N-CSR 1 d800765dncsr.htm WASATCH FUNDS TRUST Wasatch Funds Trust
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-04920

 

 

WASATCH FUNDS TRUST

(Exact name of registrant as specified in charter)

 

 

505 Wakara Way, 3rd Floor

Salt Lake City, UT 84108

(Address of principal executive offices)(Zip code)

 

 

 

(Name and Address of Agent for Service)   Copy to:

Samuel S. Stewart, Jr.

Wasatch Advisors, Inc.

505 Wakara Way, 3rd Floor

Salt Lake City, UT 84108

 

Eric F. Fess, Esq.

Chapman & Cutler LLP

111 West Monroe Street

Chicago, IL 60603

 

 

Registrant’s telephone number, including area code: (801) 533-0777

Date of fiscal year end: September 30

Date of reporting period: September 30, 2014

 

 

 


Table of Contents
Item 1: Report to Shareholders.


Table of Contents

LOGO

2014 Annual Report
September 30, 2014
EQUITY FUNDS/ Wasatch Core Growth Fund. Wasatch Emerging India Fund. Wasatch Emerging Markets Select Fund. Wasatch Emerging Markets Small Cap Fund. Wasatch Frontier Emerging Small Countries Fund. Wasatch Global Opportunities Fund. Wasatch Heritage Growth Fund. Wasatch International Growth Fund. Wasatch International Opportunities Fund. Wasatch Large Cap Value Fund. Wasatch Long/Short Fund. Wasatch Micro Cap Fund. Wasatch Micro Cap Value Fund . Wasatch Small Cap Growth Fund. Wasatch Small Cap Value Fund. Wasatch Strategic Income Fund. Wasatch Ultra Growth Fund. Wasatch World Innovators Fund BOND FUNDS/ Wasatch-1st Source Income Fund. Wasatch-Hoisington U.S. Treasury Fund


Table of Contents

 

 

Wasatch Funds

Salt Lake City, Utah

www.WasatchFunds.com

800.551.1700

 

 

 


Table of Contents

 

TABLE OF CONTENTS  

 

 

 

 

Letter to Shareholders

    2   

Wasatch Core Growth Fund® Management Discussion

    4   

Portfolio Summary

    5   

Wasatch Emerging India Fund® Management Discussion

    6   

Portfolio Summary

    7   

Wasatch Emerging Markets Select Fund Management Discussion

    8   

Portfolio Summary

    9   

Wasatch Emerging Markets Small Cap Fund® Management Discussion

    10   

Portfolio Summary

    11   

Wasatch Frontier Emerging Small Countries Fund Management Discussion

    12   

Portfolio Summary

    13   

Wasatch Global Opportunities Fund® Management Discussion

    14   

Portfolio Summary

    15   

Wasatch Heritage Growth Fund® Management Discussion

    16   

Portfolio Summary

    17   

Wasatch International Growth Fund® Management Discussion

    18   

Portfolio Summary

    19   

Wasatch International Opportunities Fund® Management Discussion

    20   

Portfolio Summary

    21   

Wasatch Large Cap Value Fund® Management Discussion

    22   

Portfolio Summary

    23   

Wasatch Long/Short Fund® Management Discussion

    24   

Portfolio Summary

    25   

Wasatch Micro Cap Fund® Management Discussion

    26   

Portfolio Summary

    27   

Wasatch Micro Cap Value Fund® Management Discussion

    28   

Portfolio Summary

    29   

Wasatch Small Cap Growth Fund® Management Discussion

    30   

Portfolio Summary

    31   

Wasatch Small Cap Value Fund® Management Discussion

    32   

Portfolio Summary

    33   

Wasatch Strategic Income Fund® Management Discussion

    34   

Portfolio Summary

    35   

Wasatch Ultra Growth Fund® Management Discussion

    36   

Portfolio Summary

    37   

Wasatch World Innovators Fund® Management Discussion

    38   

Portfolio Summary

    39   

Wasatch-1st Source Income Fund® Management Discussion

    40   

Portfolio Summary

    41   

Wasatch-Hoisington U.S. Treasury Fund® Management Discussion

    42   

Portfolio Summary

    43   

Management Discussions — Definitions of Financial Terms

    44   

Operating Expenses

    45   

Schedule of Investments

    48   

Statements of Assets and Liabilities

    92   

Statements of Operations

    98   

Statements of Changes in Net Assets

    104   

Financial Highlights

    112   

Notes to Financial Highlights

    118   

Notes to Financial Statements

    119   

Report of Independent Registered Public Accounting Firm

    140   

Supplemental Information

    141   

Management of the Company

    141   

Additional Tax Information

    142   

Proxy Voting Policies, Procedures and Record

    143   

Quarterly Portfolio Holdings Disclosure on Form N-Q

    143   

Service Providers

    143   

Contact Wasatch

    144   

This material must be accompanied or preceded by a prospectus.

Please read the prospectus carefully before you invest.

Wasatch Funds are distributed by ALPS Distributors, Inc.

 

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Table of Contents
LETTER TO SHAREHOLDERS — READING BETWEEN THE (HEAD)LINES  

 

 

 

 

 

 

 

LOGO

 

Samuel S. Stewart, Jr. PhD, CFA

President of
Wasatch Funds

  

DEAR FELLOW SHAREHOLDERS:

 

I like a good headline as much as anyone. And as I considered possible headlines for this letter, I recalled a quote that’s been attributed to Bill Gates:

“Headlines, in a way, are what mislead you because bad news is a headline, and gradual improvement is not.”

Not only are headlines often negative, they frequently tell us what we already know — and, from an investment perspective, what’s already been factored into market prices. Just consider the pessimistic nature of recent headlines: The likelihood of an imminent correction in stocks. The potential for Fed-induced runaway inflation. The Russia/Ukraine conflict. The Ebola threat. Tensions in the Middle East. Given all this bad news, it’s little wonder that many Americans think we’re headed in the wrong direction.

Yet, by many measures, the U.S. economy has returned to where it was before the global financial crisis of 2008 and early 2009. Today, bank loans to businesses exceed those of 2007. Total private employment has topped 2008 levels. And after a multi-year trend of declining incomes, there has been some recent improvement. Despite the headlines, our economy has been making incremental progress.

ECONOMY

Annualized growth in nominal gross domestic product (GDP) was 6.8% (4.6% after inflation) for the second calendar quarter of 2014, up sharply from the negative rate recorded for the first calendar quarter. Taking a longer view, the three-year average of nominal GDP growth was just under 4%, and this growth rate has not improved over the last decade. Further, forecasters expect GDP growth for the rest of 2014 to remain near the three-year average at about 4%. The good news is that the economy continues to move ahead; the bad news is that the pace of recovery remains measured.

Other positive signs include the recent 8.4% quarterly rebound in corporate profits, continued improvement in unemployment figures, only small increases in interest rates and a decline in the rate of inflation. Unemployment dropped to 5.9% in September and the rate of new-job creation in the first half of 2014 hit a 15-year high.

At the same time, price declines in August brought the annualized inflation rate for 2014 down to 1.7%, near the Federal Reserve’s target of 2.0%. With quantitative easing set to end soon, it seems to me that the Fed has handled its responsibilities well. The economy is recovering, but not so quickly that the Fed will be forced to stomp on the brakes by rapidly raising interest rates.

If there are potential trouble spots, I think they’re mainly overseas — in Europe, China, India, Japan, Russia and the Middle East. To gain some perspective on the nature of these problems, it’s useful to consider the comparative well-being of the U.S. The U.S. is the third most populous nation on the planet, and the American economy is more self-sufficient than most. We have a common currency and a common language. As citizens, we expect our tax dollars to be used primarily for the general well-being of all Americans. Therefore, we share many of the same economic goals.

Although the eurozone in aggregate has a population similar in size to that of the U.S., the eurozone lacks a common language, a common culture and a commitment to the general welfare of all citizens. Europe does benefit from being relatively self-sufficient when taken as a whole. But the lack of commitment to the general welfare has the effect of pitting nation against nation — northern countries enjoy relative prosperity while southern countries stagnate. The net result is a sluggish economy faced with slipping back into recession, and maybe into deflation.

Europe’s challenges have implications for emerging-market countries. The two largest trading partners for the export-driven emerging markets are the U.S. and Europe, each accounting for about 30% of global consumption. When consumer and industrial spending in the U.S. and Europe are less robust, the GDPs of these emerging economies suffer.

Japan has been experiencing a long period of deflation. And after many years of a strong currency, which makes the country’s exports more expensive to the rest of the world, the Japanese government recently undertook policies to weaken the yen. While this may be good for Japan’s global-trade competitiveness, it could cause large exporting countries — including emerging markets — to devalue their currencies in an effort to support their export industries. Such a currency war would likely be inflationary on a wide scale.

The conflict between Russia and Ukraine has significant implications outside of these countries because Russia is a major energy supplier to Europe and other parts of the world. In addition, Russia is a large importer of European finished goods.

MARKETS

During the second calendar quarter of 2014, markets were almost universally riding a wave of optimism despite uneven economic news. The situation reversed somewhat during the third calendar quarter. In the U.S., economic news improved and the dollar strengthened, but stock-market conditions were mixed. Generally speaking, large-cap stocks advanced modestly, mid-caps held relatively steady and small-caps pulled back.

International stock markets were also mixed for the most recent quarter. Although the economic and geopolitical problems abroad are disturbing, I continue to believe there are attractive investment opportunities around the world. In general, while European economic growth is slower than in the U.S., valuations are somewhat less expensive in Europe and we’re able to find companies that operate globally. Within emerging markets, valuations are typically more expensive, but long-term growth rates are often higher — despite recent economic challenges. And we seek to mitigate some of the risks in emerging markets by focusing

 

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Table of Contents
  SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

on companies that are meeting home-country demands, rather than the demands of the developed world. Finally, in Japan, exporters of manufactured goods may benefit from weakness in the Japanese yen, even if this has negative implications for exporters from other countries.

Performance in the fixed-income markets was generally positive for the most recent quarter. Despite this positive overall performance, interest rates rose late in the period, leading to some declines in bond prices. Nevertheless, I continue to believe that bonds are expensive. And many investors may not even be aware that significant increases in interest rates would cause substantial principal losses — particularly for longer-term bonds.

Regarding U.S. stocks in general, while overall valuations are on the high side, we’re finding a good number of reasonably priced stocks, including some that pay attractive dividend yields. In addition, U.S. economic conditions continue to improve. And of the measures of market psychology I’ve found useful over the years, most are showing significant resilience. As a result, I remain a cautious bull.

WASATCH

Did you know the typical mutual-fund shareholder, over time, receives a return at least 2% less per year than the return of the fund itself? To explain why this is the case, and more importantly to help you avoid experiencing such poor results yourself, I want to tell you a bit about the way we invest at Wasatch.

Our funds have experienced substantial gains in the years since the global financial crisis. It’s worth noting, however, that just as all segments of the economy have not recovered at the same rate or time, our funds have not always been in sync with their benchmark indices. As active managers, our goal is to outperform the indices, not mimic them. The only way to achieve this goal over the long term is to construct fund portfolios that are substantially different from their benchmarks. As a result, performance relative to the index in the short term is very unpredictable.

Our fund portfolios may differ from the indices because we seek to invest in high-quality companies — businesses with strong balance sheets, innovative products and services, and talented management teams. It’s not unusual for the stocks of these companies to lag during certain segments of an economic recovery, which may favor companies that were severely beaten up in the preceding downturn or companies that are new and exciting but unproven. Over the long term, however, we believe that our investments in higher-quality companies will have the potential to generate outsized returns with reasonable risks.

Unlike broad-based indices, some Wasatch Funds may concentrate investments in a relatively small number of companies. Or in the case of our international funds, including those focusing on emerging markets, we may vary our investments by country, sector and company size. Many of the emerging-market indices, by contrast, are heavily weighted in companies that are large exporters to developed countries. At Wasatch, we sense better opportunities in emerging-market companies that are satisfying local demands.

We recognize that shareholders may sometimes feel frustrated that a particular fund appears to be underperforming. In our experience, this frustration often creates the urge to sell the underperforming fund in order to buy one that’s been doing better lately. While it’s human nature to want to chase performance, this behavior is rarely effective when it comes to achieving long-term goals.

That’s why we urge shareholders to do their research and choose their portfolio managers and funds with care. Periodic, short-term underperformance is normal for an actively managed fund. A quick trigger finger may cost a shareholder much more over the long term.

With sincere thanks for your continued investment and for your trust,

 

LOGO

Sam Stewart

President of Wasatch Funds

Information in this report regarding market or economic trends or the factors influencing historical or future performance reflects the opinions of management as of the date of this report. These statements should not be relied upon for any other purpose. Past performance is no guarantee of future results, and there is no guarantee that the market forecasts discussed will be realized.

CFA® is a trademark owned by CFA Institute.

Wasatch Advisors is the investment advisor to Wasatch Funds.

 

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WASATCH CORE GROWTH FUND (WGROX / WIGRX) Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Core Growth Fund is managed by a team of Wasatch portfolio managers led by JB Taylor and Paul Lambert.

 

LOGO

 

JB Taylor

Lead Portfolio Manager

  

LOGO

 

Paul Lambert Portfolio Manager

  

OVERVIEW

 

The Wasatch Core Growth Fund — Investor Class gained 3.26% for the 12 months ended September 30, 2014. The Russell 2000 Index, the Fund’s primary benchmark,

gained 3.93% for the same period.

Since early 2013, we have seen a disconnect between company fundamentals and stock prices. Over this time, companies with weaker fundamentals have outperformed those with higher-quality balance sheets and stronger earnings growth. One illustration of this trend is the recent performance of money-losing companies. For the five quarters between December 31, 2012 and March 31, 2014, Russell 2000 Growth Index companies posting quarterly losses in earnings-per-share (EPS) outperformed companies with quarterly profits. This trend began to reverse in the second calendar quarter and continued during the third calendar quarter of 2014.

We suspect the Fed’s quantitative-easing program encouraged risk taking and contributed to a momentum-driven market. The scheduled end of the program may encourage investors to once again focus on company fundamentals.

DETAILS OF THE YEAR

A future more focused on fundamentals should bode well for the Wasatch Core Growth Fund. In the most recent quarter, our companies reported sales and EPS growth of 15.6% and 16.2%, respectively. By comparison, the median sales and EPS growth of the average company in the Russell 2000 Index were 8.9% and 7.3%, respectively. Our companies have higher operating margins and better returns-on-capital than the average company in the Index. Most importantly, our companies are led by management teams that we have vetted through numerous on-site visits and conference calls. A low-turnover strategy makes this endeavor possible. On average, our current top 20 holdings have been held in the Fund for over six years.

While the Fund underperformed the Index for the 12-month period, our health-care stocks outpaced their benchmark counterparts helped by strong performance from Ensign Group, Inc. and ICON plc, both of which produced double-digit gains for the year.

The industrials sector was another area of outperformance led by Spirit Airlines, Inc., the Fund’s top overall contributor. This airline has continued to grow by entering new markets as a low-cost alternative to bigger carriers. With larger hub-and-spoke airlines focused on moving “up market” and expanding return on capital, Spirit’s low cost structure is enabling it to grow revenue through careful expansion

of its route map. At just 1% market share, we believe Spirit has plenty of room to grow.

Two other strong performers from the industrials sector were trucking companies Old Dominion Freight Line, Inc. and Knight Transportation, Inc. Both companies have been benefiting from the improving economy, especially strength in manufacturing, and tight capacity in the trucking industry. In addition, higher operating costs due to new government regulations have hurt smaller competitors.

Our largest detractor was in the consumer-staples sector. Nu Skin Enterprises, Inc. sells premium skin-care products and nutritional supplements worldwide. The stock’s weak performance began in January 2014, when the Chinese government opened an investigation into the company’s direct-selling practices. With the investigation now settled and measures taken to address the Chinese government’s concerns, Nu Skin is beginning to regain momentum. This process will take time and, for investors, a large amount of patience. We still like the stock. The company remains highly profitable, has ample financial resources, and faces significant opportunities to grow its brand in emerging Asian markets.

The energy sector was one of the worst-performing sectors for the period. Our energy companies reflected this weakness. The price of oil declined 12% over the past 12 months in spite of alarming global headlines in major oil-producing regions of the world. This kind of volatility in a commodity-related industry is not uncommon. Our investments in the energy sector are focused on the long-run need for efficient energy production to fuel economic growth and, for domestic energy producers and service providers, to help the United States gain energy independence. CARBO Ceramics, Inc. was a notably weak stock. Less expensive alternatives to CARBO’s high-quality ceramic proppants are challenging the company’s business model. We sold our position in CARBO since this shift in market share could be a long-lasting trend as weaker oil prices will result in more emphasis on saving money versus the increased output offered by ceramic proppants.

OUTLOOK

Notwithstanding recent small-cap stock performance, most indicators for the economy appear as healthy as they have been in a long time. The median company revenue growth in the Russell 2000 Growth Index topped 10% for the first time in two years and the number of Index companies missing estimates was down versus the last few quarters. Wall Street analyst expectations call for accelerating growth rates going forward. On the flipside, valuations are still a concern.

We don’t see cause for alarm. We do see signs of a transition from a period when momentum and liquidity were the market’s primary drivers, to one in which growth rates and rational valuations should determine returns. We welcome this type of “stock picker’s market” in which our insights on a company’s management, business-model quality and long-term growth prospects should be properly rewarded.

Thank you for the opportunity to manage your assets and for your trust.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH CORE GROWTH FUND (WGROX / WIGRX) Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        10 YEARS  

Core Growth (WGROX) — Investor

       3.26%           15.94%           8.09%   

Core Growth (WIGRX) — Institutional

       3.31%           15.99%           8.11%   

Russell 2000® Index

       3.93%           14.29%           8.19%   

Russell 2000® Growth Index

       3.79%           15.51%           9.03%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Core Growth Fund — Investor Class: 1.21% / Institutional Class: 1.32%, Net: 1.12%. The expense ratio shown elsewhere in this report may be different. Net expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.

Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Copart, Inc.     4.8%   
Allegiant Travel Co.     3.4%   
Dealertrack Technologies, Inc.     3.2%   
Spirit Airlines, Inc.     3.2%   
Life Time Fitness, Inc.     2.7%   
Company   % of Net
Assets
 
Vistaprint N.V.     2.7%   
MEDNAX, Inc.     2.5%   
Waste Connections, Inc.     2.5%   
IDEX Corp.     2.5%   
SEI Investments Co.     2.4%   
 

 

* As of September 30, 2014, there were 61 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

  † Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. 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 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. The Russell 2000 Growth Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. You cannot invest directly in these or any indices.

 

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WASATCH EMERGING INDIA FUND (WAINX) Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Emerging India Fund is managed by a team of Wasatch portfolio managers led by Ajay Krishnan.

 

LOGO

 

Ajay Krishnan, CFA

Lead Portfolio Manager

  

OVERVIEW

 

The Wasatch Emerging India Fund gained 53.37% in the 12 months ended September 30, 2014. The Fund outperformed its benchmark, the MSCI India Investable Market Index (IMI), which rose 41.83%.

Optimism surrounding India’s national elections last May fueled a strong rally in its stock market that pushed its major stock averages to all-time highs throughout the year.

Widespread dissatisfaction with India’s Congress party had stirred desire for a change in leadership that investors believed would usher in a new era of economic reforms.

India suffers from years of underinvestment in the capital and infrastructure needed for its economy to operate at its full potential. Inefficiencies in production and transportation have held back economic growth, while contributing to structural inflation in the prices of basic items. Investors hope that the policies of newly elected Prime Minister Narendra Modi, leader of the Bharatiya Janata Party (BJP), will engender a self-sustaining investment cycle that will revitalize India’s economy.

In response to growing sentiment for political change, we had gradually increased the Fund’s holdings of industrial companies from about 9% of assets at the beginning of the fiscal year to about 15% going into its final quarter. We viewed industrials as among the sectors likely to benefit most from a victory by the BJP — a scenario that so far has played out essentially as we had expected. Led by our machinery and building-products stocks, our industrials outgained the industrials in the Index by a wide margin. In addition, our overweight position in industrials — which proved to be the top-performing sector of the Index — provided a strong tailwind for the Fund.

As a result, the industrials sector was the Fund’s largest source of outperformance relative to its benchmark. Advantageous stock selection helped the Fund outperform its benchmark in every other sector as well.

DETAILS OF THE YEAR

Our strongest contributor to performance for the year was motor-vehicle manufacturer Eicher Motors Ltd. The company is experiencing healthy demand for its Royal Enfield motorcycles. In its most-recently reported quarter, Eicher’s consolidated net profit grew 70.5% year-over-year on increased revenues and strong operational performance.

Kajaria Ceramics Ltd. was our second-best contributor. The company manufactures and sells ceramic and vitrified tiles in India. It also exports its products to approximately 20 countries. Strong demand for Kajaria’s tiles, as well as improved sentiment toward the building-products industry, drove its shares to record highs during the year. In the company’s most-recently reported quarter, consolidated net

profit rose 48.0% on 18.6% growth in total income from operations versus the same period a year ago. Kajaria’s announcement that it planned to increase production capacity also helped lift its shares.

Our greatest detractor from performance for the year was gaming and hospitality company Delta Corp. Ltd. In addition to its offshore casinos, Delta owns one of India’s first land-based casinos. Expenses in the company’s most-recently reported quarter included all start-up costs, interest and depreciation attributable to its newly opened Deltin Hotel in Daman. Consequently, Delta posted a consolidated net loss, and its stock declined modestly. In our view, however, nothing fundamental has changed, and we continue to hold the stock in the Fund.

ICRA Ltd. is a new position in the Fund. The company, a division of international rating agency Moody’s, operates as an independent investment-information and credit-rating agency in India. In the final quarter of our fiscal year, ICRA’s stock rose sharply when management reported solid operating results. After we purchased shares for the Fund, however, the stock gave back some of its previous gains. In a year in which most of the Fund’s holdings rose in value, the moderate decline in this small position was enough to make it our second-largest detractor.

OUTLOOK

With the dramatic rise in India’s stock market — both in the run-up to this year’s elections and in their aftermath — valuations have moved somewhat faster than the fundamentals. While we believe much of the current optimism will prove justified over the long-term, a country the size of India does not change radically in just a few months. For that reason, a near-term pause in which Indian equities digest their recent gains should not be ruled out.

Nevertheless, India is the only economy among the BRIC (Brazil, Russia, India and China) nations in which growth is seen as accelerating. In the most-recent estimate from the International Monetary Fund (IMF), GDP growth in the 2014 - 2015 fiscal year (which begins on April 1) was revised upward to 5.6% from 5.4% previously. The Reserve Bank of India expects the Indian economy to grow 5.5% in the current fiscal year and accelerate to 6.3% in 2015 - 2016. These estimates compare to growth of less than 5% in India’s past two fiscal years. If the newly elected government can enact the reforms necessary to enable India’s economy to operate closer to its full potential, we believe the long-term prospects for well-situated Indian equities are among the most attractive in the world.

In the short term, we don’t expect the scheduled end of quantitative easing in the U.S. to impact India’s currency as it did in 2013. Since then, India’s foreign-currency reserves have increased, and its fiscal and current-account situations have improved significantly.

Thank you for the opportunity to manage your assets.

 

  Current and future holdings are subject to risk.
 

 

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Table of Contents
WASATCH EMERGING INDIA FUND (WAINX) Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS     

SINCE INCEPTION

4/26/11

Emerging India

         53.37%        N/A          9.79%  

MSCI India IMI

         41.83%        N/A          -0.40%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging India Fund are 2.99%. The Net Expenses are 1.95%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Marksans Pharma Ltd. (India)     2.5%   
Lupin Ltd. (India)     2.5%   
Natco Pharma Ltd. (India)     2.4%   
Persistent Systems Ltd. (India)     2.4%   
Eicher Motors Ltd. (India)     2.0%   
Company   % of Net
Assets
 
Glenmark Pharmaceuticals Ltd. (India)     2.0%   
Amara Raja Batteries Ltd. (India)     1.9%   
HCL Technologies Ltd. (India)     1.9%   
Godrej Consumer Products Ltd. (India)     1.8%   
WABCO India Ltd. (India)     1.8%   
 

 

* As of September 30, 2014, there were 77 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: April 26, 2011. The MSCI India IMI (Investable Market Index) covers all investable large, mid and small cap securities across India, targeting approximately 99% of the Indian market’s free-float adjusted market capitalization. You cannot invest directly in this or any index.

 

7


Table of Contents
WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Emerging Markets Select Fund is managed by a team of Wasatch portfolio managers led by Ajay Krishnan and Roger Edgley.

 

LOGO

 

Ajay Krishnan, CFA

Lead Portfolio Manager

  

LOGO

 

Roger Edgley, CFA

Portfolio Manager

  

OVERVIEW

 

The Wasatch Emerging Markets Select Fund —  Investor Class gained 7.92% for the 12 months ended September 30, 2014. The Fund outperformed its benchmark,

the MSCI Emerging Markets Index, which rose 4.30%.

Russia’s annexation of Crimea was one of the main factors affecting emerging markets during the year. Although Russian stocks currently account for less than 5% of the Index, the deepening conflict between Ukraine and Russia is disrupting trade in the region. The impact has been felt especially in the developed economies of Europe, which is where Russia’s primary trading partners are located.

The Fund’s focus on companies selling products and services primarily in their home countries kept it somewhat insulated from international tensions and was one of the reasons it outperformed its benchmark. Our exit from Russia during March and April also helped the Fund’s return by removing exposure to what proved to be one of the year’s worst-performing countries.

India, which is the Fund’s most-heavily weighted country, was also one of its best performers. Although India struggled in 2013 amid currency weakness and poor sentiment toward the so-called “Fragile Five” (Brazil, Indonesia, India, Turkey and South Africa), we remained convinced that our Indian companies were well-positioned for long-term growth. That patience paid off this year, as our Indian stocks outgained the Indian stocks in the Index and were the Fund’s largest source of outperformance.

Other countries in which the Fund’s investments performed especially well included Thailand and the United Arab Emirates (U.A.E.). In Thailand, the May 22nd military coup seems to have boosted investor sentiment by ending anti-government protests and restoring order. Meanwhile, strong gains in our bank stocks made the U.A.E. the Fund’s top-performing country for the year. We used that strength to reduce the Fund’s holdings in the U.A.E., as escalating violence in the Middle East dimmed our outlook for growth in the region. We also trimmed the Fund’s positions in Thailand in response to the increased valuations of our companies.

Weakness in the Fund’s Hong Kong-based hotel-casino stocks was its largest source of underperformance. The Fund’s holdings also declined in Turkey, where the poor political situation continues to forestall significant improvements in the fundamentals.

DETAILS OF THE YEAR

Our two strongest contributors to Fund performance for

the year were Lupin Ltd. of India, and China’s Sino Biopharmaceutical Ltd. Lupin markets its branded and generic pharmaceuticals primarily in India, the U.S. and Japan. Among the factors supporting the company’s stock price were its excellent record of compliance with U.S. Food and Drug Administration (FDA) regulations, and its significant number of new drugs completing registration and ready to enter production.

Sino Biopharmaceutical manufactures and sells Chinese medicines and Western chemical medicines primarily in Mainland China. Sales and earnings at the company have risen amid strong demand for its products, especially in China’s growing market for generic pharmaceuticals.

Our greatest detractor from Fund performance for the year was Yandex N.V. The Netherlands-based company operates Russia’s main Internet search engine and generates approximately 62% of all search traffic in Russia. The company also has a strong search presence in Belarus, Kazakhstan, Turkey and Ukraine. The stock declined as the crisis in Ukraine unfolded, and we sold it when we determined the situation would not be resolved quickly.

Melco International Development Ltd., based in China, operates hotel-casinos in Macau. Melco was our second-largest detractor. A number of factors combined to suppress tourism in Macau from wealthy mainland Chinese gamblers during the year. The most important was the Chinese government’s campaign against what it considered excessively lavish banquets and entertainment at VIP clubs, such as those in Macau’s casino resorts. Although we may adjust the position size in anticipation of a further deterioration in sentiment, we continue to hold the stock.

OUTLOOK

With Russian output and industrial production in decline even before the Ukraine crisis began, sanctions and uncertainty have worsened the already-weak structural situation. As a result, Russia now appears headed for recession. Nevertheless, a fading of international tensions could touch off a relief rally in Russian stocks. While we believe any such rally is likely to be temporary, the Fund’s lack of investments in Russia would work to its disadvantage in such a scenario and hurt performance relative to its benchmark.

As weakness in Russia continues to impact its trading partners in Europe, a sustained rise in exports from emerging markets to developed countries is becoming less likely in our view. For that reason and others, we continue to favor countries — such as India, Mexico and the Philippines — in which we expect domestic-demand growth to accelerate going forward.

We do not expect the scheduled end of quantitative easing (QE) to materially impact emerging markets as it did in 2013. First, in the absence of inflationary pressures, we think any increases in U.S. interest rates are likely to be subdued. Second, we believe the end of QE has been adequately discounted by the markets. Third, with the exception of South Africa, the countries that proved most vulnerable to tighter liquidity in 2013 have significantly improved their balance sheets and current-account situations.

Thank you for the opportunity to manage your assets.

 

  Current and future holdings are subject to risk.
 

 

8


Table of Contents
WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS     

SINCE INCEPTION

12/13/12

 

Emerging Markets Select (WAESX) — Investor

       7.92%         N/A        1.80%   

Emerging Markets Select (WIESX) — Institutional

       8.13%         N/A        2.27%   

MSCI Emerging Markets Index

       4.30%         N/A        0.65%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Select Fund are Investor Class — Gross: 2.40%, Net: 1.69% / Institutional Class — Gross: 2.21%, Net: 1.50%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Being non-diversified, the Fund can invest a larger portion of its assets in the securities of a limited number of companies than a diversified fund. Non-diversification increases the risk of loss to the Fund if the values of these securities decline.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Sino Biopharmaceutical Ltd. (China)     3.8%   
Cemex Latam Holdings S.A. (Colombia)     3.7%   
International Container Terminal Services, Inc. (Philippines)     3.7%   
Metropolitan Bank & Trust (Philippines)     3.3%   
Kasikornbank Public Co. Ltd. (Thailand)     3.3%   
Company   % of Net
Assets
 
M Dias Branco S.A. (Brazil)     3.2%   
BBVA Banco Continental S.A. (Peru)     3.2%   
PT Tower Bersama Infrastructure Tbk (Indonesia)     3.2%   
Raia Drogasil S.A. (Brazil)     3.2%   
Godrej Consumer Products Ltd. (India)     3.1%   
 

 

* As of September 30, 2014, there were 40 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: December 13, 2012. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index designed to measure equity market performance of emerging markets. You cannot invest directly in this or any index.

 

9


Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Emerging Markets Small Cap Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley, Laura Geritz and Andrey Kutuzov.

 

LOGO

 

Roger Edgley, CFA

Lead Portfolio Manager

 

LOGO

 

Laura Geritz, CFA

Portfolio Manager

 

LOGO

 

Andrey Kutuzov, CFA

Associate Portfolio Manager

OVERVIEW

The Wasatch Emerging Markets Small Cap Fund gained 4.90% for the fiscal year ended September 30, 2014 and underperformed its benchmark, the MSCI Emerging Markets Small Cap Index, which returned 8.84%.

During the year, the performance of the world’s small-cap markets varied considerably. Several emerging Asian markets delivered strong gains, including Thailand where greater political stability contributed to an improved economic outlook. In India, equities advanced on expectations that actions by the new government would lead to significant economic improvement.

DETAILS OF THE YEAR

The Fund is overweight relative to the Index in Thailand and our holdings significantly outperformed. India also contributed to the Fund’s performance versus the Index over the past 12 months driven by our structurally overweight position. While our Indian holdings on average had strong gains, they were not up as much as those in the Index.

The Fund’s investments in Russia detracted from performance. The Russia/Ukraine conflict has had severe negative impacts on the Russian stock market and on Russia’s currency, the ruble. The long-term consequences are likely to be continuing deceleration in economic growth and sustained currency weakness. The performance of the Fund’s Russian holdings reflected the challenging macro environment. TCS Group Holding plc, a provider of online retail financial services; MD Medical Group Investments plc, a provider of pre-natal health care; and M Video OJSC, a consumer-electronics and home-appliances retail chain, were all down significantly and detracted from performance for the year. We have since exited almost all of our positions in Russia.

Due to economic concerns and the difficulty of finding high-quality growth companies in China, we’ve been structurally underweight — and positioned defensively — in Chinese companies. Nevertheless, the Fund’s Chinese holdings weighed on performance for the year. Large decliners included Biostime International Holdings Ltd., a pediatric-nutrition and baby-care-products provider; Melco International Development Ltd., a hotel-casino operator in Macau; and Sa Sa International Holdings Ltd., a cosmetics retailer in Hong Kong with a strong regional presence. A sizable driver of Sa Sa’s sales

is Chinese tourism to Hong Kong. Such activity decelerated due to a new tourism law in China, resulting in slower top-line growth and margin pressure for Sa Sa.

It is worth discussing our strategy with regard to investing in China. Over the next 10 years, investing in China will be much like investing in Japan 20 years ago when it came to dominate investment in the Asia-Pacific region. At present, there are in effect three Chinese equity markets: H-shares listed on the Hong Kong Stock Exchange, the domestic Chinese equity market (centered in Shanghai), and offshore listings (centered in the U.S.). These three equity markets have large-scale market capitalizations.

Chinese equities are an important segment of the global equities market today, but will become even more significant as the sizable domestic market becomes truly accessible to foreign investors. We expect China to become a bigger part of the MSCI Emerging Markets Index. We could even see China becoming its own asset class the way Japan did. We also expect more convergence in the classification of Chinese equities — indices will group U.S.-listed stocks with Hong Kong-listed stocks and domestically listed Chinese stocks.

The challenges investors have faced in China include issues with corporate governance, the role of state-owned enterprises, the policy framework, and over-investment and hyper-competition in many industries. The assumption of many investors in China has been that high gross domestic product (GDP) growth would lead to high earnings per share growth and thus value creation. Investors often don’t realize that they are in for a turbulent ride.

What are some of the investment themes we currently like? E-commerce will continue to be an important theme for China, as non-legacy companies have a real opportunity to re-make the economic landscape by providing more open access to goods in third and fourth tier cities. Other themes are automation, renewable energy, health care and financial leasing. Some areas like mortgage finance — attractive to us in other emerging market countries — are the province of some of China’s large state-controlled banks and thus off limits.

The outlook for China is for slower growth. However, we believe the quality of that growth will be higher because it will be less investment-driven. New economy sectors (like health care, renewable energy and information technology) have recently delivered stronger growth, and Hong Kong H-shares have been slowing down, leaving valuations more attractive. As a result, there are opportunities to invest in new-economy stocks that have the potential to do well in a less supportive macro environment.

OUTLOOK

We see near-term challenges for investors in emerging markets as the U.S. dollar strengthens and the Federal Reserve ends its bond-buying program. For Eastern Europe, Russia will remain a difficult place in which to invest. Where are the opportunities? We are seeing a pickup in manufacturing across Asia, a marked change in India and solid growth in countries like Thailand and the Philippines.

Thank you for your ongoing support.

 

  Current and future holdings are subject to risk.
 

 

10


Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS       

SINCE INCEPTION

10/1/07

 

Emerging Markets Small Cap

       4.90%           12.49%           5.13%   

MSCI Emerging Markets Small Cap Index

       8.84%           6.66%           1.15%   

MSCI Emerging Markets Index

       4.30%           4.42%           -0.18%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Small Cap Fund are 2.06%. The Net Expenses are 1.95%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Hotel Shilla Co. Ltd. (Korea)     2.3%   
Pidilite Industries Ltd. (India)     1.9%   
Berger Paints India Ltd. (India)     1.8%   
Merida Industry Co. Ltd. (Taiwan)     1.8%   
Minor International Public Co. Ltd. (Thailand)     1.7%   
Bangkok Life Assurance Public Co. Ltd. NVDR (Thailand)     1.7%   
Company   % of Net
Assets
 
International Container Terminal Services, Inc. (Philippines)     1.6%   
Security Bank Corp. (Philippines)     1.6%   
Shriram City Union Finance Ltd. (India)     1.5%   
Interpark Corp. (Korea)     1.5%   
 

 

* As of September 30, 2014, there were 114 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

  † Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: October 1, 2007. The MSCI Emerging Markets and Emerging Markets Small Cap indices are free float-adjusted market capitalization indices designed to measure the equity market performance of emerging markets. You cannot invest directly in these or any indices.

 

11


Table of Contents
WASATCH FRONTIER EMERGING SMALL COUNTRIES  FUND (WAFMX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Frontier Emerging Small Countries Fund is managed by a team of Wasatch portfolio managers led by Laura Geritz.

 

LOGO

 

Laura Geritz, CFA

Lead Portfolio Manager

  

OVERVIEW

 

The Wasatch Frontier Emerging Small Countries Fund returned 11.97% for the year ended September 30, 2014, while its benchmark the MSCI Frontier Emerging Markets Index returned 21.51%.

I’ve mentioned in the past that I’m worried about our benchmark. This is still true. It has too few countries to be called diversified. In an environment of global capital mismanagement by central banks, I believe we’re pursuing

a responsible course for investing the Fund’s assets by focusing on broad country diversification and taking the time to thoroughly assess the quality of each company in which we invest. I believe this approach is of paramount importance in our efforts to protect shareholders from unknown risks.

I’m often asked about the future growth prospects of China and the broad implications for the rest of the world in which we invest. The truth is I just don’t know about China. What I can say is that there is now expensive labor at the low end of the manufacturing sector, but cheap labor had been the most important contributor to China’s miraculous rise. Today, China is no longer a story of farm to factory, but Bangladesh, Vietnam, and many countries in Africa are just starting on this transformative path. This is the world where the Wasatch Frontier Emerging Small Countries Fund hunts for investment ideas.

DETAILS OF THE YEAR

The Fund was substantially underweight in the Middle East during the fiscal year. The region has seen a cyclical rebound over the last year, and an even stronger rebound in its cyclical stocks — banks and property developers. We were not invested in these areas, and that detracted from performance relative to the benchmark. In a macro landscape that gets a boost from high energy prices, I think markets in the Middle East might finally lose some steam with oil prices declining.

The Fund was also hit hard by its overweight position in Africa. The headlines have not helped (although almost none of the Ebola outbreaks are happening in the countries in which we invest). I remain resolutely confident in the region. Foreign direct investment supports my view. There has been a big advance in foreign direct investment into Africa, and even better, it is moving beyond the commodities realm. China is providing a lot of cheap capital. Labor is abundant, young, and inexpensive across the continent. I see the same long-term opportunities in Africa as in Bangladesh and Sri Lanka, although I think Bangladesh and Sri Lanka are sitting prettier on the geopolitical front. As if to lend credence to this view, Bangladesh was the Fund’s top-contributing country for the 12-month period aided by strong performance from Square Pharmaceuticals Ltd., GrameenPhone Ltd. and British

American Tobacco Bangladesh Co. Ltd. Sri Lanka also made a strong contribution led by Commercial Bank of Ceylon Ltd.

In Africa, I think we will see a turn in our hard-hit consumer-staples names. Input prices have been falling, comparisons have been getting better, and I see improving fundamentals ahead, all of which support the case for future margin expansion. Nevertheless, several of the Fund’s largest detractors — East African Breweries Ltd., Guinness Nigeria plc, Unilever Ghana Ltd., Unilever Nigeria plc, and Shoprite Holdings Ltd. — were African consumer-staples companies.

The markets have been on a wild ride recently, which tends to be good for us. I believe the evolution of the global economy, one with soggy demand in countries with expensive labor — the world’s indebted markets and I would now put China in that pack when I look at debt levels and labor costs — is starting to work to our relative advantage again. With oil prices falling, hence making the top-down investment case in the oil-driven Middle East less compelling, our set of frontier and emerging small countries appear poised to benefit, as they start to gain market share with low-cost labor.

OUTLOOK

When China came on the scene, the U.S., Europe and Japan had mature, expensive labor forces. China, through its amazing success, is now struggling with similar problems. China is going to lose low-end jobs to frontier countries, and we as frontier investors are well-situated to capture this growth — the shift in market share. As you know, I’m not that excited about the cyclical markets on offer in the frontier index — primarily in the Middle East. However, I like the true frontier and emerging small countries with great secular opportunities from young, ambitious labor forces — like Bangladesh, Vietnam, Pakistan, Cambodia, Laos, Myanmar, Indonesia, the Philippines, Peru, Ecuador, and many countries in sub-Saharan Africa. The Fund has overweight positions in many of these nations. Valuations look reasonable for the non-cyclical, high-quality growth companies in which we seek to invest. When asked about investing in frontier markets, I say that one of the most important reasons to do so is their lack of correlation with the rest of the world. Since the Fund has fewer investments in the markets of the Middle East, I’d argue that the Fund should be less correlated than the Index to the developed world. However, I think the most important takeaway is that as China suffers from rising labor costs and as the developed world continues to struggle with growth and possibly deflation, there are still some regions of the world — frontier and emerging small countries — that offer good, secular growth prospects.

Thanks for your investment!

 

  Current and future holdings are subject to risk.
 

 

12


Table of Contents
WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX)  Portfolio  Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS     

SINCE INCEPTION

1/31/12

Frontier Emerging Small Countries

         11.97%        N/A          21.07%  

MSCI Frontier Emerging Markets Index

         21.51%        N/A          14.66%  

MSCI Frontier Markets Index

         30.05%        N/A          21.21%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Frontier Emerging Small Countries Fund are 2.43%. The Net Expenses are 2.25%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in frontier and emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Being non-diversified, the Fund can invest a larger portion of its assets in the stocks of a limited number of companies than a diversified fund. Non-diversification increases the risk of loss to the Fund if the values of these securities decline.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Universal Robina Corp. (Philippines)     3.1%   
GrameenPhone Ltd. (Bangladesh)     3.1%   
MTN Group Ltd. (South Africa)     3.0%   
Nigerian Breweries plc (Nigeria)     3.0%   
East African Breweries Ltd. (Kenya)     2.9%   
Company   % of Net
Assets
 
Nestlé Nigeria plc (Nigeria)     2.9%   
Square Pharmaceuticals Ltd. (Bangladesh)     2.2%   
Vietnam Dairy Products JSC (Vietnam)     2.2%   
Safaricom Ltd. (Kenya)     2.1%   
Kuwait Foods Americana (Kuwait)     2.0%   
 

 

* As of September 30, 2014, there were 130 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

  † Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: January 31, 2012. The MSCI Frontier Emerging Markets and MSCI Frontier Markets indices are free float-adjusted market capitalization indices designed to measure the equity market performance of the global frontier and emerging markets. You cannot invest directly in these or any indices.

 

13


Table of Contents
WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Global Opportunities Fund is managed by a team of Wasatch portfolio managers led by JB Taylor and Ajay Krishnan.

 

LOGO

 

JB Taylor

Lead Portfolio Manager

  

LOGO

 

Ajay Krishnan, CFA

Lead Portfolio Manager

  

OVERVIEW

 

The Wasatch Global Opportunities Fund gained 3.94% in the 12 months ended September 30, 2014, and the MSCI AC World Small Cap Index rose 6.82%.

Following extraordinary returns

in the prior 12 months, the global small-cap market continued to climb higher. Overall, emerging markets outpaced the broad market, boosted by gains in India, where voters elected a new prime minister with an ambitious reform agenda. U.S. small caps also outperformed, lifted by an improving U.S. economy and continuation of the Federal Reserve’s (Fed) near-zero interest-rate policy. While stocks in most countries posted gains, a handful of markets registered sharp declines. These included Russia, which was impacted by the Ukrainian conflict, and Brazil, whose economy fell into recession.

In this environment, the Fund’s investments in numerous countries and sectors generated positive returns. Performance trailed the benchmark, however, largely because of stock selection in the United States and developed international markets. These negative effects were partly offset by stock selection and an overweight in emerging markets that resulted from our bottom-up research.

DETAILS OF THE YEAR

The Fund’s international holdings, which accounted for about 60% of the portfolio, rose more than 8%. This result outpaced the 4.56% return of the MSCI AC World Ex-U.S.A. Small Cap Index, driven by a nearly 20% gain in our emerging market stocks. The list of top contributors was dominated by Indian names, including Lupin Ltd., a generic pharmaceutical maker, and MakeMyTrip Ltd., India’s largest online travel agency. Lupin’s product pipeline is exploding, and the company has not received any adverse comments from the U.S. Food and Drug Administration, which stepped up vigilance on Indian drug companies due to rising U.S. imports. MakeMyTrip benefited from positive trends in the company’s airline ticketing business. We see even greater potential in its hotel reservations business, where we think margins could rise to 15% over time.

Calbee, Inc. and Wirecard AG were other top contributors in the international portion of the Fund. Calbee is a Japanese snack food company that is posting strong domestic sales and expanding its footprint into the rest of Southeast Asia. Germany-based Wirecard is a processor of online payment transactions that is capitalizing on the rapid growth of e-commerce in Europe. On the negative side, Melco International Development Ltd., a Macau-based gaming company,

was one of our weaker international stocks. Melco was caught up in an industry-wide selloff precipitated by the Chinese government’s efforts to crack down on “junket operators” —people who recruit wealthy patrons for Macau casinos.

Our U.S. holdings, which accounted for about 37% of the portfolio, rose more than 3% but trailed the 8.89% increase in the MSCI U.S. Small Cap Index. Two of the biggest U.S. detractors were Nu Skin Enterprises, Inc. and Cornerstone OnDemand, Inc. Shares of Nu Skin, a marketing company that sells personal care products, declined in response to faltering revenues in China. Last winter, the Chinese government conducted an investigation into the company’s sales practices, prompting Nu Skin to put all promotional activities on hold in China. The investigation has been concluded, and Nu Skin was exonerated. The company is now rebuilding its business in China, and we expect it to show good growth from here.

Cornerstone provides human resources and talent management solutions to employers, delivered over the Internet as software-as-a-service. Second-quarter revenues came in slightly below expectations, putting pressure on the stock. However, bookings (i.e., customer commitments) were strong, with the company recording the largest number of million-dollar deals in its history. We took advantage of the selloff to add to our position.

A key area of strength in the U.S. portion of the Fund was the industrials sector — our industrial stocks posted a double-digit gain. Within the sector, the top performers were trucking companies Knight Transportation, Inc. and Old Dominion Freight Line, Inc. While improvement in the U.S. economy has been slow, the economy’s steady progress has reduced capacity in the trucking industry over the last six months, giving Knight and Old Dominion more pricing power.

OUTLOOK

The U.S. economy appears to be on solid ground, and inflation is low enough that any interest-rate increases from the Fed over the next year should be gradual. One concern we have is that valuations of certain segments of the U.S. small-cap market appear stretched. Valuations are generally more favorable overseas; however, the growth outlook is mixed. A national sales tax increase that went into effect April 1st has taken a toll on the Japanese economy, and events in Russia could stall Europe’s recovery, at least in the near term. While most emerging economies are expanding faster than their developed peers, any slowdown in Europe could have a ripple effect on export-driven growth.

Regardless of how big-picture events unfold, we believe the Fund remains well positioned for the months ahead. The weighted-average price-to-earnings (P/E) multiple of the portfolio was 21.6 times 12-month forward earnings at period-end, and its estimated long-term earnings growth rate was 19%. The level of growth we are expecting from our companies bodes well for the Fund, since history has shown that stock prices ultimately follow earnings.

Thank you for the opportunity to manage your assets.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS     

SINCE INCEPTION

11/17/08

Global Opportunities

         3.94%        13.54%          21.84%  

MSCI AC World Small Cap Index

         6.82%        12.08%          18.88%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Global Opportunities Fund are 1.80%. The expense ratio shown elsewhere in this report may be different. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in small and micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
MakeMyTrip Ltd. (India)     2.4%   
Wirecard AG (Germany)     2.2%   
Lupin Ltd. (India)     2.1%   
Knight Transportation, Inc.     2.0%   
MercadoLibre, Inc. (Brazil)     1.9%   
Company   % of Net
Assets
 
International Container Terminal Services, Inc. (Philippines)     1.9%   
Sino Biopharmaceutical Ltd. (China)     1.9%   
Shriram City Union Finance Ltd. (India)     1.8%   
Marksans Pharma Ltd. (India)     1.8%   
Calbee, Inc. (Japan)     1.7%   
 

 

* As of September 30, 2014, there were 81 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: November 17, 2008. The MSCI AC (All Country) World Small Cap Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets. This index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities. You cannot invest directly in this or any index.

 

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WASATCH HERITAGE GROWTH FUND (WAHGX) Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Heritage Growth Fund is managed by a team of Wasatch portfolio managers led by Chris Bowen.

 

LOGO

 

Chris Bowen

Lead Portfolio Manager

  

OVERVIEW

 

Despite mixed stock-market returns during the most recent quarter, equities delivered gains for the year ended September 30, 2014. The Wasatch Heritage Growth Fund advanced 7.21%, which trailed the performance of the Fund’s benchmark, the Russell Midcap Growth Index, which returned 14.43%.

In recent months, large-cap stocks in general had the strongest returns, small- and micro-cap stocks had the weakest

and mid-cap stocks fell somewhere in the middle. Investors appeared to move up the market-cap spectrum, turning to the perceived safety of large-cap stocks as a way of mitigating risk in response to the Federal Reserve’s scheduled end of quantitative easing and heightened geopolitical concerns.

This past year was a good reminder not to get too caught up in the results of any one short-term period. We take a marathon approach to investing. We believe that we can add value as an investment manager by choosing our holdings carefully and then exercising patience while waiting for the stock market to recognize the value and quality of the companies held in the Fund.

We consistently assess the Fund’s positions and overall structure. Compared with the stocks in the benchmark, the Fund’s holdings have better valuations, outstanding returns-on-capital and stronger balance sheets, while generating a compelling level of earnings growth. We believe that holding companies with these characteristics is important, especially during periods of heightened market volatility.

The Fund’s largest contributors for the 12-month period were Spirit Airlines, Inc., Amphenol Corp. and Tim Hortons, Inc. The largest detractors were Nu Skin Enterprises, Inc., RetailMeNot, Inc. and LKQ Corp.

DETAILS OF THE YEAR

Spirit Airlines has many of the attributes we seek and has been an outstanding investment since we purchased the stock a little over a year ago. The ultra-discount, no-frills airline continues to grow by methodically entering new markets as a low-cost alternative to the big carriers. It would be easy for an airline like Spirit to try to grow faster by spending more, but the management team appears to be sticking to its plan. We are keeping a close eye on Spirit’s valuation with the stock up over 170% since our initial purchase.

Electronics manufacturer Amphenol is one of our largest holdings, and its stock was up almost 30% over the last 12 months as the company continued its strong execution. Amphenol should supplement future growth through a recently acquired company that manufactures electronics for the auto industry, an area forecasting strong worldwide growth over the next several years.

While the stock price of Tim Hortons, a Canada-based chain of quick-service restaurants, had been increasing after

management reported solid earnings results, the stock price appreciated even more when Burger King* announced that it would acquire the company. We believe the buyout price is fair and, barring any unforeseen complications, we expect the Fund to recognize an attractive return from this position that we initiated over five years ago.

Nu Skin undoubtedly took a step back this year. The company markets personal-care products through a worldwide network of independent dealers that build their own businesses. Our investment thesis revolved around Nu Skin’s growing business in China. However, Chinese regulators determined that a very small portion of the company’s sales were out of compliance with Chinese regulations and Nu Skin was assessed a modest fine. The stock dropped over 60% from our initial entry point. Nu Skin’s management proactively decided to halt growth in China while it addressed the regulator’s concerns, and now the company is starting to reignite its growth. We feel that Nu Skin’s valuation is attractive and that the Chinese market will continue to grow.

RetailMeNot partners with national retailers to deliver free coupons to over two million subscribers via the Internet and through its smartphone app. For example, if a consumer is looking to purchase an item or shop at a specific store, RetailMeNot may have a coupon that can save money for the consumer. Many online retailers experience a high level of shopping-cart abandonment and often a RetailMeNot coupon can be the nudge needed to complete the sale.

Search engines help drive customer access to RetailMeNot’s service and its business slowed when Google adjusted the algorithm it uses to determine when a company like RetailMeNot appears in search results. The company has successfully adjusted to algorithm changes in the past, but it has taken longer this time for it to regain its standing in search results. RetailMeNot is aggressively promoting traffic through its app — one of the most popular in Apple’s App Store — and email targeting in order to minimize its reliance on search engines.

Aftermarket auto parts distributor LKQ Corp. was down over 15%, the target of aggressive short sellers. However, we believe the fundamentals of the business remain intact and management continues to execute its long-term strategy of consolidating the North American and European markets.

OUTLOOK

We took some punches in the most recent quarter when the Fund’s return went negative and, as is engrained in our culture at Wasatch, we are digging into the results to see what lessons can be learned. We remain grounded in our core philosophy of seeking to invest in enduring, high-quality growth businesses at reasonable valuations, and we are convinced that our process for finding and assessing these businesses remains intact.

Thank you for the opportunity to manage your assets.

 

* As of September 30, 2014, the Wasatch Heritage Growth Fund was not invested in Burger King Worldwide Inc.

 

   Current and future holdings are subject to risk.
 

 

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WASATCH HERITAGE GROWTH FUND (WAHGX) Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS      10 YEARS

Heritage Growth

         7.21%            13.08%            7.34%  

Russell Midcap® Growth Index

         14.43%            17.12%            10.24%  

S&P 500 Index

         19.73%            15.70%            8.11%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Heritage Growth Fund are 0.99%. The Net Expenses are 0.95%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in small and mid cap funds will be more volatile and loss of principal could be greater than investing in large cap funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP TEN EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Microchip Technology, Inc.     4.5%   
Amphenol Corp., Class A     4.5%   
Copart, Inc.     4.3%   
Cognizant Technology Solutions Corp., Class A     4.3%   
IHS, Inc., Class A     4.2%   
Company   % of Net
Assets
 
MSC Industrial Direct Co., Inc., Class A     3.8%   
Covance, Inc.     3.8%   
LKQ Corp.     3.4%   
SEI Investments Co.     3.4%   
Spirit Airlines, Inc.     3.3%   
 

 

* As of September 30, 2014, there were 43 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

  † Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell Midcap Growth Index measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in the Russell Midcap Growth Index are also members of the Russell 1000 Growth Index. The S&P 500 Index represents 500 of the United States’ largest stocks from a broad variety of industries. The index is unmanaged and is a common measure of common stock total return performance. You cannot invest directly in these or any indices.

 

17


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WASATCH INTERNATIONAL GROWTH FUND (WAIGX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch International Growth Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley and Linda Lasater.

 

LOGO

 

Roger Edgley, CFA

Lead Portfolio Manager

  

LOGO

 

Linda Lasater, CFA

Associate Portfolio

Manager

  

OVERVIEW

 

The Wasatch International Growth Fund declined -4.53% for the fiscal year ended September 30, 2014, while the MSCI All Country (AC) World Ex-U.S.A. Small Cap Index gained 4.56%.

We are continuously searching the world intent on investing in high-quality, long-duration growth companies that we believe will be able to grow from cycle to cycle. However, the macro environment can impact even the best companies in the short term.

In recent months, there has been more evidence of slowing growth in continental Europe. The recovery since the financial crisis has been fragile and uneven across the region. France and Italy, the second and third largest economies in the eurozone have failed to reignite growth. Germany, the one beacon of strength in the region, has seen increasingly negative economic data. Stubbornly low inflation rates and feeble growth suggest a real threat of deflation. Geopolitical risks, particularly relating to Russia, appear to be exacerbating the weak conditions.

There are structural issues in Europe that must be addressed before the region will see a durable and lasting recovery. These issues include high levels of public and private debt, high levels of unemployment and a single currency that hinders disparate countries from adjusting their monetary policies and interest rates to respond to national economic conditions.

DETAILS OF THE YEAR

We were overweight in Europe for most of the fiscal year and have now shifted to an underweight position. In addition, the companies we own have been expanding their businesses outside of Europe, reflecting an even lower weight invested into the region. What concerns us at the present time is the likelihood of Europe entering into a “Japan-like” deflationary, slow-growth period that would be a very difficult environment for many stocks, especially those with some macro-driven growth.

Because we are bottom-up investors, we have been able to find companies in all regions that can grow in any cycle or take significant share in downturns and emerge in much stronger positions in a recovery. Wirecard AG is an example of a European company that we believe will grow cycle to cycle given its strong competitive positions and unique technology platforms.

Wirecard (Germany) is a longtime holding for Wasatch. Five years ago, the company began to expand beyond

Europe. Wirecard is the market-leading payment processor in Europe and has proven it can grow from cycle to cycle. Wirecard’s technology platform allows customers to handle all aspects of online-payment processing from merchant acceptance, issuing services, wallet solutions and risk-management services. While the weak environment in Europe may impact Wirecard’s business, we believe the company is well-positioned to benefit from increasing e-commerce penetration in Europe and further expansion in Asia. In addition to Wirecard, CTS Eventim AG (Germany) was one of the Fund’s top contributors for the 12-month period. Detractors from Europe included Sweden’s Elekta AB and Italy’s Salvatore Ferragamo S.p.A.

Today’s global environment makes it less obvious where investors can “hide out” during times of turmoil. However, we are finding great investments in countries like Japan where the business and investing environment is increasingly favorable. After two decades mired in deflation, the country firmly voted for change, which Prime Minister Shinzo Abe has promised with sweeping change in fiscal and monetary policy and other economic and social areas. Since he has taken office, we’ve seen unprecedented monetary easing and fiscal stimulus. We’ve also seen business sentiment, consumer confidence, and other economic data improve.

Even more importantly, something we unveiled through our bottom-up process, we are witnessing positive changes in the business environment at a micro level in Japan. New-generation management teams are looking outside of their borders for innovative ideas, best practices and business opportunities. Companies like Pigeon Corp., Calbee, Inc. and Ryohin Keikaku Co. Ltd. are investing internationally and seeing strong growth outside Japan’s borders. Our overweight in Japan is a function of the rich opportunity set we are finding there. The performance of our Japanese holdings was mixed during the year. GMO Payment Gateway, Inc. and Infomart Corp. were among the Fund’s top contributors, while Kakaku.com, Inc. and Start Today Co. Ltd. numbered among the detractors.

OUTLOOK

We believe the environment for international small-cap companies around the world will be challenging in the short- to mid-term. The silver lining on this cloud is that valuations are starting to become more compelling and we are sharpening the pencil on some companies that we found interesting but too expensive in the past. We continue to find interesting companies that have strong brands, innovative technology or disruptive business models across regions and countries.

Although many of the Fund’s investments underperformed over the last year, we’re excited about the long-term potential of the companies we own. While it is hard to predict when the environment will improve, we have a high degree of conviction in our ability to find high-quality, market-leading businesses that we believe will make for great investments over the long term. As these companies go from strength to strength and continue to grow their earnings power, we look forward to the potential for strong returns.

 

  Current and future holdings are subject to risk.
 

 

18


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WASATCH INTERNATIONAL GROWTH FUND (WAIGX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS      10 YEARS

International Growth

         -4.53%            14.65%            10.06%  

MSCI AC World Ex-U.S.A. Small Cap Index

         4.56%            8.33%            8.98%  

MSCI World Ex-U.S.A. Small Cap Index

         3.37%            8.76%            7.94%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Growth Fund are 1.49%. The expense ratio shown elsewhere in this report may be different. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in foreign securities, especially in frontier and emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Domino’s Pizza Enterprises Ltd. (Australia)     2.7%   
Wirecard AG (Germany)     2.6%   
Pigeon Corp. (Japan)     2.5%   
Rotork plc (United Kingdom)     2.5%   
Calbee, Inc. (Japan)     2.4%   
Company   % of Net
Assets
 
Merida Industry Co. Ltd. (Taiwan)     2.2%   
Vitasoy International Holdings Ltd. (Hong Kong)     2.2%   
Rightmove plc (United Kingdom)     2.0%   
M3, Inc. (Japan)     2.0%   
Nihon M&A Center, Inc. (Japan)     2.0%   
 

 

* As of September 30, 2014, there were 78 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The MSCI AC (All Country) World Ex-U.S.A. Small Cap Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets, excluding securities of U.S. issuers. This index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities. The MSCI World Ex-U.S.A. Small Cap Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed markets, excluding the United States. You cannot invest directly in these or any indices.

 

19


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WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch International Opportunities Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley, Laura Geritz and Jared Whatcott.

 

LOGO

 

Roger Edgley, CFA

Lead Portfolio Manager

 

LOGO

 

Laura Geritz, CFA

Portfolio Manager

 

LOGO

 

Jared Whatcott, CFA

Associate Portfolio Manager

OVERVIEW

For the 12 months ended September 30, 2014, the Wasatch International Opportunities Fund returned 11.53%, significantly outperforming the MSCI All Country (AC) World Ex-U.S.A. Small Cap Index, which was up 4.56%.

While there were obviously market concerns over geopolitics during the past year, including conflict in the Middle East and tensions with Russia over Ukraine, the big questions seemed to be around central-bank policy. While ultra-loose monetary policy has apparently muffled other global concerns, as questions have begun to surface concerning when interest rates will rise, we’ve seen volatility creep back in to the markets. Macro data in the eurozone has generally been disappointing, so like Japan the European Central Bank is becoming aggressive in its quantitative easing. At the same time, the U.S. Federal Reserve and the Bank of England seem poised to start raising interest rates. India’s stock market rallied driven by investors’ optimism regarding the newly elected prime minister’s agenda for governance and economic revival. India is the Fund’s largest overweight at nearly 8% compared to just over 1% for the Index, and this allocation greatly benefited performance relative to the Index.

In addition to India, the Fund has gravitated toward higher exposure to emerging markets given the appeal of companies that benefit from powerful trends in demographics, potential productivity gains, and growth headroom. Over the past few years, having heavier exposure to emerging markets made it more difficult to outperform the developed-market heavy benchmark. Fortunately, a rebound in emerging markets caused this to reverse, and our emerging-market stocks were strong contributors to the Fund’s outperformance of the Index for the year.

DETAILS OF THE YEAR

Despite being underweight in industrials at 12% compared to the Index weight of 20%, our Indian industrial names were a big reason the Fund dominated the benchmark for the 12-month period. Battery manufacturer Amara Raja Batteries Ltd., tile producer Kajaria Ceramics Ltd., and automobile manufacturer Eicher Motors Ltd. were among the Fund’s top contributors.

Consumer discretionary was another sector where stock-picking helped the Fund to outperform. An example is Berjaya Food Berhad. The company owns the Kenny Rogers Roasters chain of restaurants in Malaysia and Indonesia, and is also the master franchisee of Starbucks in Malaysia and Brunei. After finding Berjaya Food and talking to management earlier this year, we recognized the strong position the company was in and were fortunately able to quickly move the position up to a relatively large weight.

Our information-technology stocks outperformed those in the Index helped by Infomart Corp., an e-commerce provider to the Japanese food industry, and My EG Services Berhad, a government e-services provider in Malaysia.

The Fund’s weight in the financials sector is still low compared to the Index. We have found the sector to be a notoriously difficult place in which to uncover high-quality micro-caps. Yet, we have managed to add a few names to the Fund over the past year, including some with African exposure. Insurer British-American Investments Co. Kenya Ltd. was the Fund’s top contributor for the year, and the main reason the financials sector outperformed its counterpart within the Index.

Similar to industrials, the performance of the Fund’s materials sector was led by Indian stocks. Berger Paints Ltd. and Supreme Industries Ltd., a plastic-goods manufacturer, were strong contributors, and our lack of exposure to metals and mining stocks also helped.

Health care and consumer staples were the only two sectors in which the Fund notably underperformed the Index.

OUTLOOK

While the Fund’s performance over the past 12 months benefited from the relative strength of emerging markets, where the Index is significantly underweight, the Fund still faces a persistent (if somewhat weaker in the last quarter) headwind on the market-cap front. The Fund’s micro-cap mandate has us focused on investing in companies with market capitalizations of under $1 billion (in U.S. dollars). For the 12-month period, this was the most challenging arena in which to invest as micro-caps had the weakest performance when compared to companies with larger market capitalizations.

Despite this headwind, we remain optimistic about the opportunities the Fund faces. We are committed to a process of Deeper, Disciplined Investing, which we believe will continue to lead us to high-quality stocks that provide the potential for the Fund to outperform its benchmark over time.

We are continuing to scan the globe for investment opportunities. In the past three months, our team traveled to Argentina, Bangladesh, China, Costa Rica, Denmark, Ecuador, France, Germany, Ghana, Ivory Coast, Mexico, Norway, Panama, Senegal, South Korea, Sri Lanka, Sweden, Taiwan, and the United Kingdom. We are as excited as ever about the great micro- and small-cap stocks that we continue to discover.

Thank you for entrusting us with the opportunity to invest your assets.

 

  Current and future holdings are subject to risk.
 

 

20


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WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        SINCE INCEPTION
1/27/05
 

International Opportunities

       11.53%           14.43%           10.22%   

MSCI AC World Ex-U.S.A. Small Cap Index

       4.56%           8.33%           7.48%   

MSCI World Ex-U.S.A. Small Cap Index

       3.37%           8.76%           6.33%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Opportunities Fund are 2.42%. The Net Expenses are 2.25%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in foreign securities, especially in frontier and emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investing in micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
BreadTalk Group Ltd. (Singapore)     2.0%   
British-American Investments Co. Kenya Ltd. (Kenya)     1.9%   
Amara Raja Batteries Ltd. (India)     1.8%   
Spur Corp. Ltd. (South Africa)     1.8%   
Pepsi-Cola Products Philippines, Inc. (Philippines)     1.8%   
Company   % of Net
Assets
 
Famous Brands Ltd. (South Africa)     1.8%   
Berjaya Food Berhad (Malaysia)     1.8%   
Olvi Oyj, Class A (Finland)     1.8%   
Wawel S.A. (Poland)     1.8%   
RFM Corp. (Philippines)     1.6%   
 

 

* As of September 30, 2014, there were 124 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: January 27, 2005. The MSCI AC (All Country) World Ex-U.S.A. Small Cap Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets, excluding securities of U.S. issuers. This index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities. The MSCI World Ex-U.S.A. Small Cap Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed markets, excluding the United States. You cannot invest directly in these or any indices.

