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Wasatch Frontier Emerging Small Countries Strategy

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Wasatch Frontier Emerging Small Countries Strategy
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Strategy Overview

Highlights
  • Seeks the highest-quality companies in frontier and emerging small countries
  • Truly active, collaborative, bottom-up, fundamental process
  • Systematic coverage of the frontier emerging small country universe
  • Risk controlled through extensive fundamental due diligence
Investment Approach

We use a bottom-up approach that seeks to identify companies with outstanding long-term growth potential. We look for companies with:

  • Strong financials
  • A sustainable competitive advantage
  • Industry-best management teams
  • Earnings growth greater than the relevant sector or industry

Approximately 30-70 positions

Portfolio Managers
Scott Thomas Scott Thomas Lead Portfolio Manager
3 years on strategy
7 years at wasatch
Jared Whatcott Jared Whatcott Portfolio Manager
3 years on strategy
14 years at wasatch
6 Cumulative PM years on strategy

We travel throughout frontier and emerging markets to find less well known, long-duration growth companies. We’re often told how rare it is to actually get a visit from potential investors.”

—Scott Thomas, Lead Portfolio Manager

Performance

Average Annual Total Returns AS OF 09/30/19 AS OF 11/30/19
Quarter-End Month-end
1 Month
3 Month
ytd
1 yr
3 yr
5 yr
10 yr
Since
Inception
Frontier Emerging Small Countries Composite (Gross)
1.09%
5.33%
23.50%
21.07%
9.32%
1.42%
N/A
8.03%
Frontier Emerging Small Countries Composite (Net)
0.96%
5.00%
22.05%
19.53%
7.76%
-0.11%
N/A
6.30%
MSCI Frontier Emerging Markets Index
-0.51%
1.12%
9.11%
7.44%
6.62%
-0.45%
N/A
3.35%
MSCI Frontier Markets Index
1.37%
0.19%
13.08%
9.77%
8.58%
0.99%
N/A
6.13%

Returns for periods less than one year are not annualized. Since inception performance is calculated from 01/31/2012.

Calendar Year Returns (%) NET OF FEES (AS OF 12/31/18)
Frontier Emerging Small Countries Composite
MSCI Frontier Emerging Markets Index

Performance is preliminary and subject to change. Past performance is not indicative of future results. Wasatch Global Investors is an independent registered investment advisor. Registration does not imply a certain level of skill or training. Wasatch claims compliance with the Global Investment Performance Standards (GIPS®). To receive a complete list of composite descriptions of Wasatch composites and/or a GIPS-compliant presentation, e-mail inforequest@wasatchglobal.com. The U.S. Dollar is the currency used to express performance.

The Frontier Emerging Small Countries Composite contains fully discretionary equity accounts following the Frontier Emerging Small Countries style.  The composite primarily invests in the equity securities of all market capitalizations that are tied economically to frontier markets and small emerging market countries with the goal of long-term growth of capital.  For comparison purposes the composite is measured against the MSCI Frontier Emerging Markets and MSCI FM (Frontier Markets) indices.

The MSCI Frontier Markets and Frontier Emerging Markets Indexes are free float-adjusted market capitalization indexes that are designed to measure equity market performance in the global frontier and emerging markets.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products.

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Portfolio

Characteristics AS OF 09/30/19
Portfolio
Index
Number of Holdings
40
145
Average Market Cap
($ Weighted)
$11.58 b
$9.54 b
Median Market Cap
$3.32 b
$2.61 b
EPS Growth (%, est. 5 yr)
19%
15%
P/E (Forward)
16
12
Portfolio Turnover (%)
62.55
n/a
Active Share (%)
88
n/a
Performance Statistics AS OF 09/30/19
5 yr
Alpha
1.28
Beta
0.78
R-Squared
0.72
Standard Deviation
11.06
Upside Capture
84
Downside Capture
85
Top 10 Holdings AS OF 09/30/19
Company
% of Net Assets
Cleopatra Hospital (Egypt)
5.4%
Raia Drogasil SA (Brazil)
5.3%
MercadoLibre Inc.
4.5%
Philippine Seven Corp. (Philippines)
4.3%
Bank Central Asia Tbk PT (Indonesia)
4.1%
Commercial International Bank Egypt SAE (Egypt)
4%
Grupo Aeroportuario del Sureste SAB de CV (Mexico)
3.9%
Safaricom PLC (Kenya)
3.9%
Banco Davivienda SA (Colombia)
3.4%
FPT Corp. (Vietnam)
3.4%
40 Number of holdings
88% Active share
Sector Allocation AS OF 09/30/19
Sector
Portfolio
Index
Financials
41.1
43.7
Consumer Staples
16.2
5.8
Consumer Discretionary
9.7
0.9
Health Care
8.9
1.4
Industrials
8.5
11.8
Information Technology
8.4
1.4
Communication Services
3.9
8.1
Materials
2.4
6.4
Real Estate
0.6
12.5
Cash & Cash Equivalents*
0.4
0.0
Energy
0.0
4.6
Utilities
0.0
3.3
Country Allocation AS OF 09/30/19
Portfolio (%)
Developed
10.6
United Kingdom
4.8
United States
4.5
Netherlands
1.3
Emerging & Frontier
89.4
Egypt
11.8
Mexico
9.9
Brazil
7.5
Thailand
6.8
South Africa
6.8
Indonesia
6.6
Vietnam
6.0
Other
33.9
10.6% Developed
89.4% Em and Frontier

Commentary & Literature

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Important Disclosures

Portfolio Characteristics, Allocations and Top Ten Holdings are derived from a representative account.

Est. 5-year EPS Growth %: Estimated percentage increase in earnings per share (EPS) per year of the fund's holdings over the next 5 years. Returns are not guaranteed and may be higher or lower. Source: Wasatch and FactSet. P/E Ratio (forward and trailing): Sum of stock prices of the fund's holdings divided by the aggregate earnings per share of those holdings for the next 12 months (forward), or past 12 months (trailing), calculated as a weighted harmonic average. P/E to Growth Rate: Forward 12-month P/E ratio divided by the estimated 5-year EPS growth rate. Portfolios with a number less than 1.0 would be considered undervalued, around 1.0 would be considered fair valued and significantly greater than 1.0 would be considered overvalued. Weighted Average Market Cap: Average market capitalization of companies held by the fund, weighted by their percentage of fund net assets. Portfolio Turnover: A measure of trading activity in a fund's portfolio over the past 12 months expressed as a percentage of the fund's average total assets. Alpha measures a fund's risk/reward potential. A positive alpha means the fund outperformed the index. A negative alpha means the fund underperformed the index. Beta measures a fund's risk in relation to the market. A beta of 0.8 means the fund's total return is likely to move up or down 80% of the market change; 1.25 means total return is likely to move up or down 25% more than the market. R-Squared measures (from 0 to 1.0) how closely a fund's movements are correlated with movements of its benchmark. An R-squared of 1.0 would mean that the fund's movements are completely correlated with the movements of its benchmark. Active Share measures the difference between portfolio holdings and the benchmark. It is the sum of the absolute values of the different weightings of each holding in the fund versus each holding in the benchmark, divided by 2. Standard Deviation measures the degree to which a fund's performance has varied from its average performance over a particular time period. The greater the standard deviation, the greater a fund's volatility (risk). Upside Capture explains how well a fund performs in time periods where the benchmark's returns are greater than zero. Downside Capture explains how well a fund performs in time periods where the benchmark's returns are less than zero.

Portfolio holdings are subject to risks and may change at any time.

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