State Street Corp.
Legal Services Department
PO Box 5049
Boston, MA 02206-5049
VIA EDGAR
December 20, 2004
Ms. Patricia P. Williams
Securities and Exchange Commission
Investment Company Division
450 Fifth Street, N.W.
Washington, DC 20549
Re: Wasatch Funds, Inc. ("Registrant")
File Nos. 033-10451, 811-04920
Dear Ms. Williams:
This letter responds to the comments on Post-Effective Amendment No. 32 to the
Registrant's registration statement on Form N-1A on behalf of the Wasatch
International Opportunities Fund (the "Fund") that were provided to me by
telephone on Monday, November 29, 2004.
Registrant acknowledges the Securities and Exchange Commission's ("SEC") press
release, dated June 24, 2004 ("Press Release"), in which the SEC announced that,
in connection with any filing upon which comments are provided to the registrant
by the SEC staff, the staff would require a written representation from the
registrant to the effect that the comment process would not be used as a defense
by the registrant in any securities related litigation brought against it. In
accordance with the position announced in the Press Release, and on behalf of
the Registrant, Registrant acknowledges that it is responsible for the adequacy
and accuracy of the disclosures in its filings with the SEC and that it may not
assert SEC staff comments as a defense in any proceeding initiated by the SEC or
any person under the federal securities laws of the United States. Registrant
further acknowledges that SEC staff comments or changes to disclosures in
response to SEC staff comments in a filing reviewed by the SEC staff do not
foreclose the SEC from taking any action with respect to such filing.
1. SEC COMMENT: Please confirm that the Fund will send a potential shareholder a
copy of both the Prospectus for the Fund as well as the Prospectus for the
Northern U.S. Government Money Market Fund. Please move the subscription
offering language with respect to the subscription period after the "Investment
Objectives, Principal Strategies and Principal Risks of the Fund."
RESPONSE: A copy of both the Prospectus for the Fund and the Prospectus for the
Northern U.S. Government Money Market Fund will be sent to potential
shareholders during the subscription offering and will be posted on the Funds'
web site. The subscription offering language will become a supplement to the
Prospectus.
2. SEC COMMENT: Under the section "Investment Objectives, Principal Strategies
and Principal Risks of the Fund" in the Prospectus, please move the language
explaining the closing of the Fund after the risk return summary.
RESPONSE: The change will be made as requested.
3. SEC COMMENT: Under the section "Investment Objectives, Principal Strategies
and Principal Risks of the Fund" on page 2 of the Prospectus, please explain the
term "early stage companies."
RESPONSE: The word "early stage companies" will be italicized and the following
language will be added to the Glossary of Investing Terms on page 32 of the
Prospectus:
"EARLY STAGE COMPANIES are in the developmental stage, have a limited
operating history, and are focused on building their businesses. An early stage
company may not be currently profitable and may be pursuing financing,
technology development, additional management team members and appropriate
facilities."
4. SEC COMMENT: Under the section entitled "Investment Objectives, Principal
Strategies and Principal Risks of the Fund" on page 2 of the Prospectus, please
move the section "Closing or Reopening of the Fund" after the Fees and Expenses
of the Fund.
RESPONSE: The change will be made as requested.
5. SEC COMMENT: Under the section "Fees and Expenses of the Fund" on page 4 of
the Prospectus, please change the order in the Shareholder Fees table to be
consistent with Item 3 of Form N-1A.
RESPONSE: The table will be amended to read as follows:
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions None
Redemption Fee (on shares held two months or less) 2.00%
Exchange Fee None
Maximum Account Fee None
ANNUAL IRA MAINTENANCE FEE (1) $12.50 PER ACCOUNT
IRA DISTRIBUTION FEE (2) $15.00 EACH
OUTGOING WIRE TRANSFER FEE $10.00 EACH
6. SEC COMMENT: Under the section "Management of Wasatch Funds - Research Team"
on page 14 of the Prospectus, please clarify who manages the Fund. Pursuant to
Instruction 2 of Item 5(a)(2) of Form N-1A, a committee, team or other group of
persons associated with an investment adviser of the Fund ("Adviser Group") is
jointly and primarily responsible for the day-to-day management of the Fund's
portfolio, provide disclosure to the effect that the Fund's investments are
managed by the Adviser Group; the names of the members of the Adviser Group need
not be provided.