 

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WASATCH LARGE CAP VALUE FUND (FMIEX / WILCX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Large Cap Value Fund is managed by a team of Wasatch portfolio managers led by David Powers.

 

LOGO

 

David Powers, CFA

Lead Portfolio Manager

  

OVERVIEW

 

The Wasatch Large Cap Value Fund — Investor Class gained 11.78% for the 12 months ended September 30, 2014, while lagging the 18.89% return for the Russell 1000 Value Index.

U.S. large-cap equities were among the best-performing asset classes for the 12-month period. Returns were boosted by favorable corporate-earnings trends and the relative strength of the U.S. economy

compared to developed-market counterparts. While the U.S. Federal Reserve (Fed) has curtailed its bond purchases under the stimulus measure known as quantitative easing, the Fed has made it clear that employment remains a concern and there is no urgency to remove its policy of near-zero short-term interest rates. Given this Fed messaging with respect to rates and ongoing, if moderate, growth in the economy, investors continued to move cash out of lower-risk investments and into equities. Overseas, the economic recovery has been more uneven than in the United States. As concerns over possible deflation emerged, the central banks of both Europe and Japan stepped up with accommodative policies.

Stock selection within energy, industrials and financials detracted from the Fund’s performance relative to the Index. The leading contributor to performance versus the Index was an overweight to and selection within the information-technology sector.

DETAILS OF THE YEAR

Leading individual contributors for the 12 months included LyondellBasell Industries N.V., a petrochemical refiner and manufacturer of specialized plastics used in a wide range of products. While most of its competitors rely on oil-based manufacturing processes, LyondellBasell has benefited from lower production input costs due to the decline in natural-gas prices.

Consumer-electronics icon Apple, Inc. was another standout performer, benefiting from continued revenue growth, resilient margins and a highly anticipated product launch. The introduction in September of larger iPhone models with a new operating system, along with a smartwatch and a mobile-payment service largely met expectations, despite glitches in the operating system that are expected to be temporary. We trimmed our Apple exposure a bit on the run-up to the product introductions, but are maintaining a significant position.

Software giant Microsoft Corp. was supported by a string of positive developments. With a new CEO at the reins, the company took strides toward building upon its leading enterprise- and cloud-based businesses to further its penetration on the mobile-device front. In this vein, it was announced in March that Microsoft’s Office Suite would be available for Apple’s iPad, the leading tablet.

McKesson Corp., a distributor of pharmaceuticals, medical supplies and health and beauty-care products, saw improved earnings due to increased favorable trends in private-label and generic drug utilization. Additionally, good cost controls have led to improved margins. However, we sold our position as we felt like most of the favorable drivers of the stock were priced in and we saw better value elsewhere.

On the downside, Target Corp. was hurt over the period due to a slowdown in consumer spending, struggles with the company’s Canadian store footprint and an unexpected credit-card security breach. Although several of the issues are being resolved, we decided to sell the position as, in our opinion, the recovery will take longer than we originally expected and we believe the stock price does not appropriately discount this outlook.

Anadarko Petroleum Corp. has a significant energy asset base. The stock has had a bumpy ride in the aftermath of the 2010 oil spill in the Gulf of Mexico. More recently, the stock declined on the basis of an adverse judgment regarding cleanup costs for an environmental claim the company inherited as part of an acquisition.

Eaton Corp. plc is a global manufacturer of engineered products for the industrial, vehicle, construction, commercial and aerospace markets. Along with many other industrial companies, Eaton has experienced earnings disappointments and has seen its stock impacted by concerns over global growth. The company has an excellent balance sheet and strong cash flow, and we continue to hold the stock.

Regional bank First Niagara Financial Group, Inc. was penalized by the market over the period for its ambitious acquisition strategy. In addition, the company replaced its CEO with an internal candidate when investors were expecting an outsider to be brought on board. First Niagara has initiated a significant capital-expenditure program around information technology. While we think this is a sound strategic move, it was cause for further investor unease. We believe the stock should outperform over the next two to three years, and have maintained the position.

OUTLOOK

While the current low inflation and excess capacity do not suggest a particularly robust environment for stocks, there is a lot of capital on the sidelines and little in the way of attractive alternatives for investors. As a result, we continue to expect the market to grind higher, but that gains will be harder to win as valuations are quite elevated. Given how late we are in the market cycle, it would be natural to expect bumps in the road going forward.

Against this backdrop, we would expect equity investors to pay a premium for certainty and visibility as evidenced in cash flow of underlying companies. If the global growth outlook stabilizes from the current fears over deflation, deep value could be unlocked within the energy and materials sectors. To the extent market leadership continues to be driven by price-to-earnings multiple expansion, our style would face a headwind.

As always, we will continue to apply our rigorous process to stock selection. Thank you for your continued confidence and investment in the Fund.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH LARGE CAP VALUE FUND (FMIEX / WILCX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        10 YEARS  

Large Cap Value (FMIEX) — Investor

       11.78%           10.50%           8.11%   

Large Cap Value (WILCX) — Institutional

       11.95%           10.58%           8.15%   

Russell 1000® Value Index

       18.89%           15.26%           7.84%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Large Cap Value Fund are Investor Class — Gross: 1.16%, Net: 1.10% / Institutional Class — Gross: 1.35%, Net: 0.98%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.

Investments in value stocks can perform differently from the market as a whole and from other types of stocks and can continue to be undervalued by the market for long periods of time. Loss of principal is a risk of investing.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
JPMorgan Chase & Co.     4.2%   
Citigroup, Inc.     4.1%   
General Electric Co.     4.1%   
Johnson & Johnson     4.0%   
Suncor Energy, Inc. (Canada)     3.9%   
Company   % of Net
Assets
 
Pfizer, Inc.     3.8%   
American International Group, Inc.     3.6%   
Wells Fargo & Co.     3.5%   
Microsoft Corp.     3.3%   
Cisco Systems, Inc.     3.3%   
 

 

* As of September 30, 2014, there were 34 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell 1000 Value Index measures the performance of Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in these or any indices.

 

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WASATCH LONG/SHORT FUND (FMLSX / WILSX) Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Long/Short Fund is managed by a team of Wasatch portfolio managers led by Michael Shinnick and Ralph Shive.

 

LOGO

 

Michael Shinnick

Lead Portfolio Manager

  

LOGO

 

Ralph Shive, CFA

Portfolio Manager

  

OVERVIEW

 

U.S. equity returns for the
12 months were boosted by favorable corporate-earnings trends and the relative strength of the U.S. economy compared to most of its developed-market peers.

The U.S. Federal Reserve (Fed), while tapering its bond purchases under the stimulus measure known as quantitative easing, has made it clear that employment remains front and center as a concern and that there is no rush to raise near-zero short-term interest rates. In view of this Fed messaging with respect to rates as well as continued moderate growth in the economy, investors continued to move cash out of lower-risk investments and into equities. The economic recovery has been more uneven overseas than in the United States. As concerns over possible deflation emerged, the central banks of both Europe and Japan stepped up with accommodative policies.

For the 12-month period ended September 30, 2014, the Wasatch Long/Short Fund — Investor Class returned 5.21% and lagged the 19.73% return of its primary benchmark, the S&P 500 Index. Weakness in relative performance was primarily on the long side of the portfolio, while selection was broadly strong among our short positions. In addition, as an “all-cap” strategy, performance was constrained by significant exposure to small- and mid-cap stocks, which lagged the large-cap stocks in the S&P 500.

DETAILS OF THE YEAR

The Fund underperformed its benchmark over the past year predominantly as a result of positioning on the long side of the portfolio in the energy and materials sectors. Energy stocks underperformed largely on weakness in the price of oil, which declined approximately 12% during the last 12 months. Both our selection within energy and our overweight exposure to the sector detracted from performance relative to the Index. Leading individual detractors included longstanding positions in U.S-based, oil-focused exploration and production firms Denbury Resources, Inc. and Bill Barrett Corp. We believe both firms are uniquely positioned to benefit from the ongoing transformation in U.S. energy exploration, which we expect to play out over a decade or longer, with expertise in enhanced land-based oil-recovery techniques and substantial proven reserves. We added to our positions in Denbury and Bill Barrett on stock-price weakness in order to maintain their weightings at our desired level. Holdings of offshore drillers including Ensco plc and Diamond Offshore Drilling, Inc. also detracted for

the 12-month period, as day rates and utilization declined for both companies along with the price of oil. Again, we believe these firms are positioned to benefit as the demand for energy continues to rise in coming years, and we also believe they have the balance sheets to weather the current weak pricing environment. With respect to our lagging materials exposure, we exited positions in gold miner Yamana Gold, Inc. and paper and pulp manufacturer Domtar Corp.

On the positive side, a number of short positions within the consumer-discretionary sector added to performance, including restaurant chain Buffalo Wild Wings, Inc., fashion brand Kate Spade & Co. and grocer Sprouts Farmers Markets, Inc. Long positions that contributed included business-software services firm TIBCO Software, Inc. and gambling-machine maker International Game Technology. Within information technology, consumer-electronics icon Apple, Inc. and software giant Microsoft Corp. were leading contributors. Shares of data-center services giant Iron Mountain, Inc. were boosted by the company’s conversion to a real-estate investment trust (REIT), which will allow for a substantial increase in dividend payouts.

New positions included Bank of America Corp., which we believe will benefit from reduced litigation expenses and an improved outlook for shareholder-friendly steps including dividend increases and share buybacks following its recent settlement with the government. We also initiated a short position in low-cost retailer Five Below, Inc., as we do not see its business as sufficiently differentiated to justify its current valuation. Another new short is Healthcare Services Group, Inc. which, despite a strong operational track record, will be challenged to show margin improvement in the face of rising labor costs and reimbursement headwinds.

OUTLOOK

Overall, we continue to position the Fund for an economic recovery, believing that sectors such as information technology and energy will likely benefit at this stage of the cycle. We see this outlook being confirmed in employment and business profitability metrics, although we are aware of reasonable concerns about global growth as Europe combats a perceived risk of deflation and growth in China becomes less exuberant.

Rising energy demand remains a major theme within the Fund. The price of oil has approximately tripled in the last decade. Global demand for oil has increased every year since 2009 and is projected to increase again in 2015. Our holdings within the energy sector display strong balance sheets, substantial productive assets and proven cash-flow generation. Along with our holdings in materials, we view energy stocks as well-positioned to provide a degree of support if the Fed is unable to unwind its balance sheet without generating inflation.

We thank you for your continued investment and for your confidence as we seek to provide meaningful exposure to the market’s upside and mitigate the impact of market declines.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH LONG/SHORT FUND (FMLSX / WILSX) Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        10 YEARS  

Long/Short (FMLSX) — Investor

       5.21%           8.45%           6.79%   

Long/Short (WILSX) — Institutional

       5.33%           8.49%           6.81%   

S&P 500 Index

       19.73%           15.70%           8.11%   

Citigroup U.S. Domestic 3-Month Treasury Bills Index

       0.04%           0.08%           1.51%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Long/Short Fund are — Investor Class: 1.51% / Institutional Class: 1.40%, Net: 1.39%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. Expenses include dividend expense on short sales and interest expense. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

The Institutional Class is new and does not have any performance history prior to 12/13/2012. Performance for the Institutional Class prior to 12/13/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 12/13/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.

The Fund makes short sales of securities, which involve the risk that losses may exceed the original amount invested. Equity investing involves risks, including potential loss of the principal amount invested.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Denbury Resources, Inc.     5.3%   
TIBCO Software, Inc.     3.8%   
Iron Mountain, Inc.     3.8%   
Apple, Inc.     3.5%   
Loews Corp.     3.5%   
Company   % of Net
Assets
 
Wal-Mart Stores, Inc.     3.4%   
Bill Barrett Corp.     3.1%   
Microsoft Corp.     2.8%   
General Motors Co.     2.6%   
Citigroup, Inc.     2.2%   
 

 

* As of September 30, 2014, there were 53 long and 14 short holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

  † Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The S&P 500 Index includes 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged and is a commonly used measure of common stock total return performance. The Citigroup U.S. Domestic 3-Month Treasury Bills Index tracks the performance of U.S. Treasury bills with a remaining maturity of three months. U.S. Treasury bills, which are short-term loans to the U.S. government, are full-faith-and-credit obligations of the U.S. Treasury and are generally regarded as being free of any risk of default. You cannot invest directly in these or any indices.

 

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WASATCH MICRO CAP FUND (WMICX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Micro Cap Fund is managed by a team of Wasatch portfolio managers led by Dan Chace.

 

LOGO

 

Dan Chace, CFA

Lead Portfolio Manager

  

OVERVIEW

 

For the 12 months ended September 30, 2014, the Wasatch Micro Cap Fund returned -0.81%. The Fund’s benchmark, the Russell Microcap Index, rose 2.78%

Micro-cap equities began the fiscal year on a positive note, as investors initially shrugged off news that the Federal Reserve (Fed) would begin scaling back its purchases of U.S. Treasury bonds and mortgage-backed securities. As the year progressed,

however, volatility increased and risk-taking diminished. Investors seeking the perceived stability of larger companies pushed the major large-cap averages to new all-time highs, while micro-cap stocks declined. Even within micro-caps, the stocks of larger companies tended to fare better than smaller ones. In accordance with our mandate, we have continued to hold some of our companies whose market capitalizations have grown beyond the traditional micro-cap range. That move proved beneficial and accounted for some of the Fund’s stronger performers during the year.

The consumer-discretionary sector was the Fund’s largest source of positive returns. In that sector, as well as in financials, strength in our Indian stocks significantly helped these sectors within the Fund to post returns ahead of these same sectors in the Index. India’s stock market rallied throughout the fiscal year on optimism leading up to and following the country’s national elections.

Information technology (IT) and health care are the two sectors in which we have been finding the largest number of growing, innovative companies meeting our investment criteria. During the preceding fiscal year, IT was the Fund’s largest source of outperformance. For the fiscal year ended September 30, 2014, however, our IT stocks declined more than the IT stocks in the Index and were the primary reason the Fund underperformed its benchmark. In the strong-performing health-care sector, on the other hand, our overweight position provided a tailwind for the Fund. Led by our pharmaceutical and medical-device companies, our health-care stocks outgained the health-care sector of the Index and helped the Fund’s performance.

After the previous year’s strong run in IT and health-care stocks, one of our themes in 2014 has been to seek additional opportunities for investing outside those two traditional areas of growth. This bottom-up repositioning is aimed at mitigating risk to the Fund in the eventuality that IT and health care cease to lead the market. With the economy still not firing on all cylinders, however, progress on that front has been slower than expected.

DETAILS OF THE YEAR

Our strongest contributor to Fund performance for the year was generic-pharmaceuticals manufacturer Akorn, Inc. The company sells diagnostic and therapeutic pharmaceuticals for

the eyes, as well as niche hospital drugs and injectable pharmaceuticals in the U.S. and other countries. Akorn is benefiting from recent acquisitions that have been highly accretive to earnings. A strong environment for U.S. generic drugs also boosted the stock. We trimmed the Fund’s position in Akorn as its shares increased in value during the year.

Envestnet, Inc. was our second-largest contributor. The company provides wealth-management software and services to independent financial advisors and financial institutions in the U.S. and internationally. New technologies and acquisitions have enabled Envestnet to rapidly increase its revenues and gain market share.

Our greatest detractor from Fund performance for the year was ServiceSource International, Inc. ServiceSource provides end-to-end management and optimization of the renewal process for business-to-business service contracts. Execution issues associated with the company’s new software platform have been impacting its operating cash flow, profitability and stock price. We sold the stock when it became apparent to us that management would not be able to turn the business around as soon as we had expected.

E2open, Inc. was another significant detractor. E2open’s cloud-based solutions for supply-chain management enable companies to work with suppliers for just-in-time manufacturing of products. The stock fell sharply when management reported that E2open had lost three of its customers when they were acquired by other firms, and that the resulting revenue shortfall would delay E2open’s transition to profitability. We continue to hold the stock while we conduct additional research and monitor the situation closely for further developments.

OUTLOOK

With the end of quantitative easing at hand, the sheer size of the Fed’s balance sheet was undoubtedly a source of investor uncertainty and stock-market volatility during the year. Going forward, we think it is reasonable to expect the volatility in micro-cap equities to continue, especially in view of their outperformance relative to large-cap issues in recent years. We anticipate that further volatility may provide opportunities for us to purchase what we consider high-quality companies at reasonable prices as we seek additional investments outside the health-care and technology sectors.

Over the long-term, we believe the small-and micro-cap segments of the market remain its most prolific sources of growth and innovation — as well as the areas most likely to generate attractive investment returns. We’ve been particularly encouraged by the increase in micro-cap company initial public offerings (IPOs) in 2014 compared to the previous year. Although a high number of IPOs is often viewed as an indicator of excessively optimistic short-term sentiment, from a longer-term perspective we believe it bodes well for the health and vibrancy of the micro-cap equity market. At the very least, the higher number of public micro-cap companies should provide us with an expanded universe of companies to draw from when selecting investments for the Fund.

Thank you for the opportunity to manage your assets.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH MICRO CAP FUND (WMICX) Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        10 YEARS  

Micro Cap

       -0.81%           13.60%           7.29%   

Russell Microcap® Index

       2.78%           13.60%           6.36%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Fund are 1.93%. The expense ratio shown elsewhere in this report may be different. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
ICON plc (Ireland)     2.5%   
Envestnet, Inc.     2.3%   
Akorn, Inc.     2.2%   
City Union Bank Ltd. (India)     2.0%   
Dealertrack Technologies, Inc.     1.9%   
Company   % of Net
Assets
 
Saia, Inc.     1.9%   
Ultimate Software Group, Inc.     1.9%   
LGI Homes, Inc.     1.8%   
AtriCure, Inc.     1.8%   
Ensign Group, Inc. (The)     1.8%   
 

 

* As of September 30, 2014, there were 90 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

  † Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell Microcap Index is an unmanaged total return index of the smallest 1,000 securities in the small-cap Russell 2000 Index along with the next smallest 1,000 companies, based on a ranking of all U.S. equities by market capitalization. The official start date of the index was July 1, 2005. Data for the index prior to this date was from a paper portfolio. You cannot invest directly in this or any index.

 

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WASATCH MICRO CAP VALUE FUND (WAMVX) Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Micro Cap Value Fund is managed by a team of Wasatch portfolio managers led by Brian Bythrow.

 

LOGO

 

Brian Bythrow, CFA

Lead Portfolio Manager

  

OVERVIEW

 

The Wasatch Micro Cap Value Fund gained 3.26% for the 12 months ended September 30, 2014. The Fund outperformed its benchmark, the Russell Microcap Index, which rose 2.78%.

The fiscal year started with healthy gains in micro-cap equities as the aggressive market environment that had begun in November 2012 continued. News from the Federal Reserve (Fed) that it would begin scaling back its purchases of mortgage-backed

securities and Treasury bonds had little initial impact. Instead, equity investors found comfort in new Fed assurances that short-term interest rates would remain low long after the bond-buying program ended.

For years, the Fed’s near-zero interest-rate policy had been encouraging investors to speculate in equities and other risk assets. Because micro-cap companies are perceived to be riskier than larger companies, their stocks benefited more as speculation increased. As the fiscal year progressed, however, the situation reversed. Fears of tighter monetary policy dampened speculation and impacted micro-cap stocks while the large-cap indices continued to advance.

Although low interest rates have boosted the stock market, they also have discouraged savings and encouraged households to go more deeply into debt. Low rates of savings and investment have led to weak productivity growth and stagnant wages and salaries — which, in turn, have held back household consumption and the U.S. economy as a whole. Sluggish employment growth and declining rates of participation in the labor force also have helped restrain discretionary spending.

For those reasons, our approach to the consumer-discretionary sector has been defensive. We generally have avoided mall-based retailers in favor of discounters, international companies, housing-related companies, and companies targeting upper-income consumers who still have money to spend. Over the course of the year, our consumer-discretionary stocks generated strong gains and were the Fund’s largest source of outperformance relative to its benchmark.

Information technology (IT) was the Fund’s worst-performing sector. It was also a source of moderate underperformance for the Fund, as our IT stocks declined slightly more than the IT stocks in the Index amid growing risk aversion among investors.

DETAILS OF THE YEAR

Our strongest contributor to performance for the year was Horizon Pharma, Inc. — a specialty-pharmaceuticals company with medicines for the treatment of arthritis, pain and inflammatory diseases. Late in the year, the stock gave back some of its earlier gains after two pharmacy-benefit managers (PBMs) announced they would be dropping Horizon’s medications from their formularies. We reduced the position size in Horizon to mitigate the risk of a further slide in the stock price.

Gentherm, Inc. was our second-largest contributor. The company is benefiting from increased adoption of its individualized climate-control systems for automotive seats, steering wheels and cup holders. Strong global demand for automobiles also has contributed to increased sales of Gentherm’s products.

Another strong stock in the Fund was transportation company Saia, Inc., which specializes in less-than-truckload shipments in both the regional and inter-regional segments of the U.S. trucking market. Government regulations with respect to emissions, safety equipment and driver hours have hurt weaker competitors and favored stronger companies such as Saia that are able to pass the higher costs on to their customers.

Our greatest detractor from performance for the year was Tangoe, Inc. The company provides software and services to help multinational companies and government customers manage their telecommunications assets and expenses. Slowing growth at Tangoe and deteriorating sentiment toward software stocks in general have weighed on the company’s stock price. We reduced the Fund’s position in Tangoe during the year.

ServiceSource International, Inc. was our second-largest detractor. ServiceSource provides end-to-end management and optimization of the renewals process for business-to-business service contracts. Costs associated with the company’s new software platform have been impacting its operating cash flow, profitability and stock price. We sold the stock when it became apparent to us that management would not be able to turn the business around as soon as we had expected.

Specialty consumer-finance company Regional Management Corp. was another significant detractor. The company makes loans primarily to customers with limited access to consumer credit from banks and other traditional lenders. We sold the stock in response to Regional’s deteriorating loan portfolio and increasing regulatory scrutiny of the consumer-finance industry.

OUTLOOK

Given that the stock market often declines somewhat during the initial months of Fed tightening, it would not be unusual to see some temporary weakness going forward. Rather than try to sidestep such periods of turbulence, our goal is to remain invested in companies we consider high-quality that we believe will be able to continue growing their earnings over time.

While the latest revision indicates the U.S. economy grew at an annual inflation-adjusted rate of 4.6% in the second quarter — its fastest pace in over two years — we expect weakness in household consumption to keep a lid on both economic growth and interest rates. Any coming rate hikes are likely, in our view, to be modest and unlikely to derail the economy. If this scenario unfolds, we believe many of the interest-rate fears that impacted micro-cap stocks late in the fiscal year may dissipate. Meanwhile, the recent weakness in micro-caps has improved the valuations of our companies and — given what we believe are their generally strong growth prospects — made their risk/return profiles even more attractive on our metrics.

Thank you for the opportunity to manage your assets.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH MICRO CAP VALUE FUND (WAMVX) Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        10 YEARS  

Micro Cap Value

       3.26%           13.40%           10.47%   

Russell Microcap® Index

       2.78%           13.60%           6.36%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Value Fund are 2.05%. The Net Expenses are 1.95%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investments in value stocks can perform differently from the market as a whole and from other types of stocks and can continue to be undervalued by the market for long periods of time. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Saia, Inc.     2.5%   
Gentherm, Inc.     2.3%   
Move, Inc.     2.0%   
EPAM Systems, Inc.     1.7%   
Summit Hotel Properties, Inc.     1.6%   
Company   % of Net
Assets
 
Franklin Covey Co.     1.6%   
Caesarstone Sdot-Yam Ltd. (Israel)     1.6%   
Arbor Realty Trust, Inc.     1.6%   
Torrent Pharmaceuticals Ltd. (India)     1.5%   
Customers Bancorp, Inc.     1.5%   
 

 

* As of September 30, 2014, there were 102 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

  † Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell Microcap Index is an unmanaged total return index of the smallest 1,000 securities in the small-cap Russell 2000 Index along with the next smallest 1,000 companies, based on a ranking of all U.S. equities by market capitalization. The official start date of the index was July 1, 2005. Data for the index prior to this date was from a paper portfolio. You cannot invest directly in this or any index.

 

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WASATCH SMALL CAP GROWTH FUND (WAAEX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Small Cap Growth Fund is managed by a team of Wasatch portfolio managers led by Jeff Cardon and JB Taylor.

 

LOGO

 

Jeff Cardon, CFA

Lead Portfolio Manager

  

LOGO

 

JB Taylor

Portfolio Manager

  

OVERVIEW

 

The Wasatch Small Cap Growth Fund gained 1.09% for the 12 months ended September 30, 2014. Over the same period, the Fund’s primary benchmark, the Russell 2000 Growth Index, gained 3.79%.

A trend in small-cap stocks where we have seen a divergence between stock prices and the fundamentals underpinning the companies continued into 2014. In 2013, the average stock in the Russell 2000 Growth Index advanced over 40% while delivering, on average, sales and earnings growth of less than 10%. This trend continued through March of this year. We believe the Federal Reserve’s program of quantitative easing encouraged risk-taking and contributed to a momentum- and liquidity-driven market. With the prospects of tighter monetary policy going forward and risk appetites more subdued, investors appear to now be focusing back on fundamentals and valuations.

DETAILS OF THE YEAR

A future more focused on fundamentals should bode well for the Wasatch Small Cap Growth Fund. In the most recent quarter, our companies reported sales and earnings-per-share (EPS) growth of 16.1% and 15.6%, respectively. By comparison, the median sales and EPS growth of the average company in the Russell 2000 Growth Index were 10.2% and 11.5%, respectively. Our companies have higher operating margins and better returns-on-capital than the average company in the Index and nearly 60% of our companies have balance sheets with more cash than debt. Most importantly, our companies are led by management teams that we have vetted through numerous on-site visits and conference calls. A low-turnover strategy makes this endeavor possible. On average, our current top 20 holdings have been held in the Fund for over seven years.

Over our long history, the information-technology sector has provided fertile ground for investing in great growth companies. During the past year, however, the Fund underperformed the Index in the information-technology sector, as a handful of holdings struggled to deliver growth that satisfied Wall Street’s expectations.

In the U.S., the information-technology sector has more than its share of companies that display attributes we consider characteristic of outstanding growth companies —  disruptive technological advancement, large market opportunities, and great management teams. We believe the pace of innovation and value creation will continue in the information-technology sector, and that our recent disappointing performance will revert to our longer history of success.

Energy was also a sector in which we underperformed the benchmark. Our investments in the energy sector are focused on the long-run need for efficient energy production to fuel economic growth. We also spend a significant amount of time researching companies that apply new technology to help the U.S. become less dependent on traditional energy sources. For example, Power Integrations, Inc. manufactures integrated semiconductor circuits used in diverse applications including LED lighting, new energy-efficient electronics and appliances, and energy-efficient power chargers.

The Fund’s top contributor to performance came from the industrials sector, an area in which we outperformed the Index. Knight Transportation, Inc. is among the fastest-growing and most profitable truckload carriers in the U.S. Wasatch has owned the stock continuously since 1998. During that time, the company has transformed itself from a regional truckload carrier to a full-service transportation company offering truckload, dry van, refrigerated, brokerage, and intermodal port services. Over the past 12 months, Knight’s stock benefited from market-share gains as smaller competitors struggled with increased regulatory costs and an industry-wide driver shortage.

Mattress Firm Holding Corp. was another top contributor. Mattress Firm is the market leader in mattress retailing with 1,587 locations throughout the U.S. This market dominance allows Mattress Firm to spread advertising costs over a larger base of stores and drive sustainable margin and earnings growth. The stock benefited from the company’s recent acquisition of Sleep Train, which gives Mattress Firm presence in the attractive West Coast market. We also are drawn to the company because its business model is not threatened by disruptive Internet competition — customers like testing a bed in-store before purchase, and the cost of shipping also makes it difficult for potential online competitors.

OUTLOOK

Most indicators for the economy appear as healthy as they have been in a long time. Median company revenue growth in the Russell 2000 Growth Index topped 10% for the first time in two years and the number of Index companies missing estimates was down versus the last few quarters. Wall Street analyst expectations call for accelerating growth rates going forward. Valuations are still a concern. The percentage of Russell 2000 companies trading at what we consider high valuations is well above historical averages.

The good news is that we see signs of a transition from a momentum- and liquidity-driven market, to one in which growth rates and rational valuations should determine returns. We welcome this type of “stock picker’s market” in which our insights on a company’s management, business-model quality and long-term growth prospects should be properly rewarded. We believe our ongoing focus on finding and investing in long-duration growth companies that we believe are of the highest quality has the potential to continue to deliver attractive absolute and relative long-term returns.

Thank you for the opportunity to manage your assets and for your trust.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH SMALL CAP GROWTH FUND (WAAEX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS      10 YEARS

Small Cap Growth

         1.09%            15.20%            8.89%  

Russell 2000® Growth Index

         3.79%            15.51%            9.03%  

Russell 2000® Index

         3.93%            14.29%            8.19%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Growth Fund are 1.24%. The expense ratio shown elsewhere in this report may be different. Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Knight Transportation, Inc.     5.9%   
Ultimate Software Group, Inc.     3.8%   
ICON plc (Ireland)     2.8%   
Power Integrations, Inc.     2.8%   
Allegiant Travel Co.     2.7%   
Company   % of Net
Assets
 
Wirecard AG (Germany)     2.7%   
IPG Photonics Corp.     2.3%   
Syntel, Inc.     2.2%   
MSC Industrial Direct Co., Inc., Class A     2.1%   
Dealertrack Technologies, Inc.     2.1%   
 

 

* As of September 30, 2014, there were 91 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell 2000 Growth Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. 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 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. You cannot invest directly in these or any indices.

 

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WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Small Cap Value Fund is managed by a team of Wasatch portfolio managers led by Jim Larkins.

 

LOGO

 

Jim Larkins

Lead Portfolio Manager

  

OVERVIEW

 

Small-cap value stocks posted positive performance during the 12-month period ended September 30, 2014, as gauged by the 4.13% return of the Fund’s primary benchmark, the Russell 2000 Value Index. The bulk of the gain occurred in the first half of the period, as small-cap stocks topped out in early March and then experienced higher volatility — and a downward overall bias — from April onward.

The Wasatch Small Cap Value Fund performed very well for the annual period with a return of 11.13% for Investor Class shares, which outpaced the return of the benchmark by a healthy margin. The Fund’s Investor Class shares delivered an average annual gain of 12.35% since the Fund’s inception on December 17, 1997 compared to a return of 8.14% for the benchmark in that same interval.

DETAILS OF THE YEAR

The majority of the stocks in the Fund finished the period with a gain, and many delivered returns in excess of 20%. We believe this is a function of our stock-selection process, which looks for companies with high-quality business models highlighted by recurring revenues, deeply entrenched customer bases, and a lack of excessive competition. Our stock picks did particularly well in the health-care, indus-trials, financials and consumer-discretionary sectors.

The Fund’s performance also gained a strong benefit from its weighting in international stocks, which made up about 10% of the portfolio as of September 30th. We have owned stocks in India for several years on the belief that many of the country’s small-cap stocks offered attractive valuations relative to their underlying growth. The recent election of the reform-minded Narendra Modi as prime minister has boosted sentiment and led to rising estimates for economic growth, propelling India’s stock market upward. Yes Bank Ltd., MakeMyTrip Ltd., Torrent Pharmaceuticals Ltd. and City Union Bank Ltd. were among the Fund’s top-10 contributors to performance for the past year.

Among individual stocks, one of the most significant contributors was the drug-development company Questcor Pharmaceuticals, Inc., which received an acquisition offer from Mallinckrodt plc in April. We liked the merger since it provided a larger platform for the sale of Questcor’s primary drug, Acthar, than the company would have had by itself. We therefore held on to shares of the combined entity, Mallinckrodt, which also had strong performance.

Investments in trucking companies provided an additional source of strength for the Fund. We have liked the trucking industry for several years on the belief that it was positioned to benefit from improving economic growth and industry consolidation. Our thesis was indeed proven accurate. Top-performing trucking companies included Saia, Inc., Knight Transportation, Inc. and Old Dominion Freight Line, Inc.

Naturally, the Fund had its share of underperforming investments. The leading detractor from performance was Geospace Technologies Corp., a provider of seismic equipment for oil and gas exploration that was hit by a decline in exploration activity. We continued to hold the stock through its downturn but elected not to add to the position. Another notable detractor from performance was AVG Technologies N.V. We continue to hold the stock as we think the company is well-positioned in cell phone software security, an area we believe is poised to see growth. Our position in Angie’s List, Inc. also detracted from performance. While we thought the company was on the verge of turning itself around, it proved unable to grow its business in a profitable manner. We quickly realized our error in buying the stock and elected to sell the position.

These three detractors help illustrate a key aspect of value investing — determining how to handle an underperforming position. The Fund will always have its share of losers in any given year, and in each case we need to decide, “Do we buy more, hold, or sell?” Our research-driven process has added value on this front over the years and represents an important aspect of our effort to manage risk.

OUTLOOK

We believe the recent weakness in small-cap stocks is more a reflection of simple profit-taking than it is a shift in the market’s underlying fundamentals. Small-caps have performed exceptionally well in the past three years, so they became vulnerable to selling pressure when evidence of weaker economic growth overseas caused investors to become more risk-averse. Still, we would note that three important trends continue to work in favor of small-caps: the continued expansion of the U.S. economy, the strong U.S. dollar, and the likelihood that the U.S. Federal Reserve will maintain its “lower for longer” interest-rate policy.

We are encouraged by the opportunities our research process continues to uncover in the small-cap value space, particularly amid the increased volatility of the past six months. As always, we are actively engaged in harvesting returns from stocks that we no longer find attractive and maintaining a ready list of ideas into which we can deploy the capital. This approach reflects our view that the small-cap arena is a “perpetual-motion machine” where good companies regularly stumble and fall into value territory.

Overall, we maintain our longstanding approach of seeking to minimize downside risk by emphasizing higher-quality, fundamentally sound and financially strong companies. We believe our strategy — which focuses on buying great companies when they stumble and undiscovered companies when they’re inexpensive — will continue to hold the Fund in good stead through both up and down markets.

Thank you for the opportunity to manage your assets.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        10 YEARS  

Small Cap Value (WMCVX) — Investor

       11.13%           15.65%           8.07%   

Small Cap Value (WICVX) — Institutional

       11.28%           15.77%           8.13%   

Russell 2000® Value Index

       4.13%           13.02%           7.25%   

Russell 2000® Index

       3.93%           14.29%           8.19%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Value Fund are Investor Class — 1.27% / Institutional Class — Gross: 1.46%, Net: 1.15%. The expense ratio shown elsewhere in this report may be different. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class. Performance of the Fund’s Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund’s Investor Class without any adjustments. For any such period of time, the performance of the Fund’s Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund’s Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.

Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investments in value stocks can perform differently from the market as a whole and from other types of stocks and can continue to be undervalued by the market for long periods of time. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Vistaprint N.V.     3.0%   
Summit Hotel Properties, Inc.     2.8%   
Arbor Realty Trust, Inc.     2.6%   
Copart, Inc.     2.6%   
Ensign Group, Inc. (The)     2.5%   
Company   % of Net
Assets
 
Select Comfort Corp.     2.5%   
Polypore International, Inc.     2.5%   
Nu Skin Enterprises, Inc., Class A     2.4%   
Franklin Covey Co.     2.4%   
Fabrinet     2.3%   
 

 

* As of September 30, 2014, there were 59 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell 2000 Value Index measures the performance of those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values. 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 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. You cannot invest directly in these or any indices.

 

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WASATCH STRATEGIC INCOME FUND (WASIX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Strategic Income Fund is managed by a team of Wasatch portfolio managers led by Sam Stewart.

 

LOGO

 

Samuel S. Stewart, Jr. PhD, CFA

Lead Portfolio Manager

  

OVERVIEW

 

The Wasatch Strategic Income Fund advanced 18.94% over the 12 months ended September 30, 2014. The Fund nearly matched the 19.73% gain for the S&P 500 Index and far exceeded the 3.96% return for the Barclays Capital U.S. Aggregate Bond Index.

I believe that one of the drivers of the Fund’s strong performance was the large number of “yield” stocks we own. The continuing high yields of these stocks in the face of an environment in

which dividend payouts are generally at microscopic levels reflect investor skepticism about the sustainability of the yields. Many of the yield stocks we own have yet to fully recover from the travails of the global financial crisis. As investors warm little-by-little to the business models of these companies, they’re willing to own them, which drives the stock prices higher and the yields lower.

DETAILS OF THE YEAR

Foremost among the Fund’s yield stocks over the past year was NorthStar Realty Finance Corp., which split its stock and spun off its management company. Two other commercial real-estate investment trusts (REITs), Colony Financial, Inc. and Starwood Property Trust, Inc., also helped the Fund’s performance as investors grew more confident in the prospects for these REITs. In addition, KKR Financial Holdings LLC received and accepted a takeover bid at nearly a 20% premium by its parent and current Fund holding KKR & Co. L.P.

The primary drag on the Fund’s annual performance came from Herbalife Ltd. While the general cause of Herbalife’s woes over the past year has been the continuation of short-seller Bill Ackman’s campaign to label Herbalife as a Ponzi scheme, the company’s recent quarterly report was disappointing to Wall Street and the stock fell by about 10% over the next few days. In addition, the stock fell approximately 20% more during the last two months of the fiscal year, resulting in a cumulative decline of over 30%.

Given the relative stability in the broad stock market during the past few months, I was actually surprised at the unusually large number of changes I made to the Fund. The reason for the changes was my ever-present focus on trying to ferret out any excessive risks. While I never want us to bear excessive risks, the exceptional returns for the Fund over the last several years have caused me to be especially vigilant. This is because the market usually demonstrates that high returns result from taking high risks. Unfortunately, to paraphrase Warren Buffett, we won’t know who was taking the high risks until the tide goes out and we can see who was swimming naked.

I’m working as hard as I can to make sure we’re fully clothed when the tide recedes. This is what underlies many

of the changes in the Fund. For example, I sold Wal-Mart Stores, Inc. and purchased McDonald’s Corp. Both of these large companies have built strong moats around their business models. But while Wal-Mart’s price rose over the past year, McDonald’s price fell. That, plus McDonald’s 3.6% dividend yield versus Wal-Mart’s 2.5% yield, gave me the incentive I needed to justify replacing Wal-Mart with McDonald’s. Further, it’s worth noting that McDonald’s business — as it offers about twice the return on invested capital — is inherently more attractive than Wal-Mart’s.

Finally, I would like to note that I added a small position in the ProShares VIX Short-Term Futures ETF (VIXY), an exchange-traded fund (ETF) that reflects the VIX volatility index. You may recall that the Fund has owned VIXY before, and we regretted our experience as the position declined quite a bit while we held it. I determined that, in general, it isn’t a good idea to own VIXY. But I also determined that in times of increased market risk, it makes sense to hold some VIXY as a modest hedge against increased market volatility. When the market started to struggle recently, I decided to add a small position in VIXY in hope of gaining the benefits of this hedging strategy.

OUTLOOK

By many measures, the U.S. economy has returned to where it was before the global financial crisis of 2008 and early 2009. Today, bank loans to businesses exceed those of 2007. Total private employment has topped 2008 levels. And after a multi-year trend of declining incomes, there has been some recent improvement. Compared to previous recoveries, however, this one has been slow — so much so that for many people it’s hardly noticeable. Nevertheless, our economy has been making incremental progress.

Regarding the broad stock market, I don’t see compelling evidence that we should expect anything other than a continuation of the market advance that we’ve mostly enjoyed during the past five years. While overall valuations are on the high side, we’re finding a good number of reasonably priced stocks, including some that pay attractive dividend yields. With U.S. economic conditions that continue to improve, I remain a cautious bull.

As always, I appreciate the confidence you’ve shown by allowing me to manage a portion of your assets. While I know only a few of you personally, I assume that like me many of you are nearing the end of your careers. I share with you the importance of having investments that will provide both a reasonable level of income and security at the same time. That is what I’m hoping to achieve with the investments that comprise our holdings in the Wasatch Strategic Income Fund.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH STRATEGIC INCOME FUND (WASIX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS       

SINCE INCEPTION

2/1/06

 

Strategic Income

       18.94%           17.08%           8.26%   

S&P 500 Index

       19.73%           15.70%           7.38%   

Barclays Capital U.S. Aggregate Bond Index

       3.96%           4.12%           4.95%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Strategic Income Fund are 1.10%. The Net Expenses are 0.99%. The expense ratio shown elsewhere in this report may be different. Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. Net Expenses are based on Fund expenses, net of waivers and reimbursements. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

The Fund has a concentration in the financials sector. Investing in concentrated funds can be more volatile and loss of principal could be greater than investing in more diversified funds. The financials sector can be significantly affected by various market factors, which are described in more detail in the prospectus.

With respect to the Fund’s assets invested in fixed income securities, you are subject, but not limited to, the same interest rate, inflation and credit risk associated with the underlying fixed-income securities owned by the Fund. Return of principal is not guaranteed. Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Suncor Energy, Inc. (Canada)     4.0%   
CVS Caremark Corp.     4.0%   
TAL International Group, Inc.     3.9%   
W.W. Grainger, Inc.     3.2%   
Occidental Petroleum Corp.     3.2%   
Company   % of Net
Assets
 
Starwood Property Trust, Inc.     3.2%   
Discover Financial Services     3.1%   
NorthStar Realty Finance Corp.     3.1%   
Capital One Financial Corp.     3.0%   
ZAIS Financial Corp.     2.9%   
 

 

* As of September 30, 2014, there were 40 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. ††Inception: February 1, 2006. The S&P 500 Index represents 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged and is a common measure of common stock total return performance. The Barclays Capital U.S. Aggregate Bond 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. You cannot invest directly in these or any indices.

 

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WASATCH ULTRA GROWTH FUND (WAMCX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch Ultra Growth Fund is managed by a team of Wasatch portfolio managers led by John Malooly.

 

LOGO

 

John Malooly, CFA

Lead Portfolio Manager

  

OVERVIEW

 

During the 12 months ended September 30, 2014, the Wasatch Ultra Growth Fund gained 2.66%. The Fund underperformed its benchmark, the Russell 2000 Growth Index, which rose 3.79%.

In a continuation of the favorable investment environment that prevailed during 2013, small-company stocks rallied during the first three months of the fiscal year. However, most of those

early gains would later be given back in what proved to be an up-and-down year for small-cap equities. First, an unusually cold winter and concerns about a bubble in biotechnology stocks weighed on the market. Later, the scheduled end to the Federal Reserve’s (Fed’s) quantitative-easing program dulled investors’ appetite for risk. As a result, small-cap stocks weakened as investors turned to the perceived safety of large-cap equities.

Information technology (IT) was the largest source of underperformance and the primary reason the Fund lagged the benchmark. IT, which is the Fund’s most-heavily weighted sector, is an area in which we continue to find growing, innovative companies amid sluggish growth in the U.S. economy as a whole. While several of our IT holdings declined in response to setbacks at the companies, we attribute much of the weakness in the sector to profit-taking and rotation by investors after an extraordinary period of strength. In the previous fiscal year, for example, IT was the Fund’s top-performing sector and its largest source of attractive returns relative to the benchmark.

The health-care sector is another area that has been fertile ground for finding Fund investments. The abundance of incurable diseases and the high costs of conventional treatments create enormous opportunities for innovative health-care companies to generate substantial savings for the health-care system, while improving patients’ quality of life. During the fiscal year, our health-care stocks outgained the health-care stocks in the Index, and our overweight position in the sector provided a tailwind for the Fund.

DETAILS OF THE YEAR

Our strongest contributor to Fund performance for the year was Horizon Pharma, Inc. — a specialty-pharmaceuticals company with medicines for the treatment of arthritis, pain and inflammatory diseases. Late in the year, the stock gave back some of its earlier gains after two pharmacy-benefit managers (PBMs) announced they would be dropping Horizon’s medications from their formularies. We trimmed the Fund’s position in Horizon during the year to book gains and to mitigate the risk of a further slide in the stock price.

Against the modest backdrop for U.S. small-caps, our Indian companies provided the Fund’s greatest source of positive performance. India’s stock market rallied throughout the

year on the expectation that a victory by the Bharatiya Janata Party (BJP) in the country’s national elections would usher in a new era of economic reforms. Rising food prices, political corruption and sluggish economic growth had led to widespread dissatisfaction with India’s Congress party and stirred desire for a change in leadership. Investors now hope that newly elected Prime Minister Narendra Modi will be able to bring to India the same expansions in infrastructure investment and economic growth he achieved as chief minister of the state of Gujarat.

Yes Bank Ltd. was our second-largest contributor. Together with City Union Bank Ltd., these Indian banks helped make financials the top-performing sector in the Fund. Shares of both banks benefited from improved credit conditions and the election-fueled rally in India’s stock market.

Our greatest detractor from Fund performance for the year was ServiceSource International, Inc. We sold the stock when deteriorating fundamentals showed no clear signs of improvement. The company provides management and optimization of the renewals process for business-to-business service-contracts. Costs associated with developing and integrating a new service platform impacted earnings for the past several quarters.

Tangoe, Inc. was our second-largest detractor. The company provides software and services to help multinational companies and government customers manage their telecommunications assets and expenses. We reduced the Fund’s position in Tangoe during the year, as slightly slower growth at the company and deteriorating investor sentiment toward software stocks weighed on its share price.

OUTLOOK

After nearly six years of quantitative easing in the U.S., some additional turbulence should not be ruled out as the Fed ends its bond-purchase program. As opportunities present themselves, we have been replacing selected holdings in the Fund with issues we consider high quality that we believe are still reasonably valued. Our research indicates that the highest-quality companies — as defined by the sustainability of their business models — tend to perform better than companies of lesser quality during periods of market weakness. They also tend to recover from weakness more rapidly.

In the absence of inflationary pressures, we believe that any interest-rate increases resulting from the Fed’s less-accommodative policy stance are likely to be subdued. We think our portfolio companies are positioned to hold their own even if rates tick up or if economic growth falters. For the most part, the companies we own either are taking market share from competitors or are marketing proprietary technologies for which we expect demand to increase. In our view, those types of companies have the potential to outperform both in a challenging economic environment and over the long term.

Thank you for the opportunity to manage your assets.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH ULTRA GROWTH FUND (WAMCX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS      10 YEARS

Ultra Growth

         2.66%            14.54%            6.61%  

Russell 2000® Growth Index

         3.79%            15.51%            9.03%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Ultra Growth Fund are 1.41%. The expense ratio shown elsewhere in this report may be different. Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Power Integrations, Inc.     3.0%   
Greenspring Global Partners II-B, L.P.     2.8%   
MakeMyTrip Ltd. (India)     2.4%   
Yes Bank Ltd. (India)     2.2%   
Seattle Genetics, Inc.     2.2%   
Company   % of Net
Assets
 
Polypore International, Inc.     2.1%   
FleetMatics Group plc     2.1%   
Cognizant Technology Solutions Corp., Class A     2.0%   
Ultimate Software Group, Inc.     1.9%   
Cornerstone OnDemand, Inc.     1.9%   
 

 

* As of September 30, 2014, there were 89 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Russell 2000 Growth Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. 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. You cannot invest directly in these or any indices.

 

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WASATCH WORLD INNOVATORS FUND (WAGTX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

The Wasatch World Innovators Fund is managed by a team of Wasatch portfolio managers led by Sam Stewart and Josh Stewart.

 

LOGO

 

Samuel S. Stewart, Jr. PhD, CFA

Lead Portfolio Manager

  

LOGO

 

Josh Stewart

Portfolio Manager

  

OVERVIEW

 

The Wasatch World Innovators Fund returned 2.69% over the 12 months ended September 30, 2014, but did not keep up with the 10.70% gain for its benchmark, the MSCI AC World IMI.

We’re glad that during the fiscal year we were able to do a little better than preserve the exceptional returns that the Fund achieved over the prior several years. Today, while it could be argued that we’re winning based on the entirety of our performance, it clearly feels like we’re losing — mostly because the Fund underperformed the benchmark for the fiscal year.

We, as active managers, purposely run a portfolio of 50 to 70 stocks meant to differ dramatically in composition from the benchmark, which includes over 8,500 securities from around the globe. We think that by striving to invest in what we believe are the best innovative companies at attractive prices, the Fund has the potential to provide better investment returns than the benchmark over the long term. And since the inception of the Fund, outperformance has been expected and delivered, which made the underperformance over the past year stand out in stark contrast.

DETAILS OF THE YEAR

In addition to external market factors that were headwinds against the Fund during the fiscal year, we also made some unforced errors. The primary headwind was what we describe as a risk-off market disguised as a risk-on market. The major large-cap stock indices and most Treasuries and high-quality corporate bonds were up in price. But riskier investments such as small-cap stocks and high-yield bonds were down for the year, with the losses accelerating in the latter months. This headwind impacted the Fund more than the benchmark because the Fund has a much more significant weighting in small companies.

Now for the first mea culpa — our biggest mistake was to add to our position in online fashion retailer ASOS plc after the company missed analyst expectations and guided investors to expect lower margins. Even though we liked ASOS, we only had a small position in the company because its shares were expensive. With the stock down significantly on the news, we rationalized that it was less expensive. It wasn’t. ASOS had just reported lower-than-expected profits and so the current P/E ratio remained lofty, well above 50 times earnings. As the stock fell, we continued to add to our position. The high P/E ratio set us up for another big selloff in the stock when the company missed analyst expectations again and said margins would remain lower for a longer

period of time. Our larger weighting in the stock magnified the negative impact on the Fund’s performance.

A second mea culpa is called for regarding Ocwen Financial Corp. As the leading distressed-home-loan servicer with a stock selling for a low teens multiple, we felt Ocwen was an attractive holding. While the valuation was not stretched, the stock had risen quite a bit so we bought only a small position earlier in the year. When a transfer of loan servicing from Wells Fargo to Ocwen was delayed by New York state regulators, we failed to pay adequate attention. Instead, we added to our position based on the seemingly more attractive valuation. As the regulators persisted in their delay of the servicing transfer, Ocwen’s stock continued to decline in price, contributing to the underperformance of the Fund.

While we were disappointed with the Fund’s total return for the year, there were some bright spots. Google, Inc. was a top contributor. The company continues to grow revenues from online advertisers and continues to take overall advertising market share from the traditional mediums. In addition, Google remains the undisputed world leader in online search and the company’s YouTube subsidiary dominates the marketplace for sharing videos. DIRECTV was another top contributor for the Fund. The stock was up sharply because AT&T* intends to acquire the company, pending regulatory approval.

OUTLOOK

Global economies are having a hard time getting in sync. Currently, the U.S. and maybe the United Kingdom are making some economic progress. Other key economies like China, continental Europe and Japan are backsliding. The headlines and sentiment seem to have tilted to a more bearish tone. Despite the negative headlines, the surprisingly strong economic numbers coming out of the U.S. give us reason for optimism, especially when we consider that the U.S. has by far the largest gross domestic product among all the countries in the world. That said, we remain bottom-up stock-pickers rather than macro forecasters.

We’re excited about the companies in the Fund’s portfolio. Sales growth of our portfolio companies was a brisk 24% over the trailing 12 months, compared to 7% for the MSCI All Country World Investable Market Index and compared to about 4% annualized nominal GDP growth in the U.S. Profitability at our companies has been better as well, with an EBITDA (earnings before interest, taxes, depreciation and amortization) growth rate of 17%, exceeding the 11% rate registered by benchmark.

Thank you for the opportunity to manage your assets.

 

  * As of September 30, 2014, the Wasatch World Innovators Fund was not invested in AT&T, Inc.

 

  Current and future holdings are subject to risk.
 

 

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WASATCH WORLD INNOVATORS FUND (WAGTX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS      10 YEARS

World Innovators

         2.69%            16.44%            10.56%  

MSCI AC World IMI

         10.70%            10.32%            7.57%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch World Innovators Fund are 1.80%. The expense ratio shown elsewhere in this report may be different. Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

TOP 10 EQUITY HOLDINGS*

 

Company   % of Net
Assets
 
Abcam plc (United Kingdom)     6.9%   
eBay, Inc.     5.8%   
Google, Inc., Class A     4.4%   
Valeant Pharmaceuticals International, Inc. (Canada)     3.9%   
Mekonomen AB (Sweden)     3.0%   
Company   % of Net
Assets
 
Ocwen Financial Corp.     2.7%   
Altisource Portfolio Solutions S.A.     2.6%   
Discover Financial Services     2.5%   
Capital One Financial Corp.     2.4%   
Activision Blizzard, Inc.     2.1%   
 

 

* As of September 30, 2014, there were 67 holdings in the Fund. Foreign currency contracts, written options and repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

SECTOR BREAKDOWN**

 

LOGO

 

** Excludes securities sold short and options written, if any.

 

   Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The MSCI AC World IMI (All Country World Investable Market Index) is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of large, mid, and small cap companies across developed and emerging markets throughout the world. You cannot invest directly in this or any index.

 

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Table of Contents
WASATCH-1ST SOURCE INCOME FUND (FMEQX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

LOGO

 

Paul Gifford, CFA

Lead Portfolio Manager

  

OVERVIEW

 

The Wasatch-1st Source Income Fund returned 1.91% for the fiscal year ended September 30, 2014. The Barclays Capital U.S. Intermediate Government/Credit Bond Index returned 2.20% for the same period. U.S. Treasury bonds with longer maturities ended the fiscal year with lower yields even as the Federal Reserve (Fed) reduced its bond purchases. U.S. Treasury securities with shorter

maturities saw yields rise. Compared to last year, yields improved for corporate bonds, which helped the overall performance of the Fund and the Index.

DETAILS OF THE YEAR

The Fed’s actions dominated the direction of the bond market more than usual. Bond investors had to adjust to a new Fed Chair, Janet Yellen, and the virtual elimination of the Fed’s bond-buying program. A change in Chair usually causes some volatility in the bond market as investors must become accustomed to the new Chair’s tone and message. While some miscommunications by the Fed affected the market, they were quickly corrected. The biggest challenge to the Fed and Chair Yellen has been implementing the change in strategy as the economy has improved. The Fed had been buying $85 billion worth of Treasuries and mortgage-backed securities a month, which was reduced to $15 billion on the way to zero later in 2014. The gradual loss of a buyer of $85 billion per month might lead one to believe that bond prices would drop and yields would rise. That has not been the case so far. As we wrote last year, we expected that the Fed would taper its bond purchases and that interest rates would rise modestly.

The U.S. bond market has benefited from economic malaise in Europe and China as investors have sought refuge from economic and geopolitical events occurring worldwide. Europe was showing signs of a sustainable recovery, but is now on the verge of a third recession in six years partly due to the Russia/Ukraine situation. China has seen economic growth slow to 6%, which for that country seems like a recession. Compared to other parts of the world, the U.S. looks like a safe haven, thus helping to keep interest rates low.

Almost any financial instrument with a credit component outside of Treasuries benefited from the slowly improving U.S. economy and better financial ratios. Corporate bonds easily outperformed government bonds over the past 12 months. As the fiscal year was coming to a close in September, increased volatility in the equity market flowed into the bond market causing yield spreads to widen but not enough to offset a good year.

OUTLOOK

Volatility in the equity and fixed-income markets has been headline worthy, but is much more normal than the relative calm experienced since the summer of 2011 when the U.S.

credit rating was downgraded by Standard & Poor’s, as the country was on the verge of not making interest or principal payments on the government’s debt. The furor subsided when Congress finally acted to increase taxes and raise the debt ceiling. Interest rates actually fell during that time. We expect the markets to be volatile over the next several months as the issues mentioned above are worked through. Once bond investors refocus on the fundamentals of the U.S. economy, they should become more comfortable with the stronger economic growth, lower unemployment and low inflation. The rate of inflation will impact the pace of change in interest rates next year. Favorable economic conditions and low inflation should allow the Fed to start raising rates later in 2015 at a very slow pace. Another factor supporting a slow pace for rate increases is the substantial debt of the U.S. government, now over $17 trillion.

The following review of the three major areas of the fixed-income market in which the Fund invests shows how the Fund is positioned going into the new fiscal year.

U.S. Treasury securities and government-agency bonds make up about 33% of the Fund (9% and 24%, respectively). These bonds are the most liquid, highest-quality bonds in the portfolio. Our investments in Treasuries are typically used to manage the effective duration of the Fund and to provide liquidity for raising cash as needed. Government-agency bonds provide additional yield and have call options to add even more income to the portfolio. The low absolute level of yields will make returns in these securities challenging in 2015.

Corporate bonds comprise about 41% of the Fund. Corporations’ strong earnings and balance sheets entering the fiscal year bode well for credit spreads. We expect corporate bonds to provide better value than Treasuries or agencies. Additional income from corporate bonds will help offset some of the potential price drops if interest rates rise.

Mortgage-backed securities make up 20% of the portfolio and are the Fund’s third largest area of investment. This weighting is down from about 24% last year as we restructured the Fund to be more defensive against rising interest rates. The rate environment over the past year allowed us to do this conscientiously and opportunistically. As long as rates do not rise dramatically, these bonds should provide the potential for a good return in the coming year.

The magnitude of the Fed’s interest-rate increases will ultimately decide the size of returns for bond investors in 2015. We are cautiously optimistic that the Fed will be diligent and slow in changing rates.

Thank you for entrusting us with the opportunity to manage your assets.

 

 

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Table of Contents
WASATCH-1ST SOURCE INCOME  FUND (FMEQX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR      5 YEARS      10 YEARS

Income

         1.91%            2.36%            3.13%  

Barclays Capital U.S. Intermediate Government/Credit Bond Index

         2.20%            3.42%            4.05%  

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Income Fund are 0.73%. The expense ratio shown elsewhere in this report may be different. Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”). See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investments in fixed income funds are subject to the same interest rate, inflation, credit and other risks associated with the underlying bonds. Return of principal is not guaranteed.

TOP 10 HOLDINGS*

 

Holding   Maturity
Date
    % of Net
Assets
 
U.S. Treasury Note, 3.250%     12/31/16        4.2%   
U.S. Treasury Note, 3.625%     8/15/19        4.1%   
General Electric Capital Corp., MTN, 5.400%     2/15/17        2.2%   
Federal Home Loan Mortgage Corp., 2.500%     5/27/16        1.8%   
Federal Home Loan Mortgage Corp., 0.800%     11/14/16        1.7%   
Federal Home Loan Bank,
Series 0000, 1.500%
    11/8/22        1.7%   
Holding   Maturity
Date
    % of Net
Assets
 
Federal Home Loan Mortgage Corp., MTN, 2.000%     10/22/21        1.7%   
Federal National Mortgage Assoc., Series AL2525, 3.500%     6/1/32        1.6%   
Citibank Credit Card Issuance Trust, Series 2007-A8, Class A8, 5.650%     9/20/19        1.4%   
BB&T Corp., MTN, 2.150%     3/22/17        1.3%   
 

 

* As of September 30, 2014, there were 142 holdings in the Fund. Repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

INVESTMENTS & CASH

 

LOGO

 

Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Barclays Capital U.S. Intermediate Government/Credit Bond Index is an unmanaged index considered representative of the performance of government and corporate bonds with maturities of less than 10 years. You cannot invest directly in this or any index.

 

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WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX)  Management Discussion   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

LOGO

 

Van Hoisington

Lead Portfolio Manager

 

  

OVERVIEW

 

Poor economic conditions domestically and globally along with falling inflationary pressures have produced a substantial rally in the long end of the U.S. Treasury bond market. In addition, the dollar has rallied strongly, contributing to the appeal of long-dated coupon (maturities longer than 20 years) and zero-coupon securities like those held in the Wasatch-Hoisington U.S. Treasury Fund. The

30-year Treasury bond yield closed the fiscal year at 3.20%, down from 3.68% a year ago, resulting in a 14.54% return for the Fund for the 12-month period ended September 30, 2014. This gain far outpaced the 3.96% increase in the benchmark Barclays Capital U.S. Aggregate Bond Index for the same period.

For the five and 10 years ended September 30, 2014, the Fund produced an average annual return of 7.53% and 7.72%, respectively, versus 4.12% and 4.62% for the Index over the same time frames. The Fund garnered an excess return of 3.41 percentage points and 3.10 percentage points compounded, respectively, for the five- and 10-year periods.

DETAILS OF THE YEAR

As the fiscal year was coming to an end, economic momentum was faltering. Despite the Federal Reserve’s use of all its conventional techniques and numerous experimental measures, the U.S. economy has continued to lose momentum. In the first half of the year, real gross domestic product (GDP) grew at only a 1.2% annual rate while real per capita GDP increased by a minimal 0.3% annual rate. Such increases are insufficient to raise the standard of living, which, as measured by real median household income, stands at the same level as it did 17 years ago.

Over the five years ended June 30, 2014, real GDP expanded at a paltry 2.2% annual rate. In comparison, from 1791 through 1999, the growth in real GDP was 3.9% per annum. Similarly, real per capita GDP recorded a dismal 1.4% annual growth rate over the past five years, 26% less than the long-term growth rate. A large contributor to this remarkable downshift in economic growth was that in 1999 the combined public and private debt reached a critical range of 250% to 275% of GDP. Econometric studies have shown that a country’s growth rate will lose about 25% of its “normal experience growth rate” when this occurs. Further, as debt relative to GDP moves above critical threshold levels, some researchers have found the negative consequences of debt on economic activity actually worsens at a greater rate, thus becoming non-linear. The post-1999 record is consistent with these findings as the U.S. debt-to-GDP levels swelled to a peak as high as 360%, well above the critical level noted in various economic studies.

In terms of growth, it looks as if the second half of 2014 will continue to follow this slow-growth pattern. Although all of the data has not yet been reported, it appears that the year-over-year growth in real GDP for the just-ended third

calendar quarter is unlikely to exceed the 2.2% pace of the past five years. Economic vigor is absent, and the final quarter of 2014 looks to be weaker than the third quarter.

Poor domestic business conditions in the U.S. are echoed in Europe and Japan. The issue for Europe is whether the economy triple dips into recession or manages to merely stagnate. For Japan, the question is the degree of the erosion in economic activity. This is for an economy where nominal GDP has been unchanged for almost 22 years. U.S. growth is outpacing that of Europe and Japan primarily because those economies carry much higher debt-to-GDP ratios. Based on the latest available data, aggregate debt in the U.S. stands at 334%, compared with 460% in the 18 economies in the eurozone and 655% in Japan. Economic research has suggested that the more advanced the debt sclerosis, the worse the economic performance, and this theory is in fact validated by the real-world data.

Reflecting these conditions, the 30-year U.S. Treasury bond yield decreased 0.16 of a percentage point in the third quarter of 2014. For the first nine calendar months of 2014, this yield dropped 0.77 of a percentage point, a clear reflection of the weakness in the economy and subdued inflation.

OUTLOOK

With the nominal-growth trajectory extremely soft, U.S. Treasury bond yields are likely to continue working lower as similar circumstances have created declines in government-bond yields in Europe and Japan. Viewing the yields overseas, it is evident that ample downside still exists for long U.S. Treasury bond yields, as higher U.S. yields offer global investors an incentive to continue to move funds into U.S. Treasury bonds.

Another factor suggesting lower long-term U.S. Treasury yields is the strength of the U.S. dollar. In many industries, the price leader for certain goods in the U.S. is in fact a foreign producer. When the dollar rallies, this leads to what economists sometimes call the “collapsing umbrella.” As the dollar rises, the foreign producer cuts U.S. selling prices, forcing domestic producers to match the lower prices. This reinforces the prospect for lower inflation as nominal GDP wanes. Falling bond yields and lower inflation would bode well for the Wasatch-Hoisington U.S. Treasury Fund and its investments in long-dated U.S. Treasury bonds.

Thank you for the opportunity to manage your assets.

 

 

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WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX)  Portfolio Summary   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

AVERAGE ANNUAL TOTAL RETURNS

 

        1 YEAR        5 YEARS        10 YEARS  

U.S. Treasury

       14.54%           7.53%           7.72%   

Barclays Capital U.S. Aggregate Bond Index

       3.96%           4.12%           4.62%   

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.WasatchFunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.

As of the January 31, 2014 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-Hoisington U.S. Treasury Fund are 0.71%. The expense ratio shown elsewhere in this report may be different. See the prospectus for additional information regarding Fund expenses.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees, including sales charges, or the taxes you would pay on fund distributions or the redemption of fund shares. Fees and taxes, if reflected, would reduce the performance quoted. Wasatch does not charge any sales fees. For more complete information including charges, risks and expenses, read the prospectus carefully.

Investments in fixed income funds are subject to the same interest rate, inflation, credit and other risks associated with the underlying bonds. Return of principal is not guaranteed.

TOP 10 HOLDINGS*

 

Holding   Maturity
Date
    % of Net
Assets
 
U.S. Treasury Strip, principal only     2/15/31        14.2%   
U.S. Treasury Bond, 3.125%     11/15/41        12.4%   
U.S. Treasury Strip, principal only     2/15/37        12.1%   
U.S. Treasury Strip, principal only     2/15/43        11.6%   
U.S. Treasury Bond, 3.750%     11/15/43        7.4%   
Holding   Maturity
Date
    % of Net
Assets
 
U.S. Treasury Strip, principal only     5/15/39        7.1%   
U.S. Treasury Bond, 4.500%     5/15/38        5.5%   
U.S. Treasury Strip, principal only     5/15/40        5.1%   
U.S. Treasury Bond, 2.875%     5/15/43        5.0%   
U.S. Treasury Bond, 3.500%     2/15/39        4.6%   
 

 

* As of September 30, 2014, there were 17 holdings in the Fund. Repurchase agreements, if any, are not included in the number of holdings. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk.

INVESTMENTS & CASH

 

LOGO

 

Also includes Other Assets & Liabilities.
 

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

 

LOGO

Past performance does not predict future performance. The graph above does not reflect the deduction of fees, sales charges, or taxes that you would pay on fund distributions or the redemption of fund shares. Wasatch does not charge any sales fees. The Barclays Capital U.S. Aggregate Bond 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. You cannot invest directly in this or any index.

 

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WASATCH FUNDS MANAGEMENT DISCUSSIONS  Definitions of Financial Terms   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

Someone who is “bearish” or “a bear” is pessimistic with regard to the stock market’s prospects.

Someone who is “bullish” or “a bull” is optimistic with regard to the stock market’s prospects.

A call option is an agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other financial instrument from the seller of the option for a certain price (the strike price) at a certain time (the expiration date).

