Wasatch Advisors Funds, Inc.
Annual Report
September 30, 1995
This may be used as sales literature when preceded or accompanied by a current
prospectus. The prospectus gives details about charges, investment objectives,
risks and operating policies of the Funds. Please read it carefully before
investing.
Wasatch Advisors Funds, Inc.
68 South Main Street
Salt Lake City, Utah 84101
(801) 533-0778
Letter from the Investment Advisor
September 30, 1995
Dear Shareholder:
Overview of the Year
The bull market in stocks and bonds continues. There is a good reason - the
markets have been driven by the positive news and upbeat outlook for the
economy.
Annualized
3rd ----------
Index Quarter 1 Year 5 Years
----- ------- ------ -------
S&P 500 8.0% 29.7% 17.2%
S&P Midcap 400 9.8% 20.8% 21.8%
Russell 2000 9.9% 23.4% 21.7%
Nasdaq Composite Index 11.8% 36.5% 24.8%
Lehman Bros. Gov't./Corp.
Bond Index 1.9% 14.4% 9.9%
Small companies, especially small growth companies, outperformed the S&P 500
for the quarter and Wasatch Funds fully participated. In June it would have
been hard for us to imagine that performance could get any better - but it did.
Annualized
Annualized ----------
3rd ---------- Since
Wasatch Funds Quarter 1 Year 5 Years Commencement
------------- ------ ----- ------- ------------
Aggressive Equity 12.5% 35.2% 26.3% 15.5%
Micro-Cap 25.9% - - 36.0%<F1>
Growth 11.4% 39.8% 21.3% 13.3%
Mid-Cap 17.9% 69.2% - 22.1%
Income 1.2% 10.5% 8.4% 8.2%
<F1>Cumulative total return since June 19, 1995 (Commencement)
As we review these numbers, we are gratified by the performance of the Wasatch
Funds and we remain optimistic about the future. However, many of our
shareholders are new to our funds and we feel compelled to issue the usual, but
ever-so-important caveats. Markets don't move straight up forever, and they
don't move smoothly. We recognize that someday there will be a correction. The
problem is that it is difficult, if not impossible, to say when, or how big,
the correction will be. Trying to time the market is futile and most often
counterproductive.
Our time-proven strategy, therefore, is to stay the course. Instead of timing
the market, we actively seek out the best companies we can find, we are careful
to pay a reasonable price, and we let the market take care of itself. We do
not expect to raise cash in anticipation of market moves. Neither will we
compromise the quality of the companies we invest in while searching for
bargain prices. We will stay with our strategy of capturing the earnings
growth provided by the high quality companies Wasatch defines as "America's
Best Growth Companies" (ABGCs).<F2> We are not concerned by the knowledge
that we will participate when the inevitable market correction occurs, because
after past corrections when the dust settles, and the market recovers, our
strategy of choosing ABGCs has allowed us to weather the storm. Our emphatic
advice is to develop your long-term asset allocation and stay the course.
<F2>These are companies we believe possess an identifiable, sustainable
competitive advantage, are underfollowed, undervalued, well-managed, and have
sufficient "headroom" in their markets to double their size in five years.
WASATCH AGGRESSIVE EQUITY FUND
Annual Review
Note: Wasatch Aggressive Equity Fund closed to new investors on July 15,
1995.
While high technology companies and their superior performance have been
frequently reported in the news this past year, Wasatch value-added performance
came from a variety of sources reflecting our bottom-up style of selecting high
quality companies. Surprisingly, most of our performance did not come from
stocks in the technology sector.
Our philosophy states that if we can capture consistent earnings growth, long-
run performance will take care of itself. Earnings growth in your portfolio
remains vigorous, with our captured earnings growth rate remaining at the top
of our long-term experience range at over 25% in the last year. There were few
disappointments in this quarter's earnings announcements and this, more than
any other factor, accounts for the quarter's superior performance.
Outlook
It is always wise to talk about a correction and be aware that someday one
will come. There is abundant reason for optimism for the economy, the market
and for small stocks in particular. We often speak of the economy as moving
safely down the economic highway's center lane. It continues to do so. Its
growth slowed earlier this year, but did not stop, and we believe it should
provide faster growth into 1996. Earnings for the S&P 500 are forecast by
most economists to continue double digit rates into 1996. Inflation appears
to remain in check. Bonds have rallied and long-term yields are once again
in a 6.5% to 7.0% range. Even the dollar has rallied, yet it has been so
weak in the last two years that U.S. costs remain 25% lower than Japan's,
providing a continued competitive boost to U.S. manufacturers.
<TABLE>
Aggressive Equity Fund
<CAPTION>
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87 12/6/86
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wasatch Aggressive
Equity Fund $35,615 $26,345 $24,655 $18,165 $18,593 $11,063 $12,365 $10,211 $11,760 $10,000
S&P 500 Stock Index $31,010 $23,901 $23,051 $20,399 $18,369 $14,005 $15,431 $11,602 $13,238 $10,000
Nasdaq Composite Index $29,022 $21,259 $21,214 $16,221 $14,653 $9,581 $13,152 $10,783 $12,356 $10,000
<FN>
AVERAGE ANNUAL TOTAL RETURN
1 Year 35.2%
5 Year 26.3%
Since Commencement 15.5%
The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance.
The Nasdaq Composite Index is a market capitalization price only index that
tracks the performance of domestic common stocks traded on the regular Nasdaq
market as well as National Market System-traded foreign common stocks and ADRs.
This chart assumes an initial gross investment of $10,000 made on 12/6/86
(commencement). Returns shown include the reinvestment of all dividends.
Past performance is not predictive of future performance. Investment return
and principal value will fluctuate, so that your shares, when redeemed, may be
worth more or less than the original cost.
</TABLE>
Stock prices are up, but earnings are up more. As a result, valuations are
not excessive. The price-to-earnings (P/E) ratio for the S&P 500 has fallen
from 25 times in 1992 - 1993 to around 15 now. We believe earnings growth for
the S&P 500 will slow, particularly for cyclical companies. This is where high
quality small growth companies can really shine. When the entire economy is
growing fast, as it has recently, steady growth companies get lost in the
commotion. As the economy slows, quality company performance stands out and
receives the market's limelight. We believe this is why small stocks have
begun to outperform large stocks again and why they will continue to do so
for several years.
FIVE LARGEST STOCK HOLDINGS - As of September 30, 1995
Company Industry % of Net Assets
------- -------- ---------------
Century Telephone Enterprises Telecommunications 4.9%
National Health Investors, Inc. REIT Real Estate 4.1%
Heilig-Meyers Co. Retail 4.0%
Madge, N.V. Communications Products 3.9%
United States Cellular Corp. Telecommunications 3.7%
WASATCH MICRO-CAP FUND
Review of the Year Since Commencement
The Wasatch Micro-Cap Fund opened to new investors on June 19, 1995. We're
pleased to report that the Fund got off to the best start of any fund in our
history, up 25.9% in the quarter and 36% since inception. According to Lipper
Analytical Services, based on total return, this was the second best performing
stock fund out of the 3,167 stock funds tracked by Lipper for the quarter ended
September 30, 1995. We're especially pleased with the performance given it was
not overweighted in technology (current technology bet is roughly 20%) which
has continued to be a hot part of the market. A favorable small- and micro-cap
market as we got into the second half of the year and the advantage of having a
small, fresh portfolio certainly contributed to the performance. We feel a
more important factor was that, as a general rule, our companies reported
higher than expected earnings growth during the quarter. We believe that by
staying with our investment strategy of finding companies with the potential
to mature into ABGCs we will be in a favorable position to capture future
earnings growth. In addition, many of our undiscovered names picked up
additional Wall Street coverage during the quarter and as a result we've
seen an expansion in the P/E of our portfolio as a whole.
Micro-Cap Fund
9/30/95 6/19/95
-------- --------
Wasatch Micro-Cap Fund $13,600 $10,000
Russell 2000 Index $11,042 $10,000
AVERAGE ANNUAL TOTAL RETURN
Cumulative Total Return 36.0%
The Russell 2000 is an index of the smallest 2,000 companies in the Russell
3000 Index, as ranked by total market capitalization. The Russell 2000 is
widely regarded in the industry to accurately capture the universe of small-cap
stocks.
This chart assumes an initial gross investment of $10,000 made on 6/19/95
(commencement). Returns shown include the reinvestment of all dividends.
Past performance is not predictive of future performance. Investment return
and principal value will fluctuate, so that your shares, when redeemed, may be
worth more or less than the original cost.
The Fund was created in an effort to take advantage of an attractive market
sector that we, as a Fund Family, were not fully exploiting. While micro-cap
stocks have been a subsegment of our small-cap product for the 20 years we have
been managing money, we've never had a product that focused exclusively on this
sector. As a result, we feel we have not fully tapped the potential of this
sector of the market. With a large portion of the 10,000 publicly traded
companies being micro-cap and with a continual flow of initial public offerings
in micro-cap range, there is a huge universe of companies to pick and choose
from. Many of these companies are suited to the "Wasatch style" in that they
are underfollowed by Wall Street yet growing at rates in excess of 15%
annually. The objective of the Fund is to find very small companies before
Wall Street does that can grow into ABGCs. At some point these companies
can become candidates for the portfolios of other Wasatch Funds. We feel
opening a Micro-Cap Fund is not only an attractive product but beneficial
to our entire Fund Family. The Fund will close to new investors before it
reaches $100 million in assets.