RESPONSE: The section "Management of Wasatch Funds - Research Team" on page 14
of the Prospectus will be amended to read as follows:
WASATCH INTERNATIONAL OPPORTUNITIES FUND RESEARCH TEAM
The Wasatch International Opportunities Fund is managed using a team approach.
RESEARCH TEAM
The Wasatch research team consists of a Director of Research, 14 portfolio
managers and 10 securities analysts. The portfolio managers are responsible for
making investment decisions for their respective Wasatch Funds in accordance
with each Fund's investment objective and strategies. For the International
Opportunities Fund, certain members of the research team shown below are
responsible for making investment decisions for the Fund. The research team is
responsible for analyzing securities and making investment recommendations.
DIRECTOR OF RESEARCH
Samuel S. Stewart, Jr., PhD, CFA has served as President of Wasatch Funds since
1986, Chairman of the Board from 1986-2004 and Chairman of the Board of the
Advisor since 1975. He earned a Bachelor of Science in Business Administration
degree from Northwestern University. He went on to earn a Master of Business
Administration and a Doctorate in finance from Stanford University. From 1975
through 2000, Dr. Stewart served as a professor of finance at the University of
Utah.
PORTFOLIO MANAGERS
ROGER D. EDGLEY, CFA joined the Advisor in 2002. He has 12 years of
international experience focused on investing in growing small and mid-size
companies using a process of bottom-up, fundamental analysis similar to the
style employed by the Advisor. Mr. Edgley is a native of the United Kingdom.
Prior to joining the Advisor, Mr. Edgley was a principal, director of
international research and portfolio manager for Liberty Wanger Asset Management
in Chicago, which manages the Acorn Funds. He was a co-manager of the Acorn
Foreign Forty Fund. Liberty Financial acquired Wanger Asset Management in 2000.
Mr. Edgley joined Wanger Asset Management as an equities analyst in 1994 to
cover the firm's Asia (ex-Japan) portfolio that included the markets of Hong
Kong, Singapore, Malaysia, Taiwan, Indonesia, Thailand and Korea. Prior to this,
he was a financial analyst based in Hong Kong.
Mr. Edgley is a Chartered Financial Analyst. He earned a Bachelor of Science
with honors in psychology from the University of Hertfordshire, a Master of Arts
in philosophy from the University of Sussex and a Master of Science in social
psychology with statistics from the London School of Economics.
JEFF CARDON, CFA is Vice President of Wasatch Funds and President, Treasurer and
a Director of the Advisor. He is the portfolio manager of the Wasatch Small Cap
Growth Fund. Mr. Cardon joined the Advisor in 1980. He is a Chartered Financial
Analyst and holds a Bachelor of Science degree in finance from the University of
Utah.
KAREY BARKER, CFA is a Vice President and Director of the Advisor. In addition,
she is a portfolio manager of the Wasatch Ultra Growth Fund. Ms. Barker joined
the Advisor in 1989. She is a Chartered Financial Analyst and holds a Bachelor
of Science degree in finance and a Bachelor of Arts degree in French from the
University of Utah.
ROBERT GARDINER, CFA is a Vice President and Director of the Advisor. In
addition, he is a
portfolio manager of the Wasatch Micro Cap and Wasatch Micro Cap Value Funds.
Mr. Gardiner joined the Advisor in 1987. He is a Chartered Financial Analyst.
Mr. Gardiner is a graduate of the University of Utah where he earned a Bachelor
of Arts degree in physics with a minor in French and a Bachelor of Science
degree in mathematics with a minor in chemistry.
CHRISTOPHER D. BOWEN is a portfolio manager of the Wasatch Heritage Growth Fund.
