TABLE OF CONTENTS
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LETTER FROM THE INVESTMENT ADVISOR............................. 1
Wasatch Equity Funds ......................................... 2
Wasatch-Hoisington U.S. Treasury Fund ........................ 3
MICRO-CAP FUND PORTFOLIO SUMMARY............................... 4
Six Month Review ............................................. 4
Average Annual Total Returns & Ten Largest Holdings .......... 5
MICRO-CAP VALUE FUND PORTFOLIO SUMMARY......................... 6
Six Month Review ............................................. 6
Average Annual Total Returns & Ten Largest Holdings .......... 7
AGGRESSIVE EQUITY FUND PORTFOLIO SUMMARY....................... 8
Six Month Review ............................................. 8
Average Annual Total Returns & Ten Largest Holdings .......... 9
GROWTH FUND PORTFOLIO SUMMARY................................. 10
Six Month Review ............................................ 10
Average Annual Total Returns & Ten Largest Holdings ......... 11
MID-CAP FUND PORTFOLIO SUMMARY................................ 12
Six Month Review ............................................ 12
Average Annual Total Returns & Ten Largest Holdings ......... 13
WASATCH-HOISINGTON U.S. TREASURY FUND PORTFOLIO SUMMARY....... 14
Six Month Review ............................................ 14
Average Annual Total Returns & Holdings/Maturity Date ....... 15
SCHEDULE OF INVESTMENTS....................................... 16
STATEMENTS OF ASSETS AND LIABILITIES.......................... 34
STATEMENTS OF OPERATIONS...................................... 36
STATEMENTS OF CHANGES IN NET ASSETS........................... 38
FINANCIAL HIGHLIGHTS.......................................... 42
NOTES TO FINANCIAL STATEMENTS................................. 54
SEMI-ANNUAL REPORT ------
<PAGE>
- ------ SEMI-ANNUAL REPORT
<PAGE>
(LOGO)
WASATCH FUNDS, INC.
150 Social Hall Avenue
Salt Lake City, UT 84111
1 (800) 551-1700
LETTER FROM THE INVESTMENT ADVISOR
MARCH 31, 1999
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DEAR SHAREHOLDERS:
- ------------------
Investors' continued enthusiasm for a handful of the biggest stocks carried
the Dow Jones Industrial Average past 10,000 for the first time on March 29,
1999. Although the Dow retreated slightly the following day, investor confidence
remained high, buoyed by an economy that dominates world markets. Even the
U.S./NATO bombing of Yugoslavia did little to dampen the enthusiasm of
investors.
Economic conditions remain favorable. Interest rates are low and inflation
has failed to materialize in spite of a low jobless rate. Although important,
the strong economy does not fully explain the rise of the U.S. stock market to
historic highs.
The amount of money being poured into the stock market by Americans who are
increasingly responsible for investing their retirement assets either on their
own or through an investment professional may also be important. Steve Leuthold
and Byron Wien of Morgan Stanley Dean Witter surmised that "Main Street"
investors rather than Wall Street investors may be largely responsible for the
phenomenal rise in stock prices of multinational U.S. companies with powerful
brand names both at home and abroad.
Dr. Lacy Hunt, Executive Vice President of Hoisington Investment Management
Company, sub-advisor of the Wasatch-Hoisington U.S. Treasury Fund, suggested
recently that money being spent on foreign goods in the U.S. could be coming
back into the stock market from foreign investors who want a piece of the
action. Their investments of choice are likely the largest, most well-known U.S.
companies.
The market has become increasingly trading oriented. The ease of buying and
selling stocks via the Internet has given rise to a new breed of investors.
Known as day traders, these short-term investors attempt to make their living
trading in and out of stocks. Trading-oriented investors want stocks they can
buy and sell at whim and they have been willing to pay significant premiums for
liquidity. This keeps the biggest, most liquid stocks at the top of their buy
lists.
Over the last several years the gains made in the broad market have narrowed
considerably. The outstanding returns enjoyed by stockholders in a few of the
largest companies like Microsoft, Dell and America Online have not been shared
by stockholders in other publicly traded companies. In fact, downward pressure
on the prices of other stocks, particularly small company stocks, has been
tremendous. While demand for a few large company stocks has expanded to record
levels, demand for small company stocks has been shrinking.
WASATCH EQUITY FUNDS
- --------------------
Although much of the news may seem negative for small company stocks, we
believe this dark cloud may have a silver lining. If buying low and selling high
sounds like a smart way to invest, it could be that there has never been a
better time to be invested in small company stocks. Or, to consider increasing
your allocation. We can point to some solid reasons why we believe now is an
excellent time to be invested in small company stocks and in the Wasatch Equity
Funds.
First and foremost is earnings growth. The stock prices of large companies
have risen primarily due to expansion of the price-to-earnings (P/E) ratio (the
price of a stock divided by its earnings per share). The higher prices go
without a corresponding rise in earnings growth, the more risk there is that the
stock is becoming overvalued and that its price may fall. In 1998, 83% of the
returns of the S&P 500 Index were attributable to P/E expansion, while only 17%
were due to earnings growth. Last year, average earnings growth for the 10
largest companies in the S&P 500 was 10.3% while the P/E averaged 47.9. This
means the P/E was 4.6 times higher than the earnings per share (EPS) growth.
Wall Street analysts expect earnings growth for companies in the S&P 500 to be
less than 10% in 1999.
There's no doubt that investor enthusiasm could carry prices even higher from
here. But, large companies face stiff challenges to do better than they have
done in the past. Several of the largest companies such as Coca Cola and
Gillette have already fallen short of expectations. We believe that as investors
seek to justify paying ever higher prices for large company stocks, the lack of
earnings growth will become painfully obvious.
That's when we expect the earnings growth of the small and mid-size companies
Wasatch invests in to shine. We often liken the earnings growth of these
companies to a beach ball being pushed under water. There's only so long you can
hold it down before it forces itself to the surface. When large company stocks
outperform, the stock prices of smaller companies tend to get pushed down until
they reach a point where investors can no longer ignore their superior earnings
growth. When that happens and investors turn their attention to small company
stocks, demand can force prices up dramatically.
At Wasatch, our growth equity funds focus on investing in companies with
solid earnings growth. We expect the companies we invest in to produce earnings
growth at a minimum rate of 15% annually (25% for companies in the Mid-Cap
Fund). If there is a theme for the Wasatch Equity Funds at this point in time,
it is that earnings growth is strong and prices are reasonable. We believe this
will give the Funds outstanding upside potential when small company stocks
return to favor.
Wasatch is one of only a handful of mutual fund managers with nearly 25
years of experience investing in small company stocks. We believe we have the
experience and time-tested investment strategy that can work to your advantage.
We are confident that over the long term, the small and mid-size companies we
have invested in have the potential to help you achieve your investment
objectives.
- ------ 2 Semi-Annual Report
<PAGE>
EQUITY FUNDS OUTLOOK
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We would like to stress that we remain confident in the business outlook for
companies held by the Wasatch Equity Funds. We believe they have the potential
to be outstanding investments.
Investing in small company stocks takes patience and discipline. Most of all
it requires a long time horizon. Small company stocks have historically
outperformed. But, they have been volatile with bursts of outperformance that
require investors to be there over the long haul. Missing even a few of the best
days can greatly reduce returns.
From our experience many signs in the market lead us to believe that small
company stocks are on the verge of outperforming. Large companies are up against
tough expectations and their stock prices to us seem extremely high.
The business environment remains favorable for smaller companies. Stock
prices are low compared to those of large company stocks. We believe that, on
average, the small and mid-size companies Wasatch has invested in have excellent
long-term growth prospects. In addition, we have been able to invest at prices
we believe are extremely reasonable. We believe that over the long term these
two factors can give the Wasatch Equity Funds the potential to be a powerful
force in your investment portfolio.
Even though the market has been hard on small company stocks, we are
committed to pursuing our time-tested strategy of investing in what we consider
to be great companies. When we compare the fundamentals of the small and mid-
size companies we have invested in to the largest companies in the S&P 500, we
think that right now it may be better to be at the bottom looking up than at the
top looking down.
For more information about the performance and outlook for each of the
Wasatch Funds, please see the portfolio summaries beginning on page 4.
WASATCH-HOISINGTON U.S. TREASURY FUND
- -------------------------------------
For more information about the performance and outlook of the Wasatch-
Hoisington U.S. Treasury Fund, please see the portfolio summary beginning on
page 14.
WORTH NOTING
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The current Prospectus contains more information about each Fund's investment
objectives and strategy. If you have any questions or comments regarding this
report or your investments please call us at 1 (800) 551-1700.
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 investment objectives.
We look forward to serving your investment needs in the coming years. We
appreciate your confidence and faith in Wasatch Funds.
Sincerely,
/s/Samuel S. Stewart, Jr.
Samuel S. Stewart, Jr.
Chairman of the Board
Semi-annual Report 3 ------
<PAGE>
WASATCH MICRO-CAP FUND-PORTFOLIO SUMMARY
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MARCH 31, 1999
(PHOTO)
ROBERT GARDINER, CFA-LEAD MANAGER
The Micro-Cap Fund invests the majority of its assets in companies with
market capitalizations of less than $300 million at the time of initial
purchase. We believe investments in these very small companies give the Fund the
potential for above average returns because they may be able to increase
earnings faster and sustain earnings growth longer than larger companies.
Liquidity issues and wide stock price fluctuations typical of micro-cap
companies make the Micro-Cap Fund most suitable for long-term investors.
SIX MONTH REVIEW
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The Micro-Cap Fund was closed to new investors at around $150 million to
enable us to continue investing your assets in micro-cap companies.
Micro-cap stocks were among those least favored by investors during the six
months ended March 31, 1999. The largest, most liquid stocks continued to forge
ahead while small- and micro-cap stocks fell behind.
Following strong performance in the quarter (24.61%) and year (18.98%) ended
December 31, 1998, the Wasatch Micro-Cap Fund struggled in the first quarter of
1999 (-8.52%) as the stock prices of many of the Fund's holdings lost ground in
what has been a difficult environment for micro-cap stocks.
In our opinion, companies held by the Fund are high quality and have
excellent growth prospects. In addition, we have been able to invest at prices
that to us are extremely reasonable.
At around 19%, earnings growth of companies in the Micro-Cap Fund's portfolio
continued to run ahead of our 15% minimum annual target.
We believe the overall quality and low price-to-earnings (P/E) ratio (the
price of a stock divided by its earnings per share) of the Fund position it to
do well when small company stocks rebound.
Over the past six months, in keeping with our investment discipline, we
trimmed holdings that have grown fast and reached higher P/Es. While we believe
maintaining P/Es at a reasonable level is an excellent long-term strategy, it
hurt us in an environment where fast growing companies with high P/Es did better
than the rest.
We invest from the bottom up by analyzing the prospects of individual
companies. In the past six months our investment process led us to significant
holdings in health care, technology and personal products and services.
Technology holdings were among the strongest contributors. However, positive
performance came from companies in a variety of industries. Likewise, companies
with disappointing stock price performance were not concentrated in any
particular industry.
The Fund's largest holding, Techne Corporation, a maker of disposable
- ------ 4 Semi-Annual Report
<PAGE>
WASATCH MICRO-CAP FUND-PORTFOLIO SUMMARY
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products for clinical research labs and hospitals, was a positive contributor as
the company continued to provide strong earnings growth.
OUTLOOK
- -------
We believe we have invested in some outstanding companies that give the Fund
the potential to help you achieve your long-term investment objectives.
