As filed with the Securities and Exchange Commission on March 7, 2013
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3489
THE WRIGHT MANAGED EQUITY TRUST
440 Wheelers Farms Road
Milford, Connecticut 06461
Christopher A. Madden
Three Canal Plaza, Suite 600
Portland, ME 04101
207-347-2000
Date of fiscal year end: December 31
Date of reporting period: January 1, 2012 – December 31, 2012
ITEM 1. REPORT TO STOCKHOLDERS.
The Wright Managed Blue Chip Investment Funds
The Wright Managed Blue Chip Investment Funds consist of three equity funds from The Wright Managed Equity Trust and two fixed-income funds from The Wright Managed Income Trust. Each of the five funds have distinct investment objectives and policies. They can be used individually or in combination to achieve virtually any objective. Further, as they are all “no-load” funds (no commissions or sales charges), portfolio allocation strategies can be altered as desired to meet changing market conditions or changing requirements without incurring any sales charges.
Approved Wright Investment List
Securities selected for investment in these funds are chosen mainly from a list of “investment grade” companies maintained by Wright Investors’ Service (“Wright”, “WIS” or the “Adviser”). Over 34,000 global companies (covering 63 countries) in Wright’s database are screened as new data becomes available to determine any eligible additions or deletions to the list. The qualifications for inclusion as “investment grade” are companies that meet Wright’s Quality Rating criteria. This rating includes fundamental criteria for investment acceptance, financial strength, profitability & stability and growth. In addition, securities, which are not included in Wright’s “investment grade” list, may also be selected from companies in the fund’s specific benchmark (up to 20% of the market value of the portfolio) in order to achieve broad diversification. Different quality criteria may apply for the different funds. For example, the companies in the Major Blue Chip Equities Fund would require a higher investment acceptance rating than the companies in the Selected Blue Chip Equities Fund.
Three Equity Funds
Wright Selected Blue Chip Equities Fund (WSBC) (the “Fund”) seeks to enhance total investment return through price appreciation plus income. The Fund’s portfolio is characterized as a blend of growth and value stocks. The market capitalization of the companies is typically between $1-$10 billion at the time of the Fund’s investment. The Adviser seeks to outperform the Standard & Poor’s MidCap 400 Index (“S&P MidCap 400”) by selecting stocks using fundamental company analysis and company specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors.
Wright Major Blue Chip Equities Fund (WMBC) (the “Fund”) seeks to enhance total investment return through price appreciation plus income by providing a broadly diversified portfolio of equities of larger well-established companies with market values of $5-$10 billion or more. The Adviser seeks to outperform the Standard & Poor’s 500 Index (“S&P 500”) by selecting stocks, using fundamental company analysis and company specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors.
Wright International Blue Chip Equities Fund (WIBC) (the “Fund”) seeks total return consisting of price appreciation plus income by investing in a broadly diversified portfolio of equities of well-established, non-U.S. companies. The Fund may buy common stocks traded on the securities exchange of the country in which the company is based or it may purchase American Depositary Receipts (“ADR’s”) traded in the United States. The portfolio is denominated in U.S. dollars and investors should understand that fluctuations in foreign exchange rates may impact the value of their investment. The Adviser seeks to outperform the MSCI World ex U.S. Index (“MSCI World ex U.S.”) by selecting stocks using fundamental company analysis and company-specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries, sectors and countries.
(continued on inside back cover)
Table of Contents
Investment Objectives | inside front cover |
Letter to Shareholders (Unaudited) | 2 |
Management Discussion (Unaudited) | 4 |
Performance Summaries (Unaudited) | 8 |
Fund Expenses (Unaudited) | 18 |
Management and Organization (Unaudited) | 70 |
Board of Trustees Annual Approval of the Investment Advisory Agreement (Unaudited) | 71 |
Important Notices Regarding Delivery of Shareholder Documents, Portfolio Holdings and Proxy Voting (Unaudited) | 72 |
The Wright Managed Equity Trust | | | The Wright Managed Income Trust | |
| | | | |
Wright Selected Blue Chip Equities Fund | | | Wright Total Return Bond Fund | |
Portfolio of Investments | 20 | | Portfolio of Investments | 45 |
Statement of Assets and Liabilities | 22 | | Statement of Assets and Liabilities | 50 |
Statement of Operations | 22 | | Statement of Operations | 50 |
Statements of Changes in Net Assets | 23 | | Statements of Changes in Net Assets | 51 |
Financial Highlights | 24 | | Financial Highlights | 52 |
| | | | |
Wright Major Blue Chip Equities Fund | | | Wright Current Income Fund | |
Portfolio of Investments | 25 | | Portfolio of Investments | 53 |
Statement of Assets and Liabilities | 26 | | Statement of Assets and Liabilities | 58 |
Statement of Operations | 26 | | Statement of Operations | 58 |
Statements of Changes in Net Assets | 27 | | Statements of Changes in Net Assets | 59 |
Financial Highlights | 28 | | Financial Highlights | 60 |
| | | | |
Wright International Blue Chip Equities Fund | | | Notes to Financial Statements | 61 |
Portfolio of Investments | 29 | | | |
Statement of Assets and Liabilities | 31 | | Report of Independent Registered Public Accounting Firm | 68 |
Statement of Operations | 31 | | | |
Statements of Changes in Net Assets | 32 | | Federal Tax Information (Unaudited) | 69 |
Financial Highlights | 33 | | | |
| | | | |
Notes to Financial Statements | 34 | | | |
| | | | |
Report of Independent Registered Public Accounting Firm | 43 | | | |
| | | | |
Federal Tax Information (Unaudited) | 44 | | | |
Letter to Shareholders (Unaudited)
Dear Shareholder:
Stocks – and bonds – produced better returns in 2012 than most expected a year ago, despite a global economic environment compromised by recession in Europe and Japan, below-par growth in the United States and, for good measure, gridlock in Congress. It no doubt helped that the Federal Reserve and most of the world’s central banks continued to flood the markets with low-cost money and assurances that interest rates will remain low ad infinitum. While concern over the U.S. “fiscal cliff” produced some anxious moments as the year wound down, U.S. stock market averages still managed to end 2012 near five-year highs. Bonds boasted positive returns for 2012, with the riskier classes of the fixed-income markets generally earning higher returns as market volatility receded and investors clamored for yield. High-yield bonds finished 2012 with returns approximating the 16% total return on the S&P 500. Foreign stocks outdistanced their U.S. counterparts for the first time since 2009.
As the U.S. taxpayers’ date with the fiscal cliff approached, the Federal Reserve unveiled a new tranche of Quantitative Easing (QE4) to reduce the risk of recession in 2013. On top of the QE3 program of mortgage bond buying announced in September (at a $40 billion per month clip), the Fed upped the ante with an additional $45 billion a month in Treasury bond purchases in an attempt to keep downward pressure on interest rates in order to stimulate economic activity. During the summer of 2012, Mario Draghi, president of the European Central Bank, pledged that “the ECB is ready to do whatever it takes to preserve the euro.” These assurances come along with projections from the Federal Open Market Committee that its “target range for the federal funds rate at 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6½%, inflation between one and two years ahead is (expected to be no more than 2.5%)…and longer-term inflation expectations continue to be well anchored.” In the slow growth, low inflation climate envisioned for 2013, it is hard to get excited about interest rate risk until the central banks swing over from the side of growth to the inflation-fighting side.
After trying, with some success, to support prices for five years, the Fed may have more “success” in engineering higher inflation in 2013. It is virtually impossible for prices to increase markedly without rising wage rates, and since the U.S. is only two months off the lowest rate of year-on-year increase in average hourly earnings in nearly five decades (1.3%), inflation pressures figure to build only slowly. In other words, the U.S. is not likely to have an inflation problem until personal incomes grow fast enough to afford higher prices. Until that happens, consumers will eschew higher priced goods for lower priced ones, to the extent they are interchangeable. With the Fed’s massive injections of quantitative easing, one suspects that an inflationary pulse is being generated, but so long as money velocity remains depressed, that pulse is likely to remain weak.
Another factor weighing on the inflation outlook is the output gap, the degree to which the U.S. economy and other developed economies are operating below their potential. The IMF estimates that the output gap for the advanced economies of the world is in the neighborhood of 3%, down from the 3.5% gap that existed at the depths of the global recession in 2009. By the Congressional Budget Office’s reckoning, the U.S. economy is running about 5% below capacity, compared to a 7% operating gap as the great recession was ending in 2009. In commodities, where growth in China and India make the world most vulnerable to cost-push price pressures, the inflation potential appears to be limited in the near term. Still, relaxing its inflation target is a slippery slope for the Fed to be treading on, one that might lead to more than the “optimal” amount of inflation, which the Fed says is 2%-2.5% for the next few years.
Where the three constraints on global economic growth since 2007 have been deleveraging, deflation and demographics, we find three positive factors at the start of 2013: pent-up demand for automobiles, a more vigorous rate of household formation, and an upturn in business capital expenditures deferred in 2012 due to the impending fiscal cliff. Motor vehicle sales ended 2012 at the highest rate since early 2008, and to judge by the
Letter to Shareholders (Unaudited)
record 11-year average age of the U.S. motor vehicle fleet, auto sales stand to increase for many months and even years to come. GDP in the year ahead should also get positive contributions from increased housing activity: building permits are roughly 25% higher as we look out to 2013 than they were a year ago; home prices have been firming for months; the inventory of unsold homes has dwindled; rental vacancy rates have fallen; and foreclosures are down. Indicators on business capital spending plans for 2013, while not as robust, have turned higher in the last couple of months, and Wright expects that uptrend to predominate in the post-cliff environment that is unfolding.
Resolving the “fiscal cliff” standoff does not mean that all of the nation’s fiscal problems have been settled. Washington has a series of cliffs to negotiate in coming months: the Treasury’s $16.4 trillion statutory debt ceiling; the budget sequester that was kicked down the road for two months by the New Year’s Eve deal; enacting a budget or, in its absence, a “continuing resolution” to fund government for the rest of fiscal 2013 (as the current resolution provides funds only through March 27). In addition, over the longer term, there looms a monetary cliff of bonds held in the Fed’s balance sheet that will one day be sold back into the markets, putting upward pressure on interest rates. Unless the Fed sticks the landing, so to speak, this bond cliff will someday put a damper on economic growth. With last November’s election perpetuating the gridlock status quo in Washington, higher taxes (or spending cuts, if that is the way we go) are not, to our way of thinking, a recipe for growth. Put another way, how big a market crisis or correction will it take for the White House and Congress to reach some sort of working arrangement to minimize recession risk in 2013-14? As we wrote back before the November elections, any budget agreement arrived at in Washington is “likely to be a temporary solution rather than a long-term fix, in which case investors will have to deal with this issue again in the near future, meaning ‘uncertainty’ will remain the watch word.”
While fiscal and maybe even monetary obstacles continue to constrain growth in 2013, stocks are fairly valued as the New Year begins. The S&P 500 was priced at less than 15 times trailing 12 months’ earnings, more than 2 P/E points below the market’s average valuation over the past 30 years. Prospective returns on equities of 7%-8% per annum over the next several years, while low in absolute or historical terms, are quite respectable when compared with the low yields now available on fixed-income securities. It is important to remember that high-quality corporations create fundamental value for stockholders through growth in earnings, dividends and equity, virtually independent of markets; stock prices, in Wright’s opinion, will reflect this fundamental growth sooner or later, producing rewarding rates of return in the process.
