<PAGE> PAGE 1
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<PAGE> PAGE 2
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
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<PAGE> PAGE 19
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<PAGE> PAGE 20
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<PAGE> PAGE 21
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<PAGE> PAGE 22
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<PAGE> PAGE 23
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<PAGE> PAGE 24
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<PAGE> PAGE 26
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<PAGE> PAGE 27
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<PAGE> PAGE 28
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<PAGE> PAGE 29
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<PAGE> PAGE 30
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<PAGE> PAGE 31
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<PAGE> PAGE 33
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<PAGE> PAGE 34
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SIGNATURE SAMUEL S. STEWART JR.
TITLE PRESIDENT
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<GROSS-ADVISORY-FEES> 36,590
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 74,636
<AVERAGE-NET-ASSETS> 14,677,679
<PER-SHARE-NAV-BEGIN> 11.32
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 0.75
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.73
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000806633
<NAME> WASATCH FUNDS, INC.
<SERIES>
<NUMBER> 4
<NAME> WASATCH MID-CAP FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 46,892,174
<INVESTMENTS-AT-VALUE> 56,912,185
<RECEIVABLES> 2,375,471
<ASSETS-OTHER> 19,455
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59,307,111
<PAYABLE-FOR-SECURITIES> 1,656,981
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63,798
<TOTAL-LIABILITIES> 1,720,779
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,644,769
<SHARES-COMMON-STOCK> 3,110,851
<SHARES-COMMON-PRIOR> 3,534,975
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,921,552
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,020,011
<NET-ASSETS> 57,586,332
<DIVIDEND-INCOME> 19,215
<INTEREST-INCOME> 54,641
<OTHER-INCOME> 0
<EXPENSES-NET> (560,402)
<NET-INVESTMENT-INCOME> (486,546)
<REALIZED-GAINS-CURRENT> 4,729,050
<APPREC-INCREASE-CURRENT> (8,801,604)
<NET-CHANGE-FROM-OPS> (4,559,100)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (6,627,300)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 776,736
<NUMBER-OF-SHARES-REDEEMED> (1,617,092)
<SHARES-REINVESTED> 416,232
<NET-CHANGE-IN-ASSETS> (19,656,404)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,963,008
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 400,287
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 624,703
<AVERAGE-NET-ASSETS> 64,211,231
<PER-SHARE-NAV-BEGIN> 21.85
<PER-SHARE-NII> (0.16)
<PER-SHARE-GAIN-APPREC> (1.18)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.00)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.51
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000806633
<NAME> WASATCH FUNDS, INC.
<SERIES>
<NUMBER> 5
<NAME> WASATCH MICRO-CAP FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 110,922,267
<INVESTMENTS-AT-VALUE> 145,212,282
<RECEIVABLES> 3,863,100
<ASSETS-OTHER> 33,871
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 149,109,253
<PAYABLE-FOR-SECURITIES> 824,268
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 147,558
<TOTAL-LIABILITIES> 971,826
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 103,624,841
<SHARES-COMMON-STOCK> 33,499,843
<SHARES-COMMON-PRIOR> 36,837,354
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,222,571
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,290,015
<NET-ASSETS> 148,137,427
<DIVIDEND-INCOME> 26,455
<INTEREST-INCOME> 167,096
<OTHER-INCOME> 0
<EXPENSES-NET> (1,693,298)
<NET-INVESTMENT-INCOME> (1,499,747)
<REALIZED-GAINS-CURRENT> 13,114,260
<APPREC-INCREASE-CURRENT> 3,547,391
<NET-CHANGE-FROM-OPS> 15,161,904
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (9,713,791)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,411,388
<NUMBER-OF-SHARES-REDEEMED> (14,379,159)
<SHARES-REINVESTED> 2,630,260
<NET-CHANGE-IN-ASSETS> (9,770,023)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 11,062,955
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,355,504
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,728,190
<AVERAGE-NET-ASSETS> 135,919,708
<PER-SHARE-NAV-BEGIN> 4.29
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 0.51
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.33)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.42
<EXPENSE-RATIO> 2.5
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000806633
<NAME> WASATCH FUNDS, INC.
