TABLE OF CONTENTS
-----------------
LETTER FROM THE INVESTMENT ADVISOR...................................1
Wasatch Equity Funds...............................................2
Wasatch-Hoisington U.S. Treasury Fund..............................3
MICRO CAP FUND PORTFOLIO SUMMARY.....................................4
Review of the Year.................................................4
Average Annual Total Returns & Growth of a $10,000 Investment......5
Ten Largest Holdings, Asset Allocation & Sector Breakdown..........6
SMALL CAP VALUE FUND PORTFOLIO SUMMARY...............................7
Review of the Year.................................................7
Average Annual Total Returns & Growth of a $10,000 Investment......8
Ten Largest Holdings, Asset Allocation & Sector Breakdown..........9
SMALL CAP GROWTH FUND PORTFOLIO SUMMARY.............................10
Review of the Year................................................10
Average Annual Total Returns & Growth of a $10,000 Investment.....11
Ten Largest Holdings, Asset Allocation & Sector Breakdown.........12
CORE GROWTH FUND PORTFOLIO SUMMARY..................................13
Review of the Year................................................13
Average Annual Total Returns & Growth of a $10,000 Investment.....14
Ten Largest Holdings, Asset Allocation & Sector Breakdown.........15
ULTRA GROWTH FUND PORTFOLIO SUMMARY.................................16
Review of the Year................................................16
Average Annual Total Returns & Growth of a $10,000 Investment.....17
Ten Largest Holdings, Asset Allocation & Sector Breakdown.........18
WASATCH-HOISINGTON U.S. TREASURY FUND PORTFOLIO SUMMARY.............19
Review of the Year................................................19
Average Annual Total Returns & Growth of a $10,000 Investment.....20
Holdings/Maturity Date & Asset Allocation.........................21
SCHEDULE OF INVESTMENTS.............................................22
STATEMENTS OF ASSETS AND LIABILITIES................................44
STATEMENTS OF OPERATIONS............................................46
STATEMENTS OF CHANGES IN NET ASSETS.................................48
FINANCIAL HIGHLIGHTS................................................52
NOTES TO FINANCIAL STATEMENTS.......................................58
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS............................63
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS.........................64
<PAGE>
WASATCH FUNDS, INC.
150 SOCIAL HALL AVENUE
SALT LAKE CITY, UTAH 84111
1 (800) 551-1700
LETTER FROM THE INVESTMENT ADVISOR
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
DEAR SHAREHOLDERS:
------------------
The year 2000 marks an important milestone for Wasatch Advisors, investment
advisor for Wasatch Funds. This year we celebrate 25 years of investing in small
company stocks.
We have witnessed some phenomenal changes in the world and the stock market
since we opened the doors of Wasatch Advisors in 1975. Back then, the Dow Jones
Industrial Average was at 800. The economy was bogged down with "stagflation"-an
undesirable combination of inflation and stagnation in business. Americans were
worried about the impact of foreign investment, particularly by the Japanese.
How times change. Today, the Dow is around 10,200, nearly 13 times higher
than it was in 1975. Thanks to more enlightened government policies, stagflation
is a thing of the past. Strict monetary policy helped control what was once
rampant inflation. Less government regulation created a favorable climate for
business. This has resulted in unprecedented economic growth while inflation has
remained relatively tame. The United States has emerged as the global economic
power, while Japan has struggled under a multitude of economic woes since 1998.
The technology that created computers requiring an entire temperature-controlled
room has evolved to produce computers that fit on your desktop and are
affordable for companies and individuals alike. The Internet, once the
playground of academics and government agents, is now accessible to everyone and
provides access to just about everything whether you are at home, school or
work.
The past 25 years have been good to stock market investors in general, and to
investors in small company stocks in particular. Small companies have become a
driving force in the economy and have proved to be a fertile investment ground
for managers like Wasatch Advisors.
Of course, there have been times that were painful for investors too. It's
hard to forget a day like "Black Monday" on October 19, 1987 when the stock
market suffered the biggest one day drop in its history. There have also been
times, particularly over the last few years, when investors liked large company
stocks and weren't attracted to small company stocks much at all.
We think trying to predict the direction of the stock market or which
<PAGE>
groups of stocks will be in favor or out of favor is a futile effort.
We prefer to put our energy into something we do well. From day one, Wasatch
Advisors has consistently followed an investment strategy based on three key
points. First, we focus on companies rather than stocks. We use a process of
bottom-up fundamental analysis to identify individual companies that we believe
have the potential to help us achieve our long term investment objective and
that is to help our clients' and shareholders' assets grow. Second, we know that
most successful companies are those with management teams that have a vision of
what their companies could be and know how to create and execute a plan for
achieving that vision. That's why we find out all we can about a company's
management team and its track record. Third, we want to pay reasonable prices
for stocks. We determine what is reasonable by analyzing the value and growth
potential of each company.
WASATCH EQUITY FUNDS
--------------------
Each of the Wasatch Equity Funds posted excellent results for the fiscal year
ended September 30, 2000.
Over the past 12 months, Wasatch's disciplined investment style was amply
rewarded. The Funds were well positioned with investments in strong companies
and we invested at reasonable prices that we believe left room for stocks to
appreciate in value.
For several years previously the market favored large company stocks like
those in the Dow Jones Industrial Average and S&P 500/R Index. Small company
stocks like those in which Wasatch invests were largely ignored during that
time.
In the first half of the fiscal year, the Equity Funds' performance was
driven by outstanding stock price appreciation of many technology holdings.
Two factors positioned the Equity Funds to be rewarded. First, diligent
research helped us identify profitable technology companies with excellent
management teams. Second, during the Asian economic crisis of 1998 we took
advantage of numerous opportunities to invest in outstanding technology
companies at prices that were well below what these stocks would normally
command. Our technology investments began to pay off in a big way early in
the fiscal year even though the market itself was narrowly focused on a small
group of technology and biotechnology companies.
This small group of companies drove the performance of the Russell 2000
Index, the benchmark for a number of Wasatch Equity Funds, to record highs while
the majority of companies in the Index languished or suffered stock price
declines. The Nasdaq Composite Index, which is dominated by technology stocks,
also rose to record heights.
As the stock prices of our technology holdings rose, we sold or trimmed many
positions to lock in profits and put the assets to work in other investments
that had better upside potential. These included investments in over looked and
undervalued health care and financial services companies.
Since March, the high priced technology stocks that drove the market's
performance in the first half of our fiscal year have lost favor. Investors
began to pay more attention to profitability and earnings growth as they grew
nervous about the ability of highly valued companies to meet expectations. They
moved away from the overvalued technology sector into sectors where they could
find better value. In general, Wasatch made the shift ahead of the crowd and the
Equity Funds benefited as increasing demand pushed stock prices up.
<PAGE>
In the second half of the fiscal year, investments in health care and
financial services companies were among the Equity Funds best performers.
For an in-depth discussion of the performance of each Wasatch Equity Fund for
the fiscal year ended September 30, 2000, please see the portfolio summaries
beginning on page 4.
EQUITY FUNDS OUTLOOK
--------------------
We believe the Wasatch Equity Funds remain positioned to do well over the
long term. Each Fund holds companies that, in our opinion, have outstanding
growth and value characteristics.
Looking ahead, we will continue to pursue our time honored approach to
investing rather than try to predict the direction of the market. We believe
that if we follow our chosen investment course with discipline and patience, the
Wasatch Equity Funds will have the potential to be a powerful force in your long
term investment plan.
WASATCH-HOISINGTON
U.S. TREASURY FUND
------------------
The Wasatch-Hoisington U.S. Treasury Fund benefited from strong performance
in the fiscal year ended September 30, 2000.
For information about the performance and outlook of the U.S. Treasury Fund,
please see the portfolio summary beginning on page 19.
WORTH NOTING
------------
On Wasatch Advisors' 25th anniversary, I would like to thank you for
investing your assets with us. We have stood the test of time because
shareholders like you have believed in our unique approach to investing. As your
assets have grown so have we. We enjoy being part of your investment team. We
are committed to doing everything we can to make sure the Wasatch Funds you hold
have the potential to help you achieve your long term investment objectives.
If you have any questions or comments regarding this report or your
investments, please call us at 1 (800) 551-1700 or visit our web site at
WWW.WASATCHFUNDS.COM.
---------------------
Refer to the current Wasatch Funds prospectus for more information about each
Fund's objectives and investment strategy.
We look forward with great expectations to the next 25 years and invite you
to share them with us.
Sincerely,
/s/Samuel S. Stewart, Jr.
Samuel S. Stewart, Jr.
Chairman of the Board
<PAGE>
WASATCH MICRO CAP FUND-Portfolio Summary
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
(PHOTO)
ROBERT GARDINER, CFA-LEAD MANAGER
The Micro Cap Fund seeks long term growth of capital through investments in
growing companies with market capitalizations of less than $400 million at the
time of initial purchase. The Fund is best suited for long term investors who
can tolerate the greater risks and volatility that are inherent with investments
in micro cap stocks. The Micro Cap Fund is currently closed to new investors.
REVIEW OF THE YEAR
------------------
The Wasatch Micro Cap Fund has just concluded another stellar year. With a
one year return of 63.88%, the Fund significantly outperformed the Russell 2000
Index, a widely recognized measure for the performance of small and micro cap
stocks. The Russell's one year return was 23.39%. Since inception in June 1995,
the Fund's average annual total returns were 33.99% compared to the Russell's
returns of 13.80%.
We attribute this strong performance to consistently following a disciplined
approach to investing. Our strategy is to find growing micro cap companies
through a process of bottom-up, fundamental analysis. We want to invest at a
price that is reasonable relative to a company's long term growth prospects.
In the past 12 months, the Fund's holdings have been rewarded as investors
began to pay attention to earnings growth, financial performance, and value
relative to stock price.
In the first half of the Fund's fiscal year, technology holdings were the
primary drivers of performance. We locked in profits from strong stock price
appreciation by selling or trimming a large number of technology positions. This
reduced the Fund's weight in the technology sector and generated cash. We felt
the cash could be used in other sectors where we were finding growing companies
with stock prices that we believed had greater upside potential.
In general, technology stock prices peaked in March and have declined since
then. The Fund's technology holdings have outperformed the overall market in the
last six months and made a positive contribution to performance.
The health care sector has been a big contributor to the Fund's performance
this year. The weight of this sector in the Fund and the number of large health
care positions were significant factors.
In the first six months of the fiscal year, companies like Techne Corp. and
Myriad Genetics, Inc., that have ties to the life sciences and biotechnology
industries, were strong performers.
In the last six months, strong performers have been health care services and
products companies such as AmSurg Corp., a manager of outpatient surgery
centers; CorVel Corp., a provider of case management and cost containment
services for workers' compensation; and ICUMedical, Inc., a maker of disposable
connectors for intravenous therapy.
The consumer discretionary sector, which includes business services and
retail companies, has struggled over the
<PAGE>
WASATCH MICRO CAP FUND-Portfolio Summary
--------------------------------------------------------------------------------
past 12 months. Retail stocks have been particularly weak. Whitehall Jewellers,
Inc., a fine jewelry retailer, recently announced that short term earnings
growth would be lower than expected. We continue to hold the company because we
believe its long term growth outlook is good. The Men's Wearhouse, Inc., a men's
discount clothing retailer, continues to report strong results.
The Fund is underweighted in the financial services sector compared to the
Russell 2000. In the past three months, financial services stocks generally have
been strong performers, but our holdings underperformed. We remain confident in
the growth outlook for these companies and their potential to make a positive
contribution going forward.
OUTLOOK
-------
We will continue to follow our disciplined strategy for finding growing micro
cap companies and we will strive to invest at reasonable prices. It is our
belief that adhering to these sound investment practices will give the Micro Cap
Fund the potential to be an important contributor to your long term investment
plan.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
--------------------------------------------------------------------------------
WASATCH MICRO CAP FUND 63.88% 28.09% 33.99%
--------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Russell
Micro Cap 2000
Fund Index
---------- ----------
'95<F1> $10,000 $10,000
'95 $13,600 $11,042
'96 $15,750 $12,492
'97 $22,771 $16,638
'98 $20,779 $13,474
'99 $28,619 $16,044
'00 $46,900 $19,796
<F1> Inception: June 19, 1995.
The Russell 2000 Index is an unmanaged total return index of the smallest 2,000
companies in the Russell 3000 Index, as ranked by total market capitalization.
The Russell 2000 is widely regarded in the industry to accurately capture the
universe of small company stocks.
<PAGE>
WASATCH MICRO CAP FUND-Portfolio Summary
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
--------------------
1. CORVEL CORPORATION 4%
Case management and cost containment
services for workers' compensation.
2. ICU MEDICAL, INC. 4%
Disposable connectors for
intravenous therapy.
3. PERICOM SEMICONDUCTOR CORP. 4%
Semiconductors for networking
equipment, network servers and PC's.
4. THE MEN'S WEARHOUSE, INC. 3%
Men's discount clothing retailer.
5. ON ASSIGNMENT, INC. 3%
Specialty staffing for life sciences
and research laboratories.
6. NATIONAL DENTEX CORP. 3%
Dental laboratories.
7. AMSURG CORP., CLASS A 3%
Outpatient surgery centers.
8. MICREL, INC. 2%
Analog semiconductors.
9. YOUNG INNOVATIONS, INC. 2%
Disposable products for dental
professionals.
10. SCP POOL CORPORATION 2%
Swimming pool supply distributor.
--------------------------------------------------------------------------------
ASSET ALLOCATION
----------------
Common & Preferred Stocks 83.3%
Cash & Other Assets 16.7%
SECTOR BREAKDOWN
----------------
Business Products & Services 16.5%
Health Care 15.8%
Semiconductors & Telecom 10.4%
Retail 10.1%
Pharmaceutical & Medical 9.5%
Computers & Electronics 7.9%
Transportation 5.2%
Personal Products & Services 3.8%
Other 2.3%
Financial Services 1.8%
<PAGE>
WASATCH SMALL CAP VALUE FUND-Portfolio Summary
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
(PHOTO)
JIM LARKINS, MBA-CO-MANAGER WITH
ROBERT GARDINER, CFA
The Small Cap Value Fund seeks long term growth of capital through
investments in companies with market capitalizations of less than $1.5 billion
whose stocks are selling at a substantial discount to what we believe is the
com pany's underlying value. The Fund is designed for long term investors who
have assessed their tolerance for risk and volatility.