Merger Completed
The previously disclosed merger of The Winthrop Corporation, the parent company of Wright Investors’ Service, with a wholly owned subsidiary of National Patent Development Corporation was completed during December. With this merger, Wright Investors’ Service fully expects to build on its 50-year tradition of quality and disciplined investing and to continue to earn the trust that you have shown in us. If you have any questions on this or any other investment or wealth management matter, please contact me.
Sincerely,
Peter M. Donovan
Chairman & CEO
Management Discussion (Unaudited)
WRIGHT EQUITY FUNDS
SELECTED BLUE CHIP FUND
The Wright Selected Blue Chip Fund (WSBC), which is a mid-cap blend fund, had a total return of +2.8% in the fourth quarter; its benchmark, the S&P MidCap 400 Index, returned +3.6%. For the full year, WSBC had a total return of +16%, compared to +17.9% for the Fund’s benchmark. Small and midcap stocks generally outperformed large cap stocks in Q4 and for the full year 2012.
The main positive contributors to the Fund’s performance in the fourth quarter were financial, information technology and energy stocks. The biggest detractor from performance was the consumer discretionary sector. For full year 2012, the biggest contributor by far was the energy sector, mainly due to stock selection. Energy stocks in the Fund had a return of more than 50% during the year and contributed more than 2.5 percentage points to the Fund’s total return. The biggest negative contributors were health care and consumer discretionary stocks, mainly due to adverse stock selection.
Among individual holdings, the biggest positive contributor to the Fund’s performance in the fourth quarter was BE Aerospace, a commercial aircraft manufacturer. For the full year, the main positive contributor was petroleum refiner HollyFrontier Corp., which has been a top performer most of the year and the second biggest positive contributor in Q4. The biggest negative contributor to the Fund’s performance in the fourth quarter was discounter Ross Stores, which had been one of the more positive contributors to Fund performance previously. For the full year, the biggest detractor from Fund performance was Endo Health Solutions.
In the face of a still uncertain economic environment, WSBC is positioned in the mid-cap universe to take advantage of a preference for quality. WSBC continues to be tilted toward the larger companies in the S&P MidCap 400 Index, those with larger median and weighted-average market caps compared to the S&P MidCap 400 Index. WSBC’s holdings have shown better historic earnings growth than the MidCap index constituents. In the aggregate, at December 31, 2012, WSBC stocks averaged lower trailing and forward P/E multiples than those for the S&P MidCap 400 Index. WIS continues to advise diversity in investment portfolios as the best way to navigate difficult economic times.
MAJOR BLUE CHIP FUND
The Wright Major Blue Chip Fund (WMBC) is managed as a blend of the large-cap growth and value stocks in the S&P 500 Composite, selected with a focus on the higher-quality issues in the index. WMBC had a total return of -1% in the fourth quarter of 2012, compared to -0.4% for the S&P 500, the Fund’s benchmark. For full year 2012, WMBC had a total return of +4.2 %, compared to +16% for the S&P 500.
The Fund’s underperformance came mostly in the second and third quarters, when it underperformed the S&P 500 index by six percentage points and two percentage points, respectively. The majority of the Fund’s underperformance in the second and third quarters came from stocks that had released negative earnings guidance. Equity markets during that period were influenced by what appeared to be weakening prospects for U.S. and Chinese economic growth, the impasse over the U.S. “fiscal cliff” and lingering debt problems in Europe. Against this backdrop, companies that preannounced with negative guidance were punished disproportionately, leading to double-digit negative returns for the Fund during the period. Industrial, healthcare and information technology stocks accounted for more than half of the underperformance during this period. Cummins, Kirby Exploration, Fluor Corp in industrials; Western Digital, Intel, Cisco Systems in IT; and Humana and Endo Health Solutions in healthcare were the major underperformers on negative earnings guidance. Dollar Tree in consumer discretionary and Helmerich & Payne in energy were also negative contributors for similar reasons. Monster Beverage in the consumer staples category was down on concerns related to increased regulatory scrutiny of energy drinks in general and heightened litigation risks, while J.P. Morgan Chase, which announced a large one-time trading loss at its Chief Investment Office unit, added to the negative contribution from the financial sector.
Except for a few stocks like Humana, Endo Health Solutions and Dollar Tree, all stocks that led to the underperformance in the second and third quarters subsequently recovered to post double-digit gains for the rest of the year as evidenced in the following table.
Management Discussion (Unaudited)
| Performance | Performance from 2Q |
Stock | in 2Q 2012 | to December 31, 2012 |
| | |
Fluor Corp | -17.5% | 19.8% |
Cisco Systems | -18.5% | 16.7% |
Cummins | -18.9% | 12.9% |
Helmerich & Payne | -19.3% | 29.2% |
J P Morgan Chase | -21.8% | 25.0% |
Western Digital* | -26.4% | 41.2% |
Kirby Exploration* | -28.4% | 31.5% |
S&P 500 Index | -2.8% | 6.0% |
*No longer a holding in the portfolio as of December 31, 2012
The Fund’s performance was hurt in the fourth quarter by stock selection in the consumer discretionary sector. Dollar Tree (down 16%), Bed Bath & Beyond (down 11.3%), Ross Stores (down 16%) and TJ Maxx (down 5%) were the main negative contributors on concerns over slowdown in same-store sales. However, holiday sales for Ross Stores and TJ Maxx came in better than expectations, indicating the strength of discount stores. This should bode well for these companies in the coming quarter. The main positive contributors in the fourth quarter were energy and industrial stocks. The largest individual positive contributors to WMBC’s performance in the quarter were Murphy Oil Co. and Precision Castparts. The Fund also got positive contributions from J.P. Morgan Chase and Aflac. The biggest negative contributor for the fourth quarter was Apple Inc.; although the stock rose 33% in price during the year, it fell 20% in the fourth quarter.
For full year 2012, the largest negative impact on the Fund’s performance came from stock selection in consumer discretionary, financials and information technology sectors. The Fund had an underweight position in the former two sectors and an overweight position in information technology. The main positive contributors for the year were energy and utility stocks. For the full year, the biggest positive contributor was biotech firm Amgen, followed by Aflac. The biggest negative contributors were Monster Beverage and Humana.
U.S. stocks had negative returns in the fourth quarter of 2012, but positive returns for the full year. Foreign stocks generally outperformed their U.S. counterparts in both periods. The U.S. economy improved in the second half of the year compared to the first part of the year although it continued to muddle through with subpar growth, especially in job creation, which has become the Federal Reserve’s main focus of concern. At the same time, investors were hesitant about the outcome of the U.S. presidential election and the looming fiscal cliff of tax increases and budget cuts that were scheduled to take effect at the beginning of 2013.
By contrast, the situation outside the U.S. appeared to improve. While the euro zone economy was projected to remain in recession at least through the first half of 2013 and growth projected to be weak after that, the political situation, which seemingly went through a weekly crisis in 2011 and the first half of 2012, has been relatively peaceful since the summer. Government bond yields in several of the most fragile countries in the euro zone, namely Greece, Portugal, Spain and Italy, have dropped sharply since the European Central Bank announced in July it would do “whatever it takes” to save the euro currency. European stocks rose in response. In Asia, the Chinese export engine has started to reaccelerate, boosting the country’s stock markets in December. Japan elected a pro-stimulus government that has promised strong anti-deflationary policies; Japanese stocks rose sharply in December as the yen fell to a multiyear low, making Japanese products more competitive in overseas markets.
As we move into 2013, the economic environment remains uncertain. While the U.S. Congress was able to resolve the fiscal cliff issue by passing legislation to raise taxes on the highest earners, it paid scant attention to the spending side of the budget. That sets the stage for the next likely standoff on raising the federal debt ceiling, which the Treasury is likely to bump up against by mid-February after it exhausts all of its “extraordinary measures” to pay its obligations. It now looks like the White House and Congress will have a three-month window to arrive at a new budget, during which the Treasury debt ceiling will be temporarily raised. This will be only a temporary fix, meaning it and other important issues, such as tax code overhaul and entitlement spending, will have to be addressed again down the road, but it does offer Washington the opportunity to get serious about our current and prospective fiscal imbalances. Meanwhile, the Federal Reserve has remained committed to stimulating economic
Management Discussion (Unaudited)
growth through its quantitative easing policies, now in their fourth iteration as of December 2012. While one can argue as to the effectiveness of such bond buying in boosting the real economy, they appear to have moved investors into riskier assets, which have raised the values of equities and corporate bonds.
Recent U.S. economic indicators don’t signal recession, but WIS believes they don’t offer much reason to expect more than 2% growth any time soon. Such a growth rate, while better than the recession that Europe is mired in, is not enough to boost employment to the degree necessary, a fact that we expect will keep a lid on consumer spending. We believe therefore that corporate profits will do well in 2013 just to match 2012’s estimated 5% growth rate.
In our view, WMBC is well positioned for such an environment, with its focus on stocks that are, on average, of higher quality than those that make up the S&P 500. WMBC has a higher median market capitalization and a substantially better earnings growth record over the past five years than the S&P 500, while offering attractive valuations. Based on current and forward earnings, the WMBC’s P/E multiples are lower than the S&P 500’s comparable P/E multiples.
INTERNATIONAL BLUE CHIP FUND
International stocks outperformed their U.S. counterparts by a fairly wide margin in the fourth quarter of 2012 and by a narrower margin for the full year. The Wright International Blue Chip Fund (WIBC) had a total return of +5.8% in the fourth quarter, compared to its benchmark, the MSCI World ex U.S Index, which returned +6%. For the full year, WIBC had a total return of +14.5%, below the +16.4% return for the Fund’s benchmark.
The energy sector was the biggest positive contributor to WIBC’s performance in the fourth quarter, while industrials were the biggest detractor, as they had been in the third quarter. For the full year, materials stocks were the main contributor to return by a wide margin, as they had been through much of the year; materials were also the second biggest positive contributor in the fourth quarter. For the full year, consumer discretionary stocks were the biggest negative contributor, followed by industrials and financials.
The biggest individual positive contributors to the Fund’s performance in Q4 were two German stocks, Volkswagen and chemical maker BASF, followed by Sanofi, the French pharmaceuticals company. These three stocks were also substantial contributors to the Fund’s performance for the full year, although the top contributor remained Legal & General Group, a London-based financial services company. The biggest negative contributor to the Fund’s fourth-quarter performance was KDDI Corp., the Japanese telecom provider, which had been a positive contributor in the first nine months of 2012. The biggest detractor from Fund performance for the full year was Japanese electronics retailer Yamada Denki; the company was also the second largest negative contributor in the fourth quarter.
Looking ahead, WIBC retains an overweight position in Asia, reflecting our view that the greatest economic growth over the next several years will most likely come from emerging markets such as China. While even China’s growth has been restrained by weaker growth in Europe and the U.S. and its recent territorial dispute with Japan, its largest trading partner, recent economic statistics indicate that the country’s exports are growing again. WIBC also holds overweight positions in materials, energy and consumer discretionary stocks and is underweight in consumer staples. In the aggregate, WIBC holdings are priced at significant discounts to the MSCI World ex U.S. Index in terms of current price/earnings ratio. We continue to see the inclusion of international stocks as likely to enhance risk-adjusted returns in diversified investment portfolios, as was demonstrated in their Q4 and 2012 performance.
WRIGHT FIXED INCOME FUNDS
TOTAL RETURN BOND FUND
The Wright Total Return Bond Fund (WTRB), a diversified bond fund, returned +0.15% in the fourth quarter of 2012, slightly below the +0.2% return for its benchmark, the Barclays U.S. Aggregate Bond Index. For full year 2012, the Fund returned +4.16%, also slightly below the +4.2% return for the Fund’s benchmark. WTRB had a yield of 1.58% as of December 31, 2012, calculated according to SEC guidelines. Dividends paid by this Fund may be more or less than implied by this yield.