Outlook
We're obviously delighted with the Micro-Cap Fund's strong start but our
focus is far from that of a single quarter. The Fund's portfolio is being
managed in the same style as the Aggressive Equity Fund. The Fund contains a
blend of stable core stocks, mixed with more aggressive momentum stocks. It is
also committed to the bottom-up style and therefore precludes itself from
significant quarterly swings in strategy. Like the Aggressive Equity Fund, we
seek companies with strong growth prospects based on a sustainable competitive
advantage and strong market growth. We attempt to buy them at attractive
valuations which to us means buying at a P/E at or below its projected five
year growth rate. The only difference from the Aggressive Equity Fund
strategy is in terms of the size and maturity of the companies in the
portfolio. The Micro-Cap Fund currently has approximately $120 million
median market cap for the stocks in its portfolio while the Aggressive
Equity Fund's median is approximately $250 million. Our target for the
Micro-Cap Fund is under $100 million median market cap. We expect to find
companies as low as $10 million market cap. Many companies this small won't
be very mature and will have less proven managements and therefore will
carry somewhat greater risk. The advantage is that they have
the potential to grow at a faster rate. With such a large universe to choose
from we are optimistic that there are many undiscovered opportunities.
We believe our Micro-Cap Fund strategy is fairly unique in that it is squarely
focused on growth and a micro-cap company's ability to grow and become many
times its size. This is different from the strategy of many micro-cap funds
which, from our vantage point, focus on value investing and finding cheap stocks
that may be beaten down because of poor fundamental performance.
FIVE LARGEST STOCK HOLDINGS - As of September 30, 1995
Company Industry % of Net Assets
------- -------- ---------------
National Dentex Corp. Business Services 5.8%
Sunstone Hotel Investors, Inc. REIT Real Estate 4.8%
Nature's Sunshine Products, Inc. Health Care Products 4.7%
Imnet Systems, Inc. Health Care Services 4.0%
Duracraft Corp. Personal Services 3.8%
WASATCH GROWTH FUND
Annual Review
The Wasatch Growth Fund had a strong third quarter. In fact, the third
quarter of 1995 looked very much like the past year. The Fund did better than
the average growth fund and about the same as the Nasdaq Composite Index.
Because the Nasdaq Composite Index has a heavy weighting in technology stocks,
the Composite has been a tough benchmark to beat this year. This is especially
true for the Growth Fund given the Fund's minuscule exposure to technology
stocks.
Outlook
The Growth Fund follows a time-tested strategy of investing in high quality
growth stocks. We focus our investments on companies that are positioned to
generate a stable and growing stream of earnings. We are optimistic that by
staying with our long-term investment strategy, the Growth Fund is capable of
capturing earnings growth that could reward investors over the long-run.
Fundamentally, the Growth Fund looks well-positioned today. To us this is a
comforting feeling given that many market commentators are predicting a bear
market on the horizon. The average stock in the Growth Fund carries a P/E of 22
times and is growing earnings at 24%. In other words, the securities held by
the Fund are not expensive and earnings growth is excellent.
<TABLE>
Growth Fund
<CAPTION>
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87 12/6/86
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wasatch Growth Fund $30,167 $21,584 $20,804 $16,836 $17,466 $11,498 $12,080 $9,934 $11,470 $10,000
S&P 500 Stock Index $31,010 $23,901 $23,051 $20,399 $18,369 $14,005 $15,431 $11,602 $13,238 $10,000
Nasdaq Composite Index $29,022 $21,259 $21,214 $16,221 $14,653 $9,581 $13,152 $10,783 $12,356 $10,000
<FN>
AVERAGE ANNUAL TOTAL RETURN
1 Year 5 Year Since Commencement
39.8% 21.3% 13.3%
The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance.
The Nasdaq Composite Index is a market capitalization price only index that
tracks the performance of domestic common stocks traded on the regular Nasdaq
market as well as National Market System-traded foreign common stocks and ADRs.
This chart assumes an initial gross investment of $10,000 made on 12/6/86
(commencement). Returns shown include the reinvestment of all dividends.
Past performance is not predictive of future performance. Investment return
and principal value will fluctuate, so that your shares, when redeemed, may be
worth more or less than the original cost.
</TABLE>
During the quarter, the Fund added four new stocks to the portfolio. Corvel
Corp. (CRVL) is an innovator in the important business of containing medical
costs. Friedmans, Inc. (FRDM) is a fast growing retailer of fine jewelry.
Retail stocks have been weak in this market creating the opportunity to buy
companies at bargain prices. Techne Corp. (TECH) manufactures disposable
biotechnology research products used by biomedical researchers. We see this as
a way to invest in the biotechnology industry without taking on the high degree
of risk associated with traditional biotechnology stocks. Finally, we initiated
a position in Sunstone Hotel Investors, Inc. (SSHI). Sunstone, a Real Estate
Investment Trust (REIT), is a conservative play on the improving fundamentals of
the hotel industry. We think the dividend yield of 9.5% combined with a Wasatch
forecast of 12% earnings growth could result in a 20% long-run annual
investment return.
The average P/E of these new names is 20 times, and the expected growth rate
is 25%. In other words, we are still able to find exciting new names at
reasonable prices to complement our existing holdings.
FIVE LARGEST STOCK HOLDINGS - As of September 30, 1995
Company Industry % of Net Assets
------- -------- ---------------
National Health Investors, Inc. REIT Real Estate 5.8%
Century Telephone Enterprises Telecommunications 5.2%
Oasis Residential, Inc. REIT Real Estate 4.4%
Kent Electronics Corp. Business Services 3.9%
Mercury Finance Co. Financial Services 3.4%
WASATCH MID-CAP FUND
Annual Review
The Wasatch Mid-Cap Fund added 17.9% to its performance in the third quarter.
In the October 5, 1995 issue of The Wall Street Journal, the Wasatch Mid-Cap
Fund was ranked as the #1 Mid-Cap Fund by Lipper Analytical Services for its
performance during the 12 months ended September 30, 1995.
The Mid-Cap Fund focuses on companies with extremely high growth rates. It is
generally overweighted in potential high growth sectors of the market such as
computer software and semiconductors. This aggressive style can yield high
rewards, particularly in strong markets like the one we have experienced in the
first three quarters of 1995. However, we want to remind shareholders that this
represents a high level of risk and is only appropriate for shareholders with
longer time horizons and a willingness to accept higher volatility.
The strong return during the third quarter was once again led by the Fund's
heavy weighting in computer-related stocks. However, we believe the biggest
contributor to our performance was the exceptional strength of the fundamental
earnings of the companies in the Mid-Cap portfolio. As discussed in previous
write-ups, we believe that earnings growth is the most important driver of stock
performance. On a combined portfolio basis, the companies in the Mid-Cap Fund
reported quarterly earnings in excess of 50% over the last year during the third
quarter. This far exceeded our target of 25% captured earnings growth.
Outlook
As we move into the final quarter of the calendar year, the Mid-Cap Fund will
maintain its aggressive growth strategy. The Fund will continue to pursue its
main goal of capturing a minimum 25% earnings growth rate for the portfolio at a
"fair" price which means a price-to-earnings multiple no higher than the current
portfolio growth rate.
In order to achieve this lofty level of fundamental growth, we will continue
to be heavily weighted toward a few industries that have the highest potential
growth rates. While this represents a sector risk, the Fund is a non-
diversified fund and will continue to pursue growth over diversification. One
area of heavy exposure is in technology stocks. Despite the strong move year-
to-date in technology stocks, we feel that the companies in our portfolio
represent fair valuations. Strong earnings growth, combined with attractive
valuations, cause Wasatch analysts to be enthusiastic about the Mid-Cap Fund's
future performance potential.
<TABLE>
Mid-Cap Fund
<CAPTION>
9/30/95 9/30/94 9/30/93 9/30/92 8/16/92
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Wasatch Mid-Cap Fund $18,653 $11,021 $10,511 $9,930 $10,000
S&P 500 Stock Index $15,066 $11,612 $11,199 $9,910 $10,000
S&P Midcap 400 Index $15,850 $12,603 $12,404 $10,000 $10,000
<FN>
AVERAGE ANNUAL TOTAL RETURN
1 Year Since Commencement
69.2% 22.1%
The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance.
The S&P Midcap 400 Index is a capitalization weighted index that measures the
performance of the mid-range sector of the U.S. stock market where the median
market capitalization is approximately $700 million.
This chart assumes an initial gross investment of $10,000 made on 8/16/92
(commencement). Returns shown include the reinvestment of all dividends.
Past performance is not predictive of future performance. Investment return
and principal value will fluctuate, so that your shares, when redeemed, may be
worth more or less than the original cost.
