORE GLOBAL SCIENCE INTERNATIONAL
GROWTH & TECHNOLOGY GROWTH
FUND FUND FUND
---- ---- ----
Shares sold 3,230,533 3,362,182 7,124,797
Dividends reinvested 21,847 -- --
Shares redeemed (3,239,624) (1,012,829) (528,448)
--------- --------- ---------
Net increase 12,756 2,349,353 6,596,349
========= ========= =========
SIX MONTHS ENDED MARCH 31, 2004
MICRO MICRO SMALL
CAP CAP VALUE CAP GROWTH
FUND FUND FUND
---- ---- ----
Shares sold 1,240,744 432,483 3,244,253
Dividends reinvested 6,190,303 24,548 166,382
Shares redeemed (5,614,685) (608,921) (3,295,229)
---------- -------- ----------
Net increase
(decrease) 1,816,362 (151,890) 115,406
========== ======== ==========
SIX MONTHS ENDED MARCH 31, 2004
SMALL ULTRA U.S.
CAP VALUE GROWTH TREASURY
FUND FUND FUND
---- ---- ----
Shares sold 9,555,911 1,389,746 606,127
Dividends reinvested 40,494 191,012 239,879
Shares redeemed (11,730,595) (2,869,222) (1,863,270)
----------- ---------- ----------
Net decrease (2,134,190) (1,288,464) (1,017,264)
=========== ========== ==========
YEAR ENDED SEPTEMBER 30, 2003
CORE GLOBAL SCIENCE INTERNATIONAL
GROWTH & TECHNOLOGY GROWTH
FUND FUND FUND
---- ---- ----
Shares sold 10,414,773 3,419,237 2,761,196
Dividends reinvested -- -- --
Shares redeemed (12,861,353) (1,879,780) (1,118,048)
----------- ---------- ----------
Net increase
(decrease) (2,446,580) 1,539,457 1,643,148
=========== ========== ==========
YEAR ENDED SEPTEMBER 30, 2003
MICRO MICRO SMALL
CAP CAP VALUE CAP GROWTH
FUND FUND* FUND
---- ----- ----
Shares sold 16,929,258 33,909,091 10,711,482
Dividends reinvested 4,859,976 -- 1,241
Shares redeemed (13,017,963) (143,427) (6,604,251)
----------- ---------- ----------
Net increase 8,771,271 33,765,664 4,108,472
=========== ========== ==========
*Inception date of the Fund was July 28, 2003.
YEAR ENDED SEPTEMBER 30, 2003
SMALL ULTRA U.S.
CAP VALUE GROWTH TREASURY
FUND FUND FUND
---- ---- ----
Shares sold 53,599,577 10,725,440 3,512,714
Dividends reinvested -- -- 259,080
Shares redeemed (46,012,597) (6,321,373) (4,839,225)
----------- ---------- ----------
Net increase
(decrease) 7,586,980 4,404,067 (1,067,431)
=========== ========== ==========
5.PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding U.S. government
and short-term securities, for the six months ended March 31, 2004 are
summarized below:
84
MARCH 31, 2004 (UNAUDITED)
CORE GLOBAL SCIENCE INTERNATIONAL
GROWTH & TECHNOLOGY GROWTH
FUND FUND FUND
---- ---- ----
Purchases $ 329,274,773 $ 48,039,077 $ 95,705,013
Sales $(271,338,554) $(14,645,775) $(13,293,659)
MICRO MICRO SMALL
CAP CAP VALUE CAP GROWTH
FUND FUND FUND
---- ---- ----
Purchases $ 165,668,855 $ 51,648,785 $ 230,037,766
Sales $(146,087,490) $(38,119,667) $(188,792,715)
SMALL ULTRA
CAP VALUE GROWTH
FUND FUND
---- ----
Purchases $ 194,308,521 $ 189,185,521
Sales $(204,515,292) $(195,051,907)
Purchases and sales of U.S. Government securities in the U.S. Treasury
Fund were $2,222,578 and $16,399,714, respectively.
6.OPTIONS CONTRACTS WRITTEN
The premium amount and the number of options contracts written during the
six months ended March 31, 2004, were as follows:
PREMIUM NUMBER OF
AMOUNT CONTRACTS
------ ---------
CORE GROWTH FUND
Options outstanding at
September 30, 2003 $ 457,965 3,000
Options written 446,379 2,000
Options closed -- --
Options exercised (904,344) (5,000)
Options expired -- --
--------- ------
Options outstanding at
March 31, 2004 $ -- --
========= ======
7.FEDERAL INCOME TAX INFORMATION
At March 31, 2004, the cost of securities, excluding securities sold
short, on a tax basis and gross unrealized appreciation and (depreciation) on
investments for federal income tax purposes were as follows:
CORE GLOBAL SCIENCE INTERNATIONAL
GROWTH & TECHNOLOGY GROWTH
FUND FUND FUND
---- ---- ----
Cost of Investments $1,191,840,443 $76,272,936 $128,647,079
============== =========== ============
Gross unrealized
appreciation 441,461,617 13,287,353 26,866,227
Gross unrealized
(depreciation) (51,301,048) (5,746,591) (2,938,653)
-------------- ----------- ------------
Net unrealized
appreciation on
investments $ 390,160,569 $ 7,540,762 $ 23,927,574
============== =========== ============
MICRO MICRO SMALL
CAP CAP VALUE CAP GROWTH
FUND FUND FUND
---- ---- ----
Cost of Investments $394,466,430 $75,722,703 $978,167,621
============ =========== ============
Gross unrealized
appreciation 200,233,136 18,115,371 335,551,345
Gross unrealized
(depreciation) (15,961,203) (1,434,774) (42,168,450)
------------ ----------- ------------
Net unrealized
appreciation on
investments $184,271,933 $16,680,597 $293,382,895
============ =========== ============
SMALL ULTRA U.S.
