TABLE OF CONTENTS
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LETTER FROM THE INVESTMENT ADVISOR.......................................... 1
Wasatch Equity Funds ..................................................... 1
Wasatch-Hoisington U.S. Treasury Fund .................................... 3
MICRO-CAP FUND PORTFOLIO SUMMARY............................................ 4
Review of the Year ....................................................... 4
Average Annual Total Returns & Growth of a $10,000 Investment ............ 5
Ten Largest Holdings, Asset Allocation & Sector Breakdown ................ 6
MICRO-CAP VALUE FUND PORTFOLIO SUMMARY...................................... 7
Review of the Year ....................................................... 7
Average Annual Total Returns & Growth of a $10,000 Investment ............ 8
Ten Largest Holdings, Asset Allocation & Sector Breakdown ................ 9
AGGRESSIVE EQUITY FUND PORTFOLIO SUMMARY................................... 10
Review of the Year ...................................................... 10
Average Annual Total Returns & Growth of a $10,000 Investment ........... 11
Ten Largest Holdings, Asset Allocation & Sector Breakdown ............... 12
GROWTH FUND PORTFOLIO SUMMARY.............................................. 13
Review of the Year ...................................................... 13
Average Annual Total Returns & Growth of a $10,000 Investment ........... 14
Ten Largest Holdings, Asset Allocation & Sector Breakdown ............... 15
MID-CAP FUND PORTFOLIO SUMMARY............................................. 16
Review of the Year ...................................................... 16
Average Annual Total Returns & Growth of a $10,000 Investment ........... 17
Ten Largest Holdings, Asset Allocation & Sector Breakdown ............... 18
WASATCH-HOISINGTON U.S. TREASURY FUND PORTFOLIO SUMMARY.................... 19
Review of the Year ...................................................... 19
Average Annual Total Returns & Growth of a $10,000 Investment ........... 20
Holdings/Maturity Date & Asset Allocation ............................... 21
SCHEDULE OF INVESTMENTS.................................................... 22
STATEMENTS OF ASSETS AND LIABILITIES....................................... 40
STATEMENTS OF OPERATIONS................................................... 42
STATEMENTS OF CHANGES IN NET ASSETS........................................ 44
FINANCIAL HIGHLIGHTS....................................................... 48
NOTES TO FINANCIAL STATEMENTS.............................................. 54
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS................................... 59
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS................................ 60
<PAGE>
(LOGO)
WASATCH FUNDS, INC.
150 Social Hall Avenue
Salt Lake City, UT 84111
1 (800) 551-1700
LETTER FROM THE INVESTMENT ADVISOR
SEPTEMBER 30, 1999
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DEAR SHAREHOLDERS:
- ------------------
During the fiscal year ended September 30, 1999 we witnessed the stock
market's highs and lows, saw Internet stocks skyrocket and watched day trading
come into vogue.
Large company stocks as represented by the S&P 500/R Index continued their
phenomenal run early in 1999. By September 30th, the S&P 500 was down nearly 10%
from its July peak while the average stock was down nearly 20%.
In the past six months small company stocks enjoyed a more favorable market
environment. We believe the outlook for small company stocks remains bright
because they are still undervalued compared to large company stocks.
As the Federal Reserve Board (Fed) raised short term interest rates, we felt
the fear of investors as they worried that inflation was on the rise. Our
feeling is that inflation is not likely to heat up, particularly with Fed
chairman, Alan Greenspan, keeping a watchful eye on the situation and
maintaining tight control over money and credit.
We believe that the prolonged economic expansion we have experienced for more
than a decade has been driven in part by the efficient flow of information
enabled by better communication, aided by the growth of the Internet. Readily
available information has helped corporations make better decisions and correct
mistakes before they get out of hand. In the past, one reason the economy has
gotten out of whack was a lack of adequate information which allowed inventories
to build in excess of demand.
Although market forces were brought to bear on the Wasatch Funds throughout
the year, we did not let them distract us from pursuing each Fund's investment
objective and strategy.
WASATCH EQUITY FUNDS
- --------------------
In a stormy stock market environment, the Wasatch Equity Funds experienced
intermittent sun, some blue skies and what could be a warming trend during the
fiscal year ended September 30, 1999.
Twelve months ago investors were continuing to pour their assets into large
company stocks pushing prices even higher in spite of reports that the profit
picture was not as rosy as it had
<PAGE>
been a year or so earlier. In the last six months investors began selling as
they became concerned that high stock prices were unsustainable because they
were unsupported by earnings growth.
Twelve months ago the outlook appeared bleak for small company stocks even
though, on average, the companies themselves were experiencing strong growth in
profits and revenues. Small company stocks were generally being ignored and
prices had retreated to historic lows compared to large company stock prices.
Instead of paying attention to the dark cloud, Wasatch saw the silver lining
and what we believed was a golden opportunity.
It is our belief that earnings growth drives stock prices over the long term.
In the market climate of the past 12 months we were able to invest in what we
consider to be "America's Best Growth Companies"<F1> at prices that were lower
than we could ever remember in our nearly 25 years of investing.
As the market turned more favorable for small company stocks in the past six
months, the stock prices of many of the Funds' holdings appreciated
significantly. As a result, each Equity Fund produced excellent returns over a
one year time period.
We believe there are three factors that have led many investors to rediscover
small company stocks.
First is the stock buyback programs announced by many small companies,
including many held in the portfolios of the Wasatch Equity Funds. These small
company executives have grown tired of the undeserved beating their stocks have
taken. They have chosen to send a clear message about what they believe is the
quality and value of their companies by buying back their own stock. Buying back
stock can be positive for shareholders. In the short term it can create demand
and boost stock prices. In the long term it accelerates earnings per share
growth as increasing profits are applied to fewer outstanding shares.
Second is the attention brought to the small-cap sector by corporate buyers.
Over the past two years there has been a dramatic increase in the number of
acquisitions or mergers involving small companies. The number of companies held
in the portfolios of the Wasatch Equity Funds that agreed to merge or be
acquired was representative of this trend. We believe corporate buyers have
helped put the spotlight on the discrepancy between the stock price and the
inherent quality and value of many small companies.
Third is the renewed interest we have noted from institutional investors. We
believe these powerful, well-informed decision-makers are looking at the small-
cap sector because they recognize that small company stocks may offer the
potential for increasing their clients' or institutions' assets.
Internet stocks were a hot investment topic this fiscal year. The explosive
growth of the Internet as a mainstream communications medium captured the
attention and enthusiasm of investors. Practically any stock with ".com" in its
name was destined to have a strong following of investors. Stock prices of many
Internet companies quickly went through the roof, usually outstripping the
companies' earnings growth potential. Wasatch avoided investing in the Internet
companies that were all the rage on Wall Street because we are attracted to
companies that have strong earnings growth. We chose what we believe is a more
prudent approach by investing in several companies that have the potential to
benefit from the long term growth of the Internet. These companies are currently
producing the earnings growth that our investment discipline requires and we
think they have outstanding long term growth prospects.
<PAGE>
EQUITY FUNDS OUTLOOK
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We are optimistic about the prospects for the Wasatch Equity Funds for the long
term and during the coming year. Although what happens in the stock market is
anyone's guess, we believe that we have invested in companies, according to each
Fund's investment strategy, that have the potential to help achieve each Fund's
investment objective. We believe that the Wasatch Equity Funds have the
potential to be a positive force in your long term investment plan.
WASATCH-HOISINGTON U.S. TREASURY FUND
- -------------------------------------
The bond market had its share of inclement weather too as investors feared
that inflation would rain on their parade. The Wasatch-Hoisington U.S. Treasury
Fund, with significant investments in 30 year U.S. Treasury bonds, was caught in
a downpour of negative sentiment that caused bond yields to rise and prices to
fall.
As usual, the eye of the storm was investors' perceptions about the direction
of the economy. Many took the small increases in short-term interest rates as a
warning that inflation was on the rise. Van Hoisington, the Fund's lead manager
and his team of analysts look at many economic indicators and base their
investment decisions on what they believe is the multi-year trend in inflation.
At this time, they believe inflation will continue its bumpy path down and that
interest rates will eventually follow.
U.S. TREASURY FUND OUTLOOK
- --------------------------
We expect that bond prices will rise as investors' fears about inflation
dissipate and interest rates follow the downward trend of inflation.
For more information about the performance and outlook of the U.S. Treasury
Fund, please see the portfolio summary beginning on page 19.
WORTH NOTING
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The financial markets are as changeable as the weather. That's why it's
important to maintain a long term perspective. Stay focused on your financial
goals. Choose investments that are compatible with your objectives and tolerance
for risk and volatility. Following these simple suggestions can make it easier
to weather stormy markets.
Wasatch is committed to long term investing. We believe the Funds we offer
have the potential to make a positive contribution to your efforts to achieve
long term financial objectives.
Please see the portfolio summaries beginning on page 4 for an in-depth
discussion of the performance of individual Wasatch Funds for the year ended
September 30, 1999.
If you have any questions or comments regarding this report or your
investments, please call us at 1 (800) 551-1700. Refer to the current Wasatch
Funds prospectus for more information about each Fund's objectives and
investment strategy.
We look forward to serving your investment needs in the coming years. We
appreciate your investment in Wasatch Funds.
Sincerely,
/s/Samuel S. Stewart, Jr.
Samuel S. Stewart, Jr.
Chairman of the Board
<F1> These are companies that we believe may possess an identifiable,
sustainable competitive advantage, are underfollowed, undervalued, well-
managed and have the potential to double in size within five years.
<PAGE>
WASATCH MICRO-CAP FUND-PORTFOLIO SUMMARY
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SEPTEMBER 30, 1999
ROBERT GARDINER, CFA-LEAD MANAGER
(PHOTO)
The Micro-Cap Fund seeks to achieve long term growth of capital through
investments in companies with market capitalizations of less than $300 million
at the time of initial purchase that we believe have superior growth potential.
The Fund is best-suited for long term investors who can tolerate the greater
risks and volatility that are inherent with investments in micro-cap stocks.
Wasatch intends to close the Fund at around $150 million in assets.
REVIEW OF THE YEAR
- ------------------
For the 12 months ended September 30, 1999, Micro-Cap Fund shareholders were
rewarded with an exceptional one year return of 37.73%. Since inception on June
19, 1995 the Fund has returned an average of 27.79% annually. These outstanding
results were achieved by steadfastly following the Fund's strategy of investing
in growing micro-cap companies at reasonable prices.
As the market for small- and micro-cap stocks improved in 1999, the stock
prices of many of the growing companies that we had tucked away in the Micro-Cap
Fund appreciated significantly.
There were two major contributors to performance. First, the Fund's heavily
weighted positions reported strong earnings growth throughout the year and were
rewarded with higher stock prices. Second, the majority of the Fund's technology
holdings had a banner year. Two holdings deserve special recognition.
Micrel, Inc., a manufacturer of analog semiconductors, has been a significant
holding in the Fund since we invested four years ago at prices as low as $3 a
share. The company has increased earnings at a compound annual rate of 50%. On
September 30, 1999, Micrel's stock price was $433/8, an increase of nearly 14
fold.
We invested in SDL, Inc., a manufacturer of semiconductor lasers, toward the
end of 1998. On October 8, 1998 the stock traded at $41/16 and closed at $765/16
on September 30, 1999, an increase of nearly 20 times. We expect the company to
continue providing strong earnings growth because its semiconductor laser
products help alleviate the Internet's bandwidth shortage.
The stock price appreciation of Micrel and SDL has been driven by high
earnings growth and Wall Street discovery. We feel our investments in these
companies allow shareholders to benefit from the explosive growth of the
Internet without exposing them to the valuation risk that is typical of many
Internet stocks.
A number of companies held by the Fund were acquired during the year. These
deals were positive to the Fund's performance. In contrast, stocks of
nutritional supplements companies struggled due to increased price competition
in that industry. The Fund's largest holding, Techne Corp., a maker of complex,
disposable research kits for the biotechnology industry, was a big winner. The
stock prices of some smaller
<PAGE>
WASATCH MICRO-CAP FUND-PORTFOLIO SUMMARY
- ----------------------------------------
health care holdings were weak because government reimbursement issues caused
some investors to shy away from health care. Whitehall Jewellers and O'Reilly
Automotive produced excellent returns in an environment where some retail stocks
were down as investors worried about the effects of Internet competition. In the
business service sector SCPPool Corp., CorVel Corp. and F.Y.I. Inc. made solid
contributions.
OUTLOOK
- -------
We believe the outlook for micro-cap stocks remains bright. The Fund appears
well positioned with companies that have strong growth potential and room for
stock price appreciation. Average earnings growth for companies held by the Fund
is expected to be greater than 20% over the next year.
We appreciate the opportunity to invest your assets in micro-cap stocks.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
- --------------------------------------------------------------------------------
WASATCH MICRO-CAP FUND 37.73% N/A 27.79%
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Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
-------------------------------
Fiscal Year
Ended
September 30 Wasatch Micro-Cap Fund Russell 2000 Index
- ------------ ----------------------- ------------------
6/19/95<F1> 10,000 10,000
9/30/95 13,600 11,042
9/30/96 15,750 12,353
9/30/97 22,771 16,638
9/30/98 20,779 13,474
9/30/99 28,619 16,044
<F1> Inception: June 19, 1995.
The Russell 2000 Index is an unmanaged total return index of the smallest
2,000 companies in the Russell 3000 Index, as ranked by total market
capitalization. The Russell 2000 is widely regarded in the industry to
accurately capture the universe of small company stocks.
<PAGE>
WASATCH MICRO-CAP FUND-PORTFOLIO SUMMARY
- ----------------------------------------
TEN LARGEST HOLDINGS
- --------------------
1. TECHNE CORP. 7%
Complex, disposable research kits for biotechnology.