He joined the Advisor in 2001. Prior to joining the Advisor, Mr. Bowen earned a
Master in Business Administration from the University of Maryland. From 1996 to
1999, he worked in Washington, D.C. as an analyst with the Financial
Institutions Regulatory Group of the law firm Skadden, Arps, Slate, Meagher &
Flom LLP. He received a Bachelor of Arts degree in economics from St. Mary's
College of Maryland where he graduated Summa Cum Laude.
BRIAN BYTHROW, CFA is a portfolio manager of the Wasatch Micro Cap Value Fund.
He joined the Advisor in 2003. Since 1998 and prior to joining the Advisor, Mr.
Bythrow was the portfolio manager for the Monogram Special Equity Fund. Mr.
Bythrow is a Chartered Financial Analyst. He earned a Master of Business
Administration from California State University in Sacramento, California and a
Bachelor of Science degree in social sciences from the United States Air Force
Academy.
DANIEL CHACE, CFA is a portfolio manager of the Wasatch Micro Cap Fund. He
joined the Advisor in 2002. Prior to joining the Advisor, Mr. Chace earned a
Master in Business Administration from Harvard Business School. Before entering
business school in 2000, he worked in New York City as an equities analyst
following Latin American financial institutions at J.P. Morgan Securities Inc.
From 1999 to 2000, he was lead Latin American financial institutions analyst at
SG Cowen Securities
MICHAEL W. GERDING, CFA is the portfolio manager of the Wasatch International
Growth Fund. He joined the Advisor in 2002. Prior to joining the Advisor, Mr.
Gerding was a vice president and portfolio manager with Denver Investment
Advisors (DIA). He joined DIA in 1999. Mr. Gerding was a senior vice president
and portfolio manager for Founders Asset Management in Denver. He joined
Founders in 1990. From 1985 until joining Founders, Mr. Gerding was a portfolio
manager and research analyst with NCNB Texas. He is a Chartered Financial
Analyst. Mr. Gerding earned a Bachelor of Business Administration in finance and
a Master of Business Administration from Texas Christian University.
AJAY KRISHNAN, CFA is the portfolio manager of the Wasatch Global Science &
Technology Fund and a portfolio manager of the Wasatch Ultra Growth Fund. He
joined the Advisor in 1994. He is a Chartered Financial Analyst and holds a
Master's degree in business from Utah State University and a Bachelor of Science
degree in physics with a minor in mathematics from Bombay University.
JIM LARKINS is a portfolio manager of the Wasatch Small Cap Value Fund. He
joined the Advisor in 1995. He holds a Master's degree in business and a
Bachelor of Arts degree in economics from Brigham Young University.
JOHN MALOOLY, CFA is a portfolio manager of the Wasatch Micro Cap Value Fund. He
joined the Advisor in 1997 from UMB Fund Services, Inc. (formerly Sunstone
Financial Group), the transfer agent for Wasatch Funds. Mr. Malooly is a
Chartered Financial Analyst. He holds a Bachelor of Science in Business
Administration from Marquette University.
JOHN MAZANEC is a portfolio manager of the Wasatch Small Cap Value Fund. He
joined the Advisor in 2001. Mr. Mazanec was an equity research analyst with
Huntington Partners in Chicago, Illinois from 1996 until he joined the Advisor.
He holds a Master's degree in business from Harvard University Graduate School
of Business Administration and a Bachelor of Arts degree in economics from
DePauw University.
RYAN SNOW is a portfolio manager of the Wasatch Heritage Growth Fund. He joined
the Advisor in 2000. Mr. Snow worked for Fidelity
Investments from 1999 until he joined the Advisor. He holds a Bachelor of
Science degree in finance from the University of Utah.
JB TAYLOR is a portfolio manager of the Wasatch Core Growth Fund. He joined the
Advisor in 1996. Mr. Taylor holds a Bachelor of Science degree in industrial
engineering from Stanford University.