</TABLE>
Despite a large number of new names in the portfolio during the last quarter,
most of our ten largest positions remain unchanged. We have added several
medical companies as we expand our exposure outside the technology arena. We
continue to look for high growth medical products and service companies to add
to the portfolio. We believe this area will show renewed growth as the
providers and decision makers come out of a period of uncertainty surrounding
health care reform. Another positive sign is that the FDA appears to be
accelerating new product approvals. We have also eliminated or
lowered several positions in several industries. We may sell stocks for several
reasons, namely: 1) appreciation and excessive valuation; 2) inability to meet
growth expectation; and 3) replacement. (We like to keep the number of names in
the portfolio low and will replace a stock if we find a "better" idea.)
FIVE LARGEST STOCK HOLDINGS - As of September 30, 1995
Company Industry % of Net Assets
----------- -------- ---------------
Hummingbird
Communications Ltd. Communications Products 7.7%
Madge, N.V. Communications Products 6.9%
Express Scripts, Inc., Class A Health Care Services 5.9%
Duracraft Corp. Personal Products 4.7%
WorldCom, Inc. Telecommunications 4.7%
WASATCH INCOME FUND
Annual Review
Our bond fund strategy for most of the year has been to hold a relatively
short maturity position. We continue to believe that the economy will not
readily slip into a recession and that the bond market rally earlier this year
stemmed from an overly pessimistic view of the status of the economy. We feel
the weakened trend in bond prices during the recent quarter justifies the
strategy we initiated earlier in the year.
Outlook
We believe that bond prices don't fully reflect potential economic strength
and possible resultant inflationary pressures. Accordingly, we anticipate
maintaining our conservative portfolio.
<TABLE>
Income Fund
<CAPTION>
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87 12/6/86
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wasatch Income Fund $19,970 $18,078 $17,810 $17,158 $15,823 $13,325 $12,707 $11,295 $10,190 $10,000
Lehman Bros. Gov't./
Corp. Bond Index $20,819 $18,207 $18,994 $17,053 $15,061 $12,999 $12,177 $10,939 $9,700 $10,000
<FN>
AVERAGE ANNUAL TOTAL RETURN
1 Year 5 Year Since Commencement
10.5% 8.4% 8.2%
The Lehman Brothers Government Corporate Bond Index is a market value weighted
index measuring both principal price changes of, and income provided by, the
underlying universe of securities that comprise the Index. Securities included
in the Index must meet the following criteria: fixed as opposed to variable
rate; not less than one year to maturity; minimum outstanding principal value
of $50 million; and minimum quality rating of BBB by Standard & Poor's or Baa
by Moody's.
This chart assumes an initial gross investment of $10,000 made on 12/6/86
(commencement). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be
worth more or less than the original cost.
</TABLE>
WRAPPING UP
Wasatch Advisors Funds is committed to helping our shareholders achieve their
financial goals. To this end, we believe it is crucial to have a disciplined,
long-term investment strategy. Please remember that the bull market we have
been experiencing will not go on forever. Sooner or later there will be a
correction. Our 20 years of experience, through up and down markets, has shown
that the best way to achieve your long-term financial goals is to stay with your
investment program.
Thank you for your confidence in the Wasatch Funds Family. We look forward to
continuing our relationship and will do whatever we can to assist you in
reaching your investment objectives. If you have any questions, or if we can
provide you with any other services, please give us a call at 1-800-551-1700.
Sincerely,
/s/ Samuel S. Stewart, Jr.
Samuel S. Stewart, Jr.
Chairman of the Board
Aggressive Equity Fund Schedule of Investments
SEPTEMBER 30, 1995
Number
of Shares Value
-------- ------
COMMON STOCKS 96.92%
Business Products 6.44%
157,750 American Business Information, Inc.<F3> $ 3,194,438
316,812 BMC West Corp. <F3> 4,435,368
244,600 International Imaging Materials, Inc. <F3> 5,931,550
565,625 Merfin Hygienic Products Ltd. <F3> 2,634,441
157,120 Mity-Lite, Inc. <F3> 1,355,160
59,500 Wabash National Corp. 2,104,812
----------
19,655,769
----------
Business Services 3.38%
205,625 Barrett Business Services, Inc. <F3> 3,135,780
178,200 National Dentex Corp. <F3> 3,118,500
146,200 RTW, Inc. <F3> 4,057,050
----------
10,311,330
----------
Communications Products 8.17%
278,500 Hummingbird Communications Ltd. <F3> 10,374,125
374,900 Madge, N.V. <F3> 11,996,800
46,750 Stratacom, Inc. <F3> 2,582,938
----------
24,953,863
----------
Communications Services 2.24%
115,650 CMG Information Services, Inc. <F3> 3,296,025
98,700 Data Transmission Network Corp. <F3> 3,528,525
----------
6,824,550
----------
Computer Software 7.00%
181,500 Aspen Technologies, Inc. <F3> 5,445,000
391,100 Phoenix Technologies Ltd. <F3> 4,937,637
71,500 Softkey International, Inc. <F3> 3,163,875
84,950 Synopsys, Inc. <F3> 2,612,213
205,500 Touchstone Software Corp. <F3> 2,209,125
77,500 Wonderware Corp. <F3> 3,012,813
----------
21,380,663
----------
Computer Systems & Components 2.14%
100,800 Active Voice Corp. <F3> 2,860,200
70,950 Digitran Systems, Inc. <F3> 1
40,000 Drexler Technology Corp. <F3> <F4> 391,000
106,485 Pinnacle Systems, Inc. <F3> 3,274,413
----------
6,525,614
----------
Electronics 1.41%
183,000 Cincinnati Microwave, Inc. <F3> $ 2,767,875
35,000 Kent Electronics Corp. <F3> 1,535,625
-----------
4,303,500
-----------
Financial Services 2.93%
128,862 Washington Federal, Inc. 3,060,472
414,250 World Acceptance Corp. <F3> 5,903,062
-----------
8,963,534
-----------
Health Care Products 6.79%
203,150 Bio-Plexus, Inc. <F3> 2,488,587
45,600 Corvel Corp. <F3> 1,436,400
188,375 Epitope, Inc. <F3> 2,637,250
562,416 Interpore International<F3> 2,741,778
398,104 Nature's Sunshine Products, Inc. 8,957,340
130,500 Techne Corp. <F3> 2,463,188
-----------
20,724,543
-----------
Health Care Services 6.48%
247,575 Express Scripts, Inc., Class A<F3> 10,893,300
177,425 Phamis, Inc. <F3> 4,857,009
203,575 REN Corp. - USA<F3> 4,046,053
-----------
19,796,362
-----------
Personal Products 4.24%
238,600 Duracraft Corp. <F3> 10,766,825
121,162 Varsity Spirit Corp. 2,180,916
-----------
12,947,741
-----------
Personal Services 7.16%
212,350 Barefoot, Inc. 2,787,094
492,200 Children's Discovery Centers of America, Inc. <F3> 5,783,350
118,300 Equity Corp. International<F3> 2,927,925
251,275 Loewen Group, Inc. 10,365,094
-----------
21,863,463
-----------
Real Estate 5.11%
410,100 National Health Investors, Inc. REIT 12,405,525
330,550 Sunstone Hotel Investors, Inc. REIT 3,181,544
-----------
15,587,069
-----------
Retail 12.97%
142,350 Buckle, Inc. (The) <F3> $ 2,455,538
137,800 Doubletree Corp. <F3> 3,066,050
153,036 Eateries, Inc. <F3> 439,979
182,100 Friedman's, Inc. <F3> 3,960,675
521,390 Heilig-Meyers Co. 12,122,318
82,665 Medicine Shoppe International, Inc. 3,657,926
280,850 O'Reilly Automotive, Inc. <F3> 8,495,712
110,775 St. John Knits, Inc. 5,400,281
-----------
39,598,479
-----------
Semiconductors 3.24%
63,300 Integrated Process Equipment Corp. <F3> 2,520,131
181,500 Lattice Semiconductor Corp. <F3> 7,373,438
-----------
9,893,569
-----------
Telecommunications 12.66%
487,389 Century Telephone Enterprises 14,804,456
304,150 Intercel, Inc. <F3> 6,235,075
307,390 United States Cellular Corp. <F3> 11,219,735
198,650 WorldCom, Inc. <F3> 6,381,631
-----------
38,640,897
-----------
Transportation 2.66%
107,250 Arrow Transportation Co. <F3> 268,125
247,650 Expeditors International of Washington, Inc. 6,686,550
72,000 M.S. Carriers, Inc. <F3> 1,152,000
-----------
8,106,675
-----------
Other 1.90%
171,450 FLIR Systems, Inc. <F3> 2,100,263
89,550 Interline Resources Corp. <F3> 402,975
101,150 OEA, Inc. 3,312,662
-----------
5,815,900
-----------
Total Common Stocks
(cost $238,193,468) 295,893,521
-----------
PREFERRED STOCK 0.00%
12,500 Digitran Systems, Inc. <F3> $ 1
----
Total Preferred Stock
(cost $95,729) 1
----
Principal
Amount
- ------------
DEMAND NOTES 2.18%
(variable rate)
$1,025,321 Lilly (Eli) & Co. 1,025,321
5,000 Pitney-Bowes, Inc. 5,000
684,000 Sara Lee Corp. 684,000
150,000 Southwestern Bell Telephone Co. 150,000
4,782,187 Warner-Lambert Co. 4,782,187
------------
Total Demand Notes
(cost $6,646,508) 6,646,508
------------
Total Investments 99.10%
(cost $244,935,705) 302,540,030
Cash and Other Assets,
less Liabilities 0.90% 2,770,999
------------
NET ASSETS 100.00% $305,311,029
============
<F3> Non-income Producing
<F4>Restricted security - See Note 7.