CAP VALUE GROWTH TREASURY
FUND FUND FUND
---- ---- ----
Cost of Investments $588,350,278 $457,899,952 $46,783,005
============ ============ ===========
Gross unrealized
appreciation 245,893,780 117,655,669 5,981,213
Gross unrealized
(depreciation) (20,090,377) (20,537,653) (40,999)
------------ ------------ -----------
Net unrealized
appreciation on
investments $225,803,403 $ 97,118,016 $ 5,940,214
============ ============ ===========
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
As of September 30, 2003, the components of accumulated earnings on a tax
basis were as follows:
CORE GLOBAL SCIENCE INTERNATIONAL
GROWTH & TECHNOLOGY GROWTH
FUND FUND FUND
---- ---- ----
Undistributed
ordinary income $ -- $ -- $ --
Undistributed
long-term
capital gains -- -- --
------------ ----------- -----------
Accumulated earnings -- -- --
Accumulated capital
and other losses (84,244,774) (1,932,612) (1,502,809)
Other undistributed
ordinary losses -- (632) --
Net unrealized
appreciation on
investments, securities
sold short, derivative
and foreign currency
denominated assets
and liabilities 173,912,325 2,785,543 7,346,872
------------ ----------- -----------
Total accumulated
earnings $ 89,667,551 $ 852,299 $ 5,844,063
============ =========== ===========
85
WASATCH FUNDS -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MICRO MICRO CAP SMALL CAP
CAP VALUE GROWTH
FUND FUND FUND
---- ---- ----
Undistributed
ordinary income $ 2,759,020 $ -- $ --
Undistributed
long-term
capital gains 38,805,925 -- 5,914,927
------------ ---------- ------------
Accumulated earnings 41,564,945 -- 5,914,927
Accumulated capital
and other losses -- -- (2,557,105)
Other undistributed
ordinary losses -- (21,897) --
Net unrealized
appreciation on
investments, securities
sold short, derivative
and foreign currency
denominated assets
and liabilities 134,752,375 3,219,189 167,981,542
------------ ---------- ------------
Total accumulated
earnings $176,317,320 $3,197,292 $171,339,364
============ ========== ============
SMALL CAP ULTRA U.S.
VALUE GROWTH TREASURY
FUND FUND FUND
---- ---- ----
Undistributed
ordinary income $ -- $ 103,222 $ 2,503,722
Undistributed
long-term
capital gains -- 3,599,548 --
------------ ----------- -----------
Accumulated earnings -- 3,702,770 2,503,722
Accumulated capital
and other losses -- (1,712,754) (7,148,034)
Other undistributed
ordinary losses -- -- --
Net unrealized
appreciation on
investments, securities
sold short, derivative
and foreign currency
denominated assets
and liabilities 108,333,861 65,964,782 5,173,553
------------ ----------- -----------
Total accumulated
earnings $108,333,861 $67,954,798 $ 529,241
============ =========== ===========
For the year ended September 30, 2003, the Core Growth, Global Science &
Technology, International Growth and U.S. Treasury Funds had federal income tax
capital loss carry forwards of $46,940,430, $546,501, $226,990 and $7,148,034,
respectively. Federal income tax capital loss carry forwards for the U.S.
Treasury Fund expire as follows: $1,997,575 in 2008, $4,318,964 in 2009 and
$831,495 in 2010. The entire federal income tax capital loss carry forward for
the Core Growth, Global Science & Technology and International Growth Funds
expires in 2011. To the extent future gains are offset by capital loss carry
forwards, such gains will not be distributed.
As of September 30, 2003, the Core Growth, Global Science & Technology,
International Growth, Small Cap Growth and Ultra Growth Funds had $37,304,344,
$1,386,111, $1,275,819, $2,557,104 and $1,712,753, respectively, of post-October
capital losses, which are deferred until 2004 for tax purposes. Also, the Global
Science & Technology Fund had $632 of post-October currency losses, which are
deferred until 2004 for tax purposes. Net capital losses incurred after October
31 and within the taxable year are deemed to arise on the first day of the
Fund's next taxable year.
