Wasatch Funds, Inc.

This prospectus contains important information about the no-load mutual funds offered by Wasatch Funds. Before you invest, please read the prospectus carefully, paying particular attention to the risks involved. Keep the prospectus for future reference.

As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any statement to the contrary is a criminal offense.

The information on the following pages describes the primary investment objectives, principal strategies and principal risks of investing in the Wasatch Funds as well as each Fund’s historical performance and expenses.

Management fees and net expenses for the Emerging Markets Small Cap, Global Opportunities, International Opportunities, Micro Cap and Micro Cap Value Funds are higher than those paid by most mutual funds. The management fees and net expenses for certain other Wasatch Funds are higher than those paid by many mutual funds. Please see “Fees and Expenses” for more information.

A Fund’s principal investment strategies are those Wasatch Advisors, investment advisor to Wasatch Funds, or the applicable investment sub-advisor believes are most likely to be important in trying to achieve the Fund’s primary investment objective. Each Fund may also employ strategies and invest in securities that are not described under principal strategies. Please see “Additional Information about the Funds” and the Statement of Additional Information (SAI) for a discussion of these strategies, securities and their risks.

An investment in any of the Funds is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

As with all mutual funds or investments, it is possible to lose money by investing in the Funds.

INVESTMENT OBJECTIVE

The Fund’s primary investment objective is long-term growth of capital. Income is a secondary objective, but only when consistent with long-term growth of capital. Currently, we do not expect the Fund’s investments to generate substantial income. The Fund’s investment objectives cannot be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in smaller growing companies at reasonable prices.

Under normal market conditions, we will invest at least 65% of the Fund’s net assets in the equity securities of growing companies. These companies are usually small to mid-size with market capitalizations of less than $5 billion at the time of purchase.

The Fund may invest up to 20% of its total assets at the time of purchase in securities issued by foreign companies in developed or emerging markets. Securities issued by companies incorporated outside the United States, but whose securities are publicly traded in the United States, either directly or through American Depositary Receipts, are not defined as foreign companies and are not subject to this limitation.

We focus on companies that we consider to be high quality, and we use a process of “bottom-up” fundamental analysis to look for individual companies that we believe are stable and have the potential to grow steadily for long periods of time. Our analysis may include studying a company’s financial statements, building proprietary financial models, visiting company facilities, and meeting with executive management, suppliers and customers.

The Fund seeks to purchase stocks at prices we believe are reasonable relative to our projection of a company’s long term earnings growth rate.

As we analyze growing companies, we are most interested in finding:

•

Potential for significant and sustained revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long-term trends.

•

Strong financial health and controls.

•

Reasonable use of debt.

•

Attractive valuation.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Stock Market Risk. The value of the equity securities in which the Fund invests may decline in response to developments affecting individual companies, industries and/or general economic conditions. Price changes may be temporary or last for extended periods. Historically, stock prices have fluctuated in cycles.

Stock Selection Risk. In addition to, or in spite of, the impact of movements in the overall stock market, the value of the Fund’s portfolio may decline if the companies in which the Fund invests do not perform well in the market and underperform other types of securities.

Foreign Securities Risk. Investments by the Fund in foreign securities present risks of loss in addition to those presented by investments in U.S. securities. Foreign securities are generally more volatile and less liquid than U.S. securities due to such factors as adverse economic, political, currency, social or regulatory developments in a country, less publicly available information about foreign companies, government seizure of assets, excessive taxation, limitations on the use or transfer of assets, the lack of liquidity or regulatory controls or differing legal and/or accounting standards. Issuers of foreign securities and foreign securities markets are generally not subject to the same degree of regulation as are U.S. issuers and U.S. securities markets. The reporting, accounting and auditing standards of foreign countries may differ, in some cases significantly, from U.S. standards. Foreign securities that are denominated in a foreign currency also are subject to the risk that their values may fluctuate based upon changes in currency exchange rates.

Emerging Markets Risk. Securities of companies domiciled in emerging markets are subject to the same risks as other foreign securities, and may be subject to greater risks than investments in companies domiciled in foreign countries with more established economies and securities markets. Risks of investing in these countries may include political or social instability, economies based on only a few industries, unstable currencies, runaway inflation, highly volatile securities markets, unpredictable shifts in policies relating to foreign investments, lack of protection for investors against parties who fail to complete transactions, greater potential for government seizure of assets or nationalization of companies.

Small Company Stock Risk. The stocks of smaller companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Smaller companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of smaller companies typically are traded in lower volume making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

Growth Investing Risk. The prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. The prices of growth stocks also may fall or fail to appreciate as anticipated by the Advisor, regardless of movements in the securities markets.

Sector Weightings Risk. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a single sector and the securities of companies in that sector could react similarly to these or other developments. If the Fund invests in a few sectors it may have more exposure to the price movements of those sectors than funds that diversify their investments among many sectors.

Financials Sector Risk. The financials sector is subject to extensive government regulation, can be subject to relatively rapid changes due to increasingly blurred distinctions between service segments, and can be significantly affected by the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, and price competition. The Fund may invest in companies that may be affected by the downturn in the subprime mortgage lending market in the United States. Subprime loans have higher defaults and losses than prime loans. Subprime loans also have higher delinquency rates

than prime loans. The downturn in the subprime mortgage lending market may have far-reaching consequences for various aspects of the financials sector, and consequently, the value of the Fund may decline in response to such developments.

WHO SHOULD INVEST

We seek to limit volatility by investing in companies that we believe are stable and have the potential for consistent long-term growth. Nevertheless, the Fund will experience volatility and is best suited for long-term investors. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The following tables provide information on how the Fund has performed over time. The Fund’s past performance before and after taxes is not necessarily an indication of how the Fund will perform in the future.

The chart above is intended to provide you with an indication of the risks of investing in the Core Growth Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of a market index.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns are not relevant to investors who hold Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

The Fund’s returns after taxes on distributions and sale of Fund shares may be higher than returns before taxes and after taxes on distributions because they include the effect of a tax benefit an investor may receive from the capital losses that would have been incurred.

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 the Index. The Index’s returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in small emerging market companies.

Under normal market conditions, we will invest at least 80% of the Fund’s assets in equity securities in companies with market capitalizations of less than $3 billion at the time of purchase that are domiciled in emerging market countries. Shareholders will be notified 60 days prior to any change in this policy.

We will generally consider emerging market countries to be those included in the MSCI EM Index or the S&P/IFCG Index, as well as other countries with similar emerging characteristics. We consider Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States to be developed countries.

When determining domicile we may consider different factors. For example, we may consider a company’s country of incorporation, inclusion in a particular index, primary exchange, geographic location of assets, and geographic sources of revenue. When looking at geographic sources of revenue, we will generally consider a company to be domiciled in an emerging market regardless of its country of incorporation or its primary listing exchange when the issuer has derived at least 50% of its revenues or profits from goods produced or sold, investments made, or services performed in an emerging market country. Similarly, when the majority of a company’s assets are located in an emerging market, we will generally consider the company to be domiciled in an emerging market regardless of its country of incorporation or its primary listing exchange.

We travel extensively outside of the U.S. to visit companies and expect to meet with their top management. We use a process of quantitative screening followed by “bottom up” fundamental analysis to identify individual companies that we believe have above average revenue and earnings growth potential.

As we analyze emerging market companies, we are most interested in finding:

•

Potential for significant and sustained revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long-term trends.

•

Strong financial health and controls.

•

Reasonable use of debt.

•

Expanding operating margins.

•

Substantial insider ownership.

•

Stable investment environment.

•

Attractive valuation.

We do not use allocation models to restrict the Fund’s investments to certain regions, countries or industries.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Small Company Stock Risk. The stocks of small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Small companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of smaller companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

Non-Diversification Risk. The Fund is non-diversified and can invest a larger portion of its assets in the stocks of a limited number of companies than a diversified fund. If the Fund invests in the securities of a few companies, 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.

Sector Weightings Risk. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a single sector and the securities of companies in that sector could react similarly to these or other developments. If the Fund invests in a few sectors it may have more exposure to the price movements of those sectors than funds that diversify their investments among many sectors.

WHO SHOULD INVEST

The Fund pursues an aggressive investment strategy designed for long-term investors who can tolerate the greater risks and volatility that are inherent with investing in emerging market small companies. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risk of investing in the Emerging Markets Small Cap Fund by showing the Fund’s performance for the last year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the year shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of a market index.

The MSCI Emerging Markets Small Cap Index is a free floated-adjusted market capitalization index that is designed to measure equity performance in the global emerging markets. As of November 2008, the MSCI Emerging Markets Index consisted of the following 24 emerging market country indexes: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. You cannot invest directly in the Index. The Index’s returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in small and micro cap foreign and domestic companies.

Under normal market conditions, we will invest the Fund’s assets primarily in securities issued by companies domiciled in developed and emerging markets that have market capitalizations of less than $5 billion at the time of purchase. The Fund may also invest a significant portion of its total assets (up to 35% under normal market conditions) in securities issued by companies with market capitalizations greater than $5 billion at the time of purchase when we find larger companies that meet our investment criteria outlined below.

•

The Fund may invest a significant portion of its total assets in micro cap companies with market capitalizations below
$1 billion (typically 30% to 90%).

•

The Fund will typically invest in securities issued by companies domiciled in at least three countries, including the United States.

•

The Fund may invest a significant portion of its total assets in companies domiciled in foreign countries (typically 40 to 80%). Securities issued by foreign companies incorporated outside the United States, but whose securities are publicly traded in the United States, either directly or through American Depositary Receipts, are not defined as “foreign companies” and are not, therefore, subject to this limitation.

•

The Fund may invest a significant portion of its total assets in securities issued by companies domiciled in emerging markets (typically 10% to 50%).

We consider emerging market countries to be those included in the MSCI EM Index or the S&P/IFCG Index, as well as other countries with similar emerging characteristics.

When determining domicile we may consider different factors. For example, we may consider a company’s country of incorporation, inclusion in a particular index, primary exchange, geographic location of assets, and geographic sources of revenue. When looking at geographic sources of revenue, we will generally consider a company to be domiciled in an emerging market regardless of its country of incorporation or primary listing exchange when the issuer has derived at least 50% of its revenues or profits from goods produced or sold, investments made, or services performed in an emerging market country. Similarly, when the majority of a company’s assets are located in an emerging market, we will generally consider the company to be domiciled in an emerging market regardless of its country of incorporation or its primary listing exchange.

We use a process of quantitative screening followed by “bottom up” fundamental analysis to identify individual companies that we believe are the World’s Best Growth Companies. We travel extensively to visit companies and expect to meet with their top management. As we analyze

growth companies for the Fund, we are most interested in finding:

•

Experienced, proven management team.

•

Sustainable competitive advantage that leads to a superior business model.

•

Potential for significant and sustained revenue and earnings growth.

•

Potential for expanding operating margins.

•

High return on capital and assets.

•

Market leadership and/or growing market share.

•

Barriers to competitive market entry.

•

Ability to capitalize on favorable long-term trends.

•

Attractive valuation relative to growth potential.

•

Substantial insider ownership.

•

Ability to generate sufficient cash flow to begin paying dividends within a five year window.

We may also invest in growth companies that we believe have hit a temporary setback and therefore have an appealing valuation relative to their long-term growth potential (we call these holdings “Fallen Angels”). As we look for Fallen Angels we are most interested in finding:

•

Low valuation as measured by price-to-book, enterprise value to revenue, enterprise value to EBITDA, and/or price-to-earnings relative to future potential.

•

Past demonstration of growth.

•

Past demonstration of high returns on capital and assets.

•

Experienced, proven management team.

•

Sustainable competitive advantage.

•

Companies that we believe can turn themselves around in less than two years, and once again show the desired growth characteristics previously described.

At times, we may invest in early stage companies with limited or no earnings history if we believe they have outstanding long-term growth potential. We may also invest in Initial Public Offerings (IPOs).

We do not use allocation models to restrict the Fund’s investments to certain regions, countries or industries. We may significantly shift Fund assets between asset classes, sectors, and geographic regions based on where we believe the best growth opportunities and valuations currently exist. The Fund may invest a large percentage of its assets in a few sectors or regions.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Micro Cap and Small Company Stock Risk. The stocks of micro cap and small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Micro cap and small companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of micro cap and small companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

Early Stage Companies Risk. Early stage companies may not be profitable now and there is no guarantee that they will become profitable or be able to obtain necessary financing. They may rely on untested business plans, may not be successful in developing markets for their products or services and may remain an insignificant part of their industry. Stocks of early stage companies may be illiquid or they may not be publicly traded. Investments in early stage companies tend to be more volatile and somewhat more speculative than investments in more established companies.

Value Investing Risk. Value investing attempts to identify strong companies selling at a discount from their perceived true worth. Advisors using this approach generally select stocks at prices, in their view, that are temporarily low relative to the company’s earnings, assets, cash flow and dividends. Value investing is subject to the risk that the stocks’ intrinsic values may never be fully recognized or realized by the market, or their prices may go down. There is also the risk that a stock judged to be undervalued may actually be appropriately priced.

Initial Public Offering (IPOs) Risk. IPOs involve a higher degree of risk not normally associated with offerings of more seasoned companies. Companies involved in IPOs generally have limited operating histories and their prospects for future profitability are uncertain. Prices of IPOs may also be unstable due to the absence of a prior public market, the small number of shares available for trading and limited investor information.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with global investments in micro cap and small company stocks. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

Ordinarily, this section of the prospectus contains information that would allow you to evaluate the Fund’s performance using several different measures such as yearly changes in performance, best and worst quarterly returns and average annual total returns before and after taxes compared to a relevant benchmark. The Wasatch Global Opportunities Fund commenced operations on November 17, 2008 and does not have a full calendar year of performance.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in domestic and foreign science and technology companies.

Under normal market conditions, we will invest at least 80% of the Fund’s net assets in the equity securities of science and technology companies. Shareholders will be notified 60 days prior to any change in this policy.

We define science and technology companies as those whose primary source of revenue is related to science or technology, such as companies that develop, produce or distribute products or services in the computer software, computer systems and components, semiconductor, electronics, communications and chemical industries as well as medical technology companies in the biotechnology, pharmaceutical and medical products industries. Science and technology companies are also those that develop, produce or advance technology for other non-science and technology related industries.

Typically, the Fund’s assets will be invested in at least three developed countries, including the U.S. The Fund may invest in securities issued by companies domiciled in emerging markets without limitation. Under normal market conditions, a significant portion of the Fund’s assets (typically between 30% and 80% at the time of purchase) will be invested outside the U.S.

We will use a process of “bottom up” fundamental analysis to invest in companies of any size. However, because science and technology are rapidly evolving, we expect to invest a significant portion of the Fund’s assets in early stage companies and small to mid-size companies with market capitalizations of less than $5 billion at the time of purchase.

We have defined two broad categories that we believe are critical to identifying science and technology companies with outstanding investment potential. The first is companies that possess valuable intellectual property. The second is companies that provide products or services related to science or technology.

What we look for in companies that possess valuable intellectual property:

•

Companies that have developed, invented or otherwise own or control patented, proprietary or leading technologies.

•

Technology that we believe has feasible applications with significant economic potential.

•

Superior management that we believe will be able to capitalize on the technology’s potential value.

•

Management that has a substantial ownership interest in the company.

•

Securities that we believe are rationally priced based on our assessment of the technology’s future prospects.

What we look for in companies that provide products or services related to science or technology:

•

Companies that are applying new technologies or using technology to gain a competitive advantage.

•

Companies that, in our opinion, have outstanding growth potential and can increase sales and earnings significantly faster than average companies.

•

Companies that are market leaders or potential market leaders in their industries.

•

Superior management that we believe will be successful in applying science or technology to gain a competitive advantage.

•

Management that has a substantial ownership interest in the company.

•

Superior financial characteristics and controls including high return on capital, strong cash flow and low use of debt.

•

Securities that we believe are rationally priced based on our assessment of a company’s current sales, earnings and growth rates.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

standards. Foreign securities that are denominated in a foreign currency also are subject to the risk that their values may fluctuate based upon changes in currency exchange rates.

Small Company Stock Risk. The stocks of small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Smaller companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of smaller companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

Technology and Science Risk. Technology companies can be significantly affected by obsolescence of existing technologies, short product cycles, falling prices and profits,

competition from new market entrants, and general economic conditions. Technology stocks, especially those of smaller less-seasoned companies, tend to be more volatile than the overall market. Science companies may be affected by the same risks as technology companies.

WHO SHOULD INVEST

The Fund pursues an aggressive investment strategy designed for long-term investors who can tolerate the greater risks and volatility that are inherent with global investments in science and technology companies. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Global Science & Technology Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s past performance to that of market indexes.

The Russell 2000 Technology Index is a capitalization-weighted index of companies in the Russell 2000 Index that serve the electronics and computer industries or that manufacture products based on the latest applied science.

The Nasdaq Composite Index is a market-value weighted index that measures all Nasdaq domestic and non-U.S. based common stocks listed on The Nasdaq Stock Market. Market-value weighted means each company’s security affects the Index in proportion to its market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Due to their number and size, technology stocks tend to dominate the direction of the Index.

You cannot invest directly in these Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

PRINCIPAL STRATEGIES

The Fund invests primarily in mid- and large-cap growing companies at reasonable prices.

Under normal market conditions, the Fund will primarily invest in the equity securities of growing companies with market capitalizations over $3 billion at the time of purchase.

We focus on companies that we consider to be high quality, and we use a process of “bottom up” fundamental analysis to look for individual companies that we believe are stable and have the potential to grow steadily for long periods of time. Our analysis may include studying a company’s financial statements, building proprietary financial models, visiting company facilities, and meeting with executive management, suppliers and customers.

The Fund seeks to purchase stocks at prices we believe are reasonable relative to our projection of a company’s long term earnings growth rate.

As we analyze growing companies, we are most interested in finding:

•

Potential for significant and sustained revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long-term trends.

•

Strong financial health and controls.

•

Reasonable use of debt.

•

Attractive valuation.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Small Company Stock Risk. The stocks of small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Smaller companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of smaller companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with equity investments. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Heritage Growth Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of market indexes.

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 includes 500 of the United States’ largest stocks from a broad variety of industries.

The Russell 1000 Growth Index measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.

You cannot invest directly in these Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in foreign growth companies.

Under normal market conditions, we will invest the Fund’s assets primarily in securities issued by foreign companies domiciled in developed markets that have market capitalizations of less than $5 billion at the time of purchase.

The Fund may invest a significant amount of its total assets (typically between 20% and 50%) at time of purchase in securities issued by companies domiciled in emerging markets. Under normal market conditions, the Fund will invest in at least five of the countries included in the MSCI AC World Ex-U.S.A. Small Cap Index.

We consider Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States to be developed countries.

We consider emerging market countries to be those included in the MSCI EM Index or the S&P/IFCG Index, as well as other countries with similar emerging characteristics. When determining domicile we may consider different factors. For example, we may consider a company’s country of incorporation, inclusion in a particular index, primary exchange, geographic location of assets, and geographic sources of revenue. When looking at geographic sources of revenue, we will generally consider a company to be domiciled in an emerging market regardless of its country of incorporation or primary listing exchange when the issuer has derived at least 50% of its revenues or profits from goods produced or sold, investments made, or services performed in an emerging market country. Similarly, when the majority of a company’s assets are located in an emerging market, we will generally consider the company to be domiciled in an emerging market regardless of its country of incorporation or its primary listing exchange.

As we analyze growing foreign companies, we are most interested in finding:

•

Potential for significant and sustained revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long term trends.

•

Strong financial health and controls.

•

Reasonable use of debt.

•

Attractive valuation.

We do not use allocation models to restrict the Fund’s investments to certain regions, countries or industries.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Emerging Markets Risk. Securities of companies domiciled in emerging markets are subject to the same risks as other foreign securities, and may be subject to greater risks than investments in companies domiciled in foreign countries with more established economies and securities markets. Risks of investing in these countries may include political or social instability, economies based on only a few industries, unstable currencies, runaway inflation, highly volatile securities markets, unpredictable shifts in policies relating to foreign investments, lack of protection for investors against parties who fail to complete transactions, greater potential for government seizure of assets or nationalization of companies.

Small Company Stock Risk. The stocks of small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Small companies often have narrower markets and more limited managerial, and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of smaller companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

WHO SHOULD INVEST

The Fund pursues an aggressive investment strategy designed for long-term investors who can tolerate the greater risks and volatility that are inherent with investing in international growth companies. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the International Growth Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

*Prior to January 31, 2007, the Fund primarily invested in companies with market capitalizations of less than $2 billion at the time of purchase.

The table above allows you to compare the Fund’s past performance to that of market indexes.

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 the Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in foreign micro cap companies.

Under normal market conditions, we will invest the Fund’s assets primarily in securities issued by foreign companies domiciled in developed and emerging markets that have market capitalizations of less than $1 billion at the time of purchase. The Fund may invest a significant amount of its total assets (typically between 20% and 50%) at the time of purchase in securities issued by companies domiciled in emerging markets of any capitalization. Under normal market conditions, the Fund will invest in at least five of the countries included in the MSCI AC World Ex-U.S.A. Small Cap Index.

As we analyze foreign micro cap companies, we are most interested in finding:

•

Potential for significant and sustained revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long term trends.

•

Strong financial health and controls.

•

Reasonable use of debt.

•

Attractive valuation.

•

Expanding operating margins.

•

Substantial insider ownership.

•

Stable investment environment.

We do not use allocation models to restrict the Fund’s investments to certain regions, countries or industries.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

volatile securities markets, unpredictable shifts in policies relating to foreign investments, lack of protection for investors against parties who fail to complete transactions, greater potential for government seizure of assets or nationalization of companies.

WHO SHOULD INVEST

The Fund pursues an aggressive investment strategy designed for long-term investors who can tolerate the greater risks and volatility that are inherent with investing in international companies. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the International Opportunities Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s past performance to that of market indexes.

After tax-returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns are not relevant to investors who hold Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

The MSCI World Ex-U.S.A. Small Cap Index is an unmanaged index that measures the performance of stocks with market capitalization between U.S. $200 million and $1.5 billion across 22 developed markets, excluding the United States.

You cannot invest directly in the Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. Income is an objective only when consistent with long-term growth of capital. Currently, we do not expect the Fund’s investments to generate substantial income. The Fund’s investment objectives cannot be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in growing micro cap companies.

Under normal market conditions, we will invest at least 80% of the Fund’s net assets in the equity securities of micro cap companies with market capitalizations of less than $1 billion at the time of purchase. Shareholders will be notified 60 days prior to any change in this policy.