See notes to financial statements.
Micro-Cap Fund Schedule of Investments
SEPTEMBER 30, 1995
Number
of Shares Value
---------- -----
COMMON STOCKS 81.96%
Business Products 8.08%
27,600 BMC West Corp.<F5> $ 386,400
28,600 International Imaging Materials, Inc. <F5> 693,550
103,000 Merfin Hygienic Products Ltd. <F5> 479,730
41,895 Mity-Lite, Inc. <F5> 361,344
7,500 Thompson PBE, Inc. <F5> 128,438
----------
2,049,462
----------
Business Services 11.00%
24,675 Barrett Business Services, Inc. <F5> 376,294
83,950 National Dentex Corp. <F5> 1,469,125
11,500 On Assignment, Inc. <F5> 291,813
23,600 RTW, Inc. <F5> 654,900
----------
2,792,132
----------
Communications Products 2.80%
19,100 Hummingbird Communications Ltd. <F5> 711,475
----------
Communications Services 3.14%
1,950 CMG Information Services, Inc. <F5> 55,575
20,700 Data Transmission Network Corp. <F5> 740,025
----------
795,600
----------
Computer Software 6.99%
7,900 Aspen Technologies, Inc. <F5> 237,000
1,500 Desktop Data, Inc. <F5> 52,125
2,000 Discreet Logic, Inc. <F5> 110,000
500 Legato Systems, Inc. <F5> 13,250
60,000 Phoenix Technologies Ltd. <F5> 757,500
5,000 Premenos Technology Corp. <F5> 162,500
40,900 Touchstone Software Corp. <F5> 439,675
----------
1,772,050
----------
Computer Systems & Components 3.43%
17,750 Active Voice Corp. <F5> 503,656
8,400 Adaptive Solutions, Inc. <F5> 59,850
10,000 Pinnacle Systems, Inc. <F5> 307,500
----------
871,006
----------
Electronics 2.21%
16,500 Cyberoptics Corp. <F5> $ 561,000
----------
Financial Services 0.30%
5,325 World Acceptance Corp. <F5> 75,881
----------
Health Care Equipment 2.12%
16,000 Corvel Corp. <F5> 504,000
5,000 Infrasonics, Inc. <F5> 34,688
----------
538,688
----------
Health Care Products 8.65%
13,000 Bio-Plexus, Inc. <F5> 159,250
13,500 Interpore International <F5> 65,813
52,760 Nature's Sunshine Products, Inc. 1,187,100
41,500 Techne Corp. <F5> 783,312
----------
2,195,475
----------
Health Care Services 5.85%
39,000 Imnet Systems, Inc. <F5> 1,004,250
17,500 Phamis, Inc. <F5> 479,062
----------
1,483,312
----------
Personal Products 6.35%
21,200 Duracraft Corp. <F5> 956,650
36,387 Varsity Spirit Corp. 654,966
----------
1,611,616
----------
Personal Services 6.89%
3,500 Advantage Cos., Inc. <F5> 60,375
20,000 Ambassadors International<F5> 225,000
26,900 Children's Discovery Centers of America, Inc. <F5> 316,075
30,100 Equity Corp. International<F5> 744,975
18,200 Seattle Filmworks, Inc. <F5> 400,400
----------
1,746,825
----------
Real Estate 4.76%
125,400 Sunstone Hotel Investors, Inc. REIT 1,206,975
----------
Retail 7.50%
14,000 Buckle, Inc. (The) <F5> 241,500
5,000 Eateries, Inc. <F5> 14,375
28,700 Friedman's, Inc. <F5> 624,225
19,900 O'Reilly Automotive, Inc. <F5> $ 601,975
23,000 Quality Dining, Inc. <F5> 419,750
----------
1,901,825
----------
Semiconductors 0.22%
2,000 Ontrak Systems, Inc. <F5> 55,250
----------
Telecommunications 0.89%
11,000 Intercel, Inc. <F5> 225,500
----------
Other 0.78%
16,100 FLIR Systems, Inc. <F5> 197,225
----------
Total Common Stocks
(cost $19,083,441) 20,791,297
----------
Principal
Amount
- -------------
DEMAND NOTES 25.18%
(variable rate)
$ 537,000 General Mills, Inc. 537,000
715,095 Lilly (Eli) & Co. 715,095
1,127,259 Pitney-Bowes, Inc. 1,127,259
1,134,790 Sara Lee Corp. 1,134,790
1,064,618 Southwestern Bell Telephone Co. 1,064,618
986,305 Warner-Lambert Co. 986,305
821,778 Wisconsin Electric Power Co. 821,778
----------
Total Demand Notes
(cost $6,386,845) 6,386,845
----------
Total Investments 107.14%
(cost $25,470,286) $27,178,142
Liabilities, less
Cash and Other Assets (7.14)% (1,810,001)
------------
NET ASSETS 100.00% $25,368,141
============
<F5> Non-income Producing
See notes to financial statements.
Growth Fund Schedule of Investments
SEPTEMBER 30, 1995
Number
of Shares Value
- ------------- --------
COMMON STOCKS 86.04%
Business Products 6.85%
80,875 American Business Information, Inc. <F6> $1,637,718
80,600 BMC West Corp. <F6> 1,128,400
37,100 International Imaging Materials, Inc.<F6> 899,675
----------
3,665,793
----------
Business Services 8.04%
31,900 Corvel Corp. <F6> 1,004,850
47,625 Kent Electronics Corp. <F6> 2,089,547
69,200 National Dentex Corp. <F6> 1,211,000
----------
4,305,397
----------
Computer Software 1.00%
17,800 Aspen Technologies, Inc. <F6> 534,000
----------
Computer Systems & Components 0.00%
18,100 Digitran Systems, Inc. <F6> 1
----------
Financial Services 8.36%
5,000 Franklin Savings Assn. <F6> 1
19,825 Green Tree Financial Corp. 1,209,325
75,125 Mercury Finance Co. 1,831,170
21,990 Washington Federal, Inc. 522,262
63,900 World Acceptance Corp. <F6> 910,575
----------
4,473,333
----------
Health Care Equipment 0.55%
12,850 Haemonetics Corp. <F6> 295,550
----------
Health Care Products 6.25%
84,180 Nature's Sunshine Products, Inc. 1,894,050
77,000 Techne Corp. <F6> 1,453,375
----------
3,347,425
----------
Health Care Services 2.58%
31,400 Express Scripts, Inc., Class A <F6> 1,381,600
----------
Personal Products 1.52%
45,300 Varsity Spirit Corp. 815,400
----------
Personal Services 10.04%
74,500 Barefoot, Inc. $ 977,812
94,500 Children's Discovery Centers of America, Inc. <F6> 1,110,375
61,200 Equity Corp. International <F6> 1,514,700
25,300 Loewen Group, Inc. 1,043,625
33,125 Seattle Filmworks, Inc. <F6> 728,750
----------
5,375,262
----------
Real Estate 13.33%
103,000 National Health Investors, Inc. REIT 3,115,750
103,700 Oasis Residential, Inc. 2,333,250
175,400 Sunstone Hotel Investors, Inc. REIT 1,688,225
----------
7,137,225
----------
Retail 15.28%
53,800 Buckle, Inc. (The) <F6> 928,050
25,300 Doubletree Corp. <F6> 562,925
63,300 Friedman's, Inc. <F6> 1,376,775
68,000 Heilig-Meyers Co. 1,581,000
28,400 Medicine Shoppe International, Inc. 1,256,700
49,850 O'Reilly Automotive, Inc. <F6> 1,507,962
19,900 St. John Knits, Inc. 970,125
----------
8,183,537
----------
Telecommunications 8.56%
92,938 Century Telephone Enterprises 2,822,977
54,700 WorldCom, Inc. <F6> 1,757,238
----------
4,580,215
----------
Transportation 3.68%
39,700 Expeditors International of Washington, Inc. 1,071,900
56,000 M.S. Carriers, Inc. <F6> 896,000
----------
1,967,900
----------
Total Common Stocks
(cost $39,952,902) 46,062,638
----------
WARRANTS 0.00%
1 Cherokee, Inc., Series C $ 1
-----
Total Warrants
(cost $6) 1
-----
Principal
Amount
- ------------
DEMAND NOTES 15.89%
(variable rate)
$ 930,814 General Mills, Inc. 930,814
1,576,025 Pitney-Bowes, Inc. 1,576,025
2,391,445 Sara Lee Corp. 2,391,445
1,831,269 Southwestern Bell Telephone Co. 1,831,269
1,774,056 Wisconsin Electric Power Co. 1,774,056
----------
Total Demand Notes
(cost $8,503,609) 8,503,609
----------
Total Investments 101.93%
(cost $48,456,517) 54,566,248
Liabilities, less
Cash and Other Assets (1.93)% (1,032,783)
------------
NET ASSETS 100.00% $53,533,465
============
<F6> Non-income Producing
See notes to financial statements.