2. CORVEL CORP. 6%
Case management and cost containment services for
workers' compensation.
3. WHITEHALL JEWELLERS, INC. 5%
Fine jewelry retailer.
4. ICU MEDICAL, INC. 5%
Disposable connectors for intravenous therapy.
5. SUPERTEX, INC. 5%
Semiconductor component manufacturer.
6. PERICOM SEMICONDUCTOR CORP. 3%
Semiconductors for networking equipment,
network servers and PC's.
7. SCP POOL CORPORATION 3%
Swimming pool supply distributor.
8. YOUNG INNOVATIONS, INC. 3%
Disposable products for dental professionals.
9. CHARLES RIVER ASSOCIATES INC. 3%
Economic and business consulting.
10. NATIONAL DENTEX CORP. 3%
Dental laboratories.
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ASSET ALLOCATION
----------------
Common Stocks 96.7%
Cash & Other Assets 3.3%
SECTOR BREAKDOWN
----------------
Business Products & Services 19.5%
Pharmaceutical & Medical 16.5%
Semiconductors & Telecom 14.7%
Retail 12.7%
Computers & Electronics 10.2%
Health Care 9.4%
Personal Products & Services 6.7%
Transportation 3.5%
Financial Services 2.4%
Other 1.1%
<PAGE>
WASATCH MICRO-CAP VALUE FUND-PORTFOLIO SUMMARY
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SEPTEMBER 30, 1999
(PHOTO)
ROBERT GARDINER, JEFF CARDON-CO-MANAGERS
The Micro-Cap Value Fund seeks to achieve long term growth of capital through
investments in companies with market capitalizations of less than $300 million
whose stocks are selling at a substantial discount to the company's underlying
value. The Fund is designed for long-term investors who have assessed their
tolerance for risk and volatility. Wasatch intends to close the Fund at around
$200 million in assets.
REVIEW OF THE YEAR
- ------------------
The Wasatch Micro-Cap Value Fund reported strong performance during its first
full fiscal year. For the year ended September 30, 1999 the Fund was up 35%. The
Russell 2000 Value Index, a widely recognized measure for the performance of
value-oriented small company stocks, was up only 5.83%. Fund performance
reflects our disciplined philosophy of buying small, undervalued companies which
we broadly categorize as "undiscovered gems" and "fallen angels." These are
companies whose stock prices are low because they are unknown to the broader
market, or because they are experiencing what we believe are temporary events
that affect their ability to increase earnings.
The fiscal year started with a weak market for small company stocks. Small
company stock prices were at historic lows compared to large company stock
prices. At that time, we aggressively positioned the Value Fund by investing in
companies that we believe are high quality and have outstanding long term growth
prospects at prices that had dropped to within legitimate value parameters. This
had favorable results as small- and micro-cap stocks began to recover early in
1999.
One such stock was Whitehall Jewellers, a mall-based jewelry retailer. We
increased our ownership in the stock as fundamentals at the company improved
while the stock price remained low. Late in the year, after consistent earnings
growth, the stock price rallied and Whitehall became one of the top contributors
to performance. We also increased our position in Supertex, a manufacturer of
semiconductors, after they made a strategic acquisition of additional
manufacturing assets. Supertex has since been a key contributor to fiscal 1999
performance.
One of the Fund's "undiscovered gems" is Gentner Communications, a
manufacturer of audio conferencing products. We discovered the company as they
were beginning to accelerate revenues and profits with the introduction of new
products. The company was unknown to the broader market due to its small size
and new products. Gentner is now gaining recognition as a leader in audio
conferencing equipment and the stock price has been rising accordingly.
Power-One is an example of a "fallen angel." Power-One manufactures
components which supply power to electronic devices. The company's sales and
earnings fell last year due to a general slowdown in technology markets. We
believed the company was well posi-
<PAGE>
WASATCH MICRO-CAP VALUE FUND-PORTFOLIO SUMMARY
tioned to grow once the technology market improved. During the year, demand for
Power-One's products has increased and the stock has been a strong contributor
to performance.
Fiscal year results were also positively impacted by takeovers of several
companies held by the Fund. First Commonwealth, Inc. and The Carnegie Group were
in this category. The Value Fund does not specifically target potential
takeovers. However, we believe that the significant number of companies held by
the Fund that have been taken over validates that we are investing in companies
whose fundamental valuations are below market values.
OUTLOOK
- -------
We believe the Wasatch Micro-Cap Value Fund's strategy of investing in low-
priced stocks of companies that we believe are "undiscovered gems" and "fallen
angels" will continue to give the Fund the potential to achieve returns capable
of helping you reach your long term financial objectives.
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AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
- --------------------------------------------------------------------------------
WASATCH MICRO-CAP VALUE FUND 35.00% N/A 11.52%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Russsell
Micro-Cap 2000
Value Fund Value
---------- ----------
12/17/97<F1> 10,000 10,000
9/30/98 9,000 8,767
9/30/99 Fiscal Year Ended September 30 12,150 9,278
Fiscal Year Ended September 30
<F1> Inception: December 17, 1997.
The Russell 2000 Value Index is an unmanaged total return index that
measures the performance of those Russell 2000 companies with lower price-
to-book ratios and lower forecasted growth values.
<PAGE>
WASATCH MICRO-CAP VALUE FUND-PORTFOLIO SUMMARY
- ----------------------------------------------
TEN LARGEST HOLDINGS
- --------------------
1. SUPERTEX, INC. 6%
Semiconductor component manufacturer.
2. PERICOM SEMICONDUCTOR CORP. 5%
Semiconductors for networking equipment,
network servers and PC's.
3. WORLD ACCEPTANCE CORP. 4%
Consumer lending.
4. WHITEHALL JEWELLERS, INC. 4%
Fine jewelry retailer.
5. CORVEL CORP. 3%
Case management and cost containment services
for workers' compensation.
6. NATIONAL DENTEX CORP. 3%
Dental laboratories.
7. PCD INC. 3%
Electronic connectors.
8. RAINBOW RENTALS, INC. 3%
Rent-to-own store operator.
9. THE MEN'S WEARHOUSE, INC. 3%
Men's discount clothing retailer.
10. USA TRUCK, INC. 3%
Long haul trucking.
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ASSET ALLOCATION
----------------
Common Stocks 99.4%
Cash & Other Assets 0.6%
SECTOR BREAKDOWN
----------------
Semiconductors & Telecom 18.2%
Retail 15.4%
Business Products & Services 12.7%
Personal Products & Services 9.8%
Health Care 9.6%
Computers & Electronics 8.1%
Transportation 7.8%
Financial Services 5.9%
Pharmaceutical & Medical 5.1%
Builders & Building Supplies 3.8%
Other 3.0%
<PAGE>
WASATCH AGGRESSIVE EQUITY FUND-PORTFOLIO SUMMARY
- ------------------------------------------------
SEPTEMBER 30, 1999
(PHOTO)
JEFF CARDON-LEAD MANAGER
The Aggressive Equity Fund seeks to achieve long term growth of capital
through investments in companies with market capitalizations of less than $1
billion at the time of purchase that we believe have superior growth potential.
The Fund is best-suited for long term investors who can tolerate the greater
risks and volatility that are inherent with investments in small company stocks.
Wasatch intends to close the Fund at around $300 million in assets.
REVIEW OF THE YEAR
- ------------------
The Aggressive Equity Fund's strategy of investing in growing small companies
at prices we believe are reasonable was well rewarded over the last 12 months.
The Fund's one year return of 48.96% significantly outpaced the 19.07% return
of the Russell 2000 Index, a widely recognized measure for the performance of
small company stocks. More importantly, the Fund has outperformed the Russell
2000 over longer time periods with average annual returns of 15.83% for five
years and 16.08% for 10 years compared to the Russell's average annual returns
of 12.38% and 10.93%, respectively.
Over the past year, stock market performance has been very narrow. Technolgy
and telecommunications are two of the few industries whose stocks have performed
well. Fortunately we had positioned the Fund with dynamic investments in both
these industries. A number of the Fund's telecom holdings, SDL, Powertel, United
States Cellular, JDS Fitel, MMC Networks and American Xtal Technology, enjoyed
huge returns. The Fund's large positions in several technology companies that we
believe are high quality such as Microchip Technology, Micrel, Synopsys and QRS
Corporation also paid off nicely during the year.
The Fund's largest holding a year ago and today, Techne Corp., a health care
company that makes complex, disposable research kits for the biotechnology
industry has doubled in price since last September. We believe the exceptional
quality of this company has made it stand out from health care stocks that have
generally struggled. One Fund holding, Pediatrix Medical Group, continues to
suffer from investors' fears about scrutiny of its billing practices by several
state governments.
Six companies held by the Fund were acquired during the year, lending
credibility to our belief that small companies remain undervalued in the market.
Eltron International was acquired by Zebra Technologies, JDS Fitel merged with
Uniphase, Altron was acquired by Sanmina, K&G Men's Center was acquired by The
Men's Wearhouse, Data Processing Resources was acquired by Compuware, and
General Nutrition Companies was acquired by Royal Numico. As of Sept. 30, 1999,
the Fund continues to hold Zebra Technologies, Sanmina and The Men's Wearhouse.
Although the Fund's business services holdings generally did well, Year 2000
concerns kept many investors out of
<PAGE>
WASATCH AGGRESSIVE EQUITY FUND-PORTFOLIO SUMMARY
- ------------------------------------------------
this sector. We sold several information technology consulting companies because
post Y2K growth prospects are unclear.
We have added the Russell 2000 as a benchmark for the Fund. We believe this
index of small company stocks is more representative of the Fund's investments
than the S&P 500/R, an index of large company stocks. Going forward we will no
longer use the S&P 500.
OUTLOOK
- -------
We believe small company stocks remain undervalued compared to large company
stocks. As always, we will strive to keep the Aggressive Equity Fund favorably
positioned with investments in what we believe are "America's Best Growth
Companies."<F1> In addition, we believe there is room for stock price
appreciation in the Fund's portfolio.
These factors give us reason to look forward to the coming year with great
enthusiasm. We are optimistic about the Fund's potential to be a positive force
behind your long term investment plan.
<F1> These are companies that we believe may possess an identifiable,
sustainable competitive advantage, are underfollowed, undervalued, well-
managed and have the potential to double in size within five years.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
WASATCH AGGRESSIVE EQUITY FUND 48.96% 15.83% 16.08%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Aggressive S&P 500 Russell
Equity Fund Index 2000 Index
------------------ ------------------ ------------------
9/30/89 10,000 10,000 10,000
9/30/90 8,947 9,076 7,285
9/30/91 15,037 11,904 10,569
9/30/92 14,691 13,220 11,514
9/30/93 19,939 14,938 15,331
9/30/94 21,305 15,489 15,741
9/30/95 28,802 20,096 19,419
9/30/96 28,487 24,182 21,970
9/30/97 36,877 33,963 29,262
9/30/98 29,821 37,035 23,697
9/30/99 44,420 47,333 28,216
The Russell 2000 Index is an unmanaged total return index of the smallest 2,000
companies in the Russell 3000 Index, as ranked by total market capitalization.
The Russell 2000 is widely regarded in the industry to accurately capture the
universe of small company stocks.
The S&P 500 Index is an unmanaged but commonly used measure of common stock
total return performance.
<PAGE>
WASATCH AGGRESSIVE EQUITY FUND-PORTFOLIO SUMMARY
- ------------------------------------------------
TEN LARGEST HOLDINGS
- --------------------
1. TECHNE CORP. 7%
Complex, disposable research kits for biotechnology.
2. O'REILLY AUTOMOTIVE, INC. 6%
Automotive parts retailer/distributor.
3. SYNOPSYS, INC. 5%
Software solutions for electronic design automation.
4. QRS CORPORATION 5%
Business-to-business e-commerce.
5. WHITEHALL JEWELLERS, INC. 4%
Fine jewelry retailer.
6. UNITED STATES CELLULAR CORP. 4%
Cellular systems for wireless telecom.
7. EXPRESS SCRIPTS, INC., CLASS A 4%
Pharmacy benefits manager.
8. POWERTEL, INC. 3%
Services for wireless telecom.
9. NATIONAL DENTEX CORP. 3%
Dental laboratories.
10. MICREL, INC. 3%
Analog semiconductors for cellular phones
and laptop computers.
- ------------------------------------------------------------------
ASSET ALLOCATION
----------------
Common Stocks 95.1%
Cash & Other Assets 4.9%
SECTOR BREAKDOWN
----------------
Business Services 19.3%
Retail 16.3%
Semiconductors & Telecom 15.3%
Pharmaceutical & Medical 11.4%
Computers & Electronics 10.7%
Health Care 10.2%
Transportation 5.3%
Personal Products & Services 3.6%
Real Estate 2.5%
Other 0.5%
<PAGE>
WASATCH GROWTH FUND-PORTFOLIO SUMMARY
- -------------------------------------
SEPTEMBER 30, 1999
(PHOTO)
SAMUEL S. STEWART, JR., PHD, CFA-LEAD MANAGER
- ---------------------------------------------
The Wasatch Growth Fund seeks to achieve long term growth of capital through
investments in companies that are stable and have the potential to grow steadily
for long periods of time. In addition, we seek to invest in these companies at
reasonable prices. The Growth Fund is the most conservative of the Wasatch
Equity Funds. However, because the Fund will experience volatility it is best-
suited for long term investors.
REVIEW OF THE YEAR
- ------------------
The Growth Fund's excellent return of 27.28% for the year ended September 30,
1999 was driven by our strategy of investing in "America's Best Growth
Companies"<F1> at prices we believe were especially favorable. Disciplined
execution of the Fund's strategy was rewarded in an environment that was more
favorable for small company stocks.