<SERIES>
<NUMBER> 6
<NAME> WASATCH WORLD-WIDE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
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<OTHER-ITEMS-ASSETS> 0
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
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<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000806633
<NAME> WASATCH FUNDS, INC.
<SERIES>
<NUMBER> 7
<NAME> WASATCH MICRO-CAP VALUE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> DEC-17-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 14,323,907
<INVESTMENTS-AT-VALUE> 15,382,335
<RECEIVABLES> 196,137
<ASSETS-OTHER> 653
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,579,125
<PAYABLE-FOR-SECURITIES> 65,880
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,364
<TOTAL-LIABILITIES> 90,244
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,366,577
<SHARES-COMMON-STOCK> 6,635,790
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 63,876
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,058,428
<NET-ASSETS> 15,488,881
<DIVIDEND-INCOME> 13,012
<INTEREST-INCOME> 14,589
<OTHER-INCOME> 0
<EXPENSES-NET> (43,184)
<NET-INVESTMENT-INCOME> (15,583)
<REALIZED-GAINS-CURRENT> 79,459
<APPREC-INCREASE-CURRENT> 1,058,428
<NET-CHANGE-FROM-OPS> 1,122,304
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,401,364
<NUMBER-OF-SHARES-REDEEMED> (765,574)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,488,881
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33,075
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 75,553
<AVERAGE-NET-ASSETS> 7,671,032
<PER-SHARE-NAV-BEGIN> 2.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.33
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
RESULTS OF THE SHAREHOLDER MEETING
The annual meeting of the shareholder of the Funds was held on January 16,
1998. Directors elected by the shareholders at the time of the meeting were as
follows: Samuel S. Stewart, Jr., Roy S. Jespersen, Jeffrey S. Cardon, James U.
Jensen and William R. Swinyard.
The Funds listed below each issue are those entitled to vote on that issue.
The matters voted on by the shareholders of record as of November 10, 1997
and the results of the vote at the shareholder meetings held
January 16 and 23, 1998 were as follows:
For Withheld
1. Election of Directors
Samuel S. Stewart, Jr.
Mid-Cap Fund 1,982,375 77,560
Micro-Cap Fund 20,196,614 378,020
Aggressive Equity Fund 3,783,362 104,115
Growth Fund 4,855,142 102,066
U.S. Treasury Fund 793,378 27,182
Roy S. Jespersen
Mid-Cap Fund 1,982,051 77,883
Micro-Cap Fund 20,192,284 382,350
Aggressive Equity Fund 3,783,225 104,252
Growth Fund 4,855,003 102,205
U.S. Treasury Fund 794,152 26,408
Jeffrey S. Cardon
Mid-Cap Fund 1,982,727 77,208
Micro-Cap Fund 20,189,041 385,593
Aggressive Equity Fund 3,781,398 106,079
Growth Fund 4,851,034 106,174
U.S. Treasury Fund 794,251 26,309
James U. Jensen
Mid-Cap Fund 1,984,634 75,301
Micro-Cap Fund 20,200,382 374,252
Aggressive Equity Fund 3,781,096 106,381
Growth Fund 4,851,879 105,329
U.S. Treasury Fund 793,623 26,937
William R. Swinyard
Mid-Cap Fund 1,983,518 76,416
Micro-Cap Fund 19,965,233 609,400
Aggressive Equity Fund 3,782,028 105,450
Growth Fund 4,855,213 101,995
U.S. Treasury Fund 794,251 26,309
For Against Abstain
2. Ratification of the selection of Arthur Andersen LLP as independent
auditors for the Funds.