The tax character of distributions paid during the six months ended March
31, 2004 and fiscal year ended September 30, 2003 were as follows:
CORE GROWTH
FUND
-----------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
-------------- ------------------
Ordinary income $ 849,650 $ --
Net long-term capital gains -- --
----------- ------
Total $ 849,650 $ --
=========== ======
GLOBAL SCIENCE
& TECHNOLOGY FUND
-----------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
-------------- ------------------
Ordinary income $ -- $ --
Net long-term capital gains -- --
------- ------
Total $ -- $ --
======= ======
INTERNATIONAL GROWTH
FUND
-----------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
-------------- ------------------
Ordinary income $ -- $ --
Net long-term capital gains -- --
------- ------
Total $ -- $ --
======= ======
MICRO CAP
FUND
------------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
-------------- ------------------
Ordinary income $ 2,759,021 $ --
Net long-term capital gains 40,853,142 22,295,887
------------ --------------
Total $ 43,612,163 $ 22,295,887
============ ==============
86
MARCH 31, 2004 (UNAUDITED)
MICRO CAP
VALUE FUND
------------------------------------------
Six Months Ended Period Ended
March 31, 2004 September 30, 2003*
-------------- -------------------
Ordinary income $ 59,072 $ --
Net long-term capital gains -- --
-------- ------
Total $ 59,072 $ --
======== ======
*Inception date of the Fund was July 28, 2003.
SMALL CAP
GROWTH FUND
------------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
---------------- ------------------
Ordinary income $ -- $ --
Net long-term capital gains 5,914,731 34,010
-------------- -----------
Total $ 5,914,731 $ 34,010
============== ===========
SMALL CAP
VALUE FUND
------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
---------------- ------------------
Ordinary income $ -- $ --
Net long-term capital gains 221,338 --
---------- -----
Total $ 221,338 $ --
========== =====
ULTRA GROWTH
FUND
---------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
---------------- ------------------
Ordinary income $ 103,222 $ --
Net long-term capital gains 5,343,850 --
------------- ------
Total $ 5,447,072 $ --
============= ======
U.S. TREASURY
FUND
-----------------------------------------
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
---------------- ------------------
Ordinary income $ 3,207,497 $ 3,484,505
Net long-term capital gains -- --
----------- -----------
Total $ 3,207,497 $ 3,484,505
=========== ===========
8.ADVISORY AND ADMINISTRATION FEES AND EXPENSE WAIVERS
ADVISOR FEES -- As the Funds' investment advisor, the Advisor receives a
monthly fee calculated on average daily net assets. For the six months ended
March 31, 2004, management fees for the Core Growth, Global Science &
Technology, International Growth, Micro Cap, Micro Cap Value, Small Cap Growth,
Small Cap Value, Ultra Growth and U.S. Treasury Funds were 1.00%, 1.50%, 1.50%,
2.00%, 2.00%, 1.00%, 1.50%, 1.25%, and 0.50% of the average daily net assets of
each Fund, respectively.
The Advisor has contractually agreed to limit until January 31, 2005 total
expenses of the Core Growth, Global Science & Technology, International Growth,
Micro Cap, Small Cap Growth, Small Cap Value, Ultra Growth and U.S. Treasury
Funds to 1.50%, 1.95%, 1.95%, 2.50%, 1.50%, 1.95%, 1.75%, and 0.75% of average
daily net assets, respectively, and will pay all expenses excluding interest,
taxes and extraordinary expenses, in excess of such limitation. Effective
February 1, 2004, the Advisor contractually agreed to limit the Micro Cap Value
Fund's total expenses to 2.25% of average daily net assets through January 31,
2005. Prior to February 1, 2004, the Advisor had agreed to limit the total
expenses of the Micro Cap Value Fund to 2.50% of average daily net assets. For
the six months ended March 31, 2004, the Advisor reimbursed $3,958 for the
Global Science & Technology Fund, $58,163 for the Micro Cap Value Fund and
$59,937 for the U.S. Treasury Fund.
ADMINISTRATION FEES -- The Funds have entered into an administration
services agreement with the Advisor. Pursuant to this agreement, the Funds pay
the Advisor an administration fee at an annual rate of .0425% of the first $2.7
billion of the Funds' average daily net assets and then a decreasing rate for
average daily net assets exceeding that level. For the six months ended March
31, 2004, the Core Growth, Global Science & Technology, International Growth,
Micro Cap, Micro Cap Value, Small Cap Growth, Small Cap Value, Ultra Growth and
U.S. Treasury Funds paid administration fees to the Advisor of $239,831,
$11,407, $16,563, $91,920, $13,963, $205,990, $121,322, $95,918 and $9,356,
respectively.