REVIEW OF THE YEAR
------------------
The Wasatch Small Cap Value Fund was up 49.94% for the fiscal year ended
September 30, 2000. The Fund significantly outperformed the Russell 2000 Value
Index, a widely recognized measure for the performance of value-oriented small
company stocks. The index was up 15.36%. More importantly, the returns of this
fiscal year make a strong contribution to the solid foundation we have been
striving to build since the Fund's inception nearly three years ago.
In the past 12 months, the stock market has been extremely unsettled. Late in
1999, large company stocks began to lose favor as investors turned their
attention to much-hyped technology and biotechnology stocks. These few high
priced stocks drove the market's performance while the prices of other stocks
declined.
The Fund's technology holdings drove performance in the first half of the
fiscal year. From October 1999 through March 2000, the stock prices of many of
the Fund's previously undervalued technology holdings reached or exceeded what
we considered to be their fair market value. Two semiconductor manufacturers,
Supertex, Inc. and Pericom Semiconductor Corporation, were our largest holdings
a year ago. We trimmed these and sold other holdings greatly reducing the weight
of technology in the Fund. This proved to be a good move since technology stock
prices have generally declined since March. It also generated cash that could be
invested in exciting new companies. The market's narrow focus on technology
meant many companies outside of this sector were undervalued.
In the second half of the year, the Fund's health care holdings were the
biggest contributors to performance. The weight of the health care sector and
the number of significant positions were factors. Strong performers included ICU
Medical, Inc., a maker of disposable connectors for intravenous therapy;
AmeriPath, Inc., a provider of anatomic pathology services; America Service
Group, Inc., a provider of health care services to correctional facilities; and
American Healthways, Inc., a provider of diabetes management services.
The financial services sector has been an excellent place to find undervalued
small companies. In the past three months, financial services stocks have been
strong and our holdings made a positive contribution to performance. However, we
didn't realize the full potential of the sector because we were
<PAGE>
WASATCH SMALL CAP VALUE FUND-Portfolio Summary
--------------------------------------------------------------------------------
underweighted compared to the Russell 2000 Index. A number of holdings in small,
regional banks enjoyed stock price appreciation.
The consumer discretionary sector, which includes business services and
retail companies, has struggled in the past year. We feel many excellent
companies in this sector are being overlooked by investors. Retail stocks have
generally been weak. One significant holding, Whitehall Jewellers, Inc., a fine
jewelry retailer, was a strong performer early in the year, but announced
disappointing earnings in its last quarter. We believe the company's long term
prospects are favorable. We are excited about a new investment in United
Rentals, Inc., a company that rents heavy equipment.
OUTLOOK
-------
Overall, we feel the Fund holds a well diversified mix of undervalued
companies. Our in-depth analysis of each company has revealed characteristics
that we believe may attract attention and lead to stock price increases.
We believe the Fund is well positioned for continued positive performance
that can help you move closer to your long term financial objectives.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
--------------------------------------------------------------------------------
WASATCH SMALL CAP VALUE FUND 49.94% N/A 24.02%
--------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Russell
Small Cap 2000 Value
Value Fund Index
----------- ----------
'97<F1> $10,000 $10,000
'98 $9,000 $8,767
'99 $12,150 $9,278
'00 $18,218 $10,703
<F1> Inception: December 17, 1997.
The Russell 2000 Value Index is an unmanaged total return index that measures
the performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values.
<PAGE>
WASATCH SMALL CAP VALUE FUND-Portfolio Summary
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
--------------------
1. ICUMEDICAL, INC. 3%
Disposable connectors for
intravenous therapy.
2. AMERIPATH, INC. 3%
Anatomic pathology services.
3. RENT-A-CENTER, INC. 3%
Rent-to-own store operator.
4. AMERICA SERVICE GROUP INC. 3%
Health care services for correctional
facilities.
5. HEICO CORPORATION, CLASS A 3%
Jet engine parts manufacturer.
6. THE MEN'S WEARHOUSE, INC. 3%
Men's discount clothing retailer.
7. UNITED RENTALS, INC. 3%
Heavy equipment rental company.
8. MAXWELL SHOE COMPANY INC. 2%
Casual and dress shoes for women
and children.
9. NATIONAL DENTEX CORP. 2%
Dental laboratories.
10. ORTHODONTIC CENTERS OF AMERICA, INC. 2%
Practice management for
orthodontists.
--------------------------------------------------------------------------------
ASSET ALLOCATION
----------------
Common Stocks 91.0%
Cash & Other Assets 9.0%
SECTOR BREAKDOWN
----------------
Health Care 19.8%
Business Products & Services 13.1%
Transportation 11.5%
Retail 11.4%
Personal Products & Services 10.3%
Financial Services 7.0%
Other 6.5%
Computers & Electronics 5.2%
Pharmaceutical & Medical 4.1%
Semiconductors & Telecom 2.1%
<PAGE>
WASATCH SMALL CAP GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
(PHOTO)
JEFF CARDON, CFA-LEAD MANAGER
The Small Cap Growth Fund seeks long term growth of capital through
investments in growing companies with market capitalizations of less than $1.5
billion at the time of purchase. The Fund is best suited for long term investors
who can tolerate the greater risks and volatility that are inherent with
investments in small company stocks.
REVIEW OF THE YEAR
------------------
The Small Cap Growth Fund's one year return of 49.63% more than doubled the
23.39% return of the Russell 2000 Index, a widely recognized measure for the
performance of small company stocks. Over the long term, the Fund has also
outperformed the Russell 2000. As of September 30th, the Fund's average annual
total returns of 18.20% for five years and 22.21% for 10 years outpaced the
Russell's returns of 12.39% and 16.93%, respectively.
The Fund's excellent results can be attributed to following a strict
discipline for investing in growing companies that we believe are well managed
at prices that are reasonable.
In the past six months, investors have moved away from the high priced,
unprofitable technology companies that were the market leaders from October 1999
through March 2000. We believe this represented a move toward rationality in the
market as investors began to pay more attention to companies' earnings growth,
profitability and value relative to stock price. This shift in investor
sentiment favored the types of companies in which the Fund invests.
The Fund's most heavily weighted sectors are technology, health care and
consumer discretionary which includes business services and retail companies.
From October through March, the Fund benefited from the strength of technology
stocks as a large number of holdings enjoyed strong stock price appreciation.
Health care companies with ties to biotechnology also did well. Two examples are
Techne Corp. and Myriad Genetics, Inc. Both companies have exciting business
models and provide research tools and materials to the biotech industry.
Toward the end of 1999, we trimmed or sold quite a few high priced technology
stocks to capture profits. This gave us cash to invest in companies that we
believed had better upside potential.
Since March, technology stocks generally have fallen out of favor. In our
opinion, the Fund's investments in profitable technology companies are why this
sector made a positive contribution to performance in the midst of a technology
sell-off. In fact, the recent weaker market in technology stocks has us looking
to increase our weighting in this high growth sector of the economy.
The biggest contributor to performance since March has been the health care
sector led by health care services companies. Strong performers include: AmSurg
Corp., a manager of outpatient surgery centers; AmeriPath, Inc., a
<PAGE>
WASATCH SMALL CAP GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
provider of anatomic pathology services; and Orthodontic Centers of America,
Inc., a provider of practice management services for orthodontists.
The consumer discretionary sector has struggled over the past year. Retail
stocks generally have been weak. Results have been mixed for the Fund's business
services holdings. While most holdings have reported strong earnings growth, a
few have been disappointing.
In general, holdings in the Fund's less heavily weighted sectors made
positive contributions to performance. We especially like the outlook for
wireless service providers and are excited about several holdings in this
industry.
OUTLOOK
-------
We believe strongly in our philosophy of investing in well run growth
companies with solid business models. The Wasatch research team has worked
together executing the strategy of the Small Cap Growth Fund for many years. We
believe this stability and discipline will bring you closer to achieving your
long term investment goals.
Thank you for putting your trust in Wasatch Funds.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------
1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
WASATCH SMALL CAP GROWTH FUND 49.63% 18.20% 22.21%
--------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Russell
Small Cap 2000
Growth Fund Index
----------- ----------
'90 $10,000 $10,000
'91 $16,807 $14,508
'92 $16,420 $15,805
'93 $22,286 $21,046
'94 $23,813 $21,608
'95 $32,192 $26,657
'96 $31,840 $30,160
'97 $41,218 $40,170
'98 $33,331 $32,530
'99 $49,649 $38,734
'00 $74,288 $47,794
The Russell 2000 Index is an unmanaged total return index of the smallest 2,000
companies in the Russell 3000 Index, as ranked by total market capitalization.
The Russell 2000 is widely regarded in the industry to accurately capture the
universe of small company stocks.
<PAGE>
WASATCH SMALL CAP GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
--------------------
1. POWERTEL, INC. 4%
Services for wireless telecom.
2. ORTHODONTIC CENTERS OF AMERICA, INC. 3%
Practice management for
orthodontists.
3. MICROCHIP TECHNOLOGY, INC. 3%
Proprietary chip manufacturer.
4. EXPRESS SCRIPTS, INC., CLASS A 3%
Pharmacy benefits manager.
5. MYRIAD GENETICS, INC. 3%
Research tools for biotechnology.
6. O'REILLY AUTOMOTIVE, INC. 3%
Automotive parts retailer/distributor.
7. MICREL, INC. 3%
Analog semiconductors for cellular
phones and laptop computers.
8. ICU MEDICAL, INC. 3%
Disposable connectors for
intravenous therapy.
9. TECHNE CORP. 2%
Complex, disposable research kits
for biotechnology.
10. AMERIPATH, INC. 2%
Anatomic pathology services.
--------------------------------------------------------------------------------
ASSET ALLOCATION
----------------
Common & Preferred Stocks 87.7%
Cash & Other Assets 12.3%
SECTOR BREAKDOWN
----------------
Semiconductors & Telecom 16.5%
Business Services 16.0%
Health Care 14.4%
Computers & Electronics 12.0%
Pharmaceutical & Medical 8.8%
Transportation 8.1%
Retail 7.5%
Personal Services 2.2%
Financial Services 1.5%
Other 0.7%
<PAGE>
WASATCH CORE GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
(PHOTO)
SAMUEL S. STEWART, JR., PHD, CFA-
LEAD MANAGER, JB TAYLOR-CO-MANAGER
The Wasatch Core Growth Fund seeks long term growth of capital through
investments in stable companies that we believe are high quality and have the
potential to grow steadily for long periods of time. In addition, we seek to
invest in these companies at reasonable prices. The Core Growth Fund is the most
conservative of the Wasatch Equity Funds. However, the Fund will experience
volatility and is best suited for long term investors.
REVIEW OF THE YEAR
------------------
The Core Growth Fund's disciplined approach to investing was rewarded in the
fiscal year ended September 30, 2000 with an excellent one year return of
39.50%. This outpaced the 23.39% return of the Russell 2000 Index, a widely used
measure for the performance of small company stocks. Long term results were also
favorable. The Fund's average annual total returns were 17.77% for five years
and 19.51% for 10 years while the Russell 2000 returned 12.39% and 16.93%,
respectively.
The Fund typically has few technology holdings and is underweighted in this
sector compared to the Russell 2000. From October 1999 through March 2000, lack
of a significant technology sector weighting held back the Fund's performance as
a handful of what we considered to be overvalued, largely profitless technology
and biotechnology companies were the market's top performers. The majority of
stock prices were flat or declined during this period.
In the Fund's semi-annual report dated March 31, 2000, we stated that this
market environment was unusual. We were confident that investors would
eventually begin to pay attention to companies' earnings growth, profitability
and value relative to stock price. It turns out we were right. In the past six
months, investors have turned away from high-flying stocks to seek investments
in reasonably priced, profitable companies. This environment has been favorable
for the Fund and its holdings have benefited from strong stock price
appreciation.
The consumer discretionary sector, which contains business services and
retail companies, is the most heavily weighted sector in the Fund. It
contributed significantly to performance over the past 12 months. Notably strong
performers included the Fund's largest holding, Rent-A-Center, Inc., a rent-to-
own store operator; Copart, Inc., a provider of vehicle salvage services; and
F.Y.I. Inc., a provider of document management services. Overall, the Fund's
retail holdings made a positive contribution to performance despite general
weakness in retail stocks.
In the last six months, the Fund benefited from long overdue stock price
appreciation in the health care sector. Several significant health care services
holdings were strong performers including: Express Scripts, Inc., a pharmacy
benefits manager; Lincare Holdings Inc., a provider of in-home respiratory ther-
<PAGE>
WASATCH CORE GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
apy services; and Orthodontic Centers of America, Inc., a provider of practice
management services for orthodontists.
The financial services sector has been an excellent place to find stable
companies with reasonable stock prices. The Fund is heavily weighted in this
sector which was not a contributor to performance early in the fiscal year, but
has been the biggest contributor in the last six months. Particularly strong was
the Fund's second largest holding, AmeriCredit Corp., a sub prime automobile
lender.
Weightings in other sectors were light and did not significantly contribute
to or detract from performance.
OUTLOOK
-------
We believe the Core Growth Fund has the potential to continue producing
excellent results. It holds handpicked investments in stable companies that we
believe are high quality and have the potential for steady long term growth. In
addition, we have been careful to invest at prices we believe are reasonable. We
think this gives the Fund outstanding potential to be a powerful force in your
long term investment plan.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------
1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
WASATCH CORE GROWTH FUND 39.50% 17.77% 19.51%
--------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Russell
Core Growth 2000
Fund Index
----------- ----------
'90 $10,000 $10,000
'91 $15,190 $14,508
'92 $14,642 $15,805
'93 $18,093 $21,046
'94 $18,772 $21,608
'95 $26,235 $26,657
'96 $29,485 $30,160
'97 $40,564 $40,170
'98 $33,471 $32,530
'99 $42,603 $38,734
'00 $59,431 $47,794
The Russell 2000 Index is an unmanaged total return index of the smallest 2,000
companies in the Russell 3000 Index, as ranked by total market capitalization.
The Russell 2000 is widely regarded in the industry to accurately capture the
universe of small company stocks.