Mid-Cap Fund 1,981,637 25,092 53,205
Micro-Cap Fund 19,882,745 265,675 426,215
Aggressive Equity Fund 3,748,567 35,495 103,415
Growth Fund 4,830,816 41,349 85,043
U.S. Treasury Fund 795,876 5,806 18,877
3. Approval of Agreement and Plan of Reorganization.
Mid-Cap Fund 1,709,741 99,418 77,035
Micro-Cap Fund 16,758,335 958,438 691,047
Aggressive Equity Fund 3,303,193 200,445 179,160
Growth Fund 3,285,410 196,022 352,801
U.S. Treasury Fund 745,413 17,892 27,851
4. Proposal to change the classification of the Growth Fund from a
diversified investment company to a non-diversified investment company.
Growth Fund 2,954,270 306,859 349,105
5. Proposal to eliminate investment restrictions which are inconsistent
with the current status of the funds as "non-diversified."
Mid-Cap Fund 1,606,172 106,786 58,260
Micro-Cap Fund 16,272,708 787,485 626,321
Aggressive Equity Fund 3,164,865 256,831 167,534
6. Proposal to convert the fundamental policy regarding investing for the
purpose of exercising control or management to a non-fundamental policy.
Mid-Cap Fund 1,590,514 105,612 75,092
Micro-Cap Fund 15,728,428 931,394 1,026,691
Aggressive Equity Fund 3,117,619 290,615 180,996
Growth Fund 3,048,289 201,480 360,467
U.S. Treasury Fund 687,476 78,864 21,821
7. Proposal to remove the restrictions on investing in other investment
companies which are more restrictive than the Investment Company Act of
1940.
Mid-Cap Fund 1,578,874 123,716 68,628
Micro-Cap Fund 16,029,208 925,475 731,831
Aggressive Equity Fund 3,104,603 314,265 170,362
Growth Fund 3,032,619 220,873 356,743
U.S. Treasury Fund 744,969 15,685 27,507
8. Proposal to modify a fundamental investment restriction regarding
commodities.
Mid-Cap Fund 1,542,307 156,829 72,082
Micro-Cap Fund 15,397,121 1,571,838 717,555
Aggressive Equity Fund 2,879,593 539,337 170,300
Growth Fund 2,965,922 296,904 347,409
U.S. Treasury Fund 671,967 89,638 26,556
9. Proposal to eliminate a fundamental investment restriction on investing
in illiquid securities and adopt a non-fundamental policy which conforms with
SEC policies.
Mid-Cap Fund 1,570,229 135,311 65,678
Micro-Cap Fund 15,616,175 1,355,262 715,077
Aggressive Equity Fund 3,144,211 275,720 169,299
Growth Fund 2,931,356 326,351 352,527
U.S. Treasury Fund 668,833 96,615 22,713
10. Proposal to allow the Funds to lend portfolio securities.
Mid-Cap Fund 1,523,680 171,217 76,321
Micro-Cap Fund 15,262,432 1,692,644 731,439
Aggressive Equity Fund 3,039,792 384,174 165,264
Growth Fund 2,961,520 305,513 343,202
11. Proposal to conform the fundamental policies regarding senior
securities, borrowing money and pledging assets with those of the Micro-Cap
Value Fund.
Mid-Cap Fund 1,576,338 118,255 76,625
Micro-Cap Fund 15,755,809 1,117,776 812,928
Aggressive Equity Fund 3,202,603 203,092 183,536
Growth Fund 2,987,391 262,068 360,775
U.S. Treasury Fund 739,803 17,965 30,393
12. Proposal to eliminate fundamental investment restrictions regarding put
and call options.
Mid-Cap Fund 1,531,497 167,264 72,456
Micro-Cap Fund 15,598,328 1,391,350 696,837
Aggressive Equity Fund 3,081,416 339,937 167,878
Growth Fund 2,878,581 357,299 374,355
U.S. Treasury Fund 658,825 107,212 22,124
13. Proposal to convert the fundamental policy regarding investing in oil,
gas, or other mineral interests to a non-fundamental investment policy.