9.TRANSACTIONS WITH AFFILIATES
The following is an analysis of transactions for the six months ended
March 31, 2004 in the Core Growth, Micro Cap, Small Cap Growth and Small Cap
Value Funds with "affiliated companies" as defined by the Investment Company Act
of 1940:
87
WASATCH FUNDS -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CORE GROWTH FUND
Amount of
Amount of Gain (Loss)
Dividends Realized
Credited on Sale
Share Activity to Income for of Shares for
------------------------------------------------------- the six the six
Balance Balance months ended months ended
Security Name 9/30/03 Purchases Sales 3/31/04 3/31/04 3/31/04
- ------------- ------- --------- ----- ------- ------- -------
Anworth Mortgage Asset Corp. 1,984,575 -- 290,650 1,693,925* $1,309,820 $(4,514)
Bimini Mortgage Management, Inc. -- 1,251,075 -- 1,251,075 $ 487,919 --
*No longer affiliated as of March 31, 2004.
MICRO CAP FUND
Amount of
Amount of Gain (Loss)
Dividends Realized
Credited on Sale
Share Activity to Income for of Shares for
------------------------------------------------------ the six the six
Balance Balance months ended months ended
Security Name 9/30/03 Purchases Sales 3/31/04 3/31/04 3/31/04
- ------------- ------- --------- ----- ------- ------- -------
Advanced Power Technology, Inc. 364,500 219,050 -- 583,550 -- --
CommerceWest Bank 95,000 -- 95,000 --* -- $ 327,679
Computer Access Technology Corp. 615,575 720,045 -- 1,335,620 -- --
Covalent Group, Inc. 825,000 123,500 -- 948,500 -- --
Encision, Inc. 433,075 -- 26,000 407,075 -- $ 592
inTEST Corp. 444,975 44,600 -- 489,575 -- --
IRIDEX Corp. 719,850 -- 70,825 649,025 -- $ (225,752)
PSi Technologies Holdings, Inc. ADR 1,021,975 -- 20,530 1,001,445 -- $ (349,063)
Rainbow Rentals, Inc. 404,400 -- 257,250 147,150* -- $1,401,582
*No longer affiliated as of March 31, 2004.
SMALL CAP GROWTH FUND
Amount of
Amount of Gain (Loss)
Dividends Realized
Credited on Sale
Share Activity to Income for of Shares for
----------------------------------------------------- the six the six
Balance Balance months ended months ended
Security Name 9/30/03 Purchases Sales 3/31/04 3/31/04 3/31/04
- ------------- ------- --------- ----- ------- ------- -------
AmSurg Corp.(1) 1,517,488 -- -- 1,517,488 -- --
(1)Adjusted for 3-for-2 split on March 25, 2004.
SMALL CAP VALUE FUND
Amount of
Amount of Gain (Loss)
Dividends Realized
Credited on Sale
Share Activity to Income for of Shares for
-------------------------------------------------------- the six the six
Balance Balance months ended months ended
Security Name 9/30/03 Purchases Sales 3/31/04 3/31/04 3/31/04
- ------------- ------- --------- ----- ------- ------- -------
Bimini Mortgage Management, Inc. -- 642,325 -- 642,325 $250,507 --
Mobile Mini, Inc. 730,437 119,625 -- 850,062 -- --
USA Truck, Inc. 472,250 -- -- 472,250 -- --
Whitehall Jewellers, Inc. 805,568 -- -- 805,568 -- --
88
March 31, 2004 (UNAUDITED)
10. RESTRICTED SECURITIES
The Funds may own investments that were purchased through private
placement transactions (or under Rule 144A) and cannot be sold without prior
registration under the Securities Act of 1933 or may be limited due to certain
restrictions. If and when such securities are registered, the costs of
registering such securities are paid by the issuer. At March 31, 2004, the Funds
held restricted common stocks, unless otherwise noted, as follows:
ACQUISITION ACQUISITION FAIR VALUE AS %
DATE COST VALUE OF NET ASSETS
------------------- ----------- ------------- -------------
CORE GROWTH FUND
American Financial Realty Trust(1) 12/30/02 - 1/29/03 $ 447,435 $ 609,208 0.04%
Bimini Mortgage Management, Inc.(1) 12/15/03 - 1/29/04 $18,766,125 18,766,125 1.19%
Fieldstone Investment Corp.(1) 11/10/03 - 11/11/03 $13,355,388 16,998,231 1.07%
------------- ----
$ 36,373,564 2.30%