It's hard to say when the market environment will turn favorable for small-
and micro-cap stocks. In the meantime, and as always, we will strive to keep the
Fund well-positioned by following our investment strategy.
We believe earnings growth is the key to long-term stock price performance.
Finding and investing in micro-cap companies with strong earnings growth will
remain the major focus of the Micro-Cap Fund. We are also committed to
purchasing stocks at reasonable prices. This strategy has helped the Fund do
well in the past and we believe it remains viable for the future.
We look forward to continuing our relationship with you and urge you to stay on
your chosen investment course.
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AVERAGE ANNUAL TOTAL RETURNS (as of March 31, 1999)
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1 YEAR 5 YEARS SINCE INCEPTION<F1>
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WASATCH MICRO-CAP FUND -7.41% N/A 25.58%
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Past performance is not necessarily indicative of future results. Within a long-
term investment time frame share prices will fluctuate. Shareholders' capital
will grow more at some times, less at other times or it may decline. For more
complete information including charges and expenses read the prospectus
carefully.
<F1> Inception: June 19, 1995.
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TEN LARGEST HOLDINGS
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1. TECHNE CORP. 9%
Disposable products for clinical research
labs and hospitals.
2. ICU MEDICAL, INC. 6%
Disposable connectors for intravenous therapy.
3. WHITEHALL JEWELLERS, INC. 5%
Fine jewelry retailer.
4. CORVEL CORP. 5%
Case management and cost containment services for
workers' compensation.
5. SUPERTEX, INC. 4%
Semiconductor component manufacturer.
6. FIRST CASH FINANCIAL SERVICES, INC. 3%
Consumer financial services and pawn shops.
7. YOUNG INNOVATIONS, INC. 3%
Disposable products for dental professionals.
8. NATIONAL DENTEX CORP. 3%
Dental laboratories.
9. MICREL, INC. 3%
Analog semiconductors.
10.TRAVIS BOATS & MOTORS, INC. 3%
Recreational boats, motors and marine
accessories retailer.
Semi-Annual Report 5 ------
<PAGE>
WASATCH MICRO-CAP VALUE FUND-PORTFOLIO SUMMARY
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MARCH 31, 1999
(PHOTO)
ROBERT GARDINER, JEFF CARDON-CO-MANAGERS
The Micro-Cap Value Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve its objective by investing primarily in
companies with market capitalizations of less than $300 million whose stocks are
selling at a substantial discount to what we believe is 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 when it
reaches approximately $200 million in assets.
SIX MONTH REVIEW
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The Micro-Cap Value Fund celebrated its first birthday on December 17, 1998.
With this important milestone under our belt, we are more excited than ever
about the Fund's potential to make a positive difference to your long-term
investment plan.
The Fund's focus on investing in quality companies at low prices is
considered a powerful long-term investment strategy and is practiced by some of
the world's most successful investors. Since the Fund's inception we have worked
diligently to invest in quality companies at low prices. As a result of our
efforts, we believe the Fund is in an excellent position to benefit when micro-
cap stock prices rebound.
For the year ended March 31, 1999, the Russell 2000 Value Index, a widely
recognized measure of the performance of small- and micro-cap stocks, was down
22.03%. The performance of the Index revealed overall weakness in small- and
micro-cap stock prices. For the same period, the Micro-Cap Value Fund did about
six points better than its benchmark, the Russell 2000 Value Index.
The Fund ranked in the top 15% of 221 funds in the small value category
tracked by Morningstar for the 12 months ended March 31, 1999. This indicates
that the Fund has done well relative to its peers.
After rallying late in 1998, the prices of small- and micro-cap growth and
value stocks faded again in the first quarter of 1999.
The upside is that over the past 12 months, and particularly in the most
recent three months, the stock prices of many micro-cap companies that we
believe are high quality and have outstanding long-term growth prospects dropped
within legitimate value parameters. Several of the Fund's largest holdings-
Whitehall Jewellers, ICU Medical and First Cash Financial Services-are growing
companies that we invested in at prices well below what we believe these
companies would normally command.
We increased our position in MarineMax, a recreational boats and boating
products retailer, late last year when its stock price was down. After
- ------ 6 Semi-Annual Report
<PAGE>
WASATCH MICRO-CAP VALUE FUND-PORTFOLIO SUMMARY
- ----------------------------------------------
meeting with the company's management we felt MarineMax had excellent business
momentum. The stock price has been moving briskly ahead in 1999.
We sold American Bank Note Holographics when the company announced that it
would need to restate financial results.
Over the past six months, the Fund has benefited from a number of companies
that were acquired. We believe this is a validation of our strategy to invest in
good, undervalued companies.
The Fund's second largest holding, K&G Men's Center, a men's discount
clothing retailer, announced that it planned to merge with a subsidiary of Men's
Warehouse. We believe the merger will have a positive effect on the Fund.
Trident International Inc., a manufacturer of ink jet print heads and
specialty inks for industrial applications, made a significant contribution to
the Fund's performance when the company announced that it was being acquired by
Illinois Tool Works Inc.
OUTLOOK
- -------
Within the large universe of micro-cap companies we believe we will continue
to find quality companies that are undervalued.
Over the long term, we are confident that this value-oriented approach to
investing has the potential to be a positive force in your portfolio.
Thank you for investing in the Wasatch Micro-Cap Value Fund.
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Average Annual Total Returns (AS OF MARCH 31, 1999)
- ---------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
- -----------------------------------------------------------------------------
WASATCH MICRO-CAP VALUE FUND -16.31 N/A -1.95%
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Past performance is not necessarily indicative of future results. Within a long-
term investment time frame share prices will fluctuate. Shareholders' capital
will grow more at some times, less at other times or it may decline. For more
complete information including charges and expenses read the prospectus
carefully.
<F1> Inception: December 17, 1997.
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TEN LARGEST HOLDINGS
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1. WHITEHALL JEWELLERS, INC. 6%
Fine jewelry retailer.
2. K&G MEN'S CENTER, INC. 5%
Men's discount clothing retailer.
3. SUPERTEX, INC. 5%
Semiconductor component manufacturer.
4. ICU MEDICAL, INC. 4%
Disposable connectors for intravenous therapy.
5. SCP POOL CORPORATION 4%
Swimming pool supply distributor.
6. NATIONAL DENTEX CORP. 4%
Dental laboratories.
7. FIRST CASH FINANCIAL SERVICES, INC. 4%
Consumer financial services and pawn shops.
8. RAINBOW RENTALS, INC. 4%
Rent-to-own store operator.
9. WORLD ACCEPTANCE CORP. 4%
Consumer lending.
10.MARINEMAX, INC. 3%
Recreational boats and boating products retailer.
Semi-Annual Report 7 ------
<PAGE>
WASATCH AGGRESSIVE EQUITY FUND-PORTFOLIO SUMMARY
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MARCH 31, 1999
(PHOTO)
JEFF CARDON-LEAD MANAGER
The Aggressive Equity Fund invests primarily in growing small companies with
market capitalizations of less than $1 billion at the time of purchase.
Investing in this segment of the market has historically achieved higher returns
for investors but requires patience and a long time horizon because small
company stock prices are subject to wide fluctuations. We intend to close the
Aggressive Equity Fund when it reaches approximately $300 million in assets.
SIX MONTH REVIEW
- ----------------
Over the past six months, the Aggressive Equity Fund faced the challenges of
investing in a market where small company stocks have been widely ignored.
For the year ended March 31, 1999, the Fund was down 5.17%. We believe this
can largely be attributed to widespread weakness in small company stock prices.
Our belief is supported by the performance of the Russell 2000 Index, a widely
recognized barometer for small company stocks, which was down 16.26% over the
same period.
The Fund's 10 year track record is stellar with an average annual return of
16.42% which puts it in the top 25% of 33 funds in Morning star's small growth
catetory. This track record was produced over a long period when small company
stocks were both in and out of favor.
While past performance is not necessarily predictive of future results, we
have never wavered from our investment discipline and we believe it remains a
viable investment strategy.
Our bottom-up process of analyzing the investment potential of individual
companies has resulted in the Fund being heavily weighted in health care,
technology, business products and services and retail.
On average, the small companies we have invested in continue to produce
strong earnings growth. We believe the business environment remains favorable
for these companies.
Small company stock prices reached historic lows and we took advantage of
numerous opportunities to invest or increase our position in companies that we
believe are high quality and that appear to have ample room for stock price
appreciation. We believe these holdings have the potential to be outstanding
long-term investments.
The Fund's two largest holdings have done extremely well. Over the past six
months, Techne Corporation, a maker of disposable products for clinical research
labs and hospitals, was up 97%, and O'Reilly Automotive, an automotive parts
retailer and distributor, was up 23% following a large acquisition late last
year.
News that the SEC would require an
- ------ Semi-Annual Report 8
<PAGE>
WASATCH AGGRESSIVE EQUITY FUND-PORTFOLIO SUMMARY
- ------------------------------------------------
independent audit of Pediatrix Medical Group's 1998 financial statements
resulted in a dramatic drop in the company's stock price. The audit revealed
that the company's financial data were fairly stated. Now, several states are
looking into the company's billing practices. Pediatrix has a strict compliance
policy regarding billing and discussions with management have given us
confidence that the company will pass the states' inspection. Once the company
has been given a clean bill of health, we expect the stock price to recover.
OUTLOOK
- -------
We believe the Aggressive Equity Fund's investments in small companies that
we consider to be high quality have the potential to help you achieve your long-
term investment objectives. They are capable of earnings growth that will surely
shine when small company stocks return to favor.
Given the historical outperformance of small company stocks, we believe
patient long-term investors are most likely to reap the rewards.
AVERAGE ANNUAL TOTAL RETURNS (AS OF MARCH 31, 1999)
- ---------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
WASATCH AGGRESSIVE EQUITY FUND -5.17% 12.91% 16.42%
- --------------------------------------------------------------------------------
Past performance is not necessarily indicative of future results. Within a long-
term investment time frame share prices will fluctuate. Shareholders' capital
will grow more at some times, less at other times or it may decline. For more
complete information including charges and expenses read the prospectus
carefully.
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
- --------------------
1. TECHNE CORP. 9%
Disposable products for clinical research
labs and hospitals.
2. O'REILLY AUTOMOTIVE, INC. 5%
Automotive parts retailer/distributor.
3. SYNOPSYS, INC. 4%
Software solutions for electronic design automation.
4. MICROCHIP TECHNOLOGY, INC. 4%
Proprietary chip manufacturer.
5. MICREL, INC. 4%
Analog semiconductors.
6. QRS CORPORATION 3%
Business-to-business e-commerce.
7. PEDIATRIX MEDICAL GROUP INC. 3%
Practice management for neonatalogists.
8. NATIONAL HEALTH INVESTORS, INC. 3%
Nursing home REIT.
9. WHITEHALL JEWELLERS, INC. 3%
Fine jewelry retailer.
10.ICU MEDICAL, INC. 3%
Disposable connectors for intravenous therapy.
Semi-Annual Report 9 ------
<PAGE>
WASATCH GROWTH FUND-PORTFOLIO SUMMARY
- -------------------------------------
MARCH 31, 1999
(PHOTO)
SAMUEL S. STEWART, JR., PHD, CFA-
LEAD MANAGER
The Wasatch Growth Fund seeks to invest in growing companies that we believe
are stable and that have a history of consistent earnings growth. In addition,
we seek to invest in these companies at reasonable prices. The Growth Fund is
the most conservative of all the Wasatch Equity Funds. However, because the Fund
may invest in smaller companies, we believe it is best-suited for long-term
investors.