The Fund may invest up to 30% of its total assets at the time of purchase in securities issued by foreign companies in developed or emerging markets. Securities issued by companies incorporated outside the United States, but whose securities are publicly traded in the United States, either directly or through American Depositary Receipts, are not defined as foreign companies and are not subject to this limitation.

We focus on companies that we consider to be high quality, and we use a process of “bottom up” fundamental analysis to look for individual companies that we believe have superior growth potential. Our analysis may include studying a company’s financial statements, building proprietary financial models, visiting company facilities, and meeting with executive management, suppliers and customers.

The Fund seeks to purchase stocks at prices we believe are reasonable relative to our projection of a company’s long term earnings growth rate.

As we analyze micro cap companies, we are most interested in finding:

•

Potential for significant and sustained revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long term trends.

•

Strong financial health and controls.

•

Reasonable use of debt.

•

Attractive valuation.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Micro Cap Company Risk. The stocks of micro cap companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Micro cap companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of micro cap companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

Growth Investing Risk. The prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. The prices of growth stocks

also may fall or fail to appreciate as anticipated by the Advisor, regardless of movements in the securities markets.

lending market may have far-reaching consequences for various aspects of the financials sector, and consequently, the value of the Fund may decline in response to such developments.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with investments in micro cap companies. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Micro Cap Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of market indexes.

The Russell Microcap Index is an unmanaged total return index of the smallest 1,000 securities in the small cap Russell 2000 Index plus the next smallest 1,000 securities. The Index commenced operations after the Fund commenced operations.

You cannot invest directly in these Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in micro cap companies.

The Fund may invest in initial public offerings.

While the Fund primarily invests in value companies, it may also invest in growth companies if the Advisor believes that current valuation is at a sufficient discount to the projected long term earnings growth rate.

We use a “bottom up” process of fundamental analysis to look for individual companies that we believe are temporarily undervalued but have significant potential for stock price appreciation. Our analysis may include studying a company’s financial statements, visiting company facilities, and meeting with executive management, suppliers and customers.

We look for companies that we believe will generally fall into one of four categories at the time of purchase:

•

Fallen Angels — Growth companies that have experienced a temporary setback and therefore have appealing valuation relative to their long term growth potential.

•

Value Momentum — Cheap valuation relative to history, but catalyst for future growth has been identified.

•

Undiscovered Gems — Attractive companies that have yet to be broadly discovered by Wall Street.

•

Hidden Value — Companies with assets or earnings potential that are not fully reflected in their stock prices.

As we analyze micro cap value companies, we are most interested in finding:

•

Catalyst for improved earnings growth.

•

New products or services that may increase revenue growth and market share.

•

Experienced top management with a substantial stake in the company’s future.

•

Low stock valuation as measured in a variety of ways, including: price-to-earnings ratio (P/E), price-to-sales ratio, price-to-book ratio, etc.

•

Potential to generate improved financial performance.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

of the Fund’s portfolio. The stocks of micro cap companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with investments in micro cap value stocks. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Micro Cap Value Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of market indexes.

The Russell Microcap Index is an unmanaged total return index of the smallest 1,000 securities in the small cap Russell 2000 Index plus the next smallest 1,000 securities.

You cannot invest directly in the Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

PRINCIPAL STRATEGIES

The Fund invests primarily in small growth companies.

Under normal market conditions, we will invest at least 80% of the Fund’s net assets in the equity securities of small companies with market capitalizations of less than $2.5 billion at the time of purchase. Shareholders will be notified 60 days prior to any change in this policy.

Within the Fund’s portfolio, we seek to create a blend of “core” companies that we believe have the potential to grow steadily over long periods of time at faster rates than average large companies, and “high growth” companies that we believe have the potential to grow faster and more aggressively than core companies.

We use a “bottom up” process of fundamental analysis to look for individual companies that we believe have superior growth prospects. Our analysis may include studying a company’s financial statements, building proprietary financial models, visiting company facilities, and meeting with executive management, suppliers and customers.

As we analyze “core” companies, we are most interested in finding:

•

Potential for significant and sustained revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long term trends.

•

Strong financial health.

•

Reasonable use of debt.

•

Attractive valuation.

As we analyze “high growth” companies, we are most interested in finding:

•

Potential for high revenue and earnings growth.

•

Experienced, proven management team.

•

High return on capital.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

High return on capital.

•

Strong cash flow.

•

Reasonable use of debt.

•

Sound financial controls.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Small Company Stock Risk. The stocks of small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies.

Small companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of smaller companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

other developments. If the Fund invests in a few sectors it may have more exposure to the price movements of those sectors than funds that diversify their investments among many sectors.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with investments in small company stocks. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Small Cap Growth Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of market indexes.

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 Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is long-term growth of capital. Income is a secondary objective, but only when consistent with long-term growth of capital. Currently, we do not expect the Fund’s investments to generate substantial income. The Fund’s investment objectives cannot be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in small companies.

The Fund may also invest in growth companies if the Advisor believes that current valuation is at a sufficient discount to the projected long-term earnings growth rate.

We use a “bottom-up” process of fundamental analysis to look for individual companies that we believe are temporarily undervalued but have significant potential for stock price appreciation. Our analysis may include studying a company’s financial statements, visiting company facilities, and meeting with executive management, suppliers and customers.

We look for companies that we believe will generally fall into one of four categories at the time of purchase:

•

Fallen Angels — Growth companies that have experienced a temporary setback and therefore have appealing valuation relative to their long term growth potential.

•

Value Momentum — Cheap valuation relative to history, but catalyst for future growth has been identified.

•

Undiscovered Gems — Attractive companies that have yet to be broadly discovered by Wall Street.

•

Hidden Value — Companies with assets or earnings potential that are not fully reflected in their stock prices.

As we analyze small cap value companies, we are most interested in finding:

•

Catalyst for improved earnings growth.

•

New products or services that may increase revenue growth and market share.

•

Experienced top management with a substantial stake in the company’s future.

•

Introduction of valuable new products and services.

•

Low stock valuation as measured in a variety of ways, including: price-to-earnings ratio (P/E), price-to-sales ratio, price-to-book ratio, market capitalization- to-revenue ratio, etc.

•

Potential to generate improved financial performance.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Small Company Stock Risk. The stocks of small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger

companies. Small companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of smaller companies typically are traded in lower volume, making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

Financials Sector Risk. The financials sector is subject to extensive government regulation, can be subject to relatively rapid changes due to increasingly blurred distinctions

between service segments, and can be significantly affected by the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, and price competition. The Fund may invest in companies that may be affected by the downturn in the subprime mortgage lending market in the United States. Subprime loans have higher defaults and losses than prime loans. Subprime loans also have higher delinquency rates than prime loans. The downturn in the subprime mortgage lending market may have far-reaching consequences for various aspects of the financials sector, and consequently, the value of the Fund may decline in response to such developments.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with investments in small cap value stocks. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Small Cap Value Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s past performance to that of market indexes.

The Russell 2000 Value Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with lower price- to-book ratios and lower forecasted growth values.

You cannot invest directly in these Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

PRINCIPAL STRATEGIES

The Fund invests primarily in smaller high growth companies.

Under normal market conditions, we will invest the Fund’s assets primarily in the equity securities of rapidly growing companies. These companies are usually small to mid-size with market capitalizations of less than $5 billion at the time of purchase.

We use a process of “bottom up” fundamental analysis to look for individual companies that we believe have above average potential for rapid earnings and price appreciation. Our analysis may include studying a company’s financial statements, visiting company facilities, and meeting with executive management, suppliers and customers.

As we analyze “high growth” companies, we are most interested in finding:

•

Potential for high revenue and earnings growth.

•

Experienced, proven management team.

•

Sustainable competitive advantage.

•

Market leadership and/or growing market share.

•

Ability to capitalize on favorable long term trends.

•

Strong cash flow.

•

Reasonable use of debt

•

Sound financial controls.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

The chart above is intended to provide you with an indication of the risks of investing in the Ultra Growth Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s past performance to that of a market index.

The Russell 2000 Growth Index measures the performance of 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 the Index. The Index’s returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVES

The Fund’s investment objectives are to seek capital appreciation and income. The Fund’s investment objectives can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in equity securities.

Under normal market conditions, we will invest at least 80% of the Fund’s net assets primarily in equity securities, including common stock and securities convertible into common stocks. The Fund typically invests in the securities of companies with market capitalizations of at least $100 million at the time of purchase, which we believe will pay above average dividends or interest.

The Fund may invest in fixed income securities consisting of corporate notes, bonds and debentures that are rated investment grade at the time of purchase.

When evaluating a potential investment for the Fund, we employ a comprehensive valuation analysis intended to establish a range for fair valuation or intrinsic company value, with a particular emphasis on company fundamentals. The initial valuation review may include:

•

Calculating and reviewing standard ratios, such as price-to-sales, price-to-book, price-to-earnings, and price/earnings-to-growth.

•

Modified discounted cash flow models with sensitivity analysis for changes to revenue growth rates, operating margins, outstanding share counts, earnings multiples, and tangible book value.

•

Changing sector and company specific outlooks due to subjective factors, including globalization of capital, labor and process knowledge, as well as increasing information and price transparency.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds.”

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund. The Fund is subject to the following principal investment risks:

Interest Rate Risk. Interest rate risk is the risk that a debt security’s value will decline due to changes in market interest

rates. Even though some interest-bearing securities offer a stable stream of income, their prices will fluctuate with changes in interest rates.

Credit Risk. Credit risk refers to the risk related to the credit quality of the issuer of a security held in the Fund’s portfolio. The lower a bond issue is rated by an agency, the more credit risk it is considered to represent. The Fund could lose money if the issuer of a security is unable to meet its financial obligations.

Sector Weightings Risk. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a single sector and securities of companies in that sector could react similarly to these or other developments. If the Fund invests in a few sectors it may have more exposure to the price movements of those sectors than funds that diversify their investments among many sectors.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with investments in value stocks. It is not appropriate for investors seeking a monthly income, short-term investors, or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The Fund commenced operations on December 15, 2008, upon the reorganization of the 1st Source Monogram Income Equity Fund, the Fund’s predecessor fund (the “Predecessor Fund”), into the Fund. With the reorganization, the Fund assumed the financial and performance

The chart above is intended to provide you with an indication of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of a market index.

The Russell 1000 Value Index is a widely recognized, unmanaged index that contains 1,000 securities with less than average growth orientation. The Russell 1000 Value Index measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged total return-index of the 3,000 largest U.S. companies based on total market capitalization.

You cannot invest directly in the Index. The Index’s returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is capital appreciation. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in equity securities by maintaining long equity positions and short equity positions.

Under normal market conditions, we will invest the Fund’s assets typically in the equity securities of companies with market capitalizations of at least $100 million at the time of purchase that we have identified as being undervalued (“long” equity positions) and we sell short those securities (“short” equity positions) that we have identified as being overvalued. The equity securities in which the Fund invests include common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, warrants and any rights to purchase common stocks.

The Fund may invest in fixed income securities consisting of corporate notes, bonds and debentures, including those that are rated less than investment grade at the time of purchase.

The Fund may at any time have either a net long exposure or a net short exposure to the equity markets and the Fund will not be managed to maintain either net long or net short market exposure.

The Fund may invest in early stage companies.

We believe that the best opportunities to make both short and long equity investments are when the market’s perception of the values of individual companies (measured by the stock price) differs widely from our assessment of the intrinsic values of such companies. We further believe that opportunities to invest in undervalued and overvalued stocks arise due to a variety of market inefficiencies including:

•

Changes in market participant psychology and circumstances.

•

Imperfect information.

•

Forecasts and projections by Wall Street analysts and company representatives that differ from experienced reality.

When evaluating a potential investment for the Fund, both long and short, we employ a comprehensive valuation analysis intended to establish a range for fair valuation or intrinsic company value, with particular emphasis on company fundamentals. The initial valuation review may include:

•

Calculating and reviewing standard ratios, such as price-to-sales, price-to-book, price-to-earnings, and price/earnings-to-growth.

•

Modified discounted cash flow models with sensitivity analysis for changes to revenue growth rates, operating margins, outstanding share counts, earnings multiples, and tangible book value.

•

Changing sector and company specific outlooks due to subjective factors, including globalization of capital, labor and process knowledge, as well as increasing information and price transparency.

Investment opportunities may be further prioritized based upon metrics for market participant psychology including:

•

Money flow.

•

Insider activity.

•

Stochastics.

•

Relative strength.

•

Variation from moving averages.

Along with long positions, the Long/Short Fund intends to engage in short sales of securities of companies that we believe:

•

Have earnings that appear to be reflected in the current price.

•

Are likely to fall short of market expectations.

•

Are in industries exhibiting weaknesses.

•

Have poor management.

•

Are likely to suffer an event affecting long-term earnings.

The Fund is non-diversified meaning that it can concentrate investments in a more limited number of issuers than a diversified fund.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Funds.”

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Stock Market Risk. The value of the equity securities in which the Fund invests may decline in response to developments affecting individual companies, industries and/or general economic conditions, although the value of short securities may rise in such circumstances. Price changes may be temporary or last for extended periods. Historically, stock prices have fluctuated in cycles.

Interest Rate Risk. Interest rate risk is the risk that a debt security’s value will decline due to changes in market interest rates. Even though some interest-bearing securities offer a stable stream of income, their prices will fluctuate with changes in interest rates.

Market Direction Risk. Since the Fund has both a “long” and a “short” portfolio, an investment in the Fund will involve market risks associated with different types of investment decisions than those made for a typical “long only” stock fund. The Fund’s results will suffer both when there is a general stock market advance and the Fund holds significant “short” equity positions, or when there is a general stock market decline when the Fund holds significant “long” equity positions.

Stock Selection Risk. While it may be the intent of the Advisor to take long positions in stocks that are undervalued and are expected to subsequently outperform the market and short positions in stocks that are overvalued and are expected to underperform the market, in various market conditions, there is no assurance that the Advisor will be successful in its selection process.

Short Sales Risk. There are certain unique risks associated with the use of short sales strategies. The Advisor may sell a security short by borrowing it from a third party and selling it at the then-current market price. The Fund is then obligated to buy the security on a later date so it can return the security to the lender. Short sales therefore involve the risk that the Fund will incur a loss by subsequently buying a security at a higher price than the price at which the Fund previously sold the security short. This would occur if the securities lender required the Fund to deliver the securities the Fund had borrowed at the commencement of the short sale and the Fund was unable to borrow the securities from other securities lenders. Moreover, because a Fund’s loss on a short sale arises from increases in the value of the security sold short, such loss, like the price of the security sold short, is theoretically unlimited. By contrast, a Fund’s loss on a long position arises from decreases in the value of the security and therefore is limited by the fact that a security’s value cannot drop below zero.

Non-Investment Grade Securities Risk. High yield, or non-investment grade, securities (also known as “junk bonds”) are those rated below investment grade by the primary rating agencies (e.g., below BB/Ba by S&P/Moody’s) and are considered speculative. Compared to investment grade debt securities, non-investment grade debt securities tend to have more volatile prices and increased price sensitivity to changing interest rates and adverse economic and business developments. In addition, compared to investments in investment grade securities, investments in non-investment grade securities are subject to greater risk of loss due to default or a decline in credit quality, a greater likelihood that adverse economic or company-specific events will make the issuer unable to make interest and/or principal payments, and greater susceptibility to negative market sentiment, leading to depressed prices and decreased liquidity.

Portfolio Turnover Rate. The Fund’s portfolio turnover rate is expected to exceed 200%. This type of Fund has a high portfolio turnover that necessarily results in greater transaction costs and causes more short-term capital gains (or losses) to be realized. Distributions to shareholders of short-term capital gains are taxed as ordinary income under federal income tax laws.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the greater risks and volatility that are inherent with investments in small-, mid- and large-cap value stocks. It is not appropriate for investors seeking safety of principal, a monthly income, short-term investors, or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The Fund commenced operations on December 15, 2008, upon the reorganization of the 1st Source Monogram Long/Short Fund, the Fund’s predecessor fund (the “Predecessor Fund”), into the Fund. With the reorganization, the Fund

The chart above is intended to provide you with an indication of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of a market index.

The Citigroup Three-Month U.S. Treasury Bills Index is an unmanaged index generally representative of the U.S. money markets. It is an average of the last three-month U.S. Treasury bill issues (excluding the current month-end bill).

The S&P 500 Index includes 500 of the United States’ largest stocks from a broad variety of industries.

You cannot invest directly in the Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

INVESTMENT OBJECTIVE

The Fund’s investment objective is to provide a rate of return that exceeds the rate of inflation over a business cycle by investing in U.S. Treasury securities with an emphasis on both income and capital appreciation. The Fund’s investment objective cannot be changed without shareholder approval.

PRINCIPAL STRATEGIES

In pursuit of the Fund’s investment objective, Hoisington Investment Management Company (HIMCO), the Fund’s Sub-Advisor will:

•

Typically invest at least 90% of the Fund’s total assets in U.S. Treasury securities and in repurchase agreements collateralized by such securities. Shareholders will be notified 60 days prior to any change in this policy.

•

Adjust the average maturity and effective duration of the Fund’s portfolio based on HIMCO’s assessment of multi-year trends in national and international economic conditions and interest rates, changes in inflationary pressures, and the value of long term U.S. Treasury bonds (maturities longer than 20 years) relative to inflation.

•

Invest in long term U.S. Treasury bonds, including U.S. Treasury Strips (zero coupon Treasury securities), when HIMCO determines that economic conditions suggest lower inflation and the multi-year trend is toward decreasing interest rates.

•

Invest in U.S. Treasury bills or notes (maturities less than five years) when HIMCO determines that economic conditions suggest rising inflation and the multi-year trend is toward increasing interest rates.

Over the course of a business cycle, under normal market conditions:

•

The effective duration of the Fund’s holdings is expected to vary from less than a year to a maximum of 25 years.

•

The maturity of the Fund’s holdings will range from less than a year to a maximum of the longest maturity Treasury bonds available.

•

When the Fund is invested in longer weighted average maturities it will be more sensitive to changes in market interest rates and its share price may be subject to greater volatility.

•

The Fund’s portfolio turnover rate will vary substantially from year to year. During some periods, turnover will be well below 50%. At other times, turnover could exceed 200% annually. At these times, increased portfolio turnover may result in higher transaction costs and may also result in taxable capital gains.

•

Portfolio adjustments may require the sale of securities prior to their maturity date. The goal of these transactions will be to increase income and/or change the duration of the overall portfolio.

For more information, please see “Additional Information about the Funds”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Credit Risk. Credit risk is the risk that the issuer of a debt security will fail to repay principal and interest on the security when due. HIMCO seeks to limit credit risk by investing primarily in U.S. Treasury securities and in repurchase agreements collateralized by such securities. Unlike corporate bonds or government agency securities, all Treasury securities are direct obligations of the U.S. government and vary only in maturity and coupon. U.S. Treasury securities are backed by the full faith and credit of the U.S. government and are viewed as carrying minimal credit risk.

LOGO

When interest rates rise, the value of the Fund’s portfolio securities and its share price generally decline. The values of fixed-rate debt securities with maturities longer than 20 years (U.S. Treasury bonds) are more sensitive to changes in market interest rates than the values of securities with shorter maturities (U.S. Treasury bills or notes). If the Fund is invested in U.S. Treasury bonds or zero coupon U.S. Treasury securities, the Fund’s share price should be expected to have greater volatility during periods of changing market interest rates.

LOGO

If HIMCO expects that interest rates will decrease, the average maturity of the portfolio can be extended to the maximum maturity of any existing Treasury issue. If interest rates are expected to increase, HIMCO may determine that a defensive policy is more appropriate, and may reduce the average maturity of the Fund’s portfolio to less than one year.

Income Risk. Income risk is the potential for a decline in the Fund’s income due to falling interest rates.

Effective Duration. 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%. Similarly, if the interest rate increased 1% on a bond with an effective duration of 15 years, the bond would decline 15%. At a yield of 5%, the effective duration of the longest maturity U.S. Treasury bond is about 15 years. The effective duration of the longest maturity U.S. zero coupon bond is 29 years. If the interest rate increased 1%, the value of the longest maturity zero coupon bond would decline 29%. Similarly, if the interest rate decreased 1%, the value of the longest maturity zero coupon bond would increase 29%.

It is important to understand that, while a valuable measure, effective duration is based on certain assumptions and has several limitations. It is most useful as a measure of interest rate risk when interest rate changes are small, rapid and occur equally across all the different points of the yield curve.

Zero Coupon Treasury Securities Risk. Zero coupon Treasury securities (U.S. Treasury Strips) are debt obligations which do not entitle the holder to periodic interest payments prior to maturity. They are traded at a discount from their face value. The discount of zero coupon Treasury securities varies primarily depending on the time remaining until maturity and prevailing levels of interest rates. Zero coupon securities can be sold prior to their due date in the secondary market at the then-prevailing market value. The market prices of zero coupon securities are generally more volatile than the market prices of securities of comparable quality and similar

maturity that pay interest periodically. Zero coupon securities are more sensitive to fluctuations in interest rates than non-zero coupon securities.

Repurchase Agreements Risk. As it pertains to the Fund, a repurchase agreement is a contract in which the seller of U.S. Treasury securities (a member of the Federal Reserve System or a recognized securities dealer) agrees to buy back the same securities (collateral) at a later date and at a predetermined price or yield. The main risk of a repurchase agreement is that the original seller might default on its obligation to repurchase the securities. If the seller defaults, the Fund will seek to recover its investment by selling the collateral and could encounter restrictions, costs or delays. The Fund will suffer a loss if it sells the collateral for less than the repurchase price.

WHO SHOULD INVEST

The Fund is not a money market fund and is best suited for long-term investors who can tolerate wide share price fluctuations. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Wasatch-Hoisington U.S. Treasury Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of a bond market index.

Barclays Capital Aggregate Bond Index (formerly the Lehman Brothers 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. To be included in the Index, the security must meet the following criteria: must have at least one year to final maturity, regardless of call features; must have at least $100 million par amount outstanding; must be rated investment grade or better by Moody’s Investors Service, Standard & Poor’s, or Fitch Investor’s Service; must be fixed rate, although it can carry a coupon that steps up or changes to a predetermined schedule; must be dollar-denominated and nonconvertible. All corporate and asset-backed securities must be registered with the SEC and must be publicly issued.

INVESTMENT OBJECTIVE

The Fund’s investment objective is to seek current income consistent with the preservation of capital. The Fund’s investment objective can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund normally invests at least 65% of the Fund’s total assets in debt securities of all types, including corporate bonds, U.S. government bonds, and variable and floating rate securities.