Management Discussion (Unaudited)
WTRB’s sector allocation remains significantly overweight in corporate bonds and underweight in Treasury bonds relative to the Barclays U.S. Aggregate Bond Index, which worked in the Fund’s favor in both the fourth quarter and the full year. Corporate bonds outperformed long-term Treasurys by a wide margin during both periods. As spreads against Treasurys continued to narrow, the Fund in Q4 further reduced its exposure to Treasury securities while increasing its exposure to mortgage-backed securities and corporate bonds. At the end of Q4, the Fund’s sector weightings were: Treasury bonds 10% versus 36% for the Barclays U.S. Aggregate Bond Index; corporates 48% versus 27%; mortgages 27% versus 31%; commercial mortgages 9% versus 2%; agency bonds 0% versus 5%; asset-backed securities 1% versus 0%; and 6% in cash versus 0%. In terms of credit quality, 52% of the Fund’s assets were in AAA-rated securities at the end of 2012, versus 74% for the benchmark; 23% was in A-rated paper versus 11% for the benchmark; and 20% was in BBB-rated securities versus 11% for the benchmark.
CURRENT INCOME FUND
The Wright Current Income Fund (WCIF) returned -0.2% in the fourth quarter of 2012, outperforming the Barclays GNMA Backed Bond Index, the Fund’s benchmark, which returned -0.3%. For the full year, the Fund returned +3.1%, ahead of the benchmark’s +2.4 % return. WCIF is managed to be invested in GNMA issues (mortgage-based securities, known as Ginnie Maes, guaranteed by the full faith and credit of the U.S. government) and other mortgage-based securities. The -0.2% return in the mortgage-backed sector of the bond market in the fourth quarter of 2012 trailed the +0.2% return for the Barclays Capital U.S. Aggregate Bond Index as well as the -0.1% return for U.S. Treasury securities. For all of 2012, WCIF outpaced mortgage-backed securities generally (+3.1% versus +2.6%), as well as U.S. Treasurys (+2.0%). The WCIF Fund is actively managed to maximize income and minimize principal fluctuation. WCIF had a yield of 1.75% at December 31, 2012, calculated according to SEC guidelines. Dividends paid by this Fund may be more or less than implied by this yield.
In addition to its holdings in GNMA-backed mortgage issues, WCIF also holds issues backed by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Fannie Mae securities (-0.16%) and Freddie Mac (-0.24%) both slightly outperformed GNMA-backed bonds in Q4. For the full year, both Fannie Maes (+2.8%) and Freddie Macs (+2.5%) again slightly outperformed GNMAs
At the end of 2012, the WCIF Fund was 97.4% invested in agency-backed mortgages, up from 95% at the end of Q3. The Fund lowered its cash position back to 2% at year-end 2012 from 4% three months earlier; it had been at 2% at mid-year 2012. The Fund continued to have a higher average coupon than the GNMA benchmark, reflecting the Fund’s mandate to maximize income. At the end of Q4, WCIF’s average coupon was 5.5%, compared to 4.3% for the GNMA benchmark. The emphasis on well-seasoned higher-coupon issues contributes to the Fund’s lesser negative convexity compared to the GNMA benchmark, which tends to result in a more stable performance when interest rates are volatile. In 2012, the Fund’s overweight position in higher-coupon bonds enhanced the Fund’s relative performance.
During the fourth quarter, WCIF slightly increased its position in mortgages with lower coupons and slightly reduced its position in higher-coupon mortgages, which are more vulnerable to prepayments, i.e., refinancing risk. Nevertheless, the Fund remains overweight in higher-coupon mortgages relative to its benchmark. At the end of December 2012, the Fund held 78% of its assets in mortgages with 5%-8% coupons, compared with 29% for the benchmark. The Fund also held 18% of its assets in 3%-5% mortgages, compared with 71% for the benchmark. The Fund’s biggest positions are in mortgages with 5%-6% coupons (36% of the portfolio) and 6%-7% coupons (33% of the portfolio). These positions were larger than benchmark holdings of 23% in 5%-6% coupons and 6% in 6-7% coupons. The average maturity of securities held by the Fund at the end of December 2012 was 4.3 years versus 4.1 years for the benchmark, while the Fund’s average duration was 2.5 years compared to 2.6 years for the index.
Performance Summaries (Unaudited)
Important
The Total Investment Return is the percent return of an initial $10,000 investment made at the beginning of the period to the ending redeemable value assuming all dividends and distributions are reinvested. 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. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Past performance is not predictive of future performance.
|
| WRIGHT SELECTED BLUE CHIP EQUITIES FUND |
| Growth of $10,000 Invested 1/1/03 Through 12/31/12 |
|
| | Average Annual Total Return | |
Last 1 Yr | | Last 5 Yrs | | Last 10 Yrs | |
| | |
| — WSBC | | | | | | | | | | | | | | | | |
| | - Return before taxes | | | 16.02 | % | | | 3.47 | % | | | 8.67 | % | |
| | - Return after taxes on distributions | | | 15.44 | % | | | 3.07 | % | | | 7.70 | % | |
| | - Return after taxes on distributions and sales of fund shares | | | 11.18 | % | | | 2.91 | % | | | 7.49 | % | |
| — S&P MidCap 400* | | | | | | 17.89 | % | | | 5.15 | % | | | 10.53 | % | |
| ----Average of Morningstar Mid Cap Value/Blend Funds** | | | 15.84 | % | | | 2.47 | % | | | 8.62 | % | |
| | | | | | | | | | | | | | |
| Investment Value as of 12/31/12 (in thousands $) | | | | | | | | | | | | | |
| — WSBC | | $ | 22.96 | | | | | | | | | | |
| — S&P MidCap 400* | | $ | 27.23 | | | | | | | | | | |
| ----Average of Morningstar Mid Cap Value/Blend Funds** | | $ | 22.85 | | | | | | | | | | |
* The Fund’s average annual return is compared with that of the S&P MidCap 400, an unmanaged index of stocks in a broad range of industries with market capitalizations of a few billion or less. The performance of the S&P MidCap 400, unlike that of the Fund, reflects no deductions for fees, expense or taxes. As stated in the current prospectus, the Fund’s annual operating expense ratio (gross) is 1.46%. However, Wright and Wright Investors’ Service Distributors, Inc. (“WISDI”) have contractually agreed to waive a portion of its fees and/or reimburse certain expenses to limit total operating expense to 1.40%, which is in effect until April 30, 2013. During the year, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. Returns greater than one year are annualized.
** Morningstar Mid Cap Funds represent the average return of 147 current funds ex multi-share classes in the Mid Cap Blend category reported in the Morningstar, Inc. database. © 2013 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. Past performance is no guarantee of future results.
Performance Summaries (Unaudited)
WRIGHT SELECTED BLUE CHIP EQUITIES FUND | |
| |
Industry Weightings | | Ten Largest Stock Holdings |
% of net assets @ 12/31/12 | | % of net assets @ 12/31/12 |
| | | | | | | | | | | | | |
Capital Goods | | 11.9 | % | | Consumer Services | | 3.5 | % | | Alliance Data Systems Corp. | | 3.1 | % |
Materials | | 9.6 | % | | Transportation | | 3.3 | % | | Universal Health Services, Inc. –Class B | | 3.1 | % |
Retailing | | 8.8 | % | | Technology Hardware & Equipment | | 3.1 | % | | Valspar Corp. | | 3.0 | % |
Software & Services | | 8.7 | % | | Food, Beverage & Tobacco | | 3.1 | % | | AGCO Corp. | | 3.0 | % |
Insurance | | 7.1 | % | | Pharmaceuticals & Biotechnology | | 2.4 | % | | HollyFrontier Corp. | | 3.0 | % |
Health Care Equipment & Services | | 6.1 | % | | Commercial & Professional Services | | 2.3 | % | | Waddell & Reed Financial, Inc. –Class A | | 3.0 | % |
Diversified Financials | | 5.4 | % | | Real Estate | | 2.2 | % | | B/E Aerospace, Inc. | | 3.0 | % |
Utilities | | 5.2 | % | | Industrial | | 1.2 | % | | Advance Auto Parts, Inc. | | 2.8 | % |
Energy | | 5.1 | % | | Semiconductors & Semiconductor Equipment | | 0.9 | % | | HCC Insurance Holdings, Inc. ValueClick, Inc. | | 2.6 2.5 | % % |
Banks | | 5.0 | % | | Commercial Services & Supplies | | 0.5 | % | | | | | |
Consumer Durables & Apparel | | 3.5 | % | | | | | | | | | | |
| | | | | | | | | | | | | |
Performance Summaries (Unaudited)
|
| WRIGHT MAJOR BLUE CHIP EQUITIES FUND |
| Growth of $10,000 Invested 1/1/03 Through 12/31/12 |
|
| | Average Annual Total Return | |
Last 1 Yr | | Last 5 Yrs | | Last 10 Yrs | |
| | |
| — WMBC | | | | | | | | | | | | | | | | |
| | - Return before taxes | | | 4.23 | % | | | -1.95 | % | | | 4.65 | % | |
| | - Return after taxes on distributions | | | 4.13 | % | | | -2.05 | % | | | 4.52 | % | |
| | - Return after taxes on distributions and sales of fund shares | | | 2.90 | % | | | -1.66 | % | | | 4.02 | % | |
| — S&P 500* | | | | | | 15.98 | % | | | 1.66 | % | | | 7.10 | % | |
| ----Average of Morningstar Large Cap Value/Blend Funds** | | | 14.84 | % | | | 0.58 | % | | | 6.17 | % | |
| | | | | | | | | | | | | | | | | |
| Investment Value on 12/31/12 (in thousands $) | | | | | | | | | | | | | |
| — WMBC | | | | | $ | 15.75 | | | | | | | | | | |
| — S&P 500* | | | | | $ | 19.86 | | | | | | | | | | |
| ----Average of Morningstar Large Cap Value/Blend Funds** | | $ | 18.20 | | | | | | | | | | |
* The Fund’s average annual return is compared with that of the S&P 500, an unmanaged index of 500 widely held common stocks that generally indicates the performance of the market. The performance of the S&P 500, unlike that of the Fund, reflects no deductions for fees, expenses or taxes. As stated in the current prospectus, the Fund’s annual operating expense ratio (gross) is 1.70%. However, Wright and WISDI have contractually agreed to waive a portion of its fees and/or reimburse certain expenses to limit total operating expense to 1.40%, which is in effect until April 30, 2013. During the year, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. Returns greater than one year are annualized.
** Morningstar Large Cap Funds represent the average return of 513 current funds ex multi-share classes in the Large Cap Blend category reported in the Morningstar, Inc. database. © 2013 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. Past performance is no guarantee of future results.