<PAGE>
WASATCH CORE GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
--------------------
1. RENT-A-CENTER, INC. 8%
Rent-to-own store operator.
2. AMERICREDIT CORP. 7%
Sub prime automobile lender.
3. LINCARE HOLDINGS INC. 5%
In-home respiratory therapy services.
4. UNITED RENTALS, INC. 4%
Heavy equipment rentals.
5. O'REILLY AUTOMOTIVE, INC. 4%
Automotive parts retailer/distributor.
6. METRIS COMPANIES INC. 4%
Direct marketer of consumer
credit products.
7. FIRST HEALTH GROUP CORP. 4%
Medical cost management services
for group health and workers'
compensation.
8. ORTHODONTIC CENTERS OF AMERICA, INC. 3%
Practice management for
orthodontists.
9. EXPRESS SCRIPTS, INC., CLASS A 3%
Pharmacy benefits manager.
10. THE MEN'S WEARHOUSE, INC. 3%
Men's discount clothing retailer.
--------------------------------------------------------------------------------
ASSET ALLOCATION
----------------
Common Stocks 88.8%
Cash & Other Assets 11.2%
SECTOR BREAKDOWN
----------------
Health Care 21.6%
Business Services 18.7%
Financial Services 15.5%
Personal Services 9.1%
Retail 7.6%
Transportation 6.4%
Computers 4.7%
Pharmaceutical & Medical 2.7%
Semiconductors 2.5%
<PAGE>
WASATCH ULTRA GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
(PHOTO)
KAREY BARKER, CFA-LEAD MANAGER
AJAY KRISHNAN, CFA-CO-MANAGER
The Ultra Growth Fund is the most aggressive Fund in the Wasatch Funds
family. The Fund seeks to invest in rapidly growing companies in fast growing
sectors of the economy. It is best suited for aggressive investors who plan to
hold the Fund at least five years.
REVIEW OF THE YEAR
------------------
For the fiscal year ended September 30, 2000, the Ultra Growth Fund posted
excellent results. The Fund's one year return of 46.66% nearly doubled the
23.39% return of the Russell 2000 Index, a widely recognized measure for the
performance of small company stocks. The Fund has significantly outperformed the
Russell 2000 over longer time periods. The Fund's average annual total returns
were 16.93% for three years and 13.66% for five years compared to the Russell
2000's returns of 5.96% and 12.39%, respectively.
In the first half of the fiscal year, a small group of high priced, largely
profitless technology and biotechnology stocks pushed the Russell 2000 and
Nasdaq Composite to record levels while the stock prices of most other companies
were flat or declined.
The Fund was not invested in many of the market's top performers. However, we
were invested in some fast growing, profitable technology and biotechnology
companies that were strong performers in this environment. Notable among these
were SDL, Inc., a manufacturer of semiconductor lasers, and Micrel, Inc., a
manu facturer of analog semiconductors. We trimmed or sold a large number of
technology holdings to capture profits during this time. Although our holdings
propelled the Fund to a positive six month return through March, its performance
lagged the Russell 2000 and Nasdaq.
The last six months have been a different story. Since March, the Fund has
gained over 23% while the Russell 2000 is down almost 3% and the Nasdaq has
dropped nearly 20%. Technology stock prices have generally declined and
companies with strong financial performance and value relative to stock price
have been the market's best performers.
The Fund was well positioned for this shift in investor sentiment because we
had invested in fast growing, profitable companies many of which we felt were
undervalued. The Fund has been heavily weighted in the health care sector. This
was the right place to be in the past six months. Health care companies have
been the biggest contributors to performance. The Fund was rewarded by large
positions in Shire Pharmaceuticals Group, a developer of prescription
medications; AmSurg Corp., a manager of outpatient surgery centers; and Accredo
Health, Incorporated and Priority Healthcare Corporation, similar companies that
distribute specialty pharmaceuticals.
The consumer discretionary sector, which includes business services and
retail companies, has struggled in the last 12 months. Retail stocks have been
<PAGE>
WASATCH ULTRA GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
generally weak. Our largest position in the sector is long time holding, F.Y.I.
Inc., a provider of document management services. The company has continued to
meet our growth expectations and made a positive contribution to performance.
The technology, health care and consumer discretionary sectors are primarily
where we have been able to find companies capable of the highest growth rates.
The Fund has few holdings in other industries and these did not make a
significant positive or negative contribution to performance. One exception is a
financial services holding. AmeriCredit Corp., is a sub prime automobile lender
that continues to post outstanding financial results and reward the Fund with
strong stock price performance.
OUTLOOK
-------
We expect to continue finding fast growing companies in the technology,
health care and consumer discretionary sectors. We are likely to continue
investing significant assets in these areas of dynamic growth.
Going into a new fiscal year, we believe the Fund is well positioned to
provide outstanding results over the long term. We look forward to working with
you as you strive to achieve your investment objectives.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------
1 YEAR 5 YEARS SINCE INCEPTION<F1>
--------------------------------------------------------------------------------
WASATCH ULTRA GROWTH FUND 46.66% 13.66% 16.82%
--------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch Russell
Ultra Growth 2000
Fund Index
----------- ----------
'92<F1> $10,000 $10,000
'92 $9,930 $9,941
'93 $10,511 $13,237
'94 $11,021 $13,591
'95 $18,653 $16,767
'96 $18,179 $18,970
'97 $22,132 $25,266
'98 $17,248 $20,461
'99 $24,123 $24,362
'00 $35,380 $30,061
<F1> Inception: August 16, 1992.
The Russell 2000 Index is an unmanaged total return index of the smallest 2,000
companies in the Russell 3000 Index, as ranked by total market capitalization.
The Russell 2000 is widely regarded in the industry to accurately capture the
universe of small company stocks.
<PAGE>
WASATCH ULTRA GROWTH FUND-Portfolio Summary
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
--------------------
1. SHIRE PHARMACEUTICALS GROUP 4%
Prescription medications developer.
2. EXPRESS SCRIPTS, INC., CLASS A 4%
Pharmacy benefits manager.
3. PEDIATRIX MEDICAL GROUP INC. 4%
National network of neonatalogists.
4. CIMA LABS INC. 4%
Fast-dissolve, enhanced-absorption
oral drug delivery systems.
5. F.Y.I. INC. 4%
Document management services.
6. AMERIPATH, INC. 4%
Anatomic pathology services.
7. PRIORITY HEALTHCARE CORP. 3%
Pharmaceutical delivery services and
treatment programs for individuals
with chronic diseases.
8. ACCREDO HEALTH, INC. 3%
Services for individuals with
chronic diseases.
9. SDL, INC. 3%
Semiconductor lasers manufacturer.
10. AMSURG CORP., CLASS A 3%
Outpatient surgery centers.
--------------------------------------------------------------------------------
ASSET ALLOCATION
-----------------
Common and Preferred Stocks 92.1%
Cash & Other Assets 7.9%
SECTOR BREAKDOWN
----------------
Health Care 23.9%
Semiconductors & Telecom 19.1%
Business Services 12.8%
Computers 12.2%
Pharmaceutical & Medical 12.0%
Personal Products & Services 4.0%
Transportation 3.6%
Financial Services 2.5%
Retail 1.3%
Other 0.7%
<PAGE>
WASATCH-HOISINGTON U.S. TREASURY FUND-Portfolio Summary
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
(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 with an emphasis on both income and
capital appreciation.
REVIEW OF THE YEAR
------------------
For two out of the past three years, the Wasatch-Hoisington U.S. Treasury Fund
produced outstanding results. For the fiscal year ended September 30, 2000, the
total return was 9.84%, far better than the Lehman Brothers Aggregate Bond
Index's return of 6.99%. The Fund's average annual total returns of 6.85% for
three years and 7.60% for five years bested the Lehman's returns of 5.93% for
three years and 6.47% for five years.
Over the past year, the Fund's assets were positioned in long term U.S.
Treasury bonds (maturities longer than 20 years). The long end of the Treasury
bond market benefited from the largest U.S. budget surplus, relative to Gross
Domestic Product (GDP), since 1946. Due to this surplus, the Treasury greatly
curtailed the issuance of new 30-year bonds and repurchased outstanding long
term bonds from the market.
In addition, the Federal Reserve's restrictive monetary policy gave investors
confidence that inflation would continue to remain tame, even though oil prices
surged dramatically and labor markets were extremely tight. Accordingly, 30-year
Treasury bond yields fell to 5.88% at the end of September, down from 6.06% a
year earlier. The drop in yields resulted in appreciation in the value of the
long term Treasury securities held in your Fund.
OUTLOOK
-------
We believe that the probability of a recession in the next 12 months has
moved to above 50%. A rapid response to a sustained slowdown by the Federal
Reserve can probably prevent a contraction, but the window of opportunity is
closing. Most observers feel that recent events are consistent with a soft
landing. Indeed, consumer spending did improve in the third quarter, but a
continuation of this longest expansion in U.S. history is doubtful.
Five factors are contributing to this downside risk: 1) restrictive monetary
conditions; 2) the oil shock which is serving as a giant excise tax increase on
world consumers; 3) the record setting expansion, which has eliminated the pent-
up demand for goods; 4) the flattening of stock prices eliminating the stimulus
for consumer spending; and 5) the drag on U.S. economic growth from a global
slowdown.
Globally, Japan remains mired in persistent deflation. Europe is slowing
rapidly. Though the Asian economic
<PAGE>
WASATCH-HOISINGTON U.S. TREASURY FUND-Portfolio Summary
--------------------------------------------------------------------------------
crisis made the necessity of reforms painfully apparent, most reforms have not
been undertaken. World liquidity was so quickly restored in 1998 that the
problems of over-leveraged banks, excessive government interference, corruption,
lack of standardized accounting requirements, and either non-existent or
woefully inadequate bankruptcy laws were never seriously addressed.
Even if the recession is extremely mild, history indicates that the core
inflation rate will drop 2%. With a key core inflation rate rising just 1.8% in
the last year, core inflation could move to zero, or possibly into a slight
deflationary trend. Since Treasury bond yields move proportionally with the
inflation rate over time, investors holding long term Treasury bonds should be
rewarded as yields decline and prices rise.
The total return prospects for the Wasatch-Hoisington U.S. Treasury Fund over
the next two years appear promising.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
----------------------------
1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
WASATCH-HOISINGTON U.S. TREASURY FUND 9.84% 7.60% 8.01%
--------------------------------------------------------------------------------
Past performance is not indicative of future results.
GROWTH OF A $10,000 INVESTMENT
------------------------------
Wasatch-
Hoisington Lehman Bros.
U.S. Treasury Aggregate
Fund Index
----------- ----------
'90 $10,000 $10,000
'91 $11,874 $11,599
'92 $12,876 $13,055
'93 $13,365 $14,357
'94 $13,567 $13,894
'95 $14,986 $15,848
'96 $15,648 $16,625
'97 $17,719 $18,239
'98 $22,025 $20,339
'99 $19,678 $20,266
'00 $21,614 $21,683
The Lehman Brothers Aggregate Index covers the U.S. investment grade fixed rate
bond market, including government and corporate securities, agency mortgage
pass-through securities, and asset-backed securities. To be included in the
index the security must meet the following criteria: must have at least one year
to final maturity, regardless of call features; must have at least $100 million
par amount outstanding; must be rated investment grade or better by Moody's
Investors Service, Standard & Poor's, or Fitch Investor's Service; must be fixed
rate, although it can carry a coupon that steps up or changes to a predetermined
schedule; must be dollar-denominated and nonconvertible. All corporate and
asset-backed securities must be registered with the SEC; must be publicly
issued.