Consistent with the Income Fund’s investment objective, 1st Source Corporation Investment Advisors, Inc. (“1st Source”) expects the Fund to:

•

invest substantially all, but in no event less than 65%, of the Fund’s total assets at the time of purchase in debt securities.

•

invest in fixed income securities consisting of bonds, fixed income preferred stocks, debentures, notes, zero-coupon securities, mortgage-related and other asset-backed securities, state, municipal or industrial revenue bonds, obligations issued or guaranteed by agencies or instrumentalities of the U.S. government, debt securities convertible into, or exchangeable for, common stocks, foreign debt securities, income participation loans, guaranteed investment contracts, first mortgage loans and participation certificates in pools of mortgages issued or guaranteed by agencies or instrumentalities of the U.S. government.

•

typically invest in debt securities rated at the time of purchase within the four highest rating categories assigned by one or more nationally recognized statistical rating organizations (NRSROs) or, if unrated, those which the portfolio manager deems to be of comparable quality. The Fund may also invest up to 10% of its total assets in non-investment grade debt securities.

The Fund may engage in repurchase transactions, credit default swaps, forward contracts, and may also engage in futures transactions solely for hedging purposes and invest in options on futures. The Fund may also invest in other investment companies.

The Fund may purchase securities on a when-issued or delayed delivery basis, in which a security’s price and yield are fixed on a specific date, but payment and delivery are scheduled for a future date beyond the standard settlement period.

It is anticipated that the Fund will have an average maturity of 3¹/2 years to 5 years and a duration of 2¹/2 years to 4¹/2 years.

For more information, please see “Additional Information about the Funds.”

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

Interest Rate Risk. Interest rate risk is the risk that a debt security’s value will decline due to changes in market interest

rates. Even though some interest-bearing securities offer a stable stream of income, their prices will fluctuate with changes in interest rates.

Income Risk. Income risk refers to the risk that the income from the Fund’s portfolio will decline because of falling market interest rates. This can result when the Fund invests the proceeds from new share sales, or from matured or called bonds, at market interest rates that are below the Fund’s current earnings rate.

Convertible Securities Risk. The Fund may invest in convertible securities. Convertible securities are preferred stocks or debt obligations that are convertible into common stock. Generally, convertible securities offer lower interest or dividend yields than non-convertible securities of similar quality and less potential for gains or capital appreciation in a rising stock market than other equity securities. They tend to be more volatile than other fixed income securities, and the markets for convertible securities may be less liquid than markets for common stocks or bonds. Convertible securities have both equity and fixed income risk characteristics. Like all fixed income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. The market value of convertible securities tends to decline as interest rates increase. If, however, the market price of the common stock underlying a convertible security approaches or exceeds the conversion price of the convertible security, the convertible security tends to reflect the market price of the underlying common stock. In such a case, a convertible security may lose much or all of its value if the value of the underlying common stock then falls below the conversion price of the security. As the market price of the underlying common stock declines, the convertible security tends to trade increasingly based on its fixed income characteristics, and thus, may not necessarily decline in price as much as the underlying common stock. Additionally, an issuer may have the right to buy back a convertible security at a time and price that is unfavorable to the Fund.

Ratings Agency Risk. Credit quality in the high yield securities market can change suddenly and unexpectedly, and

even recently issued credit ratings may not fully reflect the actual risks posed by a particular high yield security. For these reasons, it is generally the policy of 1st Source, not to rely exclusively on ratings issued by established credit rating agencies, but to supplement such ratings with its own independent and on-going review of credit quality. The achievement of the Fund’s investment objective by investments in such securities may be more dependent on 1st Source’s credit analysis than is the case for higher quality bonds. Should the rating of a portfolio security be downgraded, 1st Source will determine whether it is in the best interests of the Fund to retain or dispose of such security.

When-Issued Securities. The Fund may purchase securities on a “when-issued” basis (i.e., for delivery beyond the normal settlement date at a stated price and yield). When the Fund engages in “when-issued” transactions, it relies on the seller to consummate the trade. Failure of the seller to do so may result in the Fund’s incurring a loss or missing the opportunity to obtain a price considered to be advantageous. The Fund will engage in “when-issued” delivery transactions only for the purpose of acquiring portfolio securities consistent with such Fund’s investment objective and strategies and not for investment leverage.

Investment Companies Risk. The Fund may invest in shares of other investment companies, including foreign and domestic registered and unregistered open-end funds, closed-end funds, and unit investment trusts and exchange traded funds noted below. Investing in another investment company subjects the Fund to the same risks associated with investing in the securities held by the applicable investment company and the investment strategies employed by such funds (such as the use of leverage). In addition, the benefit of investing in another investment company is largely dependent on the skill of the investment advisor of the underlying company and whether the associated fees and costs involved with investing in such company are offset by the potential gains. As a shareholder in an investment company, the Fund will bear its ratable share of that investment company’s expenses including advisory and administrative fees. Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies.

a futures contract may result in an immediate and substantial loss (or gain) to the Fund. Certain derivatives have the potential for unlimited losses regardless of the size of the initial investment. Investments in derivatives also entail exposure to the credit and default risk of the derivative’s counterparty. Derivatives also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the relevant assets, rates and indexes. Derivatives may also be less liquid and may be difficult or impossible to sell or terminate at a desirable time or price. Use of derivatives may increase the amount and affect the timing and character of taxes payable by shareholders. The Fund may engage in these derivative transactions to hedge against the economic impact of adverse changes in the market value of portfolio securities because of changes in market prices, currency exchange rates or interest rates. The Fund may not fully benefit or may lose money on derivatives if changes in their value do not correspond accurately to changes in the value of the Fund’s holdings. Another risk of derivatives is counterparty risk — the risk that the counterparty to a derivative transaction will not perform its obligations — which could leave the Fund worse off than if it had not entered into the position.

Credit Default Swaps Risk. The Fund may enter into credit default swaps, interest rate swaps and currency swaps. Swap agreements will tend to shift a Fund’s investment exposure from one type of investment to another. Depending on how they are used, swap agreements may increase or decrease the overall volatility of the Fund’s portfolio and its share price and yield. Swaps are subject to counterparty risk. The Fund bears the loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty; for this reason the Fund will enter into swap agreements only with counterparties that meet certain standards of creditworthiness.

Market Risk. Volatile financial markets can expose the Fund to greater market risk. The value of the securities in which the Fund invests may decline in response to developments affecting general economic conditions. Price changes may be temporary or last for extended periods.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who are looking to add a monthly income component to their portfolio, seeking higher potential returns than those provided by money market funds, and willing to accept the risks of price and dividend fluctuations.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The Fund commenced operations on December 15, 2008, upon the reorganization of 1st Source Monogram Income

The chart above is intended to provide you with an indication of the risks of investing in the Fund by showing changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of a market index.

Barclays Capital Intermediate U.S. Government/Credit Bond Index (formerly the Lehman Brothers Intermediate U.S. Government/Credit Bond Index) is an unmanaged index generally representative of the performance of government and corporate bonds with maturities of less than 10 years.

You cannot invest directly in the Index. The Index’s returns reflect no deductions for fees, expenses or taxes.

The following tables describe the fees and expenses you may pay if you buy, sell or hold shares of the Funds.

The management fees and net expenses for the Emerging Markets Small Cap, Global Opportunities, International Opportunities, Micro Cap and Micro Cap Value Funds are higher than those paid by most mutual funds. The management fees and net expenses for certain other Wasatch Funds are higher than those paid by many mutual funds.

The above example reflects contractual fee waivers and reimbursements through January 31, 2010 for all Funds except the Income Equity Fund. The above example for the Income Equity Fund reflects contractual fee waivers and reimbursements through January 31, 2011.

The Core Growth Fund, Emerging Markets Small Cap Fund, Global Opportunities Fund, Global Science & Technology Fund, Heritage Growth Fund, International Growth Fund, International Opportunities Fund, Micro Cap Fund, Micro Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Ultra Growth Fund, Income Equity Fund and Long/Short Fund are referred to as equity funds (each, an “Equity Fund,” and collectively, the “Equity Funds”).

INVESTMENT PROCESS

Securities for the Equity Funds are recommended by an experienced in-house research team. Each Fund’s portfolio manager seeks to ensure that investments are compatible with the Fund’s investment objective and strategies.

The research team uses “bottom-up” fundamental analysis to identify companies that they believe have outstanding investment potential. The research process includes prescreening potential investments using databases and industry contacts, analyzing annual reports and financial statements, making onsite visits, meeting with top management, evaluating the competitive environment, looking at distribution channels and identifying areas of potential growth.

SELLING SECURITIES

Decisions to sell securities are based on the best judgment of a Fund’s portfolio managers in a continuing effort to enhance long-term performance. In general, we are likely to sell a security when:

•

The rationale we used to buy the security is no longer valid.

•

The security becomes overpriced.

•

We believe another security has better investment potential.

With respect to the Long/Short Fund, we may make a decision to close out a short position when:

•

The price of the security sold short has fallen to a point

where we will recognize a gain.

•

The price of the security sold short has risen to a point where we feel capital is unreasonably at risk, regardless of how we evaluate the security.

INVESTMENT STRATEGIES AND RISKS

The section below provides additional information about certain of the Funds’ principal risks and describes certain other applicable investment strategies and related risks. The Funds may use other techniques and invest in other securities and are subject to further restrictions and risks that are described in the SAI under the section entitled “Investment Strategies and Their Risks.”

Convertible Securities Risk. The Equity Funds may invest in convertible securities. Convertible securities are preferred stocks or debt obligations that are convertible into common stock. Generally, convertible securities offer lower interest or dividend yields than non-convertible securities of similar quality and have less potential for gains or capital appreciation in a rising stock market than other equity securities. They tend to be more volatile than other fixed income securities, and the markets for convertible securities may be less

liquid than markets for common stocks or bonds. Convertible securities have both equity and fixed income risk characteristics. Like all fixed income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. The market value of convertible securities tends to decline as interest rates increase. If, however, the market price of the common stock underlying a convertible security approaches or exceeds the conversion price of the convertible security, the convertible security tends to reflect the market price of the underlying common stock. In such a case, a convertible security may lose much or all of its value if the value of the underlying common stock then falls below the conversion price of the security. As the market price of the underlying common stock declines, the convertible security tends to trade increasingly based on its fixed income characteristics, and thus, may not necessarily decline in price as much as the underlying common stock. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and price that is unfavorable to a Fund.

Early Stage Companies Risk. The Equity Funds may invest in early stage companies. Early stage companies may not be profitable now and there is no guarantee that they will become profitable or be able to obtain necessary financing. They may rely on untested business plans, may not be successful in developing markets for their products or services and may remain an insignificant part of their industry. Stocks of early stage companies may be illiquid or they may not be publicly traded. Investments in early stage companies tend to be more volatile and somewhat more speculative than investments in more established companies.

Exchange Traded Funds (ETFs) Risk. The Equity Funds may invest in ETFs. These companies are investment companies that are bought and sold on a securities exchange. When a Fund invests in an ETF, it will bear additional expenses based on its pro rata share of the ETF’s operating expenses. The risk of owning an ETF generally reflects the risks of the underlying securities that ETF is designed to track. Lack of liquidity in an ETF could result in the ETF being more volatile than the underlying portfolio of securities. In addition, because of ETF expenses, compared to owning the underlying securities directly, it may be more costly to own an ETF.

Foreign Securities Risk. The Equity Funds and the Income Fund may invest in foreign securities. Foreign securities may be less liquid and their prices may be more volatile than domestic securities. There may be less government supervision and regulation of foreign stock exchanges, brokers, custodians and listed companies than in the U.S.

Foreign Market Risk. Foreign securities markets may be less liquid and their prices may be more volatile than domestic markets. There also may be less government supervision and regulation of foreign stock exchanges, brokers, custodians and listed companies than in the U.S. Certain markets may require payment for securities before delivery and delays may be encountered in settling securities transactions. In some foreign markets, there may not be protection against failure by other parties to complete transactions. There may be limited legal recourse against an issuer in the event of a default on a debt instrument.

Currency Risk. The U.S. dollar value of a Fund’s assets will be affected by foreign currency exchange rates and may be affected by exchange control regulations. A change in the value of any foreign currency will change the U.S. dollar value of a Fund’s assets that are denominated or traded in that country. In addition, a Fund may incur costs in connection with conversions between various currencies. While the Funds have the ability to hedge against fluctuations in foreign currency exchange rates, they have no present intention to do so. A risk of not hedging currencies is that if the U.S. dollar strengthens, returns from foreign markets will be less when converted into U.S. dollars.

Political and Economic Risk. Foreign investments may be subject to heightened political and economic risks, particularly in countries with emerging economies and securities markets, which may have relatively unstable governments and economies based on only a few industries. In some countries, there is the risk that the government could seize or nationalize companies, impose additional withholding taxes on dividends or interest income payable on securities, impose exchange controls or adopt other restrictions that could affect a Fund’s investments.

Regulatory Risk. Foreign companies not publicly traded in the U.S. are not subject to accounting and financial reporting standards and requirements comparable to those U.S. companies must meet. In addition, there may be less information publicly available about such companies.

Foreign Tax Risk. A Fund’s income from foreign issuers may be subject to non-U.S. withholding taxes. A Fund may also be subject to taxes on trading profits or on transfers of securities in some countries. To the extent foreign income taxes are paid by a Fund, shareholders may be entitled to a credit or deduction for U.S. tax purposes.

Transaction Costs. The costs of buying and selling foreign securities including brokerage, tax and custody costs are generally higher than those for domestic transactions.

Initial Public Offerings (IPOs) Risk. The Equity Funds may invest in IPOs. IPOs involve a higher degree of risk not normally associated with offerings of more seasoned companies. Companies involved in IPOs generally have limited operating histories and their prospects for future profitability are uncertain. Prices of IPOs may also be unstable due to such factors as the absence of a prior public market, the small number of shares available for trading and limited investor information. Shares purchased in IPOs may be difficult to sell at a time or price that is desirable.

Sector Weightings Risk. Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a single sector and the securities of companies in that sector could react similarly to these or other developments. If a Fund invests in a few sectors it may have more exposure to the price movements of those sectors than funds that diversify their investments among many sectors.

OTHER INVESTMENT STRATEGIES

The Funds may use other investment strategies in addition to their principal strategies. For information about the more significant of these strategies and their risks see “Investment Strategies and Their Risks” in the SAI.

FUNDAMENTAL POLICIES

Certain policies of the Funds cannot be changed without a shareholder vote. These policies are described in the SAI.

CASH/TEMPORARY DEFENSIVE POSITIONS

If the research team is unable to locate attractive investment opportunities for the Equity Funds and the Income Fund, or when we consider market, economic or political conditions to be unfavorable for profitable investing, we may take temporary defensive positions that are inconsistent with an Equity Fund’s and the Income Fund’s principal investment strategies.

For example, we may temporarily increase a Fund’s cash position, invest a larger portion of its assets in money market instruments or repurchase agreements, or in the case of the Global Opportunities, Global Science & Technology, International Growth and International Opportunities Funds, invest in fewer than three countries. We reserve the right to invest all of a Fund’s assets in temporary defensive positions.

When a Fund takes temporary defensive positions by increasing its holdings in cash, money market instruments or repurchase agreements, it may not participate in stock market advances or declines to the same extent that it would if the Fund remained more fully invested in stocks. In addition, the Fund may not achieve its investment objective.

PORTFOLIO TURNOVER

Each Equity Fund generally intends to purchase securities for long-term investment rather than short-term gains. However, short term transactions may result from liquidity needs, securities having reached a price or yield objective, or by reason of economic or other developments not foreseen at the time of the initial investment decision. Changes are made in a Fund’s portfolio whenever the Fund’s portfolio manager(s) believe such changes are desirable. Portfolio turnover rates are generally not a factor in making decisions to buy or sell securities.

To a lesser extent, a Fund may purchase securities in anticipation of relatively short-term price gains. Increased portfolio turnover may result in higher costs for brokerage commissions, dealer mark-ups and other transaction costs and may also result in taxable capital gains. The Long/Short Fund is expected to regularly enter into trades that will generate short term capital gains.

INVESTMENT ADVISOR AND SUB-ADVISORS

The investment advisor for Wasatch Funds is Wasatch Advisors, Inc. (the “Advisor”). The Advisor and Wasatch Funds are located at 150 Social Hall Avenue, 4th Floor, Salt Lake City, Utah 84111. The Advisor has been in the investment advisory business since 1975. As of December 31, 2008, the Advisor had approximately $4.5 billion in assets under management.

The Advisor is responsible for investing Wasatch Funds’ assets, placing orders to buy and sell securities and negotiating brokerage commissions on portfolio transactions. In addition, the Advisor provides certain administrative services and manages the Funds’ business affairs.

The Advisor has entered into a sub-advisory agreement with Hoisington Investment Management Company (“HIMCO”) to perform the duty of portfolio management of the U.S. Treasury Fund. The Advisor has entered into a sub-advisory agreement with 1st Source Corporation Investment Advisors, Inc. (“1st Source”) to perform the duty of portfolio management for the Income Fund.

HIMCO is a registered investment advisor that has been in business since 1980. The firm agreed to become the sub-advisor for the Wasatch-Hoisington U.S. Treasury Fund in 1996. HIMCO has offices at 1250 S. Capital of Texas Highway, Building 3, #600, Austin, TX 78746-6464.

HIMCO provides investment management services for individuals, pension and profit-sharing plans, trusts and estates, charitable organizations and corporations, and other business entities. As of December 31, 2008, HIMCO provided investment advice to 42 separately managed accounts and had approximately $6 billion in assets under management. HIMCO provides investment advice for fixed income securities, including U.S. government securities.

1st Source is a registered investment advisor that has been in business since 2001. 1st Source agreed to become the sub-advisor for the Income Fund in 2008. 1st Source has offices at 100 North Michigan Street, South Bend, Indiana 46601. 1st Source is a wholly owned subsidiary of 1st Source Bank, which is a wholly owned subsidiary of 1st Source Corporation, a publicly held bank holding company. 1st Source Bank, which was founded in 1936, and its affiliates, administer and manage on behalf of its clients, assets of approximately $2.8 billion. 1st Source Bank has over 70 years of banking experience. As of December 31, 2008, 1st Source had approximately $2.6 billion in assets under management.

1st Source makes the day-to-day investment decisions for the Income Fund. In addition, 1st Source continuously reviews, supervises and administers the Income Fund’s investment program.

MANAGEMENT FEES AND EXPENSE LIMITATIONS

Each Fund pays the Advisor a monthly management fee that is a percentage of the Fund’s average daily net assets. More detailed information about the Advisor’s investment advisory and service contracts with Wasatch Funds and the Advisor’s contract with each Sub-Advisor can be found in the SAI. A discussion regarding the basis for the Board of

Directors’ approval at its annual review of the Advisory and Service Contract with respect to the Funds (except the Global Opportunities Fund, Income Equity Fund, Long/Short Fund and Income Fund) and the Sub-Advisory Agreement with respect to the U.S. Treasury Fund at a meeting held on February 6, 2008, is available in the Funds’ Semi-Annual Report dated March 31, 2008.

A discussion regarding the basis for the Board of Directors’ approval of the Advisory and Service Contract with respect to the Equity Funds at a meeting held on January 28, 2009, (except the Income Equity, Long/Short and Income Funds) and U.S. Treasury Fund, the Advisory and Service Contract with respect to the Income Equity, Long/Short and Income Funds, the Sub-Advisory Agreement with respect to the U.S Treasury Fund, and the Sub-Advisory Agreement with respect to the Income Fund will be available in the Funds’ Semi-Annual Report dated March 31, 2009.

The following chart reflects the management fees paid by the Funds to the Advisor after taking into account any reimbursements during the most recent fiscal year, except as noted.

The Advisor has contractually agreed to limit the expenses of each Fund (except the Long/Short Fund and Income Fund) at least through January 31, 2010, to a certain percentage of average net assets computed on a daily basis, subject to the following. The Advisor has contractually agreed to limit the expenses of the Income Equity Fund at least through January 31, 2011, to a certain percentage of average net assets computed on a daily basis. Expense limits are shown in the following chart. The Advisor will pay all expenses, excluding interest, taxes, brokerage commissions, other investment related costs and extraordinary expenses, in excess of such limitations. Acquired Fund Fees and Expenses and Dividend Expense on Short Sales are also excluded from the contractual fee limitation. The Advisor may rescind these contractual limitations on expenses any time after January 31, 2010 or January 31, 2011 for the Income Equity Fund.


Wasatch Fund	Annual Management Fees, Net of Reimbursements		Expense Limitations
Core Growth Fund	1.00	%	1.50	%
Emerging Markets Small Cap Fund*	1.75	%	2.10	%
Global Opportunities Fund**	1.59	%	2.25	%
Global Science & Technology Fund	1.50	%	1.95	%
Heritage Growth Fund	0.64	%	0.95	%
International Growth Fund	1.50	%	1.95	%
International Opportunities Fund	1.66	%	2.25	%
Micro Cap Fund	1.95	%	2.25	%
Micro Cap Value Fund	1.90	%	2.25	%
Small Cap Growth Fund	1.00	%	1.50	%


Wasatch Fund	Annual Management Fees, Net of Reimbursements		Expense Limitations
Small Cap Value Fund	1.50	%	1.95	%
Ultra Growth Fund	1.25	%	1.75	%
Income Equity Fund***	0.90	%	1.10	%
Long/Short Fund***	1.10	%	—
U.S. Treasury Fund^†	0.50	%	0.75	%
Income Fund^††	0.55	%	—

The expense limitation for the Emerging Markets Small Cap Fund will decrease to 2.05% when average net assets reach $50 million; to 2.00% when average net assets reach $100 million; and to 1.95% when average net assets of the Fund reach $150 million. The decrease will take effect on the first day of the quarter after the Fund’s assets reach such threshold. After Fund assets reach a particular threshold, the expense limitation will remain at the applicable percentage even if the Fund’s assets subsequently decrease below the required level.

Contractual management fee. The Global Opportunities Fund commenced operations on November 17, 2008.

***

The 1st Source Monogram Income Equity Fund, the Predecessor Fund to the Income Equity Fund, paid an advisory fee of 0.80% of the fund’s average daily net assets to its investment adviser, 1st Source Corporation Investment Advisors, Inc. (“1st Source”), during its last fiscal year ended September 30, 2008. The 1st Source Monogram Long/Short Fund, the Predecessor Fund to the Long/Short Fund, paid an advisory fee of 1.10% of the fund’s average daily net assets to its investment adviser, 1st Source, during its last fiscal year ended September 30, 2008.

^†

The U.S. Treasury Fund is managed by HIMCO. Under a sub-advisory agreement between the Advisor and HIMCO, the Advisor has agreed to pay HIMCO a management fee, which is currently equal to 0.25% of such Fund’s daily net assets. HIMCO may reimburse the Advisor for certain expenses.