Mid-Cap Fund Schedule of Investments
September 30, 1995
Number of
Shares Value
- --------- --------
COMMON STOCKS 86.20%
Business Products 0.92%
25,600 Wabash National Corp. $ 905,600
----------
Business Services 2.83%
7,500 Barrett Business Services, Inc. <F7> 114,375
96,300 RTW, Inc. <F7> 2,672,325
----------
2,786,700
----------
Communications Products 15.32%
204,700 Hummingbird Communications Ltd. <F7> 7,625,075
211,750 Madge, N.V. <F7> 6,776,000
12,700 Stratacom, Inc. <F7> 701,675
----------
15,102,750
----------
Computer Software 14.08%
68,100 Aspen Technologies, Inc. <F7> 2,043,000
50,600 Parametric Technology Corp. <F7> 3,111,900
300,450 Phoenix Technologies Ltd. <F7> 3,793,181
15,000 Premenos Technology Corp. <F7> 487,500
49,900 Softkey International, Inc. <F7> 2,208,075
24,200 Synopsys, Inc. <F7> 744,150
139,000 Touchstone Software Corp. <F7> 1,494,250
----------
13,882,056
----------
Computer Systems & Components 5.79%
74,600 Active Voice Corp. <F7> 2,116,775
124,500 Adaptive Solutions, Inc. <F7> 887,063
85,000 Drexler Technology Corp. <F7><F8> 830,875
61,000 Pinnacle Systems, Inc. <F7> 1,875,750
----------
5,710,463
----------
Electronics 7.07%
245,675 Cincinnati Microwave, Inc. <F7> 3,715,834
74,200 Kent Electronics Corp. <F7> 3,255,525
----------
6,971,359
----------
Health Care Products 0.75%
33,000 Nature's Sunshine Products, Inc. 742,500
----------
Health Care Services 13.42%
131,825 Express Scripts, Inc., Class A <F7> $ 5,800,300
20,000 HBO & Company 1,250,000
165,700 Imnet Systems, Inc. <F7> 4,266,775
69,800 Phamis, Inc. <F7> 1,910,775
-----------
13,227,850
-----------
Personal Products 4.72%
103,150 Duracraft Corp. <F7> 4,654,644
-----------
Personal Services 2.04%
171,600 Children's Discovery Centers of America, Inc. <F7> 2,016,300
-----------
Retail 4.26%
30,000 Doubletree Corp. <F7> 667,500
109,000 Friedman's, Inc. <F7> 2,370,750
3,000 O'Reilly Automotive, Inc. <F7> 90,750
58,500 Quality Dining, Inc. <F7> 1,067,625
-----------
4,196,625
-----------
Semiconductors 4.65%
36,500 Integrated Process Equipment Corp. <F7> 1,453,156
77,200 Lattice Semiconductor Corp. <F7> 3,136,250
-----------
4,589,406
-----------
Telecommunications 8.74%
70,200 Intercel, Inc. <F7> 1,439,100
70,100 United States Cellular Corp. <F7> 2,558,650
143,900 WorldCom, Inc. <F7> 4,622,788
-----------
8,620,538
-----------
Other 1.61%
129,900 FLIR Systems, Inc. <F7> 1,591,275
-----------
Total Common Stocks
(cost $72,972,850) 84,998,066
-----------
Principal
Amount
---------- COMMERCIAL PAPER 8.11%
$1,000,000 G.E. Capital Corp., 5.73%, 10/3/95 $ 1,000,000
1,000,000 Norwest Financial, Inc., 5.77%, 10/5/95 1,000,000
2,000,000 Norwest Financial, Inc., 5.77%, 10/12/95 2,000,000
3,000,000 Prudential Funding Corp., 5.70%, 10/3/95 3,000,000
1,000,000 Prudential Funding Corp., 5.76%, 10/4/95 1,000,000
-----------
Total Commercial Paper
(cost $8,000,000) 8,000,000
-----------
DEMAND NOTES 9.61%
(variable rate)
1,490,487 General Mills, Inc. 1,490,487
950,793 Lilly (Eli) & Co. 950,793
1,717,559 Pitney-Bowes, Inc. 1,717,559
1,907,922 Sara Lee Corp. 1,907,922
1,628,501 Southwestern Bell Telephone Co. 1,628,501
1,781,050 Wisconsin Electric Power Co. 1,781,050
----------
Total Demand Notes
(cost $9,476,313) 9,476,313
----------
Total Investments 103.92%
(cost $90,449,163) 102,474,379
Liabilities, less
Cash and Other Assets (3.92)% (3,868,902)
-----------
NET ASSETS 100.00% $98,605,477
============
<F7> Non-income Producing
<F8> Restricted security - See Note 7.
See notes to financial statements.
Income Fund Schedule of Investments
September 30, 1995
Principal Amount Value
- ---------------- -------
CORPORATE BONDS 0.65%
$ 25,000 Illinois Bell Telephone Co.,
8.50%, 4/22/26 $ 26,125
--------
Total Corporate Bonds
(cost $26,231) 26,125
--------
U.S. GOVERNMENT AGENCY 9.94%
400,000 Student Loan Marketing Assn.,
8.80%, 11/15/04 400,952
--------
Total U.S. Government Agency
(cost $400,000) 400,952
--------
U.S. GOVERNMENT OBLIGATIONS 64.17%
2,200,000 U.S. Treasury Bill,
5.57%, 2/8/96 2,156,843
350,000 U.S. Treasury Note,
9.375%, 2/15/06 432,506
---------
Total U.S. Government Obligations
(cost $2,550,973) 2,589,349
---------
DEMAND NOTES 24.53%
(variable rate)
40,000 General Mills, Inc. 40,000
142,176 Lilly (Eli) & Co. 142,176
86,460 Pitney-Bowes, Inc. 86,460
227,292 Sara Lee Corp. 227,292
194,421 Southwestern Bell Telephone Co. 194,421
123,739 Warner-Lambert Co. 123,739
175,880 Wisconsin Electric Power Co. 175,880
---------
Total Demand Notes
(cost $989,968) 989,968
---------
Total Investments 99.29%
(cost $3,967,172) $4,006,394
Cash and Other Assets,
less Liabilities 0.71% 28,829
----------
NET ASSETS 100.00% $4,035,223
==========
See notes to financial statements.
<TABLE>
Wasatch Advisors Funds, Inc.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<CAPTION>
Aggressive
Equity Micro-Cap Growth Mid-Cap Income
Fund Fund Fund Fund Fund
------------- ------------ ------------- ------------- ------------
<S> <C> <C><C> <C> <C> <C>
Assets:
Investments, at market value
Nonaffiliated issuers (cost
$230,242,019, $25,470,286,
$48,456,517,$90,449,163,
and $3,967,172, respectively) $289,541,242 $27,178,142 $54,566,248 $102,474,379 $4,006,394
Affiliated issuers (cost $14,693,686,
$0, $0, $0 and $0, respectively) 12,998,788 - - - -
Cash 328,900 - 400,000 - -
Receivable for investment
securities sold 2,414,999 - - 266,390 -
Interest and dividends receivable 289,918 21,029 101,582 38,654 22,226
Prepaid expenses 29,447 7,248 8,323 10,036 7,322
Receivable from adviser - 3,943 3,384 18,342 6,022
------------ ----------- ----------- ------------ -----------
Total Assets 305,603,294 27,210,362 55,079,537 102,807,801 4,041,964
------------ ----------- ----------- ------------ -----------
Liabilities:
Payable for securities purchased - 1,812,541 1,500,342 4,113,174 -
Accrued investment advisory fee 84,436 12,811 14,143 32,194 553
Accrued expenses 207,829 16,869 31,587 56,956 6,188
------------ ----------- ----------- ------------ -----------
Total Liabilities 292,265 1,842,221 1,546,072 4,202,324 6,741
------------ ----------- ----------- ------------ -----------
Net Assets: $305,311,029 $25,368,141 $53,533,465 $ 98,605,477 $ 4,035,223
============ =========== =========== ============ ===========
Net Assets Consist of:
Capital stock $ 12,212 $ 9,334 $ 3,352 $ 5,298 $ 384
Paid-in-capital in excess of par 246,407,438 23,651,704 46,729,891 86,322,202 3,930,190
Undistributed net investment income - - 57,262 - 151,554
Undistributed net realized gain (loss)
on investments 1,287,054 (753) 633,229 252,761 (86,127)
Net unrealized appreciation
on investment securities 57,604,325 1,707,856 6,109,731 12,025,216 39,222
------------ ----------- ----------- ------------ -----------
Net Assets $305,311,029 $25,368,141 $53,533,465 $ 98,605,477 $ 4,035,223
============ =========== =========== ============ ===========
Capital Stock, $.001 par value:
Authorized 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000
Issued and outstanding 12,212,284 9,333,798 3,351,512 5,297,597 384,158
NET ASSET VALUE, REDEMPTION
PRICE AND OFFERING PRICE
PER SHARE: $25.00 $2.72 $15.97 $18.61 $10.50
====== ===== ====== ====== ======
<FN>
See notes to financial statements.