SIX MONTH REVIEW
- ----------------
For the six months ended March 31, 1999, the Growth Fund was up 14.13%. For
the past 12 months, however, the Fund remains in negative territory.
The Fund's 10 year average annual return of 15.88% was achieved by investing
in markets that were both kind and unkind to small company stock investors like
Wasatch.
The Fund ranked in the top 25% of 237 small blend funds tracked by
Morningstar for the 12 months ended March 31, 1999. This indicates that the Fund
has done well relative to its peers.
The Fund's performance over the past six months was helped by October's
dramatic, though short-lived, rally in small company stock prices.
In addition, we have made a concerted effort to improve the average earnings
growth of the Fund's holdings by pruning or eliminating companies that have
fallen short of our 15% minimum annual earnings growth target.
One of the companies we sold was Washington Federal, Inc. Even though this
is one of our favorite companies and has been one of the most steady growers in
the portfolio, we think its future earnings growth is not likely to be up to our
standard.
We have added a number of companies that we believe have the potential to
consistently grow at or above our 15% target. These include Expeditors
International, Knight Transportation and Hibbett Sporting Goods.
Health care was the best performing sector with strong stock price
performance from two of the Fund's largest holdings-Techne Corporation and
Concentra Managed Care, Inc.
The Fund was hurt by weak stock price performance from companies in a
variety of sectors. These included several of the largest holdings-AmeriCredit
Corp., General Nutrition Cos., and Rent-A-Center, Inc. The business outlook for
these companies appears bright. We believe that over the long term they have the
potential to consistently produce the earnings growth we seek.
We took advantage of a dramatic drop in the stock price of Pediatrix Medical
Group to significantly increase our position.
The market continued to reward companies with high price-to-earnings
- ------ 10 Semi-Annual Report
<PAGE>
WASATCH GROWTH FUND-PORTFOLIO SUMMARY
- -------------------------------------
(P/E) ratios (the price of a stock divided by its earnings per share) and
penalize companies with low P/Es. This means the Fund's strategy of trimming
stocks with high P/Es went against the grain.
We believe selling stocks that appear fully valued and buying stocks that we
believe are undervalued remains an excellent long-term strategy.
OUTLOOK
- -------
We expect the average earnings growth of the Fund's holdings to continue to
improve throughout 1999. Like you, we are anxious for small company stocks to
turn around. Our focus is to position the Wasatch Growth Fund so that it may
benefit from any upturn in small company stock prices.
We are confident that the reasonably priced investments we have made in
small companies capable of sustained earnings growth have the potential to help
you achieve your long-term investment objectives.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF MARCH 31, 1999)
- ---------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
WASATCH GROWTH FUND -13.07% 16.53% 15.88%
- --------------------------------------------------------------------------------
Past performance is not necessarily indicative of future results. Within a long-
term investment time frame share prices will fluctuate. Shareholders' capital
will grow more at some times, less at other times or it may decline. For more
complete information including charges and expenses read the prospectus
carefully.
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
- --------------------
1. AMERICREDIT CORP. 11%
Automobile and mortgage lender.
2. FIRST HEALTH GROUP CORP. 8%
Medical cost management services for group health
and workers' compensation.
3. PEDIATRIX MEDICAL GROUP INC. 8%
Practice management for neonatalogists.
4. TECHNE CORP. 8%
Disposable products for clinical research
labs and hospitals.
5. RENT-A-CENTER, INC. 7%
Operates rent-to-own stores.
6. GENERAL NUTRITION COS., INC. 7%
Vitamins, health care and sports
nutrition products.
7. CONCENTRA MANAGED CARE, INC. 6%
Cost containment services for auto injury and
workers' compensation claims.
8. WORLD ACCEPTANCE CORP. 4%
Consumer lending.
9. SCP POOL CORPORATION 3%
Swimming pool supply distributor.
10.WHITEHALL JEWELLERS, INC. 3%
Fine jewelry retailer.
Semi-Annual Report 11 ------
<PAGE>
WASATCH MID-CAP FUND-PORTFOLIO SUMMARY
- --------------------------------------
MARCH 31, 1999
(PHOTO)
KAREY BARKER, CFA-LEAD MANAGER
The Mid-Cap Fund is the most aggressive Fund in the Wasatch Funds family.
The Fund seeks to invest in companies with the highest growth rates. It has
relatively few holdings which tend to be concentrated in the most dynamic
industries. It is best-suited for aggressive investors who plan to hold the Fund
for at least five years.
SIX MONTH REVIEW
- ----------------
Over the past six months the Wasatch Mid-Cap Fund has produced excellent
performance. The Fund's six month return at March 31, 1999 was 26.03% compared
to the 20.01% return of the S&P MidCap 400, an index that measures the
performance of mid-size company stocks, and the 10.00% return of the Russell
2000, an index that measures the performance of small company stocks, over the
same period. Recent strong results have pulled the Fund's one year return up to
2.81%. This compared favorably to the 0.45% return of the S&P MidCap 400 and the
- -16.26% return of the Russell 2000.
In accordance with the Mid-Cap Fund's aggressive investment strategy, we
have high concentration in our most promising ideas. Over the past six months
there has been unusual activity in some of our largest holdings. On September
30, 1998, at the beginning of this fiscal year, Curative Health Services was the
top holding in the Fund. During our ongoing research we became concerned with
several issues regarding the company's growth prospects. A more detailed
analysis did little to dispel our concerns. We sold the stock before its
precipitous fall.
There was also an abrupt drop in stock price of our current top holding,
Pediatrix Medical Group. However we view this drop in price as a buying
opportunity. Pediatrix's stock fell dramatically when news came out that the SEC
would require an independent audit of the company's 1998 financial statements.
We felt that the company's fundamentals were intact and our financial analysis
and discussions with management gave us no reason to believe that the financials
were misrepresented. Our confidence was justified when the audit was completed
and showed that Pediatrix had fairly stated their numbers. The stock price went
up, but is now under pressure again due to a few state inquiries into the
company's Medi caid billing practices. Pediatrix has a thorough compliance
policy regarding billing. Once again our discussions with management have given
us confidence that inappropriate billing practices will not be discovered. The
price will remain under pressure until the issues are resolved.
Other long-time holdings that are large positions in the Fund-Sanmina,
Express Scripts, Micrel and Synopsys-
- ------ 12 Semi-Annual Report
<PAGE>
WASATCH MID-CAP FUND-PORTFOLIO SUMMARY
- --------------------------------------
contributed substantially to the Fund's earnings growth and performance over the
past six months. Strong performance also came from two new holdings, JDS Fitel
Inc. and SDL Inc., both makers of fiber optics components for the
telecommunications industry.
OUTLOOK
- -------
We are firm believers that over the long term earnings growth drives stock
prices. The Wasatch Mid-Cap Fund invests in companies capable of the highest
growth rates because we expect these investments to produce above average long-
term returns. We are pleased with the Fund's earnings performance over the past
six months. Looking ahead, we expect the average earnings growth of the Fund's
holdings to meet or exceed our 25% minimum annual target. As a result, we
believe the future looks bright for the Mid-Cap Fund's investments at quarter
end.
As always we will continue to monitor companies held by the Fund for issues
such as slowing growth, changes in the competitive environment, timely
introduction of new products and services and handling of acquisitions.
We believe our strategy of taking large positions in fast growing small and
mid-size companies has the potential 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 (AS OF MARCH 31, 1999)
- ---------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
- --------------------------------------------------------------------------------
WASATCH MID-CAP FUND 2.81% 16.36% 12.43%
- --------------------------------------------------------------------------------
Past performance is not necessarily indicative of future results. Within a long-
term investment time frame share prices will fluctuate. Shareholders' capital
will grow more at some times, less at other times or it may decline. For more
complete information including charges and expenses read the prospectus
carefully.
<F1> Inception: August 16, 1992.
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
1. PEDIATRIX MEDICAL GROUP INC. 11%
Practice management for neonatalogists.
2. SYNOPSYS, INC. 7%
Software solutions for electronic design automation.
3. SANMINA CORP. 6%
Contract manufacturer of electronics.
4. O'REILLY AUTOMOTIVE, INC. 6%
Automotive parts retailer/distributor.
5. THE METZLER GROUP, INC. 6%
Consulting services to energy and utility businesses.
6. EXPRESS SCRIPTS INC., CLASS A 5%
Pharmacy benefits manager.
7. F.Y.I. INCORPORATED 4%
Document management services.
8. MICROCHIP TECHNOLOGY, INC. 3%
Proprietary chip manufacturer.
9. MICREL, INC. 3%
Analog semiconductors.
10.JDS FITEL INC. 3%
Fiber optics components.
Semi-Annual Report 13 ------
<PAGE>
WASATCH-HOISINGTON U.S. TREASURY FUND-PORTFOLIO SUMMARY
- -------------------------------------------------------
MARCH 31, 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 (the time it takes for the economy to
shift from a peak in business activity to a trough and back to a peak) by
investing in U.S. Treasury securities.
SIX MONTH REVIEW
- ----------------
Although inflation decelerated over the past six months, bond market
investors worried that strong economic growth in the United States would lead to
faster domestic inflation. Accordingly, Treasury yields rose sharply. The 30-
year Treasury Bond yield, for example, rose to 5.62% at the end of March, 0.64%
higher than at the end of the third quarter of 1998. Most of this advance
(0.51%) happened since year-end. Accordingly, the return on the Wasatch-
Hoisington U.S. Treasury Fund was -6.90% for this six month period, compared
with -0.2% for the Fund's benchmark, the Lehman Bros. Aggregate Index, which
measures the performance of U.S. investment grade fixed-rate bonds, including
government and corporate securities, agency mortgage pass-through securities and
asset-backed securities. However, for the past 12 months, the 30-year Treasury
Bond yield fell 0.33%, as some important inflation gauges fell to the slowest
pace in the past 40 years even as real growth was well above trend. Accordingly,
the Fund returned 6.51%, which was slightly better than the 6.48% earned by the
Lehman Aggregate.
We continue to believe that the key to investing in Treasury Bonds is to
base portfolio decisions on the trend in inflation, not real economic activity.
Numerous scares in the bond market occurred in this decade and were based on the
notion that faster real economic growth would produce faster inflation. In fact,
most of the first calendar quarters of this decade witnessed such scares. Just
as they passed, this current flare-up too should fade away.
We continue to believe that the long-term trend in inflation and therefore
long-term Treasury Bond yields is headed downward. Global conditions point to
disinflation, if not deflation. While some of the smaller economies in Asia have
stabilized, the Japanese economy remains mired in a record-setting recession and
the Chinese government's forecast for the second half of the year was just
lowered substantially. In addition, conditions in Europe have been steadily
deteriorating. While the European Central Bank recently cut the base lending
rate to 2.5% (from 3%), this reduction is not likely to be any more effective
than prior significant rate reductions in turning around the Euroland.
The dollar continues to move irregularly higher on the foreign exchange
- ------ 14 Semi-Annual Report
<PAGE>
WASATCH-HOISINGTON U.S. TREASURY FUND-PORTFOLIO SUMMARY
- -------------------------------------------------------
markets, bringing in ever-larger quantities of lower priced imported goods. The
stronger dollar also indicates that foreign buyers will have fewer funds to
purchase our planes, cars and personal computers. In addition, monetary and
fiscal conditions remain disinflationary. The yield curve restrains bank
lending. Not surprisingly, bank lending in the latest 12 months rose only one-
half the pace of the peak rate of growth for this decade. In spite of some
increase in government spending to fund the war in the Balkans, the federal
government will run a $100 billion budget surplus. Another surplus is expected
for the next fiscal year as well. This is of particular interest to Treasury
Bond investors since it means that the supply of outstanding debt will be
heading downward.