Performance Summaries (Unaudited)
WRIGHT MAJOR BLUE CHIP EQUITIES FUND | |
| |
Industry Weightings | | Ten Largest Stock Holdings |
% of net assets @ 12/31/12 | | % of net assets @ 12/31/12 |
| | | | | | | | | | | | | |
Software & Services | | 13.9 | % | | Materials | | 4.9 | % | | JPMorgan Chase & Co. | | 4.7 | % |
Capital Goods | | 12.1 | % | | Health Care Equipment & Services | | 4.8 | % | | Chevron Corp. | | 4.7 | % |
Pharmaceuticals & Biotechnology | | 12.1 | % | | Food & Staples Retailing | | 3.5 | % | | Microsoft Corp. | | 4.1 | % |
Energy | | 8.4 | % | | Insurance | | 3.3 | % | | Coca-Cola Co. | | 4.0 | % |
Diversified Financials | | 8.0 | % | | Semiconductors & Semiconductor Equipment | | 3.1 | % | | Cisco Systems, Inc. Walgreen Co. | | 3.9 3.5 | % % |
Retailing | | 7.9 | % | | Consumer Durables & Apparel | | 2.0 | % | | Amgen, Inc. | | 3.5 | % |
Food, Beverage & Tobacco | | 7.5 | % | | Consumer Services | | 0.5 | % | | General Dynamics Corp. | | 3.4 | % |
Technology Hardware & Equipment | | 7.0 | % | | Transportation | | 0.5 | % | | Aflac, Inc. | | 3.3 | % |
| | | | | | | | | | Precision Castparts Corp. | | 3.3 | % |
| | | | | | | | | | | | | |
Performance Summaries (Unaudited)
|
| WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND |
| Growth of $10,000 Invested 1/1/03 Through 12/31/12 |
|
| | Average Annual Total Return | |
Last 1 Yr | | Last 5 Yrs | | Last 10 Yrs | |
| | |
| — WIBC | | | | | | | | | | | | | | | | |
| | - Return before taxes | | | 14.45 | % | | | -6.08 | % | | | 6.42 | % | |
| | - Return after taxes on distributions | | | 14.52 | % | | | -6.52 | % | | | 6.00 | % | |
| | - Return after taxes on distributions and sales of fund shares | | | 10.23 | % | | | -5.11 | % | | | 5.65 | % | |
| — MSCI World ex U.S. Index* | | | | | | 16.41 | % | | | -3.43 | % | | | 8.60 | % | |
| ----Average of Morningstar Foreign Large Blend Funds** | | | 18.30 | % | | | -3.57 | % | | | 7.85 | % | |
| | | | | | | | | | | | | | |
| Investment Value as of 12/31/12 (in thousands $) | | | | | | | | | | | | | |
| — WIBC | | $ | 18.64 | | | | | | | | | | |
| — MSCI World ex U.S. Index* | | $ | 22.81 | | | | | | | | | | |
| ----Average of Morningstar Foreign Large Blend Funds** | | $ | 21.29 | | | | | | | | | | |
* The Fund’s average annual return is compared with that of the MSCI World ex U.S. Index. While the Fund does not seek to match the returns of this index, this unmanaged index generally indicates foreign stock market performance. The performance of the MSCI World ex U.S. Index, unlike that of the Fund, reflects no deductions for fees, expenses or taxes. As stated in the current prospectus, the Fund’s annual operating expense ratio (gross) is 1.78%. However, Wright and WISDI have contractually agreed to waive a portion of its fees and/or reimburse certain expenses to limit total operating expense to 1.85%, which is in effect until April 30, 2013. Returns greater than one year are annualized. Shares held less than 90 days will be subject to a 2.00% redemption fee.
** Morningstar International Equity Funds represent the average of 210 current funds ex multi-share classes in the Foreign Large Blend category reported in the Morningstar, Inc. database. © 2013 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. Past performance is no guarantee of future results.
Performance Summaries (Unaudited)
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND | |
| |
Country Weightings | | Ten Largest Stock Holdings |
% of net assets @ 12/31/12 | | % of net assets @ 12/31/12 |
| | | | | | | | | | | | | |
United Kingdom | | 21.5 | % | | Netherlands | | 3.0 | % | | Nestle SA | | 3.4 | % |
Japan | | 14.0 | % | | Singapore | | 2.9 | % | | Sanofi | | 3.3 | % |
Germany | | 11.5 | % | | Spain | | 2.7 | % | | BASF SE | | 3.1 | % |
France | | 9.7 | % | | Italy | | 2.4 | % | | AstraZeneca PLC | | 2.7 | % |
Switzerland | | 8.0 | % | | China | | 1.0 | % | | Legal & General Group PLC | | 2.6 | % |
Australia | | 6.3 | % | | Sweden | | 0.9 | % | | Toronto-Dominion Bank (The) | | 2.3 | % |
Canada | | 6.3 | % | | Denmark | | 0.7 | % | | KDDI Corp. | | 2.3 | % |
Norway | | 3.8 | % | | Luxembourg | | 0.4 | % | | BHP Billiton PLC | | 2.2 | % |
Hong Kong | | 3.4 | % | | | | | | | Total SA | | 1.9 | % |
| | | | | | | | | | Jardine Cycle & Carriage, Ltd. | | 1.9 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Performance Summaries (Unaudited)
|
| WRIGHT TOTAL RETURN BOND FUND |
| Growth of $10,000 Invested 1/1/03 Through 12/31/12 |
|
| | Average Annual Total Return | |
Last 1 Yr | | Last 5 Yrs | | Last 10 Yrs | |
| | |
| — WTRB | | | | | | | | | | | | | | | | |
| | - Return before taxes | | | 4.16 | % | | | 5.81 | % | | | 4.62 | % | |
| | - Return after taxes on distributions | | | 2.91 | % | | | 4.26 | % | | | 3.06 | % | |
| | - Return after taxes on distributions and sales of fund shares | | | 2.70 | % | | | 4.05 | % | | | 3.02 | % | |
| — Barclays U.S. Aggregate Bond Index* | | | 4.21 | % | | | 5.95 | % | | | 5.18 | % | |
| ----Average of Morningstar Intermediate Term Bond Funds** | | | 6.83 | % | | | 5.56 | % | | | 4.57 | % | |
| | | | | | | | | | | | | | |
| Investment Value as of 12/31/12 (in thousands $) | | | | | | | | | | | | | |
| — WTRB | | $ | 15.71 | | | | | | | | | | |
| — Barclays U.S. Aggregate Bond Index* | | $ | 16.58 | | | | | | | | | | |
| ----Average of Morningstar Intermediate Term Bond Funds** | | $ | 15.63 | | | | | | | | | | |
* The Fund’s average annual return is compared with that of the Barclays U.S. Aggregate Bond Index, an unmanaged index that is a broad representation of the investment-grade fixed income market in the U.S. The Barclays U.S. Aggregate Bond Index, unlike the Fund, reflects no deductions for fees, expenses or taxes. As stated in the current prospectus, the Fund’s annual operating expense ratio (gross) is 1.37%. However, Wright and WISDI have contractually agreed to waive a portion of its fees and/or reimburse certain expenses to limit total operating expense to 0.95%, which is in effect until April 30, 2013. During the year, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. Returns greater than one year are annualized.
** Morningstar average represents the return of 324 current funds ex multi-share classes in the Intermediate Term Bond category in the Morningstar, Inc. database. © 2013 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. Past performance is no guarantee of future results.
Performance Summaries (Unaudited)
WRIGHT TOTAL RETURN BOND FUND | | |
| | |
Holdings by Security Type | | Five Largest Bond Holdings |
% of net assets @ 12/31/12 | | % of net assets @ 12/31/12 |
| | | | | | | | | | | | |
Asset-Backed Securities | | 0.8 | % | | | | | U.S. Treasury Bond | 3.13% | 02/15/42 | 4.4 | % |
Corporate Bonds | | 48.7 | % | | | | | GNMA, Series 2010-44, Class NK | 4.00% | 10/20/37 | 3.4 | % |
Mortgage-Backed Securities | | 36.6 | % | | | | | U.S. Treasury Note | 3.88% | 05/15/18 | 3.1 | % |
U.S. Treasuries | | 10.4 | % | | | | | FHLMC, Series 2627, Class MW | 5.00% | 06/15/23 | 2.5 | % |
| | | | | | | | FNMA Pool #888366 | 7.00% | 04/01/37 | 2.1 | % |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Holdings by Credit Quality | | | | | | |
% of net assets @ 12/31/12 | | | | | | |
| | | | | | | | | | | | | |
A | | 23 | % | | | | | | | | | | |
Aa | | 4 | % | | | | | | | | | | |
Aaa | | 52 | % | | | | | | | | | | |
BBB | | 20 | % | | | | | | | | | | |
<BBB | | 1 | % | | | | | | | | | | |
U.S. Government Agencies | | 0 | % | | | | | | | | | | |
U.S. Treasuries | | 0 | % | | | | | | | | | | |
Performance Summaries (Unaudited)
|
| WRIGHT CURRENT INCOME FUND |
| Growth of $10,000 Invested 1/1/03 Through 12/31/12 |
|
| | Average Annual Total Return | |
Last 1 Yr | | Last 5 Yrs | | Last 10 Yrs | |
| | |
| — WCIF | | | | | | | | | | | | | | | | |
| | - Return before taxes | | | 3.06 | % | | | 5.45 | % | | | 4.36 | % | |
| | - Return after taxes on distributions | | | 1.66 | % | | | 3.82 | % | | | 2.64 | % | |
| | - Return after taxes on distributions and sales of fund shares | | | 1.98 | % | | | 3.70 | % | | | 2.73 | % | |
| — Barclays GNMA Backed Bond Index* | | | 2.42 | % | | | 6.03 | % | | | 5.21 | % | |
| ----Average of Morningstar Government Mortgage Funds** | | | 2.91 | % | | | 4.87 | % | | | 4.06 | % | |
| | | | | | | | | | | | | | |
| Investment Value as of 12/31/12 (in thousands $) | | | | | | | | | | | | | |
| — WCIF | | $ | 15.33 | | | | | | | | | | |
| — Barclays GNMA Backed Bond Index* | | $ | 16.63 | | | | | | | | | | |
| ----Average of Morningstar Government Mortgage Funds** | | $ | 14.89 | | | | | | | | | | |
* The Fund’s average annual return is compared with that of the Barclays GNMA Backed Bond Index. While the Fund does not seek to match the returns of the Barclays GNMA Backed Bond Index, Wright believes that this unmanaged index generally indicates the performance of government and corporate mortgage-backed bond markets. The Barclays GNMA Backed Bond Index, unlike the Fund, reflects no deductions for fees, expenses or taxes. As stated in the current prospectus, the Fund’s annual operating expense ratio (gross) is 1.20%. However, Wright and WISDI have contractually agreed to waive a portion of its fees and/or reimburse certain expenses to limit total operating expense to 1.00%, which is in effect until April 30, 2013. During the year, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. Returns greater than one year are annualized.
** The Morningstar Government Mortgage Fund Average represents the average return of all 84 current funds ex multi-share classes in the Intermediate Government category reported in the Morningstar, Inc. database. © 2013 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. Past performance is no guarantee of future results.
Performance Summaries (Unaudited)
WRIGHT CURRENT INCOME FUND | |
| |
Holdings by Security Type | Five Largest Bond Holdings |
% of net assets @ 12/31/12 | % of net assets @ 12/31/12 |
| | | | | | | | | | | | |
| | | | | | | | GNMA, Series 2010-116, Class PB | 5.00% | 06/16/40 | 3.1 | % |
Agency Mortgage-Backed Securities | | 97.4 | % | | | | | GNMA II Pool #004828 | 4.50% | 10/20/40 | 2.2 | % |
| | | | | | | | FNMA Pool #MA0641 | 4.00% | 02/01/31 | 2.0 | % |
| | | | | | | | GNMA, Series 2009-14, Class AG | 4.50% | 03/20/39 | 1.6 | % |
| | | | | | | | FNMA Pool #689108 | 5.50% | 02/01/33 | 1.5 | % |
Weighted Average Maturity | | | | | | | | | | | | |
| | | | | | | | | | | | |
@ 12/31/12 | | 4.3 | Years | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Fund Expenses (Unaudited)
Example:
As a shareholder of a fund, you incur two types of costs: (1) transaction costs, including redemption fees (if applicable); and (2) ongoing costs including management fees; distribution or service fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2012 – December 31, 2012).