</TABLE>
<TABLE>
Wasatch Advisors Funds, Inc.
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<CAPTION>
Aggressive
Equity Micro-Cap Growth Mid-Cap Income
Fund Fund<F9> Fund Fund Fund
------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 852,827 $ 43,923 $133,660 $193,915 $232,459
Dividends 739,138<F10> 1,995 217,185<F11> 2,897 -
--------- -------- -------- -------- --------
1,591,965 45,918 350,845 196,812 232,459
--------- -------- -------- -------- --------
Expenses:
Investment advisory fees 1,446,523 52,691 195,697 237,215 16,871
Shareholder servicing 257,546 6,749 25,567 35,184 9,753
Fund administration and
accounting fees 151,167 6,742 21,824 15,449 4,359
Federal and state registration fees 122,623 17,589 31,340 51,638 15,027
Custody fees 54,837 675 12,575 11,907 1,052
Reports to shareholders 54,112 873 6,812 6,470 1,229
Audit fees 10,430 2,992 7,762 5,371 2,268
Legal fees 10,006 295 4,232 1,367 1,011
Other 7,684 249 2,265 1,062 1,232
Directors' fees 3,755 120 799 1,026 399
Pricing 2,525 370 1,346 1,196 516
--------- ------- -------- -------- --------
Total expenses before
reimbursement 2,121,208 89,345 310,219 367,885 53,717
Reimbursement of expenses
by advisor - (23,438) (16,636) (35,750) (19,946)
---------- --------- --------- ---------- ---------
Net expenses 2,121,208 65,907 293,583 332,135 33,771
---------- --------- --------- ---------- ---------
Net Investment (Loss) Income: (529,243) (19,989) 57,262 (135,323) 198,688
---------- --------- --------- ---------- ---------
Realized and unrealized gain:
Net realized gain (loss) on investments 2,696,275 (753) 736,267 417,714 (35,783)
Change in unrealized appreciation
on investments 54,953,184 1,707,856 6,268,326 12,017,873 167,864
----------- ---------- ---------- ----------- ---------
Net gain on investments 57,649,459 1,707,103 7,004,593 12,435,587 132,081
----------- ---------- ---------- ----------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS: $57,120,216 $1,687,114 $7,061,855 $12,300,264 $330,769
=========== ========== ========== =========== ========
<FN>
<F9> Commenced operations on June 19, 1995.
<F10> Net of $2,322 in foreign withholding taxes.
<F11> Net of $265 in foreign withholding taxes.
See notes to financial statements.
</TABLE>
<TABLE>
Wasatch Advisors Funds, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Aggressive Equity Fund Micro-Cap Fund Growth Fund
Year ended Year ended June 19, 1995<F12> Year ended Year ended
Sept.30, 1995 Sept.30, 1994 to Sept.30, 1995 Sept.30, 1995 Sept.30, 1994
------------- ------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income $ (529,243) $ (235,772) $ (19,989) $ 57,262 $ (71,126)
Net realized gain (loss) on investments 2,696,275 4,156,773 (753) 736,267 2,977,656
Change in unrealized appreciation/
depreciation on investments 54,953,184 (1,534,286) 1,707,856 6,268,326 (2,699,070)
----------- ----------- ---------- ----------- -----------
Net increase in net assets resulting
from operations 57,120,216 2,386,715 1,687,114 7,061,855 207,460
----------- ----------- ---------- ----------- -----------
DIVIDENDS PAID FROM:
Net investment income - - - - -
Net realized gains (4,403,597) (1,539,930) - (2,878,781) (952,468)
----------- ----------- ---------- ----------- -----------
(4,403,597) (1,539,930) - (2,878,781) (952,468)
----------- ----------- ---------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 246,050,188 25,582,930 24,358,929 40,273,774 1,301,424
Shares issued to holders in
reinvestment of dividends 4,262,844 1,502,281 - 2,805,588 947,918
------------ ----------- ---------- ----------- ------------
250,313,032 27,085,211 24,358,929 43,079,362 2,249,342
Shares redeemed (44,087,768) (4,856,212) (677,902) (4,947,865) (7,904,118)
------------ ----------- ----------- ----------- ------------
Net increase (decrease) 206,225,264 22,228,999 23,681,027 38,131,497 (5,654,776)
------------ ----------- ----------- ----------- ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS: 258,941,883 23,075,784 25,368,141 42,314,571 (6,399,784)
NET ASSETS:
Beginning of period 46,369,146 23,293,362 - 11,218,894 17,618,678
------------ ----------- ----------- ------------ ------------
End of period $305,311,029 $46,369,146 $25,368,141 $53,533,465 $11,218,894
============ =========== =========== ============ ============
Undistributed net investment
income included in net assets
at end of period - - - $ 57,262 -
============ =========== =========== =========== ============
<FN>
<F12> Commencement of operations.
See notes to financial statements.
</TABLE>
<TABLE>
Wasatch Advisors Funds, Inc.
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Mid-Cap Fund Income Fund
Year ended Year ended Year ended Year ended
September 30, 1995 September 30, 1994 September 30, 1995 September 30, 1994
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income $ (135,323) $ (17,402) $ 198,688 $ 180,533
Net realized gain (loss) on investments 417,714 127,191 (35,783) (50,344)
Change in unrealized appreciation/
depreciation on investments 12,017,873 (107,833) 167,864 (76,066)
----------- ----------- ---------- ----------
Net increase in net assets resulting
from operations 12,300,264 1,956 330,769 54,123
----------- ----------- ---------- ----------
DIVIDENDS PAID FROM:
Net investment income - - (183,919) (163,631)
Net realized gains (2,697) - - (7,011)
----------- ----------- ---------- ----------
(2,697) - (183,919) (170,642)
----------- ----------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 93,354,746 161,009 1,362,975 283,296
Shares issued to holders in
reinvestment of dividends 2,678 - 179,666 167,058
----------- ----------- ---------- ----------
93,357,424 161,009 1,542,641 450,354
Shares redeemed (8,140,574) (1,523,064) (904,145) (832,134)
----------- ----------- ---------- ----------
Net increase (decrease) 85,216,850 (1,362,055) 638,496 (381,780)
----------- ----------- ---------- ----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS: 97,514,417 (1,360,099) 785,346 (498,299)
NET ASSETS:
Beginning of period 1,091,060 2,451,159 3,249,877 3,748,176
----------- ----------- ----------- ----------
End of period $98,605,477 $1,091,060 $4,035,223 $3,249,877
=========== =========== =========== ==========
Undistributed net investment
income included in net assets
at end of period - - $ 151,554 $ 136,785
=========== =========== =========== ==========
<FN>
See notes to financial statements.
</TABLE>
<TABLE>
Wasatch Advisors Funds, Inc.
FINANCIAL HIGHLIGHTS
Micro-Cap
Aggressive Equity Fund Fund
<CAPTION>
Dec. 6, June 19,
1986<F13> 1995<F13>
through through
Year ended September 30, Year ended September 30, Sept.30, Sept.30,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1995
----- ----- ----- ----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $19.96 $19.75 $15.23 $16.42 $ 9.77 $10.92 $ 9.07 $11.76 $10.00 $2.00
Income (loss) from investment
operations:
Net investment (loss) income (0.04) (0.02) (0.09) (0.03) (0.04) 0.01 (0.01) 0.03 0.02 -
Net realized and unrealized
gains (losses) on securities 6.59 1.33 5.40 (0.26) 6.69 (1.16) 1.91 (1.66) 1.74 0.72
------ ------ ----- ------ ------ ------ ------ ------- ----- -----
Total from investment
operations 6.55 1.31 5.31 (0.29) 6.65 (1.15) 1.90 (1.63) 1.76 0.72
Less distributions:
Dividends from net investment
income - - - - - - (0.05) (0.01) - -
Distributions from net realized
gains (1.51) (1.10) (0.79) (0.90) - - - (1.05) - -
------ ------ ------ ------ ----- ------ ------ ------ ------- ------
Total distributions (1.51) (1.10) (0.79) (0.90) - - (0.05) (1.06) - -
------ ------ ------ ------ ----- ------ ------ ------ ------- ------
Net asset value, end of period $25.00 $19.96 $19.75 $15.23 $16.42 $ 9.77 $10.92 $ 9.07 $11.76 $2.72
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Total return <F14> 35.19% 6.85% 35.73% (2.30)% 68.07% (10.53)% 21.09% (13.17)% 17.60% 36.00%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $305,311 $46,369 $23,293 $12,542 $7,588 $2,767 $1,191 $833 $1,266 $25,368
Ratio of expenses to average
net assets <F14> <F15> 1.47% 1.50% 1.50% 1.51% 1.51% 1.56% 1.50% 1.50% 1.26% 2.50%
Ratio of net (loss) income to
average net assets <F15> (0.37)% (0.67)% (0.77)% (0.41)% (0.36)% 0.08% (0.12)% 0.30% 0.16% (0.76)%
Portfolio turnover rate 29% 64% 70% 32% 41% 74% 82% 71% 58% 0%
<FN>
<F13> Commencement of operations.