<PAGE>
WASATCH-HOISINGTON U.S. TREASURY FUND-Portfolio Summary
--------------------------------------------------------------------------------
HOLDINGS/MATURITY DATE
----------------------
1. U.S. TREASURY BOND 26%
11/15/2024
2. U.S. TREASURY BOND 12%
11/15/2027
3. U.S. TREASURY BOND 11%
8/15/2027
4. U.S. TREASURY BOND 11%
11/15/2026
5. U.S. TREASURY BOND 8%
2/15/2027
6. U.S. TREASURY STRIP 7%
8/15/2025
7. U.S. TREASURY BOND 5%
8/15/2025
8. U.S. TREASURY BOND 5%
2/15/2026
9. U.S. TREASURY BOND 3%
11/15/2021
10. U.S. TREASURY BOND 3%
8/15/2026
--------------------------------------------------------------------------------
ASSET ALLOCATION
----------------
U.S. Treasury Bonds & Strips 96.2%
Cash & Other Assets 3.8%
<PAGE>
MICRO CAP FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 83.3%
---------------------------------
BASIC MATERIALS 0.5%
113,800 Concert Industries Ltd.<F1> $ 423,554
19,200 Eden Bioscience Corporation 633,600
-------------
1,057,154
-------------
BUILDERS & BUILDING SUPPLIES 0.5%
87,191 Building Materials Holding Corp.<F1> 773,820
15,000 Crossman Communities, Inc.<F1> 296,250
-------------
1,070,070
-------------
BUSINESS PRODUCTS 0.6%
91,300 Embrex, Inc.<F1> 1,209,725
18,200 Koala Corp.<F1> 292,338
-------------
1,502,063
-------------
BUSINESS SERVICES 15.9%
20,900 ACT Teleconferencing, Inc.<F1> 156,750
115,000 ASI Solutions, Inc.<F1> 2,141,875
19,000 Bottomline Technologies, Inc.<F1> 716,063
239,100 Charles River Associates Incorporated<F1> 2,899,087
21,600 Cognizant Technology Solutions Corporation<F1> 842,400
251,200 Daisytek International Corp.<F1> 1,585,700
27,000 Forward Air Corporation<F1> 950,062
91,900 F.Y.I. Inc.<F1> 3,434,763
83,400 Global Imaging Systems, Inc.<F1> 489,975
90,000 Legal Research Center, Inc.<F1> 202,500
444,750 National Dentex Corp.<F1> 7,671,937
250,200 On Assignment, Inc.<F1> 7,850,025
490,000 PEC Solutions, Inc.<F1> 3,154,375
89,200 QRS Corporation<F1> 1,343,575
63,000 RemedyTemp, Inc.<F1> 753,047
28,100 RWD Technologies, Inc.<F1> 238,850
152,000 SCP Pool Corporation<F1> 4,503,000
-------------
38,933,984
-------------
COMPUTER SOFTWARE 2.0%
20,000 Accrue Software, Inc.<F1> 238,750
43,000 Aspen Technologies, Inc.<F1> 1,940,375
45,000 FactSet Research Systems Inc. 1,692,000
50,900 Virage Logic Corporation<F1> 836,669
9,100 Zengine, Inc.<F1> 128,537
-------------
4,836,331
-------------
<PAGE>
MICRO CAP FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMPUTER SYSTEMS & COMPONENTS 3.3%
363,150 Active Voice Corp.<F1> $ 4,267,013
31,000 Computer Network Technology Corporation<F1> 1,065,625
18,200 F5 Networks, Inc.<F1> 618,800
143,000 Fargo Electronics<F1> 884,812
46,100 PLX Technology, Inc.<F1> 1,238,938
-------------
8,075,188
-------------
ELECTRONICS 2.6%
82,000 Nu Horizons Electronics Corp.<F1> 2,280,625
365,500 PCD Inc.<F1> 4,157,563
-------------
6,438,188
-------------
ENERGY 0.3%
10,000 CARBO Ceramics, Inc. 265,625
27,000 Gulf Island Fabrication, Inc.<F1> 475,875
-------------
741,500
-------------
FINANCIAL SERVICES 1.8%
71,000 MicroFinancial Incorporated 639,000
741,075 World Acceptance Corp.<F1> 3,774,851
-------------
4,413,851
-------------
HEALTH CARE PROVIDERS 5.1%
478,784 AmSurg Corp., Class A<F1> 6,702,976
322,375 AmSurg Corp., Class B<F1> 4,311,766
98,800 U.S. Physical Therapy, Inc.<F1> 1,488,175
-------------
12,502,917
-------------
HEALTH CARE SERVICES 10.7%
10,500 Accredo Health, Incorporated<F1> 513,188
450,100 American Healthways, Inc.<F1> 3,628,931
278,600 AmeriPath, Inc.<F1> 4,039,700
380,350 CorVel Corp.<F1> 10,578,484
68,000 Mid Atlantic Medical Services, Inc.<F1> 1,028,500
365,500 OrthAlliance, Inc.<F1> 2,238,687
57,200 Orthodontic Centers of America, Inc.<F1> 1,905,475
31,000 RehabCare Group, Inc.<F1> 1,317,500
45,875 Renal Care Group, Inc.<F1> 854,422
-------------
26,104,887
-------------
OTHER 1.0%
50,600 Cabot Microelectronics Company<F1> 2,428,800
-------------
<PAGE>
MICRO CAP FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
PERSONAL PRODUCTS 0.8%
179,300 Maxwell Shoe Company Inc.<F1> $ 2,005,919
-------------
PERSONAL SERVICES 3.0%
10,000 Bright Horizons Family Solutions, Inc.<F1> 255,625
372,600 First Cash Financial Services, Inc.<F1> 908,212
362,500 Rainbow Rentals, Inc.<F1> 2,786,719
113,153 Rent-Way, Inc.<F1> 3,437,022
-------------
7,387,578
-------------
PHARMACEUTICAL & MEDICAL PRODUCTS 9.5%
59,900 ArthroCare Corporation<F1> 1,164,306
10,000 Aspect Medical Systems, Inc.<F1> 123,750
24,500 Cyberonics, Inc.<F1> 525,219
38,400 Exactech, Inc.<F1> 667,200
405,000 ICU Medical, Inc.<F1> 10,479,375
148,900 IRIDEX Corporation<F1> 1,628,594
30,000 Minntech Corp. 206,250
22,000 Myriad Genetics, Inc.<F1> 1,900,250
11,117 Techne Corp.<F1> 1,245,104
337,400 Young Innovations, Inc.<F1> 5,271,875
-------------
23,211,923
-------------
RETAIL 10.1%
49,666 99 Cents Only Stores<F1> 2,492,612
101,400 Cato Corporation (The) 1,267,500
71,500 Cost Plus, Inc.<F1> 2,153,937
67,500 Finish Line, Inc. (The)<F1> 493,594
57,800 Guitar Center, Inc.<F1> 711,662
152,800 Hibbett Sporting Goods, Inc.<F1> 4,049,200
34,500 Linens 'n Things, Inc.<F1> 879,750
74,000 MarineMax, Inc.<F1> 499,500
290,153 Men's Wearhouse, Inc. (The)<F1> 8,214,957
10,000 Nautica Enterprises, Inc.<F1> 129,375
65,000 O'Charley's Inc.<F1> 800,313
195,100 Travis Boats & Motors, Inc.<F1> 719,431
263,055 Whitehall Jewellers, Inc.<F1> 2,087,999
70,000 YOCREAM International, Inc.<F1> 262,500
-------------
24,762,330
-------------
<PAGE>
MICRO CAP FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
SEMICONDUCTORS 9.4%
10,000 Advanced Power Technology, Inc.<F1> $ 331,250
25,800 Integrated Measurement Systems, Inc.<F1> 348,300
87,056 Micrel, Inc.<F1> 5,832,752
9,500 Nanometrics Incorporated<F1> 507,656
34,900 O2Micro International Limited<F1> 600,389
263,000 Pericom Semiconductor Corporation<F1> 9,731,000
240,600 PSi Technologies Holdings, Inc.<F1> 3,067,650
52,000 Supertex, Inc.<F1> 2,619,500
-------------
23,038,497
-------------
TELECOMMUNICATIONS 1.0%
65,500 Catapult Communications Corporation<F1> 1,219,938
30,500 Management Network Group, Inc. (The) 636,688
47,965 Metro-Optix, Inc.<F1><F2> 474,853
-------------
2,331,479
-------------
TRANSPORTATION 5.2%
186,800 Aramex International Limited<F1> 2,148,200
156,100 Heartland Express, Inc.<F1> 2,712,238
238,300 Knight Transportation, Inc.<F1> 3,708,544
215,500 O'Reilly Automotive, Inc.<F1> 3,151,687
58,000 Smithway Motor Xpress Corp.<F1> 145,000
167,000 USA Truck, Inc.<F1> 897,625
-------------
12,763,294
-------------
TOTAL COMMON AND PREFERRED
STOCKS (COST $154,803,447) 203,605,953
-------------
<PAGE>
MICRO CAP FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 17.7%
----------------------------
(Variable Rate Demand Deposits)
$43,274,890 UMB Bank Money Market Fiduciary $ 43,274,890
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $43,274,890) 43,274,890
-------------
TOTAL INVESTMENTS (COST $198,078,337) 101.0% 246,880,843
LIABILITIES LESS OTHER ASSETS (1.0)% (2,436,363)
-------------
NET ASSETS 100.0% $244,444,480
=============
<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. The security is valued at its fair value under procedures approved
by the Board of Directors. At September 30, 2000, this security amounted to
0.2% of net assets.
See notes to financial statements.
<PAGE>
SMALL CAP VALUE FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS 91.0%
BASIC MATERIALS 0.4%
24,800 Encore Wire Corporation<F1> $ 176,700
-------------
BUILDERS & BUILDING SUPPLIES 2.2%
20,500 Building Materials Holding Corp.<F1> 181,938
18,400 Crossman Communities, Inc.<F1> 363,400
29,400 Monaco Coach Corporation<F1> 485,100
-------------
1,030,438
-------------
BUSINESS PRODUCTS 2.9%
21,700 Astronics Corporation<F1> 231,919
22,700 Embrex, Inc.<F1> 300,775
11,000 Kaydon Corporation 253,000
34,800 Koala Corp.<F1> 558,975
-------------
1,344,669
-------------
BUSINESS SERVICES 10.2%
7,000 Daisytek International Corp.<F1> 44,188
60,000 Charles River Associates Incorporated<F1> 727,500
38,000 Global Imaging Systems, Inc.<F1> 223,250
56,300 National Dentex Corp.<F1> 971,175
14,000 QRS Corporation<F1> 210,875
35,100 RemedyTemp, Inc.<F1> 419,555
47,700 RWD Technologies, Inc.<F1> 405,450
14,950 SCP Pool Corporation<F1> 442,894
53,050 United Rentals, Inc.<F1> 1,279,831
-------------
4,724,718
-------------
COMPUTER SYSTEMS & COMPONENTS 2.4%
38,155 Active Voice Corp.<F1> 448,321
66,000 Fargo Electronics<F1> 408,375
7,000 Synopsys, Inc.<F1> 265,125
-------------
1,121,821
-------------
ELECTRONICS 2.8%
18,200 Nu Horizons Electronics Corp.<F1> 506,188
72,000 PCD Inc.<F1> 819,000
-------------
1,325,188
-------------
<PAGE>
SMALL CAP VALUE FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
ENERGY 2.0%
51,800 Gulf Island Fabrication, Inc.<F1> $ 912,975
-------------
FINANCIAL SERVICES 7.0%
10,000 ACE Cash Express, Inc.<F1> 110,000
17,050 BWC Financial Corp.<F1> 392,150
36,700 Financial Federal Corporation 887,681
38,100 Hibernia Corporation<F1> 466,725
12,375 RLI Corp. 477,211
7,300 UCBH Holdings, Inc. 261,431
130,500 World Acceptance Corp.<F1> 664,734
-------------
3,259,932
-------------
HEALTH CARE PROVIDERS 3.7%
27,125 AmSurg Corp., Class A<F1> 379,750
6,000 AmSurg Corp., Class B<F1> 80,250
12,000 Lincare Holdings Inc.<F1> 344,250
32,000 Pediatrix Medical Group Inc.<F1> 414,000
10,400 Sybron International Corp.<F1> 249,600
16,000 U.S. Physical Therapy, Inc.<F1> 241,000
-------------
1,708,850
-------------
HEALTH CARE SERVICES 16.1%
51,000 America Service Group, Inc.<F1> 1,326,000
98,900 American Healthways, Inc.<F1> 797,381
94,500 AmeriPath, Inc.<F1> 1,370,250
33,950 CorVel Corp.<F1> 944,234
24,900 Interwest Home Medical, Inc.<F1> 88,706
44,800 Mid Atlantic Medical Services, Inc. 677,600
136,100 OrthAlliance, Inc.<F1> 833,613
28,500 Orthodontic Centers of America, Inc.<F1> 949,406
27,000 Renal Care Group, Inc.<F1> 502,875
-------------
7,490,065
-------------
PERSONAL PRODUCTS 3.8%
90,900 Maxwell Shoe Company Inc.<F1> 1,016,944
65,000 Sport-Haley, Inc.<F1> 276,250
22,000 WD-40 Company 467,500
-------------
1,760,694
-------------
<PAGE>
SMALL CAP VALUE FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
PERSONAL SERVICES 6.5%
45,500 First Cash Financial Services, Inc.<F1> $ 110,906
82,400 Rainbow Rentals, Inc.<F1> 633,450
39,100 Rent-A-Center, Inc.<F1> 1,356,281
31,000 Rent-Way, Inc.<F1> 941,625
-------------
3,042,262
-------------
PHARMACEUTICAL & MEDICAL PRODUCTS 4.1%
53,700 ICU Medical, Inc.<F1> 1,389,487
7,000 Minntech Corp. 48,125
29,400 Young Innovations, Inc.<F1> 459,375
-------------
1,896,987
-------------
REAL ESTATE 1.4%
96,500 National Health Investors, Inc. REIT 651,375
-------------
RETAIL 11.4%
35,100 Cato Corporation (The) 438,750
51,000 Finish Line, Inc. (The)<F1> 372,938
1,000 Hibbett Sporting Goods, Inc.<F1> 26,500
32,500 MarineMax, Inc.<F1> 219,375
45,944 Men's Wearhouse, Inc. (The)<F1> 1,300,789
55,600 Monro Muffler Brake, Inc.<F1> 604,650
11,200 Nautica Enterprises, Inc.<F1> 144,900
10,000 O'Charley's Inc.<F1> 123,125
42,200 Ross Stores, Inc. 606,625
11,000 Travis Boats & Motors, Inc.<F1> 40,563
119,162 Whitehall Jewellers, Inc.<F1> 945,848
22,000 Wilsons The Leather Experts Inc.<F1> 397,375
21,000 YOCREAM International, Inc.<F1> 78,750
-------------
5,300,188
-------------
SEMICONDUCTORS 2.0%
6,000 Integrated Measurement Systems, Inc.<F1> 81,000
1,000 Nanometrics Incorporated<F1> 53,437
9,600 Pericom Semiconductor Corporation<F1> 355,200
5,100 Photronics, Inc.<F1> 111,244
7,000 Supertex, Inc.<F1> 352,625
-------------
953,506
-------------
TELECOMMUNICATIONS 0.1%
2,000 GENTNER COMMUNICATIONS CORPORATION<F1> 24,625
-------------
<PAGE>
SMALL CAP VALUE FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION 11.5%
35,850 Aramex International Limited<F1> $ 412,275
25,325 Frontier Airlines, Inc.<F1> 492,255
19,000 Heartland Express, Inc.<F1> 330,125
5,000 HEICO Corporation 65,000
103,250 HEICO Corporation, Class A 1,309,984
63,000 Keystone Automotive Industries, Inc.<F1> 303,188
21,600 Knight Transportation, Inc.<F1> 336,150
10,100 Landstar System, Inc.<F1> 450,713
34,000 O'Reilly Automotive, Inc.<F1> 497,250
9,025 SkyWest, Inc. 462,531
33,900 Smithway Motor Xpress Corp.<F1> 84,750
13,500 Trinity Industries, Inc. 315,562
57,300 USA Truck, Inc.<F1> 307,988
-------------
5,367,771
-------------
UTILITIES 0.5%
12,000 Sierra Pacific Resources 216,000
-------------
TOTAL COMMON STOCKS (COST $36,667,769) 42,308,764
-------------
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 11.0%
----------------------------
(Variable Rate Demand Deposits)
$5,107,730 UMB Bank Money Market Fiduciary $ 5,107,730
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $5,107,730) 5,107,730
-------------
TOTAL INVESTMENTS (COST $41,775,499) 102.0% 47,416,494
LIABILITIES LESS OTHER ASSETS (2.0)% (946,061)
-------------
NET ASSETS 100.0% $46,470,433
=============
<F1> Non-income producing
See notes to financial statements.