GLOBAL SCIENCE & TECHNOLOGY FUND
Montagu Newhall Global Partners II-B, L.P.(4) 10/10/03 - 3/10/04 $ 50,000 $ 50,000 0.06%
SEZ Holding AG(3) 3/31/04 -- -- --
SiRF Technology Holdings, Inc., Series H(2) 12/20/01 $ 277,875 277,875 0.32%
SiRF Technology Holdings, Inc.(3) 1/11/02 -- -- --
Vanguard Response Systems, Inc. PIPE(5) 3/5/04 $ 282,957 293,696 0.34%
Vanguard Response Systems, Inc.(3) 3/5/04 -- -- --
Xtera Communications, Inc.(2) 9/3/03 $ 7,076 7,076 0.01%
------------- ----
$ 628,647 0.73%
INTERNATIONAL GROWTH FUND
SEZ Holding AG(3) 3/31/04 -- $ -- --
Vanguard Response Systems, Inc. PIPE(5) 3/5/04 $ 235,058 243,979 0.16%
Vanguard Response Systems, Inc.(3) 3/5/04 -- -- --
------------- ----
$ 243,979 0.16%
MICRO CAP FUND
Fieldstone Investment Corp.(1) 11/10/03 - 11/11/03 $ 2,632,803 3,350,944 0.58%
IMPCO Technologies, Inc. PIPE(5) 12/17/03 $ 1,376,000 1,141,392 0.19%
SEZ Holding AG(3) 3/31/04 -- -- --
Vanguard Response Systems, Inc. PIPE(5) 3/5/04 $ 1,886,491 1,958,091 0.34%
Vanguard Response Systems, Inc.(3) 3/5/04 -- -- --
------------- ----
$ 6,450,427 1.11%
MICRO CAP VALUE FUND
Bimini Mortgage Management, Inc.(1) 12/15/03 - 1/29/04 $ 1,074,000 $ 1,074,000 1.18%
CorVu Corp. PIPE(5) 11/17/03 $ 500,000 619,400 0.68%
CorVu Corp.(3) 11/17/03 -- -- --
EuroZinc Mining Corp. PIPE(5) 2/26/04 $ 602,864 858,481 0.94%
EuroZinc Mining Corp.(3) 2/26/04 -- 83,079 0.09%
Fieldstone Investment Corp.(1) 11/10/03 - 11/11/03 $ 732,436 932,181 1.02%
89
WASATCH FUNDS -- NOTES TO FINANCIAL STATEMENTS March 31, 2004 (UNAUDITED)
(CONTINUED)
ACQUISITION ACQUISITION FAIR VALUE AS %
DATE COST VALUE OF NET ASSETS
------------------- ----------- ------------- -------------
MICRO CAP VALUE FUND (CONTINUED)
Franklin Bank Corp.(1) 9/24/03 - 10/20/03 $ 742,675 $ 1,102,201 1.20%
Medical Properties Trust, Inc.(1) 3/31/04 $ 362,500 362,500 0.40%
Patient Infosystems, Inc. PIPE(5) 2/24/04 $ 500,000 482,775 0.53%
------------- ----
$ 5,514,617 6.04%
SMALL CAP GROWTH FUND
Montagu Newhall Global Partners II-B, L.P.(4) 10/10/03 - 3/10/04 $ 500,000 $ 500,000 0.04%
SiRF Technology Holdings, Inc., Series H(2) 12/20/01 $ 2,616,120 2,616,120 0.21%
SiRF Technology Holdings, Inc.(3) 1/11/02 -- -- --
------------- ----
$ 3,116,120 0.25%
SMALL CAP VALUE FUND
American Financial Realty Trust(1) 9/4/02 - 12/6/02 $ 6,095,965 $ 9,891,020 1.21%
Arbor Realty Trust, Inc.(3) 6/26/03 $ 5,626,875 6,833,277 0.84%
Bimini Mortgage Management, Inc.(1) 12/15/03 - 1/29/04 $ 9,634,875 9,634,875 1.18%
Fieldstone Investment Corp.(1) 11/10/03 - 11/11/03 $ 6,700,984 8,528,713 1.05%
Medical Properties Trust, Inc.(1) 3/31/04 $ 3,255,000 3,255,000 0.40%
Vanguard Response Systems, Inc. PIPE(5) 3/5/04 $ 857,630 890,181 0.11%
Vanguard Response Systems, Inc.(3) 3/5/04 -- -- --
------------- ----
$ 39,033,066 4.79%
ULTRA GROWTH FUND
IMPCO Technologies, Inc. PIPE(5) 12/17/03 $ 1,472,000 $ 1,221,024 0.22%
IQ4Hire, Inc.(2) 9/7/00 $ 110,000 440 --
Montagu Newhall Global Partners II-B, L.P.(4) 10/10/03 - 3/10/04 $ 450,000 450,000 0.08%
SiRF Technology Holdings, Inc., Series H(2) 12/20/01 $ 806,000 806,000 0.14%
SiRF Technology Holdings, Inc.(3) 1/11/02 -- -- --
Xtera Communications, Inc.(2) 9/3/03 $ 99,065 99,065 0.02%
------------- ----
$ 2,576,529 0.46%
(1) Common stock. Rule 144A Security.
(2) Preferred Stock.
(3) Rights/Warrants/Units.
(4) Limited Partnership Interests.
(5) Private Investment in a Public Equity.
11. PURCHASE COMMITMENTS
In September 2003, the Global Science & Technology, Small Cap Growth and
Ultra Growth Funds entered into subscription agreements to acquire limited
partnership interests in Montagu Newhall Global Partners II, L.P. The remaining
commitment amounts at March 31, 2004 are $450,000, $4,500,000 and $4,050,000,
respectively. Securities held by the Funds have been designated to meet these
purchase commitments.