Mid-Cap Fund 1,550,189 151,136 69,893
Micro-Cap Fund 15,635,104 1,294,651 756,759
Aggressive Equity Fund 3,060,814 356,426 171,990
Growth Fund 2,934,242 337,806 338,187
U.S. Treasury Fund 666,278 97,750 24,133
14. Proposal to eliminate a fundamental restriction limiting investing in
warrants.
Mid-Cap Fund 1,551,087 154,235 65,896
Micro-Cap Fund 15,474,859 1,463,000 748,655
Aggressive Equity Fund 3,040,224 369,734 179,273
Growth Fund 2,893,124 345,519 371,592
U.S. Treasury Fund 743,477 19,582 25,102
15. Proposal to eliminate a fundamental restriction limiting investing in
"new" issuers.
Mid-Cap Fund 1,592,275 119,502 59,442
Micro-Cap Fund 16,097,533 910,763 678,217
Aggressive Equity Fund 3,125,967 298,802 164,461
Growth Fund 3,002,985 259,528 347,722
U.S. Treasury Fund 742,302 23,443 22,416
16. Proposal to convert the fundamental policy regarding investing in
"special situations" to a non-fundamental investment policy.
Mid-Cap Fund 1,574,960 128,576 67,683
Micro-Cap Fund 16,007,742 950,890 727,882
Aggressive Equity Fund 3,097,000 324,286 167,945
Growth Fund 2,979,117 277,316 353,802
U.S. Treasury Fund 670,395 91,440 26,326
* All Directors were elected and all proposals were approved.
Exhibit to Accompany
Item 77J
Form N-SAR
Wasatch Funds, Inc.
(the "Funds")
In accordance to the provisions of Statement of Position 93 -
2 (SOP 93 - 2) "Determination, Disclosure and Financial
Statement Presentation of Income, Capital Gain and Return
of Capital Distributions by Investment Companies," the
Funds are required to report the accumulated net investment
income (loss) and accumulated net capital gain (loss)
accounts to approximate amounts available for future
distributions on a tax basis (or to offset future realized
capital gains). Accordingly, reclassifications were recorded
to increase undistributed net investment income by
$486,546, $1,499,747, $444,577, $15,583 and $412,874 to
decrease undistributed net realized gain on investments by
$2,143,206, $4,240,853, $4,452,250, $15,583 and
$2,870,342 and to increase paid-in-capital in excess of par
by $1,656,660, $2,741,106, $4,007,673, $0 and $2,457,450,
for the Mid-Cap, Micro-Cap, Aggressive Equity, Micro-Cap
Value and Growth Funds, respectively, for the six months
ended March 31, 1998.
The reclassification has no impact on the net asset value of
the Fund and is designed to present the Funds' capital
accounts on a tax basis.
ADVISORY AND SERVICE CONTRACT
This Agreement, made as of January 27, 1998, by and
between Wasatch Funds, Inc., a Minnesota corporation (the
"Corporation"), on behalf of each Fund represented by a series
of shares of common stock of the Fund that adopts this
Agreement (each a "Fund" and, collectively, the "Funds") (the
Funds, together with the date each Fund adopts this Agreement,
are set forth in Exhibit A hereto, which shall be updated from
time to time to reflect additions, deletions or other changes
thereto), and Wasatch Advisors, Inc., a Utah Corporation (the
"Adviser").
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto
as follows:
1. The Corporation hereby employs the Adviser to act
as the investment adviser for and to manage the investment and
reinvestment of the assets of each Fund in accordance with each
Fund's investment objective and policies and limitations, and to
administer their affairs to the extent requested by and subject to
the supervision of the Board of Directors of the Corporation for
the period and upon the terms herein set forth. The investment
of funds shall be subject to all applicable restrictions of the
Articles of Incorporation and Bylaws of the Corporation as may
from time to time be in force.