7. SEC COMMENT: Under the section "Account Policies - Policies to Prevent Market
Timing" on page 20 of the Prospectus, please revise the section to comply with
Item 6(e) of Form N-1A. Please see SEC Release No. 33-8408.
RESPONSE: The section will be amended to read as follows:
"Short-term trading" or "market timing" involves frequent purchases
and redemptions of fund shares and may present risks for long-term
shareholders of a fund including, among other things, dilution in
the value of fund shares held by long-term shareholders,
interference in the efficient management of the fund's portfolio,
increased brokerage and administrative costs and forcing the fund to
hold excess levels of cash. Another form of market timing is called
time zone arbitrage. This occurs when shareholders of funds that
primarily invest in securities that are listed on foreign exchanges
take advantage of time zone differences between the close of foreign
markets on which the Fund's securities trade and the close of the
U.S. markets, which is when the Fund's share prices are calculated.
Wasatch Funds are intended as long-term investments. Therefore, the
Fund's Board of Directors has adopted policies and procedures
designed to prohibit short-term trading, excessive exchanges and
other market timing activities. Steps the Fund will take include
periodically reviewing individual shareholder trading activity to
identify shareholders who are making excessive transactions or
otherwise trading the Fund inappropriately. In addition, the Fund
generally charges a 2.00% redemption fee on Fund shares held two
months or less. (See "Redemption Fee" on page 22 for additional
details.) The Advisor reserves the right to revise or terminate the
exchange privilege, limit the amount of any exchange, or reject an
exchange, at any time, for any reason.
The Fund cannot always know about or reasonably detect excessive
trading by shareholders who purchase shares of the Fund through
financial intermediaries. Intermediaries generally maintain omnibus
accounts with the Fund, which do not allow access to individual
shareholders' account information. With respect to trades that occur
through omnibus accounts at intermediaries, the Fund has requested
assurance that intermediaries have policies to prevent market
timing."
8. SEC COMMENT: Under the section "Account Policies - Exchanging Shares" on page
25 of the Prospectus, the first bullet point reads "Fund shares may be exchanged
on days the New York Stock Exchange is open for business." and the second bullet
point reads "Fund shares may be exchanged for money market fund shares on days
banks are open for business."
Under the section "Account Policies - Exchanges between Wasatch Funds and the
Northern U.S. Government Money Market Fund" on page 25 of the Prospectus, the
sixth bullet point reads "Exchange requests will be effective the day the
transfer agent receives them in good order by 4:00 p.m. Eastern Time, or market
close on days the Fund's shares are priced, unless it is a bank holiday.
Requests made on
bank holidays will be processed the following business day. This applies to the
Fund being redeemed and the Fund being purchased."
Please clarify the difference between bank holidays and New York Stock Exchange
holidays and revise language as appropriate.
RESPONSE: The first bullet point under the section "Account Policies -
Exchanging Shares" on page 25 will be revised to read as follows: "Fund shares
may be exchanged for shares of other Wasatch Funds on days the New York Stock
Exchange is open for business."
The second bullet point will be revised to read as follows: "Fund shares may be
exchanged for money market fund shares on days the New York Stock Exchange is
open for business, unless it is a bank holiday. Bank holidays include Columbus
Day and Veteran's Day. Bank holiday schedules are subject to change without
notice."
Under the section "Account Policies - Exchanges between Wasatch Funds and the
Northern U.S. Government Money Market Fund" on page 25 of the Prospectus, the
following will be added to the sixth bullet point: "Bank holidays include
Columbus Day and Veteran's Day. Bank holiday schedules are subject to change
without notice."
9. SEC COMMENT: Under the section "Investment Objectives and Strategies" in the
Statement of Additional Information, the Fund states that its investment
objective can be changed without shareholder approval. Please add this
disclosure to the Prospectus.
RESPONSE: The change will be made as requested.
Please call me at (617) 662-3968 if you have any further questions.
Very truly yours,
/s/ Julie Tedesco
- -----------------
Julie Tedesco
Vice President and Senior Counsel
cc: A. Palmer
F. Hayes