When seeking "America's Best Growth Companies" we don't limit ourselves to
specific industries. We select the Fund's holdings one company at a time based
on our assessment of each company's potential for steady long term growth.
That's why it is not surprising that many industry sectors made positive
contributions to the Fund's performance over the past 12 months.
It is worth noting, however, that the Fund's return was gained without
significant weight in technology which was one of the best performing sectors of
the market this year. It is typical for the Fund to have relatively few
technology holdings because we tend to favor companies with products that have
long lifespans. Rapid advances in technology usually mean that if a company's
products are not updated frequently they will become obsolete quickly. One of
the few technology companies that fits the Fund's investment profile is
Synopsys, Inc., a software developer for electronic design automation. Synopsys
has been a strong performer in the Fund and its stock price nearly doubled from
where it was a year ago. We have been investing in Synopsys since 1992 and the
company has reliably produced the stable growth we seek.
The biggest positive contributor to performance was long time holding,
General Nutrition Companies, a manufacturer and distributor of vitamins, herbs
and nutritional supplements. The company was acquired for cash by Royal Numico
in August and is no longer part of the Fund's portfolio.
The Fund's 10 largest positions were also among the top performers. The stock
price of the Fund's largest holding, AmeriCredit, an automobile lender, was up
over 20% from a year ago. World Acceptance, a consumer lender, was a solid
performer throughout the year.
While health care stocks were generally weak, three of the Fund's health care
holdings, Techne, First Health
<F1> These are companies that we believe possess an identifiable, sustainable
competitive advantage, are underfollowed, undervalued, well-managed and
have the potential to double in size within five years.
<PAGE>
WASATCH GROWTH FUND-PORTFOLIO SUMMARY
- -------------------------------------
Group and Concentra Managed Care enjoyed significant gains. On the other
hand, Pediatrix Medical Group continued to suffer from investors' fears about
scrutiny of its billing practices by several state governments.
We have added the Russell 2000 as a benchmark for the Fund. We believe this
small company stock index better represents the Fund's investments than the
current benchmarks. Going forward we will no longer use the Lipper Growth Funds
Index or the S&P 500/R Index.
OUTLOOK
- -------
We believe the Growth Fund is well positioned to be a positive force in your
long term investment plan because we have invested in growing companies that we
believe are stable and of high quality. Adding to our optimistic outlook is the
success we had over the past 12 months of investing in "America's Best Growth
Companies" at reasonable prices.
We look forward to serving you as you strive to achieve your long term
financial goals.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
WASATCH GROWTH FUND 27.28% 17.81% 15.03%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Growth S&P 500 Lipper Growth Russell
Fund Index Funds Index 2000 Index
------------- ------------- ------------- -------------
9/30/89 10,000 10,000 10,000 10,000
9/30/90 9,518 9,076 8,608 7,285
9/30/91 14,459 11,904 11,749 10,569
9/30/92 13,937 13,220 12,651 11,514
9/30/93 17,221 14,938 15,070 15,331
9/30/94 17,867 15,489 15,340 15,741
9/30/95 24,972 20,096 19,639 19,419
9/30/96 28,065 24,182 22,335 21,970
9/30/97 38,610 33,963 30,068 29,262
9/30/98 31,859 37,035 30,992 23,697
9/30/99 40,551 47,333 40,367 28,216
The Russell 2000 Index is an unmanaged total return index of the smallest 2,000
companies in the Russell 3000 Index, as ranked by total market capitalization.
The Russell 2000 is widely regarded in the industry to accurately capture the
universe of small company stocks.
The Lipper Growth Funds Index includes the largest 30 funds which, by prospectus
or portfolio practice, normally invest in companies whose long-term earnings are
expected to grow significantly faster than the earnings of the stocks
represented in the major unmanaged stock indices.
The S&P 500 Index is an unmanaged but commonly used measure of common stock
total return performance.
<PAGE>
WASATCH GROWTH FUND-PORTFOLIO SUMMARY
- -------------------------------------
TEN LARGEST HOLDINGS
- --------------------
1. AMERICREDIT CORP. 11%
Automobile lender.
2. RENT-A-CENTER, INC. 9%
Operates rent-to-own stores.
3. FIRST HEALTH GROUP CORP. 7%
Medical cost management services for group
health and workers' compensation.
4. TECHNE CORP. 7%
Complex, disposable research kits for biotechnology.
5. PEDIATRIX MEDICAL GROUP INC. 7%
National network of neonatalogists.
6. SYNOPSYS, INC. 6%
Software solutions for electronic design automation.
7. WHITEHALL JEWELLERS, INC. 4%
Fine jewelry retailer.
8. ZEBRA TECHNOLOGIES CORP. 3%
Barcode printers and supplies.
9. SCP POOL CORPORATION 3%
Swimming pool supply distributor.
10. WORLD ACCEPTANCE CORP. 3%
Consumer lending.
- -----------------------------------------------------------------
ASSET ALLOCATION
----------------
Common Stocks 93.4%
Cash & Other Assets 6.6%
SECTOR BREAKDOWN
----------------
Health Care 19.8%
Financial Services 16.1%
Business Services 14.8%
Personal Services 13.0%
Pharmaceutical & Medical 10.2%
Computers 8.9%
Retail 6.6%
Semiconductors 2.7%
Transportation 1.3%
<PAGE>
WASATCH MID-CAP FUND-PORTFOLIO SUMMARY
- --------------------------------------
SEPTEMBER 30, 1999
(PHOTO)
KAREY BARKER, CFA-LEAD MANAGER
The Mid-Cap Fund seeks long term growth of capital through investments in
rapidly growing companies with market capitalizations between $300 million and
$5 billion. The Fund typically has relatively few holdings which tend to be
concentrated in the most dynamic industries. It pursues an aggressive strategy
designed for long term investors who can tolerate greater risks and volatility.
REVIEW OF THE YEAR
- ------------------
The Mid-Cap Fund's outstanding return of 39.86% for the 12 months ended
September 30, 1999 far outpaced the 19.07% return of the Russell 2000 Index, a
widely recognized measure for the performance of small company stocks, and the
25.5% return of the S&P MidCap 400 Index, which the industry deems to be
representative of the performance of mid-cap stocks.
The Fund's exceptional performance can largely be attributed to our heavy
weighting in the technology sector. Last year amid economic turmoil in Asia we
stated that we did not foresee any slowdown in global demand for technology and
that we expected to continue investing significant assets in fast growing
technology companies. This stance paid off nicely as the stocks of many of the
Fund's long term technology holdings such as Micrel, Microchip Technology,
Sanmina and Synopsys performed phenomenally well this year.
During the year the Fund benefited from the dramatic growth of the Internet
by investing in companies that are profitable and growing. JDS Fitel (now JDS
Uniphase) and SDL are two exciting companies that make semiconductor lasers used
to increase the bandwidth of the fiber optic cables that are the backbone of the
Internet. They have provided significant growth to the Fund's portfolio. Another
strong Internet-related performer, International Integration, helps clients link
older computer programs to newer Internet systems, giving them the necessary
infrastructure to do e-business.
The Fund also maintained a heavy weighting in the health care sector. Over
the past 12 months this sector has significantly underperformed the rest of the
market and we have had our share of difficulties. Many health care stocks have
performed poorly due to government reimbursement issues. These issues are high
lighted by troubles at Pediatrix Medical Group, a national network of
neonatalogists. The company's performance has been affected by scrutiny of its
billing practices by several state governments. A large long term holding,
Express Scripts, a pharmacy benefits manager, enjoyed strong stock price
appreciation despite broad health care weakness. Over the past 12 months it has
exceeded earnings expectations and announced sound strategic actions.
In general, business and consumer services made solid contributions to
performance. The two largest holdings in these sectors, O'Reilly Automotive and
Navigant Consulting (formerly The Metzler Group), made strong positive
<PAGE>
WASATCH MID-CAP FUND-PORTFOLIO SUMMARY
- --------------------------------------
contributions during the past 12 months.
We have added the Russell 2000 Index as a benchmark for the Fund because we
believe it better represents the Fund's investments than the current bench-
marks. Going forward it will replace the S&P MidCap 400 and S&P 500/R.
OUTLOOK
- -------
Stock prices will continue to fluctuate in an uncertain market. As always we
will monitor the Fund's holdings for issues such as slowing growth, changes in
the competitive environment and valuation.
We expect to continue carrying heavy weightings in technology and health care
because we believe they currently provide the greatest potential to produce
above average long term growth in earnings. Looking ahead, we expect the average
earnings growth of the Fund's holdings to meet or exceed our 25% minimum annual
target.
We believe our strategy of taking large positions in fast growing companies
will continue to reward shareholders who have assessed their tolerance for risk
and volatility and are willing to take a long term approach to investing.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
- --------------------------------------------------------------------------------
WASATCH MID-CAP FUND 39.86% 16.96% 13.15%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Mid-Cap S&P 500 S&P MidCap Russell
Fund Index 400 Index 2000 Index
------------- ------------- ------------- -------------
8/16/92<F1> 10,000 10,000 10,000 10,000
9/30/92 9,930 9,910 10,000 9,941
9/30/93 10,511 11,199 12,404 13,237
9/30/94 11,021 11,612 12,603 13,591
9/30/95 18,653 15,066 15,850 16,767
9/30/96 18,179 18,129 18,069 18,970
9/30/97 22,132 25,461 25,135 25,266
9/30/98 17,248 27,764 23,550 20,461
9/30/99 24,123 35,484 29,554 24,362
Fiscal Years Ended September 30
<F1> Inception: August 16, 1992.
The Russell 2000 Index is an unmanaged total return index of the smallest
2,000 companies in the Russell 3000 Index, as ranked by total market
capitalization. The Russell 2000 is widely regarded in the industry to
accurately capture the universe of small company stocks.
The S&P MidCap 400 Index is an unmanaged capitalization weighted total
return 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.
The S&P 500 Index is an unmanaged but commonly used measure of common stock
total return performance.
<PAGE>
WASATCH MID-CAP FUND-PORTFOLIO SUMMARY
- --------------------------------------
TEN LARGEST HOLDINGS
- --------------------
1. EXPRESS SCRIPTS, INC., CLASS A 9%
Pharmacy benefits manager.
2. O'REILLY AUTOMOTIVE, INC. 8%
Automotive parts retailer/distributor.
3. NAVIGANT CONSULTING, INC. 8%
Consulting services to energy and utility businesses.
4. SYNOPSYS, INC. 7%
Software solutions for electronic design automation.
5. PEDIATRIX MEDICAL GROUP INC. 5%
National network of neonatalogists.
6. F.Y.I. INCORPORATED 5%
Document management services.
7. SANMINA CORP. 4%
Electronic components manufacturer.
8. MEDQUIST INC. 4%
Electronic transcription and data management
for health care.
9. INTERNATIONAL INTEGRATION INC. 3%
Information technology integration services.
10. TLC THE LASER CENTER INC. 3%
Eye care and laser surgery centers.
- -----------------------------------------------------------------
ASSET ALLOCATION
----------------
Common and Preferred Stocks 90.8%
Cash & Other Assets 9.2%
SECTOR BREAKDOWN
----------------
Business Services 22.8%
Health Care Services 19.7%
Computers 12.1%
Semiconductors & Telecom 12.0%
Health Care Providers 9.4%
Retail 9.0%
Pharmaceutical & Medical 3.9%
Other 1.9%
<PAGE>
WASATCH-HOISINGTON U.S. TREASURY FUND-PORTFOLIO SUMMARY
- -------------------------------------------------------
SEPTEMBER 30, 1999
(PHOTO)
VAN R. HOISINGTON-LEAD MANAGER
The U.S. Treasury Fund seeks to provide a rate of return that exceeds the rate
of inflation over a business cycle by investing in U.S. Treasury securities with
an emphasis on both income and capital appreciation.
REVIEW OF THE YEAR
- ------------------
For the three years ended September 30, 1999 the Wasatch-Hoisington U.S.
Treasury Fund had an exceptional gain of 7.94%, beating the Lehman Brothers
Aggregate Index's return of 6.83% by over one percent.
Some of these exceptional gains were retraced in the 1999 fiscal year,
however, as a result of the worst Treasury bond market on record. In the latest
fiscal year, the Fund experienced a return of -10.65% compared with the Lehman
Index's return of -0.36%.
With the core rate of the Consumer and Producer Price indices trending
downward, we continued to fully invest the Fund's assets in long dated U.S.
Treasury securities. Even though wage rate increases slowed and productivity
growth accelerated, the psychology of bond market investors turned extremely
negative in the face of solid U.S. economic growth and improving expansion
overseas. Investors fretted that this growth would reverse the favorable
inflation picture even though money and credit growth slowed as a result of
restrictive Federal Reserve policy. The U.S. Treasury registered a record budget
surplus reflecting the adverse sentiment in the market. The 30-year Treasury
bond yield jumped to 6.06% on September 30th, substantially above the 4.98%
yield recorded a year earlier. The rise in yields resulted in price depreciation
of the long dated Treasury securities held by the Fund in the latest fiscal
year.
OUTLOOK
- -------
In spite of the negative sentiment prevailing in the bond market this year,
history has repeatedly demonstrated that actual inflation, not psychology,
determines the level of long term interest rates.
We believe inflation is not heating up. In the short term, interest rates may
rise but we believe that over the long term the trend will continue its downward
path.
Inflation is likely to remain tame since economic fundamentals have not
worsened in spite of this year's sharp increase in oil prices and disappointing
crop failures. A variety of economic measures show that U.S. firms are
experiencing a general lack of pricing power. For instance, even in the midst of
booming conditions in the auto and computer markets, prices are falling-in some
cases quite sharply. Downward price pressures reflect overcapacity of the
world's factories, which has been one of the main factors in the decade-long
decline in inflation and bond yields.