^††

The Income Fund’s portfolio is managed by a sub-advisor, 1st Source. Under a sub-advisory agreement between the Advisor and 1st Source, the Advisor has agreed to pay 1st Source a management fee, which is currently equal to 0.52% of the Fund’s daily net assets. The 1st Source Monogram Income Fund, the Predecessor Fund to the Income Fund paid an advisory fee of 0.55% of the fund’s average daily net assets to its investment adviser, 1st Source, during its last fiscal year ended March 31, 2008. 1st Source may reimburse the Advisor for certain expenses.

PORTFOLIO MANAGEMENT

All Wasatch Funds (except the Income and U.S. Treasury Funds) are managed using a team approach. The Wasatch research team consists of the Chief Investment Officer, 17 portfolio managers and 12 securities analysts. The lead portfolio managers are responsible for making investment decisions for their respective Funds in accordance with each Fund’s investment objective and strategies. The research team is responsible for analyzing securities and making investment recommendations. The individuals listed in the table below are primarily responsible for the day-to-day management of the respective Fund.


Name of Fund		Lead Portfolio Manager(s)
Core Growth Fund		JB Taylor and Paul Lambert
Emerging Markets Small Cap Fund		Roger D. Edgley, CFA and Laura Geritz


Name of Fund		Lead Portfolio Manager(s)
Global Opportunities Fund		Robert Gardiner, CFA and Blake H. Walker
Global Science & Technology Fund		Samuel S. Stewart, Jr., PhD, CFA
Heritage Growth Fund		Christopher D. Bowen and Ryan Snow
International Growth Fund		Roger D. Edgley, CFA
International Opportunities Fund		Roger D. Edgley, CFA and Blake H. Walker
Micro Cap Fund		Daniel Chace, CFA
Micro Cap Value Fund		Brian Bythrow, CFA and John Malooly, CFA
Small Cap Growth Fund		Jeff Cardon, CFA
Small Cap Value Fund		Jim Larkins
Ultra Growth Fund		Ajay Krishnan, CFA
Income Equity Fund		Ralph Shive, CFA and Michael Shinnick
Long/Short Fund		Michael Shinnick and Ralph Shive, CFA

HIMCO and 1st Source, under the supervision of the Advisor, are responsible for making investment decisions for the U.S. Treasury Fund and the Income Fund, respectively. The individuals listed below are primarily responsible for the day-to-day portfolio management of the respective Fund.


Name of Fund		Portfolio Manager
U.S. Treasury Fund		Van Robert Hoisington
Income Fund		Paul Gifford, CFA

Samuel S. Stewart, Jr., PhD, CFA has served as President of Wasatch Funds since 1986, Chairman of the Board from 1986 through 2004 and Chairman of the Board of the Advisor since 1975. He has been the lead portfolio manager for the Wasatch Strategic Income Fund since February 2006 and the Global Science & Technology Fund since May 2008. Dr. Stewart earned a Bachelor of Science in Business Administration from Northwestern University. He went on to earn a Master of Business Administration and a Doctorate in Finance from Stanford University. From 1975 through 2000, Dr. Stewart served as a professor of finance at the University of Utah.

Jeff Cardon, CFA is President, Treasurer and a Director of the Advisor. He has been the lead portfolio manager for the Wasatch Small Cap Growth Fund since 1986. Mr. Cardon joined the Advisor in 1980. He holds a Bachelor of Science in Finance from the University of Utah.

Christopher D. Bowen has been a lead portfolio manager for the Wasatch Heritage Growth Fund since 2004. He joined the Advisor in 2001. Prior to joining the Advisor, Mr. Bowen earned a Master in Business Administration from the University of Maryland. From 1996 to 1999, he worked in Washington, D.C. as an analyst with the Financial Institutions Regulatory Group of the law firm Skadden, Arps, Slate, Meagher & Flom LLP. He received a Bachelor of Arts in Economics from St. Mary’s College of Maryland where he graduated Summa Cum Laude.

Brian Bythrow, CFA has been a lead portfolio manager for the Wasatch Micro Cap Value Fund since 2003 and the Wasatch Heritage Value Fund since August 2007. He joined the Advisor in 2003. Since 1998 and prior to joining the Advisor, Mr. Bythrow was the portfolio manager for the 1st

Source Monogram Special Equity Fund. He earned a Master of Business Administration from California State University in Sacramento and a Bachelor of Science in Social Sciences from the United States Air Force Academy.

Daniel Chace, CFA has been a lead portfolio manager for the Wasatch Micro Cap Fund since 2004. He joined the Advisor in 2002. Prior to joining the Advisor, Mr. Chace earned a Master in Business Administration from Harvard Business School. Before entering business school in 2000, he worked in New York City as an equities analyst following Latin American financial institutions at J.P. Morgan Securities Inc. From 1999 to 2000, he was the lead Latin American financial institutions analyst at SG Cowen Securities Corporation. Mr. Chace received a Bachelor of Arts in Cultural Anthropology from Pomona College.

Roger D. Edgley, CFA has been a lead portfolio manager for the Wasatch International Growth Fund since January 2006, the Wasatch International Opportunities Fund since 2005 and the Wasatch Emerging Markets Small Cap Fund since October 2007. Mr. Edgley is also the Director of International Research for the Advisor. Prior to joining the Advisor in 2002, Mr. Edgley was a principal, director of international research and portfolio manager for Liberty Wanger Asset Management in Chicago, which managed the Acorn Funds. He was a co-manager of the Acorn Foreign Forty Fund. Liberty Financial acquired Wanger Asset Management in 2000. Mr. Edgley joined Wanger Asset Management as an equities analyst in 1994 to cover the firm’s Asia (ex-Japan) portfolio that included the markets of Hong Kong, Singapore, Malaysia, Taiwan, Indonesia, Thailand and Korea. Mr. Edgley is a native of the United Kingdom and earned a Bachelor of Science with honors in Psychology from the University of Hertfordshire, a Master of Arts in Philosophy from the University of Sussex and a Master of Science in Social Psychology with Statistics from the London School of Economics.

Robert Gardiner has been a portfolio manager for the Wasatch Global Opportunities Fund since it launched in 2008. Previously, he was the lead portfolio manager on the Micro Cap Fund from its inception in 1995 through 2007. Mr. Gardiner was also instrumental in launching the Wasatch Small Cap Value and Micro Cap Value Funds and served as a Portfolio Manager on both. Mr. Gardiner joined Wasatch Advisors in 1981 and has spent his entire career in the field of investment management. He served as a Director of Wasatch Advisors from 1994 to 2007 and the Director of Research from 2005 to 2007. Mr. Gardiner relinquished his administrative duties in 2008 to focus solely on analyzing investments and managing the Global Opportunities Fund. Mr. Gardiner graduated magna cum laude from the University of Utah with a Bachelor of Arts in Mathematics and a Bachelor of Science in Physics, with minors in French and Chemistry.

Laura Geritz has been a portfolio manager for the Emerging Markets Small Cap Fund since 2009. She joined the Advisor in 2006 as a Senior Equities Analyst for the Wasatch International Growth and International Opportunities Funds. Before joining the Advisor, Ms. Geritz worked as a Senior Analyst for Mellon Corporation where she made

investment recommendations for two of the company’s small cap growth funds. Prior to joining Mellon Corporation, Ms. Geritz spent four years analyzing securities for various products at American Century Investments, where her stock selections represented approximately 1/3 of the assets held in each mid cap growth portfolio. Ms. Geritz graduated with honors from The University of Kansas with a Bachelor of Arts in Political Science and History. Later, she earned a masters degree in East Asian Languages & Cultures. Before completing her masters, Laura spent one year in Japan.

Ajay Krishnan, CFA has been a lead portfolio manager for the Wasatch Ultra Growth Fund since 2000. He served as a portfolio manager for the Global Science & Technology Fund from 2000 through January 2007. Mr. Krishnan joined the Advisor in 1994. He holds a Master’s degree in business from Utah State University and a Bachelor of Science in Physics with a minor in Mathematics from Bombay University.

Paul Lambert has been a lead portfolio manager for the Wasatch Core Growth Fund since 2005. Mr. Lambert began working on the Core Growth Fund as a Senior Analyst in 2003. He joined the Advisor in 2000. From 1999 until joining the Advisor, he worked for Fidelity Investments. Mr. Lambert holds a Bachelor of Science in Finance from the University of Utah.

Jim Larkins has been a lead portfolio manager for the Wasatch Small Cap Value Fund since 1999. Mr. Larkins became an analyst on the Small Cap Value portfolios at its launch in 1997. Mr. Larkins joined the Advisor in 1995. He holds a Master’s degree in Business and a Bachelor of Arts in Economics from Brigham Young University.

John Malooly, CFA has been a lead portfolio manager for the Wasatch Micro Cap Value Fund since 2003. He joined the Advisor in 1997 from UMB Fund Services, Inc. (formerly Sunstone Financial Group), the transfer agent for Wasatch Funds. Mr. Malooly holds a Bachelor of Science in Business Administration from Marquette University.

Ralph Shive, CFA, has been a lead portfolio manager for the Income Equity Fund and the Long/Short Fund since these Funds commenced of operations in December 2008. Mr. Shive joined the Advisor at that time. Mr. Shive was a portfolio manager of the 1st Source Monogram Income Equity Fund (the Predecessor Fund to the Income Equity Fund) from September 1996 until December 2008. Mr. Shive served as Vice President and Chief Investment Officer of 1st Source from April 1998 through December 2008 and served as Investment Officer of 1st Source Bank from September 1989 through December 2008. Mr. Shive has worked as an analyst and portfolio manager for over 30 years after receiving his Bachelor of Arts from Southern Methodist University.

Michael Shinnick has been a lead portfolio manager of the Long/Short Fund and Income Equity Fund since these Funds commenced of operations in December 2008. Mr. Shinnick joined the Advisor at that time. Mr. Shinnick was a portfolio manager of the 1st Source Monogram Long/Short Fund (the Predecessor Fund to the Long/Short Fund) from its inception in August 2003 through December 2008.

Mr. Shinnick served as a Portfolio Manager of 1st Source Corporation Investment Advisors, Inc. from May 2003 through December 2008. From 1994 to 2000, Mr. Shinnick was a principal and then a partner with Diamond Technology Partners, Inc., Chicago, Illinois, a global management consulting firm. From 2000 to 2001, Mr. Shinnick was an officer of Zurich Financial Services, Inc., New York, New York, in its Z-COSM venture group. From 2002 to May 2003, Mr. Shinnick was a private investor. Mr. Shinnick received a Bachelor of Arts from the University of Notre Dame.

Ryan Snow has been a lead portfolio manager for the Wasatch Heritage Growth Fund since 2004. He joined the Advisor in 2000. Mr. Snow worked for Fidelity Investments from 1999 until he joined the Advisor. Ryan Snow has been a lead portfolio manager for the Wasatch Heritage Growth Fund since its inception in 2004. He holds a Bachelor of Science in Finance from the University of Utah.

JB Taylor has been a lead portfolio manager for the Wasatch Core Growth Fund since 2000. Mr. Taylor began working on the portfolio as a Senior Analyst in 1999. Mr. Taylor joined the Advisor in 1996. He holds a Bachelor of Science in Industrial Engineering from Stanford University.

Blake H. Walker has been a lead portfolio manager for the Wasatch International Opportunities Fund since January 2005 and the Wasatch Global Opportunities Fund since November 2008. He joined the Advisor in 2002. Mr. Walker graduated from Brigham Young University in 2002 with a Bachelor of Science in Accounting. A native of Toronto, Canada, Mr. Walker also spent nearly two years living in France and is fluent in French.

Van Robert Hoisington has been the portfolio manager of the Wasatch-Hoisington U.S. Treasury Fund since 1996. In addition, he has served as President and Senior Investment Officer of HIMCO since he founded the firm in 1980. Mr. Hoisington received a Bachelor of Arts degree from the University of Kansas and a Master’s degree in business from Fort Hays Kansas University.

Paul Gifford, CFA serves as Chief Investment Officer and Vice President of 1st Source and joined 1st Source Bank in April 2000. He has been the portfolio manager of the Income Fund since the Fund commenced operations in December 2008. Mr. Gifford served as the portfolio manager of the 1st Source Monogram Income Fund (the Predecessor Fund) from April 2000 through December 2008. From December 1990 to April 2000, Mr. Gifford served as assistant Vice President, Portfolio Manager and Product Manager with Bremer Trust, N.A., after receiving his Bachelor of Science from the University of Minnesota-Mankato.

The SAI provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers and the portfolio managers’ ownership of securities in the Funds.

SERVICE PROVIDERS

Investment Advisor

Wasatch Advisors, Inc.

150 Social Hall Avenue, 4th Floor

Salt Lake City, UT 84111

Sub-Advisor for the U.S. Treasury Fund

Hoisington Investment Management Co.

1250 S. Capital of Texas Highway

Building 3, #600

Austin, TX 78746-6464

Sub-Advisor for the Income Fund

1st Source Corporation Investment Advisors, Inc.

100 North Michigan Street

South Bend, IN 46601

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.

803 West Michigan Street, Suite A

Milwaukee, WI 53233-2301

Custodian

State Street Bank and Trust Company

801 Pennsylvania Avenue

Kansas City, MO 64105

Legal Counsel to Wasatch Funds and Independent Directors

Chapman and Cutler, LLP

111 West Monroe Street

Chicago, IL 60603

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP

1100 Walnut, Suite 1300

Kansas City, MO 64106

For policies governing the following transactions and services, please see “Account Policies”.

New accounts are subject to acceptance by Wasatch Funds. To open a retirement or education savings account, you will also need the appropriate information kit and application.

ONLINE

Visit Wasatch Funds’ web site, complete and electronically submit the online application. You may also sign up to invest automatically by filling out the Account Privileges Change Form.

Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions.

ONLINE

If you have previously established bank information, you may add to your account in amounts of $100 or more.

TELEPHONE

You may add to your account via electronic funds transfer in amounts of $100 up to $50,000 ($100,000 for corporate accounts). If an electronic funds transfer cannot be processed for any reason, your account will be charged a service fee (currently $20.00).

MAIL

Complete the additional investment form from your statement or write a note that includes the name of the Fund, name of the account and the account number. Mail the form or note and a check.

WIRE

Have your bank send your investment to:

•

UMB Bank, N.A.

•

ABA Number 101000695

For credit to Wasatch Funds

•

Account Number 987-060-9800

For further credit to:

•

Wasatch (name of Fund)

•

Your Wasatch account number

•

Name(s) of investor(s)

•

Social security or tax ID number

AUTOMATICALLY

Automatic Investment Plan (AIP) — Complete and mail the Account Privileges Change Form and any other required materials. The Form can be obtained from our web site or by calling a shareholder services representative.

The minimum for subsequent automatic investments is $50 per month or $100 per quarter.

GENERAL

•

Redemption requests for over $50,000 ($100,000 for corporate accounts) must be made in writing (a Medallion signature guarantee is required).

•

Checks will be mailed to the address on your account.

•

Redemption requests made within 30 days of an address change must be made in writing and require a Medallion signature guarantee.

ONLINE

You may sell shares in amounts of $500 up to $50,000.

TELEPHONE

You may sell shares in your account in amounts of $500 up to $50,000 ($100,000 for corporate accounts) by calling Wasatch Funds if you did not decline the telephone redemption privilege when establishing your account.

MAIL

Send Wasatch Funds a letter that includes:

•

Your name

•

The Fund(s) name

•

Your account number(s)

•

The dollar amount or number of shares to be redeemed

•

Your daytime telephone number

•

Signature(s) of account owners (sign exactly as the account is registered)

•

Medallion signature guarantee (if required)

For IRA accounts, please obtain an IRA Distribution Form from our web site or by calling a shareholder services representative. If no withholding instructions are given, Wasatch Funds is required to withhold 10%.

AUTOMATICALLY

Systematic Withdrawal Plan — Complete and mail the Account Privileges Change Form and any other required materials. The Form can be obtained from our web site or by calling a shareholder services representative.

This plan allows you to make monthly, quarterly, semiannual or annual redemptions of $50 or more.

WHY WASATCH CLOSES OR REOPENS FUNDS

The Advisor periodically closes certain Wasatch Funds to control asset levels.

We will close a Fund when we feel it is necessary to preserve the integrity of the Fund’s investment strategies. Closing Funds can be an important component of portfolio management, particularly for Funds that primarily invest in smaller companies. We believe closing Funds is in the best interest of our shareholders.

Wasatch has two levels of closed Funds, sometimes referred to as “soft closed” and “hard closed.” A “soft closed” fund permits existing shareholders of that Fund to make additional investments in that Fund, but it is closed to new investors. A “hard closed” fund is closed to all investors.

In closing a Fund, the Advisor may well be foregoing potential revenue in order to protect the Fund’s investment objectives. We decide to close Funds because the alternatives to closing a Fund would likely result in diminishing the effectiveness of the Fund’s investment strategies. These alternatives include:

Increase position sizes — which may be difficult to accomplish and could increase the overall risk of the fund.

Invest in a longer list of names — which may dilute the manager’s best investment ideas.

Invest in larger companies — which could be a departure from the Fund’s intended strategy.

Conversely, when the assets of a closed Fund are at a level that we believe additional assets could be invested without impairing the Fund, we may reopen the Fund.

The Advisor also manages separate account portfolios that are similar in composition to some of the Wasatch Funds. We carefully consider many business factors including aggregate assets in Funds and separate accounts when deciding to close or open Funds.

As described in more detail in the SAI, the Advisor retains the right to make investor exceptions to closed Funds.

HOW WASATCH CLOSES OR REOPENS FUNDS

Fund closings or reopenings will be posted on Wasatch Funds’ web site at www.wasatchfunds.com. The Advisor will make every effort to post information related to fund closings at least two weeks prior to the effective date of the closing. You may sign up on the Funds’ web site to receive an electronic notification of fund closings and openings. You can also request information about a Fund’s open or closed status from a shareholder services representative by calling our toll-free number at 800.551.1700.

Each change in a Fund’s status also will be filed electronically with the Securities and Exchange Commission (SEC). Please see “Other Important Information” for more information about how to view or obtain copies of documents filed with the SEC.

POLICIES TO PREVENT MARKET TIMING

Short-term trading or “market timing” involves frequent purchases and redemptions of fund shares and may present

risks for long-term shareholders of the fund including among other things, dilution in the value of fund shares held by long-term shareholders, interference in the efficient management of the fund’s portfolio, increased brokerage and administrative costs and forcing the fund to hold excess levels of cash. One form of market timing is called “time zone arbitrage.” This occurs when shareholders of a fund that primarily invests in securities that are listed on foreign exchanges take advantage of time zone differences between the close of foreign markets on which the fund’s securities trade and the close of the U.S. markets, which is when the fund’s share price is calculated. Arbitrage opportunities may also occur in funds that do not invest in foreign securities. For example, if trading in a security held by a fund is halted and does not resume prior to the time the fund’s share price is calculated, such “stale pricing” presents an opportunity for investors to take advantage of the pricing discrepancy. Similarly, funds that hold thinly-traded securities, such as certain micro- or small-capitalization securities, may be exposed to varying levels of pricing arbitrage.

Wasatch Funds are intended as long-term investments. Therefore, the Funds’ Board of Directors has adopted policies and procedures designed to prohibit short-term trading, excessive exchanges and other market timing activities. Steps the Funds have taken include: periodically reviewing individual shareholder trading activity to identify shareholders who are making excessive transactions or otherwise trading the Funds inappropriately, imposing a 2.00% redemption fee on shares held 60 days or less (subject to certain exceptions) and revising or terminating the exchange privilege, limiting the amount of any exchange, or rejecting an exchange, at any time, for any reason.

The redemption fee may be waived for certain omnibus accounts held by financial intermediaries whose systems are unable to assess the redemption fee and certain employer-sponsored retirement accounts (including certain 401(k) and other types of defined contribution or employee benefit plans).

The redemption fee may be waived by the Funds’ officers in any case where the nature of the transaction or circumstances do not pose the risks that the Board of Directors’ policies and procedures to prevent market timing are designed to mitigate. All waivers provided by the Funds’ officers will be disclosed to the Funds’ Board of Directors at its next regularly scheduled quarterly meeting.

The Funds cannot always know about or reasonably detect excessive trading by shareholders who purchase shares of the Funds through financial intermediaries. Intermediaries generally maintain omnibus accounts with the Funds, which do not allow access to individual shareholders’ account information. In compliance with federal securities laws, the Funds execute agreements with intermediaries that obligate them to provide certain shareholder data so the Funds may be able to detect excessive trading and market timing by underlying shareholders. Shareholders who have purchased Funds through financial intermediaries that do not execute the new information sharing agreements may be restricted from purchasing additional shares of the Funds (other than an automatic reinvestment of dividends) through an omnibus account with such financial intermediary.

REQUIRED INFORMATION

Federal regulations may require the Funds to obtain your name, your date of birth, your residential address or principal place of business and mailing address as well as your taxpayer identification number at the time you open your account. Applications without this information may not be accepted. To the extent permitted by law, the Funds reserve the right to place limits on transactions in your account until your identity is verified.

INVESTMENT MINIMUMS

•

If you purchase shares directly from Wasatch Funds, the minimum initial investment for a regular account is $2,000 unless otherwise noted on the application.

•

The minimum initial investment for Individual Retirement Accounts (IRAs), Education Savings Accounts and regular accounts opened with an automatic investment plan is $1,000.

•

Other than the reinvestment of dividends and capital gains, the minimum for subsequent purchases in regular and IRA accounts is $100. The minimum for subsequent purchases via the automatic investment plan is $50 monthly or $100 quarterly.

•

The Funds reserve the right to waive or lower investment minimums for any reason.

•

Accounts opened through third parties such as brokers or banks may be subject to different minimums for initial and subsequent purchases.

TYPES OF REGULAR ACCOUNTS

•

Individual or Joint Ownership

•

Gift to Minor

•

Corporation, Partnership, Trust or Other Entity

TYPES OF INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)

•

Traditional IRA

•

Rollover IRA

•

Roth IRA

•

SEP-IRA

•

SIMPLE IRA

•

Section 403(b)(7) Plan

TYPES OF EDUCATION SAVINGS PLANS

•

Coverdell Education Savings Account

PREMIER SERVICES

Shareholders who purchase shares directly through Wasatch Funds and maintain a combined balance in their accounts of more than $250,000 for three consecutive months may qualify for additional benefits as a member of Wasatch Premier Services. These benefits include:

•

Priority e-mail notification of new and reopened Funds.