The “cloud” is the Internet. Cloud-computing is a model for delivering information technology services in which resources are retrieved from the Internet through web-based tools and applications rather than from a direct connection to a server.

A corporate bond is a debt security issued by a corporation for the purpose of raising money to expand its business.

Correlation, in the financial world, is a statistical measure of how asset classes, securities, markets, or countries move in relation to each other.

A credit rating is an assessment of the credit worthiness of individuals, corporations or countries. It is based upon the history of borrowing and repayment, as well as the availability of assets and extent of liabilities. Ratings are issued by S&P or Moody’s and typically range from AAA (highest) to D (lowest). For information on the rating agency’s methodology visit: http://www.standardandpoors.com/home/en/us and http://www.moodys.com.

Debt-to-GDP ratio is a measure of a country’s federal debt in relation to its gross domestic product (GDP). The higher the debt-to-GDP ratio, the less likely the country will be to pay back its debt, and the higher its risk of default.

Dividend yield is a company’s annual dividend payments divided by its market capitalization, or the dividend per share divided by the price per share. For example, a company whose stock sells for $30 per share that pays an annual dividend of $3 per share has a dividend yield of 10%.

Earnings growth is a measure of growth in a company’s net income over a specific period, often one year.

Earnings-per-share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS growth rates help investors identify companies that are increasing or decreasing in profitability.

Effective duration is a measure of the responsiveness of a bond’s price to market interest rate changes. For example, if the interest rate increased 1%, a bond with an effective duration of five years would experience a decline in price of 5%.

Government-agency bonds are debt securities issued by a U.S. government-sponsored agency.

Gross domestic product (GDP) is a basic measure of a country’s economic performance and is the market value of all final goods and services made within the borders of a country in a year.

An initial public offering (IPO) is a company’s first sale of stock to the public.

The International Monetary Fund (IMF) is an international organization established in 1945 that aims to promote international trade and monetary cooperation, and stabilization of the world’s currencies. The IMF maintains a monetary pool from which member nations can draw in order to

correct a deficit in their balance of payments. It is a specialized agency of the United Nations.

Mortgage-backed securities are debt issues backed by a pool of mortgages. Investors receive payments from the interest and principal payments made on the underlying mortgages.

The MSCI AC World Ex-U.S.A. Small Cap Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets, excluding securities of U.S. issuers. This index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities. You cannot invest directly in this or any index.

The MSCI U.S. Small Cap Index represents the universe of small capitalization companies in the U.S. equity market. You cannot invest directly in this or any index.

Operating margin equals operating income divided by revenues, expressed as a percentage.

Per capita GDP is a measure of the total output of a country that takes the GDP and divides it by the number of people in the country.

The price-to-earnings (P/E) multiple, also known as the P/E ratio, is the price of a stock divided by its earnings per share.

Quantitative easing (QE) is a government monetary policy used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Return on capital is a measure of how effectively a company uses the money, owned or borrowed, that has been invested in its operations.

“Risk-off” is when investors become more cautious and take money out of the market, not being willing to risk it, thus risk off.

“Risk-on” is when investors are seeking the potentially higher returns of riskier assets and put money back in the market willing to risk the money, thus risk on.

Sales growth is the increase in sales over a specified period of time, not necessarily one year.

Valuation is the process of determining the current worth of an asset or company.

VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectations of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 Index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge.”

 

 

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Table of Contents
WASATCH FUNDS — OPERATING EXPENSES   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

EXPENSE EXAMPLE

As a shareholder of Wasatch Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Wasatch Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000.00 invested at the beginning of the period and held for the entire six month period ended September 30, 2014.

ACTUAL EXPENSES

The first line of the table below provides information about actual account values and actual expenses, based upon the actual total return of the fund during the most recent six month period ended September 30, 2014. You may use the information in this line, together with the amount you invested, to estimate the expenses you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

In addition, the Funds charge a $15.00 IRA distribution fee, a $12.50 IRA annual maintenance fee and a $15.00 fee for redemptions paid by wire. To the extent these fees apply to your account, your expenses paid during the period would be higher and your ending account value would be lower than the amounts shown in the table below.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line of the table below provides information about hypothetical account values and hypothetical expenses

based on a fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Wasatch Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

In addition, the Funds charge a $15.00 IRA distribution fee, a $12.50 IRA annual maintenance fee and a $15.00 fee for redemptions paid by wire. To the extent these fees apply to your account, your expenses paid during the period would be higher and your ending account value would be lower than the amounts shown in the table below. If another fund’s fees differ from those listed above, your expenses paid and your ending account value could be higher or lower than those of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

A Fund’s annualized expense ratio may vary as a result of various factors including expenses that are not reimbursable under the contractual agreement between the Fund and the Advisor such as interest, taxes, brokerage commissions, other investment related costs, dividend expense on short sales, and extraordinary expenses. The Long/Short Fund — Investor Class and the Income Fund have no contractual limitation on expenses.

 

 

45


Table of Contents
WASATCH FUNDS — OPERATING EXPENSES (continued)  

 

 

 

    Account Value     

Expenses

Paid
During Period*

    

Annualized

Expense
Ratio*

 
Fund/Class and Return   Beginning of Period
April 1, 2014
     End of Period
September 30, 2014
       

Core Growth Fund — Investor Class

          

Actual

    $1,000.00         $976.80         $5.85         1.18%   

Hypothetical (5% before expenses)

    $1,000.00         $1,019.15         $5.97         1.18%   

Core Growth Fund — Institutional Class

          

Actual

    $1,000.00         $977.00         $5.55         1.12%   

Hypothetical (5% before expenses)

    $1,000.00         $1,019.45         $5.67         1.12%   

Emerging India Fund

          

Actual

    $1,000.00         $1,252.30         $11.12         1.97%   

Hypothetical (5% before expenses)

    $1,000.00         $1,015.19         $9.95         1.97%   

Emerging Markets Select Fund — Investor Class

          

Actual

    $1,000.00         $1,047.70         $8.73         1.70%   

Hypothetical (5% before expenses)

    $1,000.00         $1,016.55         $8.59         1.70%   

Emerging Markets Select Fund — Institutional Class

          

Actual

    $1,000.00         $1,048.40         $7.75         1.51%   

Hypothetical (5% before expenses)

    $1,000.00         $1,017.50         $7.64         1.51%   

Emerging Markets Small Cap Fund

          

Actual

    $1,000.00         $1,066.10         $10.10         1.95%   

Hypothetical (5% before expenses)

    $1,000.00         $1,015.29         $9.85         1.95%   

Frontier Emerging Small Countries Fund

          

Actual

    $1,000.00         $1,047.30         $11.55         2.25%   

Hypothetical (5% before expenses)

    $1,000.00         $1,013.79         $11.36         2.25%   

Global Opportunities Fund

          

Actual

    $1,000.00         $1,000.00         $9.12         1.82%   

Hypothetical (5% before expenses)

    $1,000.00         $1,015.94         $9.20         1.82%   

Heritage Growth Fund

          

Actual

    $1,000.00         $960.60         $4.67         0.95%   

Hypothetical (5% before expenses)

    $1,000.00         $1,020.31         $4.81         0.95%   

International Growth Fund

          

Actual

    $1,000.00         $938.40         $7.19         1.48%   

Hypothetical (5% before expenses)

    $1,000.00         $1,017.65         $7.49         1.48%   

International Opportunities Fund

          

Actual

    $1,000.00         $1,040.40         $11.51         2.25%   

Hypothetical (5% before expenses)

    $1,000.00         $1,013.79         $11.36         2.25%   

Large Cap Value Fund — Investor Class

          

Actual

    $1,000.00         $1,031.30         $5.60         1.10%   

Hypothetical (5% before expenses)

    $1,000.00         $1,019.55         $5.57         1.10%   

Large Cap Value Fund — Institutional Class

          

Actual

    $1,000.00         $1,032.80         $4.99         0.98%   

Hypothetical (5% before expenses)

    $1,000.00         $1,020.16         $4.96         0.98%   

Long/Short Fund — Investor Class

          

Actual

    $1,000.00         $998.20         $7.56         1.51%   

Hypothetical (5% before expenses)

    $1,000.00         $1,017.50         $7.64         1.51%   

Long/Short Fund — Institutional Class

          

Actual

    $1,000.00         $999.40         $6.92         1.38%   

Hypothetical (5% before expenses)

    $1,000.00         $1,018.15         $6.98         1.38%   

Micro Cap Fund

          

Actual

    $1,000.00         $910.90         $9.15         1.91%   

Hypothetical (5% before expenses)

    $1,000.00         $1,015.49         $9.65         1.91%   

Micro Cap Value Fund

          

Actual

    $1,000.00         $929.20         $9.43         1.95%   

Hypothetical (5% before expenses)

    $1,000.00         $1,015.29         $9.85         1.95%   

Small Cap Growth Fund

          

Actual

    $1,000.00         $949.40         $5.91         1.21%   

Hypothetical (5% before expenses)

    $1,000.00         $1,019.00         $6.12         1.21%   

 

46


Table of Contents
  SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

    Account Value     

Expenses

Paid
During Period*

    

Annualized

Expense
Ratio*

 
Fund/Class and Return   Beginning of Period
April 1, 2014
     End of Period
September 30, 2014
       

Small Cap Value Fund — Investor Class

          

Actual

    $1,000.00         $979.30         $5.90         1.19%   

Hypothetical (5% before expenses)

    $1,000.00         $1,019.10         $6.02         1.19%   

Small Cap Value Fund — Institutional Class

          

Actual

    $1,000.00         $979.50         $5.71         1.15%   

Hypothetical (5% before expenses)

    $1,000.00         $1,019.30         $5.82         1.15%   

Strategic Income Fund

          

Actual

    $1,000.00         $1,058.60         $4.90         0.95%   

Hypothetical (5% before expenses)

    $1,000.00         $1,020.31         $4.81         0.95%   

Ultra Growth Fund

          

Actual

    $1,000.00         $909.70         $6.22         1.30%   

Hypothetical (5% before expenses)

    $1,000.00         $1,018.55         $6.58         1.30%   

World Innovators Fund

          

Actual

    $1,000.00         $954.00         $8.57         1.75%   

Hypothetical (5% before expenses)

    $1,000.00         $1,016.29         $8.85         1.75%   

Income Fund

          

Actual

    $1,000.00         $1,009.00         $3.53         0.70%   

Hypothetical (5% before expenses)

    $1,000.00         $1,021.56         $3.55         0.70%   

U.S. Treasury Fund

          

Actual

    $1,000.00         $1,093.80         $3.57         0.68%   

Hypothetical (5% before expenses)

    $1,000.00         $1,021.66         $3.45         0.68%   

*Expenses are equal to a fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the full fiscal year (183/365).

 

47


Table of Contents

 

WASATCH CORE GROWTH FUND (WGROX / WIGRX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 98.8%  
  Airlines 6.5%  
  247,674      Allegiant Travel Co.   $ 30,627,367   
  414,578      Spirit Airlines, Inc.*     28,663,923   
   

 

 

 
      59,291,290   
   

 

 

 
  Application Software 5.8%  
  215,701      ANSYS, Inc.*     16,322,095   
  233,083      Tyler Technologies, Inc.*     20,604,537   
  109,176      Ultimate Software Group, Inc.*     15,449,496   
   

 

 

 
      52,376,128   
   

 

 

 
  Asset Management & Custody Banks 3.3%  
  597,285      SEI Investments Co.     21,597,825   
  45,851      Virtus Investment Partners, Inc.     7,964,319   
   

 

 

 
      29,562,144   
   

 

 

 
  Automotive Retail 0.9%  
  176,353      Monro Muffler Brake, Inc.     8,558,411   
   

 

 

 
  Biotechnology 2.9%  
  1,468,511      Abcam plc (United Kingdom)     9,574,208   
  456,604      Seattle Genetics, Inc.*     16,976,537   
   

 

 

 
      26,550,745   
   

 

 

 
  Commercial Printing 1.2%  
  1,328,257      InnerWorkings, Inc.*     10,745,599   
   

 

 

 
  Consumer Finance 5.9%  
  164,316      Credit Acceptance Corp.*     20,715,318   
  133,882      First Cash Financial Services, Inc.*     7,494,715   
  1,856,400      Mahindra & Mahindra Financial Services Ltd. (India)     8,187,878   
  322,036      Portfolio Recovery Associates, Inc.*     16,819,940   
   

 

 

 
      53,217,851   
   

 

 

 
  Data Processing & Outsourced Services 5.5%  
  80,874      Alliance Data Systems Corp.*     20,078,588   
  351,631      ExlService Holdings, Inc.*     8,583,313   
  252,579      NeuStar, Inc., Class A*     6,271,536   
  171,890      Syntel, Inc.*     15,116,007   
   

 

 

 
      50,049,444   
   

 

 

 
  Distributors 1.4%  
  239,077      Pool Corp.     12,891,032   
   

 

 

 
  Diversified Banks 3.7%  
  10,926,782      City Union Bank Ltd. (India)     15,206,556   
  2,083,820      Yes Bank Ltd. (India)     18,793,519   
   

 

 

 
      34,000,075   
   

 

 

 
  Diversified Support Services 4.8%  
  1,393,777      Copart, Inc.*     43,646,127   
   

 

 

 
  Electrical Components & Equipment 2.3%  
  538,186      Polypore International, Inc.*     20,940,817   
   

 

 

 
  Environmental & Facilities Services 3.5%  
  364,490      Tetra Tech, Inc.     9,104,960   
  465,627      Waste Connections, Inc.     22,592,222   
   

 

 

 
      31,697,182   
   

 

 

 
  Health Care Facilities 2.1%  
  539,076      Ensign Group, Inc. (The)     18,759,845   
   

 

 

 
  Health Care REITs 0.8%  
  539,076      CareTrust REIT, Inc.*     7,708,787   
   

 

 

 
Shares          Value  
             
  Health Care Services 3.8%  
  257,292      IPC The Hospitalist Co., Inc.*   $ 11,524,109   
  418,765      MEDNAX, Inc.*     22,956,697   
   

 

 

 
      34,480,806   
   

 

 

 
  Homebuilding 0.9%  
  565,286      Installed Building Products, Inc.*     7,942,268   
   

 

 

 
  Homefurnishing Retail 1.6%  
  246,750      Mattress Firm Holding Corp.*     14,819,805   
   

 

 

 
  Human Resource & Employment Services 0.3%  
  32,298      51job, Inc. ADR* (China)     966,679   
  53,999      TriNet Group, Inc.*     1,390,474   
   

 

 

 
      2,357,153   
   

 

 

 
  Industrial Machinery 2.4%  
  307,461      IDEX Corp.     22,250,953   
   

 

 

 
  Internet Retail 0.9%  
  155,634      Blue Nile, Inc.*     4,443,351   
  224,452      RetailMeNot, Inc.*     3,627,144   
   

 

 

 
      8,070,495   
   

 

 

 
  Internet Software &
Services 7.8%
 
  500,435      Cornerstone OnDemand, Inc.*     17,219,968   
  668,571      Dealertrack Technologies, Inc.*     29,022,667   
  448,282      Vistaprint N.V.*     24,561,371   
   

 

 

 
      70,804,006   
   

 

 

 
  IT Consulting & Other Services 1.2%  
  238,629      EPAM Systems, Inc.*     10,449,564   
   

 

 

 
  Leisure Facilities 2.7%  
  489,486      Life Time Fitness, Inc.*     24,689,674   
   

 

 

 
  Life Sciences Tools & Services 4.1%  
  573,500      Divi’s Laboratories Ltd. (India)     16,738,846   
  358,224      ICON plc* (Ireland)     20,501,159   
   

 

 

 
      37,240,005   
   

 

 

 
  Oil & Gas Equipment & Services 2.0%  
  117,555      Dril-Quip, Inc.*     10,509,417   
  298,022      TGS-NOPEC Geophysical Co. ASA (Norway)     7,577,538   
   

 

 

 
      18,086,955   
   

 

 

 
  Oil & Gas Exploration & Production 0.8%  
  309,124      Ultra Petroleum Corp.*     7,190,224   
   

 

 

 
  Oil & Gas Refining & Marketing 1.3%  
  291,271      World Fuel Services Corp.     11,627,538   
   

 

 

 
  Personal Products 1.9%  
  388,051      Nu Skin Enterprises, Inc., Class A     17,473,937   
   

 

 

 
  Research & Consulting Services 2.7%  
  686,436      Acacia Research Corp.     10,626,029   
  235,748      Corporate Executive Board Co. (The)     14,161,383   
   

 

 

 
      24,787,412   
   

 

 

 
  Semiconductors 2.5%  
  307,265      Melexis N.V. (Belgium)     14,005,923   
  158,407      Power Integrations, Inc.     8,539,721   
   

 

 

 
      22,545,644   
   

 

 

 
  Specialized Finance 0.8%  
  230,065      CRISIL Ltd. (India)     7,413,040   
   

 

 

 
  Specialty Chemicals 2.0%  
  326,281      Balchem Corp.     18,457,716   
   

 

 

 
 

 

48


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Specialty Stores 0.6%  
  131,345      Hibbett Sports, Inc.*   $ 5,599,237   
   

 

 

 
  Systems Software 1.3%  
  809,530      Infoblox, Inc.*     11,940,568   
   

 

 

 
  Trading Companies & Distributors 2.4%  
  221,302      MSC Industrial Direct Co., Inc., Class A     18,912,469   
  81,514      Rush Enterprises, Inc., Class B*     2,438,084   
   

 

 

 
      21,350,553   
   

 

 

 
  Trucking 4.2%  
  600,940      Knight Transportation, Inc.     16,459,747   
  302,485      Old Dominion Freight Line, Inc.*     21,367,540   
   

 

 

 
      37,827,287   
   

 

 

 
  Total Common Stocks
(cost $586,024,330)
    897,400,317   
   

 

 

 
Principal
Amount
         Value  
             
  SHORT-TERM INVESTMENTS 1.4%  
  Repurchase Agreement 1.4%  
  $13,047,775      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $13,345,000 of United States Treasury Notes 1.750% due 9/30/19; value: $13,311,638; repurchase proceeds: $13,047,775 (cost $13,047,775)   $ 13,047,775   
   

 

 

 
  Total Short-Term Investments
(cost $13,047,775)
    13,047,775   
   

 

 

 
  Total Investments
(cost $599,072,105) 100.2%
    910,448,092   
  Liabilities less Other Assets (0.2%)     (1,993,077
   

 

 

 
  NET ASSETS 100.0%   $ 908,455,015   
   

 

 

 
 

*Non-income producing.

 

ADR American Depositary Receipt.

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

  

  

  

  

At September 30, 2014, Wasatch Core Growth Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Belgium

    1.6   

China

    0.1   

India

    7.4   

Ireland

    2.3   

Norway

    0.8   

United Kingdom

    1.1   

United States

    86.7   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

49


Table of Contents

 

WASATCH EMERGING INDIA FUND (WAINX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 88.6%  
  Air Freight & Logistics 1.3%  
  6,654      Blue Dart Express Ltd. (India)   $ 571,742   
   

 

 

 
  Apparel, Accessories & Luxury Goods 2.8%  
  3,801      Page Industries Ltd. (India)     485,465   
  40,931      Titan Co. Ltd. (India)     270,465   
  35,366      Vaibhav Global Ltd.* (India)     495,903   
   

 

 

 
      1,251,833   
   

 

 

 
  Application Software 0.7%  
  153,820      Vakrangee Ltd. (India)     314,190   
   

 

 

 
  Auto Parts & Equipment 3.1%  
  2,318      Bosch Ltd. (India)     559,233   
  12,604      WABCO India Ltd. (India)     795,913   
   

 

 

 
      1,355,146   
   

 

 

 
  Biotechnology 1.0%  
  54,072      Biocon Ltd. (India)     436,884   
   

 

 

 
  Building Products 1.6%  
  69,368      Kajaria Ceramics Ltd. (India)     713,223   
   

 

 

 
  Commodity Chemicals 2.5%  
  99,720      Berger Paints India Ltd. (India)     610,656   
  47,842      Supreme Industries Ltd. (India)     502,046   
   

 

 

 
      1,112,702   
   

 

 

 
  Construction Machinery & Heavy Trucks 2.0%  
  4,544      Eicher Motors Ltd. (India)     882,901   
   

 

 

 
  Consumer Finance 5.7%  
  153,931      Mahindra & Mahindra Financial Services Ltd. (India)     678,931   
  72,843      Repco Home Finance Ltd. (India)     497,729   
  29,111      Shriram City Union Finance Ltd. (India)     789,523   
  37,425      Shriram Transport Finance Co., Ltd. (India)     567,768   
   

 

 

 
      2,533,951   
   

 

 

 
  Diversified Banks 5.6%  
  72,755      Axis Bank Ltd. (India)     446,119   
  328,082      City Union Bank Ltd. (India)     456,584   
  404,050      DCB Bank Ltd.* (India)     549,550   
  52,345      IndusInd Bank Ltd. (India)     525,060   
  21,970      Kotak Mahindra Bank Ltd. (India)     358,827   
  16,800      Yes Bank Ltd. (India)     151,516   
   

 

 

 
      2,487,656   
   

 

 

 
  Diversified Chemicals 1.9%  
  16,826      BASF India Ltd. (India)     356,109   
  77,796      Pidilite Industries Ltd. (India)     500,207   
   

 

 

 
      856,316   
   

 

 

 
  Diversified Real Estate
Activities 0.8%
 
  229,502      Delta Corp. Ltd. (India)     330,727   
   

 

 

 
  Electric Utilities 1.3%  
  349,743      OPG Power Ventures plc* (India)     566,864   
   

 

 

 
  Electrical Components & Equipment 2.8%  
  87,645      Amara Raja Batteries Ltd. (India)     847,216   
  28,220      V-Guard Industries Ltd. (India)     404,840   
   

 

 

 
      1,252,056   
   

 

 

 
Shares          Value  
             
  Fertilizers & Agricultural Chemicals 2.9%  
  14,163      Bayer CropScience Ltd. (India)   $ 550,995   
  97,982      Rallis India Ltd. (India)     359,262   
  68,722      UPL Ltd. (India)     377,882   
   

 

 

 
      1,288,139   
   

 

 

 
  Footwear 0.7%  
  13,815      Bata India Ltd. (India)     297,293   
   

 

 

 
  Health Care Facilities 0.9%  
  22,088      Apollo Hospitals Enterprise Ltd. (India)     404,100   
   

 

 

 
  Heavy Electrical Equipment 1.1%  
  86,039      TD Power Systems Ltd. (India)     462,515   
   

 

 

 
  Household Appliances 0.5%  
  4,244      Hawkins Cookers Ltd. (India)     209,245   
   

 

 

 
  Household Products 0.5%  
  52,625      Jyothy Laboratories Ltd. (India)     203,223   
   

 

 

 
  Housewares & Specialties 1.7%  
  136,575      LA Opala RG Ltd. (India)     744,573   
   

 

 

 
  Industrial Machinery 4.9%  
  38,906      AIA Engineering Ltd. (India)     586,488   
  41,643      Cummins India Ltd. (India)     454,425   
  8,047      FAG Bearings India Ltd. (India)     375,998   
  159,870      Sarine Technologies Ltd. (Israel)     382,194   
  20,530      SKF India Ltd. (India)     366,322   
   

 

 

 
      2,165,427   
   

 

 

 
  Internet Retail 1.7%  
  26,277      MakeMyTrip Ltd.* (India)     731,289   
   

 

 

 
  Internet Software & Services 0.4%  
  7,169      Just Dial Ltd. (India)     189,672   
   

 

 

 
  IT Consulting & Other
Services 8.3%
 
  17,495      CMC Ltd. (India)     627,735   
  16,257      Cognizant Technology Solutions Corp., Class A*     727,826   
  30,275      HCL Technologies Ltd. (India)     841,337   
  45,297      Persistent Systems Ltd. (India)     1,037,812   
  10,467      Tech Mahindra Ltd. (India)     421,273   
   

 

 

 
      3,655,983   
   

 

 

 
  Life Sciences Tools &
Services 1.0%
 
  15,087      Divi’s Laboratories Ltd. (India)     440,347   
   

 

 

 
  Packaged Foods & Meats 2.4%  
  29,224      Britannia Industries Ltd. (India)     641,168   
  2,821      GlaxoSmithKline Consumer Healthcare Ltd. (India)     257,845   
  1,639      Nestlé India Ltd. (India)     158,380   
   

 

 

 
      1,057,393   
   

 

 

 
  Personal Products 5.7%  
  77,698      Bajaj Corp. Ltd. (India)     323,637   
  15,541      Colgate-Palmolive India Ltd. (India)     439,091   
  136,037      Dabur India Ltd. (India)     488,993   
  51,372      Godrej Consumer Products Ltd. (India)     813,335   
  38,113      Marico Ltd. (India)     192,416   
  2,942      Procter & Gamble Hygiene & Health Care Ltd. (India)     257,699   
   

 

 

 
      2,515,171   
   

 

 

 
 

 

50


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Pharmaceuticals 11.9%  
  74,980      Glenmark Pharmaceuticals Ltd. (India)   $ 870,841   
  46,485      IPCA Laboratories Ltd. (India)     596,116   
  48,383      Lupin Ltd. (India)     1,091,516   
  1,144,080      Marksans Pharma Ltd. (India)     1,092,952   
  44,898      Natco Pharma Ltd. (India)     1,067,200   
  38,938      Torrent Pharmaceuticals Ltd. (India)     550,403   
   

 

 

 
      5,269,028   
   

 

 

 
  Publishing 0.7%  
  56,279      D.B. Corp. Ltd. (India)     316,205   
   

 

 

 
  Restaurants 1.0%  
  21,788      Jubilant Foodworks Ltd.* (India)     431,456   
   

 

 

 
  Specialized Consumer Services 0.0%  
  671      Marico Kaya Enterprises Ltd.* (India)     6,542   
   

 

 

 
  Specialized Finance 3.5%  
  27,190      Credit Analysis & Research Ltd. (India)     664,782   
  15,820      CRISIL Ltd. (India)     509,744   
  9,035      ICRA Ltd. (India)     380,513   
   

 

 

 
      1,555,039   
   

 

 

 
  Specialty Chemicals 1.0%  
  43,937      Asian Paints Ltd. (India)     448,192   
   

 

 

 
  Systems Software 0.4%  
  73,973      KPIT Technologies Ltd. (India)     191,640   
   

 

 

 
  Thrifts & Mortgage Finance 2.9%  
  201,102      Gruh Finance Ltd. (India)     624,211   
  25,953      Housing Development Finance Corp. Ltd. (India)     442,705   
  36,710      LIC Housing Finance Ltd. (India)     193,179   
   

 

 

 
      1,260,095   
   

 

 

 
  Wireless Telecommunication Services 1.4%  
  234,207      Idea Cellular Ltd. (India)     628,749   
   

 

 

 
  Total Common Stocks
(cost $29,051,314)
    39,137,507   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM INVESTMENTS 10.5%  
  Repurchase Agreement 10.5%  
  $4,616,986      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $4,725,000 of United States Treasury Notes 1.750% due 9/30/19; value: $4,713,188; repurchase proceeds: $4,616,986 (cost $4,616,986)   $ 4,616,986   
   

 

 

 
  Total Short-Term Investments
(cost $4,616,986)
    4,616,986   
   

 

 

 
  Total Investments
(cost $33,668,300) 99.1%
    43,754,493   
  Other Assets less Liabilities 0.9%     395,276   
   

 

 

 
  NET ASSETS 100.0%   $ 44,149,769   
   

 

 

 
 

*Non-income producing.

 

See Notes to Financial Statements.

 

At September 30, 2014, Wasatch Emerging India Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

India

    97.2   

Israel

    1.0   

United States

    1.8   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

51


Table of Contents
WASATCH EMERGING MARKETS SELECT FUND (WAESX / WIESX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 98.8%  
  Airport Services 2.1%  
  182,300      Grupo Aeroportuario del Pacifico S.A.B. de C.V., Class B (Mexico)   $ 1,228,703   
   

 

 

 
  Casinos & Gaming 4.8%  
  178,109      Galaxy Entertainment Group Ltd. (Hong Kong)     1,034,524   
  425,677      Melco International Development Ltd. (China)     986,804   
  156,600      Sands China Ltd. (Hong Kong)     816,817   
   

 

 

 
      2,838,145   
   

 

 

 
  Construction & Engineering 3.0%  
  128,424      Promotora y Operadora de Infraestructura S.A.B. de C.V.* (Mexico)     1,757,932   
   

 

 

 
  Construction Materials 3.7%  
  242,591      Cemex Latam Holdings S.A.* (Colombia)     2,156,391   
   

 

 

 
  Diversified Banks 22.9%  
  387,933      Abu Dhabi Commercial Bank PJSC (United Arab Emirates)     894,592   
  187,075      Axis Bank Ltd. (India)     1,147,107   
  14,518,599      Banco de Chile (Chile)     1,785,748   
  1,130,611      BBVA Banco Continental S.A. (Peru)     1,887,608   
  130,290      IndusInd Bank Ltd. (India)     1,306,908   
  266,800      Kasikornbank Public Co. Ltd. (Thailand)     1,925,403   
  1,009,911      Metropolitan Bank & Trust (Philippines)     1,953,324   
  489,580      National Bank of Ras Al-Khaimah PSC (United Arab Emirates)     1,222,301   
  1,599,389      PT Bank Rakyat Indonesia (Persero) Tbk (Indonesia)     1,368,373   
   

 

 

 
      13,491,364   
   

 

 

 
  Diversified Capital Markets 1.6%  
  115,166      Grupo Financiero Interacciones S.A. de C.V., Class O (Mexico)     964,701   
   

 

 

 
  Drug Retail 3.2%  
  220,043      Raia Drogasil S.A. (Brazil)     1,873,620   
   

 

 

 
  Food Retail 3.9%  
  65,329      BIM Birlesik Magazalar A.S. (Turkey)     1,366,338   
  126,367      President Chain Store Corp. (Taiwan)     905,603   
   

 

 

 
      2,271,941   
   

 

 

 
  Health Care Facilities 3.5%  
  1,534,137      Bangkok Dusit Medical Services Public Co. Ltd. (Thailand)     875,298   
  298,425      Life Healthcare Group Holdings Ltd. (South Africa)     1,177,155   
   

 

 

 
      2,052,453   
   

 

 

 
  Industrial Machinery 1.7%  
  85,400      Weg S.A. (Brazil)     992,123   
   

 

 

 
  Internet Software & Services 4.5%  
  16,361      MercadoLibre, Inc. (Brazil)     1,777,623   
  87,341      SouFun Holdings Ltd. ADR (China)     869,043   
   

 

 

 
      2,646,666   
   

 

 

 
  IT Consulting & Other
Services 2.1%
 
  44,511      HCL Technologies Ltd. (India)     1,236,953   
   

 

 

 
  Life & Health Insurance 3.8%  
  127,992      Discovery Ltd. (South Africa)     1,114,595   
  195,327      Sanlam Ltd. (South Africa)     1,129,598   
   

 

 

 
      2,244,193   
   

 

 

 
  Managed Health Care 3.0%  
  179,122      Qualicorp S.A.* (Brazil)     1,764,089   
   

 

 

 
Shares          Value  
             
  Marine Ports & Services 3.7%  
  873,052      International Container Terminal Services, Inc. (Philippines)   $ 2,147,734   
   

 

 

 
  Multi-Line Insurance 2.3%  
  101,761      BB Seguridade Participacoes S.A. (Brazil)     1,332,400   
   

 

 

 
  Packaged Foods & Meats 5.5%  
  48,060      M Dias Branco S.A. (Brazil)     1,907,743   
  322,400      Universal Robina Corp. (Philippines)     1,343,408   
   

 

 

 
      3,251,151   
   

 

 

 
  Personal Products 3.1%  
  113,727      Godrej Consumer Products Ltd. (India)     1,800,555   
   

 

 

 
  Pharmaceuticals 9.2%  
  118,849      Glenmark Pharmaceuticals Ltd. (India)     1,380,349   
  78,930      Lupin Ltd. (India)     1,780,654   
  2,264,292      Sino Biopharmaceutical Ltd. (China)     2,262,936   
   

 

 

 
      5,423,939   
   

 

 

 
  Soft Drinks 3.0%  
  82,823      Coca-Cola Icecek A.S. (Turkey)     1,786,749   
   

 

 

 
  Specialty Chemicals 2.9%  
  166,462      Asian Paints Ltd. (India)     1,698,042   
   

 

 

 
  Wireless Telecommunication Services 5.3%  
  460,708      Idea Cellular Ltd. (India)     1,236,810   
  2,859,478      PT Tower Bersama Infrastructure Tbk (Indonesia)     1,877,376   
   

 

 

 
      3,114,186   
   

 

 

 
  Total Common Stocks
(cost $53,661,308)
    58,074,030   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM
INVESTMENTS 0.4%
 
  Repurchase Agreement 0.4%  
  $247,198      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $270,000 of United States Treasury Bonds 2.875% due 5/15/43; value: $256,163; repurchase proceeds: $247,198 (cost $247,198)   $ 247,198   
   

 

 

 
  Total Short-Term Investments
(cost $247,198)
    247,198   
   

 

 

 
  Total Investments
(cost $53,908,506) 99.2%
    58,321,228   
  Other Assets less Liabilities 0.8%     486,728   
   

 

 

 
  NET ASSETS 100.0%   $ 58,807,956   
   

 

 

 
 

*Non-income producing.

 

ADR American Depositary Receipt.

 

See Notes to Financial Statements.

  

  

  

 

 

52


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

At September 30, 2014, Wasatch Emerging Markets Select Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Brazil

    16.6   

Chile

    3.1   

China

    7.1   

Colombia

    3.7   

Hong Kong

    3.2   

India

    20.0   

Indonesia

    5.6   

Mexico

    6.8   

Peru

    3.2   

Philippines

    9.4   

South Africa

    5.9   

Taiwan

    1.6   

Thailand

    4.8   

Turkey

    5.4   

United Arab Emirates

    3.6   
 

 

 

 

TOTAL

    100.0
 

 

 

 

    

 

 

53


Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 97.1%  
  Airport Services 2.8%  
  4,724,870      Grupo Aeroportuario del Centro Norte S.A.B. de C.V.* (Mexico)   $ 20,841,108   
  3,228,329      Malaysia Airports Holdings Berhad (Malaysia)     7,370,884   
  1,580,624      TAV Havalimanlari Holding A.S. (Turkey)     12,696,054   
   

 

 

 
      40,908,046   
   

 

 

 
  Apparel Retail 1.3%  
  730,541      Mr Price Group Ltd. (South Africa)     13,737,393   
  19,122,064      Trinity Ltd. (China)     5,171,686   
   

 

 

 
      18,909,079   
   

 

 

 
  Application Software 1.2%  
  830,329      Linx S.A. (Brazil)     17,286,915   
   

 

 

 
  Asset Management & Custody Banks 0.7%  
  860,000      CETIP S.A. — Mercados Organizados (Brazil)     10,595,913   
   

 

 

 
  Automotive Retail 0.5%  
  448,369      Kolao Holdings (Korea)     7,138,213   
   

 

 

 
  Biotechnology 1.0%  
  1,359,637      Biocon Ltd. (India)     10,985,409   
  18,324      Medy-Tox, Inc. (Korea)     3,889,672   
   

 

 

 
      14,875,081   
   

 

 

 
  Brewers 0.3%  
  1,068,852      Guinness Anchor Berhad (Malaysia)     4,177,010   
   

 

 

 
  Cable & Satellite 0.1%  
  13,357,782      PT MNC Sky Vision Tbk (Indonesia)     1,863,622   
   

 

 

 
  Casinos & Gaming 2.5%  
  60,872,118      Melco Crown Philippines Resorts Corp.* (Philippines)     17,904,561   
  580,777      Paradise Co. Ltd. (Korea)     19,015,253   
   

 

 

 
      36,919,814   
   

 

 

 
  Coal & Consumable Fuels 0.6%  
  4,205,909      PT Indo Tambangraya Megah Tbk (Indonesia)     8,965,818   
   

 

 

 
  Commodity Chemicals 1.8%  
  4,285,918      Berger Paints India Ltd. (India)     26,245,696   
  22,335      SAMHWA Paints Industrial Co. Ltd. (Korea)     269,861   
   

 

 

 
      26,515,557   
   

 

 

 
  Construction & Engineering 1.6%  
  8,248,197      China Singyes Solar Technologies Holdings Ltd.* (China)     14,616,910   
  595,489      Promotora y Operadora de Infraestructura S.A.B. de C.V.* (Mexico)     8,151,352   
   

 

 

 
      22,768,262   
   

 

 

 
  Construction Materials 4.2%  
  1,531,738      Cemex Latam Holdings S.A.* (Colombia)     13,615,617   
  84,301,301      PT Holcim Indonesia Tbk (Indonesia)     17,987,967   
  1,418,352      Siam City Cement Public Co. Ltd. (Thailand)     18,984,264   
  9,900,855      Union Andina de Cementos S.A.A. (Peru)     10,506,611   
   

 

 

 
      61,094,459   
   

 

 

 
  Consumer Finance 3.4%  
  2,596,866      Credito Real S.A.B. de C.V. (Mexico)     7,347,660   
  4,533,458      Mahindra & Mahindra Financial Services Ltd. (India)     19,995,368   
  822,656      Shriram City Union Finance Ltd. (India)     22,311,347   
   

 

 

 
      49,654,375   
   

 

 

 
Shares          Value  
             
  Department Stores 1.0%  
  2,372,330      Poya Co. Ltd. (Taiwan)   $ 14,817,558   
   

 

 

 
  Distillers & Vintners 0.4%  
  507,634      Distell Group Ltd. (South Africa)     6,007,178   
   

 

 

 
  Diversified Banks 3.0%  
  10,405,660      EastWest Banking Corp.* (Philippines)     6,248,845   
  422,580      Intergroup Financial Services Corp. (Peru)     13,522,560   
  7,131,061      Security Bank Corp. (Philippines)     23,326,606   
   

 

 

 
      43,098,011   
   

 

 

 
  Diversified Capital Markets 0.6%  
  970,149      Grupo Financiero Interacciones S.A. de C.V., Class O (Mexico)     8,126,562   
   

 

 

 
  Diversified Chemicals 1.9%  
  4,249,666      Pidilite Industries Ltd. (India)     27,324,196   
   

 

 

 
  Drug Retail 1.0%  
  2,365,015      Clicks Group Ltd. (South Africa)     14,033,211   
   

 

 

 
  Electrical Components & Equipment 0.7%  
  1,243,997      Voltronic Power Technology Corp. (Taiwan)     9,773,839   
   

 

 

 
  Electronic Components 0.3%  
  424,330      Partron Co. Ltd. (Korea)     3,872,351   
   

 

 

 
  Electronic Equipment & Instruments 1.3%  
  6,776,518      Chroma ATE, Inc. (Taiwan)     18,823,971   
   

 

 

 
  Electronic Manufacturing Services 0.6%  
  6,711,856      Hana Microelectronics Public Co. Ltd. (Thailand)     8,745,595   
   

 

 

 
  Fertilizers & Agricultural Chemicals 1.3%  
  485,071      Bayer CropScience Ltd. (India)     18,871,116   
   

 

 

 
  Food Retail 0.4%  
  535,720      Eurocash S.A. (Poland)     5,225,629   
   

 

 

 
  Footwear 0.6%  
  241,733      Bata India Ltd. (India)     5,201,995   
  109,343      CCC S.A. (Poland)     4,218,768   
   

 

 

 
      9,420,763   
   

 

 

 
  General Merchandise Stores 1.1%  
  2,417,869      Taiwan FamilyMart Co. Ltd. (Taiwan)     16,850,646   
   

 

 

 
  Health Care Equipment 0.8%  
  208,267      i-SENS, Inc.* (Korea)     11,229,938   
   

 

 

 
  Health Care Facilities 1.2%  
  1,924,048      Bumrungrad Hospital Public Co. Ltd. (Thailand)     7,832,670   
  6,558,094      Phoenix Healthcare Group Co. Ltd. (China)     10,405,584   
   

 

 

 
      18,238,254   
   

 

 

 
  Health Care Supplies 1.8%  
  412,414      Ginko International Co. Ltd. (Taiwan)     5,558,597   
  949,344      St. Shine Optical Co. Ltd. (Taiwan)     20,285,462   
   

 

 

 
      25,844,059   
   

 

 

 
  Home Furnishings 1.2%  
  163,138      Hanssem Co. Ltd. (Korea)     17,701,304   
   

 

 

 
  Home Improvement Retail 0.5%  
  23,011,092      Home Product Center Public Co. Ltd. (Thailand)     7,380,582   
   

 

 

 
 

 

54


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Hotels, Resorts & Cruise Lines 5.1%  
  53,730,800      Bloomberry Resorts Corp.* (Philippines)   $ 16,139,294   
  292,139      Hotel Shilla Co. Ltd. (Korea)     33,082,787   
  21,798,798      Minor International Public Co. Ltd. (Thailand)     24,874,496   
   

 

 

 
      74,096,577   
   

 

 

 
  Human Resource & Employment Services 0.7%  
  343,814      51job, Inc. ADR* (China)     10,290,353   
   

 

 

 
  Hypermarkets & Super Centers 2.7%  
  277,925      Al Meera Consumer Goods Co. (Qatar)     14,003,470   
  703,755      InRetail Peru Corp.* (Peru)     13,371,345   
  4,390,595      Puregold Price Club, Inc. (Philippines)     3,394,878   
  6,051,998      Robinsons Retail Holdings, Inc. (Philippines)     8,536,382   
   

 

 

 
      39,306,075   
   

 

 

 
  Industrial Machinery 2.1%  
  1,881,057      Airtac International Group (Taiwan)     15,181,035   
  659,589      Cummins India Ltd. (India)     7,197,701   
  851,295      Hiwin Technologies Corp. (Taiwan)     7,611,967   
   

 

 

 
      29,990,703   
   

 

 

 
  Internet Retail 2.8%  
  1,130,645      B2W Cia Digital* (Brazil)     15,079,864   
  1,927,639      Interpark Corp. (Korea)     22,011,893   
  141,908      MakeMyTrip Ltd.* (India)     3,949,300   
   

 

 

 
      41,041,057   
   

 

 

 
  Internet Software & Services 0.8%  
  9,900      MercadoLibre, Inc. (Brazil)     1,075,635   
  1,049,444      PChome Online, Inc. (Taiwan)     10,211,720   
   

 

 

 
      11,287,355   
   

 

 

 
  IT Consulting & Other Services 3.3%  
  1,132,852      Mindtree Ltd. (India)     21,714,219   
  676,479      Persistent Systems Ltd. (India)     15,498,993   
  4,662,150      Sonda S.A. (Chile)     10,826,812   
   

 

 

 
      48,040,024   
   

 

 

 
  Leisure Products 3.1%  
  2,520,082      Giant Manufacturing Co. Ltd. (Taiwan)     19,634,098   
  3,755,532      Merida Industry Co. Ltd. (Taiwan)     26,173,105   
   

 

 

 
      45,807,203   
   

 

 

 
  Life & Health Insurance 1.7%  
  8,789,644      Bangkok Life Assurance Public Co. Ltd. NVDR (Thailand)     24,396,853   
   

 

 

 
  Managed Health Care 1.4%  
  2,142,411      Qualicorp S.A.* (Brazil)     21,099,601   
   

 

 

 
  Marine Ports & Services 2.8%  
  243,453      Global Ports Investments plc GDR (Russia)     1,740,689   
  9,625,914      International Container Terminal Services, Inc. (Philippines)     23,680,038   
  16,063,540      Westports Holdings Berhad (Malaysia)     14,934,857   
   

 

 

 
      40,355,584   
   

 

 

 
  Oil & Gas Equipment & Services 0.1%  
  568,186      Gulf Marine Services plc
(United Arab Emirates)
    1,445,839   
   

 

 

 
  Oil & Gas Exploration & Production 2.1%  
  5,310,436      Afren plc* (Nigeria)     8,908,409   
  932,961      Dragon Oil plc (United Arab Emirates)     9,019,938   
  2,114,213      Gran Tierra Energy, Inc.* (Colombia)     11,712,740   
  51,837      Parex Resources, Inc.* (Colombia)     575,941   
   

 

 

 
      30,217,028   
   

 

 

 
Shares          Value  
             
  Packaged Foods & Meats 3.5%  
  676,640      Britannia Industries Ltd. (India)   $ 14,845,324   
  91,586      GlaxoSmithKline Consumer Healthcare Ltd. (India)     8,371,162   
  5,392,401      Standard Foods Corp. (Taiwan)     12,142,851   
  2,430,747      Ulker Biskuvi Sanayi A.S. (Turkey)     16,110,381   
   

 

 

 
      51,469,718   
   

 

 

 
  Pharmaceuticals 4.3%  
  14,683,193      China Animal Healthcare Ltd. (China)     11,365,096   
  1,404,885      Glenmark Pharmaceuticals Ltd. (India)     16,316,775   
  10,981,922      Marksans Pharma Ltd. (India)     10,491,149   
  410,269      Natco Pharma Ltd. (India)     9,751,860   
  15,462,400      Sino Biopharmaceutical Ltd. (China)     15,453,140   
   

 

 

 
      63,378,020   
   

 

 

 
  Property & Casualty Insurance 0.5%  
  2,715,373      Qualitas Controladora S.A.B. de C.V.** (Mexico)     7,278,601   
   

 

 

 
  Real Estate Operating Companies 1.5%  
  11,235,295      Parque Arauco S.A. (Chile)     21,586,483   
   

 

 

 
  Regional Banks 0.9%  
  2,475,146      Banregio Grupo Financiero S.A.B. de C.V. (Mexico)     13,739,293   
   

 

 

 
  Restaurants 2.1%  
  3,287,023      Alsea S.A.B. de C.V.* (Mexico)     10,379,751   
  454,320      Jubilant Foodworks Ltd.* (India)     8,996,654   
  903,416      Wowprime Corp. (Taiwan)     10,646,941   
   

 

 

 
      30,023,346   
   

 

 

 
  Retail REITs 0.5%  
  16,370,283      CapitaMalls Malaysia Trust (Malaysia)     7,135,956   
   

 

 

 
  Semiconductor Equipment 2.1%  
  480,579      Hermes Microvision, Inc. (Taiwan)     20,063,950   
  416,246      Koh Young Technology, Inc. (Korea)     11,182,728   
   

 

 

 
      31,246,678   
   

 

 

 
  Semiconductors 2.3%  
  1,409,000      Advanced Optoelectronic Technology, Inc. (Taiwan)     3,381,285   
  318,177      eMemory Technology, Inc. (Taiwan)     3,561,507   
  255,215      LEENO Industrial, Inc. (Korea)     9,831,310   
  264,520      Seoul Semiconductor Co. Ltd. (Korea)     6,003,558   
  7,631,190      Vanguard International Semiconductor Corp. (Taiwan)     11,188,582   
   

 

 

 
      33,966,242   
   

 

 

 
  Specialized Finance 1.7%  
  8,850,290      Chailease Holding Co. Ltd. (Taiwan)     21,500,565   
  153,602      Credit Analysis & Research Ltd. (India)     3,755,489   
   

 

 

 
      25,256,054   
   

 

 

 
  Specialty Chemicals 1.4%  
  69,548,355      D&L Industries, Inc. (Philippines)     20,115,596   
   

 

 

 
  Systems Software 0.8%  
  799,600      Totvs S.A. (Brazil)     12,104,954   
   

 

 

 
  Technology Hardware, Storage & Peripherals 2.3%  
  1,198,700      Ennoconn Corp. (Taiwan)     7,940,237   
  460,080      KONA I Co. Ltd. (Korea)     17,003,667   
  1,038,981      TSC Auto ID Technology Co. Ltd. (Taiwan)     8,385,077   
   

 

 

 
      33,328,981   
   

 

 

 
  Textiles 0.3%  
  496,190      Eclat Textile Co. Ltd. (Taiwan)     4,510,151   
   

 

 

 
 

 

55


Table of Contents
WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Trading Companies & Distributors 1.3%  
  619,272      iMarketKorea, Inc. (Korea)   $ 18,661,786   
   

 

 

 
  Wireless Telecommunication Services 1.2%  
  26,650,413      PT Tower Bersama Infrastructure Tbk (Indonesia)     17,497,194   
   

 

 

 
  Total Common Stocks
(cost $1,214,294,923)
    1,415,730,232   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM INVESTMENTS 0.5%  
  Repurchase Agreement 0.5%  
  $6,725,048      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $7,235,000 of United States Treasury Bonds 2.875% due 5/15/43; value: $6,864,206; repurchase proceeds: $6,725,048 (cost $6,725,048)   $ 6,725,048   
   

 

 

 
  Total Short-Term Investments
(cost $6,725,048)
    6,725,048   
   

 

 

 
  Total Investments
(cost $1,221,019,971) 97.6%
    1,422,455,280   
  Other Assets less Liabilities 2.4%     35,426,571   
   

 

 

 
  NET ASSETS 100.0%   $ 1,457,881,851   
   

 

 

 
 

*Non-income producing.

 

**Common units.

 

ADR American Depositary Receipt.

 

GDR Global Depositary Receipt.

 

NVDR Non-Voting Depositary Receipt.

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

  

  

  

  

  

  

  

At September 30, 2014, Wasatch Emerging Markets Small Cap Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Brazil

    5.5   

Chile

    2.3   

China

    4.8   

Colombia

    1.8   

India

    17.8   

Indonesia

    3.3   

Korea

    12.8   

Malaysia

    2.4   

Mexico

    5.4   

Nigeria

    0.6   

Peru

    2.6   

Philippines

    8.4   

Poland

    0.7   

Qatar

    1.0   

Russia

    0.1   

South Africa

    2.4   

Taiwan

    18.9   

Thailand

    6.5   

Turkey

    2.0   

United Arab Emirates

    0.7   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

56


Table of Contents

 

WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  COMMON STOCKS 93.3%  
  Advertising 0.0%  
  110,600      Scan Group Ltd. (Kenya)   $ 51,399   
   

 

 

 
  Air Freight & Logistics 1.7%  
  6,551,520      Agility Public Warehousing Co. KSC (Kuwait)     20,214,432   
  3,288,909      Aramex PJSC (United Arab Emirates)     2,865,410   
   

 

 

 
      23,079,842   
   

 

 

 
  Brewers 12.7%  
  1,321,873      Carlsberg Brewery Malaysia Berhad (Malaysia)     4,827,325   
  7,270,554      Delta Corp. Ltd. (Zimbabwe)     9,379,015   
  12,265,372      East African Breweries Ltd. (Kenya)     38,046,003   
  4,825,690      Florida Ice & Farm Co. S.A. (Costa Rica)     6,461,581   
  262,581      Guinness Anchor Berhad (Malaysia)     1,026,151   
  1,074,765      Guinness Ghana Breweries Ltd. (Ghana)     1,012,696   
  10,748,081      Guinness Nigeria plc (Nigeria)     14,119,951   
  2,256,243      Lion Brewery Ceylon plc (Sri Lanka)     10,898,471   
  5,600      Namibia Breweries Ltd. (Namibia)     8,153   
  36,605,999      Nigerian Breweries plc (Nigeria)     39,368,505   
  337,337      SABMiller plc (United Kingdom)     18,734,803   
  608      Societe de Limonaderies et Brasseries
(Ivory Coast)
    573,556   
  79,340      Societe Des Brasseries du Maroc (Morocco)     20,290,739   
  275,000      Tanzania Breweries Ltd.
(Tanzania, United Republic of)
    2,781,157   
  6,852      Union de Cervecerias Peruanas Backus y Johnston S.A.A. (Peru)     28,422   
   

 

 

 
      167,556,528   
   

 

 

 
  Building Products 0.6%  
  5,344,977      Al Anwar Ceramic Tile Co. (Oman)     7,996,641   
   

 

 

 
  Coal & Consumable Fuels 0.4%  
  2,648,700      PT Indo Tambangraya Megah Tbk (Indonesia)     5,646,285   
   

 

 

 
  Commodity Chemicals 0.2%  
  123,150      Berger Paints Bangladesh Ltd. (Bangladesh)     1,718,927   
  27,000      Paints & Chemical Industries Co. S.A.E. (Egypt)     181,295   
   

 

 

 
      1,900,222   
   

 

 

 
  Construction Materials 4.4%  
  1,896,460      Bamburi Cement Co. Ltd. (Kenya)     2,866,989   
  4,588,840      Kohat Cement Co. Ltd. (Pakistan)     5,412,581   
  15,562,929      Lafarge Africa plc (Nigeria)     12,051,879   
  3,450,000      Lafarge Cement Zambia plc* (Zambia)     14,283,439   
  9,092,076      Lafarge Republic, Inc. (Philippines)     1,991,535   
  5,680,412      Lucky Cement Ltd. (Pakistan)     22,204,467   
   

 

 

 
      58,810,890   
   

 

 

 
  Consumer Finance 0.2%  
  10,963,288      Letshego Holdings Ltd. (Botswana)     3,148,075   
   

 

 

 
  Department Stores 0.2%  
  2,951,376      Parkson Retail Asia Ltd. (Malaysia)     2,035,751   
   

 

 

 
  Distillers & Vintners 2.6%  
  738,191      Distell Group Ltd. (South Africa)     8,735,516   
  4,230,100      Distilleries Co. of Sri Lanka plc (Sri Lanka)     6,875,838   
  25,119,600      Emperador, Inc. (Philippines)     6,168,303   
  6,582,050      Vina Concha y Toro S.A. (Chile)     12,822,104   
   

 

 

 
      34,601,761   
   

 

 

 
Shares          Value  
             
  Diversified Banks 12.4%  
  414,422      Banco Latinoamericano de Comercio Exterior S.A., Class E   $ 12,714,467   
  835,620      Bancolombia S.A. (Colombia)     11,422,344   
  10,426,300      Barclays Bank of Kenya Ltd. (Kenya)     2,043,228   
  2,078,536      BBVA Banco Continental S.A. (Peru)     3,470,214   
  120,144      BLOM Bank SAL (Lebanon)     1,078,893   
  659,681      BLOM Bank SAL GDR (Lebanon)     6,233,985   
  4,578,100      CAL Bank Ltd. (Ghana)     1,294,113   
  16,680,882      Commercial Bank of Ceylon plc (Sri Lanka)     19,939,042   
  1,224,200      Commercial International Bank S.A.E (Egypt)     8,595,022   
  19,569,100      Equity Bank Ltd. (Kenya)     11,285,651   
  497,000      Ghana Commercial Bank Ltd. (Ghana)     771,936   
  1,508,371      Guaranty Trust Bank plc GDR (Nigeria)     13,575,339   
  26,965,395      Kenya Commercial Bank Ltd. (Kenya)     17,664,900   
  4,243,668      MCB Bank Ltd. (Pakistan)     11,624,635   
  3,505,596      National Bank of Kuwait SAK (Kuwait)     11,910,155   
  4,740,865      National Bank of Ras Al-Khaimah PSC (United Arab Emirates)     11,836,190   
  202,000      National Microfinance Bank plc
(Tanzania, United Republic of)
    528,790   
  126,092,227      Stanbic Bank Uganda Ltd.* (Uganda)     1,573,173   
  108,891,213      Zenith Bank plc (Nigeria)     16,142,382   
   

 

 

 
      163,704,459   
   

 

 

 
  Diversified Chemicals 0.7%  
  427,983      Omnia Holdings Ltd. (South Africa)     8,740,458   
   

 

 

 
  Food Retail 0.9%  
  1,500,000      Cargills Ceylon plc (Sri Lanka)     1,897,642   
  24,353,700      OK Zimbabwe (Zimbabwe)     4,383,666   
  2,768,730      Philippine Seven Corp. (Philippines)     5,614,271   
   

 

 

 
      11,895,579   
   

 

 

 
  Footwear 1.1%  
  49,400      Bata Shoe Co. Bangladesh Ltd. (Bangladesh)     716,340   
  3,144,226      Forus S.A. (Chile)     13,279,765   
   

 

 

 
      13,996,105   
   

 

 

 
  Health Care Facilities 0.7%  
  273,000      Al Noor Hospitals Group plc
(United Kingdom)
    4,504,432   
  653,429      NMC Health plc (United Arab Emirates)     5,051,803   
   

 

 

 
      9,556,235   
   

 

 

 
  Household Products 1.2%  
  1,038,070      Unilever Ghana Ltd.* (Ghana)     4,969,484   
  36,399,807      Unilever Nigeria plc (Nigeria)     10,396,132   
   

 

 

 
      15,365,616   
   

 

 

 
  Hypermarkets & Super Centers 1.7%  
  266,846      PriceSmart, Inc. (Costa Rica)     22,852,691   
   

 

 

 
  Industrial Conglomerates 0.2%  
  3,684,458      Innscor Africa Ltd. (Zimbabwe)     2,487,009   
   

 

 

 
  Industrial Gases 0.1%  
  71,000      Linde Bangladesh Ltd. (Bangladesh)     789,144   
   

 

 

 
  Integrated Telecommunication Services 1.2%  
  356,687      Sonatel (Senegal)     15,797,411   
   

 

 

 
  Marine Ports & Services 1.0%  
  338,860      DP World Ltd. (United Arab Emirates)     7,031,345   
  2,544,266      International Container Terminal Services, Inc. (Philippines)     6,258,971   
   

 

 

 
      13,290,316   
   

 

 

 
 

 

57


Table of Contents
WASATCH FRONTIER EMERGING SMALL COUNTRIES FUND (WAFMX) — Schedule of Investments (continued)  

 

 

 

Shares          Value  
             
  Oil & Gas Exploration & Production 1.0%  
  2,626,665      Pakistan Oilfields Ltd. (Pakistan)   $ 13,570,782   
   

 

 

 
  Oil & Gas Refining &
Marketing 1.0%
 
  5,300,185      Chevron Lubricants Lanka plc (Sri Lanka)     13,617,727   
   

 

 

 
  Packaged Foods & Meats 19.8%  
  10,448,645      Agthia Group PJSC (United Arab Emirates)     18,490,911   
  4,325,433      Alicorp S.A. (Peru)     11,961,101   
  24,254,221      Cadbury Nigeria plc (Nigeria)     8,001,744   
  15,581      Centrale Laitiere (Morocco)     2,590,220   
  6,651,700      Dairibord Holdings Ltd.* (Zimbabwe)     665,170   
  104,300      Dutch Lady Milk Industries Berhad (Malaysia)     1,491,135   
  1,638,172      FAN Milk Ltd. (Ghana)     2,439,831   
  2,382,300      Grupo Herdez S.A.B. de C.V. (Mexico)     6,401,758   
  1,013,480      Grupo Nutresa S.A. (Colombia)     13,863,577   
  14,526,194      Juhayna Food Industries* (Egypt)     20,316,213   
  2,058,090      Kinh Do Corp. (Vietnam)     5,768,760   
  7,049      Ledo dd (Croatia)     9,414,228   
  517,172      National Foods Holdings (Zimbabwe)     1,603,233   
  435,331      Nestlé Lanka plc (Sri Lanka)     7,009,355   
  74,400      Nestlé Malaysia Berhad (Malaysia)     1,505,917   
  5,896,734      Nestlé Nigeria plc (Nigeria)     37,888,272   
  21,076      Nestlé Pakistan Ltd. (Pakistan)     1,520,324   
  4,496,250      Olympic Industries Ltd. (Bangladesh)     14,382,189   
  14,899,452      PT Indofood CBP Sukses Makmur Tbk (Indonesia)     13,878,439   
  721,374      PT Mayora Indah Tbk (Indonesia)     1,805,655   
  1,618,714      Ulker Biskuvi Sanayi A.S. (Turkey)     10,728,430   
  9,979,996      Universal Robina Corp. (Philippines)     41,585,633   
  5,921,876      Vietnam Dairy Products JSC (Vietnam)     29,292,049   
   

 

 

 
      262,604,144   
   

 

 

 
  Personal Products 0.2%  
  25,907      Colgate-Palmolive Pakistan Ltd. (Pakistan)     394,092   
  160,650      Marico Bangladesh Ltd. (Bangladesh)     2,283,877   
   

 

 

 
      2,677,969   
   

 

 

 
  Pharmaceuticals 5.0%  
  2,161,635      Abbott Laboratories Pakistan Ltd. (Pakistan)     12,769,419   
  731,293      DHG Pharmaceutical JSC (Vietnam)     3,152,199   
  705,189      Egyptian International Pharmaceutical Industrial Co. (Egypt)     5,944,258   
  10,526,421      GlaxoSmithKline Consumer Nigeria plc (Nigeria)     4,020,816   
  1,854,050      GlaxoSmithKline Pakistan Ltd. (Pakistan)     3,639,060   
  226,144      Hikma Pharmaceuticals plc (United Kingdom)     6,352,041   
  8,767,887      Square Pharmaceuticals Ltd. (Bangladesh)     29,405,708   
  300,000      Traphaco JSC (Vietnam)     1,067,012   
   

 

 

 
      66,350,513   
   

 

 

 
  Publishing 0.2%  
  743,422      Nation Media Group Ltd. (Kenya)     2,614,048   
   

 

 

 
  Restaurants 2.0%  
  2,504,000      Kuwait Foods Americana*** (Kuwait)     26,737,112   
   

 

 

 
  Soft Drinks 1.2%  
  940,900      Arca Continental S.A.B. de C.V. (Mexico)     6,459,372   
  241,909      Coca-Cola Icecek A.S. (Turkey)     5,218,727   
  36,456,973      Pepsi-Cola Products Philippines, Inc.* (Philippines)     3,899,359   
   

 

 

 
      15,577,458   
   

 

 

 
Shares          Value  
             
  Specialty Chemicals 0.0%  
  863,988      Chemical and Allied Products plc (Nigeria)   $ 203,947   
   

 

 

 
  Specialty Stores 0.8%  
  290,800      FF Group* (Greece)     10,815,119   
   

 

 

 
  Steel 1.0%  
  4,790,797      Hoa Phat Group JSC (Vietnam)     12,977,073   
   

 

 

 
  Technology Distributors 0.4%  
  2,299,047      FPT Corp. (Vietnam)     5,631,866   
   

 

 

 
  Tobacco 3.4%  
  598,500      British American Tobacco Bangladesh Co. Ltd. (Bangladesh)     21,812,859   
  1,103,641      British American Tobacco Kenya Ltd. (Kenya)     10,628,570   
  1,217,442      Ceylon Tobacco Co. plc (Sri Lanka)     10,781,257   
  263,645      Pakistan Tobacco Co. Ltd. (Pakistan)     2,378,588   
   

 

 

 
      45,601,274   
   

 

 

 
  Wireless Telecommunication Services 13.1%  
  13,621,760      Econet Wireless Zimbabwe Ltd. (Zimbabwe)     10,488,755   
  381,760      Globe Telecom, Inc. (Philippines)     13,806,395   
  8,285,600      GrameenPhone Ltd. (Bangladesh)     40,831,008   
  214,600      Millicom International Cellular S.A. (Colombia)     17,225,667   
  1,893,811      MTN Group Ltd. (South Africa)     39,971,044   
  261,610      Philippine Long Distance Telephone Co. (Philippines)     18,059,557   
  187,600,961      Safaricom Ltd. (Kenya)     27,205,291   
  548,674      Vodacom Group Ltd. (South Africa)     6,316,930   
   

 

 

 
      173,904,647   
   

 

 

 
  Total Common Stocks
(cost $1,103,272,323)
    1,236,186,096   
   

 

 

 
  PARTICIPATION NOTES 3.4%  
  Health Care Facilities 1.0%  
  417,264      Al Mouwasat Medical Services, HSBC Bank, 4/13/15, Series 0002 (Saudi Arabia)     13,931,045   
   

 

 

 
  Hypermarkets & Super
Centers 1.0%
 
  427,322      Abdullah Al Othaim Markets, HSBC Bank, 7/31/17, Series 0012 (Saudi Arabia)     13,070,825   
   

 

 

 
  Office Services & Supplies 0.5%  
  123,152      Jarir Marketing Co., HSBC Bank, 5/4/15, Series 000R (Saudi Arabia)     6,614,722   
   

 

 

 
  Restaurants 0.9%  
  309,723      Herfy Food Services Co., HSBC Bank, 10/8/15, Series 0000 (Saudi Arabia)     8,483,017   
  123,889      Herfy Food Services Co., HSBC Bank, 7/6/17, Series 0000 (Saudi Arabia)     3,393,201   
   

 

 

 
      11,876,218   
   

 

 

 
  Total Participation Notes
(cost $36,069,586)
    45,492,810   
   

 

 

 
 

 

58


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Principal
Amount
         Value  
  SHORT-TERM
INVESTMENTS 2.7%
 
  Repurchase Agreement 2.7%  
  $35,570,196      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $38,245,000 of United States Treasury Bonds 2.875% due 5/15/43; value: $36,284,944; repurchase proceeds: $35,570,196 (cost $35,570,196)   $ 35,570,196   
   

 

 

 
  Total Short-Term Investments
(cost $35,570,196)
    35,570,196   
   

 

 

 
  Total Investments
(cost $1,174,912,105) 99.4%
    1,317,249,102   
  Other Assets less Liabilities 0.6%     7,445,193   
   

 

 

 
  NET ASSETS 100.0%   $ 1,324,694,295   
   

 

 

 
 

*Non-income producing.

 

***Security was fair valued under procedures adopted by the Board of Trustees (see Note 14).

 

GDR Global Depositary Receipt.

 

See Notes to Financial Statements.