<PAGE>
SMALL CAP GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 87.7%
BUSINESS SERVICES 16.0%
80,775 Bottomline Technologies, Inc.<F1> $ 3,044,208
108,825 Braun Consulting, Inc.<F1> 2,156,095
213,665 Charles River Associates Incorporated<F1> 2,590,688
40,400 Cognizant Technology Solutions Corporation<F1> 1,575,600
88,400 Concord EFS, Inc.<F1> 3,139,581
163,175 Copart, Inc.<F1> 2,264,053
41,900 Daisytek International Corp.<F1> 264,494
9,900 Digital Insight Corporation<F1> 355,163
61,100 Forward Air Corporation<F1> 2,149,956
114,300 F.Y.I. Inc.<F1> 4,271,963
215,350 National Dentex Corp.<F1> 3,714,788
75,600 NOVA Corporation<F1> 1,294,650
142,700 On Assignment, Inc.<F1> 4,477,213
194,385 PEC Solutions, Inc.<F1> 1,251,353
114,175 QRS Corporation<F1> 1,719,761
41,282 Sanmina Corp.<F1> 3,865,027
-------------
38,134,593
-------------
COMPUTER SOFTWARE 4.3%
22,200 Chordiant Software, Inc.<F1> 172,050
48,800 Embarcadero Technologies, Inc.<F1> 2,507,100
62,300 FactSet Research Systems Inc. 2,342,480
46,350 InterCept Group, Inc. (The)<F1> 1,080,534
73,800 Peregrine Systems, Inc.<F1> 1,397,588
71,800 Synopsys, Inc.<F1> 2,719,425
7,100 Zengine, Inc.<F1> 100,287
-------------
10,319,464
-------------
COMPUTER SYSTEMS & COMPONENTS 6.9%
188,200 Active Voice Corp.<F1> 2,211,350
87,247 Computer Network Technology Corporation<F1> 2,999,116
89,000 PLX Technology, Inc.<F1> 2,391,875
82,450 Polycom, Inc.<F1> 5,521,573
68,640 Zebra Technologies Corporation<F1> 3,299,010
-------------
16,422,924
-------------
ELECTRONICS 0.8%
172,100 PCD Inc.<F1> 1,957,637
-------------
FINANCIAL SERVICES 1.5%
90,312 Metris Companies Inc. 3,567,324
-------------
<PAGE>
SMALL CAP GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
HEALTH CARE PROVIDERS 2.2%
313,925 AmSurg Corp., Class A<F1> $ 4,394,950
60,300 AmSurg Corp., Class B<F1> 806,512
-------------
5,201,462
-------------
HEALTH CARE SERVICES 12.2%
67,000 Accredo Health, Incorporated<F1> 3,274,625
390,010 AmeriPath, Inc.<F1> 5,655,145
103,725 Express Scripts, Inc., Class A<F1> 7,494,131
21,300 Lincare Holdings Inc.<F1> 611,043
37,084 MedQuist Inc.<F1> 748,633
236,700 Orthodontic Centers of America, Inc.<F1> 7,885,069
39,975 Priority Healthcare Corporation<F1> 3,048,094
65,050 TLC The Laser Center Inc.<F1> 239,872
-------------
28,956,612
-------------
OTHER 0.5%
24,875 Cabot Microelectronics Corporation<F1> 1,194,000
-------------
PERSONAL SERVICES 2.2%
12,500 First Cash Financial Services, Inc.<F1> 30,469
47,000 Rent-A-Center, Inc.<F1> 1,630,313
118,188 Rent-Way, Inc.<F1> 3,589,961
-------------
5,250,743
-------------
PHARMACEUTICAL & MEDICAL PRODUCTS 8.8%
76,550 American Medical Systems Holdings, Inc.<F1> 1,196,094
245,611 ICU Medical, Inc.<F1> 6,355,185
86,650 Myriad Genetics, Inc.<F1> 7,484,394
50,794 Techne Corp.<F1> 5,688,928
11,500 Vascular Solutions, Inc.<F1> 215,805
-------------
20,940,406
-------------
REAL ESTATE 0.2%
80,175 National Health Investors, Inc. REIT 541,181
-------------
RETAIL 7.5%
56,666 99 Cents Only Stores<F1> 2,843,925
84,500 Hibbett Sporting Goods, Inc.<F1> 2,239,250
175,300 Linens 'n Things, Inc.<F1> 4,470,150
78,950 MarineMax, Inc.<F1> 532,912
195,740 Men's Wearhouse, Inc. (The)<F1> 5,541,889
280,875 Whitehall Jewellers, Inc.<F1> 2,229,445
-------------
17,857,571
-------------
<PAGE>
SMALL CAP GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
SEMICONDUCTORS 9.5%
105,278 Micrel, Inc.<F1> $ 7,053,626
232,293 Microchip Technology, Inc.<F1> 7,680,187
110,100 Pericom Semiconductor Corporation<F1> 4,073,700
155,675 PSi Technologies Holdings, Inc.<F1> 1,984,856
33,300 Supertex, Inc.<F1> 1,677,488
-------------
22,469,857
-------------
TELECOMMUNICATIONS 7.0%
10,000 Alamosa PCS Holdings, Inc.<F1> 161,875
10,000 InterWAVE Communications International, Ltd.<F1> 80,000
152,675 Metro-Optix, Inc.<F1><F2> 1,511,483
135,125 Powertel, Inc.<F1> 10,277,945
3,500 Triton PCS Holdings<F1> 96,250
63,625 UbiquiTel Inc.<F1> 572,625
56,490 United States Cellular Corp.<F1> 3,954,300
-------------
16,654,478
-------------
TRANSPORTATION 8.1%
46,450 C.H. Robinson Worldwide, Inc. 2,617,893
92,225 Expeditors International of Washington, Inc. 4,155,889
17,800 HEICO Corporation 231,400
43,140 HEICO Corporation, Class A 547,339
295,600 Knight Transportation, Inc.<F1> 4,600,275
486,575 O'Reilly Automotive, Inc.<F1> 7,116,159
-------------
19,268,955
-------------
TOTAL COMMON AND PREFERRED
STOCKS (COST $139,349,944) 208,737,207
-------------
<PAGE>
SMALL CAP GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 12.0%
----------------------------
(Variable Rate Demand Deposits)
$ 28,474,098 UMB Bank Money Market Fiduciary $ 28,474,098
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $28,474,098) 28,474,098
-------------
TOTAL INVESTMENTS (COST $167,824,042) 99.7% 237,211,305
OTHER ASSETS LESS LIABILITIES 0.3% 600,577
-------------
NET ASSETS 100.0% $237,811,882
=============
<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. The security is valued at its fair value under procedures approved
by the Board of Directors. At September 30, 2000, this security amounted to
0.6% of net assets.
See notes to financial statements.
<PAGE>
CORE GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS 88.8%
BUSINESS SERVICES 18.7%
305,800 American Bank Note Holographics, Inc.<F1> $ 592,487
38,825 BISYS Group, Inc. (The)<F1> 3,001,658
173,800 Charles River Associates Incorporated<F1> 2,107,325
57,900 Concord EFS, Inc.<F1> 2,056,355
640,950 Copart, Inc.<F1> 8,893,181
96,575 CSG Systems International, Inc.<F1> 2,800,675
32,275 Forward Air Corporation<F1> 1,135,677
156,900 F.Y.I. Inc.<F1> 5,864,137
134,325 NOVA Corporation<F1> 2,300,316
192,625 On Assignment, Inc.<F1> 6,043,609
103,250 QRS Corporation<F1> 1,555,203
181,225 SCP Pool Corporation<F1> 5,368,791
524,125 United Rentals, Inc.<F1> 12,644,516
-------------
54,363,930
-------------
COMPUTER SOFTWARE 2.6%
195,450 Synopsys, Inc.<F1> 7,402,669
-------------
COMPUTER SYSTEMS & COMPONENTS 2.1%
125,195 Zebra Technologies Corporation<F1> 6,017,185
-------------
FINANCIAL SERVICES 15.5%
673,562 AmeriCredit Corp.<F1> 19,407,005
79,100 Countrywide Credit Industries, Inc. 2,986,025
65,925 Financial Federal Corporation 1,594,561
70,500 MBIA, Inc. 5,014,312
297,912 Metris Companies Inc. 11,767,524
231,550 MicroFinancial Incorporated 2,083,950
212,550 RTW, Inc.<F1> 704,072
43,725 WFS Financial Inc.<F1> 740,592
173,086 World Acceptance Corp.<F1> 881,657
-------------
45,179,698
-------------
HEALTH CARE SERVICES 21.6%
135,900 Express Scripts, Inc., Class A<F1> 9,818,775
330,825 First Health Group Corp.<F1> 10,669,106
483,325 Lincare Holdings Inc.<F1> 13,865,386
70,104 MedQuist Inc.<F1> 1,415,224
300,381 Orthodontic Centers of America, Inc.<F1> 10,006,442
645,225 Pediatrix Medical Group Inc.<F1> 8,347,598
467,650 Renal Care Group, Inc.<F1> 8,709,981
-------------
62,832,512
-------------
<PAGE>
CORE GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
PERSONAL SERVICES 9.1%
95,100 Bright Horizons Family Solutions, Inc.<F1> $ 2,430,994
246,550 First Cash Financial Services, Inc.<F1> 600,966
675,825 Rent-A-Center, Inc.<F1> 23,442,680
-------------
26,474,640
-------------
PHARMACEUTICAL & MEDICAL PRODUCTS 2.7%
302,800 ICU Medical, Inc.<F1> 7,834,950
-------------
RETAIL 7.6%
96,000 Hibbett Sporting Goods, Inc.<F1> 2,544,000
337,725 Men's Wearhouse, Inc. (The)<F1> 9,561,839
238,900 Ross Stores, Inc. 3,434,187
150,475 TJX Companies, Inc. (The) 3,385,688
399,350 Whitehall Jewellers, Inc.<F1> 3,169,841
-------------
22,095,555
-------------
SEMICONDUCTORS 2.5%
178,218 Microchip Technology, Inc.<F1> 5,892,333
44,600 Dallas Semiconductor Corporation 1,466,225
-------------
7,358,558
-------------
TRANSPORTATION 6.4%
48,000 Expeditors International of Washington, Inc. 2,163,000
90,900 HEICO Corporation 1,181,700
94,120 HEICO Corporation, Class A 1,194,147
141,893 Knight Transportation, Inc.<F1> 2,208,210
815,640 O'Reilly Automotive, Inc.<F1> 11,928,735
-------------
18,675,792
-------------
TOTAL COMMON STOCKS (COST $199,831,510) 258,235,489
-------------
<PAGE>
CORE GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 11.7%
----------------------------
(Variable Rate Demand Deposits)
$34,016,086 UMB Bank Money Market Fiduciary $ 34,016,086
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $34,016,086) 34,016,086
-------------
TOTAL INVESTMENTS (COST $233,847,596) 100.5% 292,251,575
LIABILITIES LESS OTHER ASSETS (0.5)% (1,546,238)
-------------
NET ASSETS 100.0% $290,705,337
=============
<F1> Non-income producing
See notes to financial statements.