In addition, fixing the Year 2000 (Y2K) computer bug may have
<PAGE>
WASATCH-HOISINGTON U.S. TREASURY FUND-PORTFOLIO SUMMARY
- -------------------------------------------------------
accounted, directly and indirectly, for as much as 25% of this year's growth in
Gross Domestic Product (GDP). We believe that as expenditures for the Y2K
problem diminish, so will the economic growth rate for the Year 2000. The
reduction in Y2K spending is likely to expose many soft spots in the global
economy. We think this will result in a continued flow of low cost goods into
the United States.
With domestic monetary and fiscal policies restrictive, we believe lower
inflation will continue to be a reality. We believe bond investors who are
willing to operate on a multi-year time horizon will be amply rewarded for
holding long dated U.S. Treasury bonds.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
WASATCH-HOISINGTON U.S.
TREASURY FUND -10.65% 7.72% 7.51%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch-Hoisington Lehman Bros.
U.S. Treasury Fund Aggregate Index
---------------------------- ------------------
9/30/89 10,000 10,000
9/30/90 10,487 10,756
9/30/91 12,452 12,477
9/30/92 13,503 14,042
9/30/93 14,016 15,443
9/30/94 14,227 14,945
9/30/95 15,716 17,047
9/30/96 16,410 17,882
9/30/97 18,582 19,619
9/30/98 23,097 21,877
9/30/99 20,636 21,799
The Lehman Brothers Aggregate Index covers the U.S. investment grade fixed rate
bond market, including government and corporate securities, agency mortgage
pass-through securities, and asset-backed securities. To be included in the
index the security must meet the following criteria: must have at least one year
to final maturity, regardless of call features; must have at least $100 million
par amount outstanding; must be rated investment grade or better by Moody's
Investors Service, Standard & Poor's, or Fitch Investor's Service; must be fixed
rate, although it can carry a coupon that steps up or changes to a predetermined
schedule; must be dollar-denominated and nonconvertible. All corporate and
asset-backed securities must be registered with the SEC; must be publicly
issued.
WASATCH-HOISINGTON U.S. TREASURY FUND-PORTFOLIO SUMMARY
- -------------------------------------------------------
HOLDINGS/MATURITY DATE
- ----------------------
1. U.S. TREASURY BOND 33%
8/15/2027
2. U.S. TREASURY BOND 19%
11/15/2024
3. U.S. TREASURY BOND 14%
11/15/2026
4. U.S. TREASURY BOND 8%
8/15/2025
5. U.S. TREASURY BOND 7%
2/15/2026
6. U.S. TREASURY BOND 6%
2/15/2027
7. U.S. TREASURY STRIP 6%
11/15/2021
8. U.S. TREASURY STRIP 5%
8/15/2025
9. U.S. TREASURY BOND 1%
8/15/2026
10. U.S. TREASURY BOND 1%
8/15/2023
- -----------------------------------
ASSET ALLOCATION
----------------
U.S. Treasury Bonds & Strips 98.5%
Cash & Other Assets 1.5%
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 96.7%
-------------------
BUILDERS & BUILDING SUPPLIES 0.7%
94,191 Building Materials Holding Corp.<F1> $ 941,910
5,000 Crossman Communities, Inc.<F1> 81,562
-----------
1,023,472
-----------
BUSINESS PRODUCTS 0.2%
9,100 Koala Corp.<F1> 279,825
-----------
BUSINESS SERVICES 19.3%
167,600 Charles River Associates Incorporated<F1> 4,671,850
84,500 Daisytek International Corp.<F1> 1,188,281
56,900 F.Y.I. Inc.<F1> 1,916,819
43,000 Global Imaging Systems, Inc.<F1> 639,625
253,750 National Dentex Corp.<F1> 4,329,609
2,000 NOVA Corporation<F1> 50,000
64,000 On Assignment, Inc.<F1> 1,536,000
39,300 QRS Corporation<F1> 2,520,113
56,000 RemedyTemp, Inc.<F1> 805,000
4,100 RWD Technologies, Inc.<F1> 32,287
200,000 SCP Pool Corporation<F1> 4,700,000
68,000 StarTek, Inc.<F1> 3,740,000
138,500 Wilmar Industries, Inc.<F1> 1,783,188
-----------
27,912,772
-----------
COMPUTER SOFTWARE 1.4%
22,300 CFI ProServices, Inc.<F1> 218,122
20,000 Landmark Systems Corporation<F1> 162,500
7,900 ShowCase Corporation<F1> 79,000
27,000 Synopsys, Inc.<F1> 1,516,219
-----------
1,975,841
-----------
COMPUTER SYSTEMS & COMPONENTS 7.0%
189,200 Active Voice Corp.<F1> 2,979,900
32,000 MMC Networks, Inc.<F1> 998,000
90,000 Pinnacle Systems, Inc.<F1> 3,813,750
90,000 Power-One, Inc.<F1> 2,295,000
63,700 RF Industries, Ltd.<F1> 113,466
-----------
10,200,116
-----------
ELECTRONICS 1.8%
336,600 PCD Inc.<F1> 2,650,725
-----------
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
FINANCIAL SERVICES 2.4%
5,500 ACE Cash Express, Inc.<F1> $ 79,750
628,700 World Acceptance Corp.<F1> 3,379,262
-----------
3,459,012
-----------
HEALTH CARE PROVIDERS 2.9%
367,420 AmSurg Corp., Class A<F1> 2,342,302
279,500 AmSurg Corp., Class B<F1> 1,746,875
7,000 U.S. Physical Therapy, Inc.<F1> 54,250
-----------
4,143,427
-----------
HEALTH CARE SERVICES 6.5%
73,000 American Healthcorp, Inc.<F1> 447,125
100,600 AmeriPath, Inc.<F1> 842,525
363,750 CorVel Corp.<F1> 8,002,500
7,000 Superior Consultant Holdings Corp.<F1> 82,250
-----------
9,374,400
-----------
PERSONAL PRODUCTS 1.7%
34,000 Maxwell Shoe Company Inc.<F1> 299,625
136,100 Signature Eyewear, Inc.<F1> 501,869
217,800 USANA, Inc.<F1> 1,606,275
-----------
2,407,769
-----------
PERSONAL SERVICES 5.0%
334,600 First Cash Financial Services, Inc.<F1> 3,680,600
260,000 Rainbow Rentals, Inc.<F1> 2,405,000
64,153 Rent-Way, Inc.<F1> 1,218,907
-----------
7,304,507
-----------
PHARMACEUTICAL & MEDICAL PRODUCTS 16.5%
140,000 Biosite Diagnostics, Inc.<F1> 1,273,125
484,900 ICU Medical, Inc.<F1> 7,273,500
7,500 Invitrogen Corporation<F1> 252,187
69,900 Minntech Corp. 716,475
14,000 Myriad Genetics, Inc.<F1> 238,000
304,217 Techne Corp.<F1> 9,544,808
338,500 Young Innovations, Inc.<F1> 4,696,688
-----------
23,994,783
-----------
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
REAL ESTATE 0.4%
32,000 National Health Investors, Inc. REIT $ 526,000
-----------
RETAIL 12.7%
4,200 Finish Line, Inc. (The)<F1> 36,750
10,000 Garden Fresh Restaurant Corp.<F1> 153,125
105,200 Hibbett Sporting Goods, Inc.<F1> 1,722,650
78,000 MarineMax, Inc.<F1> 780,000
51,950 O'Reilly Automotive, Inc.<F1> 2,475,742
5,000 PJ America, Inc.<F1> 104,375
172,053 The Men's Wearhouse, Inc.<F1> 3,699,140
164,000 Travis Boats & Motors, Inc.<F1> 1,578,500
274,670 Whitehall Jewellers, Inc.<F1> 7,896,762
-----------
18,447,044
-----------
SEMICONDUCTORS 13.2%
24,000 Cohu, Inc. 507,000
95,978 Micrel, Inc.<F1> 4,163,046
12,900 Microchip Technology, Inc.<F1> 662,737
35,000 Nanometrics Incorporated<F1> 315,000
325,800 Pericom Semiconductor Corporation<F1> 4,846,275
44,000 Semtech Corporation<F1> 1,611,500
435,000 Supertex, Inc.<F1> 7,095,938
-----------
19,201,496
-----------
TELECOMMUNICATIONS 1.5%
20,000 SDL, Inc.<F1> 1,526,250
61,900 Vari-L Company, Inc.<F1> 626,738
-----------
2,152,988
-----------
TRANSPORTATION 3.5%
56,500 Aramex International Limited<F1> 466,125
45,600 Carey International, Inc.<F1> 1,140,000
34,000 Covenant Transport, Inc.<F1> 518,500
22,900 Knight Transportation, Inc.<F1> 332,050
11,800 Motor Cargo Industries, Inc.<F1> 81,125
90,000 Smithway Motor Xpress Corp.<F1> 669,375
53,000 Transport Corp. of America, Inc.<F1> 689,000
130,000 USA Truck, Inc.<F1> 1,161,875
-----------
5,058,050
-----------
TOTAL COMMON STOCKS (COST $111,106,596) 140,112,227
-----------
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
SEPTEMBER 30, 1999
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 2.8%
---------------------------
(Variable Rate Demand Deposits)
$4,039,130 UMB Bank Money Market Fiduciary, 3.99% $ 4,039,130
------------
TOTAL SHORT-TERM INVESTMENTS (COST $4,039,130) 4,039,130
------------
TOTAL INVESTMENTS (COST $115,145,726) 99.5% 144,151,357
OTHER ASSETS LESS LIABILITIES 0.5% 724,000
------------
NET ASSETS 100.0% $144,875,357
============
<F1> Non-income producing
See notes to financial statements.
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 99.4%
-------------------
BASIC MATERIALS 0.7%
13,800 Encore Wire Corporation<F1> $ 125,063
-----------
BUILDERS & BUILDING SUPPLIES 3.8%
800 American Woodmark Corporation 21,500
35,000 Building Materials Holding Corp.<F1> 350,000
8,000 Crossman Communities, Inc.<F1> 130,500
7,000 National R.V. Holdings, Inc.<F1> 138,250
-----------
640,250
-----------
BUSINESS PRODUCTS 0.8%
12,000 Astronics Corporation<F1> 102,000
1,000 Koala Corp.<F1> 30,750
-----------
132,750
-----------
BUSINESS SERVICES 11.9%
2,000 Analysts International Corporation 20,750
20,900 Daisytek International Corp.<F1> 293,906
31,900 National Dentex Corp.<F1> 544,294
13,300 RemedyTemp, Inc.<F1> 191,188
9,000 RWD Technologies, Inc.<F1> 70,875
18,600 SCP Pool Corporation<F1> 437,100
34,000 Wilmar Industries, Inc.<F1> 437,750
-----------
1,995,863
-----------
COMPUTER SOFTWARE 2.1%
18,000 ANSYS, Inc.<F1> 177,750
10,000 Aspen Technologies, Inc.<F1> 97,500
6,000 CFI ProServices, Inc.<F1> 58,687
1,000 Evans & Sutherland Computer Corporation<F1> 12,375
-----------
346,312
-----------
COMPUTER SYSTEMS & COMPONENTS 2.5%
17,150 Active Voice Corp.<F1> 270,113
4,500 Power-One, Inc.<F1> 114,750
20,000 RF Industries, Ltd.<F1> 35,625
-----------
420,488
-----------
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRONICS 3.5%
3,000 Kent Electronics Corporation<F1> $ 55,500
3,000 Nu Horizons Electronics Corp.<F1> 24,000
64,200 PCD Inc.<F1> 505,575
-----------
585,075
-----------
ENERGY 1.2%
15,500 Gulf Island Fabrication, Inc.<F1> 204,406
-----------
FINANCIAL SERVICES 5.9%
7,300 BWC Financial Corp.<F1> 160,144
22,000 Gainsco, Inc. 136,125
130,500 World Acceptance Corp.<F1> 701,437
-----------
997,706
-----------
HEALTH CARE PROVIDERS 2.1%
25,525 AmSurg Corp., Class A<F1> 162,722
2,000 AmSurg Corp., Class B<F1> 12,500
8,000 Pediatrix Medical Group Inc.<F1> 111,000
7,500 U.S. Physical Therapy, Inc.<F1> 58,125
-----------
344,347
-----------
HEALTH CARE SERVICES 7.5%
32,000 America Service Group, Inc.<F1> 432,000
25,450 CorVel Corp.<F1> 559,900
5,000 Interwest Home Medical, Inc.<F1> 17,500
14,000 Orthodontic Centers of America, Inc.<F1> 245,000
-----------
1,254,400
-----------
PERSONAL PRODUCTS 4.8%
28,000 Maxwell Shoe Company Inc.<F1> 246,750
33,500 Racing Champions Corporation<F1> 190,531
73,600 Signature Eyewear, Inc.<F1> 271,400
8,000 Sport-Haley, Inc.<F1> 37,000
8,000 USANA, Inc.<F1> 59,000
-----------
804,681
-----------
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
PERSONAL SERVICES 5.0%
31,500 First Cash Financial Services, Inc.<F1> $ 346,500
53,400 Rainbow Rentals, Inc.<F1> 493,950
-----------
840,450
-----------
PHARMACEUTICAL & MEDICAL PRODUCTS 5.1%
26,300 ICU Medical, Inc.<F1> 394,500
4,000 Minntech Corp. 41,000
9,000 Serologicals Corp.<F1> 38,250
27,500 Young Innovations, Inc.<F1> 381,562
-----------
855,312
-----------
REAL ESTATE 1.1%
10,200 National Health Investors, Inc. REIT 167,663
1,875 Prison Realty Corporation REIT 20,156
-----------
187,819
-----------
RETAIL 15.4%
26,000 Finish Line, Inc. (The)<F1> 227,500
32,000 Guitar Center, Inc.<F1> 302,000
25,000 MarineMax, Inc.<F1> 250,000
20,000 Monro Muffler Brake, Inc.<F1> 133,750
18,000 Nautica Enterprises, Inc.<F1> 290,250
1,350 O'Charley's Inc.<F1> 19,912
1,000 Payless ShoeSource, Inc.<F1> 50,500
19,000 Pier 1 Imports, Inc.<F1> 128,250
21,944 The Men's Wearhouse, Inc.<F1> 471,796
5,000 Travis Boats & Motors, Inc.<F1> 48,125
22,775 Whitehall Jewellers, Inc.<F1> 654,781
-----------
2,576,864
-----------
SEMICONDUCTORS 15.5%
15,000 Align-Rite International, Inc.<F1> 282,187
3,000 Asyst Technologies, Inc.<F1> 99,000
6,000 Integrated Measurement Systems, Inc.<F1> 76,875
24,000 Nanometrics Incorporated<F1> 216,000
56,000 Pericom Semiconductor Corporation 833,000
66,700 Supertex, Inc.<F1> 1,088,044
-----------
2,595,106
-----------
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS 2.7%
29,000 Gentner Communications Corporation<F1> $ 232,000
22,300 Vari-L Company, Inc.<F1> 225,788
-----------
457,788
-----------
TRANSPORTATION 7.8%
5,000 American Aircarriers Support, Incorporated<F1> 43,750
27,000 Aramex International Limited<F1> 222,750
5,000 Covenant Transport, Inc.<F1> 76,250
17,000 Motor Cargo Industries, Inc.<F1> 116,875
34,800 Smithway Motor Xpress Corp.<F1> 258,825
10,000 Transport Corp. of America, Inc.<F1> 130,000
52,000 USA Truck, Inc.<F1> 464,750
-----------
1,313,200
-----------
TOTAL COMMON STOCKS (COST $16,171,297) 16,677,880
-----------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 0.8%
---------------------------
(Variable Rate Demand Deposits)
$129,761 UMB Bank Money Market Fiduciary, 3.99% $ 129,761
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $129,761) 129,761
-----------
TOTAL INVESTMENTS (COST $16,301,058) 100.2% 16,807,641
LIABILITIES LESS OTHER ASSETS (0.2)% (37,161)
-----------
NET ASSETS 100.0% $16,770,480
===========
<F1> Non-income producing
See notes to financial statements.