OUTLOOK
- -------
By focusing on the long-term trend toward lower inflation, rather than
reacting to movements in volatile short-term considerations, patient investors
should, over time, earn excellent returns from Treasury Bonds. In the meantime,
bond investors earn a high real current income (income adjusted for inflation),
which recently yielded almost 5% on the 30-year Treasury Bond, more than double
the historical average.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF MARCH 31, 1999)
- ---------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
WASATCH-HOISINGTON
U.S. TREASURY FUND 6.51% 8.74% 8.94%
- --------------------------------------------------------------------------------
Past performance is not necessarily indicative of future results. Within a long-
term investment time frame share prices will fluctuate. Shareholders' capital
will grow more at some times, less at other times or it may decline. For more
complete information including charges and expenses read the prospectus
carefully.
- --------------------------------------------------------------------------------
HOLDINGS/MATURITY DATE
- ----------------------
1. U.S. TREASURY BOND 25%
8/15/2027
2. U.S. TREASURY BOND 22%
11/15/2024
3. U.S. TREASURY BOND 13%
11/15/2026
4. U.S. TREASURY BOND 10%
8/15/2025
5. U.S. TREASURY BOND 10%
2/15/2026
6. U.S. TREASURY BOND 5%
2/15/2027
7. U.S. TREASURY STRIP 5%
11/15/2021
8. U.S. TREASURY STRIP 4%
8/15/2025
9. U.S. TREASURY BOND 2%
11/15/2028
10.U.S. TREASURY BOND 1%
8/15/2023
Semi-Annual Report 15 ------
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
COMMON STOCKS 98.3%
-------------------
BUILDERS & BUILDING SUPPLIES 0.5%
64,191 Building Materials Holding Corp.<F1> $ 649,934
----------
BUSINESS PRODUCTS 1.3%
89,500 Daisytek International Corp.<F1> 1,487,937
9,100 Koala Corp.<F1> 188,825
----------
1,676,762
----------
BUSINESS SERVICES 12.1%
60,000 DA Consulting Group, Inc.<F1> 592,500
65,000 F.Y.I. Inc.<F1> 2,080,000
274,750 National Dentex Corp.<F1> 3,983,875
2,500 On Assignment, Inc.<F1> 64,062
27,200 QRS Corporation<F1> 1,701,700
76,000 RemedyTemp, Inc.<F1> 954,750
37,000 RWD Technologies, Inc.<F1> 645,187
225,000 SCP Pool Corporation<F1> 3,150,000
69,000 SteriGenics International, Inc.<F1> 672,750
113,500 Wilmar Industries, Inc.<F1> 1,681,219
----------
15,526,043
----------
COMPUTER SOFTWARE 2.4%
33,300 CFI ProServices, Inc.<F1> 403,763
90,500 Deltek Systems, Inc.<F1> 984,187
15,000 Made2Manage Systems, Inc.<F1> 131,250
29,000 Synopsys, Inc.<F1> 1,558,750
----------
3,077,950
----------
COMPUTER SYSTEMS & COMPONENTS 4.2%
139,100 Active Voice Corp.<F1> 1,338,837
79,500 Pinnacle Systems, Inc.<F1> 3,617,250
41,000 Power-One, Inc.<F1> 276,750
63,700 RF Industries, Ltd.<F1> 121,428
----------
5,354,265
----------
ELECTRONICS 1.7%
238,200 PCD Inc.<F1> 2,158,688
----------
FINANCIAL SERVICES 2.2%
4,000 Bay Area Bancshares 158,000
503,700 World Acceptance Corp.<F1> 2,707,388
----------
2,865,388
----------
- ------ 16 Semi-Annual Report
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------
HEALTH CARE PRODUCTS 21.9%
165,500 Biosite Diagnostics, Inc.<F1> $ 1,655,000
507,900 ICU Medical, Inc.<F1> 8,253,375
77,400 Minntech Corp. 977,175
23,000 Myriad Genetics, Inc.<F1> 207,000
20,500 Osteotech, Inc.<F1> 704,688
419,917 Techne Corp.<F1> 12,125,103
357,000 Young Innovations, Inc.<F1> 4,194,750
----------
28,117,091
----------
HEALTH CARE PROVIDERS 4.4%
292,770 AmSurg Corp., Class A<F1> 2,049,390
256,500 AmSurg Corp., Class B<F1> 1,795,500
61,000 Pediatrix Medical Group Inc.<F1> 1,715,625
7,000 U.S. Physical Therapy, Inc.<F1> 54,250
----------
5,614,765
----------
HEALTH CARE SERVICES 7.6%
68,000 American Healthcorp, Inc.<F1> 518,500
123,600 AmeriPath, Inc.<F1> 1,112,400
162,100 CorVel Corp.<F1> 5,795,075
54,700 First Commonwealth, Inc.<F1> 813,663
175,600 Healthcare Recoveries, Inc.<F1> 856,050
34,400 Medstone International, Inc.<F1> 236,500
10,000 Superior Consultant Holdings Corp.<F1> 341,250
16,200 V.I. Technologies, Inc.<F1> 159,975
----------
9,833,413
----------
PERSONAL PRODUCTS 5.2%
14,000 Maxwell Shoe Company Inc.<F1> 120,750
49,000 Natrol, Inc.<F1> 297,063
99,400 Natural Alternatives International, Inc.<F1> 484,575
117,100 Signature Eyewear, Inc.<F1> 409,850
206,200 Travis Boats & Motors, Inc.<F1> 3,711,600
265,500 USANA, Inc.<F1> 1,659,375
----------
6,683,213
----------
PERSONAL SERVICES 6.3%
471,000 First Cash Financial Services, Inc.<F1> 4,297,875
250,000 Rainbow Rentals, Inc.<F1> 2,500,000
56,153 Rent-Way, Inc.<F1> 1,347,672
----------
8,145,547
----------
Semi-Annual Report 17 ------
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
REAL ESTATE 1.0%
61,000 National Health Investors, Inc. REIT $ 1,311,500
----------
RETAIL 13.1%
5,000 Garden Fresh Restaurant Corp.<F1> 71,250
67,900 Guitar Center, Inc.<F1> 1,387,706
110,200 Hibbett Sporting Goods, Inc.<F1> 2,300,425
309,825 K&G Men's Center, Inc.<F1> 3,078,886
86,400 MarineMax, Inc.<F1> 950,400
46,950 O'Reilly Automotive, Inc.<F1> 2,101,013
29,500 PJ America, Inc.<F1> 678,500
410,445 Whitehall Jewellers, Inc.<F1> 6,310,592
----------
16,878,772
----------
SEMICONDUCTORS 11.4%
75,489 Micrel, Inc.<F1> 3,779,168
39,900 Microchip Technology, Inc.<F1> 1,381,537
231,800 Pericom Semiconductor Corporation<F1> 1,955,812
17,000 SDL, Inc.<F1> 1,542,750
28,000 Semtech Corporation<F1> 892,500
486,000 Supertex, Inc.<F1> 5,103,000
----------
14,654,767
----------
TELECOMMUNICATIONS 0.2%
34,500 Vari-L Company, Inc.<F1> 208,617
----------
TRANSPORTATION 2.8%
46,500 Aramex International Limited<F1> 462,094
31,000 Covenant Transport, Inc.<F1> 461,125
10,000 Knight Transportation, Inc.<F1> 193,750
11,800 Motor Cargo Industries, Inc.<F1> 70,800
90,000 Smithway Motor Xpress Corp.<F1> 697,500
58,000 Transport Corp. of America, Inc.<F1> 667,000
108,500 USA Truck, Inc.<F1> 1,105,344
----------
3,657,613
----------
TOTAL COMMON STOCKS (COST $118,994,181) 126,414,328
-----------
- ------ 18 Semi-Annual Report
<PAGE>
MICRO-CAP FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------
MARCH 31, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 0.1%
---------------------------
(Variable Rate Demand Deposits)
$158,111 UMB Bank Money Market Fiduciary, 3.99% $ 158,111
------------
TOTAL SHORT-TERM INVESTMENTS (COST $158,111) 158,111
------------
TOTAL INVESTMENTS (COST $119,152,292) 98.4% 126,572,439
CASH AND OTHER ASSETS, LESS LIABILITIES 1.6% 2,073,313
------------
NET ASSETS 100.0% $128,645,752
============
<F1> Non-income producing
See notes to financial statements.