  

   

  

  

At September 30, 2014, Wasatch Frontier Emerging Small Countries Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Bangladesh

    8.7   

Botswana

    0.3   

Chile

    2.0   

Colombia

    3.3   

Costa Rica

    2.3   

Croatia

    0.7   

Egypt

    2.7   

Ghana

    0.8   

Greece

    0.8   

Indonesia

    1.7   

Ivory Coast

    0.1   

Kenya

    8.8   

Kuwait

    4.6   

Lebanon

    0.6   

Malaysia

    0.9   

Mexico

    1.0   

Morocco

    1.8   

Namibia

    <0.1   

Nigeria

    12.2   

Oman

    0.6   

Pakistan

    5.7   

Peru

    1.2   

Philippines

    7.6   

Saudi Arabia

    3.6   

Senegal

    1.2   

South Africa

    5.0   

Sri Lanka

    5.5   

Tanzania, United Republic of

    0.3   

Turkey

    1.2   

Uganda

    0.1   

United Arab Emirates

    3.5   

United Kingdom

    2.3   

United States

    1.0   

Vietnam

    4.5   

Zambia

    1.1   

Zimbabwe

    2.3   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

59


Table of Contents
WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 97.6%  
  Airlines 2.8%  
  25,423      Allegiant Travel Co.   $ 3,143,808   
  32,300      Spirit Airlines, Inc.*     2,233,222   
   

 

 

 
      5,377,030   
   

 

 

 
  Airport Services 1.6%  
  706,925      Grupo Aeroportuario del Centro Norte S.A.B. de C.V.* (Mexico)     3,118,202   
   

 

 

 
  Apparel, Accessories & Luxury Goods 1.2%  
  82,345      Salvatore Ferragamo Italia S.p.A. (Italy)     2,261,768   
   

 

 

 
  Application Software 1.3%  
  17,839      Ultimate Software Group, Inc.*     2,524,397   
   

 

 

 
  Asset Management & Custody Banks 0.6%  
  7,078      Virtus Investment Partners, Inc.     1,229,449   
   

 

 

 
  Biotechnology 4.7%  
  94,091      Abcam plc (United Kingdom)     613,442   
  373,892      Biocon Ltd. (India)     3,020,921   
  11,427      Medy-Tox, Inc. (Korea)     2,425,632   
  79,054      Seattle Genetics, Inc.*     2,939,228   
   

 

 

 
      8,999,223   
   

 

 

 
  Casinos & Gaming 1.0%  
  815,225      Melco International Development Ltd. (China)     1,889,853   
   

 

 

 
  Construction & Engineering 1.5%  
  212,803      Promotora y Operadora de Infraestructura S.A.B. de C.V.* (Mexico)     2,912,954   
   

 

 

 
  Construction Materials 1.5%  
  322,520      Cemex Latam Holdings S.A.* (Colombia)     2,866,880   
   

 

 

 
  Consumer Finance 6.5%  
  597,062      Credito Real S.A.B. de C.V. (Mexico)     1,689,347   
  437,090      Mahindra & Mahindra Financial Services Ltd. (India)     1,927,839   
  52,122      Portfolio Recovery Associates, Inc.*     2,722,332   
  130,805      Shriram City Union Finance Ltd. (India)     3,547,577   
  171,006      Shriram Transport Finance Co., Ltd. (India)     2,594,302   
   

 

 

 
      12,481,397   
   

 

 

 
  Data Processing & Outsourced Services 3.7%  
  33,675      Syntel, Inc.*     2,961,379   
  112,170      Wirecard AG (Germany)     4,144,083   
   

 

 

 
      7,105,462   
   

 

 

 
  Diversified Banks 2.6%  
  1,045,075      Abu Dhabi Commercial Bank PJSC
(United Arab Emirates)
    2,409,993   
  1,028,400      National Bank of Ras Al-Khaimah PSC (United Arab Emirates)     2,567,535   
   

 

 

 
      4,977,528   
   

 

 

 
  Diversified Chemicals 1.4%  
  421,747      Pidilite Industries Ltd. (India)     2,711,718   
   

 

 

 
  Diversified Support Services 1.6%  
  97,480      Copart, Inc.*     3,052,586   
   

 

 

 
  Drug Retail 1.2%  
  18,170      Cosmos Pharmaceutical Corp. (Japan)     2,304,488   
   

 

 

 
  Electronic Manufacturing Services 1.6%  
  44,442      IPG Photonics Corp.*     3,056,721   
   

 

 

 
Shares          Value  
             
  Health Care Facilities 2.9%  
  112,601      Apollo Hospitals Enterprise Ltd. (India)   $ 2,060,037   
  42,781      Ensign Group, Inc. (The)     1,488,779   
  495,790      Life Healthcare Group Holdings Ltd. (South Africa)     1,955,673   
   

 

 

 
      5,504,489   
   

 

 

 
  Health Care Services 1.9%  
  41,481      CorVel Corp.*     1,412,428   
  51,427      IPC The Hospitalist Co., Inc.*     2,303,415   
   

 

 

 
      3,715,843   
   

 

 

 
  Household Products 1.5%  
  50,474      Pigeon Corp. (Japan)     2,857,931   
   

 

 

 
  Hypermarkets & Super Centers 1.8%  
  62,963      InRetail Peru Corp.* (Peru)     1,196,297   
  27,370      PriceSmart, Inc. (Costa Rica)     2,343,967   
   

 

 

 
      3,540,264   
   

 

 

 
  Industrial Machinery 2.2%  
  18,982      IDEX Corp.     1,373,728   
  63,090      Rotork plc (United Kingdom)     2,827,387   
   

 

 

 
      4,201,115   
   

 

 

 
  Internet Retail 3.8%  
  166,594      MakeMyTrip Ltd.* (India)     4,636,311   
  57,438      Start Today Co. Ltd. (Japan)     1,250,098   
  7,258      Vipshop Holdings Ltd. ADR* (China)     1,371,835   
   

 

 

 
      7,258,244   
   

 

 

 
  Internet Software & Services 8.5%  
  79,657      Cornerstone OnDemand, Inc.*     2,740,997   
  52,800      Dealertrack Technologies, Inc.*     2,292,048   
  43,034      Envestnet, Inc.*     1,936,530   
  34,476      MercadoLibre, Inc. (Brazil)     3,745,817   
  77,727      SMS Co. Ltd. (Japan)     1,995,708   
  22,945      SPS Commerce, Inc.*     1,219,527   
  19,201      Vistaprint N.V.*     1,052,023   
  67,661      Xoom Corp.*     1,485,159   
   

 

 

 
      16,467,809   
   

 

 

 
  IT Consulting & Other Services 3.4%  
  117,202      HCL Technologies Ltd. (India)     3,257,024   
  83,132      Tech Mahindra Ltd. (India)     3,345,874   
   

 

 

 
      6,602,898   
   

 

 

 
  Leisure Facilities 1.0%  
  37,979      Life Time Fitness, Inc.*     1,915,661   
   

 

 

 
  Leisure Products 1.4%  
  402,078      Merida Industry Co. Ltd. (Taiwan)     2,802,168   
   

 

 

 
  Life Sciences Tools & Services 2.4%  
  39,348      Covance, Inc.*     3,096,688   
  60,175      Fluidigm Corp.*     1,474,287   
   

 

 

 
      4,570,975   
   

 

 

 
  Managed Health Care 1.7%  
  335,946      Qualicorp S.A.* (Brazil)     3,308,575   
   

 

 

 
  Marine Ports & Services 1.9%  
  1,476,025      International Container Terminal Services, Inc. (Philippines)     3,631,066   
   

 

 

 
  Oil & Gas Equipment & Services 0.7%  
  51,404      TGS-NOPEC Geophysical Co. ASA (Norway)     1,307,003   
   

 

 

 
  Oil & Gas Exploration & Production 2.0%  
  185,252      Gran Tierra Energy, Inc.* (Colombia)     1,026,296   
  91,200      Northern Oil and Gas, Inc.*     1,296,864   
  124,863      Nostrum Oil & Gas plc* (Kazakhstan)     1,527,954   
   

 

 

 
      3,851,114   
   

 

 

 
 

 

60


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

    
Shares
         Value  
             
  Packaged Foods & Meats 3.2%  
  102,590      Calbee, Inc. (Japan)   $ 3,358,086   
  28,380      GlaxoSmithKline Consumer Healthcare Ltd. (India)     2,593,994   
  62,800      Vietnam Dairy Products JSC (Vietnam)     310,635   
   

 

 

 
      6,262,715   
   

 

 

 
  Personal Products 0.8%  
  36,561      Nu Skin Enterprises, Inc., Class A     1,646,342   
   

 

 

 
  Pharmaceuticals 6.9%  
  169,569      IPCA Laboratories Ltd. (India)     2,174,525   
  179,708      Lupin Ltd. (India)     4,054,196   
  3,524,000      Marksans Pharma Ltd. (India)     3,366,516   
  3,614,325      Sino Biopharmaceutical Ltd. (China)     3,612,160   
   

 

 

 
      13,207,397   
   

 

 

 
  Publishing 1.1%  
  60,939      Rightmove plc (United Kingdom)     2,125,530   
   

 

 

 
  Regional Banks 1.3%  
  21,667      Signature Bank*     2,428,004   
   

 

 

 
  Research & Consulting
Services 1.4%
 
  21,205      IHS, Inc., Class A*     2,654,654   
   

 

 

 
  Semiconductor Equipment 0.7%  
  104,047      PDF Solutions, Inc.*     1,312,033   
   

 

 

 
  Semiconductors 2.1%  
  40,443      Microchip Technology, Inc.     1,910,123   
  40,686      Power Integrations, Inc.     2,193,382   
   

 

 

 
      4,103,505   
   

 

 

 
  Soft Drinks 1.6%  
  140,786      Coca-Cola Icecek A.S. (Turkey)     3,037,191   
   

 

 

 
  Thrifts & Mortgage
Finance 0.5%
 
  21,713      Home Capital Group, Inc. (Canada)     976,412   
   

 

 

 
  Trading Companies & Distributors 1.4%  
  31,856      MSC Industrial Direct Co., Inc., Class A     2,722,414   
   

 

 

 
  Trucking 3.6%  
  10,643      J.B. Hunt Transport Services, Inc.     788,114   
  141,966      Knight Transportation, Inc.     3,888,449   
  31,599      Old Dominion Freight Line, Inc.*     2,232,153   
   

 

 

 
      6,908,716   
   

 

 

 
  Wireless Telecommunication Services 1.1%  
  3,276,742      PT Tower Bersama Infrastructure Tbk (Indonesia)     2,151,328   
   

 

 

 
  Total Common Stocks
(cost $142,751,399)
    187,941,052   
   

 

 

 
  PARTICIPATION NOTES 1.2%  
  Office Services & Supplies 1.2%  
  44,000      Jarir Marketing Co., HSBC Bank, 5/4/15, Series 000R (Saudi Arabia)     2,363,321   
   

 

 

 
  Total Participation Notes
(cost $2,283,107)
    2,363,321   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM
INVESTMENTS 1.2%
 
  Repurchase Agreement 1.2%  
  $2,300,784      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $2,475,000 of United States Treasury Bonds 2.875% due 5/15/43; value: $2,348,156; repurchase proceeds: $2,300,784 (cost $2,300,784)   $ 2,300,784   
   

 

 

 
  Total Short-Term Investments
(cost $2,300,784)
    2,300,784   
   

 

 

 
  Total Investments
(cost $147,335,290) 100.0%
    192,605,157   
  Other Assets less Liabilities <0.1%     58,993   
   

 

 

 
  NET ASSETS 100.0%   $ 192,664,150   
   

 

 

 
 

*Non-income producing.

 

ADR American Depositary Receipt.

 

See Notes to Financial Statements.

  

  

  

At September 30, 2014, Wasatch Global Opportunities Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Brazil

    3.7   

Canada

    0.5   

China

    3.6   

Colombia

    2.0   

Costa Rica

    1.2   

Germany

    2.2   

India

    20.7   

Indonesia

    1.1   

Italy

    1.2   

Japan

    6.2   

Kazakhstan

    0.8   

Korea

    1.3   

Mexico

    4.1   

Norway

    0.7   

Peru

    0.6   

Philippines

    1.9   

Saudi Arabia

    1.2   

South Africa

    1.0   

Taiwan

    1.5   

Turkey

    1.6   

United Arab Emirates

    2.6   

United Kingdom

    2.9   

United States

    37.2   

Vietnam

    0.2   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

61


Table of Contents
WASATCH HERITAGE GROWTH FUND (WAHGX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 92.1%  
  Aerospace & Defense 1.6%  
  10,454      TransDigm Group, Inc.   $ 1,926,986   
   

 

 

 
  Airlines 3.3%  
  56,199      Spirit Airlines, Inc.*     3,885,599   
   

 

 

 
  Apparel Retail 2.7%  
  34,953      Ross Stores, Inc.     2,641,748   
  15,885      Urban Outfitters, Inc.*     582,979   
   

 

 

 
      3,224,727   
   

 

 

 
  Application Software 1.8%  
  27,852      ANSYS, Inc.*     2,107,561   
   

 

 

 
  Asset Management & Custody Banks 5.0%  
  12,076      Artisan Partners Asset Management, Inc.     628,556   
  111,802      SEI Investments Co.     4,042,760   
  16,961      T. Rowe Price Group, Inc.     1,329,742   
   

 

 

 
      6,001,058   
   

 

 

 
  Auto Parts & Equipment 1.4%  
  60,324      Gentex Corp.     1,614,873   
   

 

 

 
  Automotive Retail 1.1%  
  8,360      O’Reilly Automotive, Inc.*     1,257,010   
   

 

 

 
  Biotechnology 1.3%  
  41,731      Seattle Genetics, Inc.*     1,551,559   
   

 

 

 
  Communications Equipment 1.3%  
  13,534      F5 Networks, Inc.*     1,607,027   
   

 

 

 
  Data Processing & Outsourced Services 2.5%  
  11,856      Alliance Data Systems Corp.*     2,943,489   
   

 

 

 
  Distributors 3.4%  
  154,356      LKQ Corp.*     4,104,326   
   

 

 

 
  Diversified Chemicals 1.4%  
  30,306      FMC Corp.     1,733,200   
   

 

 

 
  Diversified Support Services 4.3%  
  165,721      Copart, Inc.*     5,189,553   
   

 

 

 
  Electronic Components 4.5%  
  53,630      Amphenol Corp., Class A     5,355,492   
   

 

 

 
  Electronic Manufacturing Services 2.6%  
  45,810      IPG Photonics Corp.*     3,150,812   
   

 

 

 
  Health Care Equipment 2.4%  
  48,582      St. Jude Medical, Inc.     2,921,236   
   

 

 

 
  Health Care Services 3.0%  
  85,593      Catamaran Corp.* (Canada)     3,607,745   
   

 

 

 
  Health Care Supplies 1.0%  
  23,003      Align Technology, Inc.*     1,188,795   
   

 

 

 
  Industrial Machinery 2.5%  
  40,596      IDEX Corp.     2,937,933   
   

 

 

 
  Internet Retail 0.5%  
  37,503      RetailMeNot, Inc.*     606,048   
   

 

 

 
  IT Consulting & Other Services 5.8%  
  113,740      Cognizant Technology Solutions Corp., Class A*     5,092,140   
  41,901      EPAM Systems, Inc.*     1,834,845   
   

 

 

 
      6,926,985   
   

 

 

 
  Leisure Facilities 1.1%  
  25,522      Life Time Fitness, Inc.*     1,287,330   
   

 

 

 
Shares          Value  
             
  Life Sciences Tools & Services 3.7%  
  56,934      Covance, Inc.*   $ 4,480,706   
   

 

 

 
  Managed Health Care 0.7%  
  10,136      Centene Corp.*     838,349   
   

 

 

 
  Oil & Gas Equipment & Services 1.8%  
  14,583      Core Laboratories N.V.     2,134,222   
   

 

 

 
  Oil & Gas Exploration & Production 2.7%  
  137,158      Ultra Petroleum Corp.*     3,190,295   
   

 

 

 
  Personal Products 1.7%  
  10,391      Herbalife Ltd.     454,606   
  35,365      Nu Skin Enterprises, Inc., Class A     1,592,486   
   

 

 

 
      2,047,092   
   

 

 

 
  Pharmaceuticals 1.6%  
  21,328      Mallinckrodt plc*     1,922,719   
   

 

 

 
  Regional Banks 2.5%  
  26,587      Signature Bank*     2,979,339   
   

 

 

 
  Research & Consulting Services 4.2%  
  39,929      IHS, Inc., Class A*     4,998,711   
   

 

 

 
  Restaurants 2.1%  
  31,320      Tim Hortons, Inc. (Canada)     2,468,329   
   

 

 

 
  Semiconductors 6.3%  
  21,016      Linear Technology Corp.     932,900   
  113,445      Microchip Technology, Inc.     5,358,007   
  29,095      Silicon Laboratories, Inc.*     1,182,421   
   

 

 

 
      7,473,328   
   

 

 

 
  Specialized Finance 2.5%  
  15,608      Intercontinental Exchange, Inc.     3,044,340   
   

 

 

 
  Technology Distributors 2.1%  
  80,258      CDW Corp.     2,492,011   
   

 

 

 
  Trading Companies & Distributors 3.8%  
  53,106      MSC Industrial Direct Co., Inc., Class A     4,538,439   
   

 

 

 
  Trucking 1.9%  
  31,475      J.B. Hunt Transport Services, Inc.     2,330,724   
   

 

 

 
  Total Common Stocks
(cost $66,718,180)
    110,067,948   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM INVESTMENTS 7.8%  
  Repurchase Agreement 7.8%  
  $9,319,814      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $9,535,000 of United States Treasury Notes 1.750% due 9/30/19; value: $9,511,163; repurchase proceeds: $9,319,814 (cost $9,319,814)   $ 9,319,814   
   

 

 

 
  Total Short-Term Investments
(cost $9,319,814)
    9,319,814   
   

 

 

 
  Total Investments
(cost $76,037,994) 99.9%
    119,387,762   
  Other Assets less Liabilities 0.1%     80,795   
   

 

 

 
  NET ASSETS 100.0%   $ 119,468,557   
   

 

 

 
 

*Non-income producing.

 

See Notes to Financial Statements.

  

  

 

 

62


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

At September 30, 2014, Wasatch Heritage Growth Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Canada

    5.5   

United States

    94.5   
 

 

 

 

TOTAL

    100.0
 

 

 

 

    

 

 

63


Table of Contents
WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 98.0%  
  Aerospace & Defense 1.1%  
  3,525,732      Senior plc (United Kingdom)   $ 15,326,313   
   

 

 

 
  Apparel, Accessories & Luxury Goods 1.1%  
  584,389      Salvatore Ferragamo Italia S.p.A. (Italy)     16,051,399   
   

 

 

 
  Application Software 4.0%  
  572,077      Aveva Group plc (United Kingdom)     14,269,959   
  1,894,796      Computer Modelling Group Ltd. (Canada)     19,682,679   
  4,679,359      Diligent Board Member Services, Inc.* ‡‡ (New Zealand)     16,914,905   
  1,216,211      Fusionex International plc (Malaysia)     5,834,857   
   

 

 

 
      56,702,400   
   

 

 

 
  Asset Management & Custody Banks 2.8%  
  566,702      Alaris Royalty Corp. (Canada)     15,682,860   
  17,499,244      ARA Asset Management Ltd. (Singapore)     24,003,509   
   

 

 

 
      39,686,369   
   

 

 

 
  Biotechnology 3.0%  
  4,236,075      Abcam plc (United Kingdom)     27,617,815   
  71,085      Medy-Tox, Inc. (Korea)     15,089,353   
   

 

 

 
      42,707,168   
   

 

 

 
  Casinos & Gaming 1.3%  
  7,774,839      Melco International Development Ltd. (China)     18,023,620   
   

 

 

 
  Construction Materials 2.6%  
  2,625,819      Cemex Latam Holdings S.A.* (Colombia)     23,340,902   
  7,478,016      PT Indocement Tunggal Prakarsa Tbk (Indonesia)     13,225,379   
   

 

 

 
      36,566,281   
   

 

 

 
  Consumer Finance 1.3%  
  4,031,947      Mahindra & Mahindra Financial Services Ltd. (India)     17,783,393   
   

 

 

 
  Data Processing & Outsourced Services 3.1%  
  341,378      GMO Payment Gateway, Inc. (Japan)     7,719,329   
  985,820      Wirecard AG (Germany)     36,420,787   
   

 

 

 
      44,140,116   
   

 

 

 
  Diversified Support Services 0.4%  
  80,016      KEPCO Plant Service & Engineering Co. Ltd. (Korea)     6,339,102   
   

 

 

 
  Drug Retail 3.5%  
  197,306      Cosmos Pharmaceutical Corp. (Japan)     25,024,176   
  584,690      Sugi Holdings Co. Ltd. (Japan)     24,549,783   
   

 

 

 
      49,573,959   
   

 

 

 
  Electrical Components & Equipment 1.4%  
  1,991,044      Amara Raja Batteries Ltd. (India)     19,246,329   
   

 

 

 
  Electronic Equipment & Instruments 4.2%  
  176,808      Ai Holdings Corp. (Japan)     3,577,269   
  394,246      Axis Communications AB (Sweden)     10,725,108   
  1,555,794      Chroma ATE, Inc. (Taiwan)     4,321,721   
  1,680,543      Halma plc (United Kingdom)     16,669,811   
  661,549      LPKF Laser & Electronics AG (Germany)     11,625,103   
  505,368      Renishaw plc (United Kingdom)     13,351,343   
   

 

 

 
      60,270,355   
   

 

 

 
  General Merchandise Stores 2.7%  
  156,476      Ryohin Keikaku Co. Ltd. (Japan)     18,647,288   
  502,495      Seria Co. Ltd. (Japan)     19,151,394   
   

 

 

 
      37,798,682   
   

 

 

 
Shares          Value  
             
  Health Care Equipment 1.2%  
  1,711,604      Elekta AB, Class B (Sweden)   $ 16,868,291   
   

 

 

 
  Health Care Supplies 1.0%  
  88,365      Sartorius Stedim Biotech (France)     14,763,581   
   

 

 

 
  Health Care Technology 2.9%  
  1,069,193      EMIS Group plc (United Kingdom)     12,884,474   
  1,785,625      M3, Inc. (Japan)     28,654,662   
   

 

 

 
      41,539,136   
   

 

 

 
  Household Products 2.5%  
  635,080      Pigeon Corp. (Japan)     35,959,396   
   

 

 

 
  Human Resource & Employment Services 1.6%  
  407,312      51job, Inc. ADR* (China)     12,190,848   
  776,374      Seek Ltd. (Australia)     11,001,827   
   

 

 

 
      23,192,675   
   

 

 

 
  Industrial Machinery 3.3%  
  794,498      Rotork plc (United Kingdom)     35,605,539   
  4,614,623      Sarine Technologies Ltd. (Israel)     11,031,980   
   

 

 

 
      46,637,519   
   

 

 

 
  Internet Retail 2.9%  
  9,812,879      boohoo.com plc* (United Kingdom)     7,594,504   
  358,845      Jumei International Holding Ltd. ADR* (China)     8,425,681   
  514,819      Start Today Co. Ltd. (Japan)     11,204,677   
  621,153      Yoox S.p.A.* (Italy)     14,252,961   
   

 

 

 
      41,477,823   
   

 

 

 
  Internet Software & Services 7.0%  
  1,584,126      carsales.com Ltd. (Australia)     13,654,551   
  369,193      Criteo S.A. ADR* (France)     12,423,345   
  646,714      Infomart Corp. (Japan)     11,121,063   
  999,130      Kakaku.com, Inc. (Japan)     14,193,249   
  220,802      MercadoLibre, Inc. (Brazil)     23,990,137   
  919,967      SMS Co. Ltd. (Japan)     23,620,944   
   

 

 

 
      99,003,289   
   

 

 

 
  Leisure Products 2.2%  
  4,484,556      Merida Industry Co. Ltd. (Taiwan)     31,253,830   
   

 

 

 
  Life & Health Insurance 1.1%  
  1,827,333      Discovery Ltd. (South Africa)     15,913,001   
   

 

 

 
  Marine Ports & Services 1.9%  
  10,952,268      International Container Terminal Services, Inc. (Philippines)     26,942,909   
   

 

 

 
  Movies & Entertainment 1.4%  
  702,662      CTS Eventim AG & Co KGaA (Germany)     19,850,161   
   

 

 

 
  Oil & Gas Equipment & Services 6.1%  
  185,642      Dril-Quip, Inc.*     16,596,395   
  302,600      Pason Systems, Inc. (Canada)     8,455,139   
  146,814      Schoeller-Bleckmann Oilfield Equipment AG (Austria)     14,322,458   
  510,619      ShawCor Ltd. (Canada)     25,746,262   
  825,876      TGS-NOPEC Geophysical Co. ASA (Norway)     20,998,806   
   

 

 

 
      86,119,060   
   

 

 

 
  Oil & Gas Exploration & Production 2.2%  
  4,698,156      Afren plc* (Nigeria)     7,881,291   
  2,079,861      Gran Tierra Energy, Inc.* (Colombia)     11,522,430   
  1,000,069      Nostrum Oil & Gas plc* (Kazakhstan)     12,237,890   
   

 

 

 
      31,641,611   
   

 

 

 
  Oil & Gas Storage & Transportation 1.0%  
  236,189      Gaztransport Et Technigaz S.A. (France)     13,971,021   
   

 

 

 
 

 

64


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Packaged Foods & Meats 4.6%  
  1,044,490      Calbee, Inc. (Japan)   $ 34,189,369   
  24,318,155      Vitasoy International Holdings Ltd. (Hong Kong)     30,974,552   
   

 

 

 
      65,163,921   
   

 

 

 
  Pharmaceuticals 1.1%  
  276,872      Sawai Pharmaceutical Co. Ltd. (Japan)     15,929,449   
   

 

 

 
  Property & Casualty
Insurance 1.6%
 
  8,412,356      Qualitas Controladora S.A.B. de C.V.** (Mexico)     22,549,455   
   

 

 

 
  Publishing 2.0%  
  832,651      Rightmove plc (United Kingdom)     29,042,560   
   

 

 

 
  Real Estate Development 0.2%  
  246,515      Patrizia Immobilien AG* (Germany)     3,306,126   
   

 

 

 
  Research & Consulting
Services 3.6%
 
  304,280      DKSH Holding AG (Switzerland)     22,709,841   
  977,400      Nihon M&A Center, Inc. (Japan)     28,384,035   
   

 

 

 
      51,093,876   
   

 

 

 
  Restaurants 4.5%  
  1,657,258      Domino’s Pizza Enterprises Ltd. (Australia)     38,001,367   
  2,828,968      Domino’s Pizza Group plc (United Kingdom)     26,043,898   
   

 

 

 
      64,045,265   
   

 

 

 
  Semiconductor Equipment 1.2%  
  419,288      Hermes Microvision, Inc. (Taiwan)     17,505,079   
   

 

 

 
  Soft Drinks 1.5%  
  972,195      Coca-Cola Icecek A.S. (Turkey)     20,973,263   
   

 

 

 
  Specialized Finance 1.0%  
  5,760,200      Chailease Holding Co. Ltd. (Taiwan)     13,993,615   
   

 

 

 
  Specialty Chemicals 2.9%  
  472,561      Chr. Hansen Holding A/S (Denmark)     18,262,995   
  281,778      Hexpol AB (Sweden)     22,520,383   
   

 

 

 
      40,783,378   
   

 

 

 
  Thrifts & Mortgage Finance 2.3%  
  4,887,601      Gruh Finance Ltd. (India)     15,170,873   
  391,053      Home Capital Group, Inc. (Canada)     17,585,258   
   

 

 

 
      32,756,131   
   

 

 

 
  Trading Companies & Distributors 0.7%  
  399,423      MonotaRO Co. Ltd. (Japan)     10,004,240   
   

 

 

 
  Total Common Stocks
(cost $1,220,255,814)
    1,392,495,147   
   

 

 

 
  Total Investments
(cost $1,220,255,814) 98.0%
    1,392,495,147   
  Other Assets less Liabilities 2.0%     28,590,995   
   

 

 

 
  NET ASSETS 100.0%   $ 1,421,086,142   
   

 

 

 
 

*Non-income producing.

 

**Common units.

 

‡‡Affiliated company (see Note 9).

 

ADR American Depositary Receipt.

 

See Notes to Financial Statements.

  

  

  

  

  

At September 30, 2014, Wasatch International Growth Fund’s investments were in the following countries:

 

Country   %  

Australia

    4.5   

Austria

    1.0   

Brazil

    1.7   

Canada

    6.3   

China

    2.8   

Colombia

    2.5   

Denmark

    1.3   

France

    3.0   

Germany

    5.1   

Hong Kong

    2.2   

India

    3.8   

Indonesia

    1.0   

Israel

    0.8   

Italy

    2.2   

Japan

    22.4   

Kazakhstan

    0.9   

Korea

    1.5   

Malaysia

    0.4   

Mexico

    1.6   

New Zealand

    1.2   

Nigeria

    0.6   

Norway

    1.5   

Philippines

    1.9   

Singapore

    1.7   

South Africa

    1.1   

Sweden

    3.6   

Switzerland

    1.6   

Taiwan

    4.8   

Turkey

    1.5   

United Kingdom

    14.3   

United States

    1.2   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

65


Table of Contents
WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 97.5%  
  Apparel Retail 2.0%  
  804,622      Apranga PVA (Lithuania)   $ 2,743,515   
  6,842,290      Padini Holdings Berhad (Malaysia)     4,004,632   
   

 

 

 
      6,748,147   
   

 

 

 
  Apparel, Accessories & Luxury Goods 1.9%  
  117,976      Delta-Galil Industries Ltd. (Israel)     3,430,876   
  375,358      Makalot Industrial Co. Ltd. (Taiwan)     1,906,435   
  1,878,000      MC Group Public Co. Ltd. (Thailand)     1,071,488   
   

 

 

 
      6,408,799   
   

 

 

 
  Application Software 1.0%  
  165,375      Linx S.A. (Brazil)     3,443,001   
   

 

 

 
  Asset Management & Custody Banks 0.5%  
  923,100      Peregrine Holdings Ltd. (South Africa)     1,839,415   
   

 

 

 
  Auto Parts & Equipment 0.5%  
  27,901      WABCO India Ltd. (India)     1,761,883   
   

 

 

 
  Automotive Retail 0.6%  
  91,400      Mekonomen AB (Sweden)     1,981,315   
   

 

 

 
  Brewers 4.9%  
  362,475      Carlsberg Brewery Malaysia Berhad (Malaysia)     1,323,716   
  9,927,213      International Breweries plc (Nigeria)     1,819,837   
  197,574      Olvi Oyj, Class A (Finland)     5,975,674   
  32,020      Royal UNIBREW A/S* (Denmark)     5,329,062   
  1,227,502      Turk Tuborg Bira ve Malt Sanayii A.S.* (Turkey)     2,085,078   
   

 

 

 
      16,533,367   
   

 

 

 
  Building Products 1.4%  
  716,251      Dynasty Ceramic Public Co. Ltd. (Thailand)     1,281,189   
  326,077      Kajaria Ceramics Ltd. (India)     3,352,638   
   

 

 

 
      4,633,827   
   

 

 

 
  Commodity Chemicals 4.9%  
  694,627      Berger Paints India Ltd. (India)     4,253,690   
  16,954      SAMHWA Paints Industrial Co. Ltd. (Korea)     204,846   
  134,965      Sniezka S.A. (Poland)     1,507,602   
  350,857      Supreme Industries Ltd. (India)     3,681,840   
  155,700      Tikkurila Oyj (Finland)     3,248,256   
  1,273,500      Yung Chi Paint & Varnish Manufacturing Co. Ltd. (Taiwan)     3,646,406   
   

 

 

 
      16,542,640   
   

 

 

 
  Communications Equipment 0.7%  
  6,700      Ericsson Nikola Tesla (Croatia)     1,564,138   
  37,569      Ituran Location and Control Ltd. (Israel)     790,593   
   

 

 

 
      2,354,731   
   

 

 

 
  Computer & Electronics Retail 0.3%  
  292,708      Teknosa Ic ve Dis Ticaret A.S. (Turkey)     1,032,951   
   

 

 

 
  Data Processing & Outsourced Services 1.4%  
  4,030,000      My EG Services Berhad (Malaysia)     4,631,337   
   

 

 

 
  Department Stores 1.4%  
  1,921,057      Parkson Retail Asia Ltd. (Malaysia)     1,325,075   
  536,815      Poya Co. Ltd. (Taiwan)     3,352,943   
   

 

 

 
      4,678,018   
   

 

 

 
  Distillers & Vintners 1.0%  
  2,015,680      Capevin Holdings Ltd. (South Africa)     1,481,658   
  1,100,000      Watt’s Alimentos S.A. (Chile)     1,782,642   
   

 

 

 
      3,264,300   
   

 

 

 
Shares          Value  
             
  Diversified Banks 1.6%  
  3,106,000      CRDB Bank plc
(Tanzania, United Republic of)
  $ 611,199   
  5,090,000      EastWest Banking Corp.* (Philippines)     3,056,665   
  1,177,801      Hatton National Bank plc (Sri Lanka)     1,740,174   
   

 

 

 
      5,408,038   
   

 

 

 
  Diversified Real Estate
Activities 0.4%
 
  1,040,300      Delta Corp. Ltd. (India)     1,499,137   
   

 

 

 
  Diversified Support Services 1.0%  
  181,400      Prestige International, Inc. (Japan)     1,534,891   
  371,000      Vicom Ltd. (Singapore)     1,750,604   
   

 

 

 
      3,285,495   
   

 

 

 
  Drug Retail 1.5%  
  121,800      Kusuri No Aoki Co. Ltd. (Japan)     5,219,603   
   

 

 

 
  Electrical Components & Equipment 3.1%  
  648,140      Amara Raja Batteries Ltd. (India)     6,265,213   
  550,200      Voltronic Power Technology Corp. (Taiwan)     4,322,813   
   

 

 

 
      10,588,026   
   

 

 

 
  Electronic Equipment & Instruments 0.6%  
  32,100      Isra Vision AG (Germany)     1,966,067   
   

 

 

 
  Fertilizers & Agricultural Chemicals 0.6%  
  581,810      Rallis India Ltd. (India)     2,133,272   
   

 

 

 
  Food Distributors 0.8%  
  8,606,200      Premier Marketing Public Co. Ltd. (Thailand)     2,614,374   
   

 

 

 
  Food Retail 7.4%  
  4,210,400      7-Eleven Malaysia Holdings Berhad, Class B* (Malaysia)     2,297,399   
  6,445,800      BreadTalk Group Ltd. (Singapore)     6,845,947   
  3,345,000      Choppies Enterprises Ltd. (Botswana)     1,478,675   
  3,915,100      Convenience Retail Asia Ltd. (Hong Kong)     2,682,456   
  2,432,810      Philippine Seven Corp. (Philippines)     4,933,111   
  106,070      Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. (Israel)     5,250,505   
  3,399,000      Sheng Siong Group Ltd. (Singapore)     1,771,700   
   

 

 

 
      25,259,793   
   

 

 

 
  General Merchandise Stores 1.1%  
  98,972      Seria Co. Ltd. (Japan)     3,772,081   
   

 

 

 
  Health Care Equipment 0.5%  
  55,000      Vieworks Co. Ltd. (Korea)     1,837,242   
   

 

 

 
  Health Care Facilities 3.3%  
  10,651,300      Asiri Hospital Holdings plc (Sri Lanka)     1,910,987   
  211,422      Instituto de Diagnostico S.A. (Chile)     999,623   
  366,900      MD Medical Group Investments plc GDR (Russia)     3,008,580   
  430,957      NMC Health plc (United Arab Emirates)     3,331,823   
  509,693      Raffles Medical Group Ltd. (Singapore)     1,538,108   
  460,000      Religare Health Trust** (Singapore)     342,530   
   

 

 

 
      11,131,651   
   

 

 

 
  Health Care Supplies 0.4%  
  70,230      St. Shine Optical Co. Ltd. (Taiwan)     1,500,666   
   

 

 

 
  Health Care Technology 0.5%  
  147,600      EMIS Group plc (United Kingdom)     1,778,676   
   

 

 

 
  Home Improvement Retail 0.7%  
  33,496,700      PT Ace Hardware Indonesia Tbk (Indonesia)     2,432,875   
   

 

 

 
 

 

66


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Household Products 2.8%  
  10,430,980      DSG International Thailand Public Co. Ltd. (Thailand)   $ 2,718,328   
  493,300      Jyothy Laboratories Ltd. (India)     1,904,988   
  88,645      Pigeon Corp. (Japan)     5,019,242   
   

 

 

 
      9,642,558   
   

 

 

 
  Industrial Conglomerates 1.0%  
  42,897,800      Expolanka Holdings plc (Sri Lanka)     3,223,296   
   

 

 

 
  Industrial Machinery 3.3%  
  854,171      Howden Africa Holdings Ltd. (South Africa)     3,215,008   
  1,238,000      Mincon Group plc (Ireland)     1,235,092   
  2,094,814      Sarine Technologies Ltd. (Israel)     5,007,981   
  79,300      Yushin Precision Equipment Co. Ltd. (Japan)     1,729,525   
   

 

 

 
      11,187,606   
   

 

 

 
  Internet Retail 0.7%  
  162,100      Ikyu Corp. (Japan)     2,222,917   
   

 

 

 
  Internet Software & Services 2.9%  
  76,177      Aufeminin* (France)     2,693,603   
  107,800      Infomart Corp. (Japan)     1,853,757   
  213,229      PChome Online, Inc. (Taiwan)     2,074,846   
  89,412      SMS Co. Ltd. (Japan)     2,295,730   
  7,290      XING AG (Germany)     775,988   
   

 

 

 
      9,693,924   
   

 

 

 
  IT Consulting & Other
Services 1.1%
 
  449,494      EOH Holdings Ltd. (South Africa)     3,769,834   
   

 

 

 
  Leisure Products 1.0%  
  175,368      Samchuly Bicycle Co. Ltd. (Korea)     3,523,148   
   

 

 

 
  Metal & Glass Containers 0.5%  
  71,252      Winpak Ltd. (Canada)     1,774,067   
   

 

 

 
  Multi-Line Insurance 2.9%  
  1,379,800      Botswana Insurance Holdings Ltd. (Botswana)     1,693,555   
  16,585,500      British-American Investments Co. Kenya Ltd. (Kenya)     6,593,340   
  2,468,000      Tune Ins Holdings Berhad (Malaysia)     1,700,253   
   

 

 

 
      9,987,148   
   

 

 

 
  Office Services & Supplies 0.9%  
  92,804      Adel Kalemcilik Ticaret ve Sanayi A.S. (Turkey)     2,036,694   
  1,146,000      Riverstone Holdings Ltd. (Singapore)     844,364   
   

 

 

 
      2,881,058   
   

 

 

 
  Oil & Gas Refining &
Marketing 1.4%
 
  9,294      Hankook Shell Oil Co. Ltd. (Korea)     4,896,910   
   

 

 

 
  Packaged Foods & Meats 12.0%  
  71,120      Agro Tech Foods Ltd. (India)     700,836   
  7,950      Atlantic Grupa (Croatia)     1,352,890   
  1,293,927      Cloetta AB, Class B* (Sweden)     3,871,296   
  1,262,907      Clover Industries Ltd. (South Africa)     1,864,470   
  81,100      Dutch Lady Milk Industries Berhad (Malaysia)     1,159,454   
  1,069,300      Grupo Herdez S.A.B. de C.V. (Mexico)     2,873,441   
  1,464,666      Hup Seng Industries Berhad (Malaysia)     455,406   
  2,420,662      Oldtown Berhad (Malaysia)     1,313,452   
  371,261      Pinar Sut Mamulleri Sanayii A.S. (Turkey)     3,813,153   
  10,203,000      PT Tiga Pilar Sejahtera Food Tbk* (Indonesia)     1,921,698   
  4,626,000      PT Ultrajaya Milk Industry & Trading Co. Tbk (Indonesia)     1,476,827   
  46,454,981      RFM Corp. (Philippines)     5,486,299   
  2,363,435      TAT Gida Sanayi A.S.* (Turkey)     2,946,125   
Shares          Value  
             
  Packaged Foods & Meats (continued)  
  269,681      Vigor Alimentos S.A.* (Brazil)   $ 702,920   
  3,743,120      Vitasoy International Holdings Ltd. (Hong Kong)     4,767,692   
  19,788      Wawel S.A. (Poland)     5,962,058   
   

 

 

 
      40,668,017   
   

 

 

 
  Paper Packaging 0.9%  
  4,835,600      Greatview Aseptic Packaging Co. Ltd. (China)     3,157,450   
   

 

 

 
  Personal Products 0.5%  
  1,754,100      Karex Berhad* (Malaysia)     1,523,909   
   

 

 

 
  Pharmaceuticals 3.0%  
  2,238,177      Lee’s Pharmaceutical Holdings Ltd. (China)     2,963,232   
  1,469,000      Mega Lifesciences Public Co. Ltd. (Thailand)     892,500   
  47,612,300      PT Kimia Farma Persero Tbk (Indonesia)     4,493,569   
  146,250      Renata Ltd. (Bangladesh)     1,819,643   
   

 

 

 
      10,168,944   
   

 

 

 
  Publishing 0.4%  
  571,200      Morningstar Japan KK (Japan)     1,374,942   
   

 

 

 
  Regional Banks 0.5%  
  302,800      Banregio Grupo Financiero S.A.B. de C.V. (Mexico)     1,680,813   
   

 

 

 
  Research & Consulting
Services 1.4%
 
  167,700      Nihon M&A Center, Inc. (Japan)     4,870,066   
   

 

 

 
  Restaurants 9.0%  
  68,048      AmRest Holdings SE* (Poland)     1,756,488   
  29,500      B-R31 Ice Cream Co. Ltd. (Japan)     1,132,391   
  6,545,978      Berjaya Food Berhad (Malaysia)     6,006,217   
  223,980      Domino’s Pizza Enterprises Ltd. (Australia)     5,135,921   
  450,900      Fairwood Holdings Ltd. (Hong Kong)     987,205   
  696,953      Famous Brands Ltd. (South Africa)     6,061,883   
  114,700      Hiday Hidaka Corp. (Japan)     3,048,557   
  2,269,963      Spur Corp. Ltd. (South Africa)     6,252,123   
   

 

 

 
      30,380,785   
   

 

 

 
  Soft Drinks 2.4%  
  102,540      Seven-Up Bottling Co. plc (Nigeria)     97,189   
  1,987,900      Corp. Lindley S.A.* (Peru)     1,855,282   
  57,833,532      Pepsi-Cola Products Philippines, Inc.* (Philippines)     6,185,749   
   

 

 

 
      8,138,220   
   

 

 

 
  Specialty Chemicals 1.3%  
  5,017,000      Chemical and Allied Products plc (Nigeria)     1,184,276   
  673,719      DuluxGroup Ltd. (Australia)     3,274,646   
   

 

 

 
      4,458,922   
   

 

 

 
  Specialty Stores 0.4%  
  1,471,000      Michael Hill International Ltd. (New Zealand)     1,432,478   
   

 

 

 
  Technology Hardware, Storage & Peripherals 0.8%  
  74,561      KONA I Co. Ltd. (Korea)     2,755,630   
   

 

 

 
  Tobacco 0.4%  
  5,249      Karelia Tobacco Co., Inc. S.A. (Greece)     1,446,879   
   

 

 

 
  Total Common Stocks
(cost $269,568,995)
    331,140,248   
   

 

 

 
 

 

67


Table of Contents
WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

Principal
Amount
         Value  
             
  SHORT-TERM INVESTMENTS 1.5%  
  Repurchase Agreement 1.5%  
  $5,224,617      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $5,620,000 of United States Treasury Bonds 2.875% due 5/15/43; value: $5,331,975; repurchase proceeds: $5,224,617 (cost $5,224,617)   $ 5,224,617   
   

 

 

 
  Total Short-Term Investments
(cost $5,224,617)
    5,224,617   
   

 

 

 
  Total Investments
(cost $274,793,612) 99.0%
    336,364,865   
  Other Assets less Liabilities 1.0%     3,294,352   
   

 

 

 
  NET ASSETS 100.0%   $ 339,659,217   
   

 

 

 
 

*Non-income producing.

 

**Common units.

 

GDR Global Depositary Receipt.

 

See Notes to Financial Statements.

  

  

  

  

At September 30, 2014, Wasatch International Opportunities Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Australia

    2.5   

Bangladesh

    0.6   

Botswana

    1.0   

Brazil

    1.3   

Canada

    0.5   

Chile

    0.8   

China

    1.8   

Croatia

    0.9   

Denmark

    1.6   

Finland

    2.8   

France

    0.8   

Germany

    0.8   

Greece

    0.4   

Hong Kong

    2.5   

India

    7.7   

Indonesia

    3.1   

Ireland

    0.4   

Israel

    4.4   

Japan

    10.3   

Kenya

    2.0   

Korea

    4.0   

Lithuania

    0.8   

Malaysia

    7.8   

Mexico

    1.4   

New Zealand

    0.4   

Nigeria

    0.9   

Peru

    0.6   

Philippines

    5.9   

Poland

    2.8   

Russia

    0.9   

Singapore

    4.0   

South Africa

    7.4   

Sri Lanka

    2.1   

Sweden

    1.8   

Taiwan

    5.1   

Tanzania, United Republic of

    0.2   

Thailand

    2.6   

Turkey

    3.6   

United Arab Emirates

    1.0   

United Kingdom

    0.5   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

68


Table of Contents
WASATCH LARGE CAP VALUE FUND (FMIEX / WILCX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  COMMON STOCKS 98.8%  
  Automobile Manufacturers 2.3%  
  646,534      Ford Motor Co.   $ 9,562,238   
   

 

 

 
  Commodity Chemicals 2.4%  
  94,070      LyondellBasell Industries N.V., Class A     10,221,646   
   

 

 

 
  Communications Equipment 3.3%  
  547,319      Cisco Systems, Inc.     13,776,019   
   

 

 

 
  Computer & Electronics
Retail 2.1%
 
  209,341      GameStop Corp., Class A     8,624,849   
   

 

 

 
  Department Stores 3.0%  
  216,726      Macy’s, Inc.     12,609,119   
   

 

 

 
  Diversified Banks 14.8%  
  333,203      Citigroup, Inc.     17,266,580   
  238,763      HSBC Holdings plc ADR (United Kingdom)     12,148,261   
  292,085      JPMorgan Chase & Co.     17,595,200   
  280,853      Wells Fargo & Co.     14,567,845   
   

 

 

 
      61,577,886   
   

 

 

 
  Diversified Chemicals 2.6%  
  133,612      Eastman Chemical Co.     10,807,875   
   

 

 

 
  Electric Utilities 1.5%  
  181,426      UIL Holdings Corp.     6,422,480   
   

 

 

 
  Electrical Components & Equipment 5.3%  
  197,906      Eaton Corp. plc     12,541,303   
  146,112      Regal-Beloit Corp.     9,387,696   
   

 

 

 
      21,928,999   
   

 

 

 
  Environmental & Facilities Services 1.0%  
  158,588      ABM Industries, Inc.     4,074,126   
   

 

 

 
  Health Care Equipment 5.5%  
  254,567      Abbott Laboratories     10,587,442   
  197,417      Medtronic, Inc.     12,229,983   
   

 

 

 
      22,817,425   
   

 

 

 
  Industrial Conglomerates 4.0%  
  660,032      General Electric Co.     16,910,020   
   

 

 

 
  Integrated Oil & Gas 9.3%  
  95,887      Chevron Corp.     11,441,237   
  117,228      Occidental Petroleum Corp.     11,271,472   
  445,939      Suncor Energy, Inc. (Canada)     16,120,695   
   

 

 

 
      38,833,404   
   

 

 

 
  Integrated Telecommunication Services 2.8%  
  233,438      Verizon Communications, Inc.     11,669,566   
   

 

 

 
  Investment Banking & Brokerage 3.1%  
  70,914      Goldman Sachs Group, Inc. (The)     13,017,683   
   

 

 

 
  Multi-Line Insurance 3.6%  
  275,135      American International Group, Inc.     14,862,793   
   

 

 

 
  Oil & Gas Exploration & Production 4.3%  
  104,160      Apache Corp.     9,777,499   
  1,571,103      Pengrowth Energy Corp. (Canada)     8,169,736   
   

 

 

 
      17,947,235   
   

 

 

 
  Other Diversified Financial Services 3.0%  
  319,574      Voya Financial, Inc.     12,495,343   
   

 

 

 
Shares          Value  
             
  Pharmaceuticals 7.7%  
  156,414      Johnson & Johnson   $ 16,672,168   
  529,009      Pfizer, Inc.     15,642,796   
   

 

 

 
      32,314,964   
   

 

 

 
  Regional Banks 5.4%  
  1,251,115      First Niagara Financial Group, Inc.     10,421,788   
  139,937      PNC Financial Services Group, Inc.     11,975,808   
   

 

 

 
      22,397,596   
   

 

 

 
  Semiconductors 2.6%  
  312,820      Intel Corp.     10,892,392   
   

 

 

 
  Specialized REITs 3.1%  
  251,712      EPR Properties     12,756,764   
   

 

 

 
  Systems Software 3.3%  
  298,299      Microsoft Corp.     13,829,142   
   

 

 

 
  Technology Hardware, Storage & Peripherals 2.8%  
  115,948      Apple, Inc.     11,681,761   
   

 

 

 
  Total Common Stocks
(cost $356,619,324)
    412,031,325   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM
INVESTMENTS 1.2%
 
  Repurchase Agreement 1.2%  
  $5,038,500      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $5,155,000 of United States Treasury Notes 1.750% due 9/30/19; value: $5,142,113; repurchase proceeds: $5,038,500 (cost $5,038,500)   $ 5,038,500   
   

 

 

 
  Total Short-Term Investments
(cost $5,038,500)
    5,038,500   
   

 

 

 
  Total Investments
(cost $361,657,824) 100.0%
    417,069,825   
  Other Assets less Liabilities <0.1%     167,187   
   

 

 

 
  NET ASSETS 100.0%   $ 417,237,012   
   

 

 

 
 

ADR American Depositary Receipt.

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

  

  

  

At September 30, 2014, Wasatch Large Cap Value Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Canada

    5.9   

United Kingdom

    2.9   

United States

    91.2   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

69


Table of Contents
WASATCH LONG/SHORT FUND (FMLSX / WILSX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 83.6%  
  Advertising 1.9%  
  2,810,926      Interpublic Group of Cos., Inc. (The)†   $ 51,496,164   
   

 

 

 
  Airlines 1.7%  
  1,330,826      Southwest Airlines Co.     44,941,994   
   

 

 

 
  Apparel Retail 1.2%  
  2,146,212      Chico’s FAS, Inc.     31,699,551   
   

 

 

 
  Application Software 3.8%  
  4,397,845      TIBCO Software, Inc.* †     103,921,077   
   

 

 

 
  Automobile Manufacturers 2.6%  
  2,228,009      General Motors Co.†     71,162,608   
   

 

 

 
  Automotive Retail 1.6%  
  1,075,357      CST Brands, Inc.     38,659,084   
  628,360      Pep Boys—Manny, Moe & Jack (The)*     5,598,688   
   

 

 

 
      44,257,772   
   

 

 

 
  Communications Equipment 2.5%  
  1,416,622      Cisco Systems, Inc.†     35,656,376   
  419,500      QUALCOMM, Inc.     31,366,015   
   

 

 

 
      67,022,391   
   

 

 

 
  Construction & Engineering 0.4%  
  530,650      Aegion Corp.*     11,806,963   
   

 

 

 
  Data Processing & Outsourced Services 1.0%  
  404,241      Global Payments, Inc.     28,248,361   
   

 

 

 
  Diversified Banks 3.6%  
  2,244,609      Bank of America Corp.     38,270,583   
  1,133,034      Citigroup, Inc.†     58,713,822   
   

 

 

 
      96,984,405   
   

 

 

 
  Diversified REITs 0.6%  
  2,040,302      Investors Real Estate Trust     15,710,325   
   

 

 

 
  Environmental & Facilities Services 1.0%  
  722,352      Republic Services, Inc.†     28,186,175   
   

 

 

 
  Fertilizers & Agricultural Chemicals 1.7%  
  1,046,243      Mosaic Co. (The)†     46,463,652   
   

 

 

 
  Gas Utilities 0.4%  
  206,400      Atmos Energy Corp.     9,845,280   
   

 

 

 
  General Merchandise Stores 1.3%  
  581,048      Target Corp.†     36,420,089   
   

 

 

 
  Health Care Equipment 1.4%  
  352,900      Medtronic, Inc.†     21,862,155   
  208,800      Stryker Corp.     16,860,600   
   

 

 

 
      38,722,755   
   

 

 

 
  Health Care REITs 1.0%  
  431,885      Ventas, Inc.     26,755,276   
   

 

 

 
  Health Care Services 2.0%  
  765,663      Express Scripts Holding Co.* †     54,078,778   
   

 

 

 
  Hypermarkets & Super
Centers 3.4%
 
  1,210,581      Wal-Mart Stores, Inc.†     92,573,129   
   

 

 

 
  Insurance Brokers 0.8%  
  261,155      Aon plc     22,895,459   
   

 

 

 
  Integrated Oil & Gas 1.0%  
  272,500      Occidental Petroleum Corp.     26,200,875   
   

 

 

 
  Integrated Telecommunication Services 1.0%  
  525,685      Verizon Communications, Inc.     26,278,993   
   

 

 

 
Shares          Value  
             
  Life & Health Insurance 2.0%  
  610,721      MetLife, Inc.†   $ 32,807,932   
  625,782      Unum Group†     21,514,385   
   

 

 

 
      54,322,317   
   

 

 

 
  Multi-Line Insurance 3.5%  
  2,276,807      Loews Corp.†     94,851,780   
   

 

 

 
  Multi-Sector Holdings 1.0%  
  1,162,980      Leucadia National Corp.     27,725,443   
   

 

 

 
  Office REITs 0.9%  
  403,582      Digital Realty Trust, Inc.     25,175,445   
   

 

 

 
  Oil & Gas Drilling 4.0%  
  926,289      Diamond Offshore Drilling, Inc.     31,743,924   
  975,584      Ensco plc, Class A     40,301,375   
  637,605      Unit Corp.*     37,395,533   
   

 

 

 
      109,440,832   
   

 

 

 
  Oil & Gas Equipment & Services 3.1%  
  871,448      Halliburton Co.†     56,217,111   
  354,721      National Oilwell Varco, Inc.†     26,994,268   
   

 

 

 
      83,211,379   
   

 

 

 
  Oil & Gas Exploration & Production 10.7%  
  3,843,259      Bill Barrett Corp.* ‡‡     84,705,428   
  9,556,826      Denbury Resources, Inc.†     143,639,095   
  1,224,603      Northern Oil and Gas, Inc.*     17,413,854   
  1,615,968      Swift Energy Co.*     15,513,293   
  3,539,318      Talisman Energy, Inc. (Canada)     30,615,101   
   

 

 

 
      291,886,771   
   

 

 

 
  Pharmaceuticals 2.2%  
  294,335      Novartis AG ADR (Switzerland)     27,705,754   
  907,509      Zoetis, Inc.     33,532,457   
   

 

 

 
      61,238,211   
   

 

 

 
  Property & Casualty
Insurance 2.3%
 
  1,059,124      CNA Financial Corp.†     40,278,486   
  634,382      XL Group plc     21,042,451   
   

 

 

 
      61,320,937   
   

 

 

 
  Residential REITs 2.0%  
  1,485,981      American Campus Communities, Inc.†     54,164,007   
   

 

 

 
  Specialized REITs 4.7%  
  883,506      CBS Outdoor Americas, Inc.     26,452,170   
  3,125,659      Iron Mountain, Inc.†     102,052,766   
   

 

 

 
      128,504,936   
   

 

 

 
  Systems Software 4.7%  
  1,644,390      Microsoft Corp.†     76,233,920   
  1,357,967      Oracle Corp.     51,982,977   
   

 

 

 
      128,216,897   
   

 

 

 
  Technology Hardware, Storage & Peripherals 4.5%  
  951,527      Apple, Inc.†     95,866,345   
  2,820,938      Silicon Graphics International
Corp.* ‡‡
    26,037,258   
   

 

 

 
      121,903,603   
   

 

 

 
  Trading Companies & Distributors 2.1%  
  1,874,512      NOW, Inc.*     57,003,910   
   

 

 

 
  Total Common Stocks
(cost $1,978,037,319)
    2,274,638,540   
   

 

 

 
 

 

70


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Principal
Amount
         Value  
             
  SHORT-TERM INVESTMENTS 15.3%  
  Repurchase Agreement 15.3%  
  $414,928,217      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $426,105,000 of United States Treasury Notes 1.750% due 9/30/19; value: $332,471,738; United States Treasury Notes 2.000% due 5/31/21; value: $59,957,906; United States Treasury Bonds 2.875% due 5/15/43; value: $30,801,169; repurchase proceeds: $414,928,217† (cost $414,928,217)   $ 414,928,217   
   

 

 

 
  Total Short-Term Investments
(cost $414,928,217)
    414,928,217   
   

 

 

 
  Total Investments
(cost $2,392,965,536) 98.9%
    2,689,566,757   
  Other Assets less Liabilities 1.1%     29,708,295   
   

 

 

 
  NET ASSETS 100.0%   $ 2,719,275,052   
   

 

 

 
Number of
Contracts
         Value  
  CALL OPTIONS WRITTEN 0.1%  
  Technology Hardware, Storage & Peripherals 0.1%  
  5,066      Apple, Inc., expiring 10/18/14,
exercise price $95
  $ 3,064,930   
   

 

 

 
  Total Call Options Written (premium $2,054,471)     3,064,930   
   

 

 

 
Shares          Value  
  SECURITIES SOLD SHORT 10.8%  
  Aerospace & Defense 1.1%  
  228,578      Boeing Co. (The)   $ 29,116,266   
   

 

 

 
  Apparel, Accessories & Luxury Goods 0.3%  
  310,357      Kate Spade & Co.*     8,140,664   
   

 

 

 
  Department Stores 1.2%  
  3,373,807      JC Penney Co., Inc.*     33,873,022   
   

 

 

 
  Diversified Support Services 0.1%  
  87,576      Healthcare Services Group, Inc.     2,505,549   
   

 

 

 
  Electric Utilities 0.9%  
  684,208      Exelon Corp.     23,324,651   
   

 

 

 
  Food Distributors 1.1%  
  775,903      Sysco Corp.     29,445,519   
   

 

 

 
  Food Retail 0.5%  
  451,488      Sprouts Farmers Market, Inc.*     13,124,756   
   

 

 

 
  Home Improvement Retail 1.2%  
  629,084      Lowe’s Cos., Inc.     33,291,125   
   

 

 

 
  Household Products 0.8%  
  273,476      Procter & Gamble Co. (The)     22,900,880   
   

 

 

 
    
Shares
         Value  
             
  IT Consulting & Other Services 1.8%  
  228,069      Accenture plc, Class A   $ 18,546,571   
  165,491      International Business Machines Corp.     31,415,157   
   

 

 

 
      49,961,728   
   

 

 

 
  Restaurants 0.9%  
  183,063      Buffalo Wild Wings, Inc.*     24,579,869   
   

 

 

 
  Specialty Stores 0.9%  
  88,044      Five Below, Inc.*     3,487,423   
  208,462      Tiffany & Co.     20,076,975   
   

 

 

 
      23,564,398   
   

 

 

 
  Total Securities Sold Short
(proceeds $279,864,218)
    293,828,427   
   

 

 

 
     

*Non-income producing.

 

†All or a portion of this security has been designated as collateral for
securities sold short and call options written (see Notes 3 and 4).

 

‡‡Affiliated company (see Note 9).

 

ADR American Depositary Receipt.

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

 

At September 30, 2014, Wasatch Long/Short Fund’s investments, excluding short-term investments, options written and securities sold short, were in the following countries:

 

Country   %  

Canada

    1.4   

Switzerland

    1.2   

United States

    97.4   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

71


Table of Contents
WASATCH MICRO CAP FUND (WMICX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 95.9%  
  Air Freight & Logistics 0.6%  
  77,597      Echo Global Logistics, Inc.*   $ 1,827,409   
   

 

 

 
  Apparel Retail 1.6%  
  167,365      Zumiez, Inc.*     4,702,957   
   

 

 

 
  Apparel, Accessories & Luxury Goods 1.1%  
  24,710      Page Industries Ltd. (India)     3,155,966   
   

 

 

 
  Application Software 8.4%  
  405,760      Diligent Board Member Services, Inc.* (New Zealand)     1,466,737   
  133,337      Ellie Mae, Inc.*     4,346,786   
  249,716      Exa Corp.*     2,816,796   
  35,826      Interactive Intelligence Group, Inc.*     1,497,527   
  87,309      PROS Holdings, Inc.*     2,200,187   
  197,825      Tangoe, Inc.*     2,680,529   
  46,417      Tyler Technologies, Inc.*     4,103,263   
  39,117      Ultimate Software Group, Inc.*     5,535,447   
   

 

 

 
      24,647,272   
   

 

 

 
  Asset Management & Custody Banks 3.6%  
  38,906      Diamond Hill Investment Group, Inc.     4,787,383   
  344,096      Pzena Investment Management, Inc., Class A     3,286,117   
  188,366      Silvercrest Asset Management Group, Inc.     2,565,545   
   

 

 

 
      10,639,045   
   

 

 

 
  Automotive Retail 1.0%  
  61,597      Monro Muffler Brake, Inc.     2,989,302   
   

 

 

 
  Biotechnology 4.5%  
  496,548      Abcam plc (United Kingdom)     3,237,330   
  122,952      Cellular Dynamics International, Inc.*     864,353   
  176,227      ChemoCentryx, Inc.*     793,021   
  250,157      Cytokinetics, Inc.*     880,553   
  62,309      Esperion Therapeutics, Inc.*     1,524,078   
  170,440      Exact Sciences Corp.*     3,303,127   
  80,250      Inovio Pharmaceuticals, Inc.*     790,463   
  159,440      Sangamo BioSciences, Inc.*     1,719,560   
   

 

 

 
      13,112,485   
   

 

 

 
  Casinos & Gaming 0.9%  
  72,935      Multimedia Games Holding Co., Inc.*     2,626,389   
   

 

 

 
  Commercial Printing 1.2%  
  436,475      InnerWorkings, Inc.*     3,531,083   
   

 

 

 
  Consumer Finance 1.9%  
  73,322      Encore Capital Group, Inc.*     3,248,898   
  127,105      Regional Management Corp.*     2,281,535   
   

 

 

 
      5,530,433   
   

 

 

 
  Data Processing & Outsourced Services 2.7%  
  120,511      ExlService Holdings, Inc.*     2,941,674   
  137,823      Wirecard AG (Germany)     5,091,824   
   

 

 

 
      8,033,498   
   

 

 

 
  Diversified Banks 2.0%  
  4,218,211      City Union Bank Ltd. (India)     5,870,389   
   

 

 

 
  Electronic Manufacturing Services 0.8%  
  36,316      IPG Photonics Corp.*     2,497,815   
   

 

 

 
  Environmental & Facilities Services 0.9%  
  185,549      Heritage-Crystal Clean, Inc.*     2,757,258   
   

 

 

 
Shares          Value  
             
  Food Distributors 0.9%  
  158,297      Chefs’ Warehouse, Inc. (The)*   $ 2,573,909   
   

 

 

 
  Health Care Distributors 1.0%  
  20,696      MWI Veterinary Supply, Inc.*     3,071,286   
   

 

 

 
  Health Care Equipment 6.0%  
  76,423      Abaxis, Inc.     3,875,410   
  351,384      AtriCure, Inc.*     5,172,372   
  1,928,308      Cardica, Inc.*     2,063,290   
  151,770      Novadaq Technologies, Inc.* (Canada)     1,925,961   
  73,239      NuVasive, Inc.*     2,553,844   
  142,380      Tandem Diabetes Care, Inc.*     1,910,740   
   

 

 

 
      17,501,617   
   

 

 

 
  Health Care Facilities 1.8%  
  148,133      Ensign Group, Inc. (The)     5,155,028   
   

 

 

 
  Health Care REITs 1.2%  
  240,580      CareTrust REIT, Inc.*     3,440,294   
   

 

 

 
  Health Care Services 2.7%  
  97,070      CorVel Corp.*     3,305,234   
  106,790      IPC The Hospitalist Co., Inc.*     4,783,124   
   

 

 

 
      8,088,358   
   

 

 

 
  Health Care Technology 1.1%  
  137,544      HealthStream, Inc.*     3,302,431   
   

 

 

 
  Homebuilding 3.2%  
  289,956      Installed Building Products, Inc.*     4,073,882   
  289,293      LGI Homes, Inc.*     5,311,419   
   

 

 

 
      9,385,301   
   

 

 

 
  Industrial Machinery 1.1%  
  46,181      Proto Labs, Inc.*     3,186,489   
   

 

 

 
  Internet Retail 1.7%  
  177,762      MakeMyTrip Ltd.* (India)     4,947,117   
   

 

 

 
  Internet Software & Services 10.0%  
  186,709      Amber Road, Inc.*     3,237,534   
  130,423      Dealertrack Technologies, Inc.*     5,661,663   
  240,480      E2open, Inc.*     2,238,869   
  152,729      Envestnet, Inc.*     6,872,805   
  46,347      Reis, Inc.     1,093,326   
  217,783      SciQuest, Inc.*     3,275,456   
  75,718      SPS Commerce, Inc.*     4,024,412   
  136,352      Xoom Corp.*     2,992,926   
   

 

 

 
      29,396,991   
   

 

 

 
  Life Sciences Tools & Services 3.4%  
  109,114      Fluidigm Corp.*     2,673,293   
  129,147      ICON plc* (Ireland)     7,391,083   
   

 

 

 
      10,064,376   
   

 

 

 
  Managed Health Care 0.5%  
  33,551      HealthEquity, Inc.*     614,319   
  89,371      Trupanion, Inc.*     759,653   
   

 

 

 
      1,373,972   
   

 

 

 
  Oil & Gas Equipment & Services 1.1%  
  120,093      Pason Systems, Inc. (Canada)     3,355,595   
   

 

 

 
  Oil & Gas Exploration & Production 2.3%  
  174,077      Comstock Resources, Inc.     3,241,314   
  256,130      Northern Oil and Gas, Inc.*     3,642,168   
   

 

 

 
      6,883,482   
   

 

 

 
  Oil & Gas Refining &
Marketing 0.5%
 
  384,242      Amyris, Inc.*     1,456,277   
   

 

 

 
 

 

72


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Pharmaceuticals 6.0%  
  50,064      Aerie Pharmaceuticals, Inc.*   $ 1,035,824   
  174,771      Akorn, Inc.*     6,338,944   
  163,308      Cardiovascular Systems, Inc.*     3,858,968   
  243,957      Cempra, Inc.*     2,673,769   
  77,430      Egalet Corp.*     441,351   
  139,989      Natco Pharma Ltd. (India)     3,327,459   
   

 

 

 
      17,676,315   
   

 

 

 
  Regional Banks 1.8%  
  188,919      Customers Bancorp, Inc.*     3,392,985   
  52,738      Pinnacle Financial Partners, Inc.     1,903,842   
   

 

 

 
      5,296,827   
   

 

 

 
  Research & Consulting
Services 1.7%
 
  250,759      Franklin Covey Co.*     4,912,369   
   

 

 

 
  Semiconductor Equipment 1.3%  
  292,330      PDF Solutions, Inc.*     3,686,281   
   

 

 

 
  Semiconductors 3.9%  
  95,907      Melexis N.V. (Belgium)     4,371,686   
  42,979      NVE Corp.*     2,773,865   
  80,515      Power Integrations, Inc.     4,340,563   
   

 

 

 
      11,486,114   
   

 

 

 
  Specialized Finance 0.0%  
  154,000      Goldwater Bank, N.A.* *** † ‡‡     32,340   
   

 

 

 
  Specialty Stores 0.9%  
  60,752      Hibbett Sports, Inc.*     2,589,858   
   

 

 

 
  Systems Software 2.4%  
  70,258      FleetMatics Group plc*     2,142,869   
  177,318      Infoblox, Inc.*     2,615,441   
  201,072      TubeMogul, Inc.*     2,312,328   
   

 

 

 
      7,070,638   
   

 

 

 
  Technology Hardware, Storage & Peripherals 1.0%  
  290,211      Intevac, Inc.*     1,935,707   
  491,295      USA Technologies, Inc.*     884,331   
   

 

 

 
      2,820,038   
   

 

 

 
  Thrifts & Mortgage
Finance 1.3%
 
  1,225,430      Gruh Finance Ltd. (India)     3,803,674   
   

 

 

 
  Trading Companies & Distributors 3.0%  
  256,801      CAI International, Inc.*     4,969,100   
  131,441      Rush Enterprises, Inc., Class B*     3,931,400   
   

 

 

 
      8,900,500   
   

 

 

 
  Trucking 2.9%  
  161,025      Marten Transport Ltd.     2,867,855   
  113,581      Saia, Inc.*     5,629,075   
   

 

 

 
      8,496,930   
   

 

 

 
  Total Common Stocks
(cost $181,264,985)
    281,875,708   
   

 

 

 
Principal
Amount
         Value  
             
  SHORT-TERM
INVESTMENTS 4.7%
 
  Repurchase Agreement 4.7%  
  $13,796,424      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $14,110,000 of United States Treasury Notes 1.750% due 9/30/19; value: $14,074,725; repurchase proceeds: $13,796,424 (cost $13,796,424)   $ 13,796,424   
   

 

 

 
  Total Short-Term Investments
(cost $13,796,424)
    13,796,424   
   

 

 

 
  Total Investments
(cost $195,061,409) 100.6%
    295,672,132   
  Liabilities less Other Assets (0.6%)     (1,856,821
   

 

 

 
  NET ASSETS 100.0%   $ 293,815,311   
   

 

 

 
 

*Non-income producing.