<PAGE>
AGGRESSIVE EQUITY FUND-SCHEDULE OF INVESTMENTS
- ----------------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 95.1%
-------------------
BUSINESS SERVICES 19.3%
32,100 Concord EFS, Inc.<F1> $ 662,062
175,500 Daisytek International Corp.<F1> 2,467,969
93,900 F.Y.I. Inc.<F1> 3,163,256
251,700 National Dentex Corp.<F1> 4,294,631
42,800 Navigant Consulting, Inc.<F1> 1,984,850
115,400 NOVA Corporation<F1> 2,885,000
42,400 Pegasus Systems, Inc.<F1> 1,590,000
102,750 QRS Corporation<F1> 6,588,844
32,766 Sanmina Corp.<F1> 2,535,269
17,000 TenFold Corporation<F1> 450,500
125,300 Wilmar Industries, Inc.<F1> 1,613,238
-----------
28,235,619
-----------
COMPUTER SOFTWARE 5.5%
15,000 SOFTWORKS, Inc.<F1> 76,875
122,350 Synopsys, Inc.<F1> 6,870,717
54,600 The InterCept Group, Inc.<F1> 1,010,100
-----------
7,957,692
-----------
COMPUTER SYSTEMS & COMPONENTS 4.2%
54,150 Active Voice Corp.<F1> 852,862
42,475 MMC Networks, Inc.<F1> 1,324,689
44,100 Polycom, Inc.<F1> 2,101,641
41,040 Zebra Technologies Corporation<F1> 1,866,038
-----------
6,145,230
-----------
ELECTRONICS 1.0%
189,800 PCD Inc.<F1> 1,494,675
-----------
HEALTH CARE PROVIDERS 2.4%
252,500 AmSurg Corp., Class A<F1> 1,609,687
60,300 AmSurg Corp., Class B<F1> 376,875
110,100 Pediatrix Medical Group Inc.<F1> 1,527,638
-----------
3,514,200
-----------
HEALTH CARE SERVICES 7.8%
176,200 AmeriPath, Inc.<F1> 1,475,675
65,200 Express Scripts, Inc., Class A<F1> 5,101,900
31,000 MedQuist Inc.<F1> 1,036,563
130,625 Orthodontic Centers of America, Inc.<F1> 2,285,938
62,200 TLC The Laser Center Inc.<F1> 1,531,675
-----------
11,431,751
-----------
<PAGE>
AGGRESSIVE EQUITY FUND-SCHEDULE OF INVESTMENTS
- ----------------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS 0.7%
128,750 USANA, Inc.<F1> $ 949,531
-----------
PERSONAL SERVICES 2.9%
87,500 First Cash Financial Services, Inc.<F1> 962,500
500 Regis Corporation 9,625
66,000 Rent-A-Center, Inc.<F1> 1,229,250
106,488 Rent-Way, Inc.<F1> 2,023,272
500 Webstakes.com, Inc.<F1> 4,437
-----------
4,229,084
-----------
PHARMACEUTICAL & MEDICAL PRODUCTS 11.4%
266,931 ICU Medical, Inc.<F1> 4,003,965
27,200 Invitrogen Corporation<F1> 914,600
96,900 Myriad Genetics, Inc.<F1> 1,647,300
321,619 Techne Corp.<F1> 10,090,796
-----------
16,656,661
-----------
REAL ESTATE 2.5%
169,850 National Health Investors, Inc. REIT 2,791,909
93,825 Sunstone Hotel Investors, Inc. REIT 820,969
-----------
3,612,878
-----------
RETAIL 16.3%
84,500 Hibbett Sporting Goods, Inc.<F1> 1,383,687
78,950 MarineMax, Inc.<F1> 789,500
45,272 Nautica Enterprises, Inc.<F1> 730,011
96,175 O'Charley's Inc.<F1> 1,418,581
181,550 O'Reilly Automotive, Inc.<F1> 8,651,992
149,490 The Men's Wearhouse, Inc.<F1> 3,214,035
128,025 Travis Boats & Motors, Inc.<F1> 1,232,241
219,850 Whitehall Jewellers, Inc.<F1> 6,320,687
-----------
23,740,734
-----------
SEMICONDUCTORS 6.0%
96,514 Micrel, Inc.<F1> 4,186,295
75,725 Microchip Technology, Inc.<F1> 3,890,372
10,000 Power Integrations, Inc.<F1> 692,500
-----------
8,769,167
-----------
<PAGE>
AGGRESSIVE EQUITY FUND-SCHEDULE OF INVESTMENTS
- ----------------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS 9.3%
5,500 Interspeed, Inc.<F1> $ 96,937
80,050 Powertel, Inc.<F1> 4,407,753
43,500 SDL, Inc.<F1> 3,319,594
83,590 United States Cellular Corp.<F1> 5,684,120
-----------
13,508,404
-----------
TRANSPORTATION 5.3%
66,850 Covenant Transport, Inc.<F1> 1,019,463
129,700 Expeditors International of Washington, Inc. 4,162,559
178,650 Knight Transportation, Inc.<F1> 2,590,425
-----------
7,772,447
-----------
OTHER 0.5%
24,350 Cinar Corporation, Class B 736,588
-----------
TOTAL COMMON STOCKS (COST $94,671,150) 138,754,661
-----------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 4.2%
---------------------------
(Variable Rate Demand Deposits)
$ 6,177,784 UMB Bank Money Market Fiduciary, 3.99% $ 6,177,784
------------
TOTAL SHORT-TERM INVESTMENTS (COST $6,177,784) 6,177,784
------------
TOTAL INVESTMENTS (COST $100,848,934) 99.3% 144,932,445
OTHER ASSETS LESS LIABILITIES 0.7% 982,412
------------
NET ASSETS 100.0% $145,914,857
============
<F1> Non-income producing
See notes to financial statements.
<PAGE>
GROWTH FUND-SCHEDULE OF INVESTMENTS
- -----------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 93.4%
-------------------
BUSINESS SERVICES 14.8%
305,800 American Bank Note Holographics, Inc.<F1> $ 917,400
130,000 Copart, Inc.<F1> 2,396,875
80,000 CSG Systems International, Inc.<F1> 2,192,500
183,000 National Dentex Corp.<F1> 3,122,437
81,700 NOVA Corporation<F1> 2,042,500
131,000 On Assignment, Inc.<F1> 3,144,000
140,050 PROVANT, Inc.<F1> 2,258,306
95,300 Res-Care, Inc.<F1> 1,620,100
233,900 SCP Pool Corporation<F1> 5,496,650
36,900 Sykes Enterprises, Incorporated<F1> 910,969
115,000 Wilmar Industries, Inc.<F1> 1,480,625
-----------
25,582,362
-----------
COMPUTER SOFTWARE 5.6%
173,250 Synopsys, Inc.<F1> 9,729,070
-----------
COMPUTER SYSTEMS & COMPONENTS 3.3%
126,095 Zebra Technologies Corporation<F1> 5,733,382
-----------
FINANCIAL SERVICES 16.1%
1,219,112 AmeriCredit Corp.<F1> 18,210,485
65,275 Metris Companies Inc. 1,921,533
112,450 MicroFinancial Incorporated 1,222,894
274,600 RTW, Inc.<F1> 1,578,950
926,886 World Acceptance Corp.<F1> 4,982,012
-----------
27,915,874
-----------
HEALTH CARE PROVIDERS 7.6%
2,500 AmSurg Corp., Class B<F1> 15,625
910,575 Pediatrix Medical Group Inc.<F1> 12,634,228
574,700 Physicians Resource Group, Inc.<F1> 448,266
-----------
13,098,119
-----------
HEALTH CARE SERVICES 12.2%
30,725 Express Scripts, Inc., Class A<F1> 2,404,231
575,300 First Health Group Corp.<F1> 12,908,294
233,000 Orthodontic Centers of America, Inc.<F1> 4,077,500
88,000 Quintiles Transnational Corp.<F1> 1,674,750
-----------
21,064,775
-----------
<PAGE>
GROWTH FUND-SCHEDULE OF INVESTMENTS
- -----------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
PERSONAL SERVICES 13.0%
120,000 Bright Horizons Family Solutions, Inc.<F1> $ 1,875,000
253,350 Carriage Services, Inc.<F1> 2,137,641
276,550 First Cash Financial Services, Inc.<F1> 3,042,050
829,575 Rent-A-Center, Inc.<F1> 15,450,834
-----------
22,505,525
-----------
PHARMACEUTICAL & MEDICAL PRODUCTS 10.2%
328,075 ICU Medical, Inc.<F1> 4,921,125
407,350 Techne Corp.<F1> 12,780,606
-----------
17,701,731
-----------
RETAIL 6.6%
92,200 Guitar Center, Inc.<F1> 870,137
55,000 Hibbett Sporting Goods, Inc.<F1> 900,625
2,500 Home Centers (DIY) Ltd.<F1> 16,250
44,700 O'Reilly Automotive, Inc.<F1> 2,130,234
3,500 PJ America, Inc.<F1> 73,063
39,300 The Men's Wearhouse, Inc.<F1> 844,950
230,400 Whitehall Jewellers, Inc.<F1> 6,624,000
-----------
11,459,259
-----------
SEMICONDUCTORS 2.7%
51,500 Microchip Technology, Inc.<F1> 2,645,812
123,000 Supertex, Inc.<F1> 2,006,438
-----------
4,652,250
-----------
TRANSPORTATION 1.3%
53,000 Expeditors International of Washington, Inc. 1,700,969
40,250 Knight Transportation, Inc.<F1> 583,625
-----------
2,284,594
-----------
TOTAL COMMON STOCKS (COST $144,718,159) 161,726,941
-----------
<PAGE>
GROWTH FUND-SCHEDULE OF INVESTMENTS
- -----------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
WARRANTS 0.0%
-------------
1 Cherokee, Inc. Series C $ 1
-----------
TOTAL WARRANTS (COST $6) 1
-----------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 6.6%
---------------------------
(Variable Rate Demand Deposits)
$11,424,222 UMB Bank Money Market Fiduciary, 3.99% 11,424,222
------------
TOTAL SHORT-TERM INVESTMENTS (COST $11,424,222) 11,424,222
------------
TOTAL INVESTMENTS (COST $156,142,387) 100.0% 173,151,164
LIABILITIES LESS OTHER ASSETS 0.0% (32,923)
------------
NET ASSETS 100.0% $173,118,241
============
<F1> Non-income producing
See notes to financial statements.