Semi-Annual Report 19 ------
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 102.0%
--------------------
BASIC MATERIALS 0.8%
4,800 Encore Wire Corporation<F1> $ 37,800
6,500 RTI International Metals, Inc.<F1> 60,937
----------
98,737
----------
BUILDERS & BUILDING SUPPLIES 3.6%
3,500 American Woodmark Corporation 110,687
13,000 Building Materials Holding Corp.<F1> 131,625
7,000 Crossman Communities, Inc.<F1> 139,562
8,000 Drew Industries Incorporated<F1> 91,000
----------
472,874
----------
BUSINESS PRODUCTS 2.6%
11,400 Daisytek International Corp.<F1> 189,525
5,000 Koala Corp.<F1> 103,750
2,500 Optek Technology, Inc.<F1> 36,719
----------
329,994
----------
BUSINESS SERVICES 9.8%
8,400 Deswell Industries, Inc.<F1> 67,725
33,400 National Dentex Corp.<F1> 484,300
10,800 RemedyTemp, Inc.<F1> 135,675
37,000 SCP Pool Corporation<F1> 518,000
1,000 StaffMark, Inc.<F1> 7,875
5,000 SteriGenics International, Inc.<F1> 48,750
----------
1,262,325
----------
COMPUTER SOFTWARE 1.7%
20,000 ANSYS, Inc.<F1> 137,500
6,000 CFI ProServices, Inc.<F1> 72,750
1,000 Deltek Systems, Inc.<F1> 10,875
----------
221,125
----------
COMPUTER SYSTEMS & COMPONENTS 5.1%
15,150 Active Voice Corp.<F1> 145,819
19,000 Kofax Image Products, Inc.<F1> 171,000
9,400 Percon Incorporated<F1> 62,275
16,000 Power-One, Inc.<F1> 108,000
6,000 RF Industries, Ltd.<F1> 11,437
9,000 SBS Technologies, Inc.<F1> 162,000
----------
660,531
----------
- ------ 20 Semi-Annual Report
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRONICS 2.2%
31,300 PCD Inc.<F1> $ 283,656
----------
ENERGY 2.1%
16,300 Bolt Technology Corporation<F1> 139,569
13,000 Gulf Island Fabrication, Inc.<F1> 136,500
----------
276,069
----------
FINANCIAL SERVICES 6.8%
12,000 AmeriCredit Corp.<F1> 157,500
6,800 BWC Financial Corp.<F1> 130,050
3,050 PVF Capital Corp.<F1> 38,506
26,000 United PanAm Financial Corp.<F1> 104,000
84,500 World Acceptance Corp.<F1> 454,188
----------
884,244
----------
HEALTH CARE PRODUCTS 7.5%
12,000 Del Global Technologies Corp.<F1> 103,500
32,300 ICU Medical, Inc.<F1> 524,875
2,000 Minntech Corp. 25,250
27,500 Young Innovations, Inc.<F1> 323,125
----------
976,750
----------
HEALTH CARE PROVIDERS 0.4%
6,500 U.S. Physical Therapy, Inc.<F1> 50,375
----------
HEALTH CARE SERVICES 6.8%
9,700 CorVel Corp.<F1> 346,775
20,100 First Commonwealth, Inc.<F1> 298,988
12,000 Healthcare Recoveries, Inc.<F1> 58,500
25,500 Medstone International, Inc.<F1> 175,313
----------
879,576
----------
PERSONAL PRODUCTS 6.5%
5,000 Maxwell Shoe Company Inc.<F1> 43,125
12,400 Natural Alternatives International, Inc.<F1> 60,450
3,000 North Face, Inc. (The)<F1> 37,500
11,500 Racing Champions Corporation<F1> 126,500
3,000 Rexall Sundown, Inc.<F1> 57,562
62,300 Signature Eyewear, Inc.<F1> 218,050
10,000 Travis Boats & Motors, Inc.<F1> 180,000
7,600 USANA, Inc.<F1> 47,500
12,800 Utah Medical Products, Inc.<F1> 75,200
----------
845,887
----------
Semi-Annual Report 21 ------
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
PERSONAL SERVICES 7.3%
52,000 First Cash Financial Services, Inc.<F1> $ 474,500
46,400 Rainbow Rentals, Inc.<F1> 464,000
----------
938,500
----------
REAL ESTATE 2.5%
9,700 National Health Investors, Inc. REIT 208,550
4,375 Prison Realty Corporation REIT 76,289
5,400 Sunstone Hotel Investors, Inc. REIT 38,813
----------
323,652
----------
RETAIL 18.6%
5,000 Finish Line, Inc. (The)<F1> 64,375
7,000 Il Fornaio (America) Corporation<F1> 68,250
62,662 K&G Men's Center, Inc.<F1> 622,704
36,600 MarineMax, Inc.<F1> 402,600
10,000 Monro Muffler Brake, Inc.<F1> 71,250
22,000 Nautica Enterprises, Inc.<F1> 248,875
3,350 O'Charley's Inc.<F1> 45,434
15,000 Pier 1 Imports, Inc. 121,875
49,400 Whitehall Jewellers, Inc.<F1> 759,525
----------
2,404,888
----------
SEMICONDUCTORS 8.3%
13,000 Align-Rite International, Inc.<F1> 150,313
4,000 Integrated Measurement Systems, Inc.<F1> 29,000
7,000 Nanometrics Incorporated<F1> 39,375
28,000 Pericom Semiconductor Corporation<F1> 236,250
58,700 Supertex, Inc.<F1> 616,350
----------
1,071,288
----------
TELECOMMUNICATIONS 2.2%
71,000 Gentner Communications Corporation<F1> 221,875
9,300 Vari-L Company, Inc.<F1> 56,236
----------
278,111
----------
- ------ 22 Semi-Annual Report
<PAGE>
MICRO-CAP VALUE FUND-SCHEDULE OF INVESTMENTS
- --------------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION 6.5%
21,000 American Aircarriers Support, Incorporated<F1> $ 189,000
8,000 Aramex International Limited<F1> 79,500
5,000 Covenant Transport, Inc.<F1> 74,375
1,000 Motor Cargo Industries, Inc.<F1> 6,000
41,800 Smithway Motor Xpress Corp.<F1> 323,950
7,000 Transport Corp. of America, Inc.<F1> 80,500
8,000 USA Truck, Inc.<F1> 81,500
----------
834,825
----------
UTILITIES 0.7%
5,000 CMP Group, Inc. 91,875
----------
TOTAL COMMON STOCKS (COST $15,107,897) 102.0% 13,185,282
----------
LIABILITIES, LESS CASH AND OTHER ASSETS (2.0)% (263,535)
----------
NET ASSETS 100.0% $12,921,747
===========
<F1> Non-income producing
See notes to financial statements.
Semi-Annual Report 23 ------
<PAGE>
AGGRESSIVE EQUITY FUND-SCHEDULE OF INVESTMENTS
- ----------------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 96.3%
-------------------
BUSINESS PRODUCTS 1.3%
109,300 Daisytek International Corp.<F1> $1,817,112
----------
BUSINESS SERVICES 16.0%
34,550 ABR Information Services, Inc. 600,306
28,900 Data Processing Resources Corp.<F1> 395,569
93,900 F.Y.I. Inc.<F1> 3,004,800
45,000 Metzler Group, Inc. (The)<F1> 1,411,875
262,800 National Dentex Corp.<F1> 3,810,600
54,100 Pegasus Systems, Inc.<F1> 2,157,238
75,500 QRS Corporation<F1> 4,723,469
116,100 RemedyTemp, Inc.<F1> 1,458,506
37,266 Sanmina Corp.<F1> 2,375,708
116,600 Wilmar Industries, Inc.<F1> 1,727,137
----------
21,665,208
----------
COMPUTER SOFTWARE 5.5%
131,250 Deltek Systems, Inc.<F1> 1,427,344
112,050 Synopsys, Inc.<F1> 6,022,688
----------
7,450,032
----------
COMPUTER SYSTEMS & COMPONENTS 1.6%
51,300 MMC Networks, Inc.<F1> 820,800
56,740 Zebra Technologies Corporation<F1> 1,347,575
----------
2,168,375
----------
ELECTRONICS 0.5%
81,300 PCD Inc.<F1> 736,781
----------
HEALTH CARE PRODUCTS 12.6%
247,900 ICU Medical, Inc.<F1> 4,028,375
90,100 Myriad Genetics, Inc.<F1> 810,900
25,100 Serologicals Corp.<F1> 340,419
410,244 Techne Corp.<F1> 11,845,795
----------
17,025,489
----------
HEALTH CARE PROVIDERS 5.0%
237,500 AmSurg Corp., Class A<F1> 1,662,500
60,300 AmSurg Corp., Class B<F1> 422,100
166,950 Pediatrix Medical Group Inc.<F1> 4,695,469
----------
6,780,069
----------
- ------ 24 Semi-Annual Report
<PAGE>
AGGRESSIVE EQUITY FUND-SCHEDULE OF INVESTMENTS
- ----------------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
HEALTH CARE SERVICES 4.0%
176,200 AmeriPath, Inc.<F1> $1,585,800
44,000 Express Scripts, Inc., Class A<F1> 3,781,250
----------
5,367,050
----------
PERSONAL PRODUCTS 5.1%
96,600 Nu Skin Asia Pacific, Inc., Class A<F1> 2,209,725
179,250 Travis Boats & Motors, Inc.<F1> 3,226,500
236,700 USANA, Inc.<F1> 1,479,375
----------
6,915,600
----------
PERSONAL SERVICES 4.0%
68,000 First Cash Financial Services, Inc.<F1> 620,500
7,800 Loewen Group, Inc. 14,137
66,000 Rent-A-Center, Inc.<F1> 1,897,500
121,488 Rent-Way, Inc.<F1> 2,915,712
----------
5,447,849
----------
REAL ESTATE 4.0%
193,150 National Health Investors, Inc. REIT 4,152,725
175,750 Sunstone Hotel Investors, Inc. REIT 1,263,203
----------
5,415,928
----------
RETAIL 15.1%
1,000 Barbers, Hairstyling for Men & Women, Inc. (The)<F1> 11,875
193,300 General Nutrition Cos., Inc.<F1> 2,706,200
62,000 Hibbett Sporting Goods, Inc.<F1> 1,294,250
285,525 K&G Men's Center, Inc.<F1> 2,837,405
83,950 MarineMax, Inc.<F1> 923,450
98,550 Nautica Enterprises, Inc.<F1> 1,114,847
104,975 O'Charley's Inc.<F1> 1,423,723
136,700 O'Reilly Automotive, Inc.<F1> 6,117,325
265,200 Whitehall Jewellers, Inc.<F1> 4,077,450
----------
20,506,525
----------
SEMICONDUCTORS 10.2%
59,925 American Xtal Technology, Inc.<F1> 1,348,312
97,597 Micrel, Inc.<F1> 4,885,950
152,725 Microchip Technology, Inc.<F1> 5,288,103
25,750 SDL, Inc.<F1> 2,336,813
----------
13,859,178
----------
Semi-Annual Report 25 ------
<PAGE>
AGGRESSIVE EQUITY FUND-SCHEDULE OF INVESTMENTS
- ----------------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS 4.6%
12,500 Frontier Corp. $ 648,437
114,650 Powertel, Inc.<F1> 1,633,762
89,590 United States Cellular Corp.<F1> 3,941,960
----------
6,224,159
----------
TRANSPORTATION 6.2%
66,850 Covenant Transport, Inc.<F1> 994,394
70,100 Expeditors International of Washington, Inc. 3,785,400
184,300 Knight Transportation, Inc.<F1> 3,570,813
----------
8,350,607
----------
OTHER 0.6%
32,750 Cinar Corporation, Class B<F1> 753,250
----------
TOTAL COMMON STOCKS (COST $101,888,897) 130,483,212
-----------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 4.7%
(Variable Rate Demand Deposits)
$6,302,976 UMB Bank Money Market Fiduciary, 3.99% $ 6,302,976
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $6,302,976) 6,302,976
-----------
TOTAL INVESTMENTS (COST $108,191,873) 101.0% 136,786,188
LIABILITIES, LESS CASH AND OTHER ASSETS (1.0)% (1,411,112)
-----------
NET ASSETS 100.0% $135,375,076
============
<F1> Non-income producing
See notes to financial statements.