 

***Security was fair valued under procedures adopted by the Board of Trustees (see Note 14).

 

†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 10).

 

‡‡Affiliated company (see Note 9).

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

  

   

   

  

  

  

At September 30, 2014, Wasatch Micro Cap Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Belgium

    1.6   

Canada

    1.9   

Germany

    1.8   

India

    7.5   

Ireland

    2.6   

New Zealand

    0.5   

United Kingdom

    1.1   

United States

    83.0   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

73


Table of Contents

 

WASATCH MICRO CAP VALUE FUND (WAMVX) — Schedule of Investments  

 

 

 

Shares          Value  
             
  COMMON STOCKS 91.9%  
  Airlines 1.3%  
  17,000      Allegiant Travel Co.   $ 2,102,220   
   

 

 

 
  Alternative Carriers 0.6%  
  160,000      ORBCOMM, Inc.*     920,000   
   

 

 

 
  Application Software 4.5%  
  240,000      ClickSoftware Technologies Ltd.* (Israel)     1,927,200   
  142,000      Ebix, Inc.     2,013,560   
  31,000      ESI Group* (France)     854,999   
  35,771      Interactive Intelligence Group, Inc.*     1,495,228   
  67,000      Tangoe, Inc.*     907,850   
   

 

 

 
      7,198,837   
   

 

 

 
  Asset Management & Custody Banks 3.5%  
  110,000      Medallion Financial Corp.     1,282,600   
  231,000      Pzena Investment Management, Inc., Class A     2,206,050   
  80,000      Silvercrest Asset Management Group, Inc.     1,089,600   
  6,000      Virtus Investment Partners, Inc.     1,042,200   
   

 

 

 
      5,620,450   
   

 

 

 
  Auto Parts & Equipment 2.3%  
  85,000      Gentherm, Inc.* ††     3,589,550   
   

 

 

 
  Automotive Retail 0.6%  
  48,000      Mekonomen AB (Sweden)     1,040,515   
   

 

 

 
  Brewers 1.1%  
  1,000,000      Turk Tuborg Bira ve Malt Sanayii A.S.* (Turkey)     1,698,635   
   

 

 

 
  Commercial Printing 1.1%  
  222,000      InnerWorkings, Inc.*     1,795,980   
   

 

 

 
  Commodity Chemicals 1.1%  
  140,000      Trecora Resources*     1,733,200   
   

 

 

 
  Communications Equipment 0.9%  
  220,000      ShoreTel, Inc.*     1,463,000   
   

 

 

 
  Construction & Engineering 1.2%  
  57,200      Northwest Pipe Co.*     1,950,520   
   

 

 

 
  Construction Machinery & Heavy Trucks 1.0%  
  137,000      Manitex International, Inc.*     1,546,730   
   

 

 

 
  Construction Materials 1.6%  
  49,000      Caesarstone Sdot-Yam Ltd. (Israel)     2,532,320   
   

 

 

 
  Consumer Finance 1.2%  
  44,000      Encore Capital Group, Inc.*     1,949,640   
   

 

 

 
  Data Processing & Outsourced Services 0.5%  
  80,000      KGMobilians Co. Ltd. (Korea)     883,203   
   

 

 

 
  Distillers & Vintners 1.1%  
  187,000      Crimson Wine Group Ltd.*     1,714,790   
   

 

 

 
  Diversified Banks 1.3%  
  1,300,000      City Union Bank Ltd. (India)     1,809,181   
  55,556      Idaho Trust Bancorp*** †     206,668   
   

 

 

 
      2,015,849   
   

 

 

 
  Electronic Manufacturing Services 0.5%  
  53,000      Fabrinet*     773,800   
   

 

 

 
  Environmental & Facilities Services 0.9%  
  21,837      Heritage-Crystal Clean, Inc.*     324,498   
  330,000      Hudson Technologies, Inc.*     1,092,300   
   

 

 

 
      1,416,798   
   

 

 

 
Shares          Value  
             
  Food Distributors 0.8%  
  74,000      Chefs’ Warehouse, Inc. (The)*   $ 1,203,240   
   

 

 

 
  General Merchandise Stores 0.7%  
  30,000      Seria Co. Ltd. (Japan)     1,143,378   
   

 

 

 
  Health Care Equipment 3.3%  
  113,000      AtriCure, Inc.*     1,663,360   
  515,728      Cardica, Inc.*     551,829   
  110,000      Ion Beam Applications* (Belgium)     1,930,897   
  164,200      iRadimed Corp.*     1,151,042   
   

 

 

 
      5,297,128   
   

 

 

 
  Health Care Facilities 1.0%  
  42,000      Ensign Group, Inc. (The)     1,461,600   
  20,005      MD Medical Group Investments plc GDR (Russia)     164,041   
   

 

 

 
      1,625,641   
   

 

 

 
  Health Care REITs 1.9%  
  114,000      CareTrust REIT, Inc.*     1,630,200   
  100,000      Physicians Realty Trust     1,372,000   
   

 

 

 
      3,002,200   
   

 

 

 
  Health Care Services 2.4%  
  38,993      CorVel Corp.*     1,327,711   
  88,000      National Research Corp., Class A*     1,144,880   
  291,100      Northstar Healthcare, Inc.* (Canada)     358,501   
  930,000      Northstar Healthcare, Inc. PIPE* *** † (Canada)     971,041   
   

 

 

 
      3,802,133   
   

 

 

 
  Health Care Supplies 2.2%  
  37,000      Guerbet (France)     1,906,865   
  450,000      Synergetics USA, Inc.*     1,534,500   
   

 

 

 
      3,441,365   
   

 

 

 
  Health Care Technology 1.0%  
  110,000      Nexus AG (Germany)     1,664,183   
   

 

 

 
  Heavy Electrical Equipment 0.6%  
  112,000      Pioneer Power Solutions, Inc.*     896,000   
   

 

 

 
  Homebuilding 2.6%  
  135,000      Installed Building Products, Inc.*     1,896,750   
  121,000      LGI Homes, Inc.*     2,221,560   
   

 

 

 
      4,118,310   
   

 

 

 
  Homefurnishing Retail 0.8%  
  59,000      Select Comfort Corp.*     1,234,280   
   

 

 

 
  Hotels & Resort REITs 1.6%  
  240,000      Summit Hotel Properties, Inc.     2,587,200   
   

 

 

 
  Housewares & Specialties 0.3%  
  28,300      Lifetime Brands, Inc.     433,273   
   

 

 

 
  Industrial Machinery 2.0%  
  50,000      Hy-Lok Corp. (Korea)     1,610,993   
  58,000      John Bean Technologies Corp.     1,631,540   
   

 

 

 
      3,242,533   
   

 

 

 
  Internet Software & Services 3.9%  
  152,000      IntraLinks Holdings, Inc.*     1,231,200   
  150,000      Move, Inc.*     3,144,000   
  119,000      Perficient, Inc.*     1,783,810   
   

 

 

 
      6,159,010   
   

 

 

 
  IT Consulting & Other Services 2.5%  
  62,000      EPAM Systems, Inc.* ††     2,714,980   
  77,300      ServiceSource International, Inc.*     249,679   
  600,000      WidePoint Corp.*     1,026,000   
   

 

 

 
      3,990,659   
   

 

 

 
 

 

74


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Leisure Facilities 1.2%  
  1,000,000      Grupo Sports World S.A.B. de C.V.* (Mexico)   $ 1,839,132   
   

 

 

 
  Mortgage REITs 2.7%  
  370,000      Arbor Realty Trust, Inc.     2,493,800   
  80,000      Colony Financial, Inc.     1,790,400   
   

 

 

 
      4,284,200   
   

 

 

 
  Oil & Gas Exploration & Production 2.1%  
  70,000      Comstock Resources, Inc.     1,303,400   
  210,000      Emerald Oil, Inc.*     1,291,500   
  28,000      Sanchez Energy Corp.*     735,280   
   

 

 

 
      3,330,180   
   

 

 

 
  Packaged Foods & Meats 2.2%  
  32,000      John B. Sanfilippo & Son, Inc.     1,035,520   
  2,000,000      Kawan Food Berhad (Malaysia)     1,444,902   
  1,875,000      Oldtown Berhad (Malaysia)     1,017,375   
   

 

 

 
      3,497,797   
   

 

 

 
  Paper Packaging 1.0%  
  2,400,000      Greatview Aseptic Packaging Co. Ltd. (China)     1,567,102   
   

 

 

 
  Personal Products 2.1%  
  150,000      MusclePharm Corp. PIPE*     1,980,000   
  30,000      Nu Skin Enterprises, Inc., Class A     1,350,900   
   

 

 

 
      3,330,900   
   

 

 

 
  Pharmaceuticals 6.1%  
  54,000      Cempra, Inc.*     591,840   
  130,000      Horizon Pharma plc*     1,596,400   
  1,595,000      Lee’s Pharmaceutical Holdings Ltd. (China)     2,111,699   
  225,000      Moberg Pharma AB* (Sweden)     1,031,581   
  80,000      Natco Pharma Ltd. (India)     1,901,554   
  170,000      Torrent Pharmaceuticals Ltd. (India)     2,403,012   
   

 

 

 
      9,636,086   
   

 

 

 
  Property & Casualty Insurance 3.1%  
  140,000      1347 Property Insurance Holdings, Inc.*     1,094,800   
  145,000      Atlas Financial Holdings, Inc.*     2,006,800   
  222,878      Kingstone Cos., Inc.     1,805,312   
   

 

 

 
      4,906,912   
   

 

 

 
  Regional Banks 3.6%  
  129,000      Customers Bancorp, Inc.*     2,316,840   
  34,000      First of Long Island Corp. (The)     1,171,300   
  80,290      Investar Holding Corp.*     1,067,857   
  89,000      Pacific Continental Corp.     1,143,650   
   

 

 

 
      5,699,647   
   

 

 

 
  Research & Consulting Services 1.6%  
  130,000      Franklin Covey Co.*     2,546,700   
   

 

 

 
  Residential REITs 0.7%  
  83,000      Bluerock Residential Growth REIT, Inc.     1,079,000   
   

 

 

 
  Semiconductor Equipment 1.7%  
  85,000      PDF Solutions, Inc.*     1,071,850   
  175,000      Ultra Clean Holdings, Inc.*     1,566,250   
   

 

 

 
      2,638,100   
   

 

 

 
  Semiconductors 0.6%  
  850,000      GigOptix, Inc.*     1,028,500   
   

 

 

 
  Soft Drinks 0.9%  
  14,000,000      Pepsi-Cola Products Philippines, Inc.* (Philippines)     1,497,410   
   

 

 

 
  Specialized Finance 0.0%  
  41,900      Goldwater Bank, N.A.* *** †     8,799   
   

 

 

 
Shares          Value  
             
  Systems Software 0.4%  
  20,000      CyberArk Software Ltd.* (Israel)   $ 640,200   
   

 

 

 
  Technology Hardware, Storage & Peripherals 1.2%  
  50,000      KONA I Co. Ltd. (Korea)     1,847,903   
   

 

 

 
  Thrifts & Mortgage Finance 0.9%  
  10,000      BofI Holding, Inc.*     727,100   
  49,455      Ocean Shore Holding Co.     711,163   
   

 

 

 
      1,438,263   
   

 

 

 
  Trading Companies & Distributors 2.2%  
  85,000      CAI International, Inc.*     1,644,750   
  25,000      DXP Enterprises, Inc.*     1,842,000   
   

 

 

 
      3,486,750   
   

 

 

 
  Trucking 3.7%  
  85,000      Roadrunner Transportation Systems, Inc.*     1,937,150   
  79,000      Saia, Inc.* ††     3,915,240   
   

 

 

 
      5,852,390   
   

 

 

 
  Total Common Stocks
(cost $116,804,883)
    145,942,541   
   

 

 

 
  PREFERRED STOCKS 1.6%  
  Apparel Retail 0.7%  
  166,000      Grazziotin S.A. Pfd. (Brazil)     1,177,879   
   

 

 

 
  Pharmaceuticals 0.9%  
  105,263      Acetylon Pharmaceuticals, Inc., Series B Pfd.* *** †     1,366,314   
   

 

 

 
  Total Preferred Stocks
(cost $1,860,729)
    2,544,193   
   

 

 

 
  WARRANTS 0.0%  
  Health Care Services 0.0%  
  465,000      Northstar Healthcare, Inc., expiring 9/25/16* *** † (Canada)     4,150   
   

 

 

 
  Total Warrants
(cost $0)
    4,150   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM INVESTMENTS 5.7%  
  Repurchase Agreement 5.7%  
  $9,012,804      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $9,220,000 of United States Treasury Notes 1.750% due 9/30/19; value: $9,196,950; repurchase proceeds: $9,012,804†† (cost $9,012,804)   $ 9,012,804   
   

 

 

 
  Total Short-Term Investments
(cost $9,012,804)
    9,012,804   
   

 

 

 
  Total Investments
(cost $127,678,416) 99.2%
    157,503,688   
  Other Assets less Liabilities 0.8%     1,296,718   
   

 

 

 
  NET ASSETS 100.0%   $ 158,800,406   
   

 

 

 
 

 

75


Table of Contents
WASATCH MICRO CAP VALUE FUND (WAMVX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

Number of
Contracts
         Value  
             
  CALL OPTIONS
WRITTEN 0.1%
 
  Auto Parts & Equipment 0.0%  
  400      Gentherm, Inc., expiring 12/20/14,
exercise price $50
  $ 53,200   
   

 

 

 
  IT Consulting & Other Services 0.1%  
  300      EPAM Systems, Inc., expiring 10/18/14, exercise price $40     129,000   
   

 

 

 
  Trucking 0.0%  
  130      Saia, Inc., expiring 12/20/14,
exercise price $55
    14,300   
   

 

 

 
  Total Call Options Written
(premium $206,836)
    196,500   
   

 

 

 
 

*Non-income producing.

 

***Security was fair valued under procedures adopted by the Board of Trustees (see Note 14).

 

†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 10).

 

††All or a portion of this security has been designated as collateral for call options written (see Note 4).

 

GDR Global Depositary Receipt.

 

PIPE Private Investment in a Public Equity.

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

  

   

   

   

  

  

  

  

At September 30, 2014, Wasatch Micro Cap Value Fund’s investments, excluding short-term investments and call options written, were in the following countries:

 

Country   %  

Belgium

    1.3   

Brazil

    0.8   

Canada

    0.9   

China

    2.5   

France

    1.9   

Germany

    1.1   

India

    4.1   

Israel

    3.4   

Japan

    0.8   

Korea

    2.9   

Malaysia

    1.7   

Mexico

    1.2   

Philippines

    1.0   

Russia

    0.1   

Sweden

    1.4   

Turkey

    1.1   

United States

    73.8   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

76


Table of Contents
WASATCH SMALL CAP GROWTH FUND (WAAEX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  COMMON STOCKS 97.6%  
  Aerospace & Defense 2.0%  
  1,126,738      HEICO Corp., Class A   $ 45,407,541   
   

 

 

 
  Air Freight & Logistics 3.6%  
  36,319,023      Aramex PJSC (United Arab Emirates)     31,642,378   
  1,383,181      Echo Global Logistics, Inc.* ‡‡     32,573,913   
  396,311      HUB Group, Inc., Class A*     16,062,485   
   

 

 

 
      80,278,776   
   

 

 

 
  Airlines 2.7%  
  483,651      Allegiant Travel Co.     59,808,283   
   

 

 

 
  Airport Services 1.4%  
  1,805,991      Wesco Aircraft Holdings, Inc.*     31,424,243   
   

 

 

 
  Apparel Retail 1.5%  
  1,145,388      Zumiez, Inc.*     32,185,403   
   

 

 

 
  Application Software 4.7%  
  153,030      Concur Technologies, Inc.*     19,407,265   
  594,444      Ultimate Software Group, Inc.*     84,119,770   
   

 

 

 
      103,527,035   
   

 

 

 
  Automotive Retail 2.2%  
  496,884      Monro Muffler Brake, Inc.     24,113,780   
  162,913      O’Reilly Automotive, Inc.*     24,495,599   
   

 

 

 
      48,609,379   
   

 

 

 
  Biotechnology 6.0%  
  2,727,500      Abcam plc (United Kingdom)     17,782,402   
  642,332      Argos Therapeutics, Inc.*     6,461,860   
  527,438      Cellular Dynamics International, Inc.*     3,707,889   
  1,357,191      ChemoCentryx, Inc.*     6,107,360   
  298,905      Esperion Therapeutics, Inc.*     7,311,216   
  1,490,482      Exact Sciences Corp.*     28,885,541   
  1,529,490      Sangamo BioSciences, Inc.*     16,495,550   
  1,241,169      Seattle Genetics, Inc.*     46,146,663   
   

 

 

 
      132,898,481   
   

 

 

 
  Consumer Finance 0.7%  
  3,305,639      Mahindra & Mahindra Financial Services Ltd. (India)     14,579,923   
   

 

 

 
  Data Processing & Outsourced Services 5.7%  
  745,510      ExlService Holdings, Inc.*     18,197,899   
  549,162      Syntel, Inc.*     48,293,306   
  1,616,209      Wirecard AG (Germany)     59,710,295   
   

 

 

 
      126,201,500   
   

 

 

 
  Diversified Banks 1.8%  
  565,550      HDFC Bank Ltd. ADR (India)     26,343,319   
  1,566,515      Yes Bank Ltd. (India)     14,128,058   
   

 

 

 
      40,471,377   
   

 

 

 
  Diversified Support Services 1.6%  
  1,124,516      Copart, Inc.*     35,214,219   
   

 

 

 
  Drug Retail 0.7%  
  119,229      Cosmos Pharmaceutical Corp. (Japan)     15,121,727   
   

 

 

 
  Electrical Components & Equipment 1.1%  
  648,886      Polypore International, Inc.*     25,248,154   
   

 

 

 
  Electronic Manufacturing Services 2.3%  
  729,002      IPG Photonics Corp.*     50,140,758   
   

 

 

 
  Environmental & Facilities Services 1.2%  
  1,067,205      Tetra Tech, Inc.     26,658,781   
   

 

 

 
Shares          Value  
             
  Food Distributors 1.0%  
  1,423,495      Chefs’ Warehouse, Inc. (The)* ‡‡   $ 23,146,029   
   

 

 

 
  Health Care Distributors 1.5%  
  223,977      MWI Veterinary Supply, Inc.*     33,238,187   
   

 

 

 
  Health Care Equipment 1.9%  
  484,672      Abaxis, Inc.     24,577,717   
  229,767      DexCom, Inc.*     9,188,383   
  593,260      Tandem Diabetes Care, Inc.*     7,961,549   
   

 

 

 
      41,727,649   
   

 

 

 
  Health Care Services 2.1%  
  1,030,019      IPC The Hospitalist Co., Inc.* ‡‡     46,134,551   
   

 

 

 
  Homefurnishing Retail 2.0%  
  751,690      Mattress Firm Holding Corp.*     45,146,501   
   

 

 

 
  Industrial Machinery 1.9%  
  262,005      Graco, Inc.     19,121,125   
  339,785      Proto Labs, Inc.*     23,445,165   
   

 

 

 
      42,566,290   
   

 

 

 
  Internet Retail 4.7%  
  786,591      Blue Nile, Inc.* ‡‡     22,457,173   
  1,640,474      MakeMyTrip Ltd.* (India)     45,654,391   
  860,209      RetailMeNot, Inc.*     13,900,978   
  481,882      Start Today Co. Ltd. (Japan)     10,487,826   
  183,857      zooplus AG* (Germany)     12,786,357   
   

 

 

 
      105,286,725   
   

 

 

 
  Internet Software & Services 8.2%  
  1,093,102      Angie’s List, Inc.*     6,963,060   
  1,331,244      Cornerstone OnDemand, Inc.*     45,808,106   
  1,077,668      Dealertrack Technologies, Inc.*     46,781,568   
  396,238      Envestnet, Inc.*     17,830,710   
  1,615,954      SciQuest, Inc.* ‡‡     24,303,948   
  280,753      SPS Commerce, Inc.*     14,922,022   
  456,539      Vistaprint N.V.*     25,013,772   
   

 

 

 
      181,623,186   
   

 

 

 
  Leisure Facilities 1.8%  
  768,942      Life Time Fitness, Inc.*     38,785,434   
   

 

 

 
  Life Sciences Tools & Services 6.2%  
  1,172,379      Divi’s Laboratories Ltd. (India)     34,218,432   
  897,084      Fluidigm Corp.*     21,978,558   
  1,103,068      ICON plc* (Ireland)     63,128,582   
  189,236      Techne Corp.     17,703,028   
   

 

 

 
      137,028,600   
   

 

 

 
  Managed Health Care 0.3%  
  655,582      Trupanion, Inc.*     5,572,447   
   

 

 

 
  Oil & Gas Equipment & Services 4.2%  
  334,085      Dril-Quip, Inc.*     29,867,199   
  437,524      Pason Systems, Inc. (Canada)     12,225,136   
  160,362      Schoeller-Bleckmann Oilfield Equipment AG (Austria)     15,644,135   
  382,702      ShawCor Ltd. (Canada)     19,296,473   
  675,162      TGS-NOPEC Geophysical Co. ASA (Norway)     17,166,737   
   

 

 

 
      94,199,680   
   

 

 

 
  Oil & Gas Exploration & Production 2.1%  
  2,608,954      Gran Tierra Energy, Inc.* (Colombia)     14,453,605   
  978,179      Northern Oil and Gas, Inc.*     13,909,705   
  3,483,665      Premier Oil plc (United Kingdom)     18,802,268   
   

 

 

 
      47,165,578   
   

 

 

 
 

 

77


Table of Contents

 

WASATCH SMALL CAP GROWTH FUND (WAAEX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Packaged Foods &
Meats 1.2%
 
  2,461      Annie’s, Inc.*   $ 112,960   
  286,067      GlaxoSmithKline Consumer Healthcare Ltd. (India)     26,147,154   
   

 

 

 
      26,260,114   
   

 

 

 
  Personal Products 0.6%  
  472,827      Colgate-Palmolive India Ltd. (India)     13,359,124   
   

 

 

 
  Pharmaceuticals 1.5%  
  1,752,428      Cempra, Inc.* ‡‡     19,206,611   
  1,152,557      IPCA Laboratories Ltd. (India)     14,780,200   
   

 

 

 
      33,986,811   
   

 

 

 
  Research & Consulting
Services 1.6%
 
  549,657      Stantec, Inc. (Canada)     35,854,126   
   

 

 

 
  Restaurants 1.3%  
  1,491,986      Jubilant Foodworks Ltd.* (India)     29,544,995   
   

 

 

 
  Semiconductors 3.6%  
  248,064      Cavium, Inc.*     12,336,223   
  1,150,899      Power Integrations, Inc.     62,044,965   
  161,235      Silicon Laboratories, Inc.*     6,552,590   
   

 

 

 
      80,933,778   
   

 

 

 
  Specialty Stores 0.5%  
  259,737      Hibbett Sports, Inc.*     11,072,588   
   

 

 

 
  Systems Software 1.7%  
  600,133      FleetMatics Group plc*     18,304,057   
  1,327,319      Infoblox, Inc.*     19,577,955   
   

 

 

 
      37,882,012   
   

 

 

 
  Trading Companies & Distributors 2.6%  
  141,374      DXP Enterprises, Inc.*     10,416,436   
  547,600      MSC Industrial Direct Co., Inc.,
Class A
    46,797,896   
   

 

 

 
      57,214,332   
   

 

 

 
  Trucking 5.9%  
  4,784,182      Knight Transportation, Inc.†† ‡‡     131,038,745   
   

 

 

 
  Total Common Stocks
(cost $1,413,794,700)
    2,166,543,062   
   

 

 

 
  PREFERRED STOCKS 1.5%  
  Biotechnology 0.0%  
  677,966      Nanosys, Inc., Series D Pfd.* *** †     366,848   
  161,519      Nanosys, Inc., Series E Pfd.* *** †     183,211   
   

 

 

 
      550,059   
   

 

 

 
  Oil & Gas Equipment & Services 0.7%  
  5,818,582      Drilling Info Holdings, Inc., Series B Pfd.* *** †     15,350,001   
   

 

 

 
  Systems Software 0.8%  
  1,114,610      DataStax, Inc., Series E Pfd.* *** †     8,000,002   
  33,296      DocuSign, Inc., Series B Pfd.
* *** †
    437,256   
  9,974      DocuSign, Inc., Series B-1 Pfd.
* *** †
    130,983   
  23,905      DocuSign, Inc., Series D Pfd.
* *** †
    313,930   
  618,152      DocuSign, Inc., Series E Pfd.
* *** †
    8,117,819   
   

 

 

 
      16,999,990   
   

 

 

 
  Total Preferred Stocks
(cost $34,534,930)
    32,900,050   
   

 

 

 
Shares          Value  
             
  LIMITED PARTNERSHIP INTEREST 0.2%  
  Asset Management & Custody Banks 0.2%  
  Greenspring Global Partners II-B, L.P.*** †   $ 3,166,752   
  Greenspring Global Partners III-B, L.P.*** †     1,348,923   
   

 

 

 
      4,515,675   
   

 

 

 
  Total Limited Partnership Interest
(cost $4,634,695)
    4,515,675   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM
INVESTMENTS 0.9%
 
  Repurchase Agreement 0.9%  
  $20,033,263      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $20,490,000 of United States Treasury Notes 1.750% due 9/30/19; value: $20,438,775; repurchase proceeds: $20,033,263†† (cost $20,033,263)   $ 20,033,263   
   

 

 

 
  Total Short-Term Investments
(cost $20,033,263)
    20,033,263   
   

 

 

 
  Total Investments
(cost $1,472,997,588) 100.2%
    2,223,992,050   
  Liabilities less Other
Assets (0.2%)
    (4,354,357
   

 

 

 
  NET ASSETS 100.0%   $ 2,219,637,693   
   

 

 

 
     

*Non-income producing.

 

***Security was fair valued under procedures adopted by the Board of
Trustees (see Note 14).

 

†Security purchased in a private placement transaction or under Rule
144A of the Securities Act of 1933 (see Note 10).

 

††All or a portion of this security has been designated as collateral for
purchase commitments (see Note 11).

 

‡‡Affiliated company (see Note 9).

 

ADR American Depositary Receipt.

 

See Notes to Financial Statements.

 

At September 30, 2014, Wasatch Small Cap Growth Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Austria

    0.7   

Canada

    3.0   

Colombia

    0.6   

Germany

    3.3   

India

    9.9   

Ireland

    2.9   

Japan

    1.2   

Norway

    0.8   

United Arab Emirates

    1.4   

United Kingdom

    1.7   

United States

    74.5   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

78


Table of Contents

 

WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  COMMON STOCKS 99.8%  
  Aerospace & Defense 2.3%  
  155,347      HEICO Corp., Class A   $ 6,260,484   
   

 

 

 
  Airlines 2.1%  
  46,882      Allegiant Travel Co.     5,797,428   
   

 

 

 
  Airport Services 1.2%  
  190,823      Wesco Aircraft Holdings, Inc.*     3,320,320   
   

 

 

 
  Apparel Retail 1.4%  
  257,095      Chico’s FAS, Inc.     3,797,293   
   

 

 

 
  Apparel, Accessories & Luxury Goods 1.4%  
  279,920      Vaibhav Global Ltd.* (India)     3,925,044   
   

 

 

 
  Application Software 2.1%  
  409,921      Ebix, Inc.     5,812,680   
   

 

 

 
  Asset Management & Custody Banks 2.5%  
  177,376      Manning & Napier, Inc.     2,978,143   
  22,089      Virtus Investment Partners, Inc.     3,836,859   
   

 

 

 
      6,815,002   
   

 

 

 
  Auto Parts & Equipment 1.1%  
  75,297      Dorman Products, Inc.*     3,016,398   
   

 

 

 
  Computer & Electronics
Retail 1.7%
 
  114,116      GameStop Corp., Class A     4,701,579   
   

 

 

 
  Construction & Engineering 1.4%  
  116,813      Northwest Pipe Co.*     3,983,323   
   

 

 

 
  Consumer Finance 4.7%  
  28,148      Credit Acceptance Corp.*     3,548,618   
  131,719      Encore Capital Group, Inc.*     5,836,469   
  70,937      Portfolio Recovery Associates, Inc.*     3,705,040   
   

 

 

 
      13,090,127   
   

 

 

 
  Data Processing & Outsourced Services 3.4%  
  153,063      NeuStar, Inc., Class A*     3,800,554   
  61,960      Syntel, Inc.*     5,448,763   
   

 

 

 
      9,249,317   
   

 

 

 
  Diversified Banks 3.2%  
  3,170,210      City Union Bank Ltd. (India)     4,411,910   
  477,059      Yes Bank Ltd. (India)     4,302,491   
   

 

 

 
      8,714,401   
   

 

 

 
  Diversified Support Services 2.6%  
  230,425      Copart, Inc.*     7,215,759   
   

 

 

 
  Electrical Components & Equipment 2.5%  
  176,878      Polypore International, Inc.*     6,882,323   
   

 

 

 
  Electronic Manufacturing Services 2.3%  
  441,395      Fabrinet*     6,444,367   
   

 

 

 
  Fertilizers & Agricultural Chemicals 2.7%  
  309,426      American Vanguard Corp.     3,465,571   
  260,379      Intrepid Potash, Inc.*     4,022,856   
   

 

 

 
      7,488,427   
   

 

 

 
  Footwear 1.3%  
  66,622      Skechers U.S.A., Inc., Class A*     3,551,619   
   

 

 

 
  Health Care Facilities 2.5%  
  201,641      Ensign Group, Inc. (The)     7,017,107   
   

 

 

 
Shares          Value  
             
  Health Care REITs 1.7%  
  324,267      CareTrust REIT, Inc.*   $ 4,637,018   
   

 

 

 
  Health Care Services 2.4%  
  73,411      Air Methods Corp.*     4,077,981   
  75,653      CorVel Corp.*     2,575,985   
   

 

 

 
      6,653,966   
   

 

 

 
  Homefurnishing Retail 2.5%  
  334,586      Select Comfort Corp.*     6,999,539   
   

 

 

 
  Hotels & Resort REITs 2.8%  
  708,220      Summit Hotel Properties, Inc.     7,634,612   
   

 

 

 
  Internet Retail 1.1%  
  106,688      MakeMyTrip Ltd.* (India)     2,969,127   
   

 

 

 
  Internet Software & Services 3.0%  
  152,533      Vistaprint N.V.*     8,357,283   
   

 

 

 
  IT Consulting & Other
Services 1.7%
 
  107,055      EPAM Systems, Inc.*     4,687,938   
   

 

 

 
  Life Sciences Tools & Services 1.4%  
  68,678      ICON plc* (Ireland)     3,930,442   
   

 

 

 
  Mortgage REITs 2.6%  
  1,072,975      Arbor Realty Trust, Inc.     7,231,851   
   

 

 

 
  Oil & Gas Equipment &
Services 2.1%
 
  66,776      Geospace Technologies Corp.*     2,347,177   
  128,850      TGS-NOPEC Geophysical Co. ASA (Norway)     3,276,153   
  8,000      TGS-NOPEC Geophysical Co. ASA ADR (Norway)     202,840   
   

 

 

 
      5,826,170   
   

 

 

 
  Oil & Gas Exploration & Production 5.8%  
  255,364      Comstock Resources, Inc.     4,754,878   
  429,047      Northern Oil and Gas, Inc.*     6,101,048   
  220,286      Ultra Petroleum Corp.*     5,123,852   
   

 

 

 
      15,979,778   
   

 

 

 
  Oil & Gas Refining &
Marketing 1.5%
 
  101,953      World Fuel Services Corp.     4,069,964   
   

 

 

 
  Personal Products 3.8%  
  149,755      Nu Skin Enterprises, Inc., Class A     6,743,468   
  51,867      USANA Health Sciences, Inc.*     3,820,523   
   

 

 

 
      10,563,991   
   

 

 

 
  Pharmaceuticals 3.6%  
  56,818      Mallinckrodt plc*     5,122,143   
  343,950      Torrent Pharmaceuticals Ltd. (India)     4,861,858   
   

 

 

 
      9,984,001   
   

 

 

 
  Regional Banks 7.2%  
  310,491      Customers Bancorp, Inc.*     5,576,418   
  306,353      MidSouth Bancorp, Inc.     5,728,801   
  85,647      Pinnacle Financial Partners, Inc.     3,091,857   
  96,731      Prosperity Bancshares, Inc.     5,530,111   
   

 

 

 
      19,927,187   
   

 

 

 
  Research & Consulting
Services 3.9%
 
  278,475      Acacia Research Corp.     4,310,793   
  331,134      Franklin Covey Co.*     6,486,915   
   

 

 

 
      10,797,708   
   

 

 

 
  Systems Software 1.6%  
  257,261      AVG Technologies N.V.*     4,265,387   
   

 

 

 
 

 

79


Table of Contents
WASATCH SMALL CAP VALUE FUND (WMCVX / WICVX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Trading Companies & Distributors 2.7%  
  73,034      DXP Enterprises, Inc.*   $ 5,381,145   
  25,155      MSC Industrial Direct Co., Inc., Class A     2,149,746   
   

 

 

 
      7,530,891   
   

 

 

 
  Trucking 6.0%  
  152,800      Knight Transportation, Inc.     4,185,192   
  41,546      Old Dominion Freight Line, Inc.*     2,934,810   
  112,754      Saia, Inc.*     5,588,088   
  156,868      Universal Truckload Services, Inc.     3,804,049   
   

 

 

 
      16,512,139   
   

 

 

 
  Total Common Stocks
(cost $228,995,014)
    275,641,990   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM
INVESTMENTS 1.5%
 
  Repurchase Agreement 1.5%  
  $4,009,099      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $4,100,000 of United States Treasury Notes 1.750% due 9/30/19; value: $4,089,750; repurchase proceeds: $4,009,099 (cost $4,009,099)   $ 4,009,099   
   

 

 

 
  Total Short-Term Investments
(cost $4,009,099)
    4,009,099   
   

 

 

 
  Total Investments
(cost $233,004,113) 101.3%
    279,651,089   
  Liabilities less Other
Assets (1.3%)
    (3,694,874
   

 

 

 
  NET ASSETS 100.0%   $ 275,956,215   
   

 

 

 
 

*Non-income producing.

 

ADR American Depositary Receipt.

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

  

  

  

  

At September 30, 2014, Wasatch Small Cap Value Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

India

    7.4   

Ireland

    1.4   

Norway

    1.3   

United States

    89.9   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

80


Table of Contents

 

WASATCH STRATEGIC INCOME FUND (WASIX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  COMMON STOCKS 87.9%  
  Asset Management & Custody Banks 9.5%  
  110,600      Ares Capital Corp.   $ 1,787,296   
  187,000      FS Investment Corp.     2,013,990   
  232,200      Medallion Financial Corp.     2,707,452   
  139,100      NorthStar Asset Management Group, Inc.*     2,562,222   
   

 

 

 
      9,070,960   
   

 

 

 
  Cable & Satellite 1.9%  
  34,500      Comcast Corp., Class A     1,855,410   
   

 

 

 
  Consumer Finance 6.1%  
  35,030      Capital One Financial Corp.     2,859,149   
  45,500      Discover Financial Services     2,929,745   
   

 

 

 
      5,788,894   
   

 

 

 
  Data Processing & Outsourced
Services 5.5%
 
  35,000      MasterCard, Inc., Class A     2,587,200   
  12,335      Visa, Inc., Class A     2,631,919   
   

 

 

 
      5,219,119   
   

 

 

 
  Diversified REITs 0.2%  
  177,857      Star Asia Financial Ltd.* *** †     231,214   
   

 

 

 
  Drug Retail 5.9%  
  47,500      CVS Health Corp.     3,780,525   
  30,500      Walgreen Co.     1,807,735   
   

 

 

 
      5,588,260   
   

 

 

 
  Health Care Services 2.0%  
  18,240      Chemed Corp.     1,876,896   
   

 

 

 
  Integrated Oil & Gas 7.2%  
  31,400      Occidental Petroleum Corp.     3,019,110   
  104,630      Suncor Energy, Inc. (Canada)     3,784,440   
   

 

 

 
      6,803,550   
   

 

 

 
  Integrated Telecommunication
Services 2.1%
 
  40,000      Verizon Communications, Inc.     1,999,600   
   

 

 

 
  Mortgage REITs 20.5%  
  91,900      Altisource Residential Corp.     2,205,600   
  106,600      American Capital Mortgage Investment Corp.     2,006,212   
  108,000      Capstead Mortgage Corp.     1,321,920   
  123,491      Colony Financial, Inc.     2,763,728   
  165,100      NorthStar Realty Finance Corp.     2,917,317   
  136,200      Starwood Property Trust, Inc.     2,990,952   
  261,000      Two Harbors Investment Corp.     2,523,870   
  161,168      ZAIS Financial Corp.     2,781,760   
   

 

 

 
      19,511,359   
   

 

 

 
  Movies & Entertainment 2.2%  
  23,100      Walt Disney Co. (The)     2,056,593   
   

 

 

 
  Multi-Line Insurance 1.7%  
  30,000      American International Group, Inc.     1,620,600   
   

 

 

 
  Oil & Gas Drilling 2.1%  
  20,000      Helmerich & Payne, Inc.     1,957,400   
   

 

 

 
  Personal Products 4.0%  
  40,374      Herbalife Ltd.     1,766,362   
  46,000      Nu Skin Enterprises, Inc., Class A     2,071,380   
   

 

 

 
      3,837,742   
   

 

 

 
  Railroads 2.9%  
  38,800      Canadian National Railway Co. (Canada)     2,753,102   
   

 

 

 
  Restaurants 2.0%  
  19,600      McDonald’s Corp.     1,858,276   
   

 

 

 
Shares          Value  
             
  Semiconductors 2.1%  
  46,100      Xilinx, Inc.   $ 1,952,335   
   

 

 

 
  Thrifts & Mortgage Finance 2.9%  
  130,500      Home Loan Servicing Solutions Ltd.     2,765,295   
   

 

 

 
  Trading Companies & Distributors 7.1%  
  89,400      TAL International Group, Inc.*     3,687,750   
  12,030      W.W. Grainger, Inc.     3,027,349   
   

 

 

 
      6,715,099   
   

 

 

 
  Total Common Stocks
(cost $72,790,014)
    83,461,704   
   

 

 

 
  EXCHANGE-TRADED FUNDS 3.2%  
  Asset Management & Custody Banks 3.2%  
  30,600      PowerShares Dynamic Pharmaceuticals Portfolio     1,947,690   
  50,000      ProShares VIX Short-Term Futures ETF*     1,039,000   
   

 

 

 
      2,986,690   
   

 

 

 
  Total Exchange-Traded Funds
(cost $1,826,973)
    2,986,690   
   

 

 

 
  LIMITED PARTNERSHIP INTEREST 3.8%  
  Asset Management & Custody Banks 3.8%  
  56,900      Blackstone Group L.P.     1,791,212   
  82,000      KKR & Co. L.P.     1,828,600   
   

 

 

 
      3,619,812   
   

 

 

 
  Total Limited Partnership Interest
(cost $3,642,200)
    3,619,812   
   

 

 

 
Principal
Amount
         Value  
  CORPORATE BONDS 0.0%  
  Gold 0.0%  
  $206,604      Redcorp Ventures Ltd., 13.00%, 7/11/12, Series D* *** † §§ (Canada)   $ 1,125   
   

 

 

 
  Total Corporate Bonds
(cost $152,584)
    1,125   
   

 

 

 
 

 

81


Table of Contents
WASATCH STRATEGIC INCOME FUND (WASIX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

             
Principal
Amount
         Value  
  SHORT-TERM INVESTMENTS 0.9%  
  Repurchase Agreement 0.9%  
  $ 856,868      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $925,000 of United States Treasury Bonds 2.875% due 5/15/43; value: $877,594; repurchase proceeds: $856,868 (cost $856,868)   $ 856,868   
   

 

 

 
  Total Short-Term Investments
(cost $856,868)
    856,868   
   

 

 

 
  Total Investments
(cost $79,268,639) 95.8%
    90,926,199   
             
  Other Assets less
Liabilities 4.2%
    4,031,561   
   

 

 

 
  NET ASSETS 100.0%   $ 94,957,760   
   

 

 

 
     

*Non-income producing.

 

***Security was fair valued under procedures adopted by the Board of
Trustees (see Note 14).

 

†Security purchased in a private placement transaction or under Rule
144A of the Securities Act of 1933 (see Note 10).

 

§§In default.

 

ETF Exchange-Traded Fund.

 

REIT Real Estate Investment Trust.

 

See Notes to Financial Statements.

 

At September 30, 2014, Wasatch Strategic Income Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Canada

    7.3   

United States

    92.7   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

82


Table of Contents
WASATCH ULTRA GROWTH FUND (WAMCX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  COMMON STOCKS 91.8%  
  Air Freight & Logistics 1.3%  
  56,079      Echo Global Logistics, Inc.*   $ 1,320,660   
   

 

 

 
  Apparel, Accessories & Luxury Goods 1.6%  
  12,815      Page Industries Ltd. (India)     1,636,735   
   

 

 

 
  Application Software 6.8%  
  8,564      Concur Technologies, Inc.*     1,086,086   
  94,652      Exa Corp.*     1,067,675   
  24,367      Interactive Intelligence Group, Inc.*     1,018,541   
  30,215      QLIK Technologies, Inc.*     817,014   
  73,826      Tangoe, Inc.*     1,000,342   
  14,001      Ultimate Software Group, Inc.*     1,981,281   
   

 

 

 
      6,970,939   
   

 

 

 
  Asset Management & Custody Banks 1.0%  
  5,882      Virtus Investment Partners, Inc.     1,021,703   
   

 

 

 
  Biotechnology 9.3%  
  151,370      Abcam plc (United Kingdom)     986,882   
  77,977      Argos Therapeutics, Inc.*     784,449   
  69,159      Cellular Dynamics International, Inc.*     486,188   
  84,974      ChemoCentryx, Inc.*     382,383   
  311,570      Cytokinetics, Inc.*     1,096,726   
  19,131      Esperion Therapeutics, Inc.*     467,944   
  62,457      Exact Sciences Corp.*     1,210,417   
  21,415      GlobeImmune, Inc.*     147,978   
  41,818      Inovio Pharmaceuticals, Inc.*     411,907   
  68,378      OncoGenex Pharmaceutical, Inc.*     182,569   
  105,623      Sangamo BioSciences, Inc.*     1,139,144   
  59,660      Seattle Genetics, Inc.*     2,218,159   
   

 

 

 
      9,514,746   
   

 

 

 
  Building Products 1.2%  
  34,756      Trex Co., Inc.*     1,201,515   
   

 

 

 
  Casinos & Gaming 0.8%  
  23,665      Multimedia Games Holding Co., Inc.*     852,177   
   

 

 

 
  Communications Equipment 0.7%  
  18,898      Ubiquiti Networks, Inc.*     709,242   
   

 

 

 
  Consumer Finance 0.7%  
  166,076      Mahindra & Mahindra Financial Services Ltd. (India)     732,498   
   

 

 

 
  Data Processing & Outsourced Services 1.1%  
  13,364      Syntel, Inc.*     1,175,230   
   

 

 

 
  Diversified Banks 3.9%  
  1,274,848      City Union Bank Ltd. (India)     1,774,177   
  248,096      Yes Bank Ltd. (India)     2,237,524   
   

 

 

 
      4,011,701   
   

 

 

 
  Electrical Components & Equipment 2.1%  
  55,640      Polypore International, Inc.*     2,164,952   
   

 

 

 
  Electronic Manufacturing Services 1.8%  
  27,359      IPG Photonics Corp.*     1,881,752   
   

 

 

 
  Environmental & Facilities Services 1.2%  
  25,556      Waste Connections, Inc.     1,239,977   
   

 

 

 
  Footwear 0.8%  
  14,934      Skechers U.S.A., Inc., Class A*     796,132   
   

 

 

 
Shares          Value  
             
  Health Care Equipment 5.5%  
  117,670      AtriCure, Inc.*   $ 1,732,102   
  1,158,664      Cardica, Inc.*     1,239,771   
  70,512      Novadaq Technologies, Inc.* (Canada)     894,797   
  32,272      NuVasive, Inc.*     1,125,325   
  49,910      Tandem Diabetes Care, Inc.*     669,792   
   

 

 

 
      5,661,787   
   

 

 

 
  Health Care Services 0.9%  
  20,203      IPC The Hospitalist Co., Inc.*     904,892   
   

 

 

 
  Health Care Technology 0.6%  
  70,611      Vocera Communications, Inc.*     569,831   
   

 

 

 
  Homebuilding 2.1%  
  68,515      Installed Building Products, Inc.*     962,636   
  67,462      LGI Homes, Inc.*     1,238,602   
   

 

 

 
      2,201,238   
   

 

 

 
  Industrial Machinery 1.4%  
  20,309      Proto Labs, Inc.*     1,401,321   
   

 

 

 
  Internet Retail 3.0%  
  87,990      MakeMyTrip Ltd.* (India)     2,448,762   
  41,774      RetailMeNot, Inc.*     675,068   
   

 

 

 
      3,123,830   
   

 

 

 
  Internet Software & Services 10.0%  
  97,877      Amber Road, Inc.*     1,697,187   
  56,755      Cornerstone OnDemand, Inc.*     1,952,939   
  16,854      Demandware, Inc.*     858,206   
  81,109      E2open, Inc.*     755,125   
  107,057      SciQuest, Inc.*     1,610,137   
  28,084      SPS Commerce, Inc.*     1,492,665   
  25,348      Vistaprint N.V.*     1,388,817   
  22,061      Xoom Corp.*     484,239   
  91,388      Xtera Communications, Inc.* *** †     914   
   

 

 

 
      10,240,229   
   

 

 

 
  IT Consulting & Other
Services 1.9%
 
  44,713      Cognizant Technology Solutions Corp., Class A*     2,001,801   
   

 

 

 
  Life Sciences Tools & Services 1.5%  
  26,676      ICON plc* (Ireland)     1,526,668   
   

 

 

 
  Managed Health Care 0.5%  
  11,609      HealthEquity, Inc.*     212,561   
  31,129      Trupanion, Inc.*     264,596   
   

 

 

 
      477,157   
   

 

 

 
  Oil & Gas Exploration & Production 2.4%  
  104,055      Northern Oil and Gas, Inc.*     1,479,662   
  40,207      Ultra Petroleum Corp.*     935,215   
   

 

 

 
      2,414,877   
   

 

 

 
  Oil & Gas Refining & Marketing 1.0%  
  277,686      Amyris, Inc.*     1,052,430   
   

 

 

 
  Packaged Foods & Meats 1.4%  
  15,963      GlaxoSmithKline Consumer Healthcare Ltd. (India)     1,459,053   
   

 

 

 
  Pharmaceuticals 4.8%  
  30,319      Aerie Pharmaceuticals, Inc.*     627,300   
  68,788      Cardiovascular Systems, Inc.*     1,625,460   
  119,963      Cempra, Inc.*     1,314,795   
  53,828      Egalet Corp.*     306,820   
  82,889      Horizon Pharma plc*     1,017,877   
   

 

 

 
      4,892,252   
   

 

 

 
 

 

83


Table of Contents
WASATCH ULTRA GROWTH FUND (WAMCX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

    
Shares
         Value  
             
  Regional Banks 0.8%  
  45,797      Customers Bancorp, Inc.*   $ 822,514   
   

 

 

 
  Restaurants 1.6%  
  85,378      Jubilant Foodworks Ltd.* (India)     1,690,695   
   

 

 

 
  Semiconductor Equipment 1.4%  
  113,682      PDF Solutions, Inc.*     1,433,530   
   

 

 

 
  Semiconductors 5.4%  
  146,151      MaxLinear, Inc., Class A*     1,005,519   
  22,241      NVE Corp.*     1,435,434   
  57,804      Power Integrations, Inc.     3,116,214   
   

 

 

 
      5,557,167   
   

 

 

 
  Specialized Consumer Services 1.1%  
  81,698      LifeLock, Inc.*     1,167,464   
   

 

 

 
  Specialized Finance 0.7%  
  22,618      CRISIL Ltd. (India)     728,786   
   

 

 

 
  Specialty Chemicals 2.4%  
  32,868      Balchem Corp.     1,859,343   
  468,099      EcoSynthetix, Inc.* (Canada)     626,610   
   

 

 

 
      2,485,953   
   

 

 

 
  Systems Software 5.1%  
  69,141      FleetMatics Group plc*     2,108,800   
  101,414      Infoblox, Inc.*     1,495,857   
  5,798      NetSuite, Inc.*     519,153   
  96,950      TubeMogul, Inc.*     1,114,925   
   

 

 

 
      5,238,735   
   

 

 

 
  Technology Hardware, Storage & Peripherals 0.8%  
  128,690      Intevac, Inc.*     858,362   
   

 

 

 
  Trucking 1.2%  
  45,071      Knight Transportation, Inc.     1,234,495   
   

 

 

 
  Total Common Stocks
(cost $76,469,995)
    94,375,026   
   

 

 

 
  PREFERRED STOCKS 1.9%  
  Biotechnology 0.1%  
  169,492      Nanosys, Inc., Series D Pfd.* *** †     91,712   
  40,380      Nanosys, Inc., Series E Pfd.* *** †     45,803   
   

 

 

 
      137,515   
   

 

 

 
  Health Care Technology 0.7%  
  253,064      Data Sciences International, Inc., Series B
Pfd.* *** †
    729,027   
  243,902      TherOx, Inc., Series I Pfd.* *** †     2,439   
   

 

 

 
      731,466   
   

 

 

 
  Oil & Gas Equipment & Services 1.1%  
  435,920      Drilling Info Holdings, Inc., Series B Pfd.* *** †     1,150,001   
   

 

 

 
  Total Preferred Stocks
(cost $3,171,238)
    2,018,982   
   

 

 

 
  LIMITED PARTNERSHIP INTEREST 4.1%  
  Asset Management & Custody Banks 4.1%  
  Greenspring Global Partners II-B, L.P.*** †     2,850,066   
  Greenspring Global Partners III-B, L.P.*** †     1,348,923   
   

 

 

 
      4,198,989   
   

 

 

 
  Total Limited Partnership Interest
(cost $4,304,983)
    4,198,989   
   

 

 

 
Principal
Amount
         Value  
             
  SHORT-TERM
INVESTMENTS 1.8%
 
  Repurchase Agreement 1.8%  
  $1,812,499      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $1,855,000 of United States Treasury Notes 1.750% due 9/30/19; value: $1,850,363; repurchase proceeds: $1,812,499†† (cost $1,812,499)   $ 1,812,499   
   

 

 

 
  Total Short-Term Investments
(cost $1,812,499)
    1,812,499   
   

 

 

 
  Total Investments
(cost $85,758,715) 99.6%
    102,405,496   
  Other Assets less Liabilities 0.4%     428,211   
   

 

 

 
  NET ASSETS 100.0%   $ 102,833,707   
   

 

 

 
 

*Non-income producing.

 

***Security was fair valued under procedures adopted by the Board of Trustees (see Note 14).

 

†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 10).

 

††All or a portion of this security has been designated as collateral for purchase commitments (see Note 11).

 

See Notes to Financial Statements.

  

   

   

   

  

At September 30, 2014, Wasatch Ultra Growth Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Canada

    1.5   

India

    12.6   

Ireland

    1.5   

United Kingdom

    1.0   

United States

    83.4   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

84


Table of Contents
WASATCH WORLD INNOVATORS FUND (WAGTX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  COMMON STOCKS 98.6%  
  Apparel, Accessories & Luxury Goods 0.2%  
  14,938      Calida Holding AG* (Switzerland)   $ 549,231   
   

 

 

 
  Application Software 3.0%  
  49,511      Aveva Group plc (United Kingdom)     1,235,009   
  18,819      ESI Group* (France)     519,040   
  598,206      GameLoft SE* (France)     3,973,636   
  143,180      TiVo, Inc.*     1,831,988   
   

 

 

 
      7,559,673   
   

 

 

 
  Asset Management & Custody Banks 2.8%  
  33,300      Ameriprise Financial, Inc.     4,108,554   
  155,000      NorthStar Asset Management Group, Inc.*     2,855,100   
   

 

 

 
      6,963,654   
   

 

 

 
  Automotive Retail 3.0%  
  353,730      Mekonomen AB (Sweden)     7,667,947   
   

 

 

 
  Biotechnology 6.9%  
  2,684,294      Abcam plc (United Kingdom)     17,500,713   
   

 

 

 
  Cable & Satellite 3.5%  
  92,182      Comcast Corp., Class A     4,957,548   
  43,884      DIRECTV*     3,796,844   
   

 

 

 
      8,754,392   
   

 

 

 
  Communications Equipment 1.3%  
  306,927      Infinera Corp.*     3,274,911   
   

 

 

 
  Computer & Electronics Retail 0.4%  
  28,180      Groupe Fnac* (France)     1,047,328   
   

 

 

 
  Consumer Finance 6.2%  
  74,500      Capital One Financial Corp.     6,080,690   
  99,900      Discover Financial Services     6,432,561   
  72,000      Encore Capital Group, Inc.*     3,190,320   
   

 

 

 
      15,703,571   
   

 

 

 
  Data Processing & Outsourced
Services 3.8%
 
  69,750      MasterCard, Inc., Class A     5,155,920   
  21,195      Visa, Inc., Class A     4,522,377   
   

 

 

 
      9,678,297   
   

 

 

 
  Drug Retail 1.2%  
  39,000      CVS Health Corp.     3,104,010   
   

 

 

 
  Education Services 3.5%  
  672,000      Kroton Educacional S.A. (Brazil)     4,202,647   
  130,000      TAL Education Group ADR* (China)     4,542,200   
   

 

 

 
      8,744,847   
   

 

 

 
  Fertilizers & Agricultural Chemicals 1.4%  
  30,700      Monsanto Co.     3,454,057   
   

 

 

 
  Health Care Equipment 4.3%  
  141,925      DiaSorin S.p.A. (Italy)     5,326,713   
  186,588      Ion Beam Applications* (Belgium)     3,275,293   
  972,730      Sorin S.p.A.* (Italy)     2,383,118   
   

 

 

 
      10,985,124   
   

 

 

 
  Health Care Services 1.1%  
  98,511      Bio-Reference Laboratories, Inc.*     2,764,219   
   

 

 

 
Shares          Value  
             
  Health Care Supplies 4.6%  
  1,802,813      Advanced Medical Solutions Group plc (United Kingdom)   $ 3,564,841   
  95,032      Guerbet (France)     4,897,653   
  12,496      Sartorius Stedim Biotech (France)     2,087,769   
  1,198,424      Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China)     1,189,989   
   

 

 

 
      11,740,252   
   

 

 

 
  Health Care Technology 0.3%  
  28,601      CompuGroup Medical AG (Germany)     684,812   
   

 

 

 
  Home Entertainment Software 2.1%  
  260,862      Activision Blizzard, Inc.††     5,423,321   
   

 

 

 
  Household Appliances 1.6%  
  204,627      De’ Longhi (Italy)     4,119,105   
   

 

 

 
  Hypermarkets & Super Centers 1.5%  
  42,951      PriceSmart, Inc. (Costa Rica)     3,678,324   
   

 

 

 
  Industrial Machinery 2.6%  
  69,735      KUKA AG (Germany)     4,223,588   
  53,750      Rotork plc (United Kingdom)     2,408,814   
   

 

 

 
      6,632,402   
   

 

 

 
  Internet Retail 3.6%  
  12,046      Amazon.com, Inc.*     3,884,112   
  13,922      ASOS plc* (United Kingdom)     507,708   
  277,978      Ocado Group plc* (United Kingdom)     1,193,949   
  3,000      Priceline Group, Inc. (The)*     3,475,740   
   

 

 

 
      9,061,509   
   

 

 

 
  Internet Software & Services 14.2%  
  7,157      Alibaba Group Holding Ltd. ADR* (China)     635,900   
  258,990      eBay, Inc.*     14,666,604   
  18,918      Google, Inc., Class A*     11,131,540   
  67,000      IAC/InterActiveCorp     4,415,300   
  217,213      NetGem S.A. (France)     576,045   
  87,874      Twitter, Inc.*     4,532,541   
  6,528      Xtera Communications, Inc.* *** †     65   
   

 

 

 
      35,957,995   
   

 

 

 
  IT Consulting & Other
Services 2.0%
 
  110,564      Cognizant Technology Solutions Corp.,
Class A*
    4,949,950   
   

 

 

 
  Leisure Products 0.2%  
  12,690      Fenix Outdoor International AG* (Sweden)     558,961   
   

 

 

 
  Movies & Entertainment 0.4%  
  219,843      SFX Entertainment, Inc.*     1,103,612   
   

 

 

 
  Oil & Gas Refining & Marketing 1.0%  
  63,900      World Fuel Services Corp.     2,550,888   
   

 

 

 
  Personal Products 2.4%  
  62,401      Herbalife Ltd.     2,730,044   
  72,000      Nu Skin Enterprises, Inc., Class A     3,242,160   
   

 

 

 
      5,972,204   
   

 

 

 
  Pharmaceuticals 3.9%  
  75,264      Valeant Pharmaceuticals International, Inc.* (Canada)     9,874,637   
   

 

 

 
  Publishing 0.8%  
  188,487      New York Times Co. (The)     2,114,824   
   

 

 

 
  Real Estate Services 2.6%  
  64,328      Altisource Portfolio Solutions S.A.*     6,484,262   
   

 

 

 
  Restaurants 1.5%  
  404,285      Domino’s Pizza Group plc (United Kingdom)     3,721,908   
   

 

 

 
 

 

85


Table of Contents
WASATCH WORLD INNOVATORS FUND (WAGTX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

Shares          Value  
             
  Semiconductors 3.5%  
  71,000      Altera Corp.   $ 2,540,380   
  158,500      Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)     3,198,530   
  72,700      Xilinx, Inc.     3,078,845   
   

 

 

 
      8,817,755   
   

 

 

 
  Specialized Finance 1.6%  
  67,002      MarketAxess Holdings, Inc.     4,144,744   
   

 

 

 
  Systems Software 0.5%  
  50,144      Init Innovation In Traffic Systems AG (Germany)     1,370,972   
   

 

 

 
  Technology Hardware, Storage & Peripherals 1.1%  
  1,862,000      Lenovo Group Ltd. (China)     2,772,143   
   

 

 

 
  Thrifts & Mortgage Finance 3.7%  
  261,738      Ocwen Financial Corp.*     6,852,301   
  178,000      PennyMac Financial Services, Inc., Class A*     2,607,700   
   

 

 

 
      9,460,001   
   

 

 

 
  Wireless Telecommunication Services 0.3%  
  40,417      MTN Group Ltd. (South Africa)     853,047   
   

 

 

 
  Total Common Stocks
(cost $218,232,901)
    249,799,602   
   

 

 

 
  LIMITED PARTNERSHIP INTEREST 0.1%  
  Asset Management & Custody Banks 0.1%  
  Greenspring Global Partners II-B, L.P.*** †     316,673   
   

 

 

 
  Total Limited Partnership Interest
(cost $329,706)
    316,673   
   

 

 

 
Principal
Amount
         Value  
  SHORT-TERM INVESTMENTS 3.1%  
  Repurchase Agreement 3.1%  
  $7,892,841      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $8,075,000 of United States Treasury Notes 1.750% due 9/30/19; value: $8,054,813; repurchase proceeds: $7,892,841†† (cost $7,892,841)   $ 7,892,841   
   

 

 

 
  Total Short-Term Investments
(cost $7,892,841)
    7,892,841   
   

 

 

 
  Total Investments
(cost $226,455,448) 101.8%
    258,009,116   
  Liabilities less Other Assets (1.8%)     (4,698,501
   

 

 

 
  NET ASSETS 100.0%   $ 253,310,615   
   

 

 

 
     

*Non-income producing.

 

***Security was fair valued under procedures adopted by the Board of
Trustees (see Note 14).

 

†Security purchased in a private placement transaction or under Rule
144A of the Securities Act of 1933 (see Note 10).

 

††All or a portion of this security has been designated as collateral for
purchase commitments (see Note 11).

 

ADR American Depositary Receipt.

 

See Notes to Financial Statements.