90
WASATCH FUNDS -- DIRECTORS AND OFFICERS March 31, 2004
NAME, ADDRESS, POSITION(S) HELD TERM OF OFFICE AND PRINCIPAL OCCUPATION(S)
AND AGE WITH FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS
- ------------------------------------ ---------------- --------------------- -------------------------------------
INDEPENDENT DIRECTORS:
JAMES U. JENSEN, J.D., MBA Director Indefinite Vice President, Corporate Development
NPS Pharmaceuticals, Inc. Served as Director and Legal Affairs, and Secretary, NPS
420 Chipeta Way since 1986 Pharmaceuticals, Inc. since 1991.
Salt Lake City, UT 84108
Age: 59
WILLIAM R. SWINYARD, PH.D. Director Indefinite Professor of Business Management and
Marriott School of Management Served as Director Holder of the Fred G. Meyer Chair of
624 Tanner Building since 1986 Marketing, Brigham Young University
Brigham Young University since 1978.
Provo, UT 84602
Age: 63
JONATHAN F. ZESCHIN, CFP(TM) Director Indefinite President and Founder of ESSENTIAL
1777 S. Harrison Street Served as Director Advisers, Inc., a wealth management
Skydeck since June 2002 and investment advisory firm; prior
Denver, CO 80210 to founding ESSENTIAL was Managing
Age: 50 Partner at JZ Partners LLC, a
business consulting firm; President
of Founders Asset Management
from 1995 - 1998.
INTERESTED DIRECTORS*:
SAMUEL S. STEWART, JR., PH.D., CFA President, Indefinite Chairman of the Board and Director
150 Social Hall Avenue Chairman of Served as President, of Research for Wasatch Advisors, Inc.
4th Floor the Board and Chairman of the (the "Advisor") since 1975; Professor
Salt Lake City, UT 84111 Director Board and Director of Finance at the University of Utah
Age: 61 since 1986 from 1975 - 2000.
JEFF S. CARDON, CFA Vice President Indefinite President and Treasurer for the
150 Social Hall Avenue and Director Served as Vice Advisor since 1999; Director of the
4th Floor President and Advisor since 1985; Security Analyst
Salt Lake City, UT 84111 Director since for the Advisor since 1980.
Age: 46 1986
OFFICER:
VENICE F. EDWARDS, CFA Secretary/ Indefinite Director of Compliance for the
150 Social Hall Avenue Treasurer Served as Advisor since 1995 and Secretary of
4th Floor Secretary/Treasurer the Advisor since 1999; Portfolio
Salt Lake City, UT 84111 since 1996 Manager for the Advisor
Age: 54 from 1983 - 1995.
NUMBER OF PORTFOLIOS
IN COMPLEX
NAME, ADDRESS, POSITION(S) HELD OVERSEEN BY OTHER DIRECTORSHIPS
AND AGE WITH FUND DIRECTOR HELD BY DIRECTOR
- ------------------------------------ ---------------- -------------------- -------------------
INDEPENDENT DIRECTORS:
JAMES U. JENSEN, J.D., MBA Director 9 Private companies and
NPS Pharmaceuticals, Inc. foundations only
420 Chipeta Way
Salt Lake City, UT 84108
Age: 59
WILLIAM R. SWINYARD, PH.D. Director 9 None
Marriott School of Management
624 Tanner Building
Brigham Young University
Provo, UT 84602
Age: 63
JONATHAN F. ZESCHIN, CFP(TM) Director 9 Board of Trustees
1777 S. Harrison Street ICON Funds
Skydeck
Denver, CO 80210
Age: 50
INTERESTED DIRECTORS*:
SAMUEL S. STEWART, JR., PH.D., CFA President, 9 None
150 Social Hall Avenue Chairman of
4th Floor the Board and
Salt Lake City, UT 84111 Director
Age: 61
JEFF S. CARDON, CFA Vice President 9 None
150 Social Hall Avenue and Director
4th Floor
Salt Lake City, UT 84111
Age: 46
OFFICER:
VENICE F. EDWARDS, CFA Secretary/ N/A None
150 Social Hall Avenue Treasurer
4th Floor
Salt Lake City, UT 84111
Age: 54
*INTERESTED DIRECTORS SERVE AS DIRECTORS AND OFFICERS OF WASATCH ADVISORS, INC.
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that Wasatch 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, by calling 800.551.1700 or on the Funds' web site at
WWW.WASATCHFUNDS.COM and on the SEC's web site at WWW.SEC.GOV.
Wasatch Funds' proxy voting record will be available on the Funds' web
site at WWW.WASATCHFUNDS.COM and the SEC's web site at WWW.SEC.GOV no later than
August 31 for the prior 12 months ending June 30.
91
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS
Wasatch Funds provides reports to shareholders twice a year. The Annual
Report is for the Funds' fiscal year which ends September 30. The Semi-Annual
Report is for the six months ending March 31. These reports provide shareholders
with important information that will help them evaluate the management and
performance of their investments. It is the desire of Wasatch Funds to help
shareholders stay in tune with their investments. If you have any questions
about the information in this report, a Shareholder Services Representative will
be happy to assist you when you call 800.551.1700.