The Adviser accepts such employment and agrees
during such period to render services, to furnish office facilities
and simple business equipment, to permit any of its officers to
serve without compensation as directors or officers of the
Corporation if elected to such positions and to assume the
obligations herein set forth for the compensation herein
provided. The Adviser shall for all purposes herein provided be
deemed to be an independent contractor, and, unless otherwise
expressly provided or authorized, shall have no authority to act
for or represent the Corporation in any way or otherwise be
deemed an agent of the Corporation. It is understood and
agreed that the Adviser, by separate agreement with the
Corporation, may also act as Distributor for a Fund.
2. For the services and facilities described in Section 1,
each Fund will pay to the Adviser at the end of each calendar
month, an investment management fee computed at the annual
rate of the percentage of the average daily net assets of each Fund
as set forth in Exhibit A.
If expenses borne by a Fund in any fiscal year (including
at the Adviser's fee, but excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities and, to the
extent permitted, extraordinary expenses), exceed those set forth
in any statutory or regulatory formula prescribed by any state in
which Fund shares are registered at such time, the Adviser will
reimburse the Fund for any excess.
The net asset value of each Fund shall be calculated as
of the close of the New York Stock Exchange on each day the
Exchange is open for trading or as of such other time or times as
the directors may determine in accordance with the provisions
of the Investment Corporation Act of 1940 (the "Act"). On
each day when the net asset value is not calculated, the net asset
value of a share of common stock of a Fund shall be deemed to
be the net asset value of such a share as of the close of business
on the last day on which such calculation was made for the
purpose of the foregoing computations.
For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement
is in effect during the month and year, respectively. The
services of the Adviser to the Funds under this Agreement are
not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as its
services hereunder are not impaired thereby.
3. In addition to the fee of the Adviser, the Funds shall
assume and pay any expenses for services rendered by a
custodian for the safekeeping of the Funds' securities or other
property and for any other charges of the custodian. The
Adviser shall not be required to pay and each Fund shall assume
and pay the charges and expenses of its operations, including
compensation of the directors (other than those affiliated with
the Adviser), charges and expenses of independent auditors, of
legal counsel, of any transfer or dividend disbursing agent or
any registrar of the Fund, costs of acquiring and disposing of
portfolio securities, interest, if any, on obligations incurred by
the Fund, costs of share certificates and of reports, costs for
keeping its books of account, costs for calculating the net asset
value of the Funds as provided in Articles of Incorporation of
the Corporation, membership dues in the Investment Company
Institute or any similar organization, costs of reports and notices
to shareholders, other like miscellaneous expenses and all taxes
and fees payable to federal, state or other governmental
agencies on account of the registration of securities issued by
the Funds, filing of corporate documents or otherwise. No Fund
shall pay or incur any obligation for any management or
administrative expenses for which the Fund intends to seek
reimbursement from the Adviser as herein provided without
first obtaining the written approval of the Adviser. The Adviser
shall arrange, if desired by the Corporation, for officers of the
Adviser to serve, without compensation from the Funds, as
directors, officers or agents of the Corporation if duly elected or
appointed to such positions and subject to their individual
consent and to any limitations imposed by law.
4. Subject to applicable statutes and regulations, it is
understood that directors, officers, or agents of the Corporation
are or may be interested in the Adviser as officers, directors,
agents, shareholders or otherwise, and that the officers,
directors, shareholders and agents of the Adviser may be
interested in the Corporation otherwise than as a director,
officer or agent.
-2-
5. The Adviser shall not be liable for any error of
judgement or of law, or for any loss suffered by the Funds in
connection with the matters to which this Agreement relates,
except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance
of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. The Adviser has proprietary rights in the Funds'
names and the Corporation's name. The Adviser may withdraw
from the Fund or the Corporation the use of their names. In
addition the Adviser reserves the right to grant the use of a
similar name to another investment company or business
enterprise. However, in doing so, the Adviser agrees to submit
the question of continuing this investment advisory contract to a
vote of the Funds' shareholders at the time.