Actual Expenses:
The first line of the tables shown on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes:
The second line of the tables provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual return of the Fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees (if applicable). Therefore, the second line of the tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Fund Expenses (Unaudited)
EQUITY FUNDS | | | FIXED-INCOME FUNDS | |
| | | | | | | | |
Wright Selected Blue Chip Equities Fund | | Wright Total Return Bond Fund | |
| | | | | | | | |
| | | | | | | | |
Beginning | Ending | Expenses Paid | | Beginning | Ending | Expenses Paid |
Account Value (7/1/12) | Account Value (12/31/12) | During Period* | | Account Value (7/1/12) | Account Value (12/31/12) | During Period* |
| | (7/1/12-12/31/12) | | | | (7/1/12-12/31/12) |
Actual Fund Shares | $1,000.00 | $1,088.10 | $7.35 | | Actual Fund Shares | $1,000.00 | $1,017.50 | $4.82 |
Hypothetical (5% return per year before expenses) | | Hypothetical (5% return per year before expenses) |
Fund Shares | $1,000.00 | $1,018.10 | $7.10 | | Fund Shares | $1,000.00 | $1,020.36 | $4.82 |
| | | | | | | | |
*Expenses are equal to the Fund’s annualized expense ratio of 1.40% multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2012. | | *Expenses are equal to the Fund’s annualized expense ratio of 0.95% multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2012. |
| | | | | | | | |
Wright Major Blue Chip Equities Fund | | | Wright Current Income Fund | | |
| | | | | | | | |
| | | | | | | | |
Beginning | Ending | Expenses Paid | | Beginning | Ending | Expenses Paid |
Account Value (7/1/12) | Account Value (12/31/12) | During Period* | | Account Value (7/1/12) | Account Value (12/31/12) | During Period* |
| | (7/1/12-12/31/12) | | | | (7/1/12-12/31/12) |
Actual Fund Shares | $1,000.00 | $1,029.73 | $7.14 | | Actual Fund Shares | $1,000.00 | $1,008.17 | $4.54 |
Hypothetical (5% return per year before expenses) | | Hypothetical (5% return per year before expenses) |
Fund Shares | $1,000.00 | $1,018.10 | $7.10 | | Fund Shares | $1,000.00 | $1,020.61 | $4.57 |
| | | | | | | | |
*Expenses are equal to the Fund’s annualized expense ratio of 1.40% multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2012. | | *Expenses are equal to the Fund’s annualized expense ratio of 0.90% multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2012 |
| | | | | | | | |
| | | | | | | | |
Wright International Blue Chip Equities Fund | | | | | |
| | | | | | | | |
| | | | | | | | |
Beginning | Ending | Expenses Paid | | | | | |
Account Value (7/1/12) | Account Value (12/31/12) | During Period* | | | | | |
| | (7/1/12-12/31/12) | | | | | |
Actual Fund Shares | $1,000.00 | $1,141.33 | $9.96 | | | | | |
Hypothetical (5% return per year before expenses) | | | | | |
Fund Shares | $1,000.00 | $1,015.84 | $9.37 | | | | | |
| | | | | | | | |
*Expenses are equal to the Fund’s annualized expense ratio of 1.85% multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2012. | | | | | |
Wright Selected Blue Chip Equities Fund (WSBC)
Portfolio of Investments – As of December 31, 2012
| Shares | | | Value | | | | Shares | | | Value | |
| | | | | | | | | | | | |
| | | | | | | MEDNAX, Inc.* | 1,460 | | $ | 116,099 | |
| | | | | | | Omnicare, Inc. | 3,980 | | | 143,678 | |
BANKS - 5.0% | | ResMed, Inc. | 3,655 | | | 151,938 | |
Commerce Bancshares, Inc. | 11,337 | | $ | 397,475 | | | Universal Health Services, Inc. - Class B | 18,845 | | | 911,156 | |
East West Bancorp, Inc. | 16,570 | | | 356,089 | | | | | | $ | 1,818,556 | |
Fulton Financial Corp. | 75,460 | | | 725,171 | | | | | | | | |
| | | $ | 1,478,735 | | | | | | | | |
| | | | | | | INDUSTRIAL - 1.2% |
| | | | | | | Gardner Denver, Inc. | 5,200 | | $ | 356,200 | |
CAPITAL GOODS - 11.9% | | | | | | | |
AGCO Corp.* | 18,440 | | $ | 905,773 | | | | | | | | |
Alliant Techsystems, Inc. | 1,870 | | | 115,865 | | | INSURANCE - 7.1% |
B/E Aerospace, Inc.* | 18,115 | | | 894,881 | | | American Financial Group, Inc. | 9,535 | | $ | 376,823 | |
Hubbell, Inc. - Class B | 3,330 | | | 281,818 | | | Everest Re Group, Ltd. | 2,195 | | | 241,340 | |
KBR, Inc. | 18,355 | | | 549,181 | | | HCC Insurance Holdings, Inc. | 20,795 | | | 773,782 | |
Regal-Beloit Corp. | 1,785 | | | 125,789 | | | Reinsurance Group of America, Inc. | 6,740 | | | 360,725 | |
Terex Corp.* | 6,825 | | | 191,851 | | | WR Berkley Corp. | 9,992 | | | 377,098 | |
Timken Co. | 5,850 | | | 279,805 | | | | | | $ | 2,129,768 | |
URS Corp. | 5,360 | | | 210,434 | | | | | | | | |
| | | $ | 3,555,397 | | | | | | | | |
| | | | | | | MATERIALS - 9.6% |
| | | | | | | Albemarle Corp. | 7,960 | | $ | 494,475 | |
COMMERCIAL & PROFESSIONAL SERVICES - 2.3% | | Ashland, Inc. | 4,385 | | | 352,598 | |
Deluxe Corp. | 4,385 | | $ | 141,373 | | | Domtar Corp. | 2,435 | | | 201,861 | |
FTI Consulting, Inc.* | 6,010 | | | 198,330 | | | NewMarket Corp. | 975 | | | 255,645 | |
Towers Watson & Co. - Class A | 6,335 | | | 356,090 | | | Rock-Tenn Co. - Class A | 9,505 | | | 664,495 | |
| | | $ | 695,793 | | | Valspar Corp. | 14,540 | | | 907,296 | |
| | | | | | | | | | $ | 2,876,370 | |
| | | | | | | | | | | | |
COMMERCIAL SERVICES & SUPPLIES - 0.5% | | | | | | | |
AECOM Technology Corp.* | 5,850 | | $ | 139,230 | | | PHARMACEUTICALS & BIOTECHNOLOGY - 2.4% |
| | | | | | | Endo Health Solutions, Inc.* | 20,225 | | $ | 531,311 | |
| | | | | | | United Therapeutics Corp.* | 3,170 | | | 169,341 | |
CONSUMER DURABLES & APPAREL - 3.5% | | | | | $ | 700,652 | |
Jarden Corp.* | 2,845 | | $ | 147,087 | | | | | | | | |
PVH Corp. | 5,525 | | | 613,330 | | | | | | | | |
Tupperware Brands Corp. | 4,630 | | | 296,783 | | | REAL ESTATE - 2.2% |
| | | $ | 1,057,200 | | | Jones Lang LaSalle, Inc. | 5,360 | | $ | 449,919 | |
| | | | | | | Rayonier, Inc. (REIT) | 4,257 | | | 220,640 | |
| | | | | | | | | | $ | 670,559 | |
CONSUMER SERVICES - 3.5% | | | | | | | |
Brinker International, Inc. | 23,635 | | $ | 732,449 | | | | | | | | |
Cheesecake Factory, Inc. (The) | 9,830 | | | 321,637 | | | RETAILING - 8.8% |
| | | $ | 1,054,086 | | | Aaron's, Inc. | 4,060 | | $ | 114,817 | |
| | | | | | | Advance Auto Parts, Inc. | 11,695 | | | 846,133 | |
| | | | | | | American Eagle Outfitters, Inc. | 5,035 | | | 103,268 | |
DIVERSIFIED FINANCIALS - 5.4% | | Ascena Retail Group, Inc.* | 13,970 | | | 258,305 | |
Affiliated Managers Group, Inc.* | 2,760 | | $ | 359,214 | | | Dick's Sporting Goods, Inc. | 2,435 | | | 110,768 | |
Raymond James Financial, Inc. | 9,420 | | | 362,953 | | | Foot Locker, Inc. | 8,855 | | | 284,423 | |
Waddell & Reed Financial, Inc. - Class A | 25,750 | | | 896,615 | | | PetSmart, Inc. | 4,385 | | | 299,671 | |
| | | $ | 1,618,782 | | | Rent-A-Center, Inc. | 6,500 | | | 223,340 | |
| | | | | | | Ross Stores, Inc. | 7,150 | | | 387,172 | |
| | | | | | | | | | $ | 2,627,897 | |
ENERGY - 5.1% | | | | | | | |
Helix Energy Solutions Group, Inc.* | 23,960 | | $ | 494,534 | | | | | | | | |
HollyFrontier Corp. | 19,379 | | | 902,093 | | | SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.9% |
Superior Energy Services, Inc.* | 6,580 | | | 136,338 | | | Fairchild Semiconductor International, Inc.* | 13,565 | | $ | 195,336 | |
| | | $ | 1,532,965 | | | Skyworks Solutions, Inc.* | 2,925 | | | 59,378 | |
| | | | | | | | | | $ | 254,714 | |
| | | | | | | | | | | | |
FOOD, BEVERAGE & TOBACCO - 3.1% | | | | | | | |
Ingredion, Inc. | 9,585 | | $ | 617,561 | | | SOFTWARE & SERVICES - 8.7% |
Universal Corp. | 6,090 | | | 303,952 | | | Alliance Data Systems Corp.* | 6,415 | | $ | 928,635 | |
| | | $ | 921,513 | | | Cadence Design Systems, Inc.* | 6,415 | | | 86,667 | |
| | | | | | | DST Systems, Inc. | 8,040 | | | 487,224 | |
| | | | | | | Jack Henry & Associates, Inc. | 4,875 | | | 191,392 | |
HEALTH CARE EQUIPMENT & SERVICES - 6.1% | | MICROS Systems, Inc.* | 1,625 | | | 68,965 | |
Community Health Systems, Inc. | 3,655 | | $ | 112,355 | | | Synopsys, Inc.* | 2,925 | | | 93,132 | |
Cooper Cos., Inc. (The) | 4,145 | | | 383,330 | | | | | | | | |
See Notes to Financial Statements | 20 | |
Wright Selected Blue Chip Equities Fund (WSBC)
Portfolio of Investments – As of December 31, 2012
| Shares | | | Value | |
| | | | | |
SOFTWARE & SERVICES (CONTINUED) | |
ValueClick, Inc.* | 39,070 | | $ | 758,349 | |
| | | $ | 2,614,364 | |
| | | | | |
| | | | | |
TECHNOLOGY HARDWARE & EQUIPMENT - 3.1% |
Arrow Electronics, Inc.* | 4,465 | | $ | 170,027 | |
Avnet, Inc.* | 14,050 | | | 430,070 | |
QLogic Corp.* | 9,830 | | | 95,646 | |
Tech Data Corp.* | 3,005 | | | 136,818 | |
Vishay Intertechnology, Inc.* | 9,505 | | | 101,038 | |
| | | $ | 933,599 | |
| | | | | |
| | | | | |
TRANSPORTATION - 3.3% |
Alaska Air Group, Inc.* | 10,560 | | $ | 455,030 | |
JB Hunt Transport Services, Inc. | 1,460 | | | 87,177 | |
Kansas City Southern | 5,360 | | | 447,453 | |
| | | $ | 989,660 | |
| | | | | |
| | | | | |
UTILITIES - 5.2% |
Cleco Corp. | 7,635 | | $ | 305,476 | |
NV Energy, Inc. | 18,925 | | | 343,300 | |
ONEOK, Inc. | 13,240 | | | 566,010 | |
UGI Corp. | 10,720 | | | 350,651 | |