<F14> Not annualized for periods less than a year.
<F15> Net of reimbursements by advisor. Absent reimbursement of expenses
by advisor, except for the year ended September 30, 1995 where there were
no reimbursements, the ratio of expenses to average net assets for the
Aggressive Equity Fund would be 1.52%,1.64%, 1.69%, 1.67%, 1.75%, 1.91%,
2.03% and 1.36%, respectively, and the ratio of net income (loss) to average
net assets would be (.69)%, (.92)%, (.59)%, (.52)%, (.27)%, (.55)%, (.22)%
and .06%, respectively. The ratio of expenses to average net assets for the
Micro-Cap Fund would be 3.40% and the ratio of net loss to average net
assets would be (1.66)%.
See notes to financial statements.
</TABLE>
<TABLE>
Wasatch Advisors Funds, Inc.
FINANCIAL HIGHLIGHTS
Growth Fund
<CAPTION>
Dec. 6,
1986<F16>
through
Year ended September 30, Year ended September 30, Sept.30,
1995 1994 1993 1992 1991 1990 1989 1988 1987
----- ----- ----- ----- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.30 $15.68 $13.64 $15.01 $10.73 $11.39 $ 9.48 $11.47 $10.00
Income (loss) from investment
operations:
Net investment income (loss) 0.02 (0.14) (0.08) (0.02) 0.08 0.10 0.13 0.10 0.01
Net realized and unrealized
gains (losses) on securities 4.59 0.71 3.21 (0.45) 5.16 (0.65) 1.89 (1.67) 1.46
------ ------- ------- ------- ------- ------- ------ ------ ----
Total from investment operations 4.61 0.57 3.13 (0.47) 5.24 (0.55) 2.02 (1.57) 1.47
Less distributions:
Dividends from net investment
income - - - (0.04) (0.16) (0.11) (0.11) (0.02) -
Distributions from net realized
gains (3.94) (0.95) (1.09) (0.86) (0.80) - - (0.40) -
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (3.94) (0.95) (1.09) (0.90) (0.96) (0.11) (0.11) (0.42) -
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $15.97 $15.30 $15.68 $13.64 $15.01 $10.73 $11.39 $ 9.48 $11.47
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return <F17> 39.76% 3.75% 23.57% (3.61)% 51.90% (4.82)% 21.60% (13.39)% 14.70%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $53,533 $11,219 $17,619 $14,243 $11,651 $4,574 $3,378 $2,605 $2,699
Ratio of expenses to average
net assets <F17><F18> 1.50% 1.50% 1.50% 1.49% 1.51% 1.87% 1.50% 1.50% 1.25%
Ratio of net income (loss) to
average net assets <F18> 0.29% (0.51)% (0.55)% 0.15% 0.51% 1.45% 1.37% 1.21% 0.18%
Portfolio turnover rate 88% 163% 104% 40% 37% 69% 63% 88% 50%
<FN>
<F16> Commencement of operations.
<F17> Not annualized for the period ended September 30, 1987.
<F18> Net of reimbursements by advisor. Absent reimbursement of expenses
by advisor, the ratio of expenses to average net assets would be 1.58%,
1.64%, 1.61%, 1.67%, 1.66%, 2.02%, 1.89%, 1.91% and 1.37%, respectively,
and the ratio of net income (loss) to average net assets would be 0.21%,
(.64)%, (.66)%, (.03)%, .36%, 1.29%, .96%, .80% and .06%, respectively.
See notes to financial statements.
</TABLE>
Wasatch Advisors Funds, Inc.
FINANCIAL HIGHLIGHTS
Mid-Cap Fund
Year Aug. 16,
Year ended ended 1992<F19>
September 30, Sept.30, through
1995 1994 1993 Sept.30,
1992
------- ------- -------- --------
Net asset value,
beginning of period $11.02 $10.51 $9.93 $10.00
Income from investment operations:
Net investment loss (0.02) (0.27) (0.07) -
Net realized and unrealized
gains (losses) on securities 7.64 0.78 0.65 (0.07)
------ ------ ------ -------
Total from investment operations 7.62 0.51 0.58 (0.07)
Less distributions:
Dividends from net investment
income - - - -
Distributions from net realized
gains (0.03) - - -
------ ------ ------ -------
Total distributions (0.03) - - -
------ ------ ------ -------
Net asset value, end of period $18.61 $11.02 $10.51 $9.93
====== ====== ====== ========
Total return <F20> 69.24% 4.85% 5.85% (0.70)%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $98,605 $1,091 $2,451 $148
Ratio of expenses to average
net assets <F20> <F21> 1.75% 1.75% 1.74% 1.56%
Ratio of net loss to
average net assets <F21> (0.71)% (1.19)% (0.86)% (0.38)%
Portfolio turnover rate 46% 213% 113% 40%
<F19> Commencement of operations.
<F20> Not annualized for the period ended September 30, 1992.
<F21> Net of reimbursements by advisor. Absent reimbursement of expenses by
advisor, the ratio of expenses to average net assets would be 1.94%, 3.33%,
2.69% and 7.65%, respectively, and the ratio of net loss to average net assets
would be (0.90)%, (2.76)%, (1.81)% and (6.47)%, respectively.
See notes to financial statements.
<TABLE>
Wasatch Advisors Funds, Inc.
FINANCIAL HIGHLIGHTS
<CAPTION>
Income Fund
Dec. 6,
1986<F22>
through
Year ended September 30, Year ended September 30, Sept.30,
1995 1994 1993 1992 1991 1990 1989 1988 1987
----- ----- ----- ----- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.09 $10.42 $11.17 $11.14 $10.13 $10.61 $10.64 $10.19 $10.00
Income from investment operations:
Net investment income (loss) 0.56 0.55 0.55 (0.03) 0.58 0.69 1.25 0.81 0.39
Net realized and unrealized
gains (losses) on securities 0.44 (0.40) (0.17) 0.94 1.24 (0.19) (0.06) 0.25 (0.20)
------ ------ ------ ------ ------ ------ ------ ------ -------
Total from investment operations 1.00 0.15 0.38 0.91 1.82 0.50 1.19 1.06 0.19
Less distributions:
Dividends from net investment
income (0.59) (0.46) (0.53) (0.56) (0.81) (0.69) (1.22) (0.61) -
Distributions from net realized
gains - (0.02) (0.60) (0.32) - (0.29) - - -
------ ------- ------- ------- ------ ------ ------- ------ ------
Total distributions (0.59) (0.48) (1.13) (0.88) (0.81) (0.98) (1.22) (0.61) -
------ ------- ------- ------- ------ ------ ------- ------ ------
Net asset value, end of period $10.50 $10.09 $10.42 $11.17 $11.14 $10.13 $10.61 $10.64 $10.19
====== ======= ======= ======= ====== ====== ====== ======= =======
Total return <F23> 10.46% 1.51% 3.80% 8.44% 18.74% 4.87% 12.50% 10.84% 1.90%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $4,035 $3,250 $3,748 $5,234 $3,540 $1,771 $1,119 $816 $504
Ratio of expenses to average
net assets <F23><F24> 1.00% 1.00% 1.00% 1.00% 1.01% 1.32% 0.99% 0.95% 0.94%
Ratio of net income to
average net assets <F24> 5.88% 5.15% 4.60% 4.90% 6.79% 10.00% 8.25% 8.47% 5.97%
Portfolio turnover rate 43% 45% 46% 95% 66% 71% 29% 30%
<FN>
<F22> Commencement of operations.
<F23> Not annualized for the period ended September 30, 1987.
<F24> Net of reimbursements by advisor. Absent reimbursement
of expenses by advisor, the ratio of expenses to average net assets
would be 1.59%, 1.39%, 1.35%, 1.20%, 1.20%, 1.57%, 1.42%, 1.35% and
1.20%, respectively, and the ratio of net income to average net
assets would be 5.29%, 4.76%, 4.24%, 4.71%, 6.59%, 9.75%, 7.82%,
8.06% and 5.70%, respectively.
See notes to financial statements.
</TABLE>
Wasatch Advisors Funds, Inc.
Notes to Financial Statements
September 30, 1995
1. ORGANIZATION
Wasatch Advisors Funds, Inc. was incorporated on November 18, 1986 under the
laws of the State of Utah and is registered under the Investment Company Act of
1940 as an open-end management investment company. The Aggressive Equity,
Micro-Cap and Mid-Cap Funds are nondiversified portfolios and the Growth and
Income Funds are diversified portfolios of Wasatch Advisors Funds, Inc. The
Aggressive Equity Fund, Growth Fund and Income Fund commenced operations on
December 6, 1986. The Mid-Cap Fund commenced operations on August 16, 1992 and
the Micro-Cap Fund commenced operations on June 19, 1995. The Aggressive
Equity, Micro-Cap, Growth, Mid-Cap and Income Funds (the "Funds") have entered
into an investment advisory agreement with Wasatch Advisors, Inc. (the
"Manager") as investment advisor.