•

Written quarterly comments from Wasatch portfolio managers.

•

Option to receive monthly statements.

•

Exemptions for outgoing wire and IRA fees.

•

Access to a personal relationship manager.

•

Shareholders with account balances greater than $500,000 receive detailed quarterly investment reports.

•

Accounts that drop below the $250,000 minimum due to shareholder redemptions will no longer be eligible for Premier Services.

•

The Funds reserve the right to modify Premier Services eligibility requirements, benefits or services at any time.

NO CANCELLATIONS

Please place your transactions with care. The Funds will not cancel any transaction once it has been initiated and, if applicable, a reference or confirmation number has been assigned.

PURCHASING SHARES

•

There are no sales charges to purchase shares of the Funds.

•

The purchase price of your shares will be determined the next time the Funds’ share prices are calculated after the transfer agent receives your request in good order.

•

Purchases must be made in U.S. dollars.

•

The Funds do not accept cash, money orders, third party checks, travelers checks, credit card checks, checks drawn on banks outside the U.S. or other checks deemed to be high risk.

•

The Funds reserve the right to stop selling shares at any time or to reject specific purchase requests, including purchases by exchange from another Wasatch Fund or the WA-Federated Money Market Account (Money Market Fund).

•

Purchase requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the purchase will be delayed until the request is received in good order by the transfer agent.

•

Purchase requests made by telephone will only be accepted for accounts that have previously established bank information to allow electronic funds transfer from the Automated Clearing House (ACH).

•

When you make an initial purchase of shares online, the purchase amount will be withdrawn from your bank after the transfer agent receives your online application in good order. You will receive a reference number for your transaction when you submit your application or subsequent purchase. A verification of your request will also be sent to your e-mail address and we will mail a transaction confirmation to you when we have processed your online application. Please double check that the bank information you provide is correct. You will be held liable for losses incurred by the Funds due to incorrect bank information.

•

A $20 fee will be assessed if your online purchase cannot be made for any reason. See also “Insufficient Funds Policy”.

SELLING (REDEEMING) SHARES

•

You may request that the Funds redeem all or a portion of your shares.

•

The price of shares you redeem will be determined the next time the Funds’ share prices are calculated after the transfer agent receives your request in good order.

•

Most new accounts automatically have the telephone redemption privilege, unless it is specifically declined. Some accounts such as corporate accounts do not receive the redemption privilege unless they complete and return the Redemption and Exchange Privileges Form.

•

You may redeem shares in your account in amounts of $500 up to $50,000 ($100,000 for corporate accounts) online or by telephone.

•

Redemption requests for over $50,000 ($100,000 for corporate accounts) must be made in writing and a Medallion signature guarantee is required.

•

The Funds do not accept redemption requests made via fax.

•

The Funds will mail a check to the address on your account within seven days after the transfer agent receives your request in good order.

•

Redemption proceeds can also be sent by wire ($15.00 fee) or electronic funds transfer to your preauthorized bank account.

•

Payment may be delayed for up to seven days on redemption requests for recent purchases made by check or electronic funds transfer to ensure that the payment has cleared.

•

The Funds can delay payment of redemption proceeds for up to seven days at any time.

•

Redemption requests sent to Wasatch Funds’ headquarters in Salt Lake City will be forwarded to the transfer agent in Milwaukee, but the effective date of the redemption will be delayed until the request is received in good order by the transfer agent.

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Redemption requests from corporations, executors, administrators, trustees and guardians may require additional documentation and a Medallion signature guarantee.

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If the account is worth less than the amount requested, the entire value of the account will be redeemed.

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The Funds reserve the right to redeem in kind.

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The Funds reserve the right to reject or delay a redemption on certain legal grounds. See “Emergency Circumstances”.

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Redeeming shares may result in a taxable capital gain or loss.

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Due to money movement between Wasatch Funds and the Money Market Fund, requests made on the business day prior to bank holidays will be processed the following business day. This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice.

REDEMPTION FEE

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The Funds will deduct a fee of 2.00% from redemption proceeds on Fund shares held 60 days or less, except as noted below.

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Exchanges on shares held 60 days or less will, subject to certain exceptions, trigger the redemption fee.

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The redemption fee is paid directly to the Fund and is designed to offset brokerage commissions, market impact and other costs associated with fluctuations in Fund asset

levels and cash flow caused by short term shareholder trading.

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If you bought shares on different days, the shares you held longest will be redeemed first for purposes of determining whether the redemption fee applies.

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Shares transferred from one shareholder to another shareholder retain the transferer’s “age” of the shares in the hand of the transferor.

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The redemption fee does not apply to shares acquired through reinvestment of dividends and/or capital gains.

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The redemption fee does not apply to shares redeemed through the Systematic Withdrawal Plan.

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The redemption fee does not apply to shares redeemed from shareholder accounts liquidated for failure to meet the minimum investment requirement.

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The redemption fee does not apply to shares redeemed from a shareholder account for which the identity of the shareholder, for purposes of complying with the anti-money laundering (AML) laws, could not be determined within a reasonable time after the account was opened.

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The redemption fee does not apply in the event of any involuntary redemption and/or exchange transactions, including, for example, those required by law or regulation, a regulatory agency, a court order, or as a result of a liquidation of a Fund by the Board of Directors.

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The redemption fee does not apply to shares redeemed through an automatic, non-discretionary rebalancing or asset allocation program.

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The redemption fee does not apply to shares redeemed due to a disability as defined by the IRS requirements.

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The redemption fee does not apply to shares redeemed due to death for shares transferred from a decedent’s account to a beneficiary’s account.

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The redemption fee does not apply in the event of a back office correction made to an account to provide the shareholder with the intended transaction.

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The redemption fee does not apply in the event of the following transactions: a distribution taken from a defined contribution terminated employee account, a plan distribution of non-vested participant balance in a defined contribution account, a distribution taken from a defined contribution plan to provide a participant with a loan against the account, or an amount contributed to a defined contribution plan exceeding the maximum annual contribution limit.

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The redemption fee does not apply to shares gifted from one shareholder account to another shareholder account, assuming the age of the gifted shares is greater than two months.

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designed to mitigate. All waivers provided by the Funds’ officers will be disclosed to the Funds’ Board of Directors at its next regularly scheduled quarterly meeting. The Funds reserve the right to modify or eliminate the redemption fee or waivers at any time.

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The redemption fee assessed by certain financial intermediaries that have omnibus accounts in the Funds, including employer-sponsored retirement accounts, may be calculated using methodologies that differ from those utilized by the Funds’ transfer agent. Such differences are typically attributable to system design differences unrelated to the investment in the Funds. These system differences are not intended or expected to facilitate market timing or frequent trading.

HOW FUND SHARES ARE PRICED

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The Funds’ share prices change daily, so the price of shares you wish to purchase or redeem will be determined the next time the Funds’ share prices are calculated after the transfer agent receives your request in good order.

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A Fund’s share price, or Net Asset Value (NAV), is calculated by dividing the value of all securities and other assets owned by the Fund, less the liabilities charged to the Fund, by the number of Fund shares outstanding.

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The Funds’ share prices are generally calculated as of the close of trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m. Eastern Time) every day the NYSE is open.

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The Funds’ share prices will not be calculated on holidays the NYSE observes, including New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. NYSE holiday schedules are subject to change without notice. The NYSE may close early on the day before each of these holidays and the day after Thanksgiving and Christmas.

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The Funds’ investments are primarily valued using market quotations. Debt securities (other than short-term instruments) are valued at prices furnished by a pricing service, subject to review and possible revision by the Advisor. Short-term securities are valued at either original cost or amortized cost, both of which approximate current market value. To the extent the Funds invest in registered open-end investment companies (other than exchange traded funds), such investments are valued based on the net asset value of such funds and the prospectuses of such funds will explain the circumstances under which these companies will be using fair value pricing and the effects of using fair value pricing.

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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 will be valued at fair value by the joint Pricing Committee of the Advisor and the Funds with oversight by the Board of Directors and in accordance with Board-approved Pricing Policies and Procedures.

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A Fund’s investments will be valued at fair value by or with the oversight of the joint Pricing Committee of the

Advisor and the Funds if the Advisor determines that an event impacting the value of an investment occurred after the close of the security’s primary exchange or market (for example, a foreign exchange or market) and before the time the Fund’s share price is calculated. In addition, if on any business day a change in the value of the U.S. equity markets (as represented by a benchmark index approved by the Board of Directors) exceeds a certain threshold, then each foreign security held by the Funds will be fair valued by using a value determined by an independent pricing agent (based upon changes in certain markets, indexes and/or securities) rather than using the last closing price of such foreign security on its principal overseas market or exchange.

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Despite best efforts, there is an inherent risk that the fair value of an investment may be higher or lower than the value a fund would have received if it had sold the investment.

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The Funds may hold portfolio securities, such as those traded on foreign exchanges, that trade on weekends or other days when the Funds’ shares are not priced. Therefore, the value of the Funds’ shares may change on days when shareholders will not be able to purchase or redeem shares.

MEDALLION SIGNATURE GUARANTEE

A Medallion signature guarantee assures that a signature is genuine. It is intended to protect shareholders and the Funds against fraudulent transactions by unauthorized persons.

Medallion signature guarantees are required by Wasatch Funds in the following cases:

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To change your designated bank account or bank address.

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To add bank information to an existing account.

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To request a redemption (must be made in writing) in excess of $50,000 ($100,000 for corporate accounts).

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To request a wire transfer or ACH of redemption proceeds to a bank account other than the bank account of record.

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Requests for redemption proceeds to be mailed to an address other than the address of record.

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Redemptions made within 30 days of an address change.

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Certain transactions on accounts involving executors, administrators, trustees or guardians.

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On the IRA Transfer Form if transferring your Wasatch Funds IRA to another fund family if required by the receiving fund.

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To change registered account holders.

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To change the name on an account due to divorce or marriage (or you can provide a certified copy of the certified legal documents showing the name change).

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To add telephone privileges.

The Funds reserve the right to require a Medallion signature guarantee under other circumstances.

HOW TO OBTAIN A MEDALLION SIGNATURE GUARANTEE

Medallion signature guarantees must be obtained from a participant in a Medallion program endorsed by the Securities Transfer Association. Participants are typically com-

mercial banks or trust companies in the United States, brokerage firms that are members of the National Association of Securities Dealers, Inc. or members of the New York Stock Exchange. Call your financial institution to see if it participates in a medallion program.

A Medallion signature guarantee may not be provided by a notary public.

AUTOMATIC INVESTMENT PLAN (AIP)

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Online, the AIP may be referred to as a pre-authorized draft or PAD.

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Automatic purchases of Fund shares can be made for as little as $50 per month or $100 per quarter. The Funds do not currently charge a fee for this service.

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You may elect to have your automatic purchase made on the 5th and/or the 20th day of each month. If these dates fall on a weekend or holiday, purchases will be made on the next business day.

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Your signed Account Privileges Change Form and an unsigned, voided check or deposit slip must be received at least 14 days prior to your first automatic purchase.

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Your financial institution must be a member of the Automated Clearing House (ACH).

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When your AIP has been established, the bank or financial institution you designate can begin debiting a preauthorized amount from your account on a specified date to purchase shares for your Fund account.

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A $20 fee will be assessed if your automatic purchase cannot be made for any reason.

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Instructions to change your AIP must be received at least five days prior to your regularly scheduled purchase.

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If you redeem an account with an AIP to a zero balance, the plan will be discontinued.

SYSTEMATIC WITHDRAWAL PLAN (SWP)

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You may arrange to make monthly, quarterly or annual redemptions of $50 or more. There is no charge to shareholders for using this plan.

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Your Fund account balance must be at least $5,000 at the time you begin participation in the plan.

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You may choose either the 5th and/or the 20th of the month to have systematic withdrawals distributed to you. If the day falls on a weekend or legal holiday, the distribution will be made on the next business day.

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You may terminate the SWP at any time without charge or penalty.

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The Funds may terminate or modify the plan after 60 days’ written notice to shareholders.

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The redemption fee does not apply to shares redeemed through the plan.

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If your balance is below the systematic withdrawal amount, the entire balance will be distributed and the plan will be discontinued.

EXCHANGING SHARES

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Fund shares may be exchanged for shares of other Wasatch Funds on days the New York Stock Exchange (NYSE) is open for business.

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Prior to August 11, 2008, Fund shares could be exchanged for shares of the Northern U.S. Government Money Market Fund. As of August 11, 2008 shares of the Wasatch Funds can no longer be exchanged for shares of the Northern U.S. Government Money Market Fund. Accordingly, requests to exchange Fund shares for Northern U.S. Government Money Market Fund are no longer accepted as of such date.

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The price of shares being exchanged will be determined the next time the Funds’ share prices are calculated after the transfer agent has received your exchange request in good order.

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Excessive exchanges may result in the termination of a shareholder’s exchange privileges. For more information please see “Policies to Prevent Market Timing”.

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Exchanges for shares in Funds closed to new investors may only be made by shareholders with existing accounts in those Funds.

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Exchanges may not be made for shares of Funds closed to new investors and existing shareholders.

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You may open a new account or purchase additional shares by exchanging shares from an existing Fund account.

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New accounts opened by exchange will have the same registration as existing accounts and are subject to the minimum initial investment requirements.

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Additional exchanges may be made for $500 or more.

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Additional documentation and a Medallion signature guarantee may be required for exchange requests from existing accounts if shares are registered in the name of a corporation, partnership or fiduciary.

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To add telephone exchange privileges to an existing corporate account, complete and return the Redemption and Exchange Privileges Form. The Form can be obtained from Wasatch Funds’ web site or by calling a shareholder services representative.

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Exchanges on shares held two months or less will trigger the redemption fee, subject to certain exceptions as noted above.

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New accounts automatically have the telephone exchange privilege, unless it is specifically declined.

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The Funds do not accept exchange requests made via fax.

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Exchange requests may be subject to other limitations, including those relating to frequency, that Wasatch Funds may establish to ensure that exchanges do not disadvantage shareholders or the Funds.

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Exchanging shares may result in a taxable capital gain or loss.

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The Advisor reserves the right to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason.

EXCHANGES BETWEEN WASATCH FUNDS AND THE WA-FEDERATED MONEY MARKET ACCOUNT

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You may exchange all or a portion of your investment in the Funds for shares of the WA-Federated Money Market Account (the “Money Market Fund”), a money market account advised by Federated Investment Management Company (and not by Wasatch Advisors, Inc.) that invests

in a diversified portfolio of high quality money market instruments. The WA-Federated Money Market Account and its adviser are not affiliated persons of the Wasatch Funds or Wasatch Advisors, Inc. THE SHARES OF THE WA-FEDERATED MONEY MARKET ACCOUNT ARE NOT OFFERED BY THIS PROSPECTUS.

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Exchanges are subject to the minimum purchase and redemption amounts set forth in this prospectus unless otherwise noted on the application.

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Shareholders may not exchange Money Market Fund shares to purchase shares of Funds that are closed to new investors and existing shareholders.

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The automatic exchange plan allows you to make automatic monthly investments in Wasatch Funds by exchanging shares from your Money Market Fund account. There is no fee for this service.

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Any changes to the automatic exchange plan must be made 10 business days prior to the transaction.

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Exchange requests will be effective the day the transfer agent receives them in good order by 4:00 p.m. Eastern Time, or market close on days the Funds’ shares are priced, unless it is the business day prior to a bank holiday. Requests made on the business day prior to a bank holiday will be processed the following business day. This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice.

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You will begin accruing income from the Money Market Fund the first business day following the exchange provided it is not a bank holiday.

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Dividends earned in the Money Market Fund are payable at the time of full liquidation or at the end of the month if a balance remains in the account.

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Shareholders should read the prospectus of the Money Market Fund prior to exchanging into it.

ELIGIBLE INVESTMENTS INTO CLOSED FUNDS

Information about eligible purchases in closed Funds can be found in the SAI or by calling a shareholder services representative.

PURCHASING SHARES THROUGH THIRD PARTIES SUCH AS BROKERS OR BANKS

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You may buy or sell shares of the Funds through banks or investment professionals, including brokers who may charge you a transaction fee for this service.

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Certain features offered by the Funds, such as Premier Services, minimum initial investment or subsequent investment amounts, may be modified or may not be available through other institutions.

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Once you have established an account through an institution or investment professional, any subsequent transactions for, or questions about, that account must be made through them.

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The Funds and/or the Advisor may enter into agreements with various brokerage or other firms pursuant to which such firms may accept orders on behalf of the Funds and provide administrative services with respect to customers who are beneficial owners of shares of the Funds. The Funds

and/or the Advisor may compensate such firms in amounts based on assets of customers invested in the Funds.

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The Advisor and/or the Sub-Advisors may pay out of their own legitimate profits amounts to certain financial intermediaries that support the sale of shares of the Funds or provide services to shareholders of the Funds. The amounts of these payments could be significant, and may create an incentive for the financial intermediary or its employees or associated persons to recommend or sell shares of the Funds. These payments are not reflected in the fees and expenses listed in the fee table section of the Funds’ prospectus and are described above because they are not paid by the Fund. These payments are generally based on factors such as the value of the intermediary’s client assets invested in the Funds or the type and nature of services or support furnished by the financial intermediary. These payments made by the Advisor and/or Sub-Advisors may be in addition to payments of recordkeeping and/or networking fees made by the Funds to the financial intermediary.

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If one mutual fund sponsor provides greater financial assistance than another, your financial advisor may have an incentive to recommend one mutual fund complex over another. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by the Funds and/or the Advisor and by sponsors of other mutual funds he or she may recommend to you. You should also review disclosures made by your financial advisor at the time of purchase.

SHAREHOLDER REPORTS

We mail annual and semi-annual reports and prospectuses unless you elect to receive them via e-mail by filling out the consent form on our web site.

Annual reports are dated September 30, the close of the Funds’ fiscal year, and contain important information about the Funds, including the market conditions and investment strategies that affected performance during the period, portfolio holdings and audited financial statements. Semi-annual reports are dated March 31 and contain information about the Funds’ performance and portfolio holdings as well as unaudited financial statements.

To help keep Fund expenses low, generally we send a single copy of a prospectus or shareholder report to shareholders of the same household. If your household currently receives a single copy of a prospectus or shareholder report and you would prefer to receive multiple copies, please call Shareholder Services at 800.551.1700. We will begin sending you individual copies 30 days after receiving your request.

Additional copies of shareholder reports are available by downloading them from our web site or calling a shareholder services representative.

ACCOUNT STATEMENTS

Account statements will be mailed quarterly. You may receive quarterly statements via e-mail if you consent to Electronic Document Delivery on our web site. The Funds will send you a confirmation statement after every transaction that affects your account balance or your account

registration. If you invest through the automatic investment plan, you will receive confirmation of your purchases quarterly.

We may consolidate statements for accounts with the same address and social security number. If you would like to receive individual account statements, please call or write to Wasatch Funds. We will begin sending you individual account statements 30 days after receiving your request.

ESTABLISHING A HOUSEHOLD RELATIONSHIP

You may also establish a Household Relationship for your current accounts or add accounts to your existing relationship by completing the Household Relationship Form. Our householding service combines all of your account statements and confirmations into a single envelope. It also combines financial reports and prospectuses for everyone in your “household” into one mailing. Establishing a Household Relationship will not affect the ownership status of the accounts in your Household Relationship. All accounts added to a Household Relationship must have the same address. The following types of accounts are ineligible for inclusion in a Household Relationship: Corporate, Fiduciary, Estate, Investment Club, Club, Lodge and Association.

If you would like to discontinue your Household Relationship and receive individual account statements, please call or write to Wasatch Funds. We will begin sending you individual account statements 30 days after receiving your request.

VERIFICATION OF ACCOUNT STATEMENTS

You must contact Wasatch Funds in writing regarding any errors or discrepancies within 60 days after the date of the statement confirming a transaction. We may deny your ability to refute a transaction if we do not hear from you within 60 days after the confirmation statement date.

INVOLUNTARY REDEMPTION

The Funds reserve the right to redeem the shares held in any account if the account balance falls below $500 unless the account has an automatic investment plan. Your account will not be closed if the drop is due to share price fluctuations. Shareholders will be given at least 60 days’ written notice before involuntary redemptions are made. Shareholders can prevent involuntary redemptions by restoring the account to the minimum investment amount during the 60 days.

EMERGENCY CIRCUMSTANCES

The Funds or their agents may, in case of emergency, temporarily suspend telephone transactions and other shareholder services. It may be difficult to reach the Funds by telephone during periods of substantial economic or market change or in emergency situations. Under these circumstances, you may wish to consider purchasing, redeeming or exchanging shares by mail, overnight express delivery or online. The Funds can suspend redemptions and/or delay payments of redemption proceeds when the NYSE is closed due to financial conditions or during emergency circumstances, as determined by the Securities and Exchange Commission (SEC).

RESPONSIBILITY FOR FRAUD

The Funds and their agents will not be responsible for any losses resulting from unauthorized transactions provided reasonable procedures to prevent fraudulent transactions have been followed. Procedures to reasonably assure that instructions are genuine include requesting verification of various pieces of personal and account information, recording telephone transactions, confirming transactions in writing or online and restricting transmittal of redemption proceeds to preauthorized destinations.

INSUFFICIENT FUNDS POLICY

The Funds reserve the right to cancel a purchase if a check or electronic funds transfer does not clear your bank. The Funds will charge your account a $20 fee and you will be responsible for any losses or fees imposed by your bank and any losses that may be incurred by the Funds as a result of the canceled purchase. If you are already a shareholder in the Funds, the Funds may redeem shares in your account(s) to cover losses due to fluctuations in share price.

THIRD PARTY CHECKS

To guard against check fraud, the Funds will not accept checks made payable to third parties.

CHANGES TO BANK INFORMATION

Requests to change the bank information on your account must be made in writing, signed by all account holders and accompanied by a Medallion signature guarantee.

REGISTRATION CHANGES

To change the name on an account, the shares are generally transferred to a new account. A new application, legal documentation and a Medallion signature guarantee is required.

ADDRESS CHANGES

To change the address on your account, visit our web site, call a shareholder services representative or send a written request signed by all account owners. Include the name of your Fund(s), the account number(s), the name(s) on the account and both the old and new addresses. Certain options, including redemptions, may be suspended for 30 days following an address change unless a Medallion signature guarantee is provided.

PORTFOLIO SECURITIES DISCLOSURE

The Funds’ portfolio securities disclosure policy is described in the Statement of Additional Information (SAI).