| | | $ | 1,565,437 | |
| | | | | |
TOTAL EQUITY INTERESTS - 98.9% | | | $ | 29,591,477 | |
(identified cost, $23,462,715) | |
| | | | | |
TOTAL INVESTMENTS — 98.9% | | | $ | 29,591,477 | |
(identified cost, $23,462,715) | |
| | | | | |
OTHER ASSETS, IN EXCESS OF LIABILITIES — 1.1% | | | | 330,919 | |
| | | | | |
NET ASSETS — 100.0% | | | $ | 29,922,396 | |
| | | | | |
REIT — Real Estate Investment Trust | | | | | |
* Non-income producing security. | | | | | |
| | | | | |
See Notes to Financial Statements | 21 | |
Wright Selected Blue Chip Equities Fund (WSBC)
STATEMENT OF ASSETS AND LIABILITIES | | | | STATEMENT OF OPERATIONS | | |
| | | | For the Year Ended December 31, 2012 | | |
| | | | | | | | | | |
ASSETS: | | TRUE | | | INVESTMENT INCOME (Note 1C) | | TRUE |
| Investments, at value | | | | | 2.00E+07 | Dividend income | $ | 569,748 |
| (identified cost $23,462,715) (Note 1A) | $ | 29,591,477 | | | | Total investment income | $ | 569,748 |
| Receivable for fund shares sold | | 2,014 | | | | | | |
| Receivable for investment securities sold | | 806,583 | | | Expenses – | | | |
| Dividends receivable | | 16,906 | | | | Investment adviser fee (Note 3) | $ | 205,973 |
| Prepaid expenses and other assets | | 14,715 | | | | Administrator fee (Note 3) | | 41,195 |
| Total assets | $ | 30,431,695 | | | | Trustee expense (Note 3) | | 14,979 |
| | | | | | | | Custodian fee | | 3,458 |
LIABILITIES: | | | | | | Accountant fee | | 38,638 |
| Outstanding line of credit (Note 8) | $ | 413,537 | | | | Distribution expenses (Note 4) | | 85,822 |
| Payable for fund shares reacquired | | 79,861 | | | | Transfer agent fee | | 28,070 |
| Accrued expenses and other liabilities | | 15,901 | | | | Printing | | 130 |
| Total liabilities | $ | 509,299 | | | | Shareholder communications | | 5,664 |
NET ASSETS | $ | 29,922,396 | | | | Audit services | | 17,000 |
| | | | | | | | Legal services | | 16,798 |
NET ASSETS CONSIST OF: | | | | | | Compliance services | | 6,066 |
| Paid-in capital | $ | 22,399,378 | | | | Registration costs | | 19,053 |
| Accumulated net realized gain on investments | | 1,386,810 | | | | Interest expense (Note 8) | | 1,762 |
| Undistributed net investment income | | 7,446 | | | | Miscellaneous | | 24,670 |
| Unrealized appreciation on investments | | 6,128,762 | | | | Total expenses | $ | 509,278 |
| Net assets applicable to outstanding shares | $ | 29,922,396 | | | | | | |
| | | | | | | Deduct – | | | |
SHARES OF BENEFICIAL INTEREST OUTSTANDING AT $0.000 PAR VALUE (UNLIMITED SHARES AUTHORIZED) | | 2,595,817 | | | | Waiver and/or reimbursement by the principal underwriter and/or investment adviser (Note 4) | $ | (26,910 |
| | | | | | | | Net expenses | $ | 482,368 |
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST | $ | 11.53 | | | | Net investment income | $ | 87,380 |
| | | | | | | | | | |
| | | | | | | REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | |
| | | | | | | | Net realized gain on investment transactions | $ | 1,739,677 |
| | | | | | | | Net change in unrealized appreciation (depreciation) on investments | | 3,290,176 |
| | | | | | | | Net realized and unrealized gain on investments | $ | 5,029,853 |
| | | | | | | | Net increase in net assets from operations | $ | 5,117,233 |
| | | | | | | | | | |
See Notes to Financial Statements | 22 | |
Wright Selected Blue Chip Equities Fund (WSBC)
| | | Years Ended | |
STATEMENTS OF CHANGES IN NET ASSETS | | December 31, 2012 | | December 31, 2011 | |
| | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | |
From operations – | | | | | | | | | |
| Net investment income (loss) | | $ | 87,380 | | | $ | (50,448 | ) | |
0 | Net realized gain on investment transactions | | | 1,739,677 | | | | 1,748,539 | | |
| Net change in unrealized appreciation (depreciation) on investments | | | 3,290,176 | | | | (2,203,596 | ) | |
| Net increase (decrease) in net assets from operations | | $ | 5,117,233 | | | $ | (505,505 | ) | |
Distributions to shareholders (Note 2) | | | | | | | | | |
| From net investment income | | $ | (68,336 | ) | | $ | - | | |
| From net realized capital gains | | | (1,149,678 | ) | | | - | | |
| Total distributions | | $ | (1,218,014 | ) | | $ | - | | |
Net increase (decrease) in net assets resulting from fund share transactions (Note 6) | $ | (6,338,582 | ) | | $ | 4,496,809 | | |
Net increase (decrease) in net assets | | $ | (2,439,363 | ) | | $ | 3,991,304 | | |
## | | | | | | | | | | |
NET ASSETS: | | | | | | | | | |
| At beginning of year | | | 32,361,759 | | | | 28,370,455 | | |
| At end of year | | $ | 29,922,396 | | | $ | 32,361,759 | | |
| | | | | | | | | | |
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR | | $ | 7,446 | | | $ | - | | |
| | | | | | | | | | |
See Notes to Financial Statements | 23 | |
Wright Selected Blue Chip Equities Fund (WSBC)
These financial highlights reflect selected data for a share outstanding throughout each year. | | | | |
| | Years Ended December 31, |
FINANCIAL HIGHLIGHTS | | 2012 | 2011 | 2010 | 2009 | 2008 |
| | | | | | | | | | | | | | | | | |
Net asset value, beginning of year | | $ | 10.280 | | $ | 10.400 | | $ | 8.400 | | $ | 6.060 | | $ | 11.100 | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (1) | | | 0.028 | | | (0.018 | ) | | (0.022 | ) | | 0.011 | | | (0.013 | ) |
Net realized and unrealized gain (loss) | | | 1.616 | | | (0.102 | ) | | 2.030 | | | 2.329 | | | (4.121 | ) |
| Total income (loss) from investment operations | | 1.644 | | | (0.120 | ) | | 2.008 | | | 2.340 | | | (4.134 | ) |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.025 | ) | | — | | | (0.008 | ) | | — | | | — | |
From net realized gains | | | (0.369 | ) | | — | | | — | | | — | | | (0.906 | ) |
| Total distributions | | | (0.394 | ) | | — | | | (0.008 | ) | | — | | | (0.906 | ) |
Net asset value, end of year | | $ | 11.530 | | $ | 10.280 | | $ | 10.400 | | $ | 8.400 | | $ | 6.060 | |
Total Return(2) | | | 16.02 | % | | (1.15 | )% | | 23.93 | % | | 38.61 | % | | (39.81 | )% |
Ratios/Supplemental Data(3): | | | | | | | | | | | | | | | | |
Net assets, end of year (000 omitted) | | $29,922 | | $32,362 | | $28,370 | | $16,763 | | $13,364 | |
Ratios (As a percentage of average daily net assets): |
Net expenses | | | 1.40 | % | 1.40 | % | 1.40 | % | 1.36 | % | 1.26 | % |
Net expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 1.36 | % | 1.25 | % |
Net investment income (loss) | | | 0.25 | % | (0.17 | )% | (0.24 | )% | 0.15 | % | (0.15 | )% |
Portfolio turnover rate | | | 54 | % | 82 | % | 60 | % | 41 | % | 72 | % |
| | | | | | | | | | | | | | | | |
| | | | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | | | | | | | |
(1) | Computed using average shares outstanding. |
(2) | Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. |
(3) | For each of the years presented, the operating expenses of the Fund were reduced by a waiver of fees and/or allocation of expenses to the principal underwriter and/or investment adviser. Had such action not been undertaken, expenses and net investment income (loss) ratios would have been as follows: |
| ............................................................ | | 2012 | 2011 | 2010 | 2009 | 2008 |
| |
Ratios (As a percentage of average daily net assets): |
Expenses | | | 1.48 | % | | 1.46 | % | | 1.79 | % | | 2.15 | % | | 1.90 | % |
Expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 2.15 | % | | 1.89 | % |
Net investment income (loss) | | | 0.17 | % | | (0.23 | )% | | (0.63 | )% | | (0.64 | )% | | (0.79 | )% |
| ............................................................ | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
See Notes to Financial Statements. | 24 | |
Wright Major Blue Chip Equities Fund (WMBC)
Portfolio of Investments – As of December 31, 2012
| | | | | | | | | | | | |
| Shares | | | Value | | | | Shares | | | Value | |
| | | | | | | | | | | | |
| | | | | | | Bristol-Myers Squibb Co. | 12,495 | | $ | 407,212 | |
| | | | | | | Forest Laboratories, Inc.* | 3,795 | | | 134,040 | |
| | | | | | | Gilead Sciences, Inc.* | 4,465 | | | 327,954 | |
CAPITAL GOODS - 12.1% | | Johnson & Johnson | 5,800 | | | 406,580 | |
3M Co. | 5,355 | | $ | 497,212 | | | | | | $ | 1,880,554 | |
Cummins, Inc. | 895 | | | 96,973 | | | | | | | | |
Fastenal Co. | 1,560 | | | 72,836 | | | | | | | | |
Fluor Corp. | 1,560 | | | 91,634 | | | RETAILING - 7.9% |
General Dynamics Corp. | 7,590 | | | 525,759 | | | Amazon.com, Inc.* | 380 | | $ | 95,433 | |
Precision Castparts Corp. | 2,680 | | | 507,646 | | | Bed Bath & Beyond, Inc.* | 6,250 | | | 349,437 | |
WW Grainger, Inc. | 445 | | | 90,055 | | | Dollar Tree, Inc.* | 1,560 | | | 63,274 | |
| | | $ | 1,882,115 | | | priceline.com, Inc.* | 135 | | | 83,862 | |
| | | | | | | Ross Stores, Inc. | 2,900 | | | 157,035 | |
| | | | | | | TJX Cos., Inc. | 11,160 | | | 473,742 | |
CONSUMER DURABLES & APPAREL - 2.0% | | | | | $ | 1,222,783 | |
Coach, Inc. | 1,340 | | $ | 74,384 | | | | | | | | |
Mattel, Inc. | 2,455 | | | 89,902 | | | | | | | | |
NIKE, Inc. - Class B | 1,700 | | | 87,720 | | | SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.1% |