- ------ 26 Semi-Annual Report
<PAGE>
GROWTH FUND-SCHEDULE OF INVESTMENTS
- -----------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 99.9%
-------------------
BUILDERS & BUILDING SUPPLIES 2.0%
150,000 Copart, Inc.<F1> $3,112,500
----------
BUSINESS PRODUCTS 1.0%
103,400 Optek Technology, Inc.<F1> 1,518,687
----------
BUSINESS SERVICES 10.5%
430,000 American Bank Note Holographics, Inc.<F1> 994,375
189,000 National Dentex Corp.<F1> 2,740,500
122,300 RemedyTemp, Inc.<F1> 1,536,394
371,650 SCP Pool Corporation<F1> 5,203,100
161,000 Sterling Commerce, Inc.<F1> 4,950,750
50,000 Wilmar Industries, Inc.<F1> 740,625
----------
16,165,744
----------
COMPUTER SOFTWARE 3.0%
86,400 Synopsys, Inc.<F1> 4,644,000
----------
COMPUTER SYSTEMS AND COMPONENTS 1.9%
126,095 Zebra Technologies Corporation<F1> 2,994,756
----------
FINANCIAL SERVICES 16.0%
1,287,300 AmeriCredit Corp.<F1> 16,895,812
5,000 Franklin Savings Assn.<F1> 1
274,600 RTW, Inc.<F1> 1,304,350
1,216,886 World Acceptance Corp.<F1> 6,540,762
----------
24,740,925
----------
HEALTH CARE PRODUCTS 10.5%
270,900 ICU Medical, Inc.<F1> 4,402,125
410,850 Techne Corp.<F1> 11,863,294
----------
16,265,419
----------
HEALTH CARE PROVIDERS 8.1%
422,500 Pediatrix Medical Group Inc.<F1> 11,882,813
574,700 Physicians Resource Group, Inc.<F1> 718,375
----------
12,601,188
----------
Semi-Annual Report 27 ------
<PAGE>
GROWTH FUND-SCHEDULE OF INVESTMENTS
- -----------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
HEALTH CARE SERVICES 15.5%
634,400 Concentra Managed Care, Inc.<F1> $9,198,800
782,900 First Health Group Corp.<F1> 12,575,331
300,900 Healthcare Recoveries, Inc.<F1> 1,466,887
50,000 Orthodontic Centers of America, Inc.<F1> 787,500
----------
24,028,518
----------
PERSONAL PRODUCTS 1.1%
74,600 Nu Skin Asia Pacific, Inc., Class A<F1> 1,706,475
----------
PERSONAL SERVICES 9.5%
42,350 Carriage Services, Inc.<F1> 640,544
294,000 First Cash Financial Services, Inc.<F1> 2,682,750
397,200 Rent-A-Center, Inc.<F1> 11,419,500
----------
14,742,794
----------
RETAIL 14.6%
267,375 Friedman's Inc. 2,406,375
776,500 General Nutrition Cos., Inc.<F1> 10,871,000
45,700 Guitar Center, Inc.<F1> 933,994
10,000 Hibbett Sporting Goods, Inc.<F1> 208,750
115,240 Home Centers (DIY) Ltd.<F1> 921,920
85,900 PJ America, Inc.<F1> 1,975,700
337,900 Whitehall Jewellers, Inc.<F1> 5,195,212
----------
22,512,951
----------
SEMICONDUCTORS 4.0%
139,800 Microchip Technology, Inc.<F1> 4,840,575
123,000 Supertex, Inc.<F1> 1,291,500
----------
6,132,075
----------
TRANSPORTATION 2.2%
31,500 Expeditors International of Washington, Inc. 1,701,000
18,900 Knight Transportation, Inc.<F1> 366,187
124,800 USA Truck, Inc.<F1> 1,271,400
----------
3,338,587
----------
TOTAL COMMON STOCKS (COST $145,814,681) 154,504,619
-----------
- ------ 28 Semi-Annual Report
<PAGE>
GROWTH FUND-SCHEDULE OF INVESTMENTS
- -----------------------------------
MARCH 31, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
WARRANTS 0.0%
-------------
$1 Cherokee, Inc. Series C $1
----------
TOTAL WARRANTS (COST $6) 1
----------
TOTAL INVESTMENTS (COST $145,814,687) 99.9% 154,504,620
CASH AND OTHER ASSETS, LESS LIABILITIES 0.1% 226,517
----------
NET ASSETS 100.0% $154,731,137
============
<F1> Non-income producing
See notes to financial statements.
Semi-Annual Report 29 ------
<PAGE>
MID-CAP FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 96.0%
---------------------------------
BUSINESS SERVICES 21.2%
26,000 Albany Molecular Research, Inc.<F1> $ 650,000
37,500 DA Consulting Group, Inc.<F1> 370,313
53,800 F.Y.I. Inc.<F1> 1,721,600
38,200 International Integration Incorporated<F1> 1,222,400
81,040 Metzler Group, Inc. (The)<F1> 2,542,630
5,900 Pegasus Systems, Inc.<F1> 235,262
43,700 Sanmina Corp.<F1> 2,785,875
14,000 Wilmar Industries, Inc.<F1> 207,375
----------
9,735,455
----------
COMPUTER SOFTWARE 10.8%
39,050 Aspen Technologies, Inc.<F1> 554,022
17,500 Deltek Systems, Inc.<F1> 190,312
11,150 Made2Manage Systems, Inc.<F1> 97,562
59,460 Synopsys, Inc.<F1> 3,195,975
32,575 Tecnomatix Technologies Ltd.<F1> 431,619
67,884 Verisity Ltd. Series D Preferred<F1><F2> 500,000
----------
4,969,490
----------
COMPUTER SYSTEMS & COMPONENTS 0.6%
16,400 MMC Networks, Inc.<F1> 262,400
----------
FINANCIAL SERVICES 0.7%
25,500 AmeriCredit Corp.<F1> 334,688
----------
HEALTH CARE PRODUCTS 7.2%
33,800 ICU Medical, Inc.<F1> 549,250
27,400 Incyte Pharmaceuticals, Inc.<F1> 549,713
19,100 Kendle International, Inc.<F1> 384,388
13,950 Osteotech, Inc.<F1> 479,531
9,500 Perclose, Inc.<F1> 294,500
35,700 Techne Corp.<F1> 1,030,838
----------
3,288,220
----------
HEALTH CARE PROVIDERS 15.0%
138,000 AmSurg Corp., Class A<F1> 966,000
143,400 AmSurg Corp., Class B<F1> 1,003,800
174,300 Pediatrix Medical Group Inc.<F1> 4,902,187
----------
6,871,987
----------
- ------ 30 Semi-Annual Report
<PAGE>
MID-CAP FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------
MARCH 31, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
HEALTH CARE SERVICES 14.7%
112,500 AmeriPath, Inc.<F1> $1,012,500
27,550 Express Scripts, Inc., Class A<F1> 2,367,578
15,800 Laser Vision Centers, Inc.<F1> 602,375
46,200 MedQuist Inc.<F1> 1,386,000
24,952 Quintiles Transnational Corp.<F1> 941,953
14,000 TLC The Laser Center Inc.<F1> 450,625
----------
6,761,031
----------
PERSONAL PRODUCTS 0.5%
17,500 North Face, Inc. (The)<F1> 218,750
----------
RETAIL 8.7%
14,600 Carr-Gottstein Foods Co.<F1> 179,762
25,500 Guitar Center, Inc.<F1> 521,156
28,200 Hibbett Sporting Goods, Inc.<F1> 588,675
60,200 O'Reilly Automotive, Inc.<F1> 2,693,950
----------
3,983,543
----------
SEMICONDUCTORS 11.3%
10,400 ASM Lithography Holding N.V.<F1> 468,000
29,500 Micrel, Inc.<F1> 1,476,844
45,100 Microchip Technology, Inc.<F1> 1,561,588
10,700 SDL, Inc.<F1> 971,025
14,100 Vitesse Semiconductor Corporation<F1> 713,812
----------
5,191,269
----------
TELECOMMUNICATIONS 3.1%
25,500 JDS Fitel, Inc.<F1> 1,432,774
----------
OTHER 2.2%
97,700 Children's Comprehensive Services, Inc.<F1> 549,562
21,000 Cinar Corporation, Class B<F1> 483,000
----------
1,032,562
----------
TOTAL COMMON AND PREFERRED
STOCKS (COST $34,846,423) 44,082,169
----------
Semi-Annual Report 31 ------
<PAGE>
MID-CAP FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------
MARCH 31, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
WARRANTS 0.0%
-------------
$4,202 CDnow, Inc.<F1> $ 14,202
----------
TOTAL WARRANTS (COST $0) 14,202
----------
SHORT-TERM INVESTMENTS 2.1%
---------------------------
(Variable Rate Demand Deposits)
967,755 UMB Bank Money Market Fiduciary, 3.314% $967,755
----------
TOTAL SHORT-TERM INVESTMENTS (COST $967,755) 967,755
----------
TOTAL INVESTMENTS (COST $35,814,178) 98.1% 45,064,126
CASH AND OTHER ASSETS, LESS LIABILITIES 1.9% 888,787
----------
NET ASSETS 100.0% $45,952,913
===========
<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 March 31, 1999, this security amounted
to 1.09% of net assets.
See notes to financial statements.
- ------ 32 Semi-Annual Report
<PAGE>
U.S. TREASURY FUND-SCHEDULE OF INVESTMENTS
- ------------------------------------------
MARCH 31, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS 96.9%
---------------------------------
$1,100,000 U.S. Treasury Bond, 6.25%, 8/15/23 $1,150,105
18,280,000 U.S. Treasury Bond, 7.50%, 11/15/24 22,134,155
9,405,000 U.S. Treasury Bond, 6.875%, 8/15/25 10,644,485
9,500,000 U.S. Treasury Bond, 6.00%, 2/15/26 9,659,125
750,000 U.S. Treasury Bond, 6.75%, 8/15/26 837,712
11,735,000 U.S. Treasury Bond, 6.50%, 11/15/26 12,731,184
4,570,000 U.S. Treasury Bond, 6.625%, 2/15/27 5,037,328
23,555,000 U.S. Treasury Bond, 6.375%, 8/15/27 25,206,206
2,200,000 U.S. Treasury Bond, 5.25%, 11/15/28 2,054,668
18,200,000 U.S. Treasury Bond Strip, 11/15/21 4,736,368
19,100,000 U.S. Treasury Bond Strip, 8/15/25 4,110,129
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $101,892,711) 98,301,465
----------
SHORT-TERM INVESTMENTS 1.9%
---------------------------
(Variable Rate Demand Deposits)
1,972,261 UMB Bank Money Market Fiduciary, 3.99% 1,972,261
----------
TOTAL SHORT-TERM INVESTMENTS (COST $1,972,261) 1,972,261
----------
TOTAL INVESTMENTS (COST $103,864,972) 98.8% 100,273,726
CASH AND OTHER ASSETS, LESS LIABILITIES 1.2% 1,221,642
----------
NET ASSETS 100.0% $101,495,368
============
See notes to financial statements.
Semi-Annual Report 33 ------
<PAGE>
WASATCH FUNDS-Statements of Assets and Liabilities
- --------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value
Nonaffiliated issuers (cost $97,688,127,
$15,107,897, $104,078,246,
$135,450,977, $35,814,178
and $103,864,972, respectively) $ 104,047,064 $ 13,185,282 $132,975,588 $145,223,358 $45,064,126 $100,273,726
Affiliated issuers (cost $21,464,165,
$0, $4,113,627, $10,363,710, $0
and $0, respectively) 22,525,375 - 3,810,600 9,281,262 - -
Receivable for investment
securities sold 2,919,885 162,072 789,244 1,941,675 1,434,690 -
Interest and dividends receivable 54,609 7,448 159,554 5,446 839 1,251,002
Prepaid expenses and other assets 18,520 13,311 13,500 27,446 11,540 30,862
Capital shares sold receivable 7,000 - - 4,776 - 10,000
Receivable from advisor - 6,370 - - 1,454 20,927
-------------- -------------- -------------- -------------- -------------- --------------
Total Assets 129,572,453 13,374,483 137,748,486 156,483,963 46,512,649 101,586,517
-------------- -------------- -------------- -------------- -------------- --------------
LIABILITIES:
Payable for securities purchased 529,100 67,333 2,094,135 266,239 439,641 -
Payable to custodian - 334,544 - 1,209,058 - -
Accrued investment advisory fee 283,555 22,611 140,099 158,831 59,227 50,342
Accrued expenses 114,046 28,248 139,176 118,698 60,868 40,807
-------------- -------------- -------------- -------------- -------------- --------------
Total Liabilities 926,701 452,736 2,373,410 1,752,826 559,736 91,149
-------------- -------------- -------------- -------------- -------------- --------------
NET ASSETS $128,645,752 $12,921,747 $135,375,076 $154,731,137 $45,952,913 $101,495,368
============== ============== ============== ============== ============== ==============
NET ASSETS CONSIST OF:
Capital stock 352,209 66,378 61,860 83,689 25,468 83,428
Paid-in capital in excess of par 108,096,117 14,723,260 96,908,919 149,302,395 35,839,769 104,114,516
Undistributed net investment income - - 31,424 - - 1,071,318
Undistributed net realized gain (loss)
on investments 12,777,279 54,724 9,778,558 (3,344,880) 837,728 (182,648)
Net unrealized appreciation
(depreciation) on investments 7,420,147 (1,922,615) 28,594,315 8,689,933 9,249,948 (3,591,246)
-------------- -------------- -------------- -------------- -------------- --------------
Net Assets $ 128,645,752 $ 12,921,747 $ 135,375,076 $154,731,137 $ 45,952,913 $ 101,495,368
============== ============== ============== ============== ============== ==============
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 35,220,878 6,637,833 6,186,005 8,368,876 2,546,777 8,342,778
NET ASSET VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $3.65 $1.95 $21.88 $18.49 $18.04 $12.17
====== ====== ====== ====== ====== ======
</TABLE>
See notes to financial statements.