ABOUT THE WA-FEDERATED MONEY MARKET ACCOUNT

Please be sure to read the separate prospectus for the WA-Federated Money Market Account carefully before investing in it. The WA-Federated Money Market Account is managed by Federated Investment Management Company, not by Wasatch Advisors, Inc. Federated Investment Management Company is not an affiliate of Wasatch Advisors, Inc. or Wasatch Funds. Federated Securities Corp. is the distributor of the WA-Federated Money Market Account.

In addition to any increase in the value of shares which a Fund may achieve, you may receive dividends and capital gain distributions from the Fund.

DIVIDENDS

Dividends from stocks and interest earned from other investments are the Funds’ main sources of investment income. It is intended that substantially all of the Income Equity, Long/Short and U.S. Treasury Funds’ net investment income (income less expenses) will be distributed quarterly as dividends to shareholders. For the Equity Funds, (except the Income Equity and Long/Short Funds), it is intended that substantially all of such Funds’ net investment income, if any, will be distributed at least annually as dividends to shareholders. It is intended that substantially all of the Income Fund’s net investment income (income less expenses) will be distributed monthly as dividends to shareholders. As noted below, the Equity Funds except the Income Equity Fund, expect that, as a result of their objectives and strategies, distributions (if any) will consist primarily of capital gains.

CAPITAL GAINS

When the Funds sell portfolio securities they may realize a capital gain or loss, depending on whether the security is sold for more or less than its adjusted cost basis. Net realized capital gains, if any, will be distributed at least annually.

BUYING A DIVIDEND

Purchasing shares of a Fund shortly before it makes dividends or capital gain distributions will have the effect of reducing the share price by the amount of the distribution. This is sometimes referred to as “buying a dividend” because, although the distribution is in effect a return of a portion of the purchase price, it is taxable.

Unless you are investing in a tax-deferred account like an IRA or Education Savings Account, you may want to consider waiting to invest until after a Fund makes a distribution.

REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS

Dividends and capital gain distributions made by a Fund are automatically applied to purchase additional shares of the Fund at the share price on the payable date unless you elect to have distributions paid to you in cash. You may change whether distributions are reinvested or paid in cash at any time by writing to the transfer agent. Changes will be effective for distributions with a record date on or after the date the transfer agent receives your request.

TAXES

This section summarizes some of the main U.S. federal income tax consequences of owning shares of a Fund. This section is current as of the date of this prospectus. Tax laws and interpretations change frequently, and these summaries do not describe all of the tax consequences to all taxpayers. For example, these summaries generally do not describe your situation if you are a corporation, a non-U.S. person, a

broker/dealer, or other investor with special circumstances. In addition, this section does not describe your state, local or foreign tax consequences.

This federal income tax summary is based in part on the advice of counsel to the Funds. The Internal Revenue Service (IRS) could disagree with any conclusions set forth in this section. In addition, our counsel was not asked to review, and has not reached a conclusion with respect to the federal income tax treatment of the assets to be invested in the Funds. This may not be sufficient for you to use for the purpose of avoiding penalties under federal tax law.

As with any investment, you should seek advice based on your individual circumstances from your own tax advisor.

Each Fund intends to qualify as a “regulated investment company” under the federal tax laws. If the Funds qualify as regulated investment companies and distribute their income as required by the tax law, the Funds generally will not pay federal income taxes. Dividends paid from the Funds’ net investment income and net short-term capital gains generally will be taxable as ordinary income, whether paid in cash or reinvested as additional shares. It is possible that a portion of the dividends paid from the net investment income of each Fund, except the U.S. Treasury Fund, will constitute “qualified dividends” eligible for the maximum federal income tax rate of 15% for taxable years beginning before January 1, 2011. In certain cases (for example with some capital gains attributable to REIT shares) a higher rate applies. Each Fund will inform its shareholders of the portion of its dividends (if any) that constitutes “qualified dividends.”

Distributions paid from the Funds’ long-term capital gains and designated as capital gain distributions generally are taxable as long-term capital gains, regardless of the length of time you held your shares. The Equity Funds, except the Income Equity Fund, expect that, as a result of their objectives and strategies, distributions (if any) will consist primarily of capital gains.

The tax status of your distributions from your Fund is not affected by whether you reinvest your distributions in additional shares or receive them in cash. The tax laws may require you to treat distributions made to you in January as if you had received them on December 31 of the previous year.

The following information applies to the Equity Funds to the extent that they invest in REITs. The REITs in which the Funds invest may generate significant non-cash deductions, such as depreciation on real estate holdings, while having greater cash flow to distribute to their shareholders. If a REIT distributes more cash than its current or accumulated earnings and profits, a return of capital results. Similarly, the Funds may pay a return of capital distribution to you by distributing more cash than their current or accumulated earnings and profits. The cost basis of your shares will be decreased by the amount of returned capital (but not below zero), which may result in a larger capital gain or smaller capital loss when you sell your shares. To the extent such a distribution exceeds your cost basis in your shares, you generally will be treated as realizing a taxable gain from the sale or exchange of your shares.

Gain or loss upon the sale of shares of a Fund generally will be treated as a capital gain or loss, provided that (as is usually the case) the shares represented a capital asset in the hands of the shareholder. The gain or loss will be considered long-term if the shareholder has held the shares for more than one year. The gain or loss on shares held for one year or less will be considered short-term and taxed at the same rates as ordinary income. If you receive a capital gain distribution from your Fund and sell your shares at a loss after holding them for six months or less, the loss will be recharacterized as a long-term capital loss to the extent of the capital gain distribution received.

The Funds are required to withhold and remit to the U.S. Treasury a percentage of dividend payments, capital gain distributions, and redemption proceeds at a rate set forth in applicable IRS Rules and Regulations for certain shareholders who have not certified that the social security number or taxpayer identification number they have supplied is correct and that they are not subject to backup withholding because of previous underreporting to the IRS. This backup withholding requirement generally does not apply to shareholders that are corporations or certain tax-exempt organizations.

The following information is particularly important for investors in the Emerging Markets Small Cap, Global Opportunities, Global Science & Technology, International Growth and International Opportunities Funds, which may invest significant assets in foreign countries. To the extent the Funds invest in foreign securities, they may be required to pay withholding and other taxes imposed by foreign countries. If a Fund has more than 50% of its total assets invested in securities of foreign corporations at the end of its taxable year, it may make an election that will result in the dividends taxed to you including your share of taxes paid to other countries and that may permit you either to claim a foreign tax credit with respect to foreign taxes paid by the Fund or to deduct those amounts as an itemized deduction

on your tax return. If the Fund makes this election, you will be notified and provided with sufficient information to calculate your foreign tax credit or the amount you may deduct as foreign taxes paid.

If you are a foreign investor (i.e., an investor other than a U.S. citizen or resident or a U.S. corporation, partnership, estate or trust), you should be aware that, generally, subject to applicable tax treaties, distributions from the Funds will be characterized as dividends for federal income tax purposes (other than dividends which the Funds designate as capital gain dividends) and will be subject to U.S. income taxes, including withholding taxes, subject to certain exceptions. However, distributions received by a foreign investor from the Funds that are properly designated by the Funds as capital gain dividends may not be subject to U.S. federal income taxes, including withholding taxes, provided that the Funds make certain elections and certain other conditions are met.

In the case of dividends with respect to taxable years of a Fund beginning prior to 2010, distributions from a Fund that are properly designated by the Fund as an interest-related dividend attributable to certain interest income received by the Fund or as a short-term capital gain dividend attributable to certain net short-term capital gain income received by the Fund may not be subject to U.S. federal income taxes, including withholding taxes when received by certain foreign investors, provided that the Fund makes certain elections and certain other conditions are met.

WHEN YOU WILL RECEIVE TAX INFORMATION

After the end of each calendar year, you will be sent information on redemptions, dividends and long-term capital gain distributions for tax purposes, including information as to the portion taxable as ordinary income, the portion (if any) taxable as “qualified dividends,” and the portion taxable as long-term capital gains.

Account tax information will also be sent to the IRS.

The Financial Highlights tables are intended to help you understand the financial performance of each Wasatch Fund for the past five years or since inception if a Fund has been in operation less than five years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The Global Opportunities Fund commenced operations on November 17, 2008 and therefore no financial highlights are provided for this Fund.

For the Funds specified below other than the Income Equity, Long/Short and Income Funds, information for the years ended after and including September 30, 2004 was audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with the Funds’ financial statements, is included in the annual report which is available upon request.

With respect to the Income Equity Fund, Long/Short Fund and Income Fund, each commenced operations on December 15, 2008, upon the reorganization of each Predecessor Fund into the respective Wasatch Fund. With the reorganization, each Fund assumed the financial and performance history of the applicable Predecessor Fund. Effective September 19, 2008, the Predecessor Funds changed their fiscal year end to September 30.

The information, for the six months ended September 30, 2008, has been audited by Cohen Fund Audit Services, Ltd., an independent registered public accounting firm, whose report, along with the Predecessor Funds’ financial statements, is included in the Predecessor Funds’ Annual Report to Shareholders, and is incorporated by reference into the SAI. The financial highlights for all periods prior to September 30, 2008 were audited by other independent registered public accounting firms whose reports expressed unqualified opinions on those statements. The Predecessor Funds’ Annual Report to Shareholders is available, free of charge, by contacting the Funds at 800.766.8938.

⁴	On February 1, 2004, the Advisor reduced the contractual expense limitation from 2.50% to 2.25% through January 31, 2005. As a result, the effective expense ratio net of waivers and reimbursements for the period ended September 30, 2004 was 2.27%.

⁵

In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Funds’ cross-trading policies that had no impact on the total return. The effect of net realized gains on the disposal of investments in violation of an investment restriction on total return was less than 0.01%

⁶	In 2006, the Fund received a reimbursement of investment advisory fees, which had an impact on the Fund’s expense ratio of less than 0.01%.

⁴	Includes dividend expense for securities sold short of 0.31%, 0.18%, 0.28%, 0.09%, 0.07%, and 0.06% for the six months ended September 30, 2008, and periods ended March 31, 2008, 2007, 2006, 2005 and 2004, respectively.

⁵	Annualized.

⁶	During the period, certain fees were voluntarily reduced. If such fee reductions had not occurred, the ratio would have been as indicated.

⁷	Calculated using average shares method.

GENERAL

If you have any questions about Wasatch Funds or would like more information, please contact Wasatch as noted below. You may obtain a free copy of the Funds’ SAI, annual or semi-annual reports, or quarter-end portfolio holdings on the Funds’ web site at www.wasatchfunds.com or by contacting Wasatch at the telephone number or address noted below.

The SAI provides more details about the Funds and their policies. The SAI is incorporated into the prospectus by reference and is, therefore, legally part of this prospectus.

Additional information about the Funds’ investments will be available in the Funds’ annual and semi-annual reports to shareholders. The reports contain discussions of the market conditions and investment strategies that significantly affected the Funds’ performance for the most recent six- or 12-month periods, as applicable.

ONLINE

www.wasatchfunds.com

or via e-mail at

shareholderservice@wasatchfunds.com

TELEPHONE

800.551.1700

Shareholder services representatives are available Monday through Friday 7:00 a.m. to 7:00 p.m. Central Time.

MAIL

Wasatch Funds

P.O. Box 2172

Milwaukee, WI 53201-2172

CONTACT THE SEC

You can go to the SEC’s web site (http://www.sec.gov) to view these and other documents that Wasatch Funds has filed electronically with the SEC.

Copies of this information also may be obtained for the cost of duplicating by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-0102 or by electronic request at the following e-mail address: publicinfo@sec.gov.

Information about the Funds can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Call the Commission at 202.551.8090 for information.

Investment Company Act File Number: 811-4920

INVESTMENT OBJECTIVE

PRINCIPAL STRATEGIES

The Fund invests primarily in mid- and large-cap companies.

Under normal market conditions, we will invest the Fund’s assets typically in the equity securities of companies with market capitalizations over $3 billion at the time of purchase.

The Fund may invest in early stage companies.

We look for securities of companies that we believe will generally fall into one of four categories at the time of purchase:

•

Deep Value — Very low valuation relative to history, but business has been stabilized.

•

Value Momentum — Cheap valuation relative to history, but catalyst for future growth has been identified.

•

Fallen Angel — Growth companies that have experienced a temporary setback and therefore have appealing valuation relative to their long-term growth potential.

•

Special Situations/Hidden Value — Spinoffs, post bankruptcies, companies undergoing financial restructuring, etc.

As we analyze mid- and large-cap value companies, we are most interested in finding:

•

Catalysts for improved earnings growth.

•

New products or services that may increase revenue growth and market share.

•

Experienced top management with a substantial stake in the company’s future.

•

Low stock valuation as measured in a variety of ways, including: price-to-earnings ratio (P/E), price-to-sales ratio, price-to-book ratio, etc.

•

Potential to generate improved financial performance.

•

Temporarily out of favor with Wall Street.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Fund”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

also the risk that a stock judged to be undervalued may actually be appropriately priced.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the risks and volatility that are inherent with investments in large cap value stocks. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Heritage Value Fund by showing the Fund’s performance for the last year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the year shown in the bar chart above.

The table above allows you to compare the Fund’s performance to that of a market index.

The Russell 1000 Value Index measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged total return index of the 3,000 largest U.S. companies based on total market capitalization. You can not invest directly in the Index. The Index’s returns reflect no deductions for fees, expenses or taxes.

The following tables describe the fees and expenses you may pay if you buy, sell or hold shares of the Fund.

The above example reflects contractual waivers and reimbursements through January 31, 2010.

INVESTMENT PROCESS

Securities for the Fund are recommended by an experienced in-house research team. The Fund’s portfolio manager seeks to ensure that investments are compatible with the Fund’s investment objectives and strategies.

The research team uses “bottom-up” fundamental analysis to identify companies that they believe have outstanding investment potential. The research process includes pre-screening potential investments using databases and industry contacts, analyzing annual reports and financial statements, making onsite visits, meeting with top management, evaluating the competitive environment, looking at distribution channels and identifying areas of potential growth.

SELLING SECURITIES

Decisions to sell securities are based on the best judgment of the Fund’s portfolio manager in a continuing effort to enhance long-term performance. In general, we are likely to sell a security when:

•

The rationale we used to buy the security is no longer valid.

•

The security becomes overpriced.

•

We believe another security has better investment potential.

INVESTMENT STRATEGIES AND RISKS

The section below provides additional information about certain of the Fund’s principal risks and describes certain other applicable investment strategies and related risks. The Fund may use other techniques and invest in other securities and is subject to further restrictions and risks that are described in the SAI under the section entitled “Investment Strategies and Their Risks.”

Exchange Traded Funds (ETFs) Risk. The Fund may invest in ETFs. These companies are investment companies that are bought and sold on a securities exchange. When the Fund invests in an ETF, it will bear additional expenses based on its pro rata share of the ETF’s operating expenses. The risk of owning an ETF generally reflects the risks of the underlying securities that the ETF holds. Lack of liquidity in an ETF could result in the ETF being more volatile than the underlying portfolio of securities. In addition, because of ETF expenses, compared to owning the underlying securities directly, it may be more costly to own an ETF.

Foreign Securities Risk. The Fund may invest in foreign securities. Foreign securities may be less liquid and their prices may be more volatile than domestic securities. There may be less government supervision and regulation of foreign stock exchanges, brokers, custodians and listed companies than in the U.S.

before delivery and delays may be encountered in settling securities transactions. In some foreign markets, there may not be protection against failure by other parties to complete transactions. There may be limited legal recourse against an issuer in the event of a default on a debt instrument.

Currency Risk. The U.S. dollar value of the Fund’s assets will be affected by foreign currency exchange rates and may be affected by exchange control regulations. A change in the value of any foreign currency will change the U.S. dollar value of the Fund’s assets that are denominated or traded in that country. In addition, the Fund may incur costs in connection with conversions between various currencies. While the Fund has the ability to hedge against fluctuations in foreign currency exchange rates, it has no present intention to do so. A risk of not hedging currencies is that if the U.S. dollar strengthens, returns from foreign markets will be less when converted into U.S. dollars.

Foreign Tax Risk. The Fund’s income from foreign issuers may be subject to non-U.S. withholding taxes. The Fund may also be subject to taxes on trading profits or on transfers of securities in some countries. To the extent foreign income taxes are paid by the Fund, shareholders may be entitled to a credit or deduction for U.S. tax purposes.

Transaction Costs. The costs of buying and selling foreign securities including brokerage, tax and custody costs are generally higher than those for domestic transactions.

changes in interest rates. The market value of convertible securities tends to decline as interest rates increase. If, however, the market price of the common stock underlying a convertible security approaches or exceeds the conversion price of the convertible security, the convertible security tends to reflect the market price of the underlying common stock. In such a case, a convertible security may lose much or all of its value if the value of the underlying common stock then falls below the conversion price of the security. As the market price of the underlying common stock declines, the convertible security tends to trade increasingly based on its fixed income characteristics, and thus, may not necessarily decline in price as much as the underlying common stock. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and price that is unfavorable to a Fund.

Initial Public Offerings (IPOs) Risk. The Fund may invest in IPOs. IPOs involve a higher degree of risk not normally associated with offerings of more seasoned companies. Companies involved in IPOs generally have limited operating histories and their prospects for future profitability are uncertain. Prices of IPOs may also be unstable due to such factors as the absence of a prior public market, the small number of shares available for trading and limited investor information. Shares purchased in IPOs may be difficult to sell at a time or price that is desirable.

OTHER INVESTMENT STRATEGIES

The Fund may use other investment strategies in addition to its principal strategies. For information about the more significant of these strategies and their risks see “Investment Strategies and Their Risks” in the SAI.

FUNDAMENTAL POLICIES

Certain policies of the Fund cannot be changed without a shareholder vote. These policies are described in the SAI.

CASH/TEMPORARY DEFENSIVE POSITIONS

If the research team is unable to locate attractive investment opportunities for the Fund, or when we consider market, economic or political conditions to be unfavorable for profitable investing, we may take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies.

For example, we may temporarily increase the Fund’s cash position or invest a larger portion of its assets in money market instruments or repurchase agreements. We reserve the right to invest all of the Fund’s assets in temporary defensive positions.

When the Fund takes temporary defensive positions by increasing its holdings in cash, money market instruments or repurchase agreements, it may not participate in stock market advances or declines to the same extent that it would if the Fund remained more fully invested in stocks. In addition, the Fund may not achieve its investment objective.

PORTFOLIO TURNOVER

The Fund generally intends to purchase securities for long-term investment rather than short-term gains. However, short-term transactions may result from liquidity needs, securities having reached a price or yield objective, or by reason of economic or other developments not foreseen at the time of the initial investment decision. Changes are made in the Fund’s portfolio whenever the Fund’s portfolio manager believes such changes are desirable. Portfolio turnover rates are generally not a factor in making decisions to buy or sell securities.

To a lesser extent, the Fund may purchase securities in anticipation of relatively short-term price gains. Increased portfolio turnover may result in higher costs for brokerage commissions, dealer mark-ups and other transaction costs and may also result in taxable capital gains.

INVESTMENT ADVISOR

The investment advisor for the Fund is Wasatch Advisors, Inc. (the “Advisor”). The Advisor and the Fund are located at 150 Social Hall Avenue, 4th Floor, Salt Lake City, Utah 84111. The Advisor has been in the investment advisory business since 1975. As of December 31, 2008, the Advisor had approximately $4.5 billion in assets under management.

The Advisor is responsible for investing the Fund’s assets, placing orders to buy and sell securities and negotiating brokerage commissions on portfolio transactions. In addition, the Advisor provides certain administrative services and manages the Fund’s business affairs.

MANAGEMENT FEES AND EXPENSE LIMITATIONS

The Fund pays the Advisor a monthly management fee that is a percentage of the Fund’s average daily net assets. More detailed information about the Advisor’s investment advisory and service contract with Wasatch Funds can be found in the SAI. A discussion regarding the basis for the Board of Directors’ approval of the Advisory and Service Contract with respect to the Heritage Value Fund is available in the Funds’ Semi-Annual Report dated March 31, 2008.

The Fund paid the Advisor a management fee of 0.70% of average daily net assets after taking into account any reimbursements during the most recent year.

The Advisor has contractually agreed to limit the expenses of the Fund at least through January 31, 2010, to 0.95% of average net assets computed on a daily basis. The Advisor will pay all expenses, excluding interest, taxes, brokerage commissions, other investment related costs and extraordinary expenses, in excess of such limitations. Acquired Fund fees and expenses are also excluded from this contractual limitation. The Advisor may rescind these contractual limitations on expenses any time after January 31, 2010.

Management fees and net expenses for the Fund are higher than those paid by many mutual funds. Please see “Fees and Expenses” for more information.

PORTFOLIO MANAGEMENT

The Fund is managed using a team approach. The Wasatch research team consists of the Chief Investment Officer, 17 portfolio managers and 12 securities analysts.

The lead portfolio manager is responsible for making investment decisions for the Fund in accordance with the Fund’s investment objectives and strategies. The research team is responsible for analyzing securities and making investment recommendations. The individual listed in the table below is primarily responsible for the day-to-day management of the Fund.


Name of Fund		Lead Portfolio Manager
Heritage Value Fund		Brian Bythrow, CFA

Brian Bythrow, CFA has been a lead portfolio manager for the Wasatch Micro Cap Value Fund since 2003 and Wasatch Heritage Value Fund since August 2007. He joined the Advisor in 2003. Since 1998 and prior to joining the Advisor, Mr. Bythrow was the portfolio manager for the 1st Source Monogram Special Equity Fund. He earned a Master of Business Administration from California State University in Sacramento and a Bachelor of Science in Social Sciences from the United States Air Force Academy.

The SAI provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio manager and the portfolio manager’s ownership of securities in the Fund.

SERVICE PROVIDERS

Investment Advisor

Wasatch Advisors, Inc.

150 Social Hall Avenue, 4th Floor

Salt Lake City, UT 84111

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.

803 West Michigan Street, Suite A

Milwaukee, WI 53233-2301

Custodian

State Street Bank and Trust Company

801 Pennsylvania Avenue

Kansas City, MO 64105

Legal Counsel to Wasatch Funds and Independent Directors

Chapman and Cutler, LLP

111 West Monroe Street

Chicago, IL 60603

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP

1100 Walnut, Suite 1300

Kansas City, MO 64106

For policies governing the following transactions and services, please see “Account Policies”.

New accounts are subject to acceptance by Wasatch Funds. To open a retirement or education savings account, you will also need the appropriate information kit and application.

ONLINE

Visit Wasatch Funds’ web site, complete and electronically submit the online application. You may also sign up to invest automatically by filling out the Account Privileges Change Form.

Accounts for third parties, trusts, corporations, partnerships and other entities may not be opened online and are not eligible for online transactions.

WIRE

Have your bank send your investment to:

•

UMB Bank, N.A.