<PAGE>
ULTRA GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 92.1%
BUSINESS SERVICES 12.8%
6,000 AvantGo, Inc.<F1> $ 120,000
16,575 Cognizant Technology Solutions Corporation<F1> 646,425
11,250 Concord EFS, Inc.<F1> 399,551
47,050 Copart, Inc.<F1> 652,819
3,925 Digital Insight Corporation<F1> 140,809
7,400 DoubleClick Inc.<F1> 236,800
54,750 F.Y.I. Inc.<F1> 2,046,281
44,000 IQ4HIRE<F1><F2> 110,000
80,000 PEC Solutions, Inc.<F1> 515,000
41,000 ProBusiness Services, Inc.<F1> 1,240,250
11,650 Sanmina Corp.<F1> 1,090,731
-------------
7,198,666
-------------
COMPUTER SOFTWARE 7.6%
43,000 Accrue Software, Inc.<F1> 513,312
6,000 Active Voice Corp.<F1> 70,500
2,300 Embarcadero Technologies, Inc.<F1> 118,163
77,075 Peregrine Systems, Inc.<F1> 1,459,608
15,235 Synopsys, Inc.<F1> 577,026
25,925 TTI Team Telecom International Ltd.<F1> 528,222
67,884 Verisity Ltd. Series D Preferred<F1><F2> 621,817
5,300 Versata, Inc.<F1> 140,450
16,000 Virage Logic Corporation<F1> 263,000
-------------
4,292,098
-------------
COMPUTER SYSTEMS & COMPONENTS 4.6%
800 Brocade Communications Systems, Inc.<F1> 188,800
2,400 Extreme Networks, Inc.<F1> 274,800
18,050 F5 Networks, Inc.<F1> 613,700
10,600 PLX Technology, Inc.<F1> 284,875
11,900 Polycom, Inc.<F1> 796,928
8,650 RadiSys Corporation<F1> 437,366
-------------
2,596,469
-------------
FINANCIAL SERVICES 2.5%
43,200 AmeriCredit Corp.<F1> 1,244,700
4,050 Knight Trading Group, Inc., Class A<F1> 145,800
-------------
1,390,500
-------------
<PAGE>
ULTRA GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
HEALTH CARE PROVIDERS 8.9%
105,000 AmSurg Corp., Class A<F1> $1,470,000
107,330 AmSurg Corp., Class B<F1> 1,435,539
163,300 Pediatrix Medical Group Inc.<F1> 2,112,694
-------------
5,018,233
-------------
HEALTH CARE SERVICES 15.0%
33,400 Accredo Health, Incorporated<F1> 1,632,425
135,950 AmeriPath, Inc.<F1> 1,971,275
4,700 Aurora Biosciences Corporation<F1> 319,600
32,825 Express Scripts, Inc., Class A<F1> 2,371,606
12,287 MedQuist Inc.<F1> 248,044
23,123 Priority Healthcare Corporation<F1> 1,763,129
38,800 TLC The Laser Center Inc.<F1> 143,075
-------------
8,449,154
-------------
PERSONAL PRODUCTS 1.4%
23,700 Gildan Activewear Inc.<F1> 790,987
-------------
PERSONAL SERVICES 2.6%
24,700 Career Education Corporation<F1> 1,099,150
4,175 TMP Worldwide Inc.<F1> 336,087
-------------
1,435,237
-------------
PHARMACEUTICAL & MEDICAL PRODUCTS 12.0%
13,900 Aspect Medical Systems, Inc.<F1> 172,012
40,475 CIMA Labs Inc.<F1> 2,107,230
10,500 Cyberonics, Inc.<F1> 225,094
4,700 Digene Corporation<F1> 169,200
900 ICU Medical, Inc.<F1> 23,288
4,300 Myriad Genetics, Inc.<F1> 371,413
107,025 Novavax, Inc.<F1> 973,928
48,194 Shire Pharmaceuticals Group Plc<F1> 2,488,015
2,825 United Therapeutics Corporation<F1> 246,834
-------------
6,777,014
-------------
OTHER 0.7%
8,600 Symyx Technologies<F1> 373,025
-------------
RETAIL 1.3%
46,325 Buca, Inc.<F1> 492,203
6,650 Dollar Tree Stores, Inc.<F1> 269,741
-------------
761,944
-------------
<PAGE>
ULTRA GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
SEMICONDUCTORS 8.8%
15,800 ASM Lithography Holding N.V.<F1> $ 510,538
14,650 Aware, Inc.<F1> 564,025
15,050 Micrel, Inc.<F1> 1,008,350
31,838 Microchip Technology, Inc.<F1> 1,052,627
2,475 MMC Networks, Inc.<F1> 313,087
7,700 Pericom Semiconductor Corporation 284,900
37,175 PSi Technologies Holdings, Inc.<F1> 473,981
3,100 Supertex, Inc.<F1> 156,163
6,600 Vitesse Semiconductor Corporation<F1> 586,988
-------------
4,950,659
-------------
TELECOMMUNICATIONS 10.3%
16,400 Advanced Radio Telecom Corp.<F1> 139,400
1,300 Anaren Microwave, Inc.<F1> 176,312
9,900 BreezeCom Ltd.<F1> 326,081
8,400 Illuminet Holdings Inc.<F1> 233,100
60,000 Management Network Group, Inc. (The)<F1> 1,252,500
6,600 Metawave Communications Corporation<F1> 120,863
54,825 Metro-Optix, Inc.<F1><F2> 542,767
1,950 Netopia, Inc.<F1> 21,450
5,000 SDL, Inc.<F1> 1,540,000
14,550 Vyyo Inc.<F1> 436,500
11,450 Western Multiplex Corporation<F1> 183,916
14,300 Wireless Facilities, Inc.<F1> 824,931
-------------
5,797,820
-------------
TRANSPORTATION 3.6%
11,000 HEICO Corporation 143,000
48,940 HEICO Corporation, Class A 620,926
85,500 O'Reilly Automotive, Inc.<F1> 1,250,437
-------------
2,014,363
-------------
TOTAL COMMON AND PREFERRED
STOCKS (COST $40,169,844) 51,846,169
-------------
<PAGE>
ULTRA GROWTH FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 14.0%
----------------------------
(Variable Rate Demand Deposits)
$7,853,659 UMB Bank Money Market Fiduciary $ 7,853,659
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $7,853,659) 7,853,659
-------------
TOTAL INVESTMENTS (COST $48,023,503) 106.1% 59,699,828
LIABILITIES LESS OTHER ASSETS, (6.1)% (3,418,005)
-------------
NET ASSETS 100.0% $56,281,823
=============
<F1> Non-income producing
<F2> Preferred stocks purchased in private placement transactions; resale to the
public may require registration or sale only to qualified institutional
buyers. These securities are valued at their fair value under procedures
approved by the Board of Directors. At September 30, 2000, these securities
amounted to 2.3% of net assets.
See notes to financial statements.
<PAGE>
U.S. TREASURY FUND-Schedule of Investments
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS 96.2%
$ 600,000 U.S. Treasury Bond, 6.25%, 8/15/23 $ 611,058
12,830,000 U.S. Treasury Bond, 7.50%, 11/15/24 15,099,242
2,755,000 U.S. Treasury Bond, 6.875%, 8/15/25 3,032,208
2,835,000 U.S. Treasury Bond, 6.00%, 2/15/26 2,808,408
1,750,000 U.S. Treasury Bond, 6.75%, 8/15/26 1,903,667
6,135,000 U.S. Treasury Bond, 6.50%, 11/15/26 6,476,229
4,570,000 U.S. Treasury Bond, 6.625%, 2/15/27 4,898,446
6,355,000 U.S. Treasury Bond, 6.375%, 8/15/27 6,615,110
7,196,000 U.S. Treasury Bond, 6.125%, 11/15/27 7,254,431
947,000 U.S. Treasury Bond, 6.125%, 8/15/29 967,124
7,100,000 U.S. Treasury Strip, 11/15/21 1,983,527
19,100,000 U.S. Treasury Strip, 8/15/25 4,348,115
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $58,129,023) 55,997,565
-------------
SHORT-TERM INVESTMENTS 1.3%
---------------------------
(Variable Rate Demand Deposits)
739,061 UMB Bank Money Market Fiduciary 739,061
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $739,061) 739,061
-------------
TOTAL INVESTMENTS (COST $58,868,084) 97.5% 56,736,626
OTHER ASSETS LESS LIABILITIES 2.5% 1,461,460
-------------
NET ASSETS 100.0% $58,198,086
=============
See notes to financial statements.
<PAGE>
(This page intentionally left blank.)
<PAGE>
WASATCH FUNDS-Statements of Assets and Liabilities
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP CORE ULTRA U.S.
MICRO CAP VALUE GROWTH GROWTH GROWTH TREASURY
FUND FUND FUND FUND FUND FUND
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value
Nonaffiliated issuers (cost
$174,021,226, $41,775,499,
$164,639,208, $233,847,596,
$48,023,503 and $58,868,084,
respectively) $ 216,506,639 $ 47,416,494 $233,496,517 $292,251,575 $59,699,828 $56,736,626
Affiliated issuers (cost
$24,057,111, $0, $3,184,834,
$0, $0 and $0, respectively) 30,374,204 - 3,714,788 - - -
Receivable for investment securities sold 2,680,810 159,370 2,959,059 2,236,269 780,861 -
Interest and dividends receivable 168,604 29,061 104,684 144,042 26,873 849,497
Capital shares receivable 115,803 49,089 251,578 1,175,457 161 639,259
Prepaid expenses and other assets 14,802 9,584 14,017 16,084 10,800 12,581
------------- ------------- ------------- ------------- ------------- -------------
Total Assets 249,860,862 47,663,598 240,540,643 295,823,427 60,518,523 58,237,963
------------- ------------- ------------- ------------- ------------- -------------
LIABILITIES:
Payable for securities purchased 5,202,455 1,111,355 1,380,983 4,239,582 4,184,508 -
Accrued investment advisory fee 130,324 9,247 63,361 79,547 13,866 1,981
Accrued expenses 55,383 14,555 58,714 96,852 21,946 20,814
Capital shares payable 28,220 58,008 1,133,403 702,109 16,380 17,082
Payable to Custodian - - 92,300 - - -
------------- ------------- ------------- ------------- ------------- -------------
Total Liabilities 5,416,382 1,193,165 2,728,761 5,118,090 4,236,700 39,877
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS $244,444,480 $46,470,433 $237,811,882 $290,705,337 $56,281,823 $58,198,086
============= ============= ============= ============= ============= =============
NET ASSETS CONSIST OF:
Capital stock $ 374,440 $ 132,437 $ 68,166 $ 103,525 $ 20,713 $ 48,482
Paid-in capital in excess of par 126,441,019 35,750,023 120,167,076 201,450,958 29,199,503 64,640,965
Undistributed net investment income - - - - - 2,140,544
Undistributed net realized gain (loss)
on investments 68,826,515 4,946,978 48,189,377 30,746,875 15,385,282 (6,500,447)
Net unrealized appreciation (depreciation)
on investments 48,802,506 5,640,995 69,387,263 58,403,979 11,676,325 (2,131,458)
------------- ------------- ------------- ------------- ------------- -------------
Net Assets $ 244,444,480 $ 46,470,433 $237,811,882 $290,705,337 $56,281,823 $58,198,086
============= ============= ============= ============= ============= =============
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 37,443,974 13,243,741 6,816,598 10,352,471 2,071,293 4,848,236
NET ASSET VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $6.53 $3.51 $34.89 $28.08 $27.17 $12.00
====== ====== ====== ====== ====== ======
</TABLE>
See notes to financial statements.
<PAGE>
WASATCH FUNDS-Statements of Operations
--------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP CORE ULTRA U.S.
MICRO CAP VALUE GROWTH GROWTH GROWTH TREASURY
FUND FUND FUND FUND FUND FUND
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,066,448 $ 136,071 $ 620,601 $ 737,429 $ 174,854 $3,589,187
Dividends 88,310 110,544 384,700 378,447 71,671 -
------------- ------------- ------------- ------------- ------------- -------------
1,154,758 246,615 1,005,301 1,115,876 246,525 3,589,187
------------- ------------- ------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fee 3,726,198 398,392 1,884,121 2,163,030 551,021 294,028
Shareholder servicing fees 299,874 59,163 309,629 330,363 112,432 98,933
Fund administration and accounting fees 253,335 48,925 257,264 290,138 76,418 95,314
Reports to shareholders 57,802 9,634 56,040 92,841 20,718 20,206
Federal and state registration fees 35,233 20,266 29,692 45,055 19,448 38,016
Custody fees 23,313 7,464 21,172 22,521 9,558 8,478
Audit fees 11,357 4,495 12,684 13,886 4,811 5,075
Legal fees 5,882 674 6,145 7,090 1,409 2,000
Directors' fees 4,906 606 5,177 5,957 1,270 2,103
Other 14,550 5,325 15,405 14,707 6,126 7,221
------------- ------------- ------------- ------------- ------------- -------------
Total expenses before reimbursement 4,432,450 554,944 2,597,329 2,985,588 803,211 571,374
Reimbursement of expenses by advisor - (37,035) - - (31,782) (130,331)
------------- ------------- ------------- ------------- ------------- -------------
Net expenses 4,432,450 517,909 2,597,329 2,985,588 771,429 441,043
------------- ------------- ------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) (3,277,692) (271,294) (1,592,028) (1,869,712) (524,904) 3,148,144
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments
Nonaffiliated 71,761,697 5,323,671 50,015,745 36,016,167 16,219,703 (4,512,795)
Affiliated 406,900 - (101,217) (2,885,271) - -
------------- ------------- ------------- ------------- ------------- -------------
72,168,597 5,323,671 49,914,528 33,130,896 16,219,703 (4,512,795)
Change in unrealized appreciation
(depreciation) on investments 19,796,875 5,134,412 25,303,752 41,395,202 1,000,138 5,691,560
------------- ------------- ------------- ------------- ------------- -------------
Net gain on investments 91,965,472 10,458,083 75,218,280 74,526,098 17,219,841 1,178,765
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $88,687,780 $10,186,789 $73,626,252 $72,656,386 $16,694,937 $4,326,909
============= ============= ============= ============= ============= =============
</TABLE>
<PAGE>
Wasatch Funds-STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
MICRO CAP FUND SMALL CAP VALUE FUND SMALL CAP GROWTH FUND
2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(3,277,692) $(3,111,350) $(271,294) $(245,723) $(1,592,028) $(1,102,981)
Net realized gain on investments 72,168,597 20,346,563 5,323,671 1,726,846 49,914,528 20,794,083
Change in unrealized appreciation
(depreciation) on investments 19,796,875 25,494,388 5,134,412 2,954,078 25,303,752 34,941,701
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations 88,687,780 42,729,601 10,186,789 4,435,201 73,626,252 54,632,803
DIVIDENDS PAID FROM:
Net investment income - - - - - -
Net realized gains (13,609,225) (12,017,532) (604,879) - (15,405,627) (18,539,487)
------------- ------------- ------------- ------------- ------------- -------------
(13,609,225) (12,017,532) (604,879) - (15,405,627) (18,539,487)
CAPITAL SHARE TRANSACTIONS:
Shares sold 89,742,546 67,340,072 27,409,429 11,711,690 127,343,426 37,645,640
Shares issued to holders in
reinvestment of dividends 13,428,147 11,888,645 586,278 - 15,002,699 17,995,373
------------- ------------- ------------- ------------- ------------- -------------
103,170,693 79,228,717 27,995,707 11,711,690 142,346,125 55,641,013
Shares redeemed (78,680,125) (82,598,473) (7,877,664) (13,682,187) (108,669,725) (69,542,550)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 24,490,568 (3,369,756) 20,118,043 (1,970,497) 33,676,400 (13,901,537)
------------- ------------- ------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 99,569,123 27,342,313 29,699,953 2,464,704 91,897,025 22,191,779
NET ASSETS:
Beginning of period 144,875,357 117,533,044 16,770,480 14,305,776 145,914,857 123,723,078
------------- ------------- ------------- ------------- ------------- -------------
End of period $244,444,480 $144,875,357 $46,470,433 $16,770,480 $237,811,882 $145,914,857
============= ============= ============= ============= ============= =============
Undistributed net investment income
included in net assets at end of
period - - - - - $20,392
============= ============= ============= ============= ============= =============
</TABLE>
See notes to financial statements.