Wasatch Advisors Funds, Inc. is authorized to issue 100,000,000 shares of
Series A common stock (Aggressive Equity Fund), 100,000,000 shares of Series B
common stock (Growth Fund), 100,000,000 shares of Series C common stock (Income
Fund), 100,000,000 shares of Series D common stock (Mid-Cap Fund) and
100,000,000 shares of Series E common stock (Micro-Cap Fund) all with a par
value of $.001 per share.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the Funds conform to generally
accepted accounting principles. The following is a summary of the more
significant of such policies.
a) Valuation of Securities - Securities listed or admitted for trading
privileges on the New York Stock Exchange or the American Stock Exchange are
valued at the closing price on the exchange on which the security is traded.
Securities traded in the over-the-counter market are valued at the last sales
price or, if no sales occurred on the valuation date, at the last available bid
price in the over-the-counter market or on the basis of yield equivalents as
obtained from one or more dealers that make markets in these securities. Short-
term securities are valued at either original cost or amortized cost, both of
which approximate current market value. Securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors of the Funds.
b) Investment in Securities - Security transactions are accounted for on the
trade date plus one. Gain or loss from sale of investment securities is
computed on the identified cost basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is recorded
on the accrual basis.
c) 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 of their taxable income to their
shareholders.
d) Expenses - The Funds are charged for those expenses that are directly
attributable to it, such as advisory and custodian fees. Expenses that are not
directly attributable to a portfolio are allocated among the portfolios in
proportion to their respective net assets.
3. DISTRIBUTIONS
Dividends from net investment income are declared and paid annually.
Distributions of net realized gains, if any, will be declared at least annually.
The amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting principles. To
the extent these book and tax differences are permanent in nature, such amounts
are reclassified to paid-in capital in excess of par value. Accordingly, at
September 30, 1995, reclassifications were recorded to increase undistributed
net investment income by $529,243, $19,989 and $135,323; decrease
undistributed net realized gain on investments by $529,243, $0 and $132,626; and
decrease paid-in-capital in excess of par by $0, $19,989 and $2,697 for the
Aggressive Equity, Micro-Cap and Mid-Cap Funds, respectively.
4. CAPITAL STOCK
Transactions in shares of capital stock were as follows:
Period ended September 30, 1995
Aggressive
Equity Micro-Cap Growth Mid-Cap Income
Fund Fund Fund Fund Fund
---------- ---------- --------- --------- ---------
Shares sold 11,583,792 9,592,412 2,724,508 5,698,649 132,150
Shares issued to
holders in
reinvestment of
dividends 223,654 - 241,652 230 18,774
Shares redeemed (1,917,750) (258,614) (347,867) (500,319) (88,885)
------------ ---------- --------- ---------- ---------
Net increase 9,889,696 9,333,798 2,618,293 5,198,560 62,039
============ ========== ========= ========== =========
Year ended September 30, 1994
Aggressive
Equity Growth Mid-Cap Income
Fund Fund Fund Fund
---------- ------- -------- --------
Shares sold 1,316,335 87,202 15,602 27,888
Shares issued to
holders in
reinvestment of
dividends 78,530 63,279 - 16,722
Shares redeemed (251,438) (540,948) (149,784) (82,343)
---------- ---------- --------- ---------
Net increase
(decrease) 1,143,427 (390,467) (134,182) (37,733)
========== ========== ========= =========
5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding U.S. Government and
short-term securities, for the year ended September 30, 1995 are summarized
below:
Aggressive
Equity Micro-Cap Growth Mid-Cap Income
Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------ --------
Purchases $232,262,765 $19,083,441 $46,016,178 $80,209,884 -
Sales 38,064,053 - 16,089,804 8,592,923 -
The only purchases and sales of U.S. Government securities occurred in the
Income Fund and were $679,258 and $3,080,014, respectively. Net gain or loss on
securities sold is determined on the identified cost basis which is the same as
that used for federal income tax reporting. The Micro-Cap and Income Funds'
basis in investments is the same for income tax and financial reporting
purposes. The Aggressive Equity, Growth and Mid-Cap Funds' tax basis in their
investments is $244,852,951, $48,664,140 and $90,474,099, respectively. At
September 30, 1995 the Income Fund had an accumulated net realized capital loss
carryover of $50,344 and $35,783 expiring in 2002 and 2003, respectively. To
the extent the Mid-Cap Fund realized future net capital gains, taxable
distributions to its shareholders will be offset by any unused capital loss
carryover. For the year ended September 30, 1995, 41%, 24% and 1% of dividends
paid from taxable income for the Aggressive Equity Fund, Growth Fund and Mid-Cap
Fund, respectively, qualify for the dividends received deduction available to
corporate shareholders.
As of September 30, 1995, gross unrealized appreciation and depreciation for
federal income tax purposes were as follows:
Aggressive
Equity Micro-Cap Growth Mid-Cap Income
Fund Fund Fund Fund Fund
----------- ---------- ----------- ----------- --------
Unrealized
appreciation $65,691,860 $2,125,007 $6,922,249 $14,115,272 $40,262
Unrealized
depreciation (8,191,531) (417,151) (1,020,141) (2,114,992) (1,040)
----------- ---------- ----------- ----------- --------
Net unrealized
appreciation $57,500,329 $1,707,856 $5,902,108 $12,000,280 $39,222
=========== ========== ========== =========== ========
6. INVESTMENT ADVISORY
The investment policies of the Funds and the management of the Funds'
portfolios are administered by the Manager. The Manager paid for the Funds'
office space, facilities and certain business equipment in addition to those
provided by the Funds' custodian, administrator and transfer agent. The Manager
also compensates all officers and directors of the Funds, provided such persons
are also employees of the Manager or its affiliates. During the year ended
September 30, 1995, management fees for the Aggressive Equity Fund, Micro-Cap
Fund, Growth Fund, Mid-Cap Fund and Income Fund were 1.0%, 2.0%, 1.0%, 1.25% and
0.5% of the daily net assets of each portfolio, respectively. The Manager
voluntarily agreed to reimburse its management fee to the extent that total
expenses exceeded 1.5% of the net assets of the Aggressive Equity Fund, 2.5% of
the net assets of the Micro-Cap Fund, 1.5% of the net assets of the Growth Fund,
1.75% of the net assets of the Mid-Cap Fund, and 1.0% of the net assets of the
Income Fund computed on a daily basis. For the year ended September 30, 1995,
the Manager reimbursed $23,438 for the Micro-Cap Fund, $16,636 for the Growth
Fund, $35,750 for the Mid-Cap Fund and $19,946 for the Income Fund.
7. RESTRICTED SECURITIES
Each Fund may invest up to 5% of its total assets or 10% of its net assets in
securities which cannot be readily sold because of legal or contractual
restrictions. At the end of the fiscal year, the Aggressive Equity and Mid-Cap
Funds held the securities of Drexler Technology Corp. (DRXR), a restricted
security, valued at 0.1% and 0.8% of total Fund assets, respectively.
Registration of these securities is currently pending. The security is
currently valued at a discount to market.
The following table summarizes Wasatch Advisors Funds' holdings in DRXR:
Fund Acquisition Date Value Cost
---- ---------------- ----- ------
Aggressive Equity Fund 12/27/94 $391,000 $160,000
Mid-Cap Fund 12/27/94 97,750 40,000
Mid-Cap Fund 6/30/95 733,125 300,000
8. TRANSACTIONS WITH AFFILIATES
Following is an analysis of fiscal 1995 transactions in the Aggressive Equity
Fund with "affiliated companies" as defined by the Investment Company Act of
1940:
Amount of
Amount of Gain (Loss)
Dividends Realized
Share Activity Credited on Sale
----------------------------------- to Income of Shares
Balance Balance in Fiscal in Fiscal
Security Name 9/30/94 Purchases Sales 9/30/95 1995 1995
- ------------- ------- --------- ----- ------- --------- ---------
Children's
Discovery
Centers of
America, Inc. - 492,200 - 492,200 - -
Interpore
International 44,500 517,916 - 562,416 - -
Mity-Lite, Inc. 55,650 101,470 - 157,120 - -
National Dentex
Corp. - 178,200 - 178,200 - -
Wasatch Advisors Funds, Inc.
Report of Independent Public Accountants
The Shareholders and Board of Directors of
Wasatch Advisors Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of
Wasatch Advisors Funds, Inc. (a Utah corporation, which includes the Wasatch
Aggressive Equity Fund, Wasatch Micro-Cap Fund, Wasatch Growth Fund, Wasatch
Mid-Cap Fund and Wasatch Income Fund), including the schedules of investments,
as of September 30, 1995, and the related statements of operations for the year
then ended, statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The financial highlights for the year ended September 30, 1992
and all prior years presented were audited by other auditors whose report dated
November 18, 1992 expressed an unqualified opinion on the financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the custodians and brokers. As to
securities purchased but not received, we requested confirmation from brokers
and, when replies were not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Wasatch Advisors Funds, Inc. as of September 30, 1995, and the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each of
the three years in the period then ended, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
November 10, 1995
Wasatch Advisors Funds, Inc.
68 South Main Street
Salt Lake City, UT 84101
To Open an Account or Request Information
1-800-551-1700
In Utah 1-801-533-0778
Fax 1-801-533-9828
For Account Balances and Investor Services
1-800-382-3616