•

ABA Number 101000695

For credit to Wasatch Funds

•

Account Number 987-060-9800

For further credit to:

•

Wasatch (name of Fund)

•

Your Wasatch account number

•

Name(s) of investor(s)

•

Social security or tax ID number

GENERAL

•

Redemption requests for over $50,000 ($100,000 for corporate accounts) must be made in writing (a Medallion signature guarantee is required).

•

Checks will be mailed to the address on your account.

•

Redemption requests made within 30 days of an address change must be made in writing and require a Medallion signature guarantee.

ONLINE

You may sell shares in amounts of $500 up to $50,000.

TELEPHONE

MAIL

Send Wasatch Funds a letter that includes:

•

Your name

•

The Fund(s) name

•

Your account number(s)

•

The dollar amount or number of shares to be redeemed

•

Your daytime telephone number

•

Signature(s) of account owners (sign exactly as the account is registered)

•

Medallion signature guarantee (if required)

AUTOMATICALLY

This plan allows you to make monthly, quarterly, semiannual or annual redemptions of $50 or more.

WHY WASATCH CLOSES OR REOPENS FUNDS

The Advisor periodically closes certain Wasatch Funds to control asset levels.

Increase position sizes — which may be difficult to accomplish and could increase the overall risk of the fund.

Invest in a longer list of names — which may dilute the manager’s best investment ideas.

Invest in larger companies — which could be a departure from the Fund’s intended strategy.

Conversely, when the assets of a closed Fund are at a level that we believe additional assets could be invested without impairing the Fund, we may reopen the Fund.

The Advisor also manages separate account portfolios that are similar in composition to some of the Wasatch Funds.

We carefully consider many business factors including aggregate assets in Funds and separate accounts when deciding to close or open Funds.

As described in more detail in the SAI, the Advisor retains the right to make investor exceptions to closed Funds.

HOW WASATCH CLOSES OR REOPENS FUNDS

Fund closings or reopenings will be posted on Wasatch Funds’ web site at www.wasatchfunds.com. The Advisor will make every effort to post information related to fund closings at least two weeks prior to the effective date of the closing. You may sign up on the Funds’ web site to receive an electronic notification of fund closings and openings. You can also request information about a Fund’s open or closed status from a shareholder services representative by calling our toll-free number at 800.551.1700.

Each change in a Fund’s status also will be filed electronically with the SEC. Please see “Other Important Information” about how to view or obtain copies of documents filed with the SEC.

POLICIES TO PREVENT MARKET TIMING

Short-term trading or “market timing” involves frequent purchases and redemptions of fund shares and may present risks for long-term shareholders of the fund including among other things, dilution in the value of fund shares held

by long-term shareholders, interference in the efficient management of the fund’s portfolio, increased brokerage and administrative costs and forcing the fund to hold excess levels of cash. One form of market timing is called “time zone arbitrage.” This occurs when shareholders of a fund that primarily invests in securities that are listed on foreign exchanges take advantage of time zone differences between the close of foreign markets on which the fund’s securities trade and the close of the U.S. markets, which is when the fund’s share price is calculated. Arbitrage opportunities may also occur in funds that do not invest in foreign securities.

For example, if trading in a security held by a fund is halted and does not resume prior to the time the fund’s share price is calculated, such “stale pricing” presents an opportunity for investors to take advantage of the pricing discrepancy. Similarly, funds that hold thinly-traded securities, such as certain micro- or small-capitalization securities, may be exposed to varying levels of pricing arbitrage.

The Funds cannot always know about or reasonably detect excessive trading by shareholders who purchase shares of the Funds through financial intermediaries. Intermediaries generally maintain omnibus accounts with the Funds, which do not allow access to individual shareholders’ account information. In compliance with federal securities laws, the Funds execute agreements with intermediaries that obligate them to provide certain shareholder data so the Funds may be able to detect excessive trading and market timing by underlying shareholders. Shareholders who have purchased Funds through financial intermediaries that do not execute information sharing agreements may be restricted from purchasing additional shares of the Funds (other than an automatic reinvestment of dividends) through an omnibus account with such financial intermediary.

REQUIRED INFORMATION

Federal regulations may require the Fund to obtain your name, your date of birth, your residential address or principal place of business and mailing address as well as your taxpayer identification number at the time you open your account. Applications without this information may not be accepted. To the extent permitted by law, the Fund reserves the right to place limits on transactions in your account until your identity is verified.

INVESTMENT MINIMUMS

•

If you purchase shares directly from Wasatch Funds, the minimum initial investment for a regular account is $2,000 unless otherwise noted on the application.

•

The minimum initial investment for Individual Retirement Accounts (IRAs), Education Savings Accounts and regular accounts opened with an automatic investment plan is $1,000.

•

The Fund reserves the right to waive or lower investment minimums for any reason.

•

Accounts opened through third parties such as brokers or banks may be subject to different minimums for initial and subsequent purchases.

TYPES OF REGULAR ACCOUNTS

•

Individual or Joint Ownership

•

Gift to Minor

•

Corporation, Partnership, Trust or Other Entity

TYPES OF INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)

•

Traditional IRA

•

Rollover IRA

•

Roth IRA

•

SEP-IRA

•

SIMPLE IRA

•

Section 403(b)(7) Plan

TYPES OF EDUCATION SAVINGS PLANS

•

Coverdell Education Savings Account

PREMIER SERVICES

•

Priority e-mail notification of new and reopened Funds.

•

Written quarterly comments from Wasatch portfolio managers.

•

Option to receive monthly statements.

•

Exemptions for outgoing wire and IRA fees.

•

Access to a personal relationship manager.

•

Shareholders with account balances greater than $500,000 receive detailed quarterly investment reports.

•

Accounts that drop below the $250,000 minimum due to shareholder redemptions will no longer be eligible for Premier Services.

•

The Fund reserves the right to modify Premier Services eligibility requirements, benefits or services at any time.

NO CANCELLATIONS

Please place your transactions with care. The Fund will not cancel any transaction once it has been initiated and, if applicable, a reference or confirmation number has been assigned.

PURCHASING SHARES

•

There are no sales charges to purchase shares of the Fund.

•

The purchase price of your shares will be determined the next time the Fund’s share price is calculated after the transfer agent receives your request in good order.

•

Purchases must be made in U.S. dollars.

•

The Fund does not accept cash, money orders, third party checks, travelers checks, credit card checks, checks drawn on banks outside the U.S. or other checks deemed to be high risk.

•

The Fund reserves the right to stop selling shares at any time or to reject specific purchase requests, including purchases by exchange from another Wasatch Fund or the WA-Federated Money Market Account (Money Market Fund).

•

Purchase requests made by telephone will only be accepted for accounts that have previously established bank information to allow electronic funds transfer from the Automated Clearing House (ACH).

•

A $20 fee will be assessed if your online purchase cannot be made for any reason. See also “Insufficient Funds Policy” on page 20.

SELLING (REDEEMING) SHARES

•

You may request that the Fund redeem all or a portion of your shares.

•

The price of shares you redeem will be determined the next time the Fund’s share price is calculated after the transfer agent receives your request in good order.

•

You may redeem shares in your account in amounts of $500 up to $50,000 ($100,000 for corporate accounts) online or by telephone.

•

Redemption requests for over $50,000 ($100,000 for corporate accounts) must be made in writing and a Medallion signature guarantee is required.

•

The Fund does not accept redemption requests made via fax.

•

The Fund will mail a check to the address on your account within seven days after the transfer agent receives your request in good order.

•

Redemption proceeds can also be sent by wire ($15.00 fee) or electronic funds transfer to your preauthorized bank account.

•

Payment may be delayed for up to seven days on redemption requests for recent purchases made by check or electronic funds transfer to ensure that the payment has cleared.

•

The Fund can delay payment of redemption proceeds for up to seven days at any time.

•

Redemption requests from corporations, executors, administrators, trustees and guardians may require additional documentation and a Medallion signature guarantee.

•

If the account is worth less than the amount requested, the entire value of the account will be redeemed.

•

The Fund reserves the right to redeem in kind.

•

The Fund reserves the right to reject or delay a redemption on certain legal grounds. See “Emergency Circumstances”.

•

Redeeming shares may result in a taxable capital gain or loss.

•

Due to money movement between Wasatch Funds and Money Market Fund, requests made on the business day prior to bank holidays will be processed the following business day. This applies to the Fund being redeemed and the Fund being purchased. Bank holidays include Columbus Day and Veteran’s Day. Bank holiday schedules are subject to change without notice.

REDEMPTION FEE

•

The Fund will deduct a fee of 2.00% from redemption proceeds on Fund shares held 60 days or less, except as noted below.

•

Exchanges on shares held 60 days or less will, subject to certain exceptions, trigger the redemption fee.

•

The redemption fee is paid directly to the Fund and is designed to offset brokerage commissions, market impact and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading.

•

If you bought shares on different days, the shares you held longest will be redeemed first for purposes of determining whether the redemption fee applies.

•

Shares transferred from one shareholder to another shareholder retain the transferer’s “age” of the shares in the hand of the transferor.

•

The redemption fee does not apply to shares acquired through reinvestment of dividends and/or capital gains.

•

The redemption fee does not apply to shares redeemed through the Systematic Withdrawal Plan.

•

The redemption fee does not apply to shares redeemed from shareholder accounts liquidated for failure to meet the minimum investment requirement.

•

The redemption fee does not apply to shares redeemed through an automatic, non-discretionary rebalancing or asset allocation program.

•

The redemption fee does not apply to shares redeemed due to a disability as defined by the IRS requirements.

•

The redemption fee does not apply to shares redeemed due to death for shares transferred from a decedent’s account to a beneficiary’s account.

•

The redemption fee does not apply in the event of a back office correction made to an account to provide the shareholder with the intended transaction.

•

The redemption fee does not apply to shares gifted from one shareholder account to another shareholder account, assuming the age of the gifted shares is greater than 60 days.

•

The redemption fee may be waived by the Fund’s officers in any case where the nature of the transaction or circumstances do not pose the risks that the Board of Directors’ policies and procedures to prevent market timing are designed to mitigate. All waivers provided by the Fund’s officers will be disclosed to the Fund’s Board of Directors

at its next regularly scheduled quarterly meeting. The Fund reserves the right to modify or eliminate the redemption fee or waivers at any time.

•

The redemption fee assessed by certain financial intermediaries that have omnibus accounts in the Fund, including employer-sponsored retirement accounts, may be calculated using methodologies that differ from those utilized by the Fund’s transfer agent. Such differences are typically attributable to system design differences unrelated to the investment in the Fund. These system differences are not intended or expected to facilitate market timing or frequent trading.

HOW FUND SHARES ARE PRICED

•

The Fund’s share price changes daily, so the price of shares you wish to purchase or redeem will be determined the next time the Fund’s share price is calculated after the transfer agent receives your request in good order.

•

The Fund’s share price, or Net Asset Value (NAV), is calculated by dividing the value of all securities and other assets owned by the Fund, less the liabilities charged to the Fund, by the number of Fund shares outstanding.

•

The Fund’s share price is generally calculated as of the close of trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m. Eastern Time) every day the NYSE is open.

•

The Fund’s share price will not be calculated on holidays the NYSE observes, including New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. NYSE holiday schedules are subject to change without notice. The NYSE may close early on the day before each of these holidays and the day after Thanksgiving and Christmas.

•

The Fund’s investments are primarily valued using market quotations. Debt securities (other than short-term instruments) are valued at prices furnished by a pricing service, subject to review and possible revision by the Advisor. Short-term securities are valued at either original cost or amortized cost, both of which approximate current market value. To the extent the Fund invests in registered open-end investment companies (other than exchange traded funds), such investments are valued based on the net asset value of such funds and the prospectuses of such funds will explain the circumstances under which these companies will be using fair value pricing and the effects of using fair value pricing.

•

If market quotations are not readily available for the Fund’s investments in securities such as restricted securities, private placements, securities for which trading has been halted or other illiquid securities, these investments will be valued at fair value by the joint Pricing Committee of the Advisor and the Fund with oversight by the Board of Directors and in accordance with Board-approved Pricing Policies and Procedures.

•

investment occurred after the close of the security’s primary exchange or market (for example, a foreign exchange or market) and before the time the Fund’s share price is calculated. In addition, if on any business day a change in the value of the U.S. equity markets (as represented by a benchmark index approved by the Board of Directors) exceeds a certain threshold, then each foreign security held by the Fund will be fair valued by using a value determined by an independent pricing agent (based upon changes in certain markets, indexes and/or securities) rather than using the last closing price of such foreign security on its principal overseas market or exchange.

•

Despite best efforts, there is an inherent risk that the fair value of an investment may be higher or lower than the value the Fund would have received if it had sold the investment.

•

The Fund may hold portfolio securities, such as those traded on foreign exchanges that trade on weekends or other days when the Fund’s share price is not calculated. Therefore, the value of the Fund’s shares may change on days when shareholders will not be able to purchase or redeem shares.

MEDALLION SIGNATURE GUARANTEE

A Medallion signature guarantee assures that a signature is genuine. It is intended to protect shareholders and the Fund against fraudulent transactions by unauthorized persons.

Medallion signature guarantees are required by Wasatch Funds in the following cases:

•

To change your designated bank account or bank address.

•

To add bank information to an existing account.

•

To request a redemption (must be made in writing) in excess of $50,000 ($100,000 for corporate accounts).

•

To request a wire transfer or ACH of redemption proceeds to a bank account other than the bank account of record.

•

Requests for redemption proceeds to be mailed to an address other than the address of record.

•

Redemptions made within 30 days of an address change.

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Certain transactions on accounts involving executors, administrators, trustees or guardians.

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On the IRA Transfer Form if transferring your Wasatch Funds IRA to another fund family if required by the receiving fund.

•

To change registered account holders.

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To change the name on an account due to divorce or marriage (or you can provide a certified copy of the certified legal documents) showing the name change.

•

To add telephone privileges.

The Fund reserves the right to require a Medallion signature guarantee under other circumstances.

HOW TO OBTAIN A MEDALLION SIGNATURE GUARANTEE

Medallion signature guarantees must be obtained from a participant in a Medallion program endorsed by the Securities Transfer Association. Participants are typically commercial banks or trust companies in the United States, brokerage firms that are members of the National Association of Securities Dealers, Inc. or members of the New York Stock Exchange. Call your financial institution to see if it participates in a medallion program.

A Medallion signature guarantee may not be provided by a notary public.

AUTOMATIC INVESTMENT PLAN (AIP)

•

Online, the AIP may be referred to as a pre-authorized draft or PAD.

•

Automatic purchases of Fund shares can be made for as little as $50 per month or $100 per quarter. The Fund does not currently charge a fee for this service.

•

You may elect to have your automatic purchase made on the 5th and/or the 20th day of each month. If these dates fall on a weekend or holiday, purchases will be made on the next business day.

•

Your signed Account Privileges Change Form and an unsigned, voided check or deposit slip must be received at least 14 days prior to your first automatic purchase.

•

Your financial institution must be a member of the Automated Clearing House (ACH).

•

When your AIP has been established, the bank or financial institution you designate can begin debiting a pre-authorized amount from your account on a specified date to purchase shares for your Fund account.

•

A $20 fee will be assessed if your automatic purchase cannot be made for any reason.

•

Instructions to change your AIP must be received at least five days prior to your regularly scheduled purchase.

•

If you redeem an account with an AIP to a zero balance, the plan will be discontinued.

SYSTEMATIC WITHDRAWAL PLAN (SWP)

•

You may arrange to make monthly, quarterly or annual redemptions of $50 or more. There is no charge to shareholders for using this plan.

•

Your Fund account balance must be at least $5,000 at the time you begin participation in the plan.

•

You may terminate the SWP at any time without charge or penalty.

•

The Fund may terminate or modify the plan after 60 days’ written notice to shareholders.

•

The redemption fee does not apply to shares redeemed through the plan.

•

If your balance is below the systematic withdrawal amount, the entire balance will be distributed and the plan will be discontinued.

EXCHANGING SHARES

•

Fund shares may be exchanged for shares of other Wasatch Funds on days the New York Stock Exchange (NYSE) is open for business.

•

Money Market Fund are no longer accepted as of such date.

•

The price of shares being exchanged will be determined the next time the Fund’s share price is calculated after the transfer agent has received your exchange request in good order.

•

Excessive exchanges may result in the termination of a shareholder’s exchange privileges. For more information please see “Policies to Prevent Market Timing”.

•

Exchanges for shares in Funds closed to new investors may only be made by shareholders with existing accounts in those Funds.

•

Exchanges may not be made for shares of Funds closed to new investors and existing shareholders.

•

You may open a new account or purchase additional shares by exchanging shares from an existing Fund account.

•

New accounts opened by exchange will have the same registration as existing accounts and are subject to the minimum initial investment requirements.

•

Additional exchanges may be made for $500 or more.

•

Exchanges on shares held 60 days or less will trigger the redemption fee, subject to certain exceptions as noted above.

•

New accounts automatically have the telephone exchange privilege, unless it is specifically declined.

•

The Fund does not accept exchange requests made via fax.

•

Exchange requests may be subject to other limitations, including those relating to frequency, that Wasatch Funds may establish to ensure that exchanges do not disadvantage shareholders or the Fund.

•

Exchanging shares may result in a taxable capital gain or loss.

•

The Advisor reserves the right to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason.

EXCHANGES BETWEEN WASATCH FUNDS AND THE WA-FEDERATED MONEY MARKET ACCOUNT

•

You may exchange all or a portion of your investment in the Fund for shares of the WA-Federated Money Market Account (the “Money Market Fund”), a money market account advised by Federated Investment Management Company (and not by Wasatch Advisors, Inc.) that invests in a diversified portfolio of high quality money market instruments. The WA-Federated Money Market Account and its adviser are not affiliated persons of the Wasatch Funds or Wasatch Advisors, Inc. THE SHARES OF THE WA-FEDERATED MONEY MARKET ACCOUNT ARE NOT OFFERED BY THIS PROSPECTUS.

•

Exchanges are subject to the minimum purchase and redemption amounts set forth in this prospectus unless otherwise noted on the application.

•

Shareholders may not exchange Money Market Fund shares to purchase shares of Funds that are closed to new investors and existing shareholders.

•

The automatic exchange plan allows you to make automatic monthly investments in Wasatch Funds by exchanging shares from your Money Market Fund account. There is no fee for this service.

•

Any changes to the automatic exchange plan must be made 10 business days prior to the transaction.

•

You will begin accruing income from the Money Market Fund the first business day following the exchange provided it is not a bank holiday.

•

Dividends earned in the Money Market Fund are payable at the time of full liquidation or at the end of the month if a balance remains in the account.

•

Shareholders should read the prospectus of the Money Market Fund prior to exchanging into it.

ELIGIBLE INVESTMENTS INTO CLOSED FUNDS

Information about eligible purchases in closed Funds can be found in the SAI or by calling a shareholder services representative.

PURCHASING SHARES THROUGH THIRD PARTIES SUCH AS BROKERS OR BANKS

•

You may buy or sell shares of the Fund through banks or investment professionals, including brokers, and they may charge you a transaction fee for this service.

•

Certain features offered by the Fund, such as Premier Services, minimum initial investment or subsequent investment amounts, may be modified or may not be available through other institutions.

•

Once you have established an account through an institution or investment professional, any subsequent transactions for, or questions about, that account must be made through them.

•

The Fund and/or the Advisor may enter into agreements with various brokerage or other firms pursuant to which such firms may accept orders on behalf of the Fund and provide administrative services with respect to customers who are beneficial owners of shares of the Fund. The Fund and/or the Advisor may compensate such firms in amounts based on assets of customers invested in the Fund.

•

The Advisor may pay out of its own legitimate profits amounts to certain financial intermediaries that support

the sale of shares of the Fund or provide services to shareholders of the Fund. The amounts of these payments could be significant, and may create an incentive for the financial intermediary or its employees or associated persons to recommend or sell shares of the Fund. These payments are not reflected in the fees and expenses listed in the fee table section of the Fund’s prospectus and described above because they are not paid by the Fund. These payments are generally based on factors such as the value of the intermediary’s client assets invested in the Fund or the type and nature of services or support furnished by the financial intermediary. These payments made by the Advisor may be in addition to payments of recordkeeping and/or networking fees made by the Fund to the financial intermediary.

•

If one mutual fund sponsor provides greater financial assistance than another, your financial advisor may have an incentive to recommend one mutual fund complex over another. Please speak with your financial advisor to learn more about the total amounts paid to your financial advisor and his or her firm by the Fund and/or the Advisor and by sponsors of other mutual funds he or she may recommend to you. You should also review disclosures made by your financial advisor at the time of purchase.

SHAREHOLDER REPORTS

We mail annual and semi-annual reports and prospectuses unless you elect to receive them via e-mail by filling out the consent form on our web site.

Annual reports are dated September 30, the close of the Fund’s fiscal year, and contain important information about the Fund, including the market conditions and investment strategies that affected performance during the period, portfolio holdings and audited financial statements. Semi-annual reports are dated March 31 and contain information about the Fund’s performance and portfolio holdings as well as unaudited financial statements.

Additional copies of shareholder reports are available by downloading them from our web site or calling a shareholder services representative.

ACCOUNT STATEMENTS

Account statements will be mailed quarterly. You may receive quarterly statements via e-mail if you consent to Electronic Document Delivery on our web site. We will send you a confirmation statement after every transaction that affects your account balance or your account registration. If you invest through the automatic investment plan, you will receive confirmation of your purchases quarterly.

We may consolidate statements for accounts with the same address and social security number. If you would like to receive individual account statements, please call or write

to Wasatch Funds. We will begin sending you individual account statements 30 days after receiving your request.

ESTABLISHING A HOUSEHOLD RELATIONSHIP

VERIFICATION OF ACCOUNT STATEMENTS

INVOLUNTARY REDEMPTION

The Fund reserves the right to redeem the shares held in any account if the account balance falls below $500 unless the account has an automatic investment plan. Your account will not be closed if the drop is due to share price fluctuations. Shareholders will be given at least 60 days’ written notice before involuntary redemptions are made. Shareholders can prevent involuntary redemptions by restoring the account to the minimum investment amount during the 60 days.

EMERGENCY CIRCUMSTANCES

The Fund or its agents may, in case of emergency, temporarily suspend telephone transactions and other shareholder services. It may be difficult to reach the Fund by telephone during periods of substantial economic or market change or in emergency situations. Under these circumstances, you may wish to consider purchasing, redeeming or exchanging shares by mail, overnight express delivery or online. The Fund can suspend redemptions and/or delay payments of redemption proceeds when the NYSE is closed due to financial conditions or during emergency circumstances, as determined by the Securities and Exchange Commission (SEC).