Ralph Lauren Corp. | 445 | | | 66,714 | | | Intel Corp. | 23,655 | | $ | 488,003 | |
| | | $ | 318,720 | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | SOFTWARE & SERVICES - 13.9% |
CONSUMER SERVICES - 0.5% | | Accenture PLC - Class A | 1,115 | | $ | 74,148 | |
Starbucks Corp. | 1,340 | | $ | 71,851 | | | Google, Inc. - Class A* | 670 | | | 475,278 | |
| | | | | | | Mastercard, Inc. - Class A | 225 | | | 110,538 | |
| | | | | | | Microsoft Corp. | 24,100 | | | 644,193 | |
DIVERSIFIED FINANCIALS - 8.0% | | Oracle Corp. | 12,495 | | | 416,333 | |
IntercontinentalExchange, Inc.* | 3,345 | | $ | 414,144 | | | Visa, Inc., Class A | 2,900 | | | 439,582 | |
JPMorgan Chase & Co. | 16,515 | | | 726,165 | | | | | | $ | 2,160,072 | |
T. Rowe Price Group, Inc. | 1,560 | | | 101,603 | | | | | | | | |
| | | $ | 1,241,912 | | | | | | | | |
| | | | | | | TECHNOLOGY HARDWARE & EQUIPMENT - 7.0% |
| | | | | | | Apple, Inc. | 895 | | $ | 477,062 | |
ENERGY - 8.4% | | Cisco Systems, Inc. | 30,795 | | | 605,122 | |
Chevron Corp. | 6,695 | | $ | 723,997 | | | | | | $ | 1,082,184 | |
Helmerich & Payne, Inc. | 2,230 | | | 124,902 | | | | | | | | |
Murphy Oil Corp. | 7,810 | | | 465,086 | | | | | | | | |
| | | $ | 1,313,985 | | | TRANSPORTATION - 0.5% |
| | | | | | | CH Robinson Worldwide, Inc. | 1,115 | | $ | 70,490 | |
| | | | | | | | | | | | |
FOOD & STAPLES RETAILING - 3.5% | | TOTAL EQUITY INTERESTS - 99.5% | | | $ | 15,482,036 | |
Walgreen Co. | 14,730 | | $ | 545,157 | | | (identified cost, $15,668,913) | |
| | | | | | | | | | | | |
| | | | | | | SHORT-TERM INVESTMENTS - 0.0% |
FOOD, BEVERAGE & TOBACCO - 7.5% | | Fidelity Government Money Market Fund, 0.01% (1) | 1,670 | | $ | 1,670 | |
Brown-Forman Corp. - Class B | 6,472 | | $ | 409,354 | | | | | | | | |
Coca-Cola Co. (The) | 17,185 | | | 622,956 | | | TOTAL SHORT-TERM INVESTMENTS - 0.0% | | | $ | 1,670 | |
Monster Beverage Corp.* | 2,680 | | | 141,719 | | | (identified cost, $1,670) | |
| | | $ | 1,174,029 | | | | | | | | |
| | | | | | | TOTAL INVESTMENTS — 99.5% | | | $ | 15,483,706 | |
| | | | | | | (identified cost, $15,670,583) | |
HEALTH CARE EQUIPMENT & SERVICES - 4.8% | | | | | | | |
Humana, Inc. | 5,800 | | $ | 398,054 | | | OTHER ASSETS, IN EXCESS OF LIABILITIES — 0.5% | | | | 75,474 | |
Stryker Corp. | 6,470 | | | 354,685 | | | | | | | | |
| | | $ | 752,739 | | | NET ASSETS — 100.0% | | | $ | 15,559,180 | |
| | | | | | | | | | | | |
| | | | | | | PLC — Public Limited Company | | | | | |
INSURANCE - 3.3% | | * Non-income producing security. | | | | | |
Aflac, Inc. | 9,595 | | $ | 509,686 | | | (1) Variable rate security. Rate presented is as of December 31, 2012. | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
MATERIALS - 4.9% | | | | | | | |
CF Industries Holdings, Inc. | 2,230 | | $ | 453,047 | | | | | | | | |
Freeport-McMoRan Copper & Gold, Inc. | 1,785 | | | 61,047 | | | | | | | | |
Monsanto Co. | 2,680 | | | 253,662 | | | | | | | | |
| | | $ | 767,756 | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
PHARMACEUTICALS & BIOTECHNOLOGY - 12.1% | | | | | | | |
Amgen, Inc. | 6,250 | | $ | 539,500 | | | | | | | | |
Biogen Idec, Inc.* | 445 | | | 65,268 | | | | | | | | |
See Notes to Financial Statements. | 25 | |
Wright Major Blue Chip Equities Fund (WMBC)
| | | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | STATEMENT OF OPERATIONS |
| | For the Year Ended December 31, 2012 |
| | | | | | | | | | | | | | |
ASSETS: | | | TRUE | | | INVESTMENT INCOME (Note 1C) | | | TRUE | |
| Investments, at value | | | | | | 2.00E+07 | Dividend income | | $ | 366,186 | |
| (identified cost $15,670,583) (Note 1A) | | $ | 15,483,706 | ###### | | | Total investment income | | $ | 366,186 | |
| Receivable for fund shares sold | | | 1,781 | | | | | | | | | |
| Receivable for investment securities sold | | | 101,639 | | | Expenses – | | | | |
| Dividends receivable | | | 3,244 | | | | Investment adviser fee (Note 3) | | $ | 107,547 | |
| Prepaid expenses and other assets | | | 13,578 | | | | Administrator fee (Note 3) | | | 21,510 | |
| Total assets | | $ | 15,603,948 | | | | Trustee expense (Note 3) | | | 14,979 | |
| | | | | | | | | Custodian fee | | | 5,000 | |
LIABILITIES: | | | | | | | Accountant fee | | | 37,378 | |
| Outstanding line of credit (Note 8) | | $ | 18,379 | | | | Distribution expenses (Note 4) | | | 44,811 | |
| Payable for fund shares reacquired | | | 13,670 | | | | Transfer agent fee | | | 25,407 | |
| Accrued expenses and other liabilities | | | 12,719 | | | | Printing | | | 70 | |
| Total liabilities | | $ | 44,768 | | | | Shareholder communications | | | 4,688 | |
NET ASSETS | | $ | 15,559,180 | | | | Audit services | | | 17,000 | |
| | | | | | | | | Legal services | | | 6,747 | |
NET ASSETS CONSIST OF: | | | | | | | Compliance services | | | 5,605 | |
| Paid-in capital | | $ | 21,006,713 | | | | Registration costs | | | 18,695 | |
| Accumulated net realized loss on investments | | | (5,263,319 | ) | | | Interest expense (Note 8) | | | 1,203 | |
| Undistributed net investment income | | | 2,663 | | | | Miscellaneous | | | 18,716 | |
| Unrealized depreciation on investments | | | (186,877 | ) | | | Total expenses | | $ | 329,356 | |
| Net assets applicable to outstanding shares | | $ | 15,559,180 | | | | | | | | | |
| | | | | | | | Deduct – | | | | |
SHARES OF BENEFICIAL INTEREST OUTSTANDING AT $0.000 PAR VALUE (UNLIMITED SHARES AUTHORIZED) | | | 1,226,306 | | | | Waiver and/or reimbursement by the principal underwriter and/or investment adviser (Note 4) | | $ | (77,210 | ) |
| | | | | | | | | Net expenses | | $ | 252,146 | |
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST | | $ | 12.69 | | | | Net investment income | | $ | 114,040 | |
| | | | | | | | | | | | | | |
| | | | | | | | REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | |
| | | | | | | | | Net realized loss on investment transactions | | $ | (39,296 | ) |
| | | | | | | | | Net change in unrealized appreciation (depreciation) on investments | | | 746,759 | |
| | | | | | | | | Net realized and unrealized gain on investments | | $ | 707,463 | |
| | | | | | | | | Net increase in net assets from operations | | $ | 821,503 | |
See Notes to Financial Statements. | 26 | |
Wright Major Blue Chip Equities Fund (WMBC)
| | | Years Ended | |
STATEMENTS OF CHANGES IN NET ASSETS | | December 31, 2012 | | December 31, 2011 | |
| | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | |
From operations – | | | | | | | | | |
| Net investment income (loss) | | $ | 114,040 | | | $ | (18,177 | ) | |
0 | Net realized gain (loss) on investment transactions | | | (39,296 | ) | | | 2,830,519 | | |
| Net change in unrealized appreciation (depreciation) on investments | | | 746,759 | | | | (2,666,829 | ) | |
| Net increase in net assets from operations | | $ | 821,503 | | | $ | 145,513 | | |
Distributions to shareholders (Note 2) | | | | | | | | | |
| From net investment income | | $ | (111,377 | ) | | $ | - | | |
| Total distributions | | $ | (111,377 | ) | | $ | - | | |
Net decrease in net assets resulting from fund share transactions (Note 6) | | $ | (4,071,909 | ) | | $ | (2,900,561 | ) | |
Net decrease in net assets | | $ | (3,361,783 | ) | | $ | (2,755,048 | ) | |
## | | | | | | | | | | |
NET ASSETS: | | | | | | | | | |
| At beginning of year | | | 18,920,963 | | | | 21,676,011 | | |
| At end of year | | $ | 15,559,180 | | | $ | 18,920,963 | | |
| | | | | | | | | | |
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR | | $ | 2,663 | | | $ | - | | |
| | | | | | | | | | |
See Notes to Financial Statements. | 27 | |
Wright Major Blue Chip Equities Fund (WMBC)
These financial highlights reflect selected data for a share outstanding throughout each year. | | | | |
| | Years Ended December 31, |
FINANCIAL HIGHLIGHTS | | 2012 | 2011 | 2010 | 2009 | 2008 |
| | | | | | | | | | | | | | | | | |
Net asset value, beginning of year | | $ | 12.260 | | $ | 12.250 | | $ | 10.870 | | $ | 9.340 | | $ | 14.520 | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (1) | | | 0.082 | | | (0.012 | ) | | 0.044 | | | 0.099 | | | 0.104 | |
Net realized and unrealized gain (loss) | | | 0.437 | | | 0.022 | | | 1.389 | | | 1.564 | | | (5.169 | ) |
| Total income (loss) from investment operations | | 0.519 | | | 0.010 | | | 1.433 | | | 1.663 | | | (5.065 | ) |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.089 | ) | | — | | | (0.053 | ) | | (0.133 | ) | | (0.115 | ) |
Net asset value, end of year | | $ | 12.690 | | $ | 12.260 | | $ | 12.250 | | $ | 10.870 | | $ | 9.340 | |
Total Return(2) | | | 4.23 | % | | 0.08 | % | | 13.19 | % | | 17.83 | % | | (34.85 | )% |
Ratios/Supplemental Data(3): | | | | | | | | | | | | | | | | |
Net assets, end of year (000 omitted) | | $15,559 | | $18,921 | | $21,676 | | $27,337 | | $32,484 | |
Ratios (As a percentage of average daily net assets): |
Net expenses | | | 1.40 | % | 1.40 | % | 1.41 | % | 1.36 | % | 1.26 | % |
Net expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 1.36 | % | 1.25 | % |
Net investment income (loss) | | | 0.64 | % | (0.09 | )% | 0.39 | % | 1.06 | % | 0.86 | % |