<PAGE>
MID-CAP FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 90.8%
---------------------------------
BUSINESS SERVICES 22.8%
8,000 Braun Consulting, Inc.<F1> $ 133,000
8,000 Charles River Associates Incorporated<F1> 223,000
2,000 Cognizant Technology Solutions Corporation<F1> 63,250
6,450 Concord EFS, Inc.<F1> 133,031
55,100 F.Y.I. Inc.<F1> 1,856,181
40,200 International Integration Incorporated<F1> 1,316,550
69,340 Navigant Consulting, Inc.<F1> 3,215,642
4,500 ProBusiness Services, Inc.<F1> 120,937
49,200 PROVANT, Inc.<F1> 793,350
19,900 Sanmina Corp.<F1> 1,539,762
-----------
9,394,703
-----------
COMPUTER SOFTWARE 9.4%
10,200 Accrue Software, Inc.<F1> 229,500
3,200 i2 Technologies, Inc.<F1> 124,200
8,150 Peregrine Systems, Inc.<F1> 332,113
47,860 Synopsys, Inc.<F1> 2,687,638
67,884 Verisity Ltd. Series D Preferred<F1><F2> 500,000
-----------
3,873,451
-----------
COMPUTER SYSTEMS & COMPONENTS 2.7%
19,200 MMC Networks, Inc.<F1> 598,800
2,950 Netopia, Inc.<F1> 117,631
8,550 Polycom, Inc.<F1> 407,461
-----------
1,123,892
-----------
FINANCIAL SERVICES 1.2%
31,700 AmeriCredit Corp.<F1> 473,519
-----------
HEALTH CARE PROVIDERS 9.4%
138,000 AmSurg Corp., Class A<F1> 879,750
143,400 AmSurg Corp., Class B<F1> 896,250
151,800 Pediatrix Medical Group Inc.<F1> 2,106,225
-----------
3,882,225
-----------
<PAGE>
MID-CAP FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
HEALTH CARE SERVICES 19.7%
82,500 AmeriPath, Inc.<F1> $ 690,937
46,975 Express Scripts, Inc., Class A<F1> 3,675,794
14,200 Laser Vision Centers, Inc.<F1> 199,244
44,400 MedQuist Inc.<F1> 1,484,625
8,800 NovaMed Eyecare, Inc.<F1> 89,650
38,352 Quintiles Transnational Corp.<F1> 729,887
50,800 TLC The Laser Center Inc.<F1> 1,250,950
-----------
8,121,087
-----------
PERSONAL SERVICES 0.7%
10,700 National Information Consortium, Inc.<F1> 264,156
-----------
PHARMACEUTICAL & MEDICAL PRODUCTS 3.9%
10,900 ICU Medical, Inc.<F1> 163,500
21,190 Roberts Pharmaceutical Corporation<F1> 640,997
10,000 Shire Pharmaceuticals Group Plc<F1> 288,125
16,300 Techne Corp.<F1> 511,413
-----------
1,604,035
-----------
RETAIL 9.0%
22,200 Hibbett Sporting Goods, Inc.<F1> 363,525
70,400 O'Reilly Automotive, Inc.<F1> 3,355,000
-----------
3,718,525
-----------
SEMICONDUCTORS 7.2%
6,800 ASM Lithography Holding N.V.<F1> 456,025
27,800 Micrel, Inc.<F1> 1,205,825
14,450 Microchip Technology, Inc.<F1> 742,369
6,700 Vitesse Semiconductor Corporation<F1> 572,012
-----------
2,976,231
-----------
TELECOMMUNICATIONS 4.8%
3,300 Aware, Inc.<F1> 94,669
1,800 Interspeed, Inc.<F1> 31,725
10,170 JDS Uniphase Corporation<F1> 1,154,031
9,100 SDL, Inc.<F1> 694,444
-----------
1,974,869
-----------
TOTAL COMMON AND PREFERRED
STOCKS (COST $26,732,313) 37,406,693
-----------
<PAGE>
MID-CAP FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------
SEPTEMBER 30, 1999
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
WARRANTS 0.0%
-------------
4,202 CDnow, Inc.<F1> $ 1,807
-----------
TOTAL WARRANTS (COST $0) 1,807
-----------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 7.3%
---------------------------
(Variable Rate Demand Deposits)
$3,028,314 UMB Bank Money Market Fiduciary, 3.99% 3,028,314
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $3,028,314) 3,028,314
-----------
TOTAL INVESTMENTS (COST $29,760,627) 98.1% 40,436,814
CASH AND OTHER ASSETS, LESS LIABILITIES 1.9% 767,920
-----------
NET ASSETS 100.0% $41,204,734
===========
<F1> Non-income producing
<F2> Preferred stock purchased in a private placement transaction; resale to the
public may require registration or sale only to qualified institutional
buyers. At September 30, 1999, this security amounted to 1.2% of net
assets.
See notes to financial statements.
<PAGE>
U.S. TREASURY FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------------
SEPTEMBER 30, 1999
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS 98.5%
---------------------------------
$ 600,000 U.S. Treasury Bond, 6.25%, 8/15/23 $ 590,070
12,830,000 U.S. Treasury Bond, 7.50%, 11/15/24 14,590,148
5,505,000 U.S. Treasury Bond, 6.875%, 8/15/25 5,843,943
5,735,000 U.S. Treasury Bond, 6.00%, 2/15/26 5,468,495
750,000 U.S. Treasury Bond, 6.75%, 8/15/26 784,897
10,335,000 U.S. Treasury Bond, 6.50%, 11/15/26 10,499,843
4,570,000 U.S. Treasury Bond, 6.625%, 2/15/27 4,722,775
25,030,000 U.S. Treasury Bond, 6.375%, 8/15/27 25,060,537
18,200,000 U.S. Treasury Strip, 11/15/21 4,420,780
19,100,000 U.S. Treasury Strip, 8/15/25 3,818,472
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $83,622,978) 75,799,960
-----------
SHORT-TERM INVESTMENTS 0.3%
---------------------------
(Variable Rate Demand Deposits)
251,221 UMB Bank Money Market Fiduciary, 3.99% 251,221
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $251,221) 251,221
-----------
TOTAL INVESTMENTS (COST $83,874,199) 98.8% 76,051,181
OTHER ASSETS LESS LIABILITIES 1.2% 948,102
-----------
NET ASSETS 100.0% $76,999,283
===========
See notes to financial statements.
<PAGE>
WASATCH FUNDS-STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value
Nonaffiliated issuers (cost $99,802,895,
$16,301,058, $96,944,768,
$135,313,245, $29,760,627
and $83,874,199, respectively) $127,851,560 $16,807,641 $140,637,814 $157,394,499 $40,436,814 $76,051,181
Affiliated issuers (cost $15,342,831,
$0, $3,904,166, $20,829,142, $0
and $0, respectively) 16,299,797 - 4,294,631 15,756,665 - -
Receivable for investment securities sold 1,065,549 93,757 1,324,278 1,034,345 473,681 -
Capital shares receivable 49,916 2,100 26,102 449,016 398,868 8,716
Interest and dividends receivable 35,593 9,289 147,914 42,340 7,461 966,230
Prepaid expenses and other assets 18,875 9,649 14,352 19,370 10,700 27,017
Receivable from advisor - 2,246 - - - 9,509
------------ ------------ ------------ ------------ ------------ ------------
Total Assets 145,321,290 16,924,682 146,445,091 174,696,235 41,327,524 77,062,653
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payable for securities purchased 297,984 134,209 401,300 1,301,863 69,875 -
Accrued investment advisory fee 80,175 4,684 40,191 48,462 17,664 10,618
Accrued expenses 59,951 11,044 57,173 75,652 22,499 32,086
Capital shares payable 7,823 4,265 31,570 152,017 12,752 20,666
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities 445,933 154,202 530,234 1,577,994 122,790 63,370
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS $144,875,357 $16,770,480 $145,914,857 $173,118,241 $41,204,734 $76,999,283
============ ============ ============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital stock $328,705 $69,048 $56,093 $83,949 $20,580 $65,897
Paid-in capital in excess of par 98,557,639 15,454,413 83,254,635 151,407,357 26,855,945 83,350,972
Undistributed net investment income - - 20,392 - - 3,369,820
Undistributed net realized gain (loss)
on investments 16,983,382 740,436 18,500,226 4,618,158 3,652,022 (1,964,388)
Net unrealized appreciation
(depreciation) on investments 29,005,631 506,583 44,083,511 17,008,777 10,676,187 (7,823,018)
------------ ------------ ------------ ------------ ------------ ------------
Net Assets $144,875,357 $16,770,480 $145,914,857 $173,118,241 $41,204,734 $76,999,283
============ ============ ============ ============ ============ ============
CAPITAL STOCK, $.01 PAR VALUE:
Authorized 10,000,000,000 10,000,000,000 10,000,000,000 10,000,000,000 10,000,000,000 10,000,000,000
Issued and outstanding 32,870,522 6,904,849 5,609,268 8,394,943 2,058,045 6,589,703
NET ASSET VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $4.41 $2.43 $26.01 $20.62 $20.02 $11.68
====== ====== ====== ====== ====== ======
</TABLE>
See notes to financial statements.
<PAGE>
WASATCH FUNDS-STATEMENTS OF OPERATIONS
- ---------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $228,946 $15,382 $237,195 $372,872 $120,421 $4,968,901
Dividends 101,010 49,140 672,522 234,836 - -
Other 13,770 - - - - -
------------ ------------ ------------ ------------ ------------ ------------
343,726 64,522 909,717 607,708 120,421 4,968,901
------------ ------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fee 2,804,083 238,650 1,401,362 1,649,180 579,749 435,364
Shareholder servicing fees 296,435 39,251 280,939 303,221 118,719 157,939
Fund administration and accounting fees 205,844 34,349 205,744 242,128 68,094 127,838
Reports to shareholders 60,173 5,337 51,969 73,286 19,693 41,375
Custody fees 25,370 6,379 15,909 29,585 8,254 8,073
Federal and state registration fees 22,764 11,944 16,096 25,665 12,700 26,757
Audit fees 12,049 4,855 11,979 13,623 6,571 9,182
Legal fees 8,478 1,026 8,326 11,789 2,845 4,438
Directors' fees 5,414 642 5,489 6,603 1,906 3,424
Other 14,466 4,483 14,885 15,063 6,156 8,699
------------ ------------ ------------ ------------ ------------ ------------
Total expenses before reimbursement 3,455,076 346,916 2,012,698 2,370,143 824,687 823,089
Reimbursement of expenses by advisor - (36,671) - - (13,038) (170,043)
------------ ------------ ------------ ------------ ------------ ------------
Net expenses 3,455,076 310,245 2,012,698 2,370,143 811,649 653,046
------------ ------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) (3,111,350) (245,723) (1,102,981) (1,762,435) (691,228) 4,315,855
------------ ------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments
Nonaffiliated 19,930,390 1,726,846 21,411,046 11,848,777 4,525,808 (1,579,091)
Affiliated 416,173 - (616,963) (4,765,735) - -
------------ ------------ ------------ ------------ ------------ ------------
20,346,563 1,726,846 20,794,083 7,083,042 4,525,808 (1,579,091)
Change in unrealized appreciation/
depreciation on investments 25,494,388 2,954,078 34,941,701 32,663,979 11,029,323 (13,031,830)
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments 45,840,951 4,680,924 55,735,784 39,747,021 15,555,131 (14,610,921)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $42,729,601 $4,435,201 $54,632,803 $37,984,586 $14,863,903 $(10,295,066)
============ ============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
WASATCH FUNDS-STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
MICRO-CAP FUND MICRO-CAP VALUE FUND AGGRESSIVE EQUITY FUND
1999 1998 1999 1998<F1> 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(3,111,350) $(3,171,737) $(245,723) $(114,404) $(1,102,981) $(1,012,414)
Net realized gain (loss) on
investments 20,346,563 18,133,522 1,726,846 (740,687) 20,794,083 22,152,106
Change in unrealized appreciation/
depreciation on investments 25,494,388 (27,231,381) 2,954,078 (2,447,495) 34,941,701 (50,889,169)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 42,729,601 (12,269,596) 4,435,201 (3,302,586) 54,632,803 (29,749,477)
DIVIDENDS PAID FROM:
Net investment income - - - - - -
Net realized gains (12,017,532) (9,713,791) - - (18,539,487) (22,723,111)
------------ ------------ ------------ ------------ ------------ ------------
(12,017,532) (9,713,791) - - (18,539,487) (22,723,111)
CAPITAL SHARE TRANSACTIONS:
Shares sold 67,340,072 57,814,317 11,711,690 32,497,796 37,645,640 9,579,918
Shares issued to holders in
reinvestment of dividends 11,888,645 9,626,752 - - 17,995,373 21,364,566
------------ ------------ ------------ ------------ ------------ ------------
79,228,717 67,441,069 11,711,690 32,497,796 55,641,013 30,944,484
Shares redeemed (82,598,473) (85,832,088) (13,682,187) (14,889,434) (69,542,550) (43,713,903)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (3,369,756) (18,391,019) (1,970,497) 17,608,362 (13,901,537) (12,769,419)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 27,342,313 (40,374,406) 2,464,704 14,305,776 22,191,779 (65,242,007)
NET ASSETS:
Beginning of period 117,533,044 157,907,450 14,305,776 - 123,723,078 188,965,085
------------ ------------ ------------ ------------ ------------ ------------
End of period $144,875,357 $117,533,044 $16,770,480 $14,305,776 $145,914,857 $123,723,078
============ ============ ============ ============ ============ ============
Undistributed net investment income
included in net assets at end of
period - - - - $20,392 $5,203
============ ============ ============ ============ ============ ============
</TABLE>
<F1> Inception date of the Fund was December 17, 1997.
See notes to financial statements.