7. (a) The effective date of this Agreement with
respect to each Fund shall be the date set forth on Exhibit A
hereto.
(b) Unless sooner terminated as hereinafter
provided, this Agreement shall continue in effect with respect to
each Fund for a period more than two years from the date of its
execution but only as long as such continuance is specifically
approved at lease annually (i) by the Board of Directors of the
Corporation or by the vote of a majority of the outstanding
voting securities of the applicable Fund, and (ii) by the vote of a
majority of directors of the Corporation who are not parties to
this Agreement or "interested persons", as defined in the Act, of
the Adviser or of the Corporation cast in person at a meeting
called for the purpose of voting of such approval.
(c) This Agreement may be terminated with
respect to any Fund at any time, without the payment of any
penalty, by the Board of Directors of the Corporation or by the
vote of a majority of the outstanding voting securities of such
Fund, or by the Adviser, upon 60 days' written notice to the
other party.
(d) This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the
Act).
(e) No amendment to this Agreement shall be
effective with respect to any Fund until approved by the vote of:
(i) a majority of the directors of the Corporation who are not
parties to this Agreement or "interested persons" (as defined in
the Act) of the Adviser or of the Corporation cast in person at a
meeting called for the purpose of voting on such approval; and
(ii) a majority of the outstanding voting securities of the
applicable Fund.
(f) Wherever referred to in this Agreement, the
vote or approval of the holders of a majority of the outstanding
voting securities or shares of a Fund shall mean the lesser of (i)
the vote of 67% or more of the voting securities of such Fund
present at a regular or special meeting of shareholders duly
called, if more than 50% of the Fund's outstanding voting
securities are present or represented by proxy; or (ii) the vote of
more than 50% of the outstanding voting securities of such
Fund.
-3-
8. As to the Wasatch-Hoisington U.S. Treasury Fund,
the Adviser is hereby authorized, at its option and expense, to
retain a sub-adviser or sub-advisers to assist the Adviser in
furnishing investment advice to such Funds; provided that the
Adviser shall be responsible for monitoring compliance by such
sub-adviser(s) with the investment policies and restrictions of
the Corporation and such Fund and with such other limitations
or directions as the Board of Directors of the Corporation may
from time to time prescribe. Any such retention of a sub-
adviser shall be subject to approval by the Board of Directors of
the Corporation and to the extent required by law, the
shareholders of such Fund. Any appointment of a sub-adviser
pursuant hereto shall in no way limit or diminish the Adviser's
obligations and responsibility under this Agreement.
9. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
IN WITNESS WHEREOF, the Corporation and the
Adviser have caused this Agreement to be executed by their
duly authorized officers as of the day and year first above
written.
Wasatch Funds, Inc.
By /S/ Samuel S. Stewart, Jr.
Samuel S. Stewart, Jr., President
Wasatch Advisors, Inc.
By /S/ Samuel S. Stewart, Jr.
Samuel S. Stewart, Jr., President
-4-
Exhibit A
To
Advisory and Service Contract
between
Wasatch Funds, Inc. and
Wasatch Advisors, Inc.
Fund Effective Date Annual Advisory Fee
Series A - Wasatch Aggressive
Equity Fund January 27, 1998 1.00%
Series B - Wasatch Growth
Fund January 27, 1998 1.00%
Series C - Wasatch-Hoisington
U.S. Treasury Fund January 27, 1998 0.50%
Series D - Wasatch Mid-Cap
Fund January 27, 1998 1.25%
Series E - Wasatch Micro-Cap
Fund January 27, 1998 2.00%
Series F - Wasatch World Wide
Fund January 27, 1998 1.50%
Series G - Wasatch Micro-Cap
Value Fund January 27, 1998 1.50%