- ------34 Semi-Annual Report Semi-Annual Report 35 ------
<PAGE>
WASATCH FUNDS-STATEMENTS OF OPERATIONS
- --------------------------------------
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MICRO-CAP AGGRESSIVE U.S
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 170,803 $ 5,748 $ 142,688 $ 255,694 $ 83,515 $2,340,431
Dividends 45,580 27,954 363,406 228,364 - -
-------------- -------------- -------------- -------------- -------------- --------------
216,383 33,702 506,094 484,058 83,515 2,340,431
-------------- -------------- -------------- -------------- -------------- --------------
EXPENSES:
Investment advisory fee 1,391,507 116,986 697,682 812,190 315,591 215,385
Shareholder servicing fees 154,358 24,221 166,390 141,247 75,153 59,170
Fund administration and accounting fees 102,142 15,514 102,420 119,228 37,061 63,245
Reports to shareholders 20,054 2,218 19,141 24,869 6,946 13,400
Federal and state registration fees 12,241 7,406 10,140 14,750 8,502 10,048
Custody fees 9,125 4,606 9,178 9,490 5,044 4,408
Legal fees 8,130 1,072 8,366 10,458 2,788 4,545
Audit fees 5,866 1,918 5,782 7,196 2,850 4,290
Directors' fees 3,664 471 3,691 4,560 1,325 1,960
Other 6,033 2,316 6,070 6,681 2,762 3,333
-------------- -------------- -------------- -------------- -------------- --------------
Total expenses before reimbursement 1,713,120 176,728 1,028,860 1,150,669 458,022 379,784
Reimbursement of expenses by advisor - (24,646) - - (16,280) (56,706)
-------------- -------------- -------------- -------------- -------------- --------------
Net expenses 1,713,120 152,082 1,028,860 1,150,669 441,742 323,078
-------------- -------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (1,496,737) (118,380) (522,766) (666,611) (358,227) 2,017,353
-------------- -------------- -------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments
Nonaffiliated 14,482,392 913,791 11,657,773 (573,746) 1,378,513 202,649
Affiliated 43,455 - (154,511) (2,135,147) - -
-------------- -------------- -------------- -------------- -------------- --------------
14,525,847 913,791 11,503,262 (2,708,893) 1,378,513 202,649
Change in unrealized appreciation/
depreciation on investments 3,908,904 524,880 19,452,505 24,345,134 9,603,084 (8,800,058)
-------------- -------------- -------------- -------------- -------------- --------------
Net gain (loss) on investments 18,434,751 1,438,671 30,955,767 21,636,241 10,981,597 (8,597,409)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $16,938,014 $1,320,291 $30,433,001 $20,969,630 $10,623,370 $(6,580,056)
============== ============== ============== ============== ============= ==============
</TABLE>
See notes to financial statements.
- ------ 36 Semi-Annual Report Semi-Annual Report 37 ------
<PAGE>
WASATCH FUNDS-STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------
<TABLE>
<CAPTION>
MICRO-CAP FUND MICRO-CAP VALUE FUND AGGRESSIVE EQUITY FUND
SIX MONTHS YEAR SIX MONTHS DECEMBER 17, SIX MONTHS YEAR
ENDED ENDED ENDED 1997 <F1> ENDED ENDED
MARCH 31, 1999 SEPTEMBER 30 MARCH 31, 1999 SEPTEMBER 30, MARCH 31, 1999 SEPTEMBER 30,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(1,496,737) $ (3,171,737) $ (118,380) $ (114,404) $ (522,766) $ (1,012,414)
Net realized gain (loss) on
investments 14,525,847 18,133,522 913,791 (740,687) 11,503,262 22,152,106
Change in unrealized appreciation/
depreciation on investments 3,908,904 (27,231,381) 524,880 (2,447,495) 19,452,505 (50,889,169)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations 16,938,014 (12,269,596) 1,320,291 (3,302,586) 30,433,001 (29,749,477)
DIVIDENDS PAID FROM:
Net investment income - - - - - -
Net realized gains (12,017,531) (9,713,791) - - (18,539,487) (22,723,111)
-------------- -------------- -------------- -------------- -------------- --------------
(12,017,531) (9,713,791) - - (18,539,487) (22,723,111)
CAPITAL SHARE TRANSACTIONS:
Shares sold 40,253,521 57,814,317 3,596,514 32,497,796 17,118,891 9,579,918
Shares issued to holders in
reinvestment of dividends 11,888,429 9,626,752 - - 17,994,419 21,364,566
-------------- -------------- -------------- -------------- -------------- --------------
52,141,950 67,441,069 3,596,514 32,497,796 35,113,310 30,944,484
Shares redeemed (45,949,725) (85,832,088) (6,300,834) (14,889,434) (35,354,826) (43,713,903)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) 6,192,225 (18,391,019) (2,704,320) 17,608,362 (241,516) (12,769,419)
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 11,112,708 (40,374,406) (1,384,029) 14,305,776 11,651,998 (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 $128,645,752 $117,533,044 $12,921,747 $14,305,776 $135,375,076 $123,723,078
============== ============== ============== ============== ============== ==============
Undistributed net investment income
included in net assets at end of
period - - - - $31,424 $5,203
============== ============== ============== ============== ============== ==============
</TABLE>
See notes to financial statements.
<F1> Commencement of operations.
- ------ 38 Semi-Annual Report Semi-Annual Report 39 ------
<PAGE>
WASATCH FUNDS-STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND MID-CAP FUND U.S. TREASURY FUND
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, 1999 SEPTEMBER 30 MARCH 31, 1999 SEPTEMBER 30, MARCH 31, 1999 SEPTEMBER 30,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (666,611) $ (832,112) $ (358,227) $ (882,136) $ 2,017,353 $ 1,096,921
Net realized gain (loss) on
investments (2,708,893) 8,412,807 1,378,513 5,994,474 202,649 43,377
Change in unrealized appreciation/
depreciation on investments 24,345,134 (41,295,055) 9,603,084 (19,174,751) (8,800,058) 4,676,270
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations 20,969,630 (33,714,360) 10,623,370 (14,062,413) (6,580,056) 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 30,232,052 124,006,384 21,500,487 29,634,796 97,405,755 63,988,746
Shares issued to holders in
reinvestment of dividends 6,416,128 10,904,028 2,038,909 6,518,196 2,207,232 635,951
-------------- -------------- -------------- -------------- -------------- --------------
36,648,180 134,910,412 23,539,396 36,152,992 99,612,987 64,624,697
Shares redeemed (49,553,589) (72,453,532) (29,696,386) (49,152,641) (57,133,034) (13,149,317)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease) (12,905,409) 62,456,880 (6,156,990) (12,999,649) 42,479,953 51,475,380
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,583,326 17,710,619 2,399,538 (33,689,361) 33,638,995 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 $154,731,136 $153,147,810 $45,952,913 $43,553,375 $101,495,368 $67,856,373
============== ============== ============== ============== ============== ==============
Undistributed net investment income
included in net assets at end of
period - $10,524 - - $1,071,318 $930,246
============== ============== ============== ============== ============== ==============
</TABLE>
See notes to financial statements.
- ------ 40 Semi-Annual Report Semi-Annual Report 41 ------
<PAGE>
MICRO-CAP FUND-FINANCIAL HIGHLIGHTS
- -----------------------------------
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 19, 1995<F1> THROUGH
1999 1998 1997 1996 SEPTEMBER 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <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) (0.04) (0.10) (0.04) (0.03) -
Net realized and unrealized gains (losses)
on securities 0.46 (0.27) 1.36 0.46 0.72
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.42 (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 $3.65 $3.59 $4.29 $3.15 $2.72
========== ========== ========== ========== ==========
TOTAL RETURN<F2> 13.99% (8.75)% 44.58% 15.81% 36.00%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $128,646 $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%
Expenses, before waivers and reimbursements 2.46% 2.51% 2.58% 2.67% 3.40%
Net investment income (loss), net of
waivers and reimbursements (2.15)% (2.28)% (1.64)% (1.53)% (0.76)%
Net investment income (loss), before
waivers and reimbursements (2.15)% (2.29)% (1.72)% (1.70)% (1.66)%
Portfolio turnover rate - 81% 99% 84% 0%
</TABLE>
<F1> Commencement of operations.
<F2> Not annualized for periods less than a year.
See notes to financial statements.
- ------ 42 Semi-Annual Report Semi-Annual Report 43 ------
<PAGE>
MICRO-CAP VALUE FUND-FINANCIAL HIGHLIGHTS
- -----------------------------------------
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
DECEMBER 17,
1997<F1>
THROUGH
SEPTEMBER 30,
1999 1998
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.80 $2.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.02) (0.01)
Net realized and unrealized gains (losses)
on securities 0.17 (0.19)
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.15 (0.20)
LESS DISTRIBUTIONS:
Distributions from capital gains - -
---------- ----------
TOTAL DISTRIBUTIONS - -
---------- ----------
NET ASSET VALUE, END OF PERIOD $1.95 $1.80
========== ==========
TOTAL RETURN<F2> 8.33% (10.00)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $12,922 $14,306
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.95% 1.95%
Expenses, before waivers and reimbursements 2.27% 2.52%
Net investment income (loss), net of
waivers and reimbursements (1.52)% (1.02)%
Net investment income (loss), before
waivers and reimbursements (1.84)% (1.59)%
Portfolio turnover rate - 114%
<F1> Commencement of operations.
<F2> Not annualized for periods less than a year.
See notes to financial statements.
- ------ 44 Semi-Annual Report Semi-Annual Report 45 ------
<PAGE>
AGGRESSIVE EQUITY FUND-FINANCIAL HIGHLIGHTS
- -------------------------------------------
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $20.79 $29.73 $24.17 $25.00 $19.96 $19.75
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.09) (0.17) (0.12) (0.18) (0.04) (0.02)
Net realized and unrealized gains (losses)
on securities 4.25 (5.08) 6.90 (0.11) 6.59 1.33
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 4.16 (5.25) 6.78 (0.29) 6.55 1.31
LESS DISTRIBUTIONS:
Distributions from capital gains (3.07) (3.69) (1.22) (0.54) (1.51) (1.10)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (3.07) (3.69) (1.22) (0.54) (1.51) (1.10)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $21.88 $20.79 $29.73 $24.17 $25.00 $19.96
========== ========== ========== ========== ========== ==========
TOTAL RETURN<F1> 25.30% (19.13)% 29.45% (1.09)% 35.19% 6.85%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $135,375 $123,735 $188,965 $253,319 $305,311 $46,369
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.47% 1.48% 1.50% 1.50% 1.47% 1.50%
Expenses, before waivers and reimbursements 1.47% 1.48% 1.54% 1.50% 1.47% 1.52%
Net investment income (loss), net of
waivers and reimbursements (0.75)% (0.60)% (0.39)% (0.65)% (0.37)% (0.67)%
Net investment income (loss), before
waivers and reimbursements (0.75)% (0.60)% (0.43)% (0.65)% (0.37)% (0.69)%
Portfolio turnover rate - 56% 48% 73% 29% 64%
</TABLE>
<F1> Not annualized for periods less than a year.