<PAGE>
WASATCH FUNDS-STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
GROWTH FUND MID-CAP FUND U.S. TREASURY FUND
1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(1,762,435) $(832,112) $(691,228) $(882,136) $4,315,855 $1,096,921
Net realized gain (loss) on
investments 7,083,042 8,412,807 4,525,808 5,994,474 (1,579,091) 43,377
Change in unrealized appreciation/
depreciation on investments 32,663,979 (41,295,055) 11,029,323 (19,174,751) (13,031,830) 4,676,270
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 37,984,586 (33,714,360) 14,863,903 (14,062,413) (10,295,066) 5,816,568
DIVIDENDS PAID FROM:
Net investment income - (192,244) - - (1,876,281) (640,620)
Net realized gains (6,480,895) (10,839,657) (2,066,842) (6,627,299) (384,621) -
------------ ------------ ------------ ------------ ------------ ------------
(6,480,895) (11,031,901) (2,066,842) (6,627,299) (2,260,902) (640,620)
CAPITAL SHARE TRANSACTIONS:
Shares sold 77,799,789 124,006,384 27,013,148 29,634,796 117,029,582 63,988,746
Shares issued to holders in
reinvestment of dividends 6,416,237 10,904,028 2,038,987 6,518,196 2,207,232 635,951
------------ ------------ ------------ ------------ ------------ ------------
84,216,026 134,910,412 29,052,135 36,152,992 119,236,814 64,624,697
Shares redeemed (95,749,286) (72,453,532) (44,197,837) (49,152,641) (97,537,936) (13,149,317)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (11,533,260) 62,456,880 (15,145,702) (12,999,649) 21,698,878 51,475,380
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 19,970,431 17,710,619 (2,348,641) (33,689,361) 9,142,910 56,651,328
NET ASSETS:
Beginning of period 153,147,810 135,437,191 43,553,375 77,242,736 67,856,373 11,205,045
------------ ------------ ------------ ------------ ------------ ------------
End of period $173,118,241 $153,147,810 $41,204,734 $43,553,375 $76,999,283 $67,856,373
============ ============ ============ ============ ============ ============
Undistributed net investment income
included in net assets at end of
period - $10,524 - - $3,369,820 $930,246
============ ============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
MICRO-CAP FUND-FINANCIAL HIGHLIGHTS
- ------------------------------------
YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995<F1>
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $3.59 $4.29 $3.15 $2.72 $2.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.09) (0.10) (0.04) (0.03) -
Net realized and unrealized
gains (losses) on securities 1.27 (0.27) 1.36 0.46 0.72
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 1.18 (0.37) 1.32 0.43 0.72
LESS DISTRIBUTIONS:
Distributions from
capital gains (0.36) (0.33) (0.18) - -
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.36) (0.33) (0.18) - -
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD $4.41 $3.59 $4.29 $3.15 $2.72
======= ======= ======= ======= =======
TOTAL RETURN 37.73% (8.75)% 44.58% 15.81% 36.00%<F2>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $144,875 $117,533 $157,907 $94,004 $25,368
Ratio to average
net assets of:
Expenses, net of waivers
and reimbursements 2.46% 2.50% 2.50% 2.50% 2.50%<F3>
Expenses, before waivers
and reimbursements 2.46% 2.51% 2.58% 2.67% 3.40%<F3>
Net investment income
(loss), net of waivers
and reimbursements (2.22)% (2.28)% (1.64)% (1.53)% (0.76)%<F3>
Net investment income
(loss), before waivers
and reimbursements (2.22)% (2.29)% (1.72)% (1.70)% (1.66)%<F3>
Portfolio turnover rate 57% 81% 99% 84% -
</TABLE>
<F1> Inception date of the Fund was June 19, 1995.
<F2> Not annualized for periods less than a year.
<F3> Annualized.
See notes to financial statements.
<PAGE>
MICRO-CAP VALUE FUND-FINANCIAL HIGHLIGHTS
- ------------------------------------------
YEAR ENDED SEPTEMBER 30
1999 1998<F1>
- ----------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.80 $2.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.04) (0.01)
Net realized and unrealized
gains (losses) on securities 0.67 (0.19)
------- -------
TOTAL FROM INVESTMENT
OPERATIONS 0.63 (0.20)
LESS DISTRIBUTIONS:
Distributions from
capital gains - -
------- -------
TOTAL DISTRIBUTIONS - -
------- -------
NET ASSET VALUE,
END OF PERIOD $2.43 $1.80
======= =======
TOTAL RETURN 35.00% (10.00)%<F2>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $16,770 $14,306
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.95% 1.95%<F3>
Expenses, before waivers
and reimbursements 2.18% 2.52%<F3>
Net investment income
(loss), net of waivers
and reimbursements (1.54)% (1.02)%<F3>
Net investment income
(loss), before waivers
and reimbursements (1.77)% (1.59)%<F3>
Portfolio turnover rate 106% 114%
<F1> Inception date of the Fund was December 17, 1997.
<F2> Not annualized for periods less than a year.
<F3> Annualized.
See notes to financial statements.
<PAGE>
AGGRESSIVE EQUITY FUND-FINANCIAL HIGHLIGHTS
- --------------------------------------------
YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $20.79 $29.73 $24.17 $25.00 $19.96
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.20) (0.17) (0.12) (0.18) (0.04)
Net realized and unrealized
gains (losses) on securities 8.49 (5.08) 6.90 (0.11) 6.59
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 8.29 (5.25) 6.78 (0.29) 6.55
LESS DISTRIBUTIONS:
Distributions from
capital gains (3.07) (3.69) (1.22) (0.54) (1.51)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (3.07) (3.69) (1.22) (0.54) (1.51)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD $26.01 $20.79 $29.73 $24.17 $25.00
======= ======= ======= ======= =======
TOTAL RETURN 48.96% (19.13)% 29.45% (1.09)% 35.19%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $145,915 $123,723 $188,965 $253,319 $305,311
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.44% 1.48% 1.50% 1.50% 1.47%
Expenses, before waivers
and reimbursements 1.44% 1.48% 1.54% 1.50% 1.47%
Net investment income
(loss), net of waivers
and reimbursements (0.79)% (0.60)% (0.39)% (0.65)% (0.37)%
Net investment income
(loss), before waivers
and reimbursements (0.79)% (0.60)% (0.43)% (0.65)% (0.37)%
Portfolio turnover rate 46% 56% 48% 73% 29%
</TABLE>
See notes to financial statements.
<PAGE>
GROWTH FUND-FINANCIAL HIGHLIGHTS
- --------------------------------
YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $17.00 $22.34 $17.57 $15.97 $15.30
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.21) (0.09) 0.08 0.07 0.02
Net realized and unrealized
gains (losses) on securities 4.55 (3.60) 6.07 1.87 4.59
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 4.34 (3.69) 6.15 1.94 4.61
LESS DISTRIBUTIONS:
Dividends from
net investment income - (0.03) (0.07) (0.05) -
Distributions from
capital gains (0.72) (1.62) (1.31) (0.29) (3.94)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.72) (1.65) (1.38) (0.34) (3.94)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD $20.62 $17.00 $22.34 $17.57 $15.97
======= ======= ======= ======= =======
TOTAL RETURN 27.28% (17.49)% 37.58% 12.39% 39.76%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $173,118 $153,148 $135,437 $104,237 $53,533
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.44% 1.44% 1.50% 1.50% 1.50%
Expenses, before waivers
and reimbursements 1.44% 1.44% 1.50% 1.51% 1.58%
Net investment income
(loss), net of waivers
and reimbursements (1.07)% (0.50)% 0.44% 0.40% 0.29%
Net investment income
(loss), before waivers
and reimbursements (1.07)% (0.50)% 0.44% 0.39% 0.21%
Portfolio turnover rate 79% 63% 81% 62% 88%
</TABLE>
See notes to financial statements.
<PAGE>
MID-CAP FUND-FINANCIAL HIGHLIGHTS
- ---------------------------------
YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $15.10 $21.85 $17.95 $18.61 $11.02
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.34) (0.31) (0.35) (0.26) (0.02)
Net realized and unrealized
gains (losses) on securities 6.00 (4.44) 4.25 (0.21) 7.64
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 5.66 (4.75) 3.90 (0.47) 7.62
LESS DISTRIBUTIONS:
Distributions from
capital gains (0.74) (2.00) - (0.19) (0.03)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.74) (2.00) - (0.19) (0.03)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD $20.02 $15.10 $21.85 $17.95 $18.61
======= ======= ======= ======= =======
TOTAL RETURN 39.86% (22.07)% 21.75% (2.54)% 69.24%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $41,205 $43,553 $77,243 $128,490 $98,605
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.75% 1.75% 1.75% 1.75% 1.75%
Expenses, before waivers
and reimbursements 1.78% 1.90% 1.89% 1.81% 1.94%
Net investment income
(loss), net of waivers
and reimbursements (1.49)% (1.54)% (1.48)% (1.27)% (0.71)%
Net investment income
(loss), before waivers
and reimbursements (1.52)% (1.69)% (1.62)% (1.33)% (0.90)%
Portfolio turnover rate 77% 91% 103% 121% 46%
</TABLE>
See notes to financial statements.
<PAGE>
U.S. TREASURY FUND-FINANCIAL HIGHLIGHTS
- ----------------------------------------
YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $13.42 $11.32 $10.21 $10.50 $10.09
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.61 0.27 0.61 0.44 0.56
Net realized and unrealized
gains (losses) on securities (2.01) 2.39 0.73 0.01 0.44
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS (1.40) 2.66 1.34 0.45 1.00
LESS DISTRIBUTIONS:
Dividends from
net investment income (0.28) (0.56) (0.23) (0.74) (0.59)
Distributions from
capital gains (0.06) - - - -
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.34) (0.56) (0.23) (0.74) (0.59)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD $11.68 $13.42 $11.32 $10.21 $10.50
======= ======= ======= ======= =======
TOTAL RETURN (10.65)% 24.30% 13.23% 4.42% 10.46%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $76,999 $67,856 $11,205 $7,427 $4,035
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 0.75% 0.75% 0.75% 0.93% 1.00%
Expenses, before waivers
and reimbursements 0.95% 0.95% 1.22% 1.67% 1.59%
Net investment income,
net of waivers and
reimbursements 4.96% 5.06% 5.97% 5.21% 5.88%
Net investment income,
before waivers and
reimbursements 4.76% 4.86% 5.50% 4.47% 5.29%
Portfolio turnover rate 39% 5% 19% 30% 43%
</TABLE>
See notes to financial statements.
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
1. ORGANIZATION
- ----------------
Wasatch Funds, Inc. (the "Funds") is an open-end, registered management
investment company under the Investment Company Act of 1940. The Micro-Cap,
Micro-Cap Value, Aggressive Equity, Growth and Mid-Cap Funds are non-diversified
portfolios and the Wasatch-Hoisington U.S. Treasury ("U.S. Treasury") Fund is a
diversified portfolio of Wasatch Funds. Each of the Funds maintains its own
investment objective. The Funds have entered into an investment advisory
agreement with Wasatch Advisors, Inc. (the "Manager") as investment advisor.
2. SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------
The financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make certain
estimates and assumptions at the date of the financial statements. The following
is a summary of the more significant of such policies.
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.
INVESTMENT IN SECURITIES-Security transactions are accounted for on the trade
date. Gains or losses on securities sold are determined on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the ex-
dividend date. Interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES-It is the Funds' policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all taxable income to shareholders.
EXPENSES-The Funds are charged for expenses that are directly attributable to
them, such as advisory and custodian fees. Expenses that are not directly
attributable to a portfolio are allocated among the portfolios in proportion to
their respective net assets.
USE OF MANAGEMENT ESTIMATES-The preparation of financial statements in
conformity with generally accepted accounting principles requires that
Management make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may also be affected by the
estimates and assumptions Management is required to make. Actual results may
differ from those estimates.
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
3. DISTRIBUTIONS
- -----------------
Dividends from net investment income are declared and paid annually.
Distributions of net realized gains, if any, will be declared and paid at least
annually. The amount of dividends and distributions from net investment income
and net realized 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 among paid-in capital in excess of par value,
undistributed net investment income and undistributed net realized gain (loss)
on investments. The Funds also utilize earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid deduction
for income tax purposes. Accordingly, at September 30, 1999, reclassifications
were recorded to increase undistributed net investment income by $3,111,350,
$245,723, $1,118,170, $1,751,911 and $691,228 and decrease undistributed net
realized gain on investments by $4,915,492, $245,723, $3,113,860, $2,346,496 and
$1,111,784 and increase paid-in capital in excess of par by $1,804,142, $0,
$1,995,690, $594,585 and $420,556 for the Micro-Cap, Micro-Cap Value, Aggressive
Equity, Growth and Mid-Cap Funds, respectively.
4. CAPITAL STOCK
- -----------------
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 17,262,743 5,138,745 1,644,990 4,040,000 1,495,813 9,191,867
Dividends
reinvested 3,934,845 - 1,089,991 436,117 148,165 171,636
Shares redeemed (21,064,440) (6,159,795) (3,076,017) (5,090,665) (2,469,905) (7,831,244)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease) 133,148 (1,021,050) (341,036) (614,548) (825,927) 1,532,259
============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1998
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND<F1> FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 13,775,008 14,525,643 366,524 5,843,066 1,650,493 5,095,678
Dividends
reinvested 2,630,260 - 904,895 557,466 416,232 54,823
Shares redeemed (20,505,248) (6,599,744) (1,677,752) (3,453,876) (2,717,728) (1,082,970)
------------ ----------- ---------- ----------- ----------- -----------
Net increase
(decrease) (4,099,980) 7,925,899 (406,333) 2,946,656 (651,003) 4,067,531
============ =========== ========== =========== =========== ===========
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1>Inception date of Fund was December 17, 1997.
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, 1999 are summarized
below:
<TABLE>
<CAPTION>
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchases $77,048,480 $16,748,779 $61,467,382 $126,521,534 $34,048,395 -
Sales 100,034,617 18,418,637 93,939,272 143,570,532 49,391,430 -
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The only purchases and sales of U.S. government securities occurred in the
U.S. Treasury Fund and were $55,980,709 and $32,262,299, respectively. The
Micro-Cap, Micro-Cap Value, Aggressive Equity, Growth, Mid-Cap and U.S. Treasury
Funds' tax basis in their investments is $115,283,379, $16,353,936,
$100,985,308, $156,406,618, $29,796,750 and $84,122,998, respectively.