PORTFOLIO OF INVESTMENTS
The holdings of each Wasatch Fund are detailed in the "Portfolio of
Investments." This section provides a snapshot of the securities each Fund was
invested in on the last day of the reporting period. The Wasatch Equity Funds
invest primarily in COMMON STOCKS of companies which are grouped together by
industry. The Wasatch-Hoisington U.S. Treasury Fund invests primarily in U.S.
Treasury securities. The Equity Funds will typically have only minor holdings in
Short-Term Investments. At times the Funds may take temporary defensive
positions by increasing cash or holdings in SHORT-TERM INVESTMENTS. Please see
the prospectus under "Other Investment Strategies and Their Risks."
STATEMENTS OF ASSETS AND LIABILITIES
These financial statements show the ASSETS and LIABILITIES of a Fund on
the last day of the reporting period. A Fund's ASSETS include the value of
securities owned, amounts receivable for purchases of Fund shares (capital
shares receivable), securities sold, interest and dividends, prepaid expenses
and other assets. LIABILITIES are amounts owed for shareholder redemptions
(capital shares payable), securities purchased, investment advisory fees and
other expenses. Totaling up the assets and subtracting the liabilities results
in a Fund's NET ASSETS.
NET ASSETS consist of capital stock, paid-in capital in excess of par,
undistributed net investment income, undistributed net realized gain or loss on
investments and net unrealized appreciation or depreciation on investments.
CAPITAL STOCK is stock authorized by a company's charter and having par value,
stated value or no par value. Par value is set by the company issuing the shares
and has no relation to Net Asset Value. The par value of one share of each
Wasatch Fund is $.01. PAID-IN CAPITAL IN EXCESS OF PAR is capital received from
shareholders in exchange for Fund shares that exceeds the par value of the
shares. For example, if you bought one share of a Fund for $10, $.01 would show
as "Capital stock" on the books of the Fund, and $9.99 would be accounted for
under "Paid-in capital in excess of par." UNDISTRIBUTED NET INVESTMENT INCOME is
the amount of net investment income earned by a Fund since inception that has
not been paid to shareholders as a dividend. UNDISTRIBUTED NET REALIZED GAIN
(LOSS) ON INVESTMENTS is the amount of net realized gains or losses generated by
a Fund since inception that have not been distributed to shareholders in the
form of a capital gain distribution. A gain or loss is realized when a security
is sold by a Fund. NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS is
the change in value from the purchase price of securities a Fund continues to
hold.
The number of shares a Fund is Authorized to sell can be found under
CAPITAL STOCK, $.01 par value. How many of those shares are owned by
shareholders is indicated as ISSUED AND OUTSTANDING.
NET ASSET VALUE (NAV), REDEMPTION PRICE AND OFFERING PRICE PER SHARE shows
the value of one outstanding share of a Fund on the date of the report. A Fund's
share price (NAV) is calculated by dividing the value of all securities and
other assets owned by a Fund, less the liabilities charged to that Fund, by the
number of Fund shares outstanding. The NAV is calculated at the close of
business of the New York Stock Exchange on each day the Exchange is open for
trading. Please see Wasatch Funds' prospectus for more information about how
NAVs are calculated. Information about how the NAV is affected by a Fund's
operation can be found under "Financial Highlights" on page 93.
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS show investment income and expenses for each Fund
as well as realized gains or losses from securities sold and the appreciation or
depreciation in the value of a Fund's holdings during the reporting period.
INVESTMENT INCOME shows INTEREST and DIVIDENDS earned from
interest-bearing and dividend-paying securities in a Fund's portfolio.
EXPENSES show the various fees and expenses paid out of a Fund's assets
such as the fee paid to Wasatch Advisors, the Funds' investment advisor.
Additional fees include shareholder servicing, fund administration and
accounting, custody of fund assets, federal and state registration, legal
counsel, auditing and directors' fees. The Funds pay for printing and mailing
statements, prospectuses, annual reports and semi-annual reports to
shareholders.
NET INVESTMENT INCOME (LOSS) is the amount of dividends and interest
income earned on securities held by a Fund, less the Fund's expenses.
NET REALIZED GAIN (LOSS) ON INVESTMENTS is the net gain or loss on
securities a Fund has sold. CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON
INVESTMENTS is the change in value of securities a Fund continues to hold.
NET GAIN (LOSS) ON INVESTMENTS is the result of changes in market value of
securities a Fund has sold and securities it continues to hold.
STATEMENTS OF CHANGES IN NET ASSETS
NET ASSETS are a Fund's remaining assets after taking into consideration
any liabilities. STATEMENTS OF CHANGES IN NET ASSETS show the increase or
decrease in a Fund's net assets during the reporting period. Investment
operations, dividends and capital share transactions affect a Fund's net assets.