 

At September 30, 2014, Wasatch World Innovators Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Belgium

    1.3   

Brazil

    1.7   

Canada

    4.0   

China

    3.7   

Costa Rica

    1.5   

France

    5.2   

Germany

    2.5   

Italy

    4.7   

South Africa

    0.3   

Sweden

    3.3   

Switzerland

    0.2   

Taiwan

    1.3   

United Kingdom

    12.0   

United States

    58.3   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

86


Table of Contents

 

WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Principal
Amount
         Value  
             
  ASSET-BACKED SECURITIES 6.0%  
  $1,000,000      Cabela’s Master Credit Card Trust,
2.29%, 9/17/18, Series 2010-2A,
Class A1†
  $ 1,015,887   
  1,500,000      Citibank Credit Card Issuance Trust,
5.65%, 9/20/19, Series 2007-A8, Class A8
    1,679,055   
  1,250,000      GE Capital Credit Card Master Note Trust,
2.22%, 1/15/22, Series 2012-2, Class A
    1,242,090   
  1,000,000      PFS Financing Corp., 0.754%, 2/15/19,
Series 2014-AA, Class A† †††
    1,001,875   
  585,000      World Financial Network Credit Card Master Trust, 1.76%, 5/17/21,
Series 2012-B, Class A
    587,304   
  1,400,000      World Financial Network Credit Card Master Trust, 3.14%, 1/17/23,
Series 2012-A, Class A
    1,445,991   
   

 

 

 
  Total Asset-Backed Securities
(cost $7,061,305)
    6,972,202   
   

 

 

 
  COLLATERALIZED MORTGAGE OBLIGATIONS 13.6%  
  84,111      Banc of America Merrill Lynch
Commercial Mortgage, Inc.,
5.347%, 11/10/42, Series 2005-1,
Class A4†††
    84,077   
  12,660      Countrywide Home Loan Mortgage Pass Through Trust, 4.50%, 8/25/19,
Series 2004-J7, Class 2A1
    12,668   
  421,865      Federal Home Loan Mortgage Corp., 1.50%, 9/15/22, Series 3760, Class BA     418,072   
  860,915      Federal Home Loan Mortgage Corp., 1.50%, 7/15/23, Series 4221, Class HJ     861,243   
  64,143      Federal Home Loan Mortgage Corp., 1.50%, 4/15/24, Series 3780, Class TA     64,291   
  14,741      Federal Home Loan Mortgage Corp., 2.378%, 8/1/33, Series 847281†††     15,691   
  73,795      Federal Home Loan Mortgage Corp., 2.384%, 5/1/31, Series 847292†††     76,706   
  67,860      Federal Home Loan Mortgage Corp., 2.426%, 12/1/32, Series 847527†††     72,811   
  238,566      Federal Home Loan Mortgage Corp., 2.981%, 1/1/25, Series 775629†††     242,076   
  157,634      Federal Home Loan Mortgage Corp., 3.271%, 5/1/25, Series 775617†††     164,364   
  77,824      Federal Home Loan Mortgage Corp., 5.50%, 5/15/15, Series 2808, Class VA     78,319   
  50,260      Federal Home Loan Mortgage Corp., 5.50%, 10/1/25, Series C90925     55,987   
  194,112      Federal Home Loan Mortgage Corp., 5.50%, 8/1/29, Series C46102     217,244   
  263,513      Federal National Mortgage Assoc.,
1.96%, 12/1/35, Series 848390†††
    278,482   
  378,221      Federal National Mortgage Assoc.,
2.055%, 1/1/35, Series 825245†††
    397,742   
  96,741      Federal National Mortgage Assoc.,
2.16%, 11/1/34, Series 782320†††
    101,718   
  106,634      Federal National Mortgage Assoc.,
2.485%, 2/1/21, Series 313380†††
    109,699   
  85,962      Federal National Mortgage Assoc.,
2.758%, 1/1/18, Series 57735†††
    88,768   
  1,206,873      Federal National Mortgage Assoc.,
3.00%, 1/1/28, Series AB7546
    1,247,326   
  149,598      Federal National Mortgage Assoc.,
3.50%, 6/25/23, Series 2003-46, Class LD
    156,186   
  1,750,693      Federal National Mortgage Assoc.,
3.50%, 6/1/32, Series AL2525
    1,826,893   
Principal
Amount
         Value  
             
  $ 1,140,984      Federal National Mortgage Assoc.,
3.50%, 5/1/33, Series AB9412
  $ 1,188,279   
  138,723      Federal National Mortgage Assoc.,
3.875%, 1/25/39, Series 2009-2,
Class WJ
    145,589   
  45,246      Federal National Mortgage Assoc.,
4.00%, 10/25/32, Series 2003-28,
Class GA
    45,983   
  76,416      Federal National Mortgage Assoc.,
4.08%, 7/1/19, Series 070377†††
    78,017   
  166,134      Federal National Mortgage Assoc.,
4.50%, 6/25/29, Series 2005-121,
Class V
    168,276   
  245,662      Federal National Mortgage Assoc.,
5.50%, 5/25/23, Series 2003-42,
Class EK
    269,852   
  217,597      Government National Mortgage Assoc., 1.625%, 1/20/30, Series 80364†††     224,992   
  556,466      Government National Mortgage Assoc., 1.625%, 6/20/30, Series 80416†††     574,632   
  446,296      Government National Mortgage Assoc., 1.625%, 9/20/34, Series 81054†††     463,919   
  234,726      Government National Mortgage Assoc., 2.125%, 7/20/34, Series 80987†††     245,648   
  459,133      Government National Mortgage Assoc., 3.00%, 8/20/38, Series 2010-47,
Class CG
    471,004   
  426,832      Government National Mortgage Assoc., 3.00%, 12/20/38, Series 2010-89,
Class PA
    437,570   
  805,373      Government National Mortgage Assoc., 3.00%, 5/20/39, Series 2010-68,
Class YE
    824,332   
  521,984      Government National Mortgage Assoc., 3.50%, 1/20/37, Series 2009-31,
Class PD
    532,175   
  147,948      Government National Mortgage Assoc., 4.00%, 6/20/38, Series 2009-69, Class WC     151,570   
  590,922      Government National Mortgage Assoc., 4.00%, 9/20/38, Series 2009-108,
Class WG
    623,814   
  457,117      Government National Mortgage Assoc., 4.00%, 3/20/39, Series 2009-31,
Class TA
    478,211   
  481,556      Government National Mortgage Assoc., 4.00%, 4/16/39, Series 2009-110,
Class AB
    509,469   
  417,626      Government National Mortgage Assoc., 4.00%, 8/20/39, Series 2009-69,
Class PV
    440,362   
  168,682      Government National Mortgage Assoc., 4.50%, 6/20/34, Series 2009-101,
Class G
    172,703   
  8,252      Government National Mortgage Assoc., 4.50%, 8/20/34, Series 2009-36,
Class G
    8,252   
  130,105      Government National Mortgage Assoc., 4.50%, 8/16/35, Series 2009-62,
Class DT
    132,227   
  245,116      Government National Mortgage Assoc., 4.50%, 2/20/38, Series 2009-55,
Class NP
    260,823   
  389,691      Government National Mortgage Assoc., 4.50%, 3/20/39, Series 2009-14,
Class AG
    417,143   
  432,329      Government National Mortgage Assoc., 5.00%, 7/20/34, Series 2004-105,
Class MC
    454,568   
  51,266      Government National Mortgage Assoc., 5.00%, 8/20/39, Series 004513     54,950   
   

 

 

 
  Total Collateralized Mortgage Obligations
(cost $15,762,675)
    15,944,723   
   

 

 

 
  CORPORATE BONDS 41.4%  
  Aerospace & Defense 0.5%  
  600,000      Lockheed Martin Corp., 3.35%, 9/15/21     617,417   
   

 

 

 
  Air Freight & Logistics 0.6%  
  620,000      United Parcel Service, Inc., 5.50%, 1/15/18     696,097   
   

 

 

 
  Automotive Retail 0.7%  
  775,000      AutoZone, Inc., 5.50%, 11/15/15     815,456   
   

 

 

 
  Beverages — Non-alcoholic 1.2%  
  500,000      PepsiAmericas, Inc., 5.00%, 5/15/17     547,846   
  750,000      PepsiCo, Inc., 5.00%, 6/1/18     834,658   
   

 

 

 
      1,382,504   
   

 

 

 
 

 

87


Table of Contents
WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments (continued)  

 

 

 

Principal
Amount
         Value  
             
  CORPORATE BONDS (continued)  
  Computer Hardware 0.9%  
  $ 1,000,000      Hewlett-Packard Co., 2.60%, 9/15/17   $ 1,027,129   
   

 

 

 
  Construction Machinery & Heavy Trucks 1.3%  
  500,000      Caterpillar Financial Services Corp.,
5.85%, 9/1/17 MTN
    562,501   
  1,000,000      John Deere Capital Corp., 2.25%, 4/17/19     1,008,114   
   

 

 

 
      1,570,615   
   

 

 

 
  Consumer Finance 1.8%  
  1,000,000      American Express Credit Corp.,
2.25%, 8/15/19 MTN
    993,004   
  975,000      American Express Co., 6.15%, 8/28/17     1,097,731   
   

 

 

 
      2,090,735   
   

 

 

 
  Cosmetics & Toiletries 0.4%  
  382,385      Procter & Gamble — ESOP, 9.36%, 1/1/21, Series A     477,984   
   

 

 

 
  Diversified Banks 6.2%  
  750,000      Bank of America Corp., 2.60%, 1/15/19     748,539   
  1,000,000      Bank of America Corp., 3.75%, 7/12/16,
Series 1
    1,043,888   
  1,250,000      Bank of Montreal, 1.45%, 4/9/18 MTN (Canada)     1,236,139   
  1,250,000      Goldman Sachs Group, Inc. (The),
3.625%, 2/7/16
    1,291,777   
  1,000,000      US Bancorp, 2.20%, 11/15/16 MTN     1,028,684   
  1,125,000      US Bancorp, 3.00%, 3/15/22 MTN     1,120,687   
  700,000      Wachovia Corp., 5.75%, 2/1/18 MTN     789,053   
   

 

 

 
      7,258,767   
   

 

 

 
  Diversified Financial Services 3.2%  
  2,350,000      General Electric Capital Corp.,
5.40%, 2/15/17 MTN
    2,573,581   
  1,000,000      General Electric Capital Corp.,
5.625%, 5/1/18 MTN
    1,130,539   
   

 

 

 
      3,704,120   
   

 

 

 
  Enterprise Software &
Services 1.0%
 
  1,000,000      Oracle Corp., 5.75%, 4/15/18     1,133,970   
   

 

 

 
  Finance — Auto Loans 0.7%  
  750,000      PACCAR Financial Corp., 1.60%, 3/15/17 MTN     757,333   
   

 

 

 
  Finance — Other Services 0.5%  
  500,000      Sun Canada Financial Co.,
7.25%, 12/15/15†
    536,737   
   

 

 

 
  Industrial Gases 0.5%  
  600,000      Praxair, Inc., 4.625%, 3/30/15     612,652   
   

 

 

 
  Instruments — Scientific 0.7%  
  700,000      Thermo Fisher Scientific, Inc.,
4.70%, 5/1/20
    754,650   
   

 

 

 
  Integrated Oil & Gas 0.6%  
  750,000      BP Capital Markets plc, 1.375%, 5/10/18 (United Kingdom)     736,547   
   

 

 

 
  Integrated Telecommunication
Services 0.9%
 
  87,394      Ameritech Capital Funding, 9.10%, 6/1/16     95,654   
  870,000      AT&T, Inc., 5.50%, 2/1/18     972,966   
   

 

 

 
      1,068,620   
   

 

 

 
  Investment Banking &
Brokerage 0.7%
 
  700,000      Morgan Stanley, 5.50%, 7/24/20 MTN     787,534   
   

 

 

 
Principal
Amount
         Value  
             
  Life & Health Insurance 1.2%  
  $    850,000      Prudential Financial, Inc., 6.20%, 1/15/15 MTN   $ 864,017   
  480,000      Prudential Holdings, LLC,
7.245%, 12/18/23, Series FSA†
    589,758   
   

 

 

 
      1,453,775   
   

 

 

 
  Medical Instruments 1.0%  
  1,100,000      Medtronic, Inc., 4.45%, 3/15/20     1,209,944   
   

 

 

 
  Medical — Drugs 0.6%  
  575,000      Pharmacia Corp., 6.75%, 12/15/27     736,749   
   

 

 

 
  Medical — Health Maintenance
Organizations 1.9%
 
  1,000,000      Coventry Health Care, Inc., 5.95%, 3/15/17     1,107,181   
  1,000,000      WellPoint, Inc., 4.35%, 8/15/20     1,079,292   
   

 

 

 
      2,186,473   
   

 

 

 
  Movies & Entertainment 0.6%  
  300,000      Walt Disney Co. (The), 2.75%, 8/16/21     305,315   
  350,000      Walt Disney Co. (The), 6.00%, 7/17/17, Series C MTN     396,447   
   

 

 

 
      701,762   
   

 

 

 
  Multimedia 0.8%  
  800,000      NBCUniversal Media, LLC,
5.15%, 4/30/20
    908,301   
   

 

 

 
  Oil Companies — Integrated 0.7%  
  750,000      ConocoPhillips, 5.75%, 2/1/19     855,720   
   

 

 

 
  Other Diversified Financial
Services 1.2%
 
  1,350,000      JPMorgan Chase & Co., 4.35%, 8/15/21     1,443,024   
   

 

 

 
  Pharmaceuticals 4.0%  
  1,000,000      AbbVie, Inc., 1.75%, 11/6/17     996,591   
  745,000      AstraZeneca plc, 5.90%, 9/15/17
(United Kingdom)
    838,693   
  795,000      Cardinal Health, Inc., 6.00%, 6/15/17     884,799   
  1,000,000      Johnson & Johnson, 5.55%, 8/15/17     1,124,201   
  725,000      Pharmacia Corp., 6.50%, 12/1/18     852,897   
   

 

 

 
      4,697,181   
   

 

 

 
  Railroads 1.0%  
  1,000,000      Union Pacific Corp., 5.70%, 8/15/18     1,141,020   
   

 

 

 
  Regional Banks 3.1%  
  1,500,000      BB&T Corp., 2.15%, 3/22/17 MTN     1,524,408   
  1,200,000      Fifth Third Bancorp, 5.45%, 1/15/17     1,305,020   
  750,000      SunTrust Banks, Inc., 3.50%, 1/20/17     786,626   
   

 

 

 
      3,616,054   
   

 

 

 
  Semiconductor Equipment 0.2%  
  250,000      Applied Materials, Inc., 2.65%, 6/15/16     256,925   
   

 

 

 
  Special Purpose Entity 0.5%  
  525,000      Principal Life Global Funding I,
5.05%, 3/15/15†
    535,761   
   

 

 

 
  Specialty Chemicals 1.2%  
  1,150,000      Lubrizol Corp., 8.875%, 2/1/19     1,451,667   
   

 

 

 
  Steel 1.0%  
  1,000,000      Nucor Corp., 5.75%, 12/1/17     1,120,698   
   

 

 

 
  Total Corporate Bonds
(cost $47,754,983)
    48,343,921   
   

 

 

 
 

 

88


Table of Contents

 

  SEPTEMBER 30, 2014

 

 

 

Principal
Amount
         Value  
             
  MUNICIPAL BONDS 2.2%  
  $   650,000      Arizona State Transportation Board Highway Revenue, 5.00%, 7/1/23   $ 702,754   
     696,819      Minnesota Housing Finance Agency, 2.70%, 9/1/41     675,085   
  500,000      Richmond Joint Powers Financing Authority, 8.25%, 7/1/19, Class B     560,875   
  500,000      State of Louisiana, 5.00%, 7/15/26, Series C     594,905   
   

 

 

 
  Total Municipal Bonds
(cost $2,396,724)
    2,533,619   
   

 

 

 
Shares          Value  
             
  MUTUAL FUNDS 0.1%  
  10,000      Eaton Vance Short Duration Diversified Income Fund   $ 146,700   
   

 

 

 
  Total Mutual Funds
(cost $119,611)
    146,700   
   

 

 

 
  EXCHANGE-TRADED FUNDS 1.5%  
  Asset Management & Custody
Banks 1.5%
 
  23,000      iShares S&P US Preferred Stock Index Fund ETF     908,960   
  40,000      Market Vectors Preferred Securities ex Financials ETF     819,200   
   

 

 

 
      1,728,160   
   

 

 

 
  Total Exchange-Traded Funds
(cost $1,762,546)
    1,728,160   
   

 

 

 
Principal
Amount
         Value  
  U.S. GOVERNMENT AGENCY
SECURITIES 23.5%
 
  $1,000,000      Federal Farm Credit Banks,
1.07%, 8/18/17
  $ 996,737   
  1,500,000      Federal Home Loan Bank,
1.00%, 12/28/22, Series 0006##
    1,491,792   
  1,000,000      Federal Home Loan Bank,
1.04%, 5/29/18
    983,299   
  1,000,000      Federal Home Loan Bank,
1.15%, 11/28/17
    995,166   
  1,000,000      Federal Home Loan Bank,
1.25%, 10/25/22, Series 0001##
    973,682   
  900,000      Federal Home Loan Bank,
1.50%, 8/24/22##
    898,719   
  2,000,000      Federal Home Loan Bank,
1.50%, 11/8/22, Series 0000##
    1,948,894   
  1,250,000      Federal Home Loan Bank,
2.00%, 7/8/19
    1,250,210   
  700,000      Federal Home Loan Bank,
3.625%, 3/10/17
    744,637   
  2,000,000      Federal Home Loan Mortgage Corp., 0.80%, 11/14/16     1,994,876   
  1,000,000      Federal Home Loan Mortgage Corp., 0.875%, 2/28/17 MTN     997,433   
  1,500,000      Federal Home Loan Mortgage Corp., 1.10%, 8/28/17 MTN     1,493,065   
  2,000,000      Federal Home Loan Mortgage Corp., 2.00%, 10/22/21 MTN     1,929,178   
  1,000,000      Federal Home Loan Mortgage Corp., 2.10%, 4/24/19 MTN     1,001,274   
  2,000,000      Federal Home Loan Mortgage Corp., 2.50%, 5/27/16     2,066,710   
Principal
Amount
         Value  
             
  $1,000,000      Federal National Mortgage Assoc.,
1.00%, 12/28/18##
  $ 983,818   
  1,050,000      Federal National Mortgage Assoc.,
2.05%, 5/23/17
    1,074,408   
  700,000      Federal National Mortgage Assoc.,
2.625%, 11/20/14
    702,412   
  1,300,000      Federal National Mortgage Assoc.,
4.875%, 12/15/16
    1,417,982   
  475,746      New Valley Generation IV, 4.687%, 1/15/22     523,492   
  800,000      Tennessee Valley Authority,
3.875%, 2/15/21
    871,994   
  1,000,000      Tennessee Valley Authority,
6.25%, 12/15/17, Series E
    1,154,335   
  1,000,000      Tennessee Valley Authority Generic Strip, 0.00%, 11/1/18, Series C###     921,680   
   

 

 

 
  Total U.S. Government Agency Securities
(cost $27,387,926)
    27,415,793   
   

 

 

 
  U.S. TREASURY INFLATION PROTECTED BONDS 0.6%  
  625,499      U.S. Treasury Bond, 1.625%, 1/15/18#     664,250   
   

 

 

 
  Total U.S. Treasury Inflation Protected Bonds
(cost $617,473)
    664,250   
   

 

 

 
  U.S. TREASURY NOTES 8.3%  
  4,625,000      U.S. Treasury Note, 3.25%, 12/31/16     4,882,626   
  4,450,000      U.S. Treasury Note, 3.625%, 8/15/19     4,836,941   
   

 

 

 
  Total U.S. Treasury Notes
(cost $9,645,761)
    9,719,567   
   

 

 

 
Shares          Value  
  PREFERRED STOCKS 0.8%  
  Investment Banking & Brokerage 0.2%  
  10,000      Morgan Stanley Cap TR VI, 6.60%, Pfd.   $ 255,000   
   

 

 

 
  Life & Health Insurance 0.2%  
  10,000      MetLife, Inc., 6.50%, Series B Pfd.§§§     256,200   
   

 

 

 
  Other Diversified Financial Services 0.4%  
  15,000      JPMorgan Chase Capital XXIX, 6.70%, Pfd.     383,400   
   

 

 

 
  Total Preferred Stocks
(cost $876,467)
    894,600   
   

 

 

 
 

 

89


Table of Contents
WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments (continued)   SEPTEMBER 30, 2014

 

 

 

Principal
Amount
         Value  
  SHORT-TERM INVESTMENTS 1.5%  
  Repurchase Agreement 1.5%  
  $1,759,306      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $1,800,000 of United States Treasury Notes 1.750% due 9/30/19; value: $1,795,500; repurchase proceeds: $1,759,306 (cost $1,759,306)   $ 1,759,306   
   

 

 

 
  Total Short-Term Investments
(cost $1,759,306)
    1,759,306   
   

 

 

 
  Total Investments
(cost $115,144,777) 99.5%
    116,122,841   
  Other Assets less Liabilities 0.5%     629,338   
   

 

 

 
  NET ASSETS 100.0%   $ 116,752,179   
   

 

 

 
 

†Liquid security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933.

 

†††Variable rate securities.

 

§§§Perpetual maturity. Callable any time after first call date. Maturity date is next call date.

 

#U.S. Treasury Inflation Protected Securities. A U.S. Treasury Note or Bond that offers protection from inflation by paying a fixed rate of interest on principal amount that is adjusted for inflation based on the Consumer Price Index.

 

##Step bond. The rate shown is as of September 30, 2014 and will reset at a future date.

 

###Zero coupon bond.

 

ESOP Employee Stock Ownership Plan.

 

ETF Exchange-Traded Fund.

 

MTN Medium Term Note.

 

See Notes to Financial Statements.

   

  

   

     

   

  

  

  

  

  

At September 30, 2014, Wasatch-1st Source Income Fund’s investments, excluding short-term investments, were in the following countries:

 

Country   %  

Canada

    1.1   

United Kingdom

    1.4   

United States

    97.5   
 

 

 

 

TOTAL

    100.0
 

 

 

 
 

 

90


Table of Contents
WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) — Schedule of Investments   SEPTEMBER 30, 2014

 

 

 

Principal
Amount
         Value  
             
             
  U.S. GOVERNMENT
OBLIGATIONS 99.3%
 
  $12,000,000      U.S. Treasury Bond, 2.875%, 5/15/43   $ 11,240,628   
  28,000,000      U.S. Treasury Bond, 3.125%, 11/15/41     27,772,500   
  10,200,000      U.S. Treasury Bond, 3.125%, 2/15/42     10,099,591   
  9,700,000      U.S. Treasury Bond, 3.50%, 2/15/39     10,319,888   
  15,000,000      U.S. Treasury Bond, 3.75%, 11/15/43     16,579,680   
  4,035,000      U.S. Treasury Bond, 4.25%, 5/15/39     4,826,869   
  1,400,000      U.S. Treasury Bond, 4.375%, 2/15/38     1,699,468   
  1,040,000      U.S. Treasury Bond, 4.375%, 5/15/40     1,271,725   
  10,000,000      U.S. Treasury Bond, 4.50%, 5/15/38     12,364,060   
  8,000,000      U.S. Treasury Strip, principal only, 5/15/30     5,013,320   
  52,300,000      U.S. Treasury Strip, principal only, 2/15/31     31,885,009   
  54,837,000      U.S. Treasury Strip, principal only, 2/15/37     27,081,581   
  35,150,000      U.S. Treasury Strip, principal only, 5/15/39     15,859,575   
  26,000,000      U.S. Treasury Strip, principal only, 5/15/40     11,357,996   
  15,000,000      U.S. Treasury Strip, principal only, 2/15/42     6,084,885   
  67,000,000      U.S. Treasury Strip, principal only, 2/15/43     26,049,533   
  9,000,000      U.S. Treasury Strip, principal only, 5/15/43     3,464,820   
   

 

 

 
  Total U.S. Government Obligations
(cost $198,617,046)
    222,971,128   
   

 

 

 
Principal
Amount
         Value  
             
             
  SHORT-TERM
INVESTMENTS 0.4%
 
  Repurchase Agreement 0.4%  
  $ 948,683      Repurchase Agreement dated 9/30/14, 0.00% due 10/1/14 with State Street Bank and Trust Co. collateralized by $975,000 of United States Treasury Notes 1.750% due 9/30/19; value: $972,563; repurchase proceeds: $948,683 (cost $948,683)   $ 948,683   
   

 

 

 
  Total Short-Term Investments
(cost $948,683)
    948,683   
   

 

 

 
  Total Investments
(cost $199,565,729) 99.7%
    223,919,811   
  Other Assets less Liabilities 0.3%     743,819   
   

 

 

 
  NET ASSETS 100.0%   $ 224,663,630   
   

 

 

 
  See Notes to Financial Statements.   
 

 

91


Table of Contents
WASATCH FUNDS Statements of Assets and Liabilities  

 

 

 

        CORE
GROWTH
FUND
     EMERGING
INDIA
FUND
     EMERGING
MARKETS
SELECT
FUND
 
          

Assets:

          

Investments, at cost

          

Unaffiliated issuers

     $ 586,024,330       $ 29,051,314       $ 53,661,308   

Affiliated issuers1

                         

Repurchase agreements

       13,047,775         4,616,986         247,198   
    

 

 

    

 

 

    

 

 

 
     $ 599,072,105       $ 33,668,300       $ 53,908,506   
    

 

 

    

 

 

    

 

 

 

Investments, at market value

          

Unaffiliated issuers

     $ 897,400,317       $ 39,137,507       $ 58,074,030   

Affiliated issuers1

                         

Repurchase agreements

       13,047,775         4,616,986         247,198   
    

 

 

    

 

 

    

 

 

 
       910,448,092         43,754,493         58,321,228   

Cash

                       48,447   

Foreign currency on deposit (cost of $0, $347,427, $6,357, $264,953, $1,122,890, $199,268, $0 and $788,355, respectively)

               342,711         6,359   

Receivable for investment securities sold

       1,709,178                 392,054   

Capital shares receivable

       138,911         1,825,001         264,186   

Interest and dividends receivable

       48,658         41,821         27,221   

Prepaid expenses and other assets

       22,379         6,944         28,516   
    

 

 

    

 

 

    

 

 

 

Total Assets

       912,367,218         45,970,970         59,088,011   
    

 

 

    

 

 

    

 

 

 

Liabilities:

          

Payable for securities purchased

       1,846,889         1,105,634           

Capital shares payable

       1,048,196         106,076         22,721   

Payable to Advisor

       768,909         20,783         43,175   

Accrued fund administration fees

       23,054         859         1,513   

Accrued expenses and other liabilities

       225,155         48,242         50,911   

Foreign capital gains taxes payable

               539,607         161,735   

Line of credit payable

                         
    

 

 

    

 

 

    

 

 

 

Total Liabilities

       3,912,203         1,821,201         280,055   
    

 

 

    

 

 

    

 

 

 

Net Assets

     $ 908,455,015       $ 44,149,769       $ 58,807,956   
    

 

 

    

 

 

    

 

 

 

Net Assets Consist of:

          

Capital stock

     $ 169,916       $ 161,738       $ 56,859   

Paid-in-capital in excess of par

       578,038,018         35,547,379         57,003,902   

Undistributed net investment income (loss)

       (5,205,477      (374,508      (45,607

Undistributed net realized gain (loss) on investments and foreign currency translations

       24,077,823 2       (726,241      (2,457,358

Net unrealized appreciation on investments and foreign currency translations

       311,374,735 2       9,541,401         4,250,160   
    

 

 

    

 

 

    

 

 

 

Net Assets

     $ 908,455,015       $ 44,149,769       $ 58,807,956   
    

 

 

    

 

 

    

 

 

 

Net Assets

          

Investor Class

       859,085,611         44,149,769         26,502,094   

Institutional Class

       49,369,404                 32,305,862   

Capital Stock Issued and Outstanding (Unlimited number of shares authorized,
$.01 par value)

          

Investor Class

       16,070,136         16,173,846         2,571,648   

Institutional Class

       921,497                 3,114,291   

NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE

          

Investor Class

     $ 53.46       $ 2.73       $ 10.31   
    

 

 

    

 

 

    

 

 

 

Institutional Class

     $ 53.58       $       $ 10.37   
    

 

 

    

 

 

    

 

 

 

 

1  See Note 9 for information on affiliated issuers.

 

2  Prior period adjustment for dividends of $135,307 reclassed to return of capital.

See Notes to Financial Statements.

 

92


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

EMERGING

MARKETS
SMALL CAP
FUND

   

FRONTIER

EMERGING
SMALL COUNTRIES
FUND

    GLOBAL
OPPORTUNITIES
FUND
    HERITAGE
GROWTH
FUND
   

INTERNATIONAL
GROWTH

FUND

 
       
       
       
       
$ 1,214,294,923      $ 1,139,341,909      $ 145,034,506      $ 66,718,180      $ 1,196,411,218   
                              23,844,596   
  6,725,048        35,570,196        2,300,784        9,319,814          

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 1,221,019,971      $ 1,174,912,105      $ 147,335,290      $ 76,037,994      $ 1,220,255,814   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
$ 1,415,730,232      $ 1,281,678,906      $ 190,304,373      $ 110,067,948      $ 1,375,580,242   
                              16,914,905   
  6,725,048        35,570,196        2,300,784        9,319,814          

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  1,422,455,280        1,317,249,102        192,605,157        119,387,762        1,392,495,147   
         8,519,115                        
 
 
    
264,229
 
  
    1,118,229        198,826               785,397   
  43,076,172        4,969,747        2,027,710        452,243        33,880,237   
  1,189,231        704,347        77,170        30,401        709,616   
  778,390        3,071,989        90,620        31,460        2,213,446   
  30,554        46,933        14,939        11,707        63,365   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  1,467,793,856        1,335,679,462        195,014,422        119,913,573        1,430,147,208   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
  2,512,777        1,191        1,533,023        266,494        2,684   
  573,893        866,294        37,852        50,366        2,321,415   
  2,156,677        1,932,577        246,015        72,183        1,543,853   
  37,264        32,439        4,875        3,042        37,976   
  577,959        861,322        96,143        52,931        507,240   
  4,053,435        7,291,344        432,364               826,499   
                              3,821,399   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  9,912,005        10,985,167        2,350,272        445,016        9,061,066   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 1,457,881,851      $ 1,324,694,295      $ 192,664,150      $ 119,468,557      $ 1,421,086,142   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
$ 5,322,151      $ 3,987,698      $ 449,859      $ 76,525      $ 530,582   
  1,277,881,662        1,162,924,203        123,518,254        71,342,945        1,244,302,926   
  (10,619,495     6,400,383        (1,357,807            (2,419,315
  (12,072,616     16,355,666        25,221,073        4,699,319        7,350,071   
  197,370,149        135,026,345        44,832,771        43,349,768        171,321,878   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 1,457,881,851      $ 1,324,694,295      $ 192,664,150      $ 119,468,557      $ 1,421,086,142   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
  1,457,881,851        1,324,694,295        192,664,150        119,468,557        1,421,086,142   
                                
       
  532,215,121        398,769,815        44,985,856        7,652,549        53,058,185   
                                
       
$ 2.74      $ 3.32      $ 4.28      $ 15.61      $ 26.78   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$      $      $      $      $   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

93


Table of Contents
WASATCH FUNDS — Statements of Assets and Liabilities (continued)  

 

 

 

        INTERNATIONAL
OPPORTUNITIES
FUND
    

LARGE CAP
VALUE

FUND

     LONG/SHORT
FUND
 
          

Assets:

          

Investments, at cost

          

Unaffiliated issuers

     $ 269,568,995       $ 356,619,324       $ 1,875,611,857   

Affiliated issuers1

                       102,425,462   

Repurchase agreements

       5,224,617         5,038,500         414,928,217   
    

 

 

    

 

 

    

 

 

 
     $ 274,793,612       $ 361,657,824       $ 2,392,965,536   
    

 

 

    

 

 

    

 

 

 

Investments, at market value

          

Unaffiliated issuers

     $ 331,140,248       $ 412,031,325       $ 2,163,895,854   

Affiliated issuers1

                       110,742,686   

Repurchase agreements

       5,224,617         5,038,500         414,928,217   
    

 

 

    

 

 

    

 

 

 
       336,364,865         417,069,825         2,689,566,757   

Cash

       900,000                 176,655   

Foreign currency on deposit (cost of $80,912, $0, $0, $0, $0, $8, $0 and $17, respectively)

       80,845                   

Receivable for investment securities sold

       4,030,919         1,005,683         28,020,247   

Receivable from broker for securities sold short

                       293,700,938   

Capital shares receivable

       323,814         20,794         4,380,298   

Interest and dividends receivable

       535,908         792,740         14,286,746   

Prepaid expenses and other assets

       8,878         11,045         58,709   
    

 

 

    

 

 

    

 

 

 

Total Assets

       342,245,229         418,900,087         3,030,190,350   
    

 

 

    

 

 

    

 

 

 

Liabilities:

          

Call options written at value (premiums of $0, $0, $2,054,471, $0, $206,836, $0, $0 and $0, respectively)

                       3,064,930   

Securities sold short, at value (proceeds of $0, $0, $279,864,218, $0, $0, $0, $0 and $0, respectively)

                       293,828,427   

Payable for securities purchased

       1,373,449         205,729         9,448,594   

Capital shares payable

       90,598         801,576         1,419,323   

Dividends payable to shareholders

               22,352           

Payable to Advisor

       483,981         367,646         2,519,654   

Accrued fund administration fees

       8,320         11,982         69,556   

Accrued expenses and other liabilities

       203,558         253,790         485,599   

Foreign capital gains taxes payable

       426,106                   

Dividends payable on securities sold short

                       79,215   
    

 

 

    

 

 

    

 

 

 

Total Liabilities

       2,586,012         1,663,075         310,915,298   
    

 

 

    

 

 

    

 

 

 

Net Assets

     $ 339,659,217       $ 417,237,012       $ 2,719,275,052   
    

 

 

    

 

 

    

 

 

 

Net Assets Consist of:

          

Capital stock

     $ 1,098,698       $ 328,734       $ 1,668,292   

Paid-in-capital in excess of par

       244,902,415         270,250,037         2,290,946,524   

Undistributed net investment income (loss)

       (20,725      (22,352      20,796,346   

Undistributed net realized gain (loss) on investments and foreign currency translations

       32,546,702         91,269,796         124,237,337   

Net unrealized appreciation on investments and foreign currency translations

       61,132,127         55,410,797         281,626,553   
    

 

 

    

 

 

    

 

 

 

Net Assets

     $ 339,659,217       $ 417,237,012       $ 2,719,275,052   
    

 

 

    

 

 

    

 

 

 

Net Assets

          

Investor Class

       339,659,217         409,168,595         1,696,706,980   

Institutional Class

               8,068,417         1,022,568,072   

Capital Stock Issued and Outstanding (Unlimited number of shares authorized,
$.01 par value)

          

Investor Class

       109,869,750         32,237,397         104,162,633   

Institutional Class

               636,007         62,666,571   

NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE

          

Investor Class

     $ 3.09       $ 12.69       $ 16.29   
    

 

 

    

 

 

    

 

 

 

Institutional Class

     $       $ 12.69       $ 16.32   
    

 

 

    

 

 

    

 

 

 

 

1  See Note 9 for information on affiliated issuers.

 

2  Prior period adjustment for dividends of $405,063 reclassed to return of capital.

 

3  Prior period adjustment for dividends of $1,151,861 reclassed to return of capital.

See Notes to Financial Statements.

 

94


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

MICRO

CAP

FUND

   

MICRO CAP
VALUE

FUND

   

SMALL CAP
GROWTH

FUND

    SMALL CAP
VALUE
FUND
    STRATEGIC
INCOME
FUND
 
       
       
       
$ 179,724,985      $ 118,665,612      $ 1,197,642,956      $ 228,995,014      $ 78,411,771   
  1,540,000               255,321,369                 
  13,796,424        9,012,804        20,033,263        4,009,099        856,868   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 195,061,409      $ 127,678,416      $ 1,472,997,588      $ 233,004,113      $ 79,268,639   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
$ 281,843,368      $ 148,490,884      $ 1,905,097,818      $ 275,641,990      $ 90,069,331   
  32,340               298,860,969                 
  13,796,424        9,012,804        20,033,263        4,009,099        856,868   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  295,672,132        157,503,688        2,223,992,050        279,651,089        90,926,199   
                              7,487   
 
 
    
 
  
           8               21   
         1,742,139               2,539,627        4,138,019   
                                
  33,825        37,411        905,854        570,840        71,512   
  28,232        130,787        289,362        65,747        425,777   
  13,194        12,110        51,912        18,712        8,752   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  295,747,383        159,426,135        2,225,239,186        282,846,015        95,577,767   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
 
 
    
 
  
    196,500                        
 
 
    
 
  
                           
  920,080                      5,488,650        442,032   
  19,302        98,016        2,856,389        940,446        84,271   
                              6,146   
  442,493        212,970        1,881,859        241,306        51,291   
  7,545        4,102        56,076        7,262        2,300   
  71,781        69,258        807,169        91,410        33,967   
  470,871        44,883               120,726          
                                

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  1,932,072        625,729        5,601,493        6,889,800        620,007   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 293,815,311      $ 158,800,406      $ 2,219,637,693      $ 275,956,215      $ 94,957,760   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
$ 399,428      $ 525,406      $ 441,760      $ 484,520      $ 75,162   
  185,647,571        110,308,935        1,306,588,730        271,086,222        77,934,197   
  (4,090,280     (680,747     (11,643,426     (1,019,565     (126,326
  11,719,106 2      18,866,691        174,845,477 3      (41,121,212     5,417,661   
  100,139,486 2      29,780,121        749,405,152 3      46,526,250        11,657,066   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 293,815,311      $ 158,800,406      $ 2,219,637,693      $ 275,956,215      $ 94,957,760   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
  293,815,311        158,800,406        2,219,637,693        265,520,688        94,957,760   
                       10,435,527          
       
  39,942,819        52,540,644        44,175,967        46,626,895        7,516,181   
                       1,825,111          
       
$ 7.36      $ 3.02      $ 50.25      $ 5.69      $ 12.63   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$      $      $      $ 5.72      $   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

95


Table of Contents
WASATCH FUNDS — Statements of Assets and Liabilities (continued)   SEPTEMBER 30, 2014

 

 

 

        ULTRA
GROWTH
FUND
     WORLD
INNOVATORS
FUND
     INCOME
FUND
     U.S.
TREASURY
FUND
 
             

Assets:

             

Investments, at cost

             

Unaffiliated issuers

     $ 83,946,216       $ 218,562,607       $ 113,385,471       $ 198,617,046   

Repurchase agreements

       1,812,499         7,892,841         1,759,306         948,683   
    

 

 

    

 

 

    

 

 

    

 

 

 
     $ 85,758,715       $ 226,455,448       $ 115,144,777       $ 199,565,729   
    

 

 

    

 

 

    

 

 

    

 

 

 

Investments, at market value

             

Unaffiliated issuers

     $ 100,592,997       $ 250,116,275       $ 114,363,535       $ 222,971,128   

Repurchase agreements

       1,812,499         7,892,841         1,759,306         948,683   
    

 

 

    

 

 

    

 

 

    

 

 

 
       102,405,496         258,009,116         116,122,841         223,919,811   

Receivable for investment securities sold

       747,970         946,508                   

Capital shares receivable

       114         76,739         46,214         133,502   

Interest and dividends receivable

               129,220         724,264         1,017,107   

Prepaid expenses and other assets

       9,208         15,165         5,562         10,015   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

       103,162,788         259,176,748         116,898,881         225,080,435   
    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

             

Payable for securities purchased

       126,167         5,149,818                   

Capital shares payable

       57,021         285,133         49,912         208,957   

Dividends payable to shareholders

                       2,689         55,521   

Payable to Advisor

       88,656         324,475         52,946         90,666   

Accrued fund administration fees

       2,633         6,633         2,896         5,371   

Accrued expenses and other liabilities

       54,604         100,074         38,259         56,290   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total Liabilities

       329,081         5,866,133         146,702         416,805   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net Assets

     $ 102,833,707       $ 253,310,615       $ 116,752,179       $ 224,663,630   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net Assets Consist of:

             

Capital stock

     $ 43,451       $ 112,005       $ 115,052       $ 131,522   

Paid-in-capital in excess of par

       58,847,757         200,836,987         116,106,123         212,353,970   

Undistributed net investment income (loss)

       1,162,957         (1,855,109      6,356         22,071   

Undistributed net realized gain (loss) on investments and foreign currency translations

       27,567,297 1       22,822,592         (453,416 )2       (12,198,015

Net unrealized appreciation on investments and foreign currency translations

       15,212,245 1       31,394,140         978,064 2       24,354,082   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net Assets

     $ 102,833,707       $ 253,310,615       $ 116,752,179       $ 224,663,630   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net Assets

             

Investor Class

       102,833,707         253,310,615         116,752,179         224,663,630   

Capital Stock Issued and Outstanding (Unlimited number of shares authorized, $.01 par value)

             

Investor Class

       4,345,108         11,200,548         11,505,213         13,152,201   

NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE

             

Investor Class

     $ 23.67       $ 22.62       $ 10.15       $ 17.08   
    

 

 

    

 

 

    

 

 

    

 

 

 

 

1  Prior period adjustment for dividends of $41,131 reclassed to return of capital.

 

2  Prior period adjustment for dividends of $16,745 reclassed to return of capital.

See Notes to Financial Statements.

 

96


Table of Contents

(This page intentionally left blank.)

 

 

 

97


Table of Contents
WASATCH FUNDS — Statements of Operations  

 

 

 

        CORE
GROWTH
FUND
     EMERGING
INDIA
FUND
    

EMERGING
MARKETS
SELECT

FUND

 
          

Investment Income:

          

Interest

     $       $ 140       $   

Dividends1

          

Unaffiliated issuers

       5,226,347         275,106         996,481   

Affiliated issuers

                         
    

 

 

    

 

 

    

 

 

 

Total investment income

       5,226,347         275,246         996,481   
    

 

 

    

 

 

    

 

 

 

Expenses:

          

Investment advisory fees

       9,657,663         346,010         789,263   

Shareholder servicing fees — Investor Class

       1,063,487         62,455         75,531   

Shareholder servicing fees — Institutional Class

       10,581                 14,068   

Fund administration fees

       128,969         3,335         8,668   

Fund accounting fees

       84,677         23,201         20,174   

Reports to shareholders — Investor Class

       84,996         10,649         6,552   

Reports to shareholders — Institutional Class

       22,297                 11,375   

Custody fees

       115,248         72,709         99,505   

Federal and state registration fees — Investor Class

       79,121         19,845         16,688   

Federal and state registration fees — Institutional Class

       12,213                 10,218   

Legal fees

       32,259         401         7,726   

Trustees’ fees

       64,536         1,183         4,164   

Interest

       9,212         318         2,619   

Offering and organization costs

                       19,007   

Audit fees

       28,689         26,729         29,262   

Other expenses

       35,240         27,039         17,760   
    

 

 

    

 

 

    

 

 

 

Total expenses before reimbursement

       11,429,188         593,874         1,132,580   

Reimbursement of expenses by Advisor

       (25,164      (142,479      (122,974
    

 

 

    

 

 

    

 

 

 

Net Expenses

       11,404,024         451,395         1,009,606   
    

 

 

    

 

 

    

 

 

 

Net Investment Income (Loss)

       (6,177,677      (176,149      (13,125
    

 

 

    

 

 

    

 

 

 

Realized and Unrealized Gain (Loss):

          

Net realized gain (loss) on investments and foreign currency translations

          

Unaffiliated issuers

       27,736,790         364,946         (599,409

Affiliated issuers

                         

Realized foreign capital gains taxes

                       (463

Change in unrealized appreciation (depreciation) on
investments and foreign currency translations

       10,095,753         10,084,413         5,576,336   

Change in deferred foreign capital gains taxes

               (539,607      (161,735
    

 

 

    

 

 

    

 

 

 

Net gain (loss) on investments

       37,832,543         9,909,752         4,814,729   
    

 

 

    

 

 

    

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

     $ 31,654,866       $ 9,733,603       $ 4,801,604   
    

 

 

    

 

 

    

 

 

 

 

1  Net of $161,094, $708, $98,731, $3,602,724, $2,984,178, $108,919, $13,988 and $2,299,439 in foreign withholding taxes, respectively.

See Notes to Financial Statements.

 

98


Table of Contents
  FOR THE YEAR ENDED SEPTEMBER 30, 2014

 

 

 

EMERGING
MARKETS
SMALL CAP
FUND
   

FRONTIER

EMERGING
SMALL COUNTRIES
FUND

    GLOBAL
OPPORTUNITIES
FUND
    HERITAGE
GROWTH
FUND
    INTERNATIONAL
GROWTH
FUND
 
       
       
$      $ 378      $      $      $   
       
  27,578,649        33,394,017        2,026,244        539,428        21,605,612   
  86,458                               

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  27,665,107        33,394,395        2,026,244        539,428        21,605,612   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
  28,950,484        19,289,803        3,183,789        889,922        19,276,065   
  1,837,990        2,010,878        266,942        188,536        1,765,659   
                                
  220,637        147,568        28,522        17,201        206,033   
  147,830        112,987        37,023        21,240        136,809   
  138,434        144,909        40,924        13,994        161,339   
                                
  1,693,326        2,647,746        130,091        5,330        551,128   
  123,760        142,153        34,177        20,364        147,847   
                                
  70,268        28,741        5,518        3,196        41,557   
  118,868        60,044        14,866        8,438        96,880   
  26,140        12,505        4,981        1,168        18,018   
                                
  26,628        27,323        28,105        28,111        26,634   
  103,831        32,374        16,246        10,600        54,892   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  33,458,196        24,657,031        3,791,184        1,208,100        22,482,861   
  (1,157,057     (19,996            (1,824       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  32,301,139        24,637,035        3,791,184        1,206,276        22,482,861   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (4,636,032     8,757,360        (1,764,940     (666,848     (877,249

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
       
  8,908,423        16,007,991        26,427,867        6,792,351        15,327,889   
  (167,779                            
  (1,180,585     (7,790                     
  70,618,504        96,865,421        (15,896,207     2,762,540        (87,709,094
  807,840        (6,221,353     (432,364            (826,499

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  78,986,403        106,644,269        10,099,296        9,554,891        (73,207,704

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 74,350,371      $ 115,401,629      $ 8,334,356      $ 8,888,043      $ (74,084,953

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

99


Table of Contents
WASATCH FUNDS — Statements of Operations (continued)  

 

 

 

        INTERNATIONAL
OPPORTUNITIES
FUND
    

LARGE CAP
VALUE

FUND

     LONG/SHORT
FUND
 
          

Investment Income:

          

Interest

     $       $       $   

Dividends1

          

Unaffiliated issuers

       6,046,842         15,356,521         68,664,928   

Affiliated issuers2

                         
    

 

 

    

 

 

    

 

 

 

Total investment income

       6,046,842         15,356,521         68,664,928   
    

 

 

    

 

 

    

 

 

 

Expenses:

          

Investment advisory fees

       6,369,864         5,524,534         29,199,942   

Shareholder servicing fees — Investor Class

       887,597         903,584         2,013,454   

Shareholder servicing fees — Institutional Class

               10,098         17,200   

Fund administration fees

       43,827         81,918         364,353   

Fund accounting fees

       54,192         53,643         208,113   

Reports to shareholders — Investor Class

       64,556         63,099         159,574   

Reports to shareholders — Institutional Class

               6,654         73,589   

Custody fees

       311,175         15,209         91,351   

Federal and state registration fees — Investor Class

       42,336         54,945         99,530   

Federal and state registration fees — Institutional Class

               11,017         59,000   

Legal fees

       14,278         17,223         80,603   

Trustees’ fees

       20,924         47,950         165,998   

Dividends on securities sold short

                       5,791,882   

Interest

       3,774         11,392         1,121,629   

Audit fees

       26,634         32,059         37,003   

Other expenses

       30,905         112,413         83,481   
    

 

 

    

 

 

    

 

 

 

Total expenses before reimbursement

       7,870,062         6,945,738         39,566,702   

Reimbursement of expenses by Advisor

       (517,596      (123,285        
    

 

 

    

 

 

    

 

 

 

Net Expenses

       7,352,466         6,822,453         39,566,702   
    

 

 

    

 

 

    

 

 

 

Net Investment Income (Loss)

       (1,305,624      8,534,068         29,098,226   
    

 

 

    

 

 

    

 

 

 

Realized and Unrealized Gain (Loss):

          

Net realized gain (loss) on investments and foreign currency translations

          

Unaffiliated issuers

       35,150,911         154,870,921         173,301,147   

Affiliated issuers

                       (1,917,237

Net realized gain on options written

                       5,865,618   

Net realized loss on short positions

                       (37,870,789

Realized foreign capital gains taxes

                         

Change in unrealized appreciation (depreciation) on
investments, options and foreign currency translations

       1,281,652         (83,122,286      (43,861,459

Change in deferred foreign capital gains taxes

       (375,461                
    

 

 

    

 

 

    

 

 

 

Net gain on investments

       36,057,102         71,748,635         95,517,280   
    

 

 

    

 

 

    

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

     $ 34,751,478       $ 80,282,703       $ 124,615,506   
    

 

 

    

 

 

    

 

 

 

 

1  Net of $726,316, $178,062, $484,275, $33,756, $22,041, $522,777, $42,443 and $18,744 in foreign withholding taxes, respectively.

 

2  See Note 9 for information on affiliated issuers.

See Notes to Financial Statements.

 

100


Table of Contents
  FOR THE YEAR ENDED SEPTEMBER 30, 2014

 

 

 

MICRO

CAP

FUND

    MICRO CAP
VALUE
FUND
    SMALL CAP
GROWTH
FUND
    SMALL CAP
VALUE
FUND
    STRATEGIC
INCOME
FUND
 
       
       
$      $      $ 5,080      $      $   
       
  979,042        1,287,788        10,130,441        1,688,260        2,753,518   
                1,170,736                 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  979,042        1,287,788        11,306,257        1,688,260        2,753,518   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
  5,957,003        3,256,172        24,757,315        2,515,804        545,074   
  234,301        240,100        3,401,754        263,905        97,958   
                       9,902          
  43,887        24,162        330,115        33,862        10,644   
  40,211        33,726        199,116        31,977        14,428   
  39,862        44,189        243,287        23,934        10,363   
                       12,615          
  25,611        37,234        440,182        28,447        2,802   
  26,815        22,196        102,242        24,497        24,392   
                       10,791          
  13,131        7,225        65,184        8,556        1,878   
  22,330        11,793        168,221        14,986        4,677   
                                
  3,038        1,888        33,081        2,276        684   
  33,409        39,616        29,326        30,670        29,745   
  16,664        19,605        81,850        18,262        5,587   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  6,456,262        3,737,906        29,851,673        3,030,484        748,232   
         (96,356     (11,294     (31,403     (10,031

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  6,456,262        3,641,550        29,840,379        2,999,081        738,201   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (5,477,220     (2,353,762     (18,534,122     (1,310,821     2,015,317   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       
       
  37,100,377        20,469,961        229,805,828        26,792,880        6,566,435   
                (5,109,721              
         1,322,199                        
                                
  (10                            
  (32,570,487     (13,389,637     (174,012,533     (4,225,577     3,882,627   
  (372,518     (11,642     240,916        (120,726       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  4,157,362        8,390,881        50,924,490        22,446,577        10,449,062   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ (1,319,858   $ 6,037,119      $ 32,390,368      $ 21,135,756      $ 12,464,379   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

101


Table of Contents

 

WASATCH FUNDS — Statements of Operations (continued)   FOR THE YEAR ENDED SEPTEMBER 30, 2014

 

 

 

        ULTRA
GROWTH
FUND
     WORLD
INNOVATORS
FUND
     INCOME
FUND
       U.S.
TREASURY
FUND
 
               

Investment Income:

               

Interest

     $ 4,702       $       $ 2,666,738         $ 6,805,130   

Dividends1

               

Unaffiliated issuers

       342,210         2,471,877         211,538             
    

 

 

    

 

 

    

 

 

      

 

 

 

Total investment income

       346,912         2,471,877         2,878,276           6,805,130   
    

 

 

    

 

 

    

 

 

      

 

 

 

Expenses:

               

Investment advisory fees

       1,336,121         4,428,473         669,699           982,485   

Shareholder servicing fees — Investor Class

       179,661         407,180         48,224           220,851   

Fund administration fees

       18,025         39,620         16,481           26,472   

Fund accounting fees

       27,499         41,304         38,841           20,322   

Reports to shareholders — Investor Class

       13,708         36,577         5,300           14,182   

Custody fees

       23,949         40,518         13,110           5,152   

Federal and state registration fees — Investor Class

       21,084         36,129         19,129           36,258   

Legal fees

       3,463         8,867         2,897           4,477   

Trustees’ fees

       10,058         19,397         8,385           12,607   

Interest

       2,226         3,387         1,316           1,684   

Audit fees

       34,529         28,097         26,275           26,420   

Other expenses

       16,102         22,204         7,849           17,485   
    

 

 

    

 

 

    

 

 

      

 

 

 

Total expenses before reimbursement

       1,686,425         5,111,753         857,506           1,368,395   

Reimbursement of expenses by Advisor

               (1,778                  
    

 

 

    

 

 

    

 

 

      

 

 

 

Net Expenses

       1,686,425         5,109,975         857,506           1,368,395   
    

 

 

    

 

 

    

 

 

      

 

 

 

Net Investment Income (Loss)

       (1,339,513      (2,638,098      2,020,770           5,436,735   
    

 

 

    

 

 

    

 

 

      

 

 

 

Realized and Unrealized Gain (Loss):

               

Net realized gain (loss) on investments and foreign currency translations

               

Unaffiliated issuers

       31,334,090         27,258,295         79,678           (5,386,264

Change in unrealized appreciation (depreciation) on
investments and foreign currency translations

       (21,390,497      (17,034,854      132,168           26,028,553   
    

 

 

    

 

 

    

 

 

      

 

 

 

Net gain on investments

       9,943,593         10,223,441         211,846           20,642,289   
    

 

 

    

 

 

    

 

 

      

 

 

 

Net Increase in Net Assets Resulting from Operations

     $ 8,604,080       $ 7,585,343       $ 2,232,616         $ 26,079,024   
    

 

 

    

 

 

    

 

 

      

 

 

 

 

1  Net of $0, $174,422, $0 and $0 in foreign withholding taxes, respectively.

See Notes to Financial Statements.

 

102


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103


Table of Contents
WASATCH FUNDS — Statements of Changes in Net Assets  

 

 

 

      

CORE GROWTH

FUND

    

EMERGING INDIA

FUND

 
        Year Ended
September 30, 2014
     Year Ended
September 30, 2013
     Year Ended
September 30, 2014
     Year Ended
September 30, 2013
 
             

Operations:

             

Net investment income (loss)

     $ (6,177,677    $ (2,930,250    $ (176,149    $ (140,984

Net realized gain (loss) on investments, foreign
currency translations and foreign capital gains taxes

       27,736,790         45,779,034         364,946         (239,097

Net realized gain on options written

               150,916                   

Change in unrealized appreciation (depreciation) on
investments, foreign currency translations
and deferred capital gains taxes

       10,095,753         138,151,941         9,544,806         (1,190,934
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

       31,654,866         181,151,641         9,733,603         (1,571,015

Dividends paid from:

             

Investor Class

             

Net investment income

                                 

Net realized gains

       (13,292,735                        
    

 

 

    

 

 

    

 

 

    

 

 

 
       (13,292,735                        

Institutional Class

             

Net investment income

                                 

Net realized gains

       (446,532                        
    

 

 

    

 

 

    

 

 

    

 

 

 
       (446,532                        

Capital share transactions:

             

Investor Class

             

Shares sold

       115,859,006         326,823,384         24,342,312         13,107,026   

Shares issued to holders in reinvestment of dividends

       12,976,194                           

Shares redeemed

       (211,661,828      (161,818,652      (5,867,945      (9,258,122

Redemption fees

       25,585         122,280         4,219         1,805   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease)

       (82,801,043      165,127,012         18,478,586         3,850,709   
    

 

 

    

 

 

    

 

 

    

 

 

 

Institutional Class

             

Shares sold

       35,358,853         10,765,192                   

Shares issued to holders in reinvestment of dividends

       440,938                           

Shares redeemed

       (6,736,116      (3,240,376                

Redemption fees

       1,298         413                   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase

       29,064,973         7,525,229                   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total increase (decrease) in net assets

       (35,820,471      353,803,882         28,212,189         2,279,694   

Net assets:

             

Beginning of period

       944,275,486         590,471,604         15,937,580         13,657,886   
    

 

 

    

 

 

    

 

 

    

 

 

 

End of period

     $ 908,455,015       $ 944,275,486       $ 44,149,769       $ 15,937,580   
    

 

 

    

 

 

    

 

 

    

 

 

 

Undistributed net investment income (loss) included
in net assets at end of period

     $ (5,205,477    $ (3,365,724    $ (374,508    $ (205,877
    

 

 

    

 

 

    

 

 

    

 

 

 

Capital share transactions — shares:

             

Investor Class

             

Shares sold

       2,145,922         7,068,806         9,809,678         6,861,871   

Shares issued to holders in reinvestment of dividends

       235,867                           

Shares redeemed

       (3,921,819      (3,496,679      (2,585,822      (4,673,888
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (1,540,030      3,572,127         7,223,856         2,187,983   
    

 

 

    

 

 

    

 

 

    

 

 

 

Institutional Class

             

Shares sold

       657,897         231,435                   

Shares issued to holders in reinvestment of dividends

       7,998                           

Shares redeemed

       (124,326      (71,098                
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase in shares outstanding

       541,569         160,337                   
    

 

 

    

 

 

    

 

 

    

 

 

 

 

1  Fund inception date was December 13, 2012.

See Notes to Financial Statements.

 

104


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

EMERGING MARKETS
SELECT
FUND
    EMERGING MARKETS
SMALL CAP
FUND
    FRONTIER
EMERGING
SMALL COUNTRIES
FUND
 
Year Ended
September 30, 2014
    Year Ended
September 30, 20131
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
 
         
         
$ (13,125   $ (5,823   $ (4,636,032   $ 3,589,995      $ 8,757,360      $ 3,159,406   

 

(599,872

    (1,799,840     7,560,059        81,959,238        16,000,201        (3,559,143
                                       
 
 
 
    
    
5,414,601
 
 
  
    (1,164,441     71,426,344        (107,088,486     90,644,068        40,805,380   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
 
 
    
4,801,604
 
  
    (2,970,104     74,350,371        (21,539,253     115,401,629        40,405,643   
         
         
  (21,719                   (7,553,551     (1,526,061     (141,701
                (38,681,435                   (57,117

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (21,719            (38,681,435     (7,553,551     (1,526,061     (198,818
         
  (64,529                                   
                                       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (64,529                                   
         
         
  11,991,899        43,112,331        347,159,450        846,342,710        717,734,281        776,774,213   
  21,418               32,124,819        6,807,788        1,410,893        197,269   
  (17,169,685     (11,933,841     (742,856,437     (520,777,701     (239,125,817     (120,031,663
  1,504        8,654        103,958        136,439        105,062        502,415   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (5,154,864     31,187,144        (363,468,210     332,509,236        480,124,419        657,442,234   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
  4,995,578        31,112,673                               
  63,952                                      
  (4,047,799     (1,106,309                            
  82        12,247                               

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  1,011,813        30,018,611                               

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  572,305        58,235,651        (327,799,274     303,416,432        593,999,987        697,649,059   
         
  58,235,651               1,785,681,125        1,482,264,693        730,694,308        33,045,249   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 58,807,956      $ 58,235,651      $ 1,457,881,851      $ 1,785,681,125      $ 1,324,694,295      $ 730,694,308   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    
$
 
(45,607
 
  $ (3,596   $ (10,619,495   $ (9,939,545   $ 6,400,383      $ 1,455,556   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  1,205,798        4,284,448        129,784,853        297,277,493        227,204,205        273,661,192   
  2,201               12,214,760        2,431,353        458,082        75,293   
  (1,710,416     (1,210,383     (279,567,746     (186,339,071     (75,182,416     (41,133,732

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (502,417     3,074,065        (137,568,133     113,369,775        152,479,871        232,602,753   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
  500,828        3,114,333                               
  6,539                                      
  (395,228     (112,181                            

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  112,139        3,002,152                               

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

105


Table of Contents
WASATCH FUNDS — Statements of Changes in Net Assets (continued)  

 

 

 

       GLOBAL OPPORTUNITIES
FUND
     HERITAGE GROWTH
FUND
 
        Year Ended
September 30, 2014
     Year Ended
September 30, 2013
     Year Ended
September 30, 2014
     Year Ended
September 30, 2013
 
             

Operations:

             

Net investment income (loss)

     $ (1,764,940    $ (1,309,369    $ (666,848    $ 176,407   

Net realized gain on investments, foreign
currency translations and foreign capital gains taxes

       26,427,867         22,471,421         6,792,351         2,396,739   

Change in unrealized appreciation (depreciation) on
investments, foreign currency translations and deferred capital gains taxes

       (16,328,571      19,772,020         2,762,540         20,188,006   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

       8,334,356         40,934,072         8,888,043         22,761,152   

Dividends paid from:

             

Investor Class

             

Net investment income

       (189,507              (3      (106,546

Net realized gains

       (23,360,745      (17,635,551      (3,055,839      (4,555,183
    

 

 

    

 

 

    

 

 

    

 

 

 
       (23,550,252      (17,635,551      (3,055,842      (4,661,729

Institutional Class

             

Net investment income

                                 

Net realized gains

                                 
    

 

 

    

 

 

    

 

 

    

 

 

 
                                 

Capital share transactions:

             

Investor Class

             

Shares sold

       38,477,656         78,951,413         10,748,476         15,718,322   

Shares issued to holders in reinvestment of dividends

       23,300,598         17,450,564         3,008,392         4,582,284   

Shares redeemed

       (74,373,069      (52,836,034      (20,998,564      (29,485,119

Redemption fees

       14,624         13,811         7,381         3,459   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease)

       (12,580,191      43,579,754         (7,234,315      (9,181,054
    

 

 

    

 

 

    

 

 

    

 

 

 

Institutional Class

             

Shares sold

                                 

Shares issued to holders in reinvestment of dividends

                                 

Shares redeemed

                                 

Redemption fees

                                 
    

 

 

    

 

 

    

 

 

    

 

 

 

Net decrease

                                 
    

 

 

    

 

 

    

 

 

    

 

 

 

Total increase (decrease) in net assets

       (27,796,087      66,878,275         (1,402,114      8,918,369   

Net assets:

             

Beginning of period

       220,460,237         153,581,962         120,870,671         111,952,302   
    

 

 

    

 

 

    

 

 

    

 

 

 

End of period

     $ 192,664,150       $ 220,460,237       $ 119,468,557       $ 120,870,671   
    

 

 

    

 

 

    

 

 

    

 

 

 

Undistributed net investment income (loss) included
in net assets at end of period

     $ (1,357,807    $ (1,365,700    $       $ (207,145
    

 

 

    

 

 

    

 

 

    

 

 

 

Capital share transactions — shares:

             

Investor Class

             

Shares sold

       8,688,395         19,093,276         675,554         1,188,222   

Shares issued to holders in reinvestment of dividends

       5,368,811         4,544,418         188,735         370,136   

Shares redeemed

       (17,155,917      (12,600,673      (1,317,749      (2,196,100
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (3,098,711      11,037,021         (453,460      (637,742
    

 

 

    

 

 

    

 

 

    

 

 

 

Institutional Class

             

Shares sold

                                 

Shares issued to holders in reinvestment of dividends

                                 

Shares redeemed

                                 
    

 

 

    

 

 

    

 

 

    

 

 

 

Net decrease in shares outstanding

                                 
    

 

 

    

 

 

    

 

 

    

 

 

 

See Notes to Financial Statements.

 

106


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

INTERNATIONAL GROWTH
FUND
    INTERNATIONAL OPPORTUNITIES
FUND
    LARGE CAP VALUE
FUND
 
Year Ended
September 30, 2014
    Year Ended
September 30, 2013
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
 
         
         
$ (877,249   $ 2,133,946      $ (1,305,624   $ (67,017   $ 8,534,068      $ 15,555,783   
 
 
    
15,327,889
 
  
    53,101,393        35,150,911        23,650,919        154,870,921        323,383,090   

 

(88,535,593

    158,495,032        906,191        20,421,755        (83,122,286     (122,155,005

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(74,084,953

    213,730,371        34,751,478        44,005,657        80,282,703        216,783,868   
         
         
         (2,056,223                   (8,959,912     (14,580,839
  (35,584,097            (18,321,459            (220,160,713     (10,767,081

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (35,584,097     (2,056,223     (18,321,459            (229,120,625     (25,347,920
         
                              (170,579     (204,325
                              (3,657,318     (115,116

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                              (3,827,897     (319,441
         
         
  813,164,902        898,513,811        101,294,846        96,890,115        37,422,394        176,799,999   
  32,446,727        1,885,302        17,919,621               224,799,356        24,998,559   
  (641,869,274     (220,198,846     (74,216,881     (57,437,199     (489,674,350     (902,102,981
  81,566        232,539        15,807        194,004        17,989        15,701   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  203,823,921        680,432,806        45,013,393        39,646,920        (227,434,611     (700,288,722

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
                              612,575        5,558,942   
                              3,810,756        318,359   
                              (9,439,909     (8,226,847
                              27        75   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                              (5,016,551     (2,349,471

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  94,154,871        892,106,954        61,443,412        83,652,577        (385,116,981     (511,521,686
         
  1,326,931,271        434,824,317        278,215,805        194,563,228        802,353,993        1,313,875,679   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 1,421,086,142      $ 1,326,931,271      $ 339,659,217      $ 278,215,805      $ 417,237,012      $ 802,353,993   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

$

(2,419,315

  $ 289,407      $ (20,725   $ (121,228   $ (22,352   $ 411,711   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  28,317,499        35,121,573        33,826,542        34,640,370        2,671,871        11,459,468   
  1,128,974        80,810        6,265,602               18,290,490        1,681,933   
  (22,521,529     (8,445,699     (24,700,939     (20,779,253     (36,210,359     (56,362,465

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  6,924,944        26,756,684        15,391,205        13,861,117        (15,247,998     (43,221,064

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
                              43,989        378,007   
                              310,272        21,178   
                              (650,406     (550,843

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                              (296,145     (151,658

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

107


Table of Contents
WASATCH FUNDS — Statements of Changes in Net Assets (continued)  

 

 

 

      

LONG/SHORT

FUND

    

MICRO CAP

FUND

 
        Year Ended
September 30, 2014
     Year Ended
September 30, 20131
     Year Ended
September 30, 2014
     Year Ended
September 30, 2013
 
             

Operations:

             

Net investment income (loss)

     $ 29,098,226       $ (3,856,379    $ (5,477,220    $ (3,679,572

Net realized gain on investments, foreign currency translations and foreign capital gains taxes

       171,383,910         83,026,876         37,100,367         16,739,208   

Net realized gain (loss) on options written

       5,865,618         1,309,436                   

Net realized loss on short positions

       (37,870,789      (42,360,180                

Change in unrealized appreciation (depreciation) on investments, options, foreign currency translations and deferred capital gains taxes

       (43,861,459      227,943,560         (32,943,005      63,205,416   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

       124,615,506         266,063,313         (1,319,858      76,265,052   

Dividends paid from:

             

Investor Class

             

Net investment income

                                 

Net realized gains

       (35,737,283      (3,814,682                
    

 

 

    

 

 

    

 

 

    

 

 

 
       (35,737,283      (3,814,682                

Institutional Class

             

Net investment income

                                 

Net realized gains

       (19,002,705      (37                
    

 

 

    

 

 

    

 

 

    

 

 

 
       (19,002,705      (37                

Capital share transactions:

             

Investor Class

             

Shares sold

       799,289,456         839,239,541         19,894,352         18,549,509   

Shares issued to holders in reinvestment of dividends

       32,545,875         3,533,082                   

Shares redeemed

       (659,696,589      (1,124,141,469      (47,941,399      (61,092,571

Redemption fees

       24,288         214,286         7,491         3,686   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease)

       172,163,030         (281,154,560      (28,039,556      (42,539,376
    

 

 

    

 

 

    

 

 

    

 

 

 

Institutional Class

             

Shares sold

       322,177,847         833,136,129                   

Shares issued to holders in reinvestment of dividends

       18,483,415         36                   

Shares redeemed

       (167,604,694      (47,303,233                

Redemption fees

       29,540         3,745                   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease)

       173,086,108         785,836,677                   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total increase (decrease) in net assets

       415,124,656         766,930,711         (29,359,414      33,725,676   

Net assets:

             

Beginning of period

       2,304,150,396         1,537,219,685         323,174,725         289,449,049   
    

 

 

    

 

 

    

 

 

    

 

 

 

End of period

     $ 2,719,275,052       $ 2,304,150,396       $ 293,815,311       $ 323,174,725   
    

 

 

    

 

 

    

 

 

    

 

 

 

Undistributed net investment income (loss) included in net assets at end of period

     $ 20,796,346       $       $ (4,090,280    $ (3,180,093
    

 

 

    

 

 

    

 

 

    

 

 

 

Capital share transactions — shares:

             

Investor Class

             

Shares sold

       49,006,963         56,185,020         2,556,405         3,008,503   

Shares issued to holders in reinvestment of dividends

       2,006,527         255,281                   

Shares redeemed

       (40,344,871      (75,441,028      (6,167,148      (10,173,311
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       10,668,619         (19,000,727      (3,610,743      (7,164,808
    

 

 

    

 

 

    

 

 

    

 

 

 

Institutional Class

             

Shares sold

       19,643,613         55,159,278                   

Shares issued to holders in reinvestment of dividends

       1,138,141         3                   

Shares redeemed

       (10,209,928      (3,064,536                
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       10,571,826         52,094,745                   
    

 

 

    

 

 

    

 

 

    

 

 

 

 

1  Institutional Class inception date was December 13, 2012.

See Notes to Financial Statements.

