The “Lost Decade” was Not Lost at Wasatch Funds

The end of 2009 capped what many have been calling the “lost decade” since in rare form the equity markets were essentially flat over the decade. Annualized 10-year market returns were:

• S&P 500 Index: -0.95%
• Russell 2000 Index: 3.51%

Six Wasatch equity funds existed on January 1, 2000. The annualized returns of these six funds during the “lost decade” averaged +7.93%, with a range of +4.38% to +11.26%. This placed all six of these funds in the Top 17% of their respective Morningstar peer groups for the decade.

For example, if you had made a hypothetical investment of $10,000 in the Russell 2000 Index on January 1, 2000, you would have had $14,120 at the end of the decade. The same investment in the Wasatch Micro Cap Growth Fund would have returned $29,066. (Note: this is a hypothetical example, as you cannot invest directly in an index.)

Said Wasatch Chairman, Sam Stewart, “We are pleased to have delivered solid returns over such a weak market period. As a team of investors committed to long-term investing, reflecting on these results gives us continued confidence that our disciplined approach of using deep due diligence and cross-team collaboration to find high quality companies trading at interesting valuations has worked over the long-term.”

Mr. Stewart continued “We believe the lost decade was an anomaly resulting from an extremely strong bull market in the ’90s and two major shocks this decade—the 2001 terrorist attacks and the 2008 financial crisis. We continue to believe that equities will be rewarding long-term investments.”

*Inception Dates: WAAEX: 12/6/86, WGROX: 12/6/86, WAMCX: 8/16/92, WMICX: 6/19/95, FMIEX: 9/25/96, WMCVX: 12/17/97.

Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the data quoted. For the most recent month-end performance data please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Total Expense Ratio: WAAEX: 1.21%, WGROX: 1.21%, WAMCX: 1.55%, WMICX: 2.11%, FMIEX: 1.16%, WMCVX: 1.81%.

Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted.

About Wasatch Advisors

Wasatch Advisors is the investment manager to Wasatch Funds®, a family of no-load mutual funds, as well as separately managed institutional and individual portfolios. Wasatch Advisors pursues a disciplined approach to investing, focused on bottom-up, fundamental analysis to develop a deep understanding of the investment potential of individual companies. The Portfolio Managers employ a uniquely collaborative multiple eyes™ process to leverage the knowledge and skill of the entire Wasatch Advisors research team in making investment decisions. Wasatch Advisors is an employee-owned investment adviser founded in 1975 and headquartered in Salt Lake City, Utah. Wasatch Advisors, Inc. is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.

Mutual fund investing involves risks and loss of principal is possible. Investing in small and micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investments in value stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time.

An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, containing this and other information, visit www.wasatchfunds.com or call 800.551.1700. Please read it carefully before investing.

The S&P 500 Index represents 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged, and a common measure of common stock total return performance. The Russell 2000 Index represents the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Index is unmanaged and widely considered to accurately capture the universe of small company stocks. You cannot invest directly in these or any indexes.

The Morningstar Ranking is the Funds total-return percentile rank relative to all funds within the same Morningstar Category over a specified time period and is subject to change. ©2010 Morningstar, Inc. All rights reserved. The information contained herein (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

©2010 Wasatch Funds, All rights reserved. Wasatch Funds are distributed by ALPS Distributors, Inc. Eric Huefner is a registered representative of ALPS Distributors, Inc.

WAS001675 4/20/2010