OPERATIONS is a summary of the STATEMENTS OF OPERATIONS. It includes investment
income or loss, net realized gain or loss on investments a Fund has sold as well
as
92
MARCH 31, 2004
the change in appreciation or depreciation in the value of investments a Fund
continues to hold.
DIVIDENDS are distributed by Wasatch Funds to shareholders when Fund
investments have earned income in excess of net expenses or when capital gains
in excess of capital losses are realized from the sale of securities. Most
shareholders choose to reinvest their dividends and capital gain distributions.
Each Fund is required by Internal Revenue Service (IRS) regulations to
distribute substantially all of its net investment income and capital gains to
shareholders in order to retain its status as a "regulated investment company."
CAPITAL SHARE TRANSACTIONS are any transactions involving shares of a
Fund, including the selling of Fund shares, shares issued by a Fund to
shareholders for the reinvestment of dividends, and share redemptions.
FINANCIAL HIGHLIGHTS
The FINANCIAL HIGHLIGHTS contain important historical operating
information that you may find useful in making decisions or understanding the
performance of your investment.
NET ASSET VALUE (NAV) is defined under "Statements of Assets and
Liabilities" on page 92. The difference between the Net asset value, beginning
of period and the Net asset value, end of period in the Financial Highlights is
the change in value of a Fund's shares over the reporting period, but not its
total return.
INCOME (LOSS) FROM INVESTMENT OPERATIONS shows how the NAV was affected by
a Fund's operations on a per share basis. NET INVESTMENT INCOME (LOSS) is the
per share amount of dividends and interest income earned on securities held by a
Fund, less the Fund's expenses. NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
SECURITIES is the per share increase or decrease in the value of securities a
Fund holds or has sold during the reporting period. Gains or (losses) are
realized when securities are sold. Gains or (losses) are unrealized when
securities increase or decrease in value but are not sold.
DISTRIBUTIONS are the per share amount that a Fund paid to shareholders
from net investment income and net realized gains.
TOTAL RETURN is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in unrealized and realized gains and income. For the purposes of
calculating total return, it is assumed that dividends and distributions are
reinvested at the NAV on the payable day of the distribution. A FUND'S TOTAL
RETURN CANNOT BE COMPUTED DIRECTLY FROM THE FINANCIAL HIGHLIGHTS.
SUPPLEMENTAL DATA AND RATIOS are provided to help you better understand
your investment. NET ASSETS, END OF PERIOD, are the net assets of a Fund on the
reporting date. RATIO TO AVERAGE NET ASSETS OF: EXPENSES shows the total of a
Fund's operating expenses divided by its average net assets for the stated
period before and after waivers and reimbursements by the Advisor. RATIO TO
AVERAGE NET ASSETS OF: NET INVESTMENT INCOME shows a Fund's net investment
income (loss) divided by its average net assets for the stated period before and
after waivers and reimbursements by the Advisor. PORTFOLIO TURNOVER RATE
measures a Fund's buying and selling activity during the reporting period. It is
computed by dividing total purchases or sales, whichever is less, by the average
monthly market value of a Fund's portfolio securities. This calculation does not
include securities with a maturity date of less than 12 months.
HOW TO CONTACT WASATCH
ONLINE
WWW.WASATCHFUNDS.COM
EMAIL
SHAREHOLDERSERVICE@WASATCHFUNDS.COM
Our email correspondence department responds to emails Monday
through Friday, from 8:00 a.m. to 4:00 p.m. Central Time (CT).
TELEPHONE
800.551.1700
Shareholder Services Representatives are available Monday through
Friday, from 7:00 a.m. to 7:00 p.m. Central Time (CT).
Our automated teleresponse service is available 24 hours a day.
U.S. MAIL
WASATCH FUNDS
P.O. Box 2172
Milwaukee, WI 53201-2172
OVERNIGHT DELIVERY
WASATCH FUNDS
803 West Michigan Street, Suite A
Milwaukee, WI 53233-2301
93
ITEM 2: CODE OF ETHICS.
Not required.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT.
Not required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not required.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers have
concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a
date within 90 days of the filing date of this Form N-CSR based on their
evaluation of these controls and procedures required by Rule 30a-3(b)
under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934 as amended (17 CFR 240.13a-15(b)
or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Not required.
(a)(2) The certifications required by Rule 30a-2 of the 1940 Act are
attached hereto.
(a)(3) Not applicable.
(b) The certifications required by Rule 30a-2(b) of the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
WASATCH FUNDS, INC.
By: /s/ Samuel S. Stewart, Jr.
--------------------------
Samuel S. Stewart, Jr.
President (principal executive officer) of Wasatch Funds, Inc.
Date: May 28, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Samuel S. Stewart, Jr.
--------------------------
Samuel S. Stewart, Jr.
President (principal executive officer) of Wasatch Funds, Inc.
Date: May 28, 2004
By: /s/ Venice F. Edwards
-------------------------------
Venice F. Edwards
Secretary/Treasurer (principal financial and accounting officer) of
Wasatch Funds, Inc.
Date: May 28, 2004