 

108


Table of Contents

 

  SEPTEMBER 30, 2014

 

 

 

MICRO CAP VALUE

FUND

   

SMALL CAP GROWTH

FUND

   

SMALL CAP VALUE

FUND

 
Year Ended
September 30, 2014
    Year Ended
September 30, 2013
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
 
         
         
$ (2,353,762   $ (1,339,035   $ (18,534,122   $ (8,773,760   $ (1,310,821   $ (385,158

 

20,469,961

  

    31,812,229        224,696,107        72,201,171        26,792,880        29,980,517   
  1,322,199        (402,253                          134,261   
                                       
  (13,401,279     12,551,496        (173,771,617     418,940,746        (4,346,303     25,781,113   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  6,037,119        42,622,437        32,390,368        482,368,157        21,135,756        55,510,733   
         
         
                                       
  (28,293,837     (12,598,831     (82,224,931     (120,513,937              

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (28,293,837     (12,598,831     (82,224,931     (120,513,937              
         
                                       
                                       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                       
         
         
  30,540,367        17,228,162        342,634,806        526,165,138        99,914,166        13,743,085   
  27,559,024        12,236,099        77,677,538        113,588,148                 
  (43,540,916     (31,306,629     (637,938,505     (339,431,007     (56,117,629     (31,535,450
  11,225        6,833        67,655        72,964        35,940        2,643   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  14,569,700        (1,835,535     (217,558,506     300,395,243        43,832,477        (17,789,722

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
                              409,846        114,779   
                                       
                              (361,935     (469,262
                                     9   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                              47,911        (354,474

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (7,687,018     28,188,071        (267,393,069     662,249,463        65,016,144        37,366,537   
         
  166,487,424        138,299,353        2,487,030,762        1,824,781,299        210,940,071        173,573,534   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 158,800,406      $ 166,487,424      $ 2,219,637,693      $ 2,487,030,762      $ 275,956,215      $ 210,940,071   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

$

(680,747

  $      $ (11,643,426   $ 4,321,051      $ (1,019,565   $ (900,175

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  9,343,898        5,667,705        6,608,019        11,553,173        16,975,454        3,038,390   
  8,612,195        4,652,509        1,486,367        2,786,072                 
  (13,712,525     (10,622,742     (12,384,521     (7,512,395     (9,716,502     (7,381,311

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  4,243,568        (302,528     (4,290,135     6,826,850        7,258,952        (4,342,921

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
                              67,540        27,062   
                                       
                              (63,395     (104,640

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                              4,145        (77,578

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

109


Table of Contents
WASATCH FUNDS — Statements of Changes in Net Assets (continued)  

 

 

 

      

STRATEGIC INCOME

FUND

    

ULTRA GROWTH

FUND

 
        Year Ended
September 30, 2014
     Year Ended
September 30, 2013
     Year Ended
September 30, 2014
     Year Ended
September 30, 2013
 
             

Operations:

             

Net investment income (loss)

     $ 2,015,317       $ 1,746,049       $ (1,339,513    $ (903,738

Net realized gain (loss) on investments and foreign currency translations

       6,566,435         5,445,411         31,334,090         13,638,860   

Change in unrealized appreciation (depreciation) on investments, foreign currency translations and deferred foreign capital gains taxes

       3,882,627         4,158,601         (21,390,497      18,080,625   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

       12,464,379         11,350,061         8,604,080         30,815,747   

Dividends paid from:

             

Investor Class

             

Net investment income

       (2,306,293      (1,783,475                

Net realized gains

       (993,476              (10,009,711      (18,153,849
    

 

 

    

 

 

    

 

 

    

 

 

 
       (3,299,769      (1,783,475      (10,009,711      (18,153,849

Capital share transactions:

             

Investor Class

             

Shares sold

       34,399,605         29,412,047         7,691,766         7,412,958   

Shares issued to holders in reinvestment of dividends

       3,262,457         1,753,848         9,777,591         17,764,371   

Shares redeemed

       (18,452,922      (18,796,760      (64,930,348      (29,401,210

Redemption fees

       4,988         7,879         2,841         788   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease)

       19,214,128         12,377,014         (47,458,150      (4,223,093
    

 

 

    

 

 

    

 

 

    

 

 

 

Total increase (decrease) in net assets

       28,378,738         21,943,600         (48,863,781      8,438,805   

Net assets:

             

Beginning of period

       66,579,022         44,635,422         151,697,488         143,258,683   
    

 

 

    

 

 

    

 

 

    

 

 

 

End of period

     $ 94,957,760       $ 66,579,022       $ 102,833,707       $ 151,697,488   
    

 

 

    

 

 

    

 

 

    

 

 

 

Undistributed net investment income (loss) included
in net assets at end of period

     $ (126,326    $ (163,943    $ 1,162,957       $ 3,576,821   
    

 

 

    

 

 

    

 

 

    

 

 

 

Capital share transactions — shares:

             

Investor Class

             

Shares sold

       2,774,574         2,875,259         306,155         338,575   

Shares issued to holders in reinvestment of dividends

       269,033         171,622         391,104         909,129   

Shares redeemed

       (1,537,984      (1,835,606      (2,526,727      (1,347,071
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       1,505,623         1,211,275         (1,829,468      (99,367
    

 

 

    

 

 

    

 

 

    

 

 

 

See Notes to Financial Statements.

 

110


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

WORLD INNOVATORS

FUND

   

INCOME

FUND

   

U.S. TREASURY

FUND

 
Year Ended
September 30, 2014
    Year Ended
September 30, 2013
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
    Year Ended
September 30, 2014
    Year Ended
September 30, 2013
 
         
         
$ (2,638,098   $ (1,694,953   $ 2,020,770      $ 2,265,597      $ 5,436,735      $ 6,006,729   
  27,258,295        18,170,206        79,678        248,661        (5,386,264     (6,304,627
  (17,034,854     29,296,909        132,168        (4,397,565     26,028,553        (40,377,202

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

7,585,343

  

    45,772,162        2,232,616        (1,883,307     26,079,024        (40,675,100
         
         
                (2,049,307     (2,251,846     (5,436,357     (6,003,335
  (14,888,675                                 (5,092,088

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (14,888,675            (2,049,307     (2,251,846     (5,436,357     (11,095,423
         
         
  94,143,976        120,569,904        15,034,005        34,260,559        80,288,379        152,652,150   
  13,963,650               1,993,127        1,874,537        5,215,126        10,245,647   
  (114,430,418     (67,399,194     (30,750,807     (40,901,921     (74,727,614     (189,555,949
  25,794        34,163        7,237        1,107        14,175        164,702   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (6,296,998     53,204,873        (13,716,438     (4,765,718     10,790,066        (26,493,450

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (13,600,330     98,977,035        (13,533,129     (8,900,871     31,432,733        (78,263,973
         
  266,910,945        167,933,910        130,285,308        139,186,179        193,230,897        271,494,870   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 253,310,615      $ 266,910,945      $ 116,752,179      $ 130,285,308      $ 224,663,630      $ 193,230,897   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ (1,855,109   $ (1,845,482   $ 6,356      $ 55,524      $ 22,071      $ 15,441   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  3,997,947        5,820,787        1,477,971        3,315,362        5,015,853        8,727,694   
  595,464               196,157        182,048        324,073        591,684   
  (4,922,563     (3,342,001     (3,026,250     (3,970,892     (4,794,925     (11,188,977

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (329,152     2,478,786        (1,352,122     (473,482     545,001        (1,869,599

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

111


Table of Contents
WASATCH FUNDS — Financial Highlights  

 

 

 

          Income (Loss) from
Investment Operations
                Less Distributions        
     Net Asset
Value
Beginning
of Period
    Net
Investment
Income (Loss)
    Net Realized
and Unrealized
Gains (Losses)
on Investments
    Total from
Investment
Operations
    Redemption
Fees
(See Note 2)
    Dividends
from Net
Investment
Income
    Distributions
from Net
Realized
Gains
    Total
Distributions
 

Core Growth Fund — Investor Class

               

Year ended 9/30/14

  $ 52.49        (0.39     2.12        1.73        4             (0.76     (0.76

Year ended 9/30/13

  $ 41.41        (0.12     11.19        11.07        0.01                        

Year ended 9/30/12

  $ 32.63        (0.26     9.04        8.78        4                      

Year ended 9/30/11

  $ 29.95        (0.19     2.87        2.68        4                      

Year ended 9/30/10

  $ 25.88        0.03        4.05        4.08        4      (0.01            (0.01

Core Growth Fund — Institutional Class

               

Year ended 9/30/14

  $ 52.57        (0.23     2.00        1.77        4             (0.76     (0.76

Year ended 9/30/13

  $ 41.44        (0.07     11.20        11.13        4                      

Period ended 9/30/128

  $ 38.32        (0.16     3.28        3.12                               

Emerging India Fund

               

Year ended 9/30/14

  $ 1.78        (— )4      0.95        0.95        4                      

Year ended 9/30/13

  $ 2.02        (0.01     (0.23     (0.24     4                      

Year ended 9/30/12

  $ 1.83        (0.01     0.21        0.20        4      (0.01            (0.01

Period ended 9/30/1110

  $ 2.00        4      (0.17     (0.17     4                      

Emerging Markets Select Fund — Investor Class

  

             

Year ended 9/30/14

  $ 9.56        (0.01     0.77        0.76        4      (0.01            (0.01

Period ended 9/30/1313

  $ 10.00        4      (0.44     (0.44     4                      

Emerging Markets Select Fund — Institutional Class

  

             

Year ended 9/30/14

  $ 9.61        4      0.78        0.78        4      (0.02            (0.02

Period ended 9/30/1314

  $ 10.00        (— )4      (0.39     (0.39     4                      

Emerging Markets Small Cap Fund

               

Year ended 9/30/14

  $ 2.67        (0.01     0.14        0.13        4             (0.06     (0.06

Year ended 9/30/13

  $ 2.66        0.01        0.01        0.02        4      (0.01            (0.01

Year ended 9/30/12

  $ 2.16        0.01        0.49        0.50        4                      

Year ended 9/30/11

  $ 2.37        4      (0.21     (0.21     4      4             4 

Year ended 9/30/10

  $ 1.57        0.01        0.80        0.81        4      (0.01            (0.01

Frontier Emerging Small Countries Fund

               

Year ended 9/30/14

  $ 2.97        0.03        0.33        0.36        4      (0.01            (0.01

Year ended 9/30/13

  $ 2.41        0.01        0.55        0.56        4      4      4      4 

Period ended 9/30/129

  $ 2.00        0.01        0.40        0.41        4                      

Global Opportunities Fund

               

Year ended 9/30/14

  $ 4.58        (0.05     0.23        0.18        4      4      (0.48     (0.48

Year ended 9/30/13

  $ 4.15        (0.02     0.93        0.91        4             (0.48     (0.48

Year ended 9/30/12

  $ 3.68        (0.03     0.93        0.90        4             (0.43     (0.43

Year ended 9/30/11

  $ 3.97        (0.02     (0.13     (0.15     4             (0.14     (0.14

Year ended 9/30/10

  $ 3.38        (0.02     0.70        0.68        4      (0.01     (0.08     (0.09

Heritage Growth Fund

               

Year ended 9/30/14

  $ 14.91        (0.09 )15      1.17        1.08        4      4      (0.38     (0.38

Year ended 9/30/13

  $ 12.80        0.02        2.64        2.66        4      (0.01     (0.54     (0.55

Year ended 9/30/12

  $ 10.83        (0.03     2.16        2.13        4      (0.02     (0.14     (0.16

Year ended 9/30/11

  $ 10.70        4      0.22        0.22        4      (0.09            (0.09

Year ended 9/30/10

  $ 9.28        0.09        1.39        1.48        4      (0.06            (0.06

International Growth Fund

               

Year ended 9/30/14

  $ 28.76        (0.02     (1.24     (1.26     4             (0.72     (0.72

Year ended 9/30/13

  $ 22.44        0.07        6.32        6.39        0.01        (0.08            (0.08

Year ended 9/30/12

  $ 17.21        0.09        5.14        5.23        4                      

Year ended 9/30/11

  $ 18.66        4      (1.46     (1.46     0.01                        

Year ended 9/30/10

  $ 13.91        0.02        4.73        4.75        4                      

International Opportunities Fund

               

Year ended 9/30/14

  $ 2.94        (0.01     0.33        0.32        4             (0.17     (0.17

Year ended 9/30/13

  $ 2.41        (— )4      0.53        0.53        4                      

Year ended 9/30/12

  $ 2.24        4      0.44        0.44        4             (0.27     (0.27

Year ended 9/30/11

  $ 2.57        (0.01     (0.25     (0.26     4             (0.07     (0.07

Year ended 9/30/10

  $ 1.97        (0.01     0.63        0.62        4      (0.02            (0.02

Large Cap Value Fund — Investor Class

               

Year ended 9/30/14

  $ 16.57        0.21        1.49        1.70        4      (0.22     (5.36     (5.58

Year ended 9/30/13

  $ 14.31        0.22        2.37        2.59        4      (0.20     (0.13     (0.33

Year ended 9/30/12

  $ 11.85        0.20        2.46        2.66        4      (0.20            (0.20

Year ended 9/30/11

  $ 12.64        0.17        (0.79     (0.62     4      (0.17            (0.17

Year ended 9/30/10

  $ 11.97        0.17        0.67        0.84        4      (0.17            (0.17

See Notes to Financial Highlights and Notes to Financial Statements.

 

112


Table of Contents
  (for a share outstanding throughout each period)

 

 

 

                
Ratios to Average Net Assets
    Supplemental Data  
Net Asset
Value
End of
Period
    Total Return (%)1     Expenses
Net of
Waivers and
Reimbursements (%)2
    Expenses
Before
Waivers and
Reimbursements (%)2
    Net Investment
Income Net of
Waivers and
Reimbursements (%)2
    Net Investment
Income Before
Waivers and
Reimbursements (%)2
    Net Assets
End of
Period
(000’s)
    Portfolio
Turnover
Rate1 3
 
             
$ 53.46        3.26        1.18 5      1.18 5      (0.64     (0.64   $ 859,086        26%   
$ 52.49        26.76        1.21 5      1.21 5      (0.39     (0.39   $ 924,304        16%   
$ 41.41        26.91        1.23 5      1.23 5      (0.70     (0.70   $ 581,371        28%   
$ 32.63        8.95        1.22        1.22        (0.57     (0.57   $ 433,294        27%   
$ 29.95        15.75        1.29 11      1.29 11      0.02        0.02      $ 418,642        19%   
             
$ 53.58        3.31        1.13 5      1.19 5      (0.59     (0.65 )5    $ 49,369        26%   
$ 52.57        26.86        1.12 5      1.32 5      (0.32     (0.52 )5    $ 19,971        16%   
$ 41.44        8.14        1.12 5      1.55 5      (0.62     (1.05   $ 9,101        28%   
             
$ 2.73        53.37        1.96 5      2.58 5      (0.76     (1.38   $ 44,150        13%   
$ 1.78        (11.88     1.95 5      2.99 5      (0.99     (2.03   $ 15,938        40%   
$ 2.02        11.42        1.95 5      3.41 5      (0.65     (2.11   $ 13,658        17%   
$ 1.83        (8.50     1.95        4.85        (0.07     (2.97   $ 10,580        2%   
             
$ 10.31        7.92        1.69 5      1.88 5      (0.09     (0.28   $ 26,502        59%   
$ 9.56        (4.40     1.69 5      2.40 5      0.04        (0.67   $ 29,374        43%   
             
$ 10.37        8.13        1.51 5      1.71 5      0.05        (0.15   $ 32,306        59%   
$ 9.61        (3.90     1.50 5      2.21 5      (0.18     (0.89   $ 28,861        43%   
             
$ 2.74        4.90        1.95 5      2.02 5      (0.28     (0.35   $ 1,457,882        55%   
$ 2.67        0.85        1.95 5      2.06 5      0.21        0.09      $ 1,785,681        41%   
$ 2.66        23.15        1.95 5      2.13 5      0.29        0.11      $ 1,482,265        39%   
$ 2.16        (8.85     1.96        2.19        0.22        (0.01   $ 774,198        48%   
$ 2.37        51.69        2.06 12      2.39 12      0.82        0.49      $ 446,751        23%   
             
$ 3.32        11.97        2.24 5      2.24 5      0.79        0.79      $ 1,324,694        22%   
$ 2.97        22.88        2.25 5      2.43 5      0.81        0.63      $ 730,694        13%   
$ 2.41        20.50        2.25 5      3.64 5      1.31        (0.08   $ 33,045        5%   
             
$ 4.28        3.94        1.78 5      1.78 5      (0.83     (0.83   $ 192,664        42%   
$ 4.58        24.23        1.80 5      1.80 5      (0.70     (0.70   $ 220,460        43%   
$ 4.15        26.69        1.84 5      1.84 5      (0.61     (0.61   $ 153,582        38%   
$ 3.68        (4.21     1.94        1.94        (0.41     (0.41   $ 199,855        59%   
$ 3.97        20.41        2.25 12      2.33 12      (0.73     (0.81   $ 234,904        23%   
             
$ 15.61        7.21        0.95 5      0.95 5      (0.52 )15      (0.52 )15    $ 119,469        15%   
$ 14.91        21.67        0.95 5      0.99 5      0.15        0.11      $ 120,871        19%   
$ 12.80        19.76        0.95 5      1.03 5      (0.28     (0.37   $ 111,952        26%   
$ 10.83        2.01        0.95        1.04        (0.02     (0.11   $ 72,561        35%   
$ 10.70        16.06        0.96 11      1.11 11      0.81        0.66      $ 78,274        36%   
             
$ 26.78        (4.53     1.46 5      1.46 5      (0.06     (0.06   $ 1,421,086        42%   
$ 28.76        28.63        1.49 5      1.49 5      0.25        0.25      $ 1,326,931        44%   
$ 22.44        30.39        1.57 6      1.57 6      0.51        0.51      $ 434,824        44%   
$ 17.21        (7.77     1.66        1.66        (0.01     (0.01   $ 281,481        70%   
$ 18.66        34.15        1.86 12      1.86 12      0.10        0.10      $ 285,446        44%   
             
$ 3.09        11.53        2.25 5      2.41 5      (0.40     (0.56   $ 339,659        38%   
$ 2.94        21.99        2.25 5      2.42 5      (0.03     (0.20   $ 278,216        49%   
$ 2.41        22.33        2.25 6      2.48 6      (0.16     (0.39   $ 194,563        41%   
$ 2.24        (10.49     2.25        2.55        (0.58     (0.88   $ 151,569        108%   
$ 2.57        31.71        2.26 11      2.62 11      (0.60     (0.96   $ 152,178        51%   
             
$ 12.69        11.78        1.11 5 11      1.12 5 11      1.38        1.37      $ 409,169        53%   
$ 16.57        18.40        1.10 5      1.16 5      1.27        1.21      $ 786,910        47%   
$ 14.31        22.50        1.10 5      1.15 5      1.42        1.37      $ 1,298,365        14%   
$ 11.85        (5.08     1.10        1.11        1.24        1.23      $ 1,546,471        26%   
$ 12.64        7.07        1.11 11      1.14 11      1.36        1.33      $ 1,621,113        17%   

 

113


Table of Contents
WASATCH FUNDS — Financial Highlights (continued)  

 

 

 

          Income (Loss) from
Investment Operations
                Less Distributions        
     Net Asset
Value
Beginning
of Period
    Net
Investment
Income (Loss)
    Net Realized
and Unrealized
Gains (Losses)
on Investments
    Total from
Investment
Operations
    Redemption
Fees
(See Note 2)
    Dividends
from Net
Investment
Income
    Distributions
from Net
Realized
Gains
    Total
Distributions
 

Large Cap Value Fund — Institutional Class

  

             

Year ended 9/30/14

  $ 16.57        0.20        1.52        1.72        4      (0.24     (5.36     (5.60

Year ended 9/30/13

  $ 14.31        0.22        2.39        2.61        4      (0.22     (0.13     (0.35

Period ended 9/30/128

  $ 13.77        0.12        0.57        0.69        4      (0.15            (0.15

Long/Short Fund — Investor Class

               

Year ended 9/30/14

  $ 15.82        0.17        0.65        0.82        4             (0.35     (0.35

Year ended 9/30/13

  $ 13.66        (0.04     2.23        2.19        4             (0.03     (0.03

Year ended 9/30/12

  $ 11.85        (0.02     1.83        1.81        4                      

Year ended 9/30/11

  $ 11.74        (0.04     0.16        0.12        4      (0.01            (0.01

Year ended 9/30/10

  $ 11.13        (0.01     0.62        0.61        4      4             4 

Long/Short Fund — Institutional Class

               

Year ended 9/30/14

  $ 15.83        0.18        0.66        0.84        4             (0.35     (0.35

Period ended 9/30/1314

  $ 13.80        (0.01     2.07        2.06        4             (0.03     (0.03

Micro Cap Fund

               

Year ended 9/30/14

  $ 7.42        (0.14     0.08        (0.06     4                      

Year ended 9/30/13

  $ 5.71        (0.10     1.81        1.71        4                      

Year ended 9/30/12

  $ 4.40        (0.09     1.40        1.31        4                      

Year ended 9/30/11

  $ 4.44        (0.06     0.02        (0.04     4                      

Year ended 9/30/10

  $ 3.89        (0.05     0.60        0.55        4                      

Micro Cap Value Fund

               

Year ended 9/30/14

  $ 3.45        (0.04     0.18        0.14        4             (0.57     (0.57

Year ended 9/30/13

  $ 2.85        (0.03     0.91        0.88        4             (0.28     (0.28

Year ended 9/30/12

  $ 2.24        (0.04     0.65        0.61        4                      

Year ended 9/30/11

  $ 2.38        (0.04     (0.10     (0.14     4                      

Year ended 9/30/10

  $ 2.11        (0.02     0.30        0.28        4      (0.01            (0.01

Small Cap Growth Fund

               

Year ended 9/30/14

  $ 51.31        (0.41     1.03        0.62        4             (1.68     (1.68

Year ended 9/30/13

  $ 43.82        (0.15     10.53        10.38        4             (2.89     (2.89

Year ended 9/30/12

  $ 35.37        (0.29     10.40        10.11        4             (1.66     (1.66

Year ended 9/30/11

  $ 34.24        (0.13     1.26        1.13        4                      

Year ended 9/30/10

  $ 28.59        (0.22     5.87        5.65        4                      

Small Cap Value Fund — Investor Class

               

Year ended 9/30/14

  $ 5.12        (0.02     0.59        0.57        4                      

Year ended 9/30/13

  $ 3.81        (0.01     1.32        1.31        4                      

Year ended 9/30/12

  $ 3.12        (0.03     0.72        0.69        4                      

Year ended 9/30/11

  $ 3.08        (0.02     0.06        0.04        4                      

Year ended 9/30/10

  $ 2.75        (0.01     0.34        0.33        4                      

Small Cap Value Fund — Institutional Class

  

             

Year ended 9/30/14

  $ 5.14        (0.03     0.61        0.58                               

Year ended 9/30/13

  $ 3.82        (0.01     1.33        1.32        4                      

Period ended 9/30/128

  $ 3.68        (0.01     0.15        0.14                               

Strategic Income Fund

               

Year ended 9/30/14

  $ 11.08        0.32        1.74        2.06        4      (0.35     (0.16     (0.51

Year ended 9/30/13

  $ 9.30        0.33        1.78        2.11        4      (0.33            (0.33

Year ended 9/30/12

  $ 7.57        0.16        1.77        1.93        4      (0.20            (0.20

Year ended 9/30/11

  $ 7.51        0.25        0.06        0.31        4      (0.25            (0.25

Year ended 9/30/10

  $ 6.77        0.31        0.70        1.01        4      (0.27            (0.27

Ultra Growth Fund

               

Year ended 9/30/14

  $ 24.57        (0.06     0.80        0.74        4             (1.64     (1.64

Year ended 9/30/13

  $ 22.83        (0.15     4.96        4.81        4             (3.07     (3.07

Year ended 9/30/12

  $ 20.11        (0.08     3.98        3.90        4             (1.18     (1.18

Year ended 9/30/11

  $ 19.80        (0.17     0.48        0.31        4                      

Year ended 9/30/10

  $ 15.66        (0.15     4.29        4.14        4                      

World Innovators Fund

               

Year ended 9/30/14

  $ 23.15        (0.24     0.91        0.67        4             (1.20     (1.20

Year ended 9/30/13

  $ 18.55        (0.12     4.72        4.60        4                      

Year ended 9/30/12

  $ 14.71        (0.12     3.96        3.84        4                      

Year ended 9/30/11

  $ 13.65        (0.13     1.19        1.06        4                      

Year ended 9/30/10

  $ 11.12        (0.10     2.65        2.55        4      (0.02            (0.02

See Notes to Financial Highlights and Notes to Financial Statements.

 

114


Table of Contents
  (for a share outstanding throughout each period)

 

 

 

                
Ratios to Average Net Assets
    Supplemental Data  
Net Asset
Value
End of
Period
    Total Return (%)1     Expenses
Net of
Waivers and
Reimbursements (%)2
    Expenses
Before
Waivers and
Reimbursements (%)2
    Net Investment
Income Net of
Waivers and
Reimbursements (%)2
    Net Investment
Income Before
Waivers and
Reimbursements (%)2
    Net Assets
End of
Period
(000’s)
    Portfolio
Turnover
Rate1 3
 
             
$ 12.69        11.95        0.98 5      1.25 5      1.52        1.25      $ 8,068        53%   
$ 16.57        18.54        0.98 5      1.35 5      1.37        1.00      $ 15,444        47%   
$ 14.31        5.02        0.98 5      1.31 5      1.44        1.11      $ 15,511        14%   
             
$ 16.29        5.21        1.53 7 12      1.53 7 12      1.05        1.05      $ 1,696,707        47%   
$ 15.82        16.09        1.51 7      1.51 7      (0.22     (0.22   $ 1,479,371        47%   
$ 13.66        15.27        1.51 7      1.51 7      (0.20     (0.20   $ 1,537,220        71%   
$ 11.85        0.98        1.63 7      1.63 7      (0.44     (0.44   $ 833,298        82%   
$ 11.74        5.52        1.71 7 12      1.71 7 12      0.03        0.03      $ 300,255        60%   
             
$ 16.32        5.33        1.42 7      1.42 7      1.18        1.18      $ 1,022,568        47%   
$ 15.83        14.99        1.39 7      1.40 7      (0.16     (0.17   $ 824,780        47%   
             
$ 7.36        (0.81     1.97        1.97        (1.67     (1.67   $ 293,815        26%   
$ 7.42        29.95        2.13 5      2.13 5      (1.28     (1.28   $ 323,175        17%   
$ 5.71        29.77        2.14 5      2.14 5      (1.50     (1.50   $ 289,449        25%   
$ 4.40        (0.90     2.14        2.14        (1.05     (1.05   $ 253,415        30%   
$ 4.44        14.14        2.18 5      2.18 5      (1.10     (1.10   $ 283,551        34%   
             
$ 3.02        3.26        2.03 5      2.09 5      (1.31     (1.37   $ 158,800        71%   
$ 3.45        33.92        2.25 5      2.25 5      (0.92     (0.92   $ 166,487        66%   
$ 2.85        27.23        2.25 5      2.31 5      (1.27     (1.33   $ 138,299        78%   
$ 2.24        (5.88     2.25        2.28        (1.21     (1.24   $ 142,795        94%   
$ 2.38        13.26        2.26 11      2.37 11      (1.32     (1.43   $ 185,587        88%   
             
$ 50.25        1.09        1.21 5      1.21 5      (0.75     (0.75   $ 2,219,638        23%   
$ 51.31        25.34        1.23 5      1.23 5      (0.42     (0.42   $ 2,487,031        10%   
$ 43.82        29.41        1.24 5      1.24 5      (0.73     (0.73   $ 1,824,781        20%   
$ 35.37        3.30        1.23        1.23        (0.32     (0.32   $ 1,297,982        23%   
$ 34.24        19.76        1.27 11      1.27 11      (0.74     (0.74   $ 1,110,087        17%   
             
$ 5.69        11.13        1.20 5      1.20 5      (0.52     (0.52   $ 265,521        50%   
$ 5.12        34.38        1.26 5      1.27 5      (0.21     (0.22   $ 201,581        40%   
$ 3.81        22.12        1.46 5      1.46 5      (0.73     (0.73   $ 166,330        55%   
$ 3.12        1.30        1.78        1.78        (0.65     (0.65   $ 169,401        46%   
$ 3.08        12.00        1.85 11      1.85 11      (0.23     (0.23   $ 211,571        62%   
             
$ 5.72        11.28        1.15 5      1.44 5      (0.49     (0.78   $ 10,436        50%   
$ 5.14        34.55        1.15 5      1.46 5      (0.11     (0.42   $ 9,359        40%   
$ 3.82        3.80        1.15 5      1.66 5      (0.42     (0.93   $ 7,243        55%   
             
$ 12.63        18.94        0.95 5      0.96 5      2.59        2.58      $ 94,958        69%   
$ 11.08        23.01        0.95 5      1.06 5      3.16        3.05      $ 66,579        54%   
$ 9.30        25.61        0.95 5      1.14 5      1.74        1.55      $ 44,635        57%   
$ 7.57        3.94        0.95        1.21        2.99        2.73      $ 24,057        62%   
$ 7.51        15.18        0.99 7 12      1.33 7 12      4.35        4.01      $ 19,517        73%   
             
$ 23.67        2.66        1.26 5      1.26 5      (1.00     (1.00   $ 102,834        38%   
$ 24.57        24.52        1.29 5      1.29 5      (0.64     (0.64   $ 151,697        25%   
$ 22.83        20.13        1.32 5      1.32 5      (0.35     (0.35   $ 143,259        43%   
$ 20.11        1.57        1.42        1.42        (0.51     (0.51   $ 134,203        60%   
$ 19.80        26.44        1.68 11      1.68 11      (1.14     (1.14   $ 178,566        45%   
             
$ 22.62        2.69        1.73 5      1.73 5      (0.89     (0.89   $ 253,311        111%   
$ 23.15        24.80        1.77 5      1.79 5      (0.84     (0.86   $ 266,911        84%   
$ 18.55        26.10        1.85 5      1.85 5      (0.99     (0.99   $ 167,934        66%   
$ 14.71        7.77        1.95        1.95        (0.84     (0.84   $ 72,493        85%   
$ 13.65        22.91        1.96 11      2.05 11      (0.74     (0.83   $ 65,767        74%   

 

115


Table of Contents
WASATCH FUNDS — Financial Highlights (continued)  

 

 

 

          Income (Loss) from
Investment Operations
                Less Distributions        
     Net Asset
Value
Beginning
of Period
    Net
Investment
Income
    Net Realized
and Unrealized
Gains (Losses)
on Investments
    Total from
Investment
Operations
    Redemption
Fees
(See Note 2)
    Dividends
from Net
Investment
Income
    Distributions
from Net
Realized
Gains
    Total
Distributions
 

Income Fund

               

Year ended 9/30/14

  $ 10.13        0.17        0.02        0.19        4      (0.17            (0.17

Year ended 9/30/13

  $ 10.44        0.17        (0.31     (0.14            (0.17            (0.17

Year ended 9/30/12

  $ 10.32        0.20        0.12        0.32        4      (0.20            (0.20

Year ended 9/30/11

  $ 10.34        0.25        (0.02     0.23        4      (0.25            (0.25

Year ended 9/30/10

  $ 10.04        0.29        0.30        0.59        4      (0.29            (0.29

U.S. Treasury Fund

               

Year ended 9/30/14

  $ 15.33        0.45        1.75        2.20        4      (0.45            (0.45

Year ended 9/30/13

  $ 18.75        0.44        (3.08     (2.64     0.01        (0.44     (0.35     (0.79

Year ended 9/30/12

  $ 18.75        0.42        0.77        1.19        0.01        (0.42     (0.78     (1.20

Year ended 9/30/11

  $ 17.17        0.52        2.63        3.15        0.02        (0.52     (1.07     (1.59

Year ended 9/30/10

  $ 16.29        0.54        1.35        1.89        0.01        (0.54     (0.48     (1.02

See Notes to Financial Highlights and Notes to Financial Statements.

 

116


Table of Contents
  (for a share outstanding throughout each period)

 

 

 

                
Ratios to Average Net Assets
    Supplemental Data  
Net Asset
Value
End of
Period
    Total Return (%)1     Expenses
Net of
Waivers and
Reimbursements (%)2
    Expenses
Before
Waivers and
Reimbursements (%)2
    Net Investment
Income Net of
Waivers and
Reimbursements (%)2
    Net Investment
Income Before
Waivers and
Reimbursements (%)2
    Net Assets
End of
Period
(000’s)
    Portfolio
Turnover
Rate1 3
 
             
$ 10.15        1.91        0.70 5      0.70 5      1.66        1.66      $ 116,752        13%   
$ 10.13        (1.34     0.71        0.71        1.67        1.67      $ 130,285        35%   
$ 10.44        3.16        0.70 5      0.70 5      1.97        1.97      $ 139,186        48%   
$ 10.32        2.26        0.71        0.71        2.42        2.42      $ 135,617        43%   
$ 10.34        5.95        0.72 12      0.73 12      2.87        2.86      $ 138,095        51%   
             
$ 17.08        14.54        0.70 5      0.70 5      2.77        2.77      $ 224,664        28%   
$ 15.33        (14.43     0.71 5      0.71 5      2.46        2.46      $ 193,231        34%   
$ 18.75        6.66        0.72 5      0.72 5      2.33        2.33      $ 271,495        13%   
$ 18.75        22.06        0.75        0.76        3.44        3.43      $ 187,368        44%   
$ 17.17        12.65        0.75 12      0.78 12      3.56        3.53      $ 200,855        49%   

 

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WASATCH FUNDS — Notes to Financial Highlights   SEPTEMBER 30, 2014

 

 

 

  1 Not annualized for periods less than one year.

 

  2 Annualized for periods less than one year.

 

  3 Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

 

  4 Represents amounts less than $.005 per share.

 

  5 Includes interest expense of less than 0.01%.

 

  6 Includes interest expenses of 0.01%.

 

  7 Includes interest expense and dividend payments for securities sold short. The ratios excluding such expenses are listed below:

 

     Expenses Net of
Waivers and
Reimbursements2
  Expenses Before
Waivers and
Reimbursements2

Long/Short Fund — Investor Class

        

Year ended 9/30/14

       1.27%         1.27%  

Year ended 9/30/13

       1.28%         1.28%  

Year ended 9/30/12

       1.27%         1.27%  

Year ended 9/30/11

       1.30%         1.30%  

Year ended 9/30/10

       1.34% 12       1.34% 12

Long/Short Fund — Institutional Class

        

Year ended 9/30/14

       1.16%         1.16%  

Period ended 9/30/1314

       1.17%         1.18%  

Strategic Income Fund

        

Year ended 9/30/10

       0.95% 12       1.29% 12

 

  8Institutional class inception date was January 31, 2012.

 

  9Fund inception date was January 31, 2012.

 

10Fund inception date was April 26, 2011.

 

11Includes extraordinary expenses of 0.01% (see Note 8).

 

12Includes extraordinary expenses of less than 0.01% (see Note 8).

 

13Fund inception date was December 13, 2012.

 

14Institutional class inception date was December 13, 2012.

 

15Investment Income per share reflects a large, special dividend which amounted to $0.04 per share. Excluding this special dividend, the ratio of net investment income (loss) to average net assets would have been (0.79)%.

See Notes to Financial Statements.

 

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WASATCH FUNDS — Notes to Financial Statements   SEPTEMBER 30, 2014

 

 

 

1. ORGANIZATION

Wasatch Funds Trust (the “Trust”) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and consists of 20 series or funds (each a “Fund” and collectively the “Funds”). The Core Growth Fund, Emerging India Fund, Emerging Markets Small Cap Fund, Global Opportunities Fund, Heritage Growth Fund, International Growth Fund, International Opportunities Fund, Large Cap Value Fund, Long/Short Fund, Micro Cap Fund, Micro Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Strategic Income Fund, Ultra Growth Fund, World Innovators Fund, Wasatch-1st Source Income Fund (“Income Fund”) (sub-advised), and Wasatch-Hoisington U.S. Treasury Fund (“U.S. Treasury Fund”) (sub-advised) are each diversified funds. The Emerging Markets Select Fund and Frontier Emerging Small Countries Fund are non-diversified funds. Each Fund maintains its own investment objective.

On November 9, 2011, the Trust re-designated the shares of the Funds into Investor Class shares effective January 31, 2012, and authorized and designated a new Institutional Class of shares in the Funds. Currently five funds offer Institutional Class shares: Core Growth Fund, Large Cap Value Fund and Small Cap Value Fund, which commenced operations on January 31, 2012, as well as the Emerging Markets Select Fund and Long/Short Fund, which commenced operations on December 13, 2012. Each class of shares for each Fund has identical rights and privileges except with respect to purchase minimums, distribution and service charges, shareholder services, voting rights on matters affecting a single class of shares, and the exchange and conversion features. The Funds have entered into an investment advisory agreement with Wasatch Advisors, Inc. (the “Advisor” or “Wasatch”) as investment advisor.

The Core Growth, Emerging India, Emerging Markets Select, Emerging Markets Small Cap, Frontier Emerging Small Countries, Global Opportunities, Heritage Growth, International Growth, International Opportunities, Large Cap Value, Long/Short, Micro Cap, Micro Cap Value, Small Cap Growth, Small Cap Value, Strategic Income, Ultra Growth and World Innovators Funds are referred to herein as the “Equity Funds.”

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant policies related to investments of the Funds held at September 30, 2014. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Valuation of Securities — All investments in securities are recorded at their estimated fair value as described in Note 14.

Foreign Currency Translations — Values of investments denominated in foreign currencies are converted into U.S. dollars using the current exchange rates each business day (generally 2:00 p.m. Eastern Time). Purchases and sales of investments and dividend income are translated into U.S. dollars using the current prevailing exchange rate on the transaction date. The effect of changes in foreign exchange

rates on realized and unrealized gains or losses on securities is reflected as a component of such gains or losses. Transactions in foreign denominated assets may involve greater risks than domestic transactions.

Investment in Securities and Related Investment Income — 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 except that certain dividends from foreign securities may be recorded after the ex-dividend date based on when the Fund is informed of the dividend. Interest income and estimated expenses are accrued daily. Bond discount and premiums are amortized using the interest method. To the extent dividends received include return of capital or capital gain distributions; such distributions are recorded as a reduction to cost of the related security or as realized gain/loss.

Expenses — The Funds contract for various services on a collective basis. Most expenses are directly attributable to each Fund and therefore are charged accordingly. Expenses that are not directly attributable to one or more Funds are allocated among applicable Funds on an equitable and consistent basis considering such things as the nature and type of expense and the relative net assets of the Funds.

Use of Management Estimates — The preparation of financial statements in conformity with U.S. GAAP 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.

Guarantees and Indemnifications — In the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or their affiliates that have not yet occurred. Based on experience, however, the risk of loss is expected to be remote.

Redemption Fees — The Funds deduct a fee of 2.00% from redemption proceeds on shares of the Funds held 60 days or less. Redemption fees retained by the Funds are credited to additional paid-in capital.

New Accounting Pronouncements — In June 2013, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU 2013-08”) to Accounting Standard Codification Topic 946, Financial Services — Investment Companies (“Topic 946”). ASU 2013-08 amends the guidance in Topic 946 for determining whether an entity qualifies as an investment company and requires certain additional disclosures. ASU 2013-08 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2013. FASB has determined that a fund registered under the 1940 Act automatically meets ASU 2013-08’s criteria for an investment company. Although still evaluating the potential impact of ASU 2013-08, management expects that this will not have a material impact on the Funds’ financial statements.

 

 

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Other — Income, expenses, and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets, except that each class separately bears expenses related specifically to that class, such as certain shareholder servicing fees.

3. SECURITIES AND OTHER INVESTMENTS

Repurchase Agreements — The Funds may engage in repurchase transactions. Under the terms of a typical repurchase agreement, a fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase and the fund to resell the obligation at an agreed upon price and time. The market value of the collateral must be at least equal at all times to the total amount of the repurchase obligation, including interest. Generally, in the event of counterparty default, the fund has the right to use the collateral to offset losses incurred. Refer to Note 15 (Offsetting) for more information about the offsetting of assets and liabilities.

Short Sales — The Long/Short Fund and to a lesser extent the other Equity Funds may enter into short sales whereby a fund sells a security it generally does not own (the security is borrowed), in anticipation of a decline in the security’s price. The initial amount of a short sale is recorded as a liability which is marked-to-market daily. Fluctuations in the value of the short liability are recorded as unrealized gains or losses. If a Fund shorts a security when also holding a long position in the security (a “short against the box”), as the security’s price declines, the short position increases in value, offsetting the long position’s decrease in value. The opposite effect occurs if the security’s price rises. A Fund realizes a gain or loss upon closing of the short sale (returning the security to the counterparty by way of purchase or delivery of a long position owned). Possible losses from short sales may be unlimited, whereas losses from security purchases cannot exceed the total amount invested. The Funds are liable to the buyer for any dividends payable on securities while those securities are in a short position. These dividends are an expense of the Funds. The Funds designate collateral consisting of cash, U.S. government securities or other liquid assets sufficient to collateralize the market value of short positions. Refer to Note 15 (Offsetting) for more information about the offsetting of assets and liabilities.

Participation Notes — The Frontier Emerging Small Countries and the Global Opportunities Funds invest in Participation Notes (P-Notes). P-Notes are promissory notes that are designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes are issued by banks or broker-dealers and allow a fund to gain exposure to common stocks in markets where direct investment is not allowed, such as Saudi Arabia. While the holder of a P-Note is entitled to receive from the bank or broker-dealer any dividends or other distributions paid on the underlying securities, the holder is not entitled to the same rights as an owner of the underlying securities, such as voting rights. Income received from P-Notes is recorded as dividend income in the Statement of

Operations. P-Notes are considered general unsecured contractual obligations of the bank or broker-dealer. Risks associated with P-Notes include the possible failure of a counterparty (i.e., the issuing bank or broker-dealer) to perform in accordance with the terms of the agreement, inability to transfer or liquidate the notes, potential delays or an inability to redeem the notes before maturity under certain market conditions, and limited legal recourse against the issuer of the underlying common stock.

4. FINANCIAL DERIVATIVE INSTRUMENTS

Foreign Currency Contracts — The Funds may enter into foreign currency contracts to settle planned purchases or sales of securities or to protect against a possible loss resulting from the adverse change in the relationship between the U.S. dollar and a foreign currency involved in an underlying transaction. Foreign currency contracts are agreements between two parties to buy and sell a currency at a set price on a future date. The market value of a foreign currency contract fluctuates with changes in currency exchange rates. Foreign currency contracts are marked-to-market daily and the change in market value is recorded by a fund as unrealized appreciation or depreciation. When a foreign currency contract is closed, the fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. These contracts may involve market risk in excess of the unrealized gain or loss reflected in the Schedule of Investments. In addition, a fund could be exposed to credit risk if a counterparty is unable or unwilling to meet the terms of the contracts or if the value of the currency changes unfavorably. In connection with these contracts, the Funds may segregate cash and/or securities in a sufficient amount as collateral in accordance with the terms of the respective contracts.

Options Transactions  —  The Equity Funds and the Income Fund may buy and sell put and call options and write covered put and call options, including over-the-counter options, on portfolio securities where the completion of the obligation is dependent upon the credit standing of another party. Options are a type of derivative financial instrument. The Funds may invest in derivative financial instruments, including options, in order to manage risk or gain exposure to various other investments or markets. The risk in writing a call option is that a fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that a fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that a fund pays a premium whether or not the option is exercised. A fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Possible losses from uncovered written options may be unlimited. Option contracts are valued daily and unrealized appreciation or depreciation is recorded. A fund will realize a gain or loss upon expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or

 

 

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the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. The Funds designate collateral consisting of cash, U.S. government securities or other liquid assets sufficient to collateralize the market value of written options. Refer to Note 15 (Offsetting) for more information about the offsetting of assets and liabilities.

Options written activity during the year ended September 30, 2014 was as follows:

 

     Options
Outstanding at
9/30/2013
     Written      Closed      Exercised      Expired      Options
Outstanding at
9/30/2014
 

Long/Short Fund

                

Premium amount

  $ 6,528,848       $ 10,649,611       $ (9,715,952    $ (3,760,600    $ (1,647,436    $ 2,054,471   

Number of contracts

    8,031         27,968         (8,828      (13,464      (8,641      5,066   

Micro Cap Value Fund

                

Premium amount

  $ 61,910       $ 2,381,362       $ (839,929    $ (664,295    $ (732,212    $ 206,836   

Number of contracts

    150         11,617         (3,265      (4,350      (3,322      830   

5. DISTRIBUTIONS

Dividends from net investment income and net realized gains, if any, are declared and paid at least annually for all Funds, except for dividends from net investment income in four funds. The Income Fund declares and pays dividends monthly. The Large Cap Value, Strategic Income and U.S. Treasury Funds declare and pay dividends quarterly. The amount of dividends and distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. The Funds may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).

To the extent these book and tax differences are permanent in nature, such amounts are reclassified at the end of the fiscal year among additional paid-in capital, undistributed net investment income (loss), and undistributed net realized gain (loss) on investments, options and foreign currency translations.

Accordingly, at September 30, 2014, reclassifications were recorded as follows:

 

    

Core

Growth

Fund

    

Emerging
India

Fund

     Emerging
Markets
Select
Fund
     Emerging
Markets
Small Cap
Fund
    

Frontier
Emerging

Small Countries

Fund

 

Increase (decrease) paid-in capital in excess of par

  $ (4,167,088    $       $       $ 2,110,375       $ 45   

Increase (decrease) undistributed net investment income

    4,337,924         7,518         57,362         3,956,082         (2,286,472

Increase (decrease) undistributed net realized gain (loss)

    (170,836      (7,518      (57,362      (6,066,457      2,286,427   
     Global
Opportunities
Fund
     Heritage
Growth
Fund
     International
Growth
Fund
     International
Opportunities
Fund
     Large Cap
Value
Fund
 

Increase (decrease) paid-in capital in excess of par

  $ (1,449,981    $ (166,029    $ (3,816,041    $ (39,112    $ 51,885,306   

Increase (decrease) undistributed net investment income

    1,962,340         873,996         (1,831,473      1,406,127         162,360   

Increase (decrease) undistributed net realized gain (loss)

    (512,359      (707,967      5,647,514         (1,367,015      (52,047,666
     Long/Short
Fund
     Micro
Cap
Fund
    

Micro Cap
Value

Fund

    

Small Cap
Growth

Fund

    

Small Cap
Value

Fund

 

Decrease paid-in capital in excess of par

  $ (1    $ (4,572,813    $       $ (4,118,690    $ (1,190,373

Increase (decrease) undistributed net investment income

    (8,301,880      4,567,033         1,673,015         2,569,645         1,191,431   

Increase (decrease) undistributed net realized gain (loss)

    8,301,881         5,780         (1,673,015      2,679,215         (1,058
     Strategic
Income
Fund
     Ultra
Growth
Fund
     World
Innovators
Fund
     Income
Fund
     U.S.
Treasury
Fund
 

Increase (decrease) paid-in capital in excess of par

  $       $ 3,898,469       $ (2,706,501    $ (1    $ (6,252

Increase (decrease) undistributed net investment income

    328,593         (1,074,351      2,628,471         (20,631      6,252   

Increase (decrease) undistributed net realized gain (loss)

    (328,593      (1,784,102      168,189         20,632      

 

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6. PURCHASES AND SALES OF SECURITIES

Cost of investment securities purchased and proceeds from sales of investment securities, excluding U.S. government and short-term securities for the year ended September 30, 2014 are summarized below:

 

     Core
Growth
Fund
    

Emerging
India

Fund

    

Emerging
Markets
Select

Fund

    

Emerging
Markets
Small Cap

Fund

     Frontier
Emerging
Small
Countries
Fund
     Global
Opportunities
Fund
     Heritage
Growth
Fund
 

Purchases

  $ 243,715,770       $ 19,024,922       $ 36,394,659       $ 893,891,404       $ 690,180,808       $ 88,109,826       $ 17,527,965   

Sales

    245,585,794         2,834,499         35,194,305         1,278,256,851         232,353,085         124,027,077         31,272,691   
     International
Growth
Fund
     International
Opportunities
Fund
    

Large Cap
Value

Fund

     Long/Short
Fund
     Micro
Cap
Fund
    

Micro Cap
Value

Fund

     Small Cap
Growth
Fund
 

Purchases

  $ 798,432,006       $ 142,467,901       $ 318,127,823       $ 1,267,943,237       $ 82,527,734       $ 116,859,861       $ 542,844,490   

Sales

    625,085,659         118,243,265         759,675,616         1,022,664,522         111,835,057         130,776,444         699,745,669   
    

Small Cap
Value

Fund

    

Strategic
Income

Fund

     Ultra
Growth
Fund
     World
Innovators
Fund
    

Income

Fund

               

Purchases

  $ 175,202,083       $ 68,149,752       $ 49,182,482       $ 304,707,367       $ 5,973,895         

Sales

    117,847,547         49,772,133         105,613,866         310,090,263         9,447,031         

Purchases and sales of U.S. government securities in the Income Fund were $9,626,281 and $19,400,919, respectively. Purchases and sales of U.S. government securities in the U.S. Treasury Fund were $62,834,941 and $55,855,189, respectively.

7. FEDERAL INCOME TAX INFORMATION

It is each Fund’s 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. The Funds are no longer subject to examination by tax authorities for years prior to 2011. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total of amounts of unrecognized tax benefits will significantly change in the next 12 months. Accordingly, no provision for federal income or excise taxes has been made.

As of September 30, 2014 the cost and unrealized appreciation (depreciation) of securities on a tax basis were as follows:

 

     Core
Growth
Fund
     Emerging
India
Fund
     Emerging
Markets
Select
Fund
     Emerging
Markets
Small Cap
Fund
     Frontier
Emerging
Small
Countries
Fund
     Global
Opportunities
Fund
     Heritage
Growth
Fund
 

Cost

  $ 600,841,008       $ 34,569,654       $ 54,136,520       $ 1,235,597,115       $ 1,174,972,722       $ 148,708,852       $ 76,197,743   
 

 

 

 

Gross appreciation

  $ 343,494,970       $ 9,430,428       $ 6,621,993       $ 253,555,340       $ 205,642,981       $ 47,799,173       $ 45,594,282   

Gross (depreciation)

    (33,887,886      (245,589      (2,437,285      (66,697,175      (63,366,601      (3,902,868      (2,404,263
 

 

 

 

Net appreciation

  $ 309,607,084       $ 9,184,839       $ 4,184,708       $ 186,858,165       $ 142,276,380       $ 43,896,305       $ 43,190,019   
 

 

 

 
     International
Growth
Fund
     International
Opportunities
Fund
     Large Cap
Value
Fund
     Long/Short
Fund
     Micro
Cap
Fund
     Micro Cap
Value
Fund
     Small Cap
Growth
Fund
 

Cost

  $ 1,223,221,371       $ 274,796,783       $ 362,761,168       $ 2,112,819,859       $ 195,297,401       $ 127,698,074       $ 1,475,416,309   
 

 

 

 

Gross appreciation

  $ 224,755,206       $ 73,209,082       $ 61,863,678       $ 368,154,833       $ 113,778,618       $ 34,712,690       $ 843,456,515   

Gross (depreciation)

    (55,481,430      (11,641,000      (7,555,021      (88,301,292      (13,403,887      (4,907,076      (94,880,774
 

 

 

 

Net appreciation

  $ 169,273,776       $ 61,568,082       $ 54,308,657       $ 279,853,541       $ 100,374,731       $ 29,805,614       $ 748,575,741   
 

 

 

 

 

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     Small Cap
Value
Fund
     Strategic
Income
Fund
     Ultra
Growth
Fund
     World
Innovators
Fund
     Income
Fund
     U.S.
Treasury
Fund
      

Cost

  $ 233,693,902       $ 79,794,428       $ 84,683,720       $ 227,606,147       $ 115,197,838       $ 200,072,842      
 

 

 

    

Gross appreciation

  $ 53,824,983       $ 12,249,523       $ 29,532,241       $ 40,396,660       $ 1,705,686       $ 24,609,106      

Gross (depreciation)

    (7,867,796      (1,117,752      (11,810,465      (9,993,691      (780,683      (762,137   
 

 

 

    

Net appreciation

  $ 45,957,187       $ 11,131,771       $ 17,721,776       $ 30,402,969       $ 925,003       $ 23,846,969      
 

 

 

    

The difference between book-basis and tax-basis unrealized gains is primarily attributable to the tax deferral of losses on wash sales, unrealized appreciation on passive foreign investment companies and other temporary tax adjustments.

The components of accumulated earnings on a tax basis as of September 30, 2014 were as follows:

 

     Core
Growth
Fund
     Emerging
India
Fund
     Emerging
Markets
Select
Fund
     Emerging
Markets
Small Cap
Fund
     Frontier
Emerging
Small
Countries
Fund
 

Undistributed ordinary income

  $       $ 29,423       $ 237,895       $ 1,814,426       $ 11,253,657   

Undistributed capital gains

    24,139,647                                 11,628,159   
 

 

 

 

Accumulated earnings

    24,139,647         29,423         237,895         1,814,426         22,881,816   

Accumulated capital and other losses

    (3,495,422      (698,466      (2,430,234      (9,930,904        

Other undistributed ordinary losses

            (69,959      (82,612              (65,150

Net unrealized appreciation*

    309,602,856         9,179,654         4,022,146         182,794,516         134,965,728   
 

 

 

 

Total accumulated earnings

  $ 330,247,081       $ 8,440,652       $ 1,747,195       $ 174,678,038       $ 157,782,394   
 

 

 

 
     Global
Opportunities
Fund
     Heritage
Growth
Fund
     International
Growth
Fund
     International
Opportunities
Fund
     Large Cap
Value
Fund
 

Undistributed ordinary income

  $       $       $       $       $ 5,094,438   

Undistributed capital gains

    25,243,699         4,859,068         7,932,088         32,549,873         87,278,702   
 

 

 

 

Accumulated earnings

    25,243,699         4,859,068         7,932,088         32,549,873         92,373,140   

Accumulated capital and other losses

                                      

Other undistributed ordinary losses

    (7,848                      (12,224      (22,352

Net unrealized appreciation*

    43,460,186         43,190,019         168,320,546         61,120,455         54,307,453   
 

 

 

 

Total accumulated earnings

  $ 68,696,037       $ 48,049,087       $ 176,252,634       $ 93,658,104       $ 146,658,241   
 

 

 

 
     Long/Short
Fund
     Micro
Cap
Fund
     Micro Cap
Value
Fund
     Small Cap
Growth
Fund
     Small Cap
Value
Fund
 

Undistributed ordinary income

  $ 20,875,562       $       $       $       $   

Undistributed capital gains

    126,010,349         11,955,098         18,886,349         178,641,652           
 

 

 

 

Accumulated earnings

    146,885,911         11,955,098         18,886,349         178,641,652           

Accumulated capital and other losses

            (4,090,280      (680,747      (14,605,038      (41,450,988

Other undistributed ordinary losses

    (79,216                                

Net unrealized appreciation*

    279,853,541         99,903,494         29,760,463         748,570,589         45,836,461   
 

 

 

 

Total accumulated earnings

  $ 426,660,236       $ 107,768,312       $ 47,966,065       $ 912,607,203       $ 4,385,473   
 

 

 

 
     Strategic
Income
Fund
     Ultra
Growth
Fund
     World
Innovators
Fund
     Income
Fund
     U.S.
Treasury
Fund
 

Undistributed ordinary income

  $       $       $       $ 12,372       $ 77,591   

Undistributed capital gains

    5,830,283         27,666,283         23,823,610                   
 

 

 

 

Accumulated earnings

    5,830,283         27,666,283         23,823,610         12,372         77,591   

Accumulated capital and other losses

            (1,445,037      (1,851,894      (403,682      (11,690,902

Other undistributed ordinary losses

    (13,158                      (2,689      (55,520

Net unrealized appreciation*

    11,131,276         17,721,253         30,389,907         925,003         23,846,969   
 

 

 

 

Total accumulated earnings

  $ 16,948,401       $ 43,942,499       $ 52,361,623       $ 531,004       $ 12,178,138   
 

 

 

 

 

* On investments, securities sold short, derivatives and foreign currency denominated assets and liabilities.

 

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WASATCH FUNDS — Notes to Financial Statements (continued)  

 

 

 

Capital loss carryforwards are available through the date specified below to offset future realized net capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. To the extent future gains are offset by capital loss carryforwards, such gains will not be distributed.

On December 22, 2010, The Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”) was signed by the President of the United States of America. Under the Modernization Act, a Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Post-enactment losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.

Capital loss carryforwards as of September 30, 2014 are as follows:

 

                         Non-Expiring  
Fund   2016      2017      2018      Short Term      Long Term  

Emerging India Fund

                          $ 698,466       $   

Emerging Markets Select Fund

                            2,430,234           

Small Cap Value Fund

                    40,431,423                   

Income Fund

    348,589                                   

U.S. Treasury Fund

                          $ 10,028,544       $ 1,662,358   

The Funds have elected to defer losses incurred from November 1, 2013 through September 30, 2014 in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the following fiscal year. The Funds have elected to defer losses as follows:

 

Fund    Post-October
Capital Losses
     Late-Year Ordinary
Losses
 

Core Growth Fund

   $       $ 3,495,422   

Emerging Markets Small Cap Fund

     9,930,904           

Micro Cap Fund

             4,090,280   

Micro Cap Value Fund

             680,747   

Small Cap Growth Fund

             14,605,038   

Small Cap Value Fund

             1,019,565   

Ultra Growth Fund

             1,445,037   

World Innovators Fund

             1,851,894   

Income Fund

     55,093           

During the tax year ended September 30, 2014, the Funds used capital loss carryforwards in the following amounts:

 

Fund    Amount Used  

Emerging India Fund

   $ 215,221   

Frontier Emerging Small Countries Fund

     1,786,407   

Micro Cap Fund

     24,405,083   

Small Cap Value Fund

     26,134,332   

Income Fund

     119,324   

The tax character of distributions paid during the year ended September 30, 2014 was as follows:

 

2014   Core
Growth
Fund
     Emerging
India
Fund
     Emerging
Markets
Select
Fund
     Emerging
Markets
Small Cap
Fund
     Frontier
Emerging
Small
Countries
Fund
 

Ordinary income

  $       $  —       $ 86,248       $       $ 1,526,061   

Capital gain

    13,739,267                         38,681,425           
 

 

 

 

Total

  $ 13,739,267       $       $ 86,248       $ 38,681,425       $ 1,526,061   
 

 

 

 

 

124


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  SEPTEMBER 30, 2014

 

 

 

2014   Global
Opportunities
Fund
     Heritage
Growth
Fund
     International
Growth
Fund
     International
Opportunities
Fund
     Large Cap
Value
Fund
 

Ordinary income

  $       $ 136,866       $       $       $ 11,919,583   

Capital gain

    23,550,252         2,918,976         35,584,097         18,321,459         221,028,939   
 

 

 

 

Total

  $ 23,550,252       $ 3,055,842       $ 35,584,097       $ 18,321,459       $ 232,948,522   
 

 

 

 
2014   Long/Short
Fund
     Micro
Cap
Fund
     Micro Cap
Value
Fund
     Small Cap
Growth
Fund
     Small Cap
Value
Fund
 

Ordinary income

  $ 14,828,654       $       $ 3,014,418       $ 12,739,948       $   

Capital gain

    39,911,334                 25,279,419         69,484,983           
 

 

 

 

Total

  $ 54,739,988       $       $ 28,293,837       $ 82,224,931       $   
 

 

 

 
2014   Strategic
Income
Fund
     Ultra
Growth
Fund
     World
Innovators
Fund
     Income
Fund
     U.S.
Treasury
Fund
 

Ordinary income

  $ 2,280,004       $       $       $ 2,049,307       $ 5,436,357   

Capital gain

    1,019,765         10,009,711         14,888,675                   
 

 

 

 

Total

  $ 3,299,769       $ 10,009,711       $ 14,888,675       $ 2,049,307       $ 5,436,357   
 

 

 

 

The tax character of distributions paid during the year ended September 30, 2013 was as follows:

 

2013   Core
Growth
Fund
     Emerging
India
Fund
     Emerging
Markets
Select
Fund
     Emerging
Markets
Small Cap
Fund
     Frontier
Emerging
Small
Countries
Fund
 

Ordinary income

  $       $       $       $ 7,553,551       $ 198,818   

Capital gain

                                      
 

 

 

 

Total

  $       $       $       $ 7,553,551       $ 198,818   
 

 

 

 
2013   Global
Opportunities
Fund
     Heritage
Growth
Fund
     International
Growth
Fund
     International
Opportunities
Fund
     Large Cap
Value
Fund
 

Ordinary income

  $       $ 128,220       $ 2,056,223       $       $ 14,785,164   

Capital gain

    17,635,551         4,533,509                         10,882,197   
 

 

 

 

Total

  $ 17,635,551       $ 4,661,729       $ 2,056,223       $       $ 25,667,361   
 

 

 

 
2013   Long/Short
Fund
     Micro
Cap
Fund
     Micro Cap
Value
Fund
     Small Cap
Growth
Fund
     Small Cap
Value
Fund
 

Ordinary income

  $       $       $       $       $   

Capital gain

    3,814,719                 12,598,831         120,513,937           
 

 

 

 

Total

  $ 3,814,719       $       $ 12,598,831       $ 120,513,937       $   
 

 

 

 
2013   Strategic
Income
Fund
     Ultra
Growth
Fund
     World
Innovators
Fund
     Income
Fund
     U.S.
Treasury
Fund
 

Ordinary income

  $ 1,250,372       $       $       $ 2,251,846       $ 6,003,335   

Capital gain

    533,103         18,153,849                         5,092,088   
 

 

 

 

Total

  $ 1,783,475       $ 18,153,849       $       $ 2,251,846       $ 11,095,423   
 

 

 

 

The tax character of distributions paid may differ from that shown in the Statements of Changes in Net Assets due to short-term gains being treated as ordinary income for tax purposes.

 

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WASATCH FUNDS — Notes to Financial Statements (continued)  

 

 

 

8. RELATED PARTY TRANSACTIONS

Investment Advisory Fees, Expense Limitations — As the Funds’ investment advisor, the Advisor receives a monthly fee calculated on average daily net assets. The Advisor has contractually agreed to waive its fees and/or reimburse certain Funds should a Fund’s operating expenses exceed a specified annual limitation through at least January 31, 2016. If operating expenses are less than the specified expense limit for the Fund, the Advisor shall be entitled to reimbursement of the fees waived or reduced to the extent that the operating expenses and the amounts reimbursed do not exceed such expense limit for the Fund, under the period of the agreement currently through January 31, 2016. Such reimbursement shall be paid only while the expense limitation agreement is in effect and only if such amount paid, together with all other amounts reimbursed under this agreement in the fiscal year, do not cause the Fund to exceed the expense limitation. All amounts not recovered at the end of the period expire on January 31, 2016. Ordinary operating expenses exclude any interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment-related costs and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Funds’ business. The costs of the Proxy Statement related to the identification and shareholder approval of Trustee Nominees were treated as extraordinary expenses in the 2010 fiscal year. The impact of these payments is reflected in the net expense ratios in the Financial Highlights. In late October 2013, it was discovered that the Long/Short Fund and Large Cap Value Fund had a 12b-1 receivable on the books which dated back to 2008 prior to the conversion of the 1st Source Funds to Wasatch Funds. It was determined that the amount should be written off as an extraordinary expense and posted to other expenses. The balance for the Large Cap Value Fund was $70,993 and the Long/Short Fund was $8,622. The impact of these write-offs is reflected on the Statements of Operations and in the Financial Highlights. Investment advisory fees and fees waived, if any, for the year ended September 30, 2014 are disclosed in the Statements of Operations. Investment advisory fee and expense limitation annual rates are shown below.

 

Fund   Advisory
Fee
     Expense
Limitation
Investor Class
     Expense
Limitation
Institutional Class
     Contractual Expense
Limitation/
Reimbursement
Recoverable
Expiration Date
     Reimbursement
Recoverable
 

Core Growth Fund

    1.00      1.50      1.12      1/31/2016       $ 19,950   

Emerging India Fund

    1.50      1.95      N/A         1/31/2016         103,328   

Emerging Markets Select Fund

    1.25      1.69      1.50      1/31/2016         96,321   

Emerging Markets Small Cap Fund

    1.75      1.95      N/A         1/31/2016         2,540,033   

Frontier Emerging Small Countries Fund

    1.75      2.25      N/A         1/31/2016         19,996   

Global Opportunities Fund

    1.50      1.95      N/A         1/31/2016           

Heritage Growth Fund

    0.70      0.95      N/A         1/31/2016           

International Growth Fund

    1.25      1.75      N/A         1/31/2016           

International Opportunities Fund

    1.95      2.25      N/A         1/31/2016         395,783   

Large Cap Value Fund

    0.90      1.10      0.98      1/31/2016         18,153   

Long/Short Fund

    1.10      N/A         1.17      1/31/2016           

Micro Cap Fund

    1.75 %1       1.95 %1       N/A         1/31/2016           

Micro Cap Value Fund

    1.75 %1       1.95 %1       N/A         1/31/2016         96,356   

Small Cap Growth Fund

    1.00      1.50      N/A         1/31/2016           

Small Cap Value Fund

    1.00      1.50      1.15      1/31/2016         18,463   

Strategic Income Fund

    0.70      0.95      N/A         1/31/2016         10,028   

Ultra Growth Fund

    1.00      1.50      N/A         1/31/2016           

World Innovators Fund

    1.50      1.95      N/A         1/31/2016           

Income Fund

    0.55      N/A         N/A         N/A         N/A   

U.S. Treasury Fund

    0.50      0.75      N/A         1/31/2016           

 

1  Prior to January 31, 2014, the advisory fee and expense limitation was 1.95% and 2.25%, respectively.

Affiliated Trades — Certain Funds are permitted to purchase or sell securities from or to certain related affiliated funds under specified conditions outlined in the procedures adopted by the Board of Trustees (the “Board”). The procedures have been designed to ensure that any purchase or sale of securities by the Funds from or to another fund (or funds) that are, or could be, considered an affiliate by virtue of having a common investment advisor (or affiliated investment advisors), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further each transaction is effected at the current market price, as that term is defined under the procedures. During the year ended September 30, 2014, the Funds had no purchases or sales of securities pursuant to Rule 17a-7 of the 1940 Act.