RESPONSIBILITY FOR FRAUD

The Fund and its agents will not be responsible for any losses resulting from unauthorized transactions provided

reasonable procedures to prevent fraudulent transactions have been followed. Procedures to reasonably assure that instructions are genuine include requesting verification of various pieces of personal and account information, recording telephone transactions, confirming transactions in writing or online and restricting transmittal of redemption proceeds to preauthorized destinations.

INSUFFICIENT FUNDS POLICY

The Fund reserves the right to cancel a purchase if a check or electronic funds transfer does not clear your bank. The Fund will charge your account a $20 fee and you will be responsible for any losses or fees imposed by your bank and any losses that may be incurred by the Fund as a result of the canceled purchase. If you are already a shareholder in the Fund, the Fund may redeem shares in your account(s) to cover losses due to fluctuations in share price.

THIRD PARTY CHECKS

To guard against check fraud, the Fund will not accept checks made payable to third parties.

CHANGES TO BANK INFORMATION

Requests to change the bank information on your account must be made in writing, signed by all account holders and accompanied by a Medallion signature guarantee.

REGISTRATION CHANGES

To change the name on an account, the shares are generally transferred to a new account. A new application, legal documentation and a Medallion signature guarantee is required.

ADDRESS CHANGES

PORTFOLIO SECURITIES DISCLOSURE

The Fund’s portfolio securities disclosure policy is described in the Statement of Additional Information (SAI).

ABOUT THE WA-FEDERATED MONEY MARKET ACCOUNT

In addition to any increase in the value of shares which the Fund may achieve, you may receive dividends and capital gain distributions from the Fund.

DIVIDENDS

Dividends from stocks and interest earned from other investments are the Fund’s main sources of investment income. It is intended that substantially all of the Fund’s net investment income, if any, will be distributed at least annually as dividends to shareholders. As noted below, the Fund expects that, as a result of its objectives and strategies, distributions (if any) will consist primarily of capital gains.

CAPITAL GAINS

When the Fund sells portfolio securities it may realize a capital gain or loss, depending on whether the security is sold for more or less than its adjusted cost basis. Net realized capital gains, if any, will be distributed at least annually.

BUYING A DIVIDEND

Purchasing shares of the Fund shortly before it makes dividends or capital gain distributions will have the effect of reducing the share price by the amount of the distribution. This is sometimes referred to as “buying a dividend” because, although the distribution is in effect a return of a portion of the purchase price, it is taxable.

Unless you are investing in a tax-deferred account like an IRA or Education Savings Account, you may want to consider waiting to invest until after the Fund makes a distribution.

REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS

Dividends and capital gain distributions made by the Fund are automatically applied to purchase additional shares of the Fund at the share price on the payable date unless you elect to have distributions paid to you in cash. You may change whether distributions are reinvested or paid in cash at any time by writing to the transfer agent. Changes will be effective for distributions with a record date on or after the date the transfer agent receives your request.

TAXES

This section summarizes some of the main U.S. federal income tax consequences of owning shares of the Fund. This section is current as of the date of this prospectus. Tax laws and interpretations change frequently, and these summaries do not describe all of the tax consequences to all taxpayers. For example, these summaries generally do not describe your situation if you are a corporation, a non-U.S. person, a broker/dealer, or other investor with special circumstances. In addition, this section does not describe your state, local or foreign tax consequences.

This federal income tax summary is based in part on the advice of counsel to the Fund. The Internal Revenue Service (IRS) could disagree with any conclusions set forth in this section. In addition, our counsel was not asked to review, and has not reached a conclusion with respect to the federal

income tax treatment of the assets to be invested in the Fund. This may not be sufficient for you to use for the purpose of avoiding penalties under federal tax law.

As with any investment, you should seek advice based on your individual circumstances from your own tax advisor.

The Fund intends to qualify as a “regulated investment company” under the federal tax laws. If the Fund qualifies as a regulated investment company and distributes its income as required by the tax law, the Fund generally will not pay federal income taxes. Dividends paid from the Fund’s net investment income and net short-term capital gains generally will be taxable as ordinary income, whether paid in cash or reinvested as additional shares. It is possible that a portion of the dividends paid from the net investment income of the Fund, will constitute “qualified dividends” eligible for the maximum federal income tax rate of 15% for taxable years beginning before January 1, 2011. In certain cases (for example with some capital gains attributable to REIT shares) a higher rate applies. The Fund will inform its shareholders of the portion of its dividends (if any) that constitutes “qualified dividends.” Distributions paid from the Fund’s long-term capital gains and designated as capital gain distributions generally are taxable as long-term capital gains, regardless of the length of time you held your shares. The Fund expects that, as a result of its objectives and strategies, distributions (if any) will consist primarily of capital gains.

To the extent that the Fund invests in REITs, the REITs in which the Fund invests may generate significant non-cash deductions, such as depreciation on real estate holdings, while having greater cash flow to distribute to their shareholders. If a REIT distributes more cash than its current or accumulated earnings and profits, a return of capital results. Similarly, the Fund may pay a return of capital distribution to you by distributing more cash than its current or accumulated earnings and profits. The cost basis of your shares will be decreased by the amount of returned capital (but not below zero), which may result in a larger capital gain or smaller capital loss when you sell your shares. To the extent such a distribution exceeds your cost basis in your shares, you generally will be treated as realizing a taxable gain from the sale or exchange of your shares.

Gain or loss upon the sale of shares of the Fund generally will be treated as a capital gain or loss, provided that (as is usually the case) the shares represented a capital asset in the hands of the shareholder. The gain or loss will be considered long-term if the shareholder has held the shares for more than one year. The gain or loss on shares held for one year or less will be considered short-term and taxed at the same rates as ordinary income. If you receive a capital gain distribution from your Fund and sell your shares at a loss after holding them for six months or less, the loss will be recharacterized as a long-term capital loss to the extent of the capital gain distribution received.

The Fund is required to withhold and remit to the U.S. Treasury a percentage of dividend payments, capital gain distributions, and redemption proceeds at a rate set forth in applicable IRS Rules and Regulations for certain shareholders who have not certified that the social security number or taxpayer identification number they have supplied is correct and that they are not subject to backup withholding because of previous underreporting to the IRS. This backup withholding requirement generally does not apply to shareholders that are corporations or certain tax-exempt organizations.

To the extent the Fund invests in foreign securities, it may be required to pay withholding and other taxes imposed by foreign countries. If the Fund has more than 50% of its total assets invested in securities of foreign corporations at the end of its taxable year, it may make an election that will result in the dividends taxed to you including your share of taxes paid to other countries and that may permit you either to claim a foreign tax credit with respect to foreign taxes paid by the Fund or to deduct those amounts as an itemized deduction on your tax return. If the Fund makes this election, you will be notified and provided with sufficient information to calculate your foreign tax credit or the amount you may deduct as foreign taxes paid.

characterized as dividends for federal income tax purposes (other than dividends which the Fund designates as capital gain dividends) and will be subject to U.S. income taxes, including withholding taxes, subject to certain exceptions. However, distributions received by a foreign investor from the Fund that are properly designated by the Fund as capital gain dividends may not be subject to U.S. federal income taxes, including withholding taxes, provided that the Fund makes certain elections and certain other conditions are met.

In the case of dividends with respect to taxable years of the Fund beginning prior to 2010, distributions from a Fund that are properly designated by the Fund as an interest-related dividend attributable to certain interest income received by the Fund or as a short-term capital gain dividend attributable to certain net short-term capital gain income received by the Fund may not be subject to U.S. federal income taxes, including withholding taxes when received by certain foreign investors, provided that the Fund makes certain elections and certain other conditions are met.

WHEN YOU WILL RECEIVE TAX INFORMATION

Account tax information will also be sent to the IRS.

GENERAL

If you have any questions about Wasatch Funds or would like more information, please contact Wasatch as noted below. You may obtain a free copy of the Fund’s SAI, annual or semi-annual reports, or quarter-end portfolio holdings on the Fund’s web site at www.wasatchfunds.com or by contacting Wasatch at the telephone number or address noted below.

The SAI provides more details about the Fund and its policies. The SAI is incorporated into the prospectus by reference and is, therefore, legally part of this prospectus.

Additional information about the Fund’s investments will be available in the Fund’s annual and semi-annual reports to shareholders. The reports will contain discussions of the market conditions and investment strategies that significantly affected the Fund’s performance for the most recent six- and 12-month periods.

ONLINE

www.wasatchfunds.com

or via e-mail at

shareholderservice@wasatchfunds.com

TELEPHONE

800.551.1700

Shareholder services representatives are available Monday through Friday 7:00 a.m. to 7:00 p.m. Central Time.

MAIL

Wasatch Funds

P.O. Box 2172

Milwaukee, WI 53201-2172

CONTACT THE SEC

You can go to the SEC’s web site (http://www.sec.gov) to view these and other documents that Wasatch Funds has filed electronically with the SEC.

Information about the Fund can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Call the Commission at 202.551.8090 for information.

Investment Company Act File Number: 811-4920

INVESTMENT OBJECTIVE

The Fund’s primary investment objective is to capture current income. A secondary objective is long-term growth of capital and income. The Fund’s investment objectives can be changed without shareholder approval.

PRINCIPAL STRATEGIES

The Fund invests primarily in income producing securities.

Under normal market conditions, we will invest the Fund’s assets primarily in income-producing domestic and foreign securities, including equity securities and fixed income securities. The Fund is not managed as a balanced portfolio. At times, one type of security may make up a substantial portion of the Fund, while other types may have minimal or no representation.

The Fund may invest its assets in securities issued by foreign companies in developed countries without limit. To a lesser extent, the Fund may invest in foreign companies in emerging markets. Securities issued by companies incorporated outside the United States, but whose securities are publicly traded in the United States, either directly or through American Depositary Receipts, are not defined as foreign companies.

In our search for such investments, we maintain the flexibility to invest in companies from a variety of industries. The Fund, however, does have a concentration in the financial services sector — meaning that at least 25% of the Fund’s total assets will be invested in securities of issuers in the group of industries in the financial services sector. For both domestic and foreign securities, we define the group of industries comprising the financial services sector to include, among others, Banks (Commercial Banks, Thrifts & Mortgage Finance), Diversified Financials Companies (Diversified Financial Services, Consumer Finance, Capital Markets), Finance Companies, Financial Data Processing Services and Systems, Finance Companies (Small Loan), Financial Information Services, Insurance Companies (Life, Multi-Line, Property-Casualty), Investment Management Companies, Real Estate Companies (Real Estate Investment Trusts (REITs), Real Estate Management & Development Companies, Rental & Leasing Services (Commercial)), Savings & Loans and Securities Brokerage and Services.

The Fund may invest in exchange-traded funds (ETFs).

The Fund may make short sales of securities, and may also use derivatives such as put and call options and futures contracts for hedging and non-hedging purposes. The Fund may write put and call options subject to applicable law and SEC guidelines.

In the selection of equity securities, we use “bottom up” fundamental analysis to identify individual companies with attractive, sustainable dividend yields or the potential for dividend growth. In certain situations the Fund may acquire non-income producing securities if we believe the company has the potential to pay dividends in the future. Our analysis may include studying a company’s financial statements, building proprietary financial models, visiting company facilities, and meeting with executive management, suppliers and customers.

Characteristics we consider when investing in equity securities generally include:

•

Attractive, sustainable dividend yields or the potential for dividend growth.

•

Experienced top management.

•

Sustainable competitive advantage.

•

Stable demand for products and services.

•

Ability to capitalize on favorable long-term trends.

The Fund’s investments in fixed income securities may include domestic and foreign corporate bonds with a variety of maturities (e.g., long-term, intermediate or short-term) and credit qualities (e.g., investment grade or non-investment grade). At certain times the Fund may emphasize one particular maturity or credit quality. The Fund may invest in non-investment grade securities without limitation. The Fund may also invest in U.S. Treasury securities and the debt obligations of foreign governments.

Characteristics we consider when investing in fixed income securities generally include:

•

Rates of current income.

•

Credit quality of the issuer.

•

Maturity, duration and other characteristics of the obligation.

The Fund may invest a large percentage of its assets in a few sectors.

For more information, please see “Additional Information about the Fund”.

PRINCIPAL RISKS

All investments carry some degree of risk that will affect the value of the Fund, its investment performance and the price of its shares. As a result, you may lose money if you invest in the Fund.

The Fund is subject to the following principal investment risks:

of foreign countries may differ, in some cases significantly, from U.S. standards. Foreign securities that are denominated in a foreign currency also are subject to the risk that their values may fluctuate based upon changes in currency exchange rates.

Small Company Stock Risk. The stocks of small companies may be more susceptible to market downturns, and their prices may be more volatile than those of larger companies. Small companies often have narrower markets and more limited managerial and financial resources, and product lines than larger, more established companies. As a result, they may be more sensitive to changing economic conditions, which could increase the volatility of the Fund’s portfolio. The stocks of small companies typically are traded in lower volume making them more difficult or impossible to sell at a time or price that is desirable, and their issuers are subject to greater fluctuations in their earnings and prospects.

Derivatives Risk. The Fund may suffer a loss from its use of put and call options and futures contracts, which are forms of derivatives. A derivative contract will obligate or entitle the Fund to deliver or receive an asset or cash payment based on the change in one or more securities, currencies or indexes. The primary risk with many derivatives is that they can amplify a gain or loss, potentially earning or losing substantially more money than the actual cost of the derivative instrument. A relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) to the Fund. Certain derivatives have the potential for unlimited losses regardless of the size of the initial investment. Investments in derivatives also entail exposure to the credit and default risk of the derivative’s counterparty. Derivatives also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the relevant assets, rates and indexes. Derivatives may also be less liquid and may be difficult or impossible to sell or terminate

at a desirable time or price. Use of derivatives may increase the amount and affect the timing and character of taxes payable by shareholders. The Fund may engage in these derivative transactions to hedge against the economic impact of adverse changes in the market value of portfolio securities because of changes in market prices, currency exchange rates or interest rates, or as a substitute for buying or selling securities, securities indexes or currencies. The Fund may not fully benefit or may lose money on derivatives if changes in their value do not correspond accurately to changes in the value of the Fund’s holdings.

Short Sales Risk. The Fund may make short sales of securities listed on one or more U.S. or foreign securities exchanges or on Nasdaq or EASDAQ. A short sale means a fund sells a security it does not own in anticipation of a decline in the security’s price. The Fund must borrow the security to deliver to the buyer upon the short sale. The Fund is then obligated to replace the borrowed security by purchasing it at a later date. The Fund will experience a loss if the market price of the security increases between the date of the short sale and the date the security is replaced. The Fund will not engage in short sales when these transactions would cause the market value of all of the Fund’s securities sold short to exceed 15% of its net assets. Short sales may reduce the Fund’s returns or increase volatility.

Investment Companies Risk. The Fund may invest in shares of other investment companies, including foreign and domestic registered and unregistered open-end funds, closed-end funds, and unit investment trusts and exchange-traded funds noted below. Investing in another investment company subjects the Fund to the same risks associated with investing in the securities held by the applicable investment company and the investment strategies employed by such funds (such as the use of leverage). In addition, the benefit of investing in another investment company is largely dependent on the skill of the investment advisor of the underlying company and whether the associated fees and costs involved with investing in such company are offset by the potential gains. As a shareholder in an investment company, a fund will bear its ratable share of that investment company’s expenses including advisory and administrative fees. Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies.

Exchange-Traded Funds Risk. Exchange-Traded Funds (ETFs) are investment companies that are bought and sold on a securities exchange. Shares of ETFs are redeemable only in larger aggregations of a specified number of shares and generally on an in-kind basis. When the Fund invests in an ETF, it will bear additional expenses based on its pro rata share of the ETF’s operating expenses. The risk of owning an ETF generally reflects the risks of the underlying securities that the ETF is designed to track and the investment strategies employed by such ETF. The market price may also fluctuate due to the supply and demand of the ETF’s shares upon which its shares are traded. Lack of liquidity in an ETF could result in the ETF being more volatile than the underlying portfolio of securities. In addition, because of ETF expenses, compared to owning the underlying securities directly, it may be more costly to own an ETF.

REIT Risk. Investments in real estate investment trusts or “REITs” subject the Fund to risks associated with the direct ownership of real estate. The value of securities of REITs can be affected by changes in real estate values and rental income, property taxes, interest rates, tax and regulatory requirements and the management skill and creditworthiness of the issuer. In addition, the value of a REIT can depend on the structure and cash flow generated by the REIT and REITs may not have diversified holdings. Because REITs are pooled investment vehicles that have expenses of their own, the Fund will indirectly bear its proportionate share of those expenses.

Non-Diversification Risk. The Fund can invest a larger portion of its assets in the stocks of a limited number of companies than a diversified fund. If the Fund invests in the securities of a few companies, 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.

Credit Risk. The risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable to honor a financial obligation. Credit risk is generally higher for non-investment grade securities. The price of a security can be adversely affected prior to actual default as its credit status deteriorates and the probability of default rises.

Interest Rate Risk. The risk that debt prices overall will decline over short or even long periods due to rising interest rates. A rise in interest rates typically causes a fall in values, while a fall in rates typically causes a rise in values. The longer the average maturity of the debt obligations held by the Fund, the greater its interest rate risk. The market prices of securities structured as zero coupon are generally affected to a greater extent by interest rate changes. These securities tend to be more volatile than securities that pay interest periodically.

Non-Investment Grade Securities Risk. High yield, or non-investment grade, securities (also known as “junk bonds”) are those rated below investment grade by the primary rating agencies (e.g., below BB/Ba by S&P/Moody’s) and are considered speculative. Compared to investment grade debt securities, non-investment grade debt securities tend to have more volatile prices and increased price sensitivity to changing interest rates and adverse economic and business developments. In addition, compared to investments in investment grade securities, investments in non-investment grade securities are subject to greater risk of loss due to default or a decline in credit quality, greater likelihood that adverse economic or company-specific events will make the issuer unable to make interest and/or principal payments, and greater susceptibility to negative market sentiment, leading to depressed prices and decreased liquidity.

WHO SHOULD INVEST

The Fund is best suited for long-term investors who can tolerate the risks and volatility that are inherent with investments in equity securities and fixed income securities. It is not appropriate for short-term investors or those trying to time the market.

An investment in the Fund should not be considered a complete investment program and should be carefully evaluated for appropriateness in light of your overall investment needs and goals.

HISTORICAL PERFORMANCE

The chart above is intended to provide you with an indication of the risks of investing in the Strategic Income Fund by showing the changes in the Fund’s performance from year to year.

The table above is designed to help you evaluate your risk tolerance by showing the Fund’s best and worst quarterly performance for the years shown in the bar chart above.

The table above allows you to compare the Fund’s past performance to that of market indexes.

Barclays Capital Aggregate Bond Index (formerly, the Lehman Brothers 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. To be included in the Index, the security must meet the following criteria: must have at least one year to final maturity, regardless of call features; must have at least $100 million par amount outstanding; must be rated investment grade or better by Moody’s Investors Service, Standard & Poor’s, or Fitch Investor’s Service; must be fixed rate, although it can carry a coupon that steps up or changes to a predetermined schedule; must be dollar-denominated and nonconvertible. All corporate and asset-backed securities must be registered with the SEC and must be publicly issued.

The S&P 500 Index includes 500 of the United States’ largest stocks from a broad variety of industries.

You cannot invest directly in the Indexes. The Indexes’ returns reflect no deductions for fees, expenses or taxes.

The following tables describe the fees and expenses you may pay if you buy, sell or hold shares of the Fund.

The above example reflects contractual fee waivers and reimbursements through January 31, 2010.

INVESTMENT PROCESS

SELLING SECURITIES

•

The rationale we used to buy the security is no longer valid.

•

The security becomes overpriced.

•

We believe another security has better investment potential.

INVESTMENT STRATEGIES AND RISKS

denominated or traded in that country. In addition, the Fund may incur costs in connection with conversions between various currencies. While the Fund has the ability to hedge against fluctuations in foreign currency exchange rates, it has no present intention to do so. A risk of not hedging currencies is that if the U.S. dollar strengthens, returns from foreign markets will be less when converted into U.S. dollars.

Transaction Costs. The costs of buying and selling foreign securities including brokerage, tax and custody costs are generally higher than those for domestic transactions.

its fixed income characteristics, and thus, may not necessarily decline in price as much as the underlying common stock. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and price that is unfavorable to a Fund.

Early Stage Companies Risk. The Fund may invest in early stage companies. Early stage companies may not be profitable now and there is no guarantee that they will become profitable or be able to obtain necessary financing. They may rely on untested business plans, may not be successful in developing markets for their products or services and may remain an insignificant part of their industry. Stocks of early stage companies may be illiquid or they may not be publicly traded. Investments in early stage companies tend to be more volatile and somewhat more speculative than investments in more established companies.

OTHER INVESTMENT STRATEGIES

FUNDAMENTAL POLICIES

Certain policies of the Fund cannot be changed without a shareholder vote. These policies are described in the SAI.

CASH/TEMPORARY DEFENSIVE POSITIONS

PORTFOLIO TURNOVER

INVESTMENT ADVISOR

MANAGEMENT FEES AND EXPENSE LIMITATIONS

The Fund pays the Advisor a monthly management fee that is a percentage of the Fund’s average daily net assets. More detailed information about the Advisor’s investment advisory and service contract with the Fund can be found in the SAI. A discussion regarding the basis for the Board of Directors’ approval of the Advisory and Service Contract with respect to the Fund is available in the Funds’ Semi-Annual Report dated March 31, 2008.

The Advisor has contractually agreed to limit the expenses of the Fund at least through January 31, 2010, to 0.95% of average net assets computed on a daily basis. The Advisor will pay all expenses, excluding interest, taxes, brokerage commissions, other investment related costs and extraordinary expenses, in excess of such limitations. Acquired Fund fees and expenses and dividend expense on short sales are also excluded from this contractual limitation. The Fund paid the Advisor a management fee of 0.70% of average daily net assets after taking into account any reimbursements during the most recent year. The Advisor may rescind these contractual limitations on expenses any time after January 31, 2010.

Management fees and net expenses for the Fund are higher than those paid by many mutual funds. Please see “Fees and Expenses” for more information.

PORTFOLIO MANAGEMENT

The Fund is managed using a team approach. The Wasatch research team consists of the Chief Investment Officer, 17 portfolio managers and 12 securities analysts.


Name of Fund		Lead Portfolio Manager
Strategic Income Fund		Samuel S. Stewart, Jr., PhD, CFA

The SAI provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio managers and the portfolio manager’s ownership of securities in the Fund.