For the year ended September 30, 1999, 0.2%, 1.3%, 0.5% and 3.2% of dividends
from taxable income, including short-term gains, for the Micro-Cap, Micro-Cap
Value, Aggressive Equity and Growth Funds, respectively, qualify for the
dividends received deduction available to corporate shareholders.
The Funds hereby designate approximately $13,115,292, $15,757,327,
$2,523,642, $2,284,783 and $384,625 as a capital gain dividend for the Micro-
Cap, Aggressive Equity, Growth, Mid-Cap and U.S. Treasury Funds, respectively,
for the purpose of the dividends paid deduction.
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
As of September 30, 1999, gross unrealized appreciation and (depreciation) for
federal income tax purposes were as follows:
<TABLE>
<CAPTION>
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized appreciation $41,220,217 $2,397,034 $56,098,896 $33,514,159 $14,807,173 $420,418
Unrealized depreciation (12,352,239) (1,943,329) (12,151,759) (16,769,613) (4,167,109) (8,492,235)
------------ ----------- ------------ ------------ ----------- -----------
Net unrealized appreciation
(depreciation) $28,867,978 $453,705 $43,947,137 $16,744,546 $10,640,064 $(8,071,817)
------------ ----------- ------------ ------------ ----------- -----------
------------ ----------- ------------ ------------ ----------- -----------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. INVESTMENT ADVISORY
- -----------------------
As the Funds' investment advisor, the Manager receives a monthly fee
calculated on average daily net assets. For the year ended September 30, 1999,
management fees for the Micro-Cap, Micro-Cap Value, Aggressive Equity, Growth,
Mid-Cap and U.S. Treasury Funds were 2.0%, 1.5%, 1.0%, 1.0%, 1.25% and 0.5% of
the average daily net assets of each portfolio, respectively. The Manager has
voluntarily agreed to limit the expenses of the Micro-Cap, Micro-Cap Value,
Aggressive Equity, Growth, Mid-Cap and U.S. Treasury Funds to 2.50%, 1.95%,
1.50%, 1.50%, 1.75% and 0.75% of average daily net assets, respectively. For the
year ended September 30, 1999, the Manager reimbursed $36,671 for the Micro-Cap
Value Fund, $13,038 for the Mid-Cap Fund and $170,043 for the U.S. Treasury
Fund.
- --------------------------------------------------------------------------------
7. TRANSACTIONS WITH AFFILIATES
- --------------------------------
The following is an analysis of transactions for the year ended September 30,
1999 in the Micro-Cap, Aggressive Equity and Growth Funds with "affiliated
companies" as defined by the Investment Company Act of 1940:
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------
SEPTEMBER 30, 1999
MICRO-CAP FUND
<TABLE>
<CAPTION>
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 9/30/98 PURCHASES SALES 9/30/99 1999 1999
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Cash Financial
Services, Inc. 479,000 12,000 156,400 334,600<F1> - $668,965
ICU Medical, Inc. 415,000 94,900 25,000 484,900 - (76,056)
National Dentex Corp. 268,750 6,000 21,000 253,750 - (129,043)
Young Innovations, Inc. 137,000 220,000 18,500 338,500 - (47,693)
</TABLE>
AGGRESSIVE EQUITY FUND
<TABLE>
<CAPTION>
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 9/30/98 PURCHASES SALES 9/30/99 1999 1999
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Dentex
Corp. 248,600 20,500 17,400 251,700 - $(53,425)
Travis Boats
& Motors, Inc. 213,250 - 85,225 128,025<F1> - (563,538)
</TABLE>
GROWTH FUND
<TABLE>
<CAPTION>
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 9/30/98 PURCHASES SALES 9/30/99 1999 1999
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Cash Financial
Services, Inc. 340,700 - 64,150 276,550<F1> - $241,440
Friedman's, Inc. 737,075 8,000 745,075 -<F1> - (1,247,938)
Home Health Corp. of America, Inc. 598,681 - 598,681 -<F1> - (3,053,188)
National Dentex Corp. 187,000 2,000 6,000 183,000 - 12,937
Pediatrix Medical Group Inc. 7,700 1,167,175 264,300 910,575 - (467,876)
World Acceptance Corp. 1,119,486 97,400 290,000 926,886<F1> - (251,110)
</TABLE>
<F1> No longer an affiliated company as of September 30, 1999.
<PAGE>
WASATCH FUNDS-REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------
The Shareholders and
Board of Directors of
Wasatch Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of Wasatch
Funds, Inc. (the "Funds" or the "Company," a Minnesota corporation, which
includes the Wasatch Micro-Cap Fund, Wasatch Micro-Cap Value Fund, Wasatch
Aggressive Equity Fund, Wasatch Growth Fund, Wasatch Mid-Cap Fund and Wasatch-
Hoisington U.S. Treasury Fund), including the schedules of investments, as of
September 30, 1999, 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
periods then ended, except for the Wasatch Micro-Cap Value Fund which is for the
period from inception on December 17, 1997 to September 30, 1998, and for the
year ended September 30, 1999, and the financial highlights for each of the
periods indicated therein. 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.
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 and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1999, 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
audits provide 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 Funds, Inc. as of September 30, 1999, 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 periods then ended, except for the Wasatch Micro-Cap Value Fund which is
for the period from inception on December 17, 1997 to September 30, 1998, and
for the year ended September 30, 1999, and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Milwaukee, Wisconsin
October 22, 1999
<PAGE>
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS
- --------------------------------------------
Wasatch Funds provides reports to shareholders twice a year. The Annual
Report is for the Funds' fiscal year which ends September 30th. The Semi-Annual
Report is for the six months ending March 31st. These reports provide
shareholders with important information that will help them evaluate the
management and performance of their investment. It is the desire of Wasatch
Funds to help shareholders stay in tune with their investments. If you have any
questions about the information in this report, a Shareholder Services
Representative will be happy to assist you when you call 1 (800) 551-1700.
SCHEDULE OF INVESTMENTS
- ------------------------
The holdings of each Wasatch Fund are detailed in the "Schedule of
Investments." This section provides a snapshot of the securities each Fund was
invested in on the last day of the reporting period. The Wasatch Equity Funds
invest primarily in COMMON STOCKS of companies which are categorized under a
variety of industries and will typically have only minor holdings in SHORT-TERM
INVESTMENTS. The Wasatch-Hoisington U.S. Treasury Fund invests primarily in U.S.
Treasury securities.
STATEMENTS OF ASSETS AND LIABILITIES
- ------------------------------------
These financial statements show the ASSETS and LIABILITIES of a Fund on the
last day of the reporting period. A Fund's ASSETS include the value of
securities owned, amounts receivable for shareholder subscriptions (purchases of
Fund shares), securities sold, interest and dividends, prepaid expenses and
reimbursements by the Advisor. LIABILITIES are amounts owed for shareholder
redemptions, securities purchased, investment advisory fees and other expenses.
Totaling up the assets and subtracting the liabilities results in a Fund's NET
ASSETS.
NET ASSETS consist of capital stock, paid-in capital in excess of par,
undistributed net investment income, undistributed net realized gain or loss on
investments and net unrealized appreciation or depreciation on investments.
CAPITAL STOCK is stock authorized by a company's charter and having par value,
stated value or no par value. Par value is set by the company issuing the shares
and has no relation to Net Asset Value. The par value of one share of each
Wasatch Fund is $.001. PAID-IN CAPITAL IN EXCESS OF PAR is capital received from
shareholders in exchange for Fund shares that exceeds the par value of the
shares. For example, if you bought one share of a Fund for $10, $.001 would show
as "Capital stock" on the books of the Fund, and $9.999 would be accounted for
under "Paid-in capital in excess of par." UNDISTRIBUTED NET INVESTMENT INCOME is
the amount of net investment income earned by a Fund since inception that has
not been paid to shareholders as a dividend. UNDISTRIBUTED NET REALIZED GAIN
(LOSS) ON INVESTMENTS is the amount of net realized gains or losses generated by
a Fund since inception that have not been distributed to shareholders in the
form of a capital gains distribution. A gain or loss is realized when a security
is sold by a Fund. NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS is
the change in value from the purchase price of securities a Fund continues to
hold.
The number of shares a Fund is AUTHORIZED to sell can be found under CAPITAL
STOCK, $.001 PAR VALUE. How many of those shares are owned by
<PAGE>
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS
- --------------------------------------------
shareholders is indicated as ISSUED AND OUTSTANDING.
NET ASSET VALUE (NAV) shows the value of one outstanding share of a Fund on
the date of the report. A Fund's share price (NAV) is calculated by dividing the
value of all securities and other assets owned by a Fund, less the liabilities
charged to that Fund, by the number of Fund shares outstanding. The NAV is
calculated at the close of business of the New York Stock Exchange on each day
the Exchange is open for trading. Please see the current Wasatch Funds
Prospectus for more information about how NAVs are calculated. Information about
how the NAV is affected by a Fund's operation can be found in this section under
"Financial Highlights" on page 62.
STATEMENTS OF OPERATIONS
- -------------------------
STATEMENTS OF OPERATIONS show investment income and expenses for each Fund as
well as realized gains or losses from securities sold and the change in
unrealized appreciation or depreciation in the value of a Fund's current
holdings for a specific period of time.
INVESTMENT INCOME shows INTEREST and DIVIDENDS earned from interest-bearing
and dividend-paying securities in a Fund's portfolio.
EXPENSES show the various fees and expenses paid out of a Fund's assets such
as the fee paid to Wasatch Advisors, the Funds' investment advisor. Additional
fees include shareholder servicing, fund administration and accounting, custody
of fund assets, federal and state registration, legal counsel, auditing and
directors' fees. The Funds also bear the cost
of printing and mailing statements, prospectuses, annual reports and
semi-annual reports to shareholders.
NET INVESTMENT INCOME (LOSS) is the amount of dividends and interest income
earned on securities held by a Fund, less the Fund's expenses.
NET REALIZED GAIN (LOSS) ON INVESTMENTS is the net gain or loss on securities
a Fund has sold. CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON INVESTMENTS
is the change in value of securities a Fund continues to hold.
NET GAIN (LOSS) ON INVESTMENTS is the result of changes in market value of
securities sold and securities held by a Fund.
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------
NET ASSETS are a Fund's remaining assets after taking into consideration any
liabilities. STATEMENTS OF CHANGES IN NET ASSETS show the increase or decrease
in a Fund's net assets during the reporting period. Investment operations,
dividends and capital share transactions affect a Fund's net assets. OPERATIONS
is a summary of the STATEMENTS OF OPERATIONS. It includes investment income or
loss, net realized gain or loss on a Fund's investments as well as the change in
unrealized appreciation or depreciation in the value of a Fund's investments.
DIVIDENDS are distributed by Wasatch Funds to shareholders when Fund
investments have earned income in excess of net expenses or when capital gains
in excess of capital losses are realized from the sale of securities. Most
shareholders choose to reinvest their dividends and capital gains distribu
tions. Each Fund is required by Internal Revenue Service (IRS) regulations to
distribute substantially all of its net investment income and capital gains to
<PAGE>
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS
- -------------------------------------------
shareholders in order to retain its status as a "regulated investment company."
CAPITAL SHARE TRANSACTIONS are any transactions involving shares of a Fund,
including the selling of Fund shares, shares issued by a Fund to shareholders
for the reinvestment of dividends and share redemptions.
FINANCIAL HIGHLIGHTS
- ---------------------
The FINANCIAL HIGHLIGHTS tables contain important historical operating
information that you may find useful in making decisions or understanding the
performance of your Wasatch Funds investment.
NET ASSET VALUE (NAV) is defined in this section under "Statements of Assets
and Liabilities" on page 61. The difference between the Net asset value,
beginning of period and the Net asset value, end of period in the Financial
Highlights tables is the change in value of a Fund's shares over the reporting
period, but not its total return.
INCOME (LOSS) FROM INVESTMENT OPERATIONS shows how the NAV was affected by a
Fund's operations on a per share basis. NET INVESTMENT INCOME (LOSS) is the per
share amount of dividends and interest income earned on securities held by a
Fund, less the Fund's expenses. NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
SECURITIES is the per share increase or decrease in value of the securities a
Fund holds and has sold during the reporting period. Gains or (losses) are
realized when securities are sold. Gains or (losses) are unrealized when
securities increase or decrease in value but are not sold.
DISTRIBUTIONS are the per share amount that a Fund paid to shareholders from
net investment income and net realized gains.
TOTAL RETURN is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in unrealized and realized gains and income. For the purposes of
calculating total return, it is assumed that dividends and distributions are
reinvested at the NAV on the day of the distribution.
A FUND'S TOTAL RETURN CAN NOT BE COMPUTED DIRECTLY FROM THE FINANCIAL
HIGHLIGHTS TABLES.
SUPPLEMENTAL DATA AND RATIOS are provided to help you better understand your
investment. NET ASSETS, END OF PERIOD, are the net assets of a Fund on the
reporting date. RATIO OF EXPENSES TO AVERAGE NET ASSETS is the total of a Fund's
operating expenses divided by its average net assets for the stated period.
RATIO OF NET INCOME (LOSS) TO AVERAGE NET ASSETS is a Fund's net investment
income (loss) divided by its average net assets for the stated period. PORTFOLIO
TURNOVER RATE is a measure of the annual amount of a Fund's buying and selling
activity. It is computed by dividing total purchases or sales, whichever is
less, by the average monthly market value of a Fund's portfolio securities. This
calculation does not include securities held by any Fund with a maturity date of
less than 12 months.
<PAGE>
NOTES
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