See notes to financial statements.
- ---- 46 Semi-Annual Report Semi-Annual Report 47 ------
<PAGE>
GROWTH FUND-FINANCIAL HIGHLIGHTS
- -------------------------------------------
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $17.00 $22.34 $17.57 $15.97 $15.30 $15.68
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.08) (0.09) 0.08 0.07 0.02 (0.14)
Net realized and unrealized gains (losses)
on securities 2.29 (3.60) 6.07 1.87 4.59 0.71
--------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 2.21 (3.69) 6.15 1.94 4.61 0.57
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) (0.95)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (0.72) (1.65) (1.38) (0.34) (3.94) (0.95)
NET ASSET VALUE, END OF PERIOD $18.49 $17.00 $22.34 $17.57 $15.97 $15.30
========== ========== ========== ========== ========== ==========
TOTAL RETURN<F1> 14.13% (17.49)% 37.58% 12.39% 39.76% 3.75%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $154,731 $153,148 $135,437 $104,237 $53,533 $11,219
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.42% 1.44% 1.50% 1.50% 1.50% 1.50%
Expenses, before waivers and reimbursements 1.42% 1.44% 1.50% 1.51% 1.58% 1.64%
Net investment income (loss), net of
waivers and reimbursements (0.82)% (0.50)% 0.44% 0.40% 0.29% (0.51)%
Net investment income (loss), before
waivers and reimbursements (0.82)% (0.50)% 0.44% 0.39% 0.21% (0.64)%
Portfolio turnover rate - 63% 81% 62% 88% 163%
</TABLE>
<F1> Not annualized for periods less than a year.
See notes to financial statements.
- ------ 48 Semi-Annual Report Semi-Annual Report 49 ------
<PAGE>
MID-CAP FUND-FINANCIAL HIGHLIGHTS
- ---------------------------------
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.10 $21.85 $17.95 $18.61 $11.02 $10.51
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.14) (0.31) (0.35) (0.26) (0.02) (0.27)
Net realized and unrealized gains (losses)
on securities 3.82 (4.44) 4.25 (0.21) 7.64 0.78
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 3.68 (4.75) 3.90 (0.47) 7.62 0.51
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 $18.04 $15.10 $21.85 $17.95 $18.61 $11.02
========== ========== ========== ========== ========== ==========
TOTAL RETURN<F1> 26.03% (22.07)% 21.75% (2.54)% 69.24% 4.85%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $45,953 $43,553 $77,243 $128,490 $98,605 $1,091
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.75% 1.75% 1.75% 1.75% 1.75% 1.75%
Expenses, before waivers and reimbursements 1.81% 1.90% 1.89% 1.81% 1.94% 3.33%
Net investment income (loss), net of
waivers and reimbursements (1.42)% (1.54)% (1.48)% (1.27)% (0.71)% (1.19)%
Net investment income (loss), before
waivers and reimbursements (1.48)% (1.69)% (1.62)% (1.33)% (0.90)% (2.76)%
Portfolio turnover rate - 91% 103% 121% 46% 213%
</TABLE>
<F1> Not annualized for periods less than a year.
See notes to financial statements.
- ------ 50 Semi-Annual Report Semi-Annual Report 51 ------
<PAGE>
U.S. TREASURY FUND-FINANCIAL HIGHLIGHTS
- --------------------------------------------
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.42 $11.32 $10.21 $10.50 $10.09 $10.42
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.23 0.27 0.61 0.44 0.56 0.55
Net realized and unrealized gains (losses)
on securities (1.14) 2.39 0.73 0.01 0.44 (0.40)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.91) 2.66 1.34 0.45 1.00 0.15
LESS DISTRIBUTIONS:
Dividends from net investment income (0.28) (0.56) (0.23) (0.74) (0.59) (0.46)
Distributions from capital gains (0.06) - - - - (0.02)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (0.34) (0.56) (0.23) (0.74) (0.59) (0.48)
NET ASSET VALUE, END OF PERIOD $12.17 $13.42 $11.32 $10.21 $10.50 $10.09
========== ========== ========== =========== ========== ==========
TOTAL RETURN<F1> (6.90)% 24.30% 13.23% 4.42% 10.46% 1.51%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $101,495 $67,856 $11,205 $7,427 $4,035 $3,250
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 0.75% 0.75% 0.75% 0.93% 1.00% 1.00%
Expenses, before waivers and reimbursements 0.88% 0.95% 1.22% 1.67% 1.59% 1.39%
Net investment income, net of waivers
and reimbursements 4.68% 5.06% 5.97% 5.21% 5.88% 5.15%
Net investment income, before waivers
and reimbursements 4.55% 4.86% 5.50% 4.47% 5.29% 4.76%
Portfolio turnover rate - 5% 19% 30% 43% 45%
</TABLE>
<F1> Not annualized for periods less than a year.
See notes to financial statements.
- ------ 52 Semi-Annual Report Semi-Annual Report 53 ------
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
MARCH 31, 1999 (UNAUDITED)
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.
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
- ------ 54 Semi-Annual Report
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
MARCH 31, 1999 (UNAUDITED)
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.
- --------------------------------------------------------------------------------
4. CAPITAL STOCK
- -----------------
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, 1999
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Shares sold 10,741,777 1,800,656 791,464 1,690,501 1,202,809 7,553,861
Dividends
reinvested 3,934,788 - 1,089,948 436,111 148,161 171,635
Shares redeemed (12,193,061) (3,088,723) (1,645,711) (2,767,228) (1,688,165) (4,440,163)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease) 2,483,504 (1,288,067) 235,701 (640,616) (337,195) 3,285,333
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1998
MICRO-CAP AGGRESSIVE U.S.
MICRO-CAP VALUE EQUITY GROWTH MID-CAP TREASURY
FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <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.
Semi-Annual Report 55 ------
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
MARCH 31, 1999 (UNAUDITED)
5. PURCHASES AND SALES OF SECURITIES
- ------------------------------------
Purchases and sales of investment securities, excluding U.S. government and
short-term securities, for the six months ended March 31, 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
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Purchases $52,490,293 $9,335,035 $35,285,027 $64,210,630 $23,866,860 -
Sales 61,768,128 11,255,240 51,390,991 70,371,169 27,948,491 -
</TABLE>
- --------------------------------------------------------------------------------
The only purchases and sales of U.S. government securities occurred in the
U.S. Treasury Fund and were $53,324,338 and $12,926,008, respectively. The U.S.
Treasury Fund's basis in investments is the same for income tax and financial
reporting purposes. The Micro-Cap, Micro-Cap Value, Aggressive Equity, Growth
and Mid-Cap Funds' tax basis in their investments is $119,498,298, $15,154,469,
$110,191,314, $146,025,310 and $36,758,596, respectively.
- --------------------------------------------------------------------------------
As of March 31, 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
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Unrealized
appreciation $24,116,160 $716,412 $41,507,517 $29,168,529 $14,319,134 $1,038,729
Unrealized
depreciation (17,042,019) (2,685,599) (14,912,643) (20,689,219) (6,013,604) (4,629,975)
------------ ------------ ------------ ------------ ------------ ------------
Net unrealized
appreciation
(depreciation) $7,074,141 $(1,969,187) $26,594,874 $8,479,310 $8,305,530 $(3,591,246)
============ ============ ============ ============ ============ ============
</TABLE>
Semi-Annual Report 56 ------
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
MARCH 31, 1999 (UNAUDITED)
6. INVESTMENT ADVISORY
- -----------------------
As the Funds' investment advisor, the Manager receives a monthly fee
calculated on average daily net assets. For the six months ended March 31, 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
six months ended March 31, 1999, the Manager reimbursed $24,646 for the Micro-
Cap Value Fund, $16,280 for the Mid-Cap Fund and $56,706 for the U.S. Treasury
Fund.
- --------------------------------------------------------------------------------
7. TRANSACTIONS WITH AFFILIATES
- --------------------------------
The following is an analysis of transactions for the six months ended March
31, 1999 in the Micro-Cap, Aggressive Equity and Growth Funds with "affiliated
companies" as defined by the Investment Company Act of 1940:
<TABLE>
<CAPTION>
MICRO-CAP FUND
AMOUNT OF AMOUNT OF
DIVIDENDS GAIN (LOSS)
CREDITED TO REALIZED ON
SHARE ACTIVITY INCOME SALE OF SHARES
------------------------------------------------------ FOR THE SIX FOR THE SIX
BALANCE BALANCE MOS. ENDED MOS. ENDED
SECURITY NAME 9/30/98 PURCHASES SALES 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
AmSurg Corp.,
Class B 253,500 3,000 - 256,500 - -
First Cash Financial
Services, Inc. 479,000 12,000 20,000 471,000 - $43,455
ICU Medical, Inc. 415,000 92,900 - 507,900 - -
National Dentex
Corp. 268,750 6,000 - 274,750 - -
Young
Innovations, Inc. 137,000 220,000 - 357,000 - -
</TABLE>
Semi-Annual Report 57 ------
<PAGE>
WASATCH FUNDS-NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
AGGRESSIVE EQUITY FUND
AMOUNT OF AMOUNT OF
DIVIDENDS GAIN (LOSS)
CREDITED TO REALIZED ON
SHARE ACTIVITY INCOME SALE OF SHARES
------------------------------------------------------ FOR THE SIX FOR THE SIX
BALANCE BALANCE MOS. ENDED MOS. ENDED
SECURITY NAME 9/30/98 PURCHASES SALES 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
National Dentex
Corp. 248,600 20,000 5,800 262,800 - $ (20,143)
Travis Boats
& Motors, Inc. 213,250 - 34,000 179,250<F1> - (134,368)
</TABLE>
<F1>No longer an affiliated company as of March 31, 1999
<TABLE>
<CAPTION>
GROWTH FUND
AMOUNT OF AMOUNT OF
DIVIDENDS GAIN (LOSS)
CREDITED TO REALIZED ON
SHARE ACTIVITY INCOME SALE OF SHARES
------------------------------------------------------ FOR THE SIX FOR THE SIX
BALANCE BALANCE MOS. ENDED MOS. ENDED
SECURITY NAME 9/30/98 PURCHASES SALES 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
First Cash Financial
Services, Inc. 340,700 - 46,700 294,000<F1> - $ 160,503
Friedman's, Inc. 737,075 8,000 477,700 267,375<F1> - 597,035
Home Health Corp.
of America, Inc. 598,681 - 598,681 -<F1> - (3,053,188)
National Dentex
Corp. 187,000 2,000 - 189,000 - -
World Acceptance
Corp. 1,119,486 97,400 - 1,216,886 - -
</TABLE>
<F1> No longer an affiliated company as of March 31, 1999
- ------ 58 Semi-Annual Report
<PAGE>
NOTES
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Semi-Annual Report 59 ------
<PAGE>
Notes
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Semi-Annual Report 60 ------
<PAGE>
Notes
- --------------------------------------------------------------------------------
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Semi-Annual Report 61 ------
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Notes
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Semi-Annual Report 62 ------
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