Portfolio turnover rate | | | 76 | % | 154 | % | 68 | % | 69 | % | 58 | % |
| | | | | | | | | | | | | | | | |
| | | | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | | | | | | | |
(1) | Computed using average shares outstanding. |
(2) | Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. |
(3) | For each of the years presented, the operating expenses of the Fund were reduced by a waiver of fees and/or allocation of expenses to the principal underwriter and/or investment adviser. Had such action not been undertaken, expenses and net investment income (loss) ratios would have been as follows: |
| ............................................................ | | 2012 | 2011 | 2010 | 2009 | 2008 |
| |
Ratios (As a percentage of average daily net assets): |
Expenses | | | 1.84 | % | | 1.70 | % | | 1.68 | % | | 1.55 | % | | 1.37 | % |
Expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 1.55 | % | | 1.36 | % |
Net investment income (loss) | | | 0.20 | % | | (0.39 | )% | | 0.13 | % | | 0.86 | % | | 0.75 | % |
| ............................................................ | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
See Notes to Financial Statements. | 28 | |
Wright International Blue Chip Equities Fund (WIBC)
Portfolio of Investments – As of December 31, 2012
| Shares | | | Value | | | | Shares | | | Value | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | HONG KONG - 3.4% |
| | | | | | | Cheung Kong Holdings, Ltd. | 38,000 | | $ | 593,516 | |
AUSTRALIA - 6.3% | | Power Assets Holdings, Ltd. | 19,500 | | | 168,723 | |
ALS, Ltd./Queensland | 13,310 | | $ | 150,867 | | | Techtronic Industries Co. | 70,500 | | | 131,176 | |
Australia & New Zealand Banking Group, Ltd. | 6,534 | | | 173,282 | | | Yue Yuen Industrial Holdings, Ltd. | 71,500 | | | 245,923 | |
BHP Billiton, Ltd. | 10,449 | | | 410,635 | | | | | | $ | 1,139,338 | |
Commonwealth Bank of Australia | 6,396 | | | 420,560 | | | | | | | | |
Incitec Pivot, Ltd. | 97,565 | | | 330,741 | | | | | | | | |
Orica, Ltd. | 3,823 | | | 100,460 | | | ITALY - 2.4% |
Rio Tinto, Ltd. | 3,060 | | | 211,994 | | | Enel SpA | 56,353 | | $ | 237,150 | |
Westpac Banking Corp. | 11,305 | | | 311,454 | | | Eni SpA (Azioni Ordinarie) | 23,475 | | | 574,392 | |
| | | $ | 2,109,993 | | | | | | $ | 811,542 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
CANADA - 6.3% | | JAPAN - 14.0% |
Agrium, Inc. | 5,027 | | $ | 500,529 | | | Bridgestone Corp. | 10,000 | | $ | 258,063 | |
Bank of Nova Scotia | 5,813 | | | 335,457 | | | Daito Trust Construction Co., Ltd. | 4,100 | | | 388,438 | |
BCE, Inc. | 2,914 | | | 124,760 | | | Dena Co., Ltd. | 5,400 | | | 179,428 | |
Catamaran Corp.* | 3,165 | | | 148,698 | | | ITOCHU Corp. | 52,800 | | | 558,473 | |
CGI Group, Inc. - Class A* | 2,986 | | | 68,795 | | | JGC Corp. | 3,000 | | | 94,034 | |
Magna International, Inc. | 3,123 | | | 155,821 | | | KDDI Corp. | 10,700 | | | 751,502 | |
Toronto-Dominion Bank (The) | 8,961 | | | 753,725 | | | Mitsubishi Corp. | 16,000 | | | 309,182 | |
| | | $ | 2,087,785 | | | Mitsubishi UFJ Financial Group, Inc. | 73,900 | | | 404,455 | |
| | | | | | | Nissan Motor Co., Ltd. | 8,500 | | | 80,595 | |
| | | | | | | Omron Corp. | 4,100 | | | 98,928 | |
CHINA - 1.0% | | Shionogi & Co., Ltd. | 9,200 | | | 154,567 | |
CNOOC, Ltd., ADR | 1,474 | | $ | 324,280 | | | Sumitomo Corp. | 47,200 | | | 609,479 | |
| | | | | | | Toyota Motor Corp. | 7,000 | | | 327,608 | |
| | | | | | | Toyota Tsusho Corp. | 5,900 | | | 145,823 | |
DENMARK - 0.7% | | Tsuruha Holdings, Inc. | 1,600 | | | 127,390 | |
AP Moeller - Maersk A/S - Class B | 32 | | $ | 243,513 | | | Yamada Denki Co., Ltd. | 3,970 | | | 154,331 | |
| | | | | | | | | | $ | 4,642,296 | |
| | | | | | | | | | | | |
FRANCE - 9.7% | | | | | | | |
Alstom SA | 1,622 | | $ | 65,260 | | | LUXEMBOURG - 0.4% |
AtoS | 1,270 | | | 89,472 | | | Tenaris SA | 6,554 | | $ | 136,943 | |
AXA SA | 9,472 | | | 170,743 | | | | | | | | |
BNP Paribas SA | 6,139 | | | 354,999 | | | | | | | | |
Cie Generale des Etablissements Michelin | 3,079 | | | 293,515 | | | NETHERLANDS - 3.0% |
PPR | 1,226 | | | 221,588 | | | Aegon NV | 15,759 | | $ | 101,421 | |
Sanofi | 11,602 | | | 1,102,106 | | | ASML Holding NV | 4,273 | | | 273,897 | |
Technip SA | 1,147 | | | 132,898 | | | ING Groep NV* | 19,065 | | | 179,562 | |
Total SA | 12,452 | | | 645,605 | | | Koninklijke Boskalis Westminster NV | 5,904 | | | 267,537 | |
Vivendi SA | 6,411 | | | 144,918 | | | Koninklijke DSM NV | 2,897 | | | 177,750 | |
| | | $ | 3,221,104 | | | | | | $ | 1,000,167 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
GERMANY - 11.5% | | NORWAY - 3.8% |
Allianz SE | 1,259 | | $ | 174,586 | | | Aker Solutions ASA | 3,168 | | $ | 64,969 | |
BASF SE | 10,878 | | | 1,035,001 | | | Statoil ASA | 16,844 | | | 424,603 | |
Bayer AG | 2,134 | | | 205,299 | | | Telenor ASA | 15,814 | | | 322,300 | |
Bayerische Motoren Werke AG | 3,497 | | | 340,957 | | | Yara International ASA | 8,849 | | | 442,290 | |
Daimler AG | 2,605 | | | 143,220 | | | | | | $ | 1,254,162 | |
Deutsche Bank AG | 3,689 | | | 162,003 | | | | | | | | |
Deutsche Boerse AG | 2,468 | | | 154,612 | | | | | | | | |
Henkel AG & Co. KGaA (Preferred Stock), 0.80% | 2,317 | | | 190,309 | | | SINGAPORE - 2.9% |
Muenchener Rueckversicherungs AG - Class R | 1,668 | | | 299,575 | | | Jardine Cycle & Carriage, Ltd. | 16,000 | | $ | 637,578 | |
RWE AG | 3,871 | | | 162,121 | | | Keppel Corp., Ltd. | 14,000 | | | 129,260 | |
SAP AG | 2,153 | | | 174,154 | | | SembCorp Industries, Ltd. | 42,000 | | | 182,485 | |
Siemens AG | 2,292 | | | 251,235 | | | | | | $ | 949,323 | |
Volkswagen AG | 2,372 | | | 516,046 | | | | | | | | |
| | | $ | 3,809,118 | | | | | | | | |
| | | | | | | SPAIN - 2.7% |
| | | | | | | Banco Santander SA | 56,089 | | $ | 457,561 | |
| | | | | | | Gas Natural SDG SA | 13,149 | | | 237,986 | |
| | | | | | | Iberdrola SA | 39,315 | | | 218,155 | |
| | | | | | | | | | $ | 913,702 | |
| | | | | | | | | | | | |
See Notes to Financial Statements. | 29 | |
Wright International Blue Chip Equities Fund (WIBC)
Portfolio of Investments – As of December 31, 2012
| | | | | | | | | | |
| Shares | | | Value | | | ADR — American Depositary Receipt | | |
| | | | | | | PLC — Public Limited Company | | | |
| | | | | | | * Non-income producing security. | | |
SWEDEN - 0.9% | | (1) Security fair valued in accordance with procedures adopted by the Board of Trustees. At the period end, the value of these securities amounted to $5,307 or 0.0% of net assets. |
Hexagon AB - Class B | 5,273 | | $ | 133,643 | | | (2 ) Variable rate security. Rate presented is as of December 31, 2012. | |
Tele2 AB - Class B | 9,769 | | | 175,648 | | | | | | |
| | | $ | 309,291 | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
SWITZERLAND - 8.0% | | | | | |
Credit Suisse Group AG | 14,713 | | $ | 361,033 | | | | | | |
Nestle SA | 17,225 | | | 1,118,477 | | | | | | |
Novartis AG | 5,068 | | | 320,156 | | | | | | |
Swiss Re AG* | 5,433 | | | 389,851 | | | | | | |
UBS AG* | 9,956 | | | 156,203 | | | | | | |
Zurich Insurance Group AG (Inhaberktie) | 1,201 | | | 320,739 | | | | | | |
| | | $ | 2,666,459 | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
UNITED KINGDOM - 21.5% | | | | | |
AstraZeneca PLC | 18,989 | | $ | 902,456 | | | | | | |
Aviva PLC | 59,065 | | | 363,092 | | | | | | |
BAE Systems PLC | 37,804 | | | 210,139 | | | | | | |
Barclays PLC (Ordinary) | 69,904 | | | 301,998 | | | | | | |
BHP Billiton PLC | 21,070 | | | 736,455 | | | | | | |
BP PLC | 72,306 | | | 504,492 | | | | | | |
Centrica PLC | 65,685 | | | 358,633 | | | | | | |
Ensco PLC - Class A | 4,744 | | | 281,224 | | | | | | |
GlaxoSmithKline PLC | 2,833 | | | 61,948 | | | | | | |
HSBC Holdings PLC | 16,545 | | | 175,732 | | | | | | |
Imperial Tobacco Group PLC | 5,910 | | | 229,418 | | | | | | |
Legal & General Group PLC | 354,621 | | | 858,649 | | | | | | |
Pearson PLC | 5,445 | | | 105,962 | | | | | | |
Rio Tinto PLC | 5,760 | | | 331,690 | | | | | | |
Rolls-Royce Holdings PLC* | 41,284 | | | 598,265 | | | | | | |
Rolls-Royce Holdings PLC – Class C (Preferred Stock)* (1) | 3,199,068 | | | 5,307 | | | | | | |
Royal Dutch Shell PLC - Class B | 8,760 | | | 311,559 | | | | | | |
SSE PLC | 2,759 | | | 64,118 | | | | | | |
Subsea 7 SA | 3,284 | | | 79,898 | | | | | | |
Vodafone Group PLC | 207,180 | | | 523,885 | | | | | | |
WPP PLC | 10,572 | | | 154,358 | | | | | | |
| | | $ | 7,159,278 | | | | | | |
| | | | | | | | | | |
TOTAL EQUITY INTERESTS - 98.5% | | | $ | 32,778,294 | | | | | | |
(identified cost, $26,493,504) | | | | | | |
| | | | | | | | | | |
SHORT-TERM INVESTMENTS - 1.2% | | | | | |
Fidelity Government Money Market Fund, 0.01% (2) | 393,090 | | $ | 393,090 | | | | | | |
| | | | | | | | | | |
TOTAL SHORT-TERM INVESTMENTS - 1.2% | | | $ | 393,090 | | | | | | |
(identified cost, $393,090) | | | | | | |
| | | | | | | | | | |
TOTAL INVESTMENTS — 99.7% | | | $ | 33,171,384 | | | | | | |
(identified cost, $26,886,594) | | | | | | |
| | | | | | | | | | |
OTHER ASSETS, IN EXCESS OF