Institutional Class Legal Fees — As disclosed in the annual report dated September 30, 2011, the Board approved a multi-class plan pursuant to which the Board has established and designated two classes for each series known as Investor Class shares and Institutional Class shares. The Advisor paid the legal costs associated with the establishment and designation of the new share classes for existing funds.

Payments by Advisor — During the 2012 fiscal year the Advisor discovered a trade allocation error involving several of the Wasatch Funds. In August 2012, the Advisor reimbursed the Global Opportunities Fund $1,167, the Micro Cap Fund $1,074, the Micro Cap Value Fund $1,282, the Small Cap Growth Fund $46,199, the Ultra Growth Fund $940 and the World Innovators Fund $437 as reimbursement for the error plus interest.

 

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  SEPTEMBER 30, 2014

 

 

 

During the 2013 and 2014 fiscal years, the Advisor paid certain audit, legal and/or printing fees in the Core Growth, Emerging Markets Small Cap, Large Cap Value, Long/Short Institutional Class, Small Cap Growth, Small Cap Value, Strategic Income and World Innovators Funds. The Advisor does not intend to be reimbursed for these amounts.

On February 20, 2013, the Advisor discovered a trade error involving the Frontier Emerging Small Countries Fund. The Advisor reimbursed the Fund $4,421.

The impact of the payments detailed above is reflected in the net expense ratios in the Financial Highlights.

10% Shareholders — As of September 30, 2014, the Funds had individual shareholder accounts and/or omnibus shareholder accounts (comprised of a group of individual shareholders), which individually amounted to more than 10% of the total shares outstanding of the Fund as detailed below:

 

     Number of
Accounts
     % of Shares
Outstanding
 

Core Growth Fund

    2         57.71

Emerging India Fund

    2         62.91

Emerging Markets Select Fund

    2         83.89

Emerging Markets Small Cap Fund

    2         55.03

Frontier Emerging Small Countries Fund

    2         72.41

Global Opportunities Fund

    2         65.52

Heritage Growth Fund

    2         45.69

International Growth Fund

    2         52.31

International Opportunities Fund

    1         55.27

Large Cap Value Fund

    2         73.57

Long/Short Fund

    2         75.50

Micro Cap Fund

    2         27.39

Micro Cap Value Fund

    2         47.72

Small Cap Growth Fund

    2         51.61

Small Cap Value Fund

    2         42.51

Strategic Income Fund

    3         60.80

Ultra Growth Fund

    2         28.88

World Innovators Fund

    2         42.22

Income Fund

    2         81.02

U.S. Treasury Fund

    3         62.80

Affiliated Interests — As of September 30, 2014, Wasatch Advisors, Inc. and its affiliates, and the retirement plans of Wasatch Advisors, Inc. and its affiliates, held shares of the Funds which may be redeemed at any time as detailed below:

 

    

Number of

Accounts*

    

% of Shares

Outstanding

 

Core Growth Fund

    16         0.45

Emerging India Fund

    15         19.41

Emerging Markets Select Fund

    14         8.48

Emerging Markets Small Cap Fund

    19         0.49

Frontier Emerging Small Countries Fund

    26         0.61

Global Opportunities Fund

    22         1.97

Heritage Growth Fund

    9         3.60

International Growth Fund

    13         0.41

International Opportunities Fund

    23         2.88

Large Cap Value Fund

    13         0.31

Long/Short Fund

    12         0.19

Micro Cap Fund

    11         0.81

Micro Cap Value Fund

    14         2.07

Small Cap Growth Fund

    20         1.43

Small Cap Value Fund

    8         1.47

Strategic Income Fund

    7         17.21

Ultra Growth Fund

    8         1.83

World Innovators Fund

    8         1.49

Income Fund

    2         0.01

U.S. Treasury Fund

    5         0.72

 

* Multiple accounts with the same beneficial owner are treated as one account

Payments by Former Service Provider — BISYS Fund Services, Inc. (“BISYS”) is a former service provider to the Large Cap Value Fund, Long/Short Fund and Income Fund. In August 2010, these funds received a one-time payment from the BISYS Fair Fund (a fund established pursuant to a settlement between the SEC and BISYS that requires, among other things, a distribution of settlement monies from the Fair Fund to benefit affected mutual funds). The impact of these payments is reflected in the net expense ratios in the Financial Highlights.

 

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Table of Contents
WASATCH FUNDS — Notes to Financial Statements (continued)  

 

 

 

9. TRANSACTIONS WITH AFFILIATES

If a Fund’s holding represents ownership of 5% or more of the voting securities of a company, the company is deemed to be an affiliate as defined by the 1940 Act. The following Funds conducted transactions during the year ended September 30, 2014 with an “affiliated company” as so defined:

 

     Share Activity     

Dividends
Credited to
Income for the
period ended
9/30/14

    

Gain (Loss)
Realized on
Sale of Shares
for the
period ended
9/30/14

 
      Balance
9/30/13
     Purchases/
Additions
     Sales/
Reductions
     Balance
9/30/14
       

Emerging Markets Small Cap Fund

                 

KONA I Co. Ltd.*

     584,258         11,367         135,545         460,080       $ 86,458       $ (167,779

 

 

International Growth Fund

                 

Diligent Board Member Services, Inc.

     4,104,359         575,000                 4,679,359       $       $   

 

 

Long/Short Fund

                 

Bill Barrett Corp.

     2,304,957         1,872,802         334,500         3,843,259       $       $ 1,748,617   

Silicon Graphics International Corp.**

     2,330,509         490,429                 2,820,938                   

Swift Energy Co.*

     1,706,994         1,486,230         1,577,256         1,615,968                 (3,665,854

 

 

Micro Cap Fund

                 

Goldwater Bank, N.A.

     154,000                         154,000       $       $   

 

 

Small Cap Growth Fund

                 

Blue Nile, Inc.

     999,639                 213,048         786,591       $       $ (4,868,353

Cempra, Inc.

     1,560,471         191,957                 1,752,428                   

Chefs’ Warehouse, Inc. (The)

     745,076         678,419                 1,423,495                   

Echo Global Logistics, Inc.

             1,383,181                 1,383,181                   

IPC The Hospitalist Co., Inc.

     678,732         351,287                 1,030,019                   

Knight Transportation, Inc.

     4,792,398         137,370         145,586         4,784,182         1,170,736         727,814   

SciQuest, Inc.

     899,468         716,486                 1,615,954                   

Zooplus AG*

     308,302                 124,445         183,857                 (969,182

 

* This security was deemed to no longer meet the criteria of an affiliated company at the reporting date.

 

** On March 5, 2014, a Schedule 13D was filed for Silicon Graphics International Corp. (“the Company”) on behalf of the Advisor and the Wasatch Long/Short Fund, including the portfolio managers Michael L. Shinnick and Ralph C. Shive (“Reporting Persons”).

10. RESTRICTED SECURITIES

The Funds may own investments that were purchased through private placement transactions or under Rule 144A of the Securities Act of 1933 (the “Securities Act”) and cannot be sold without prior registration under the Securities Act or may be limited due to certain restrictions. These securities are generally deemed to be illiquid and are valued at fair value as determined by a designated Pricing Committee of the Advisor (“Pricing Committee”), comprised of personnel of the Advisor, with oversight by the Board of Trustees and in accordance with Board-approved Pricing Policies and Procedures. If and when such securities are registered, the costs of registering such securities are paid by the issuer. At September 30, 2014 the Funds held the following restricted securities:

 

      Security
Type
   Acquisition
Date
   Cost      Fair
Value
     Value as %
of Net Assets
 

Micro Cap Fund

              

Goldwater Bank, N.A.

   Common Stock    2/28/07    $ 1,540,000       $ 32,340         0.01

 

 

Micro Cap Value Fund

              

Acetylon Pharmaceuticals, Inc., Series B

   Preferred Stock    2/3/11 - 5/25/12    $ 499,999       $ 1,366,314         0.86

Goldwater Bank, N.A.

   Common Stock    2/28/07      419,000         8,799         0.01

Idaho Trust Bancorp

   Common Stock    8/30/06      500,004         206,668         0.13

Northstar Healthcare, Inc.

   Common Stock—PIPE    9/25/14      1,083,528         971,041         0.61

Northstar Healthcare, Inc.

   Warrants    9/25/14              4,150         0.00
              
         $ 2,502,531       $ 2,556,972         1.61

 

128


Table of Contents
  SEPTEMBER 30, 2014

 

 

 

      Security
Type
   Acquisition
Date
   Cost      Fair
Value
     Value as %
of Net Assets
 

Small Cap Growth Fund

              

DataStax, Inc., Series E

   Preferred Stock    8/12/14    $ 8,000,002       $ 8,000,002         0.36

DocuSign, Inc., Series B

   Preferred Stock    3/3/14      437,256         437,256         0.02

DocuSign, Inc., Series B-1

   Preferred Stock    3/3/14      130,983         130,983         0.01

DocuSign, Inc., Series D

   Preferred Stock    3/3/14      313,930         313,930         0.01

DocuSign, Inc., Series E

   Preferred Stock    3/3/14      8,117,819         8,117,819         0.37

Drilling Info Holdings, Inc., Series B

   Preferred Stock    9/5/13      15,350,001         15,350,001         0.69

Greenspring Global Partners II-B, L.P.

   LP Interest    10/10/03 - 7/21/14      3,297,078         3,166,752         0.14

Greenspring Global Partners III-B, L.P.

   LP Interest    3/16/06 - 7/21/14      1,337,617         1,348,923         0.06

Nanosys, Inc., Series D

   Preferred Stock    11/8/05      2,000,000         366,848         0.02

Nanosys, Inc., Series E

   Preferred Stock    8/13/10      184,939         183,211         0.01
              
         $ 39,169,625       $ 37,415,725         1.69

 

 

Strategic Income Fund

              

Redcorp Ventures Ltd., 13.00%, 7/11/12, Series D

   Corporate Bonds    7/5/07 - 8/19/14    $ 152,583       $ 1,125         0.00

Star Asia Financial Ltd.

   Common Stock    2/22/07 - 3/19/10      305,812         231,214         0.24
              
         $ 458,395       $ 232,339         0.24

 

 

Ultra Growth Fund

              

Data Sciences International, Inc., Series B

   Preferred Stock    1/20/06    $ 475,001       $ 729,027         0.71

Drilling Info Holdings, Inc., Series B

   Preferred Stock    9/5/13      1,150,001         1,150,001         1.12

Greenspring Global Partners II-B, L.P.

   LP Interest    10/10/03 - 7/21/14      2,967,366         2,850,066         2.77

Greenspring Global Partners III-B, L.P.

   LP Interest    3/16/06 - 7/21/14      1,337,617         1,348,923         1.31

Nanosys, Inc., Series D

   Preferred Stock    11/8/05      500,001         91,712         0.09

Nanosys, Inc., Series E

   Preferred Stock    8/13/10      46,235         45,803         0.05

TherOx, Inc., Series I

   Preferred Stock    7/7/05      1,000,000         2,439         0.00

Xtera Communications, Inc.

   Common Stock    9/3/03      99,065         914         0.00
              
         $ 7,575,286       $ 6,218,885         6.05

 

 

World Innovators Fund

              

Greenspring Global Partners II-B, L.P.

   LP Interest    10/10/03 - 7/21/14    $ 329,706       $ 316,673         0.13

Xtera Communications, Inc.

   Common Stock    9/3/03      7,076         65         0.00
              
         $ 336,782       $ 316,738         0.13

11. PURCHASE COMMITMENTS

In September 2003, the Small Cap Growth, Ultra Growth and World Innovators Funds entered into subscription agreements to acquire limited partnership interests in Greenspring Global Partners II-B, L.P. The remaining commitment amounts at September 30, 2014 were $150,000, $135,000 and $15,000, respectively.

In December 2005, the Small Cap Growth and Ultra Growth Funds entered into subscription agreements to acquire limited partnership interests in Greenspring Global Partners III-B, L.P. The remaining commitment amounts at September 30, 2014 were $75,000 per Fund.

Securities held by the Funds have been designated to meet these purchase commitments as indicated in the Schedules of Investments.

12. LINE OF CREDIT

Effective May 23, 2014, the Funds in the Trust renewed and amended agreements for two open lines of credit totaling $300,000,000, one of which is $100,000,000 uncommitted, and the other of which is $200,000,000 committed, with State Street Bank and Trust Company (together, the “Line”). The agreements, as amended, increased the amounts available on the Line from the prior total of $75,000,000, with $25,000,000 uncommitted and $50,000,000 committed. The Funds incur commitment fees on the undrawn portion of the committed part of the Line, and interest expense to the extent of amounts drawn (borrowed) under the entire Line. Interest is based on the higher of (a) the Federal Funds rate as in effect on the date of borrowing, plus a margin, or (b) the overnight London Interbank Offered Rate (LIBOR) as in effect on the date of borrowing, plus a margin. Commitment fees are pro-rated among the Funds based upon relative average net assets. Interest expense is charged directly to a Fund based upon actual amounts borrowed by that Fund.

 

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For the year ended September 30, 2014, the following Funds had borrowings:

 

     Average Daily
Borrowings
       Number of
Days
Outstanding
       Interest
Expense
       Weighted
Average
Annualized
Interest Rate
       Balance at
9/30/14
 

Core Growth Fund

  $ 1,098,806           2           82           1.35      $   

Emerging India Fund

    140,131           37           158           1.10          

Emerging Markets Select Fund

    1,517,448           30           1,652           1.31          

Emerging Markets Small Cap Fund

    5,818,951           37           7,151           1.20          

Frontier Emerging Small Countries Fund

    4,772,840           12           2,124           1.34          

Global Opportunities Fund

    1,471,316           63           3,004           1.17          

International Growth Fund

    8,323,781           9           2,807           1.35        3,821,399   

International Opportunities Fund

    1,270,252           2           95           1.35          

Large Cap Value Fund

    6,883,222           28           5,914           1.10          

Small Cap Growth Fund

    7,080,826           45           11,699           1.32          

Ultra Growth Fund

    2,745,437           12           998           1.09          

World Innovators Fund

    565,936           4           85           1.35          

Income Fund

    225,344           26           210           1.29          

13. PRINCIPAL RISKS

Market and Credit Risk — In the normal course of business the Funds trade financial instruments and enter into financial transactions where risk of loss exists due to changes in the market (market risk) or failure of the other party to a transaction to perform (credit risk). Similar to credit risk, the Funds may be exposed to counterparty risk, or the risk that an institution or other entity with which the Funds have unsettled or open transactions will default. The potential loss could exceed the value of the financial assets recorded in the financial statements. Financial assets, which potentially expose the Funds to credit risk, consist principally of cash due from counterparties and investments. The extent of the Funds’ exposure to credit and counterparty risks with respect to these financial assets approximates their carrying value as recorded in the Funds’ Statements of Assets and Liabilities.

Non-Diversification Risk — A non-diversified fund can invest a larger portion of its assets in the stocks of a limited number of companies than a diversified fund, which means it may have more exposure to the price movements of a single security or small group of securities than funds that diversify their investments among many companies. The Emerging Markets Select and Frontier Emerging Small Countries Funds are non-diversified.

Inflation Risk — Inflation risk is the possibility that inflation will reduce the purchasing power of a currency, and subsequently reduce the value of a security or asset, and may result in rising interest rates. Inflation is the overall upward price movement of goods and services in an economy that causes the value of a currency to decline.

Interest Rate Risk — Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. A rise in interest rates typically causes a fall in values. Interest rate risk should be modest for shorter-term securities, moderate for intermediate-term securities and high for longer-term securities. Generally, an increase in the average maturity of a fund will make it more sensitive to interest rate risk. The interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Foreign Currency Risk — If a fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the U.S. dollar. This also includes the risk associated with higher transaction costs, delayed settlements, currency controls and adverse economic developments related to foreign investments.

Region Risk — The Funds, except the U.S. Treasury Fund, invest in equity and fixed income securities of non-U.S. issuers. Although the Funds maintain diversified investment portfolios, political or economic developments within a particular country or region may have an adverse effect on the ability of domiciled issuers to meet their obligations. These risks are exaggerated for securities of issuers tied economically to emerging and frontier market countries. Additionally, political or economic developments may have an adverse effect on the liquidity and volatility of portfolio securities and currency holdings.

Shareholder Concentration Risk — A significant portion of the net assets of the Frontier Emerging Small Countries Fund and International Opportunities Fund are owned by a group of shareholders advised by a common investment advisor. If this group of shareholders simultaneously redeems on the advice of their investment advisor, Fund expenses may increase and performance may be materially affected. However, the Advisor has contractually agreed to waive its fees and/or reimburse both the Frontier Emerging Small Countries Fund and the International Opportunities Fund should their operating expenses exceed 2.25% through at least January 31, 2016. The Emerging Markets Select Fund also has a significant portion of net assets concentrated in relatively few related accounts. The Advisor has contractually agreed to waive its fees and/or reimburse the Emerging Markets Select Fund should the operating expenses exceed 1.69% for the Investor Class and 1.50% for the Institutional Class through at least January 31, 2016.

 

 

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14. FAIR VALUE MEASUREMENTS AND INVESTMENTS

The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds use various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP established a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:

 

  Ÿ   Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access.

 

  Ÿ   Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. The inputs may include quoted prices for the identical investment on an inactive market, prices for similar investments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

 

  Ÿ   Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether a security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

Equity Securities (common and preferred stock) —  Securities are valued as of the close of the New York Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern Time) on the valuation date. Equity securities and listed warrants are valued using a commercial pricing service at the last quoted sales price taken from the primary market in which each security trades and, with respect to equity securities traded on the National Association of Securities Dealer Automated Quotation system (“NASDAQ”), such securities are valued using the NASDAQ Official Closing Price (“NOCP”) or last sales price if no NOCP is available. If there are no sales on the primary exchange or market on a day, then the security shall be valued at the mean of the last bid and ask price on the primary exchange or market as provided by a pricing service. If the mean cannot be calculated or there is no trade activity on a day, then the security shall be valued at the previous trading day’s price as provided by a pricing service. In some instances, particularly on foreign exchanges, an official close or evaluated price may be used if

the pricing service is unable to provide the last trade or most recent mean price. To the extent that these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy. Additionally, a fund’s investments are valued at fair value by the Pricing Committee if the Advisor determines that an event impacting the value of an investment occurred between the closing time of a security’s primary market or exchange (for example, a foreign exchange or market) and the time the fund’s share price is calculated. Significant events include, but are not limited to the following: significant fluctuations in domestic markets, foreign markets or foreign currencies; occurrences not directly tied to the securities markets such as natural disasters, armed conflicts or significant governmental actions; and major announcements affecting a single issuer or an entire market or market sector. In responding to a significant event, the Pricing Committee determines the fair value of affected securities by considering factors including, but not limited to: index options and futures traded subsequent to the close; American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) or other related receipts; currency spot or forward markets that trade after pricing of the foreign exchange; other derivative securities traded after the close such as Standard & Poor’s Depositary Receipts (“SPDRs”) and other exchange-traded funds (“ETFs”); and alternative market quotes on the affected securities. When applicable, the Funds use a systematic fair valuation model provided by an independent third party to assist in adjusting the valuation of foreign securities. When a Fund uses this fair value pricing method, the values assigned to the Fund’s foreign securities may not be the quoted or published prices of the investments on their primary markets or exchanges, and the securities are categorized in Level 2 of the fair value hierarchy. These valuation procedures apply equally to long or short equity positions in a fund.

Participation Notes — Investments are valued at the market price of the underlying security. Counterparty risk is regularly reviewed and considered for valuation.

Corporate Debt Securities — Investments are valued at current market value by a pricing service, or by using the last sale or bid price based on observable inputs. Observable inputs may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Although most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where observable inputs are not available, they are categorized as Level 3.

Short-Term Notes — Investments maturing in 60 days or less at the time of purchase, are generally valued at amortized cost, unless it is determined that the amortized cost method would not represent fair value, in which case the securities are marked-to-market. To the extent the inputs are observable and timely, the values would be categorized in Level 2 of the fair value hierarchy.

Asset-Backed Securities — Investments are priced using the closing bid as supplied by a pricing service based on

 

 

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observable inputs. Observable inputs may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications, new issue data, monthly payment information and collateral performance. Although most asset-backed securities are categorized in Level 2 of the fair value hierarchy, in instances where observable inputs are not available, they are categorized as Level 3.

U.S. Government Issuers — Investments are priced using the closing bid as supplied by a pricing service based on observable inputs. Observable inputs may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Although most U.S. government bonds are categorized in Level 2 of the fair value hierarchy, in instances where observable inputs are not available, they are categorized as Level 3.

Derivative Instruments — Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. Exchange-traded options are valued at the last sale price in the market where they are principally traded. If there are no sales on the primary exchange or market on a given day, then the option is valued at the mean of the last bid price and ask price on the primary exchange or market as provided by a pricing service. Forward foreign currency contracts are valued at the market rate provided by the pricing service.

Restricted Securities — If market quotations are not readily available for the Funds’ investments in securities such as restricted securities, private placements, securities for which trading has been halted or other illiquid securities, these investments are valued at fair value in accordance with Board-approved Pricing Policies and Procedures by the Pricing Committee with oversight by the Board of Trustees. Fair value is defined as the price that would be received upon the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under current market conditions. For each applicable investment that is fair valued, the Pricing Committee considers, to the extent applicable, various factors including, but not limited to, the financial condition of the company or limited partnership, operating results, prices paid in follow-on rounds, comparable companies in the public market, the nature and duration of the restrictions for holding the securities, a stated net asset value (NAV) for the partnership, if applicable, and other relevant factors. Depending on the relative significance of valuation inputs, these instruments may be classified in either Level 2 or Level 3 of the fair value hierarchy.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on days the NYSE is closed, which could result in differences between the value of a fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the fund for financial reporting purposes.

 

The following is a summary of the fair valuations according to the inputs used as of September 30, 2014 in valuing the Funds’ assets and liabilities:

 

Fund    Category    Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
     Value at
9/30/14
 

Core Growth Fund

              

Assets

              

Common Stocks

      $ 897,400,317       $       $       $ 897,400,317   

Short-Term Investments

                13,047,775                 13,047,775   
     

 

 

 
      $ 897,400,317       $ 13,047,775       $       $ 910,448,092   
     

 

 

 

Emerging India Fund

              

Assets

              

Common Stocks

      $ 39,137,507       $       $       $ 39,137,507   

Short-Term Investments

                4,616,986                 4,616,986   
     

 

 

 
      $ 39,137,507       $ 4,616,986       $       $ 43,754,493   
     

 

 

 

 

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Fund    Category    Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
     Value at
9/30/14
 

Emerging Markets Select Fund

              

Assets

              

Common Stocks

   Health Care Facilities    $ 1,177,155       $ 875,298       $       $ 2,052,453   
   Other      56,021,577                         56,021,577   

Short-Term Investments

                247,198                 247,198   
     

 

 

 
      $ 57,198,732       $ 1,122,496       $       $ 58,321,228   
     

 

 

 

Emerging Markets Small Cap Fund

              

Assets

              

Common Stocks

   Construction Materials    $ 42,110,195       $ 18,984,264       $       $ 61,094,459   
   Electronic Manufacturing Services              8,745,595                 8,745,595   
   Health Care Facilities      10,405,584         7,832,670                 18,238,254   
   Home Improvement Retail              7,380,582                 7,380,582   
   Hotels, Resorts & Cruise Lines      49,222,081         24,874,496                 74,096,577   
   Other      1,246,174,765                         1,246,174,765   

Short-Term Investments

                6,725,048                 6,725,048   
     

 

 

 
      $ 1,347,912,625       $ 74,542,655       $       $ 1,422,455,280   
     

 

 

 

Frontier Emerging Small Countries Fund

              

Assets

              

Common Stocks

   Restaurants    $       $ 26,737,112       $       $ 26,737,112   
   Other      1,209,448,984                         1,209,448,984   

Participation Notes

                45,492,810                 45,492,810   

Short-Term Investments

                35,570,196                 35,570,196   
     

 

 

 
      $ 1,209,448,984       $ 107,800,118       $       $ 1,317,249,102   
     

 

 

 

Global Opportunities Fund

              

Assets

              

Common Stocks

      $ 187,941,052       $       $       $ 187,941,052   

Participation Notes

                2,363,321                 2,363,321   

Short-Term Investments

                2,300,784                 2,300,784   
     

 

 

 
      $ 187,941,052       $ 4,664,105       $       $ 192,605,157   
     

 

 

 

Heritage Growth Fund

              

Assets

              

Common Stocks

      $ 110,067,948       $       $       $ 110,067,948   

Short-Term Investments

                9,319,814                 9,319,814   
     

 

 

 
      $ 110,067,948       $ 9,319,814       $       $ 119,387,762   
     

 

 

 

International Growth Fund

              

Assets

              

Common Stocks

      $ 1,392,495,147       $       $       $ 1,392,495,147   
     

 

 

 
      $ 1,392,495,147       $       $       $ 1,392,495,147   
     

 

 

 

International Opportunities Fund

              

Assets

              

Common Stocks

   Apparel, Accessories & Luxury Goods    $ 5,337,311       $ 1,071,488       $       $ 6,408,799   
   Building Products      3,352,638         1,281,189                 4,633,827   
   Food Distributors              2,614,374                 2,614,374   
   Household Products      6,924,230         2,718,328                 9,642,558   
   Pharmaceuticals      9,276,444         892,500                 10,168,944   
   Other      297,671,746                         297,671,746   

Short-Term Investments

                5,224,617                 5,224,617   
     

 

 

 
      $ 322,562,369       $ 13,802,496       $       $ 336,364,865   
     

 

 

 

Large Cap Value Fund

              

Assets

              

Common Stocks

      $ 412,031,325       $       $       $ 412,031,325   

Short-Term Investments

                5,038,500                 5,038,500   
     

 

 

 
      $ 412,031,325       $ 5,038,500       $       $ 417,069,825   
     

 

 

 

 

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Fund    Category    Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
     Value at
9/30/14
 

Long/Short Fund

              

Assets

              

Common Stocks

      $ 2,274,638,540       $       $       $ 2,274,638,540   

Short-Term Investments

                414,928,217                 414,928,217   
     

 

 

 
      $ 2,274,638,540       $ 414,928,217       $       $ 2,689,566,757   
     

 

 

 

Liabilities

              

Equity Contracts

      $ (3,064,930    $       $       $ (3,064,930

Securities Sold Short

        (293,828,427                      (293,828,427
     

 

 

 
      $ (296,893,357    $       $       $ (296,893,357
     

 

 

 

Micro Cap Fund

              

Assets

              

Common Stocks

   Specialized Finance    $       $       $ 32,340       $ 32,340   
   Other      281,843,368                         281,843,368   

Short-Term Investments

                13,796,424                 13,796,424   
     

 

 

 
      $ 281,843,368       $ 13,796,424       $ 32,340       $ 295,672,132   
     

 

 

 

Micro Cap Value Fund

              

Assets

              

Common Stocks

   Diversified Banks    $ 1,809,181       $       $ 206,668       $ 2,015,849   
   Health Care Services      2,831,092                 971,041         3,802,133   
   Personal Products      1,350,900         1,980,000                 3,330,900   
   Specialized Finance                      8,799         8,799   
   Other      136,784,860                         136,784,860   

Preferred Stocks

   Pharmaceuticals                      1,366,314         1,366,314   
   Other      1,177,879                         1,177,879   

Warrants

                        4,150         4,150   

Short-Term Investments

                9,012,804                 9,012,804   
     

 

 

 
      $ 143,953,912       $ 10,992,804       $ 2,556,972       $ 157,503,688   
     

 

 

 

Liabilities

              

Equity Contracts

      $ (196,500    $       $       $ (196,500
     

 

 

 
      $ (196,500    $       $       $ (196,500
     

 

 

 

Small Cap Growth Fund

              

Assets

              

Common Stocks

      $ 2,166,543,062       $       $       $ 2,166,543,062   

Preferred Stocks

                        32,900,050         32,900,050   

Limited Partnership Interest

                        4,515,675         4,515,675   

Short-Term Investments

                20,033,263                 20,033,263   
     

 

 

 
      $ 2,166,543,062       $ 20,033,263       $ 37,415,725       $ 2,223,992,050   
     

 

 

 

Small Cap Value Fund

              

Assets

              

Common Stocks

      $ 275,641,990       $       $       $ 275,641,990   

Short-Term Investments

                4,009,099                 4,009,099   
     

 

 

 
      $ 275,641,990       $ 4,009,099       $       $ 279,651,089   
     

 

 

 

Strategic Income Fund

              

Assets

              

Common Stocks

   Diversified REITs    $       $ 231,214       $       $ 231,214   
   Other      83,230,490                         83,230,490   

Exchange-Traded Funds

        2,986,690                         2,986,690   

Limited Partnership Interest

        3,619,812                         3,619,812   

Corporate Bonds

                        1,125         1,125   

Short-Term Investments

                856,868                 856,868   
     

 

 

 
      $ 89,836,992       $ 1,088,082       $ 1,125       $ 90,926,199   
     

 

 

 

 

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Fund    Category    Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
     Value at
9/30/14
 

Ultra Growth Fund

              

Assets

              

Common Stocks

   Internet Software & Services    $ 10,239,315       $       $ 914       $ 10,240,229   
   Other      84,134,797                         84,134,797   

Preferred Stocks

                        2,018,982         2,018,982   

Limited Partnership Interest

                        4,198,989         4,198,989   

Short-Term Investments

                1,812,499                 1,812,499   
     

 

 

 
      $ 94,374,112       $ 1,812,499       $ 6,218,885       $ 102,405,496   
     

 

 

 

World Innovators Fund

              

Assets

              

Common Stocks

   Internet Software & Services    $ 35,957,930       $       $ 65       $ 35,957,995   
   Other      213,841,607                         213,841,607   

Limited Partnership Interest

                        316,673         316,673   

Short-Term Investments

                7,892,841                 7,892,841   
     

 

 

 
      $ 249,799,537       $ 7,892,841       $ 316,738       $ 258,009,116   
     

 

 

 

Income Fund

              

Assets

              

Asset-Backed Securities

      $       $ 6,972,202       $       $ 6,972,202   

Collateralized Mortgage Obligations

                15,944,723                 15,944,723   

Corporate Bonds

                48,343,921                 48,343,921   

Municipal Bonds

                2,533,619                 2,533,619   

Mutual Funds

        146,700                         146,700   

Exchange-Traded Funds

        1,728,160                         1,728,160   

U.S. Government Agency Securities

                27,415,793                 27,415,793   

U.S. Treasury Inflation Protected Bonds

                664,250                 664,250   

U.S. Treasury Notes

                9,719,567                 9,719,567   

Preferred Stocks

        894,600                         894,600   

Short-Term Investments

                1,759,306                 1,759,306   
     

 

 

 
      $ 2,769,460       $ 113,353,381       $       $ 116,122,841   
     

 

 

 

U.S. Treasury Fund

              

Assets

              

U.S. Government Obligations

      $       $ 222,971,128       $       $ 222,971,128   

Short-Term Investments

                948,683                 948,683   
     

 

 

 
      $       $ 223,919,811       $       $ 223,919,811   
     

 

 

 

If the securities of an Asset Class are all the same level, the asset class is shown in total. If the securities of an Asset Class cross levels, the level with the smallest number of categories and with multiple levels within a category is displayed by category. The remaining categories that do not cross levels are combined into the “Other” category.

The valuation techniques used by the Funds to measure fair value for the year ended September 30, 2014 maximized the use of observable inputs and minimized the use of unobservable inputs.

The Funds’ policy is to recognize transfers between levels at the end of the reporting period. The table below shows the significant transfers between Level 1 and Level 2 due to fair valuation in certain foreign markets.

 

Fund    Transfers Out
Of Level 1 at
Market Value
     Transfers Into
Level 2 at
Market Value
 

Frontier Emerging Small Countries Fund

   $ 26,737,112       $ 26,737,112   

 

Fund    Transfers Out
Of Level 2 at
Market Value
     Transfers Into
Level 1 at
Market Value
 

Emerging Markets Select Fund

   $ 1,925,403       $ 1,925,403   

Frontier Emerging Small Countries Fund

     8,153         8,153   

 

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WASATCH FUNDS — Notes to Financial Statements (continued)  

 

 

 

The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Funds during the year ended September 30, 2014:

 

Fund   Market Value
Beginning
Balance
9/30/2013
    Purchases
at Cost
    Sales
(Proceeds)
    Accrued
Discounts
(Premiums)
    Realized
Gain/
(Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Transfers
in at
Market
Value
    Transfers
out at
Market
Value
    Market
Value
Ending
Balance
9/30/2014
    Net Change in
Unrealized
Appreciation
(Depreciation) on
Investments Held
at 9/30/2014
 

Global Opportunities Fund

                   

Warrants

  $ 2,000      $      $      $   —      $ (5,000   $ 3,000      $   —      $   —      $      $   
 

 

 

 

Micro Cap Fund

                   

Common Stocks

    63,140                                    (30,800                   32,340        (30,800

Warrants

    16,125                             (40,313     24,188                               
 

 

 

 
    79,265                             (40,313     (6,612                   32,340        (30,800
 

 

 

 

Micro Cap Value Fund

                   

Common Stocks

    218,709        1,083,527                             (115,728                   1,186,508        (115,728

Preferred Stocks

    1,366,314                                                         1,366,314          

Warrants

    5,525                             (13,812     12,437                      4,150        4,150   
 

 

 

 
    1,590,548        1,083,527                      (13,812     (103,291                   2,556,972        (111,578
 

 

 

 

Small Cap Growth Fund

                   

Preferred Stocks

    16,375,768        16,999,990                             (475,708                   32,900,050        (1,647,301

Limited Partnership Interest

    4,342,253        210,000        (1,226,241            96,071        1,093,592                      4,515,675        1,093,592   
 

 

 

 
    20,718,021        17,209,990        (1,226,241            96,071        617,884                      37,415,725        (553,709
 

 

 

 

Strategic Income Fund

                   

Corporate Bonds

    1,030               (1,429            379        1,145                      1,125        101   
 

 

 

 

Ultra Growth Fund

                   

Common Stocks

    914                                                         914          

Preferred Stocks

    2,063,230                                    (44,248                   2,018,982        (337,147

Limited Partnership Interest

    4,023,003        195,000        (1,124,536            84,519        1,021,003                      4,198,989        1,021,003   

Warrants

    8,250                             (20,625     12,375                               
 

 

 

 
    6,095,397        195,000        (1,124,536            63,894        989,130                      6,218,885        683,856   
 

 

 

 

World Innovators Fund

                   

Common Stocks

    65                                                         65          

Limited Partnership Interest

    319,242        15,000        (101,701            11,542        72,590                      316,673        72,590   

Warrants

    3,575                             (8,938     5,363                               
 

 

 

 
    322,882        15,000        (101,701            2,604             77,953                      316,738        72,590   
 

 

 

 

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS

 

Fund   Description   Fair Value
at 9/30/14
    Valuation Technique   Unobservable Input   Range
(Average)
 

Micro Cap Value

  Direct Venture Capital Investments: Pharmaceuticals   $ 1,366,314      Probability of warrant exercise Probability of no warrant exercise   Exercise price Remaining value     *   

Micro Cap Value

  Direct Venture Capital Investments: Diversified Banks   $ 206,668      Book value   Book value multiple     1.0   

Micro Cap Value

  Private Investment in Public Equity: Health Care Services   $ 971,041      Amortized discount on common shares   Discount for lack of marketability     15%   

Small Cap Growth Fund

  Direct Venture Capital Investments: Biotechnology   $ 550,058      Market comparable companies   EV/R** multiple Discount for lack of marketability    

 

0.8 - 3.7(1.6

20%


  

Ultra Growth Fund

  Direct Venture Capital Investments: Health Care Technology   $ 729,027      Market comparable companies   EBITDA*** multiple EV/R** multiple Discount for lack of marketability    

 

 

4.0 - 17.6(12.9

0.5 - 4.0(2.0

20%


  

Ultra Growth Fund

 

Direct Venture Capital

Investments: Biotechnology

  $ 137,515      Market comparable companies   EV/R** multiple Discount for lack of marketability    

 

0.8 - 3.7(1.6

20%


  

 

* The exercise price of the warrant will be within a range; the actual price is not set at this time. As such, this valuation is directionally sensitive to the determination of the exercise price within the range.

 

** Enterprise-Value-To-Revenue Multiple — (“EV/R”) A measure of the value of a stock that compares a company’s enterprise value to its revenue.

 

*** Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is net income with interest, taxes, depreciation and amortization added back to it. EBITDA can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions.

 

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  SEPTEMBER 30, 2014

 

 

 

Changes in book value multiples, EBITDA multiples, and EV/R multiples, each in isolation, may change the fair value of an investment. Generally, a decrease in these multiples will result in a decrease in the fair value of an investment.

The Funds’ other Level 3 investments have been valued using unadjusted third-party transactions and quotations, unadjusted historical third party information or the unadjusted NAV of an investment in private investment companies. No unobservable inputs internally developed by the Funds have been applied to these investments, thus they have been excluded from the above table.

15. OFFSETTING

Each Fund is party to various netting arrangements. The FASB requires disclosure about certain netting arrangements and similar agreements to enable users of a Fund’s financial statements to evaluate the effect or potential effect of netting arrangements on the Fund’s financial position. The scope of the disclosure is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions.

The following tables present information about financial instruments that were subject to enforceable netting arrangements as of September 30, 2014:

REPURCHASE AGREEMENTS

 

         Gross Amounts Not Offset in the Statements of Assets and Liabilities  
Fund   Counterparty    Gross Asset Amounts
Presented in Statements
of Assets and Liabilities
     Financial
Instrument
     Collateral
Received1
    Net Amount
(not less
than 0)
 

Core Growth Fund

  State Street Bank and Trust Co.    $ 13,047,775       $   —       $ (13,047,775   $   —   

Emerging India Fund

  State Street Bank and Trust Co.      4,616,986                 (4,616,986       

Emerging Markets Select Fund

  State Street Bank and Trust Co.      247,198                 (247,198       

Emerging Markets Small Cap Fund

  State Street Bank and Trust Co.      6,725,048                 (6,725,048       

Frontier Emerging Small Countries Fund

  State Street Bank and Trust Co.      35,570,196                 (35,570,196       

Global Opportunities Fund

  State Street Bank and Trust Co.      2,300,784                 (2,300,784       

Heritage Growth Fund

  State Street Bank and Trust Co.      9,319,814                 (9,319,814       

International Opportunities Fund

  State Street Bank and Trust Co.      5,224,617                 (5,224,617       

Large Cap Value Fund

  State Street Bank and Trust Co.      5,038,500                 (5,038,500       

Long/Short Fund

  State Street Bank and Trust Co.      414,928,217                 (414,928,217       

Micro Cap Fund

  State Street Bank and Trust Co.      13,796,424                 (13,796,424       

Micro Cap Value Fund

  State Street Bank and Trust Co.      9,012,804                 (9,012,804       

Small Cap Growth Fund

  State Street Bank and Trust Co.      20,033,263                 (20,033,263       

Small Cap Value Fund

  State Street Bank and Trust Co.      4,009,099                 (4,009,099       

Strategic Income Fund

  State Street Bank and Trust Co.      856,868                 (856,868       

Ultra Growth Fund

  State Street Bank and Trust Co.      1,812,499                 (1,812,499       

World Innovators Fund

  State Street Bank and Trust Co.      7,892,841                 (7,892,841       

Income Fund

  State Street Bank and Trust Co.      1,759,306                 (1,759,306       

U.S. Treasury Fund

  State Street Bank and Trust Co.      948,683                 (948,683       

EXCHANGE-TRADED WRITTEN OPTIONS

 

  

    
         Gross Amounts Not Offset in the Statements of Assets and Liabilities  
Fund        

Gross Liability Amounts

Presented in Statements

of Assets and Liabilities

     Financial
Instrument
     Collateral
Pledged2
   

Net Amount

(Not Less
Than 0)

 

Long/Short Fund

     $ 3,064,930       $       $ (3,064,930   $   

Micro Cap Value Fund

       196,500                 (196,500       

 

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WASATCH FUNDS — Notes to Financial Statements (continued)  

 

 

 

SECURITIES BORROWED FOR SHORT SALES

 

  

         Gross Amounts Not Offset in the Statements of Assets and Liabilities  
Fund   Counterparty    Gross Liability Amounts
Presented in Statements
of Assets and Liabilities
     Financial
Instrument
     Collateral
Pledged2
  

Net Amount
(Not Less

Than 0)

 

Long/Short Fund

  JPMorgan Chase      $  293,828,427         $  —       $  (293,828,427)      $  —   

 

1  Repurchase agreements are classified as short-term investments in the Statements of Assets and Liabilities. The market value of the collateral received is greater than the amounts indicated in the table. For further information, see Note 3 and the Schedules of Investments.

 

2  The market value of the collateral received is greater than the amounts indicated in the table. For further information, see Note 3—Securities and Other Investments “Short Sales,” Note 4—Financial Derivative Instruments “Options Transactions” and the Schedules of Investments.

16. FAIR VALUE OF DERIVATIVE INSTRUMENTS*

The following is a summary of the fair valuations of the Funds’ derivative instruments categorized by risk exposure:

WASATCH INTERNATIONAL GROWTH FUND

The Effect of Derivative Instruments on the Statement of Operations for the year ended September 30, 2014:

 

     Derivatives not accounted for as hedging instruments under Statement 133  
      Interest Rate
Contracts
     Foreign Exchange
Contracts
     Credit
Contracts
     Equity
Contracts
     Other
Contracts
     Total  

Realized Gain (Loss) on Derivatives Recognized in Income

                 

Net realized gain (loss) on investments and foreign currency translations

     $  —         $(5,306,980)         $  —         $  —         $  —       $ (5,306,980
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

                 

Change in unrealized appreciation (depreciation) on investments, options and foreign currency translations

     $  —         $   8,792,817         $  —         $  —         $  —         $  8,792,817   
  

 

 

 

WASATCH INTERNATIONAL OPPORTUNITIES FUND

The Effect of Derivative Instruments on the Statement of Operations for the year ended September 30, 2014:

 

     Derivatives not accounted for as hedging instruments under Statement 133  
      Interest Rate
Contracts
     Foreign Exchange
Contracts
     Credit
Contracts
     Equity
Contracts
     Other
Contracts
     Total  

Realized Gain (Loss) on Derivatives Recognized in Income

                 

Net realized gain (loss) on investments and foreign currency translations

     $  —         $1,567,306         $  —         $  —         $  —         $1,567,306   
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

                 

Change in unrealized appreciation (depreciation) on investments, options and foreign currency translations

     $  —         $   335,161         $  —         $  —         $  —         $   335,161   
  

 

 

 

WASATCH LONG/SHORT FUND

Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of September 30, 2014:

 

     Derivatives not accounted for as hedging instruments under Statement 133  
      Interest Rate
Contracts
     Foreign Exchange
Contracts
     Credit
Contracts
     Equity
Contracts
     Other
Contracts
     Total  

Liabilities Derivatives

                 

Call options written at value

     $  —         $  —         $  —         $3,064,930         $  —         $3,064,930   
  

 

 

 

 

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Table of Contents
  SEPTEMBER 30, 2014

 

 

 

WASATCH LONG/SHORT FUND

The Effect of Derivative Instruments on the Statement of Operations for the year ended September 30, 2014:

 

     Derivatives not accounted for as hedging instruments under Statement 133  
      Interest Rate
Contracts
     Foreign Exchange
Contracts
     Credit
Contracts
     Equity
Contracts
     Other
Contracts
     Total  

Realized Gain (Loss) on Derivatives Recognized in Income

                 

Net realized gain on options written

     $  —         $  —         $  —       $ 5,865,618         $  —       $ 5,865,618   
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

                 

Change in unrealized appreciation (depreciation) on investments, options and foreign currency translations

     $  —         $  —         $  —       $ (4,764,641      $  —       $ (4,764,641
  

 

 

 

WASATCH MICRO CAP VALUE FUND

Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of September 30, 2014:

 

     Derivatives not accounted for as hedging instruments under Statement 133  
      Interest Rate
Contracts
     Foreign Exchange
Contracts
     Credit
Contracts
     Equity
Contracts
     Other
Contracts
     Total  

Liabilities Derivatives

                 

Call options written at value

     $  —         $  —         $  —       $ 196,500         $  —       $ 196,500   
  

 

 

 

The Effect of Derivative Instruments on the Statement of Operations for the year ended September 30, 2014:

 

     Derivatives not accounted for as hedging instruments under Statement 133  
      Interest Rate
Contracts
     Foreign Exchange
Contracts
     Credit
Contracts
     Equity
Contracts
     Other
Contracts
     Total  

Realized Gain (Loss) on Derivatives Recognized in Income

                 

Net realized gain on options written

     $  —         $  —         $  —       $ 1,322,199         $  —       $ 1,322,199   
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

                 

Change in unrealized appreciation (depreciation) on investments, options and foreign currency translations

     $  —         $  —         $  —       $ 43,676         $  —       $ 43,676   
  

 

 

 

 

* See Note 4 — Financial Derivative Instruments for additional information.

For the year ended September 30, 2014, the average monthly balance of outstanding derivative financial instruments was as follows:

 

    

International

Growth

Fund

     International
Opportunities
Fund
     Long/Short
Fund
    

Micro Cap

Value Fund

 

Forward currency contracts:

          

Average number of contracts — U.S. dollars purchased

    1       1                 

Average U.S. dollar amounts purchased

  $ 15,572,433       $ 2,387,091       $       $   

Option contracts:

          

Average number of call contracts written

                    6,714         1,042   

Average value of call contracts written

  $       $       $ 3,812,011       $ 219,293   

 

1  Amount represents less than 0.05.

17. SUBSEQUENT EVENTS

Management has evaluated the possibility of subsequent events and has determined that there are no additional events that would require adjustment to or additional disclosure in the Funds’ financial statements.

 

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Table of Contents

 

WASATCH FUNDS — Report of Independent Registered Public Accounting Firm   SEPTEMBER 30, 2014

 

 

 

To the Board of Trustees and Shareholders of

Wasatch Funds Trust:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Wasatch Core Growth Fund, Wasatch Emerging India Fund, Wasatch Emerging Markets Select Fund, Wasatch Emerging Markets Small Cap Fund, Wasatch Frontier Emerging Small Countries Fund, Wasatch Global Opportunities Fund, Wasatch Heritage Growth Fund, Wasatch International Growth Fund, Wasatch International Opportunities Fund, Wasatch Large Cap Value Fund, Wasatch Long/Short Fund, Wasatch Micro Cap Fund, Wasatch Micro Cap Value Fund, Wasatch Small Cap Growth Fund, Wasatch Small Cap Value Fund, Wasatch Strategic Income Fund, Wasatch Ultra Growth Fund, Wasatch World Innovators Fund, Wasatch-1st Source Income Fund, and Wasatch-Hoisington U.S. Treasury Fund (hereafter referred to as the “Funds”) at September 30, 2014, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended (for the Wasatch Emerging Markets Select Fund, the changes in net assets are for the period December 13, 2012 (commencement of operations) through September 30, 2013 and the year ended September 30, 2014), and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Kansas City, Missouri

November 28, 2014

 

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WASATCH FUNDSSupplemental Information   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

MANAGEMENT OF THE COMPANY

Management Information. The business affairs of Wasatch Funds are overseen by its Board of Trustees. The Board consists of five Independent Trustees and one Interested Trustee. Three of the Independent Trustees and the Interested Trustee were elected by shareholders to serve until their successors are qualified, appointed or elected in accordance with the Trust’s Declaration of Trust and By-Laws. Two Independent Trustees have been appointed by the elected Independent Trustees to serve until their successors are qualified, appointed or elected in accordance with the Trust’s Declaration of Trust and By-Laws.

The trustees and executive officers of Wasatch Funds and their principal occupations for at least the last five years are set forth below.

 

Name, Address

and Age

  Position(s)
Held with
Wasatch Funds
  Term of Office1
and Length of
Time Served
  Principal Occupation(s)
during Past 5 Years
  Number of
Portfolios
in Fund
Complex
Overseen
by Trustee
  Other Directorships
Held by Trustee
during Past 5 Years2

Independent Trustees

         

James U. Jensen, J.D., MBA

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 70

  Trustee and Chairman of the Board  

Indefinite

 

Served as Chairman of the Board since 2004 and Trustee since 1986

  Chief Executive Officer of Clearwater Law & Governance Group (an operating law firm board governance consulting company) April 2008 to present; Co-Founder and Chairman of the Board of Intelisum, Inc. (a company pursuing computer and measurement technology and products) 2001 - 2008; Consultant on corporate growth and technology transfer since 2004; Vice President, Corporate Development, Legal Affairs and General Counsel, and Secretary, NPS Pharmaceuticals, Inc. from 1991 to 2004.   20   Trustee, Northern Lights Fund Trust III (22 portfolios) since 2012; Director and Board Chairman of Agricon Global Corporation (formerly known as Bayhill Capital Corporation (telephone communications) from December 2007 to February 2014.

D. James Croft, Ph.D.

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 72

 

Trustee and Chairman of the Governance & Nominating Committee

 

Indefinite

 

Served as Trustee since 2005

  Consultant to the mortgage industry on issues of mortgage quality, identification of mortgage fraud, strategic planning and client development since 2004; Founder and Executive Director, Mortgage Asset Research Institute from 1990 to 2004.   20   None

Miriam M. Allison3

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 67

  Trustee and Chairman of the Audit Committee  

Indefinite

 

Served as Trustee

since 2010

  Rancher since 2004. From 2001 to 2005, Chairman of UMB Fund Services, Inc.   20  

Director, Northwestern

Mutual Series Fund, Inc. (27 portfolios) since 2006.

Heikki Rinne, Ph.D.

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 62

  Trustee  

Indefinite

 

Served as Trustee

since October 2012

  Chief Executive Officer of the Halton Group Ltd. (an indoor environmental control manufacturing and technology company) since 2002.   20   Director, Touchfon International, through 2009; Director, Infostar Group, through 2009.

Kristen M. Fletcher

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 61

  Trustee  

Indefinite

 

Served as Trustee since October 2014

  Director Utah Symphony/Utah Opera since 2005; Director, Woodlands Commercial Bank 2009 - 2012; Chairman and CEO, ABN AMRO, Inc. and U.S. Country Representative, ABN AMRO Bank, NV from 2002 - 2004.   20   Director Utah Symphony/Utah Opera since 2005; Director Woodlands Commercial Bank 2009 - 2012.

 

Interested Trustee

         

Samuel S. Stewart, Jr.

  Ph.D., CFA4

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 72

  President and Trustee  

Indefinite

 

Served as President and Trustee since 1986

  Chairman of the Board for the Advisor since 1975; Chief Investment Officer of the Advisor from 2004 to June 2009; Director of Research of the Advisor from 1975 to 2004; Chairman of the Board of Wasatch Funds from 1986 to 2004.   20   None

 

 

1  A Trustee may serve until his/her death, resignation, removal or retirement. Each Independent Trustee shall retire as Trustee at the end of the calendar year in which he/she attains the age of 75 years.

 

2  Directorships are those held by a Trustee in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of the Securities Exchange Act or any company registered as an investment company under the 1940 Act.

 

3  Ms. Allison previously owned shares of UMB Financial Corp., the parent company of UMB Fund Services, Inc., the Funds’ transfer agent. Ms. Allison no longer owns such shares.

 

Dr. Stewart is an Interested Trustee because he serves as the Chairman of the Board and Portfolio Manager of the Advisor.

 

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WASATCH FUNDSSupplemental Information (continued)   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

 

Name, Address
and Age
 

Position(s)
Held with

Wasatch Funds

  Term of Office and
Length of Time Served
  Principal Occupation(s)
during Past 5 Years

Officers

     

Daniel D. Thurber

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 45

  Vice President  

Indefinite

 

Served as Vice President since February 2007

  General Counsel, Chief Compliance Officer and Director of Compliance for the Advisor since 2006.

Russell L. Biles

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 46

  Chief Compliance Officer, Vice President and Secretary  

Indefinite

 

Served as Chief Compliance

Officer and Vice President

since February 2007 and

Secretary since November 2008

  Chief Compliance Officer and Vice President for Wasatch Funds since February 2007; Secretary for Wasatch Funds since November 2008; Counsel for the Advisor since October 2006.

Cindy B. Firestone, CPA

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 56

  Treasurer  

Indefinite

 

Served as Treasurer since

May 2009

  Treasurer for Wasatch Funds since May 2009; Assistant Treasurer for Wasatch Funds from November 2008 to May 2009; Internal Auditor for the Advisor from December 2002 to August 2011.

David Corbett

505 Wakara Way

3rd Floor

Salt Lake City, UT 84108

Age 41

  Assistant Vice President  

Indefinite

 

Served as Assistant Vice President
since August 2012

  Assistant Vice President for Wasatch Funds since August 2012; Director of Mutual Fund Services for the Advisor since June 2007.

 

Additional information about the Funds’ trustees is provided in the Statement of Additional Information and is available without charge, upon request, by calling 800.551.1700.

ADDITIONAL TAX INFORMATION

The Funds hereby designate the following amounts or maximum amounts allowable as long term capital gain dividends for the purpose of the dividends paid deduction. The amounts designated here include the utilization of earnings and profits distributed to shareholders on the redemption of shares.

 

Fund    Amount  

Core Growth Fund

   $ 13,739,267   

Emerging Markets Small Cap Fund

     38,681,435   

Global Opportunities Fund

     23,550,252   

Heritage Growth Fund

     2,918,976   

International Growth Fund

     35,584,097   

International Opportunities Fund

     18,321,459   

Large Cap Value Fund

     259,205,616   

Long/Short Fund

     39,911,334   

Micro Cap Value Fund

     25,279,419   

Small Cap Growth Fund

     69,484,983   

Strategic Income Fund

     1,019,765   

Ultra Growth Fund

     14,163,261   

World Innovators Fund

     14,888,675   

For the fiscal year ended September 30, 2014, certain dividends paid by each Fund may be subject to a maximum tax rate of 20% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. To the extent dividends are paid during the calendar year 2014, complete information will be reported on shareholders’ 2014 Form 1099-DIV.

The amount designated as qualified dividend income for the year ended September 30, 2014 will be at the highest amount permitted by law.

Corporate shareholders should note for the year ended September 30, 2014, the percentage of the Funds’ investment income (i.e., net investment income plus short-term capital gains) that qualified for the corporate dividends received deductions are as follows:

 

Fund    Percentage  

Emerging Markets Select Fund

     1

Frontier Emerging Small Countries Fund

     1

Heritage Growth Fund

     75

Large Cap Value Fund

     87

Long/Short Fund

     56

Micro Cap Value Fund

     26

Small Cap Growth Fund

     72

Strategic Income Fund

     26

Income Fund

     1

The Funds may elect to pass-through to shareholders the income tax credit for taxes paid to foreign countries. The foreign taxes paid eligible for pass-through on September 30, 2014 are as follows:

 

Fund    Amount  

Emerging India Fund

   $ 708   

Emerging Markets Select Fund

     99,194   

Emerging Markets Small Cap Fund

     4,707,650   

Frontier Emerging Small Countries Fund

     2,704,706   

If elected, the pass-through of the foreign tax credit will affect only those persons who are shareholders on the dividend record date in December 2014. These shareholders will receive more detailed information along with their 2014 Form 1099-DIV.

 

 

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  SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

PROXY VOTING POLICIES, PROCEDURES AND RECORD

A description of the policies and procedures that Wasatch Advisors uses to vote proxies related to the Funds’ portfolio securities is set forth in the Funds’ Statement of Additional Information which is available without charge, upon request, on the Funds’ website at www.WasatchFunds.com or by calling 800.551.1700 and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov.

Wasatch Funds’ proxy voting record is available on the Funds’ website at www.WasatchFunds.com and the SEC’s website at www.sec.gov no later than August 31 for the prior 12 months ending June 30.

QUARTERLY PORTFOLIO HOLDINGS DISCLOSURE ON FORM N-Q

The Funds file their complete schedules of investments with the SEC for their first and third fiscal quarters of each fiscal year, commencing with the quarter ended December 31, 2004, on Form N-Q. The Funds’ Form N-Q is available on the SEC’s website at www.sec.gov.

 
SERVICE PROVIDERS  

 

 

 

INVESTMENT ADVISOR

Wasatch Advisors, Inc.

505 Wakara Way, 3rd Floor

Salt Lake City, UT 84108

SUB-ADVISOR FOR THE WASATCH-1ST SOURCE INCOME FUND

1st Source Corporation Investment Advisors, Inc.

100 North Michigan Street

South Bend, IN 46601

SUB-ADVISOR FOR THE U.S. TREASURY FUND

Hoisington Investment Management Co.

6836 Bee Caves Road

Building 2, Suite 100

Austin, TX 78746

ADMINISTRATOR AND FUND ACCOUNTANT

State Street Bank and Trust Company

801 Pennsylvania Avenue

Kansas City, MO 64105

DISTRIBUTOR

ALPS Distributors, Inc.

1290 Broadway, Suite 1100

Denver, CO 80203

TRANSFER AGENT

UMB Fund Services, Inc.

235 West Galena Street

Milwaukee, WI 53212

CUSTODIAN

State Street Bank and Trust Company

801 Pennsylvania Avenue

Kansas City, MO 64105

LEGAL COUNSEL TO WASATCH FUNDS AND INDEPENDENT TRUSTEES

Chapman and Cutler, LLP

111 West Monroe Street

Chicago, IL 60603

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PricewaterhouseCoopers LLP

1100 Walnut Street, Suite 1300

Kansas City, MO 64106

 

 

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CONTACT WASATCH   SEPTEMBER 30, 2014 (UNAUDITED)

 

 

 

TELEPHONE

800.551.1700

M - F, 7:00 a.m. to 7:00 p.m. CT

Automated Line, 24 Hours

U.S. MAIL

Wasatch Funds

P.O. Box 2172

Milwaukee, WI 53201-2172

OVERNIGHT MAIL

Wasatch Funds

803 West Michigan Street, Suite A

Milwaukee, WI 53233-2301

ONLINE

www.WasatchFunds.com

shareholderservice@wasatchfunds.com

 

 

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LOGO

2014 Annual Report
www.WasatchFunds.com . 800.551.1700


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Item 2: Code of Ethics.

 

(a) Wasatch Funds Trust (the “Registrant”) has adopted a Code of Ethics that applies to the Registrant’s principal executive officer and principal financial officer.

 

(b) No disclosures are required by this Item 2(b).

 

(c) There have been no amendments to the Registrant’s Code of Ethics during the reporting period for this form N-CSR.

 

(d) There have been no waivers granted by the Registrant to individuals covered by the Registrant’s Code of Ethics during the reporting period for this Form N-CSR.

 

(e) Not applicable.

 

(f) A copy of the Registrant’s Code of Ethics is attached as an exhibit to this Form N-CSR.

 

Item 3: Audit Committee Financial Expert.

 

(a)    (1)    The Board of Trustees of the Registrant has determined that the Registrant has at least one member serving on the Registrant’s Audit Committee that possesses the attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as “audit committee financial expert.”
   (2)    The name of the audit committee financial expert is Miriam M. Allison. Ms. Allison is deemed to be “independent” as that term is defined in Item 3(a)(2) of Form N-CSR.

 

Item 4. Principal Accountant Fees and Services.

 

(a) Audit Fees - The aggregate fees billed for professional services rendered by the independent registered public accounting firm for the audit of the Registrant’s annual financial statements or services normally provided in connection with statutory and regulatory filings or engagements for the last two fiscal years ended September 30, 2014 and 2013 were $428,147 and $457,072, respectively.

 

(b) Audit Related Fees - During the fiscal years ended September 30, 2014 and 2013, the Registrant was not billed any fees by the independent registered public accounting firm for assurance and related services rendered by the independent registered public accounting firm to the Registrant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item 4.

During the fiscal years ended September 30, 2014 and 2013, no fees for assurance and related services that relate directly to the operations and financial reporting of the Registrant were billed by the independent registered public accounting firm to the Registrant’s investment adviser (the “Advisor”) or any other entity controlling, controlled by, or under common control with the Advisor that provides ongoing services to the Registrant.

 

(c) Tax Fees - The aggregate fees billed for professional services rendered by the independent registered public accounting firm to the Registrant for tax compliance, tax advice, tax planning and tax return preparation for the last two fiscal years ended September 30, 2014 and 2013 were $96,250 and $100,910, respectively. These services consisted of the independent registered public accounting firm reviewing the Registrant’s excise tax returns, distribution requirements and RIC tax returns, as well as consultations regarding the tax consequences of specific investments.

During the fiscal years ended September 30, 2014 and 2013, no fees for tax compliance, tax advice or tax planning services that relate directly to the operations and financial reporting of the Registrant were billed by the independent registered public accounting firm to the Advisor or any other entity controlling, controlled by, or under common control with the Advisor that provides ongoing services to the Registrant.


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(d) All Other Fees - The aggregate fees billed for products and services provided by the independent registered public accounting firm to the Registrant, other than the services reported in paragraph (a) – (c) of this Item 4, for the fiscal year ended September 30, 2014 was $1,772 for professional services associated with the review of documentation regarding an option to transfer Thailand assets to a tax exempt custodial account so certain Funds could benefit from certain available tax advantages. There were no other fees billed for the fiscal year ended September 30, 2013.

During the fiscal years ended September 30, 2014 and 2013, no fees for other services that relate directly to the operations and financial reporting of the Registrant were billed by the independent registered public accounting firm to the Advisor or any other entity controlling, controlled by, or under common control with the Advisor that provides ongoing services to the Registrant.

 

(e) Pre-Approval Policies and Procedures

(1) Pursuant to the registrant’s Audit Committee Charter, the Audit Committee shall evaluate the independence of the independent public accountants, including evaluating whether the independent public accountants provide audit services or consulting services to the Registrant or consulting services to the Advisor, and to receive the specific representations of the independent registered public accounting firm as to their independence. Specifically, the Audit Committee will be responsible for evaluating the provision of non-audit services to the Registrant as required by Section 201 of the Sarbanes-Oxley Act, any pre-approval requests submitted by the independent registered public accounting firm as required by Section 202 of the Sarbanes-Oxley Act or as otherwise required under Section 2-01 of Regulation S-X, and shall monitor the conflict of interest requirements in Section 206 of the Sarbanes-Oxley Act, and the prohibitions on improper influence on the conduct of audits in Section 303 of the Sarbanes-Oxley Act. The Audit Committee shall pre-approve any engagement of the independent registered public accounting firm to provide any services (other than prohibited non-audit services) including the fees and other compensation to be paid to the independent registered public accounting firm.

The independent registered public accounting firm is authorized by the Audit Committee to provide non-audit services to the extent allowable under the Sarbanes-Oxley Act of 2002 for the Registrant provided that (i) the fees payable with respect to such services do not exceed $5,000 in any calendar quarter and (ii) such fees are ratified by the Audit Committee at its next meeting. The fees payable with respect to non-audit services may be increased by the affirmative vote of a majority of the members of the Audit Committee.

(2) There were no pre-approval requirements waived for the services provided to the Registrant described in paragraphs (b)-(d) of Item 4 by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (the “De Minimis Rule”). There were no fees billed for services provided to the Advisor described in paragraphs (b)-(d) of Item 4 that were required to be pre-approved by the Audit Committee as described in paragraph (e)(1) of Item 4.

 

(f) No disclosures are required by this Item 4(f).

 

(g) For the fiscal year ended September 30, 2014, the aggregate non-audit fees billed by the independent registered public accounting firm for services rendered to the Registrant and the Advisor and any entity controlling, controlled by, or under common control with the Advisor that provided ongoing services to the Registrant were $1,772. The independent registered public accounting firm did not bill the Registrant or the Advisor for any other ongoing non-audit services for the fiscal year ended September 30, 2013.

 

(h) No disclosures are required by this Item 4(h).

 

Item 5. Audit Committee of Listed Registrants.

Not applicable.


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Item 6. Schedule of Investments.

 

(a) Schedule of Investments is included as a part of the report to shareholders filed under Item 1 of this Form N-CSR.

 

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

 

Item 8. Portfolio Managers of Closed-End Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

 

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees, where those changes were implemented after the Registrant last provided disclosure in response to this item.

 

Item 11. Controls and Procedures.

 

(a) The Registrant’s principal executive and principal financial officers have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective, as of a date within 90 days of the filing date of this Form N-CSR based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934).

 

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 12. Exhibits.

 

(a)(1)

   Code of Ethics is attached hereto.

(a)(2)

   The certifications required by Rule 30a-2(a) of the 1940 Act are attached hereto.

(a)(3)

   Not applicable.

(b)

   The certifications required by Rule 30a-2(b) of the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

WASATCH FUNDS TRUST
By:  

/s/ Samuel S. Stewart, Jr.

  Samuel S. Stewart, Jr.
  President (principal executive officer) of Wasatch Funds Trust
Date:   December 5, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:  

/s/ Samuel S. Stewart, Jr.

  Samuel S. Stewart, Jr.
  President (principal executive officer) of Wasatch Funds Trust
Date:   December 5, 2014
By:  

/s/ Cindy B. Firestone

  Cindy B. Firestone
  Treasurer (principal financial officer) of Wasatch Funds Trust
Date:   December 5, 2014