<PAGE>
WASATCH FUNDS-Statements of Changes in Net Assets
--------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
CORE GROWTH FUND ULTRA GROWTH FUND U.S. TREASURY FUND
2000 1999 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(1,869,712) $ (1,762,435) $(524,904) $(691,228) $3,148,144 $4,315,855
Net realized gain (loss) on
investments 33,130,896 7,083,042 16,219,703 4,525,808 (4,512,795) (1,579,091)
Change in unrealized appreciation
(depreciation) on investments 41,395,202 32,663,979 1,000,138 11,029,323 5,691,560 (13,031,830)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations 72,656,386 37,984,586 16,694,937 14,863,903 4,326,909 (10,295,066)
DIVIDENDS PAID FROM:
Net investment income - - - - (4,377,430) (1,876,281)
Net realized gains (4,089,114) (6,480,895) (2,924,899) (2,066,842) (23,254) (384,621)
------------- ------------- ------------- ------------- ------------- -------------
(4,089,114) (6,480,895) (2,924,899) (2,066,842) (4,400,684) (2,260,902)
CAPITAL SHARE TRANSACTIONS:
Shares sold 161,080,727 77,799,789 36,352,718 27,013,148 39,609,880 117,029,582
Shares issued to holders in
reinvestment of dividends 4,032,987 6,416,237 2,885,083 2,038,987 4,337,145 2,207,232
------------- ------------- ------------- ------------- ------------- -------------
165,113,714 84,216,026 39,237,801 29,052,135 43,947,025 119,236,814
Shares redeemed (116,093,890) (95,749,286) (37,930,750) (44,197,837) (62,674,447) (97,537,936)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 49,019,824 (11,533,260) 1,307,051 (15,145,702) (18,727,422) 21,698,878
------------- ------------- ------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 117,587,096 19,970,431 15,077,089 (2,348,641) (18,801,197) 9,142,910
NET ASSETS:
Beginning of period 173,118,241 153,147,810 41,204,734 43,553,375 76,999,283 67,856,373
------------- ------------- ------------- ------------- ------------- -------------
End of period $290,705,337 $173,118,241 $56,281,823 $41,204,734 $58,198,086 $76,999,283
============= ============= ============= ============= ============= =============
Undistributed net investment income
included in net assets at end of
period - - - - $2,140,544 $3,369,820
============= ============= ============= ============= ============= =============
</TABLE>
See notes to financial statements.
<PAGE>
MICRO CAP FUND-Financial Highlights
--------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $4.41 $3.59 $4.29 $3.15 $2.72
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.09) (0.09) (0.10) (0.04) (0.03)
Net realized and unrealized
gains (losses) on securities 2.63 1.27 (0.27) 1.36 0.46
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 2.54 1.18 (0.37) 1.32 0.43
LESS DISTRIBUTIONS:
Distributions from
capital gains (0.42) (0.36) (0.33) (0.18) -
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.42) (0.36) (0.33) (0.18) -
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD $6.53 $4.41 $3.59 $4.29 $3.15
======== ======== ======== ======== ========
TOTAL RETURN 63.88% 37.73% (8.75)% 44.58% 15.81%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $244,444 $144,875 $117,533 $157,907 $94,004
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 2.38% 2.46% 2.50% 2.50% 2.50%
Expenses, before waivers
and reimbursements 2.38% 2.46% 2.51% 2.58% 2.67%
Net investment income
(loss), net of waivers
and reimbursements (1.76)% (2.22)% (2.28)% (1.64)% (1.53)%
Net investment income
(loss), before waivers
and reimbursements (1.76)% (2.22)% (2.29)% (1.72)% (1.70)%
Portfolio turnover rate 69% 57% 81% 99% 84%
See notes to financial statements.
<PAGE>
SMALL CAP VALUE FUND-Financial Highlights
--------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30
2000 1999 1998<F1>
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $2.43 $1.80 $2.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.02) (0.04) (0.01)
Net realized and unrealized
gains (losses) on securities 1.19 0.67 (0.19)
-------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 1.17 0.63 (0.20)
LESS DISTRIBUTIONS:
Distributions from
capital gains (0.09) - -
-------- -------- --------
TOTAL DISTRIBUTIONS (0.09) - -
-------- -------- --------
NET ASSET VALUE,
END OF PERIOD $3.51 $2.43 $1.80
======== ======== ========
TOTAL RETURN 49.94% 35.00% (10.00)%<F2>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $46,470 $16,770 $14,306
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.95% 1.95% 1.95%<F3>
Expenses, before waivers
and reimbursements 2.09% 2.18% 2.52%<F3>
Net investment income
(loss), net of waivers
and reimbursements (1.02)% (1.54)% (1.02)%<F3>
Net investment income
(loss), before waivers
and reimbursements (1.16)% (1.77)% (1.59)%<F3>
Portfolio turnover rate 67% 106% 114%
<F1> Inception date of the Fund was December 17, 1997.
<F2> Not annualized for periods less than a year.
<F3> Annualized.
See notes to financial statements.
<PAGE>
SMALL CAP GROWTH FUND-Financial Highlights
--------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $26.01 $20.79 $29.73 $24.17 $25.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.23) (0.20) (0.17) (0.12) (0.18)
Net realized and unrealized
gains (losses) on securities 11.82 8.49 (5.08) 6.90 (0.11)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 11.59 8.29 (5.25) 6.78 (0.29)
LESS DISTRIBUTIONS:
Distributions from
capital gains (2.71) (3.07) (3.69) (1.22) (0.54)
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (2.71) (3.07) (3.69) (1.22) (0.54)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD $34.89 $26.01 $20.79 $29.73 $24.17
======== ======== ======== ======== ========
TOTAL RETURN 49.63% 48.96% (19.13)% 29.45% (1.09)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $237,812 $145,915 $123,723 $188,965 $253,319
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.38% 1.44% 1.48% 1.50% 1.50%
Expenses, before waivers
and reimbursements 1.38% 1.44% 1.48% 1.54% 1.50%
Net investment income
(loss), net of waivers
and reimbursements (0.84)% (0.79)% (0.60)% (0.39)% (0.65)%
Net investment income
(loss), before waivers
and reimbursements (0.84)% (0.79)% (0.60)% (0.43)% (0.65)%
Portfolio turnover rate 72% 46% 56% 48% 73%
See notes to financial statements.
<PAGE>
CORE GROWTH FUND-Financial Highlights
-------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $20.62 $17.00 $22.34 $17.57 $15.97
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.18) (0.21) (0.09) 0.08 0.07
Net realized and unrealized
gains (losses) on securities 8.12 4.55 (3.60) 6.07 1.87
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 7.94 4.34 (3.69) 6.15 1.94
LESS DISTRIBUTIONS:
Dividends from
net investment income - - (0.03) (0.07) (0.05)
Distributions from
capital gains (0.48) (0.72) (1.62) (1.31) (0.29)
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.48) (0.72) (1.65) (1.38) (0.34)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD $28.08 $20.62 $17.00 $22.34 $17.57
======== ======== ======== ======== ========
TOTAL RETURN 39.50% 27.28% (17.49)% 37.58% 12.39%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $290,705 $173,118 $153,148 $135,437 $104,237
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.38% 1.44% 1.44% 1.50% 1.50%
Expenses, before waivers
and reimbursements 1.38% 1.44% 1.44% 1.50% 1.51%
Net investment income
(loss), net of waivers
and reimbursements (0.86)% (1.07)% (0.50)% 0.44% 0.40%
Net investment income
(loss), before waivers
and reimbursements (0.86)% (1.07)% (0.50)% 0.44% 0.39%
Portfolio turnover rate 75% 79% 63% 81% 62%
See notes to financial statements.
<PAGE>
ULTRA GROWTH FUND-Financial Highlights
--------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $20.02 $15.10 $21.85 $17.95 $18.61
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) (0.25) (0.34) (0.31) (0.35) (0.26)
Net realized and unrealized
gains (losses) on securities 8.87 6.00 (4.44) 4.25 (0.21)
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 8.62 5.66 (4.75) 3.90 (0.47)
LESS DISTRIBUTIONS:
Distributions from
capital gains (1.47) (0.74) (2.00) - (0.19)
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.47) (0.74) (2.00) - (0.19)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD $27.17 $20.02 $15.10 $21.85 $17.95
======== ======= ======== ======== ========
TOTAL RETURN 46.66% 39.86% (22.07)% 21.75% (2.54)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $56,282 $41,205 $43,553 $77,243 $128,490
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.75% 1.75% 1.75% 1.75% 1.75%
Expenses, before waivers
and reimbursements 1.82% 1.78% 1.90% 1.89% 1.81%
Net investment income
(loss), net of waivers
and reimbursements (1.19)% (1.49)% (1.54)% (1.48)% (1.27)%
Net investment income
(loss), before waivers
and reimbursements (1.26)% (1.52)% (1.69)% (1.62)% (1.33)%
Portfolio turnover rate 135% 77% 91% 103% 121%
See notes to financial statements.
<PAGE>
U.S. TREASURY FUND-Financial Highlights
--------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.68 $13.42 $11.32 $10.21 $10.50
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.66 0.61 0.27 0.61 0.44
Net realized and unrealized
gains (losses) on securities 0.39 (2.01) 2.39 0.73 0.01
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 1.05 (1.40) 2.66 1.34 0.45
LESS DISTRIBUTIONS:
Dividends from
net investment income (0.73) (0.28) (0.56) (0.23) (0.74)
Distributions from
capital gains - (0.06) - - -
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.73) (0.34) (0.56) (0.23) (0.74)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD $12.00 $11.68 $13.42 $11.32 $10.21
======== ======== ======== ======== ========
TOTAL RETURN 9.84% (10.65)% 24.30% 13.23% 4.42%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $58,198 $76,999 $67,856 $11,205 $7,427
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 0.75% 0.75% 0.75% 0.75% 0.93%
Expenses, before waivers
and reimbursements 0.97% 0.95% 0.95% 1.22% 1.67%
Net investment income,
net of waivers and
reimbursements 5.35% 4.96% 5.06% 5.97% 5.21%
Net investment income,
before waivers and
reimbursements 5.13% 4.76% 4.86% 5.50% 4.47%
Portfolio turnover rate 16% 39% 5% 19% 30%
See notes to financial statements.
<PAGE>
WASATCH FUNDS-Notes to Financial Statements
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
1. ORGANIZATION
----------------
Wasatch Funds, Inc. (the "Funds") is an open-end, registered management
investment company under the Invest ment Company Act of 1940. The Micro Cap,
Small Cap Value, Small Cap Growth, Core Growth and Ultra Growth Funds are non-
diversified portfolios and the Wasatch-Hoisington U.S. Treasury ("U.S.
Treasury") Fund is a diversified portfolio of Wasatch Funds. These funds were
formerly known as Micro-Cap, Micro-Cap Value, Aggressive Equity, Growth, Mid-Cap
and Wasatch-Hoisington U.S. Treasury, respectively. 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 accounting
principles generally accepted in the United States. 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. Any securities for which market quotations are not readily
available are valued at their fair value as determined in good faith by the
Funds' Manager under the supervision of the Board of Directors.
INVESTMENT IN SECURITIES-Security transactions are accounted for on the trade
date. Gains or losses on securities sold are determined on the identified cost
basis. Dividend income and distributions to shareholders are recorded on the ex-
dividend date. Interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES-It is the Funds' policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all taxable income to shareholders.
EXPENSES-The Funds are charged for expenses that are directly attributable to
them, such as advisory and custodian fees. Expenses that are not directly
attributable to a portfolio are allocated among the portfolios in proportion to
their respective net assets.
USE OF MANAGEMENT ESTIMATES-The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported changes in net assets during the reporting period. Actual results
could differ from those estimates.
<PAGE>
WASATCH FUNDS-Notes to Financial Statements
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
3. DISTRIBUTIONS
-----------------
Dividends from net investment income are declared and paid annually.
Distributions of net realized gains, if any, will be declared and paid at least
annually. The amount of dividends and distributions from net investment income
and net realized capital gains are determined in accordance with Federal income
tax regulations, which may differ from generally accepted accounting principles.
To the extent these book and tax differences are permanent in nature, such
amounts are reclassified among paid-in capital in excess of par value,
undistributed net investment income and undistributed net realized gain (loss)
on investments. Accordingly, at September 30, 2000, reclassifications were
recorded to increase undistributed net investment income by $3,277,692,
$271,294, $1,571,636, $1,869,712, $524,904 and $10 and decrease undistributed
net realized gain on investments by $6,716,239, $512,250 $4,819,750, $2,913,065,
$1,561,544 and $10 and increase paid-in capital in excess of par by $3,438,547,
$240,956, $3,248,114, $1,043,353, $1,036,640 and $0 for the Micro Cap, Small Cap
Value, Small Cap Growth, Core Growth, Ultra Growth and U.S. Treasury Funds,
respectively.
--------------------------------------------------------------------------------
4. CAPITAL STOCK
-----------------
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 2000
SMALL CAP SMALL CAP CORE ULTRA U.S.
MICRO CAP VALUE GROWTH GROWTH GROWTH TREASURY
FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 16,259,536 8,731,998 4,192,516 6,719,373 1,518,760 3,396,131
Dividends
reinvested 3,376,178 254,609 632,492 205,742 157,453 409,551
Shares redeemed (15,062,262) (2,647,715) (3,617,678) (4,967,587) (1,662,965) (5,547,149)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase
(decrease) 4,573,452 6,338,892 1,207,330 1,957,528 13,248 (1,741,467)
============== ============== ============== ============== ============== ==============
</TABLE>
<PAGE>
WASATCH FUNDS-Notes to Financial Statements
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
SMALL CAP SMALL CAP CORE ULTRA U.S.
MICRO CAP VALUE GROWTH GROWTH GROWTH TREASURY
FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 17,262,743 5,138,745 1,644,990 4,040,000 1,495,813 9,191,867
Dividends
reinvested 3,934,845 - 1,089,991 436,117 148,165 171,636
Shares redeemed (21,064,440) (6,159,795) (3,076,017) (5,090,665) (2,469,905) (7,831,244)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase
(decrease) 133,148 (1,021,050) (341,036) (614,548) (825,927) 1,532,259
============== ============== ============== ============== ============== ==============
</TABLE>
5. PURCHASES AND SALES OF SECURITIES
-------------------------------------
Purchases and sales of investment securities, excluding U.S. government and
short-term securities, for the year ended September 30, 2000 are summarized
below:
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP CORE ULTRA U.S.
MICRO CAP VALUE GROWTH GROWTH GROWTH TREASURY
FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchases $114,206,953 $31,523,059 $126,392,413 $171,865,705 $55,551,392 -
Sales 142,678,699 16,350,258 131,626,097 149,883,256 58,333,564 -
</TABLE>
The only purchases and sales of U.S. government securities occurred in the
U.S. Treasury Fund and were $9,157,454 and $30,464,103, respectively. The Micro
Cap, Small Cap Value, Small Cap Growth, Core Growth, Ultra Growth and U.S.
Treasury Funds' tax basis in their investments is $198,608,393, $41,794,879,
$169,210,019, $234,466,502, $48,291,692 and $58,868,084, respectively. For the
year ended September 30, 2000, the U.S. Treasury Fund incurred a net capital
loss carryforward of $2,222,459 and post-October losses of $4,277,988. The
capital loss carryforward is available to offset future gains through 2008, and
post-October losses are treated as arising in 2001.
For the year ended September 30, 2000, 0.30%, 7.07%, 7.89% and 2.34% of
dividends from taxable income, including short-term gains, for the Micro Cap,
Small Cap Value, Small Cap Growth and Ultra Growth Funds, respectively, qualify
for the dividends received deduction available to corporate shareholders.
The Funds hereby designate approximately $55,002,447, $3,620,389,
$48,228,068, $31,624,605 and $12,704,155 as a capital gain dividend for the
Micro Cap, Small Cap Value, Small Cap Growth, Core Growth and Ultra Growth
Funds, respectively, for the purpose of the dividends paid deduction.
<PAGE>
WASATCH FUNDS-Notes to Financial Statements
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
As of September 30, 2000, gross unrealized appreciation and (depreciation) for
federal income tax purposes were as follows:
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP CORE ULTRA U.S.
MICRO CAP VALUE GROWTH GROWTH GROWTH TREASURY
FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized
appreciation $63,691,015 $8,162,008 $82,877,730 $76,277,867 $16,969,802 $863,816
Unrealized
depreciation (15,418,565) (2,540,393) (14,876,444) (18,492,794) (5,561,666) (2,995,274)
-------------- -------------- -------------- -------------- -------------- --------------
Net unrealized
appreciation
(depreciation) $48,272,450 $5,621,615 $68,001,286 $57,785,073 $11,408,136 $(2,131,458)
============== ============== ============== ============== ============== ==============
</TABLE>
--------------------------------------------------------------------------------
6. INVESTMENT ADVISORY
-----------------------
As the Funds' investment advisor, the Manager receives a monthly fee
calculated on average daily net assets. For the year ended September 30, 2000,
management fees for the Micro Cap, Small Cap Value, Small Cap Growth, Core
Growth, Ultra Growth and U.S. Treasury Funds were 2.00%, 1.50%, 1.00%, 1.00%,
1.25% and 0.50% of the average daily net assets of each portfolio, respectively.
The Manager has voluntarily agreed to limit the expenses of the Micro Cap,
Small Cap Value, Small Cap Growth, Core Growth, Ultra Growth and U.S. Treasury
Funds to 2.50%, 1.95%, 1.50%, 1.50%, 1.75% and 0.75% of average daily net
assets, respectively. For the year ended September 30, 2000, the Manager
reimbursed $37,035 for the Small Cap Value Fund, $31,782 for the Ultra Growth
Fund and $130,331 for the U.S. Treasury Fund.
--------------------------------------------------------------------------------
7. TRANSACTIONS WITH AFFILIATES
--------------------------------
The following is an analysis of transactions for the year ended September 30,
2000 in the Micro Cap, Small Cap Growth and Core Growth Funds with "affiliated
companies" as defined by the Investment Company Act of 1940:
<PAGE>
WASATCH FUNDS-Notes to Financial Statements
--------------------------------------------------------------------------------
SEPTEMBER 30, 2000
MICRO CAP FUND
<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF GAIN (LOSS)
DIVIDENDS REALIZED
SHARE ACTIVITY CREDITED ON SALE
---------------------------------------------------------------- TO INCOME OF SHARES
BALANCE BALANCE IN FISCAL IN FISCAL
SECURITY NAME 9/30/99 PURCHASES SALES 9/30/00 2000 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Healthways, Inc. 73,000 377,100 - 450,100 - -
AmSurg Corp., Class A and B 646,920 154,239 - 801,159 - -
ICU Medical, Inc. 484,900 10,000 89,900 405,000<F1> - $454,991
National Dentex Corp. 253,750 201,000 10,000 444,750 - $(49,537)
Rainbow Rentals, Inc. 260,000 102,500 - 362,500 - -
Young Innovations, Inc. 338,500 - 1,100 337,400 - $1,446
</TABLE>
SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF GAIN (LOSS)
DIVIDENDS REALIZED
SHARE ACTIVITY CREDITED ON SALE
---------------------------------------------------------------- TO INCOME OF SHARES
BALANCE BALANCE IN FISCAL IN FISCAL
SECURITY NAME 9/30/99 PURCHASES SALES 9/30/00 2000 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Dentex
Corp. 251,700 1,000 37,350 215,350 - $(101,217)
</TABLE>
CORE GROWTH FUND
<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF GAIN (LOSS)
DIVIDENDS REALIZED
SHARE ACTIVITY CREDITED ON SALE
---------------------------------------------------------------- TO INCOME OF SHARES
BALANCE BALANCE IN FISCAL IN FISCAL
SECURITY NAME 9/30/99 PURCHASES SALES 9/30/00 2000 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Dentex Corp. 183,000 - 183,000 -<F1> - $(209,133)
Pediatrix Medical Group Inc. 910,575 - 265,350 645,225<F1> - $(2,676,138)
</TABLE>
<F1> No longer an affiliated company as of September 30, 2000.
<PAGE>
WASATCH FUNDS-Report of Independent Public Accountants
--------------------------------------------------------------------------------
To the Shareholders and
Board of Directors of
Wasatch Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of Wasatch
Funds, Inc. (the "Funds" or the "Company," a Minnesota corporation, which
includes the Wasatch Micro Cap Fund, Wasatch Small Cap Value Fund, Wasatch Small
Cap Growth Fund, Wasatch Core Growth Fund, Wasatch Ultra Growth Fund and
Wasatch-Hoisington U.S. Treasury Fund), including the schedules of investments,
as of September 30, 2000, and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the periods then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 2000, by correspondence
with the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Wasatch Funds, Inc. as of September 30, 2000, and the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the periods then ended, and the financial highlights for each of the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States.
/s/Arthur Andersen LLP
Arthur Andersen LLP
Milwaukee, Wisconsin
October 11, 2000
<PAGE>
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Wasatch Funds provides reports to shareholders twice a year. The Annual
Report is for the Funds' fiscal year which ends September 30th. The Semi-Annual
Report is for the six months ending March 31st. These reports provide
shareholders with important information that will help them evaluate the
management and performance of their investment. It is the desire of Wasatch
Funds to help shareholders stay in tune with their investments. If you have any
questions about the information in this report, a Shareholder Services
Representative will be happy to assist you when you call 1 (800) 551-1700.
SCHEDULE OF INVESTMENTS
------------------------
The holdings of each Wasatch Fund are detailed in the "Schedule of
Investments." This section provides a snapshot of the securities each Fund was
invested in on the last day of the reporting period. The Wasatch Equity Funds
invest primarily in COMMON STOCKS of companies which are categorized under a
variety of industries and will typically have only minor holdings in SHORT-TERM
INVESTMENTS. The Wasatch-Hoisington U.S. Treasury Fund invests primarily in U.S.
Treasury securities.
STATEMENTS OF ASSETS AND LIABILITIES
-------------------------------------
These financial statements show the ASSETS and LIABILITIES of a Fund on the
last day of the reporting period. A Fund's ASSETS include the value of
securities owned, amounts receivable for shareholder subscriptions (purchases of
Fund shares), securities sold, interest and dividends, prepaid expenses and
reimbursements by the Advisor. LIABILITIES are amounts owed for shareholder
redemptions, securities purchased, investment advisory fees and other expenses.
Totaling up the assets and subtracting the liabilities results in a Fund's NET
ASSETS.
NET ASSETS consist of capital stock, paid-in capital in excess of par,
undistributed net investment income, undistributed net realized gain or loss on
investments and net unrealized appreciation or depreciation on investments.
CAPITAL STOCK is stock authorized by a company's charter and having par value,
stated value or no par value. Par value is set by the company issuing the shares
and has no relation to Net Asset Value. The par value of one share of each
Wasatch Fund is $.01. PAID-IN CAPITAL IN EXCESS OF PAR is capital received from
shareholders in exchange for Fund shares that exceeds the par value of the
shares. For example, if you bought one share of a Fund for $10, $.01 would show
as "Capital stock" on the books of the Fund, and $9.99 would be accounted for
under "Paid-in capital in excess of par." UNDISTRIBUTED NET INVESTMENT INCOME is
the amount of net investment income earned by a Fund since inception that has
not been paid to shareholders as a dividend. UNDISTRIBUTED NET REALIZED GAIN
(LOSS) ON INVESTMENTS is the amount of net realized gains or losses generated by
a Fund since inception that have not been distributed to shareholders in the
form of a capital gains distribution. A gain or loss is realized when a security
is sold by a Fund. NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS is
the change in value from the purchase price of securities a Fund continues to
hold.
The number of shares a Fund is AUTHORIZED to sell can be found under CAPITAL
STOCK, $.01 PAR VALUE. How many of those shares are owned by
<PAGE>
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
shareholders is indicated as ISSUED AND OUTSTANDING.
NET ASSET VALUE (NAV) shows the value of one outstanding share of a Fund on
the date of the report. A Fund's share price (NAV) is calculated by dividing the
value of all securities and other assets owned by a Fund, less the liabilities
charged to that Fund, by the number of Fund shares outstanding. The NAV is
calculated at the close of business of the New York Stock Exchange on each day
the Exchange is open for trading. Please see the current Wasatch Funds
Prospectus for more information about how NAVs are calculated. Information about
how the NAV is affected by a Fund's operation can be found in this section under
"Financial Highlights" on page 66.
STATEMENTS OF OPERATIONS
-------------------------
STATEMENTS OF OPERATIONS show investment income and expenses for each Fund as
well as realized gains or losses from securities sold and the change in
unrealized appreciation or depreciation in the value of a Fund's current
holdings for a specific period of time.
INVESTMENT INCOME shows INTEREST and DIVIDENDS earned from interest-bearing
and dividend-paying securities in a Fund's portfolio.
EXPENSES show the various fees and expenses paid out of a Fund's assets such
as the fee paid to Wasatch Advisors, the Funds' investment advisor. Additional
fees include shareholder servicing, fund administration and accounting, custody
of fund assets, federal and state registration, legal counsel, auditing and
directors' fees. The Funds also bear the cost of printing and mailing
statements, prospectuses, annual reports and semi-annual reports to
shareholders.
NET INVESTMENT INCOME (LOSS) is the amount of dividends and interest income
earned on securities held by a Fund, less the Fund's expenses.
NET REALIZED GAIN (LOSS) ON INVESTMENTS is the net gain or loss on securities
a Fund has sold. CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
is the change in value of securities a Fund continues to hold.
NET GAIN (LOSS) ON INVESTMENTS is the result of changes in market value of
securities sold and securities held by a Fund.
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------
NET ASSETS are a Fund's remaining assets after taking into consideration any
liabilities. STATEMENTS OF CHANGES IN NET ASSETS show the increase or decrease
in a Fund's net assets during the reporting period. Investment operations,
dividends and capital share transactions affect a Fund's net assets. OPERATIONS
is a summary of the STATEMENTS OF OPERATIONS. It includes investment income or
loss, net realized gain or loss on a Fund's investments as well as the change in
unrealized appreciation or depreciation in the value of a Fund's investments.
DIVIDENDS are distributed by Wasatch Funds to shareholders when Fund
investments have earned income in excess of net expenses or when capital gains
in excess of capital losses are realized from the sale of securities. Most
shareholders choose to reinvest their dividends and capital gains distributions.
Each Fund is required by Internal Revenue Service (IRS) regulations to
distribute substantially all of its net investment income and capital gains to
<PAGE>
GUIDE TO UNDERSTANDING FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
shareholders in order to retain its status as a "regulated investment company."
CAPITAL SHARE TRANSACTIONS are any transactions involving shares of a Fund,
including the selling of Fund shares, shares issued by a Fund to shareholders
for the reinvestment of dividends and share redemptions.
FINANCIAL HIGHLIGHTS
---------------------
The FINANCIAL HIGHLIGHTS tables contain important historical operating
information that you may find useful in making decisions or understanding the
performance of your Wasatch Funds investment.
NET ASSET VALUE (NAV) is defined in this section under "Statements of Assets
and Liabilities" on page 65. The difference between the Net asset value,
beginning of period and the Net asset value, end of period in the Financial
Highlights tables is the change in value of a Fund's shares over the reporting
period, but not its total return.
INCOME (LOSS) FROM INVESTMENT OPERATIONS shows how the NAV was affected by a
Fund's operations on a per share basis. NET INVESTMENT INCOME (LOSS) is the per
share amount of dividends and interest income earned on securities held by a
Fund, less the Fund's expenses. NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
SECURITIES is the per share increase or decrease in value of the securities a
Fund holds and has sold during the reporting period. Gains or (losses) are
realized when securities are sold. Gains or (losses) are unrealized when
securities increase or decrease in value but are not sold.
DISTRIBUTIONS are the per share amount that a Fund paid to shareholders from
net investment income and net realized gains.
TOTAL RETURN is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in unrealized and realized gains and income. For the purposes of
calculating total return, it is assumed that dividends and distributions are
reinvested at the NAV on the payable day of the distribution. A FUND'S TOTAL
RETURN CANNOT BE COMPUTED DIRECTLY FROM THE FINANCIAL HIGHLIGHTS TABLES.
SUPPLEMENTAL DATA AND RATIOS are provided to help you better understand your
investment. NET ASSETS, END OF PERIOD, are the net assets of a Fund on the
reporting date. RATIO TO AVERAGE NET ASSETS OF: EXPENSES shows the total of a
Fund's operating expenses divided by its average net assets for the stated
period before and after waivers and reimbursements. RATIO TO AVERAGE NET ASSETS
OF: NET INVESTMENT INCOME shows a Fund's net investment income (loss) divided by
its average net assets for the stated period before and after waivers and
reimbursements. PORTFOLIO TURNOVER RATE is a measure of the annual amount of a
Fund's buying and selling activity. It is computed by dividing total purchases
or sales, whichever is less, by the average monthly market value of a Fund's
portfolio securities. This calculation does not include securities held by any
Fund with a maturity date of less than 12 months.
<PAGE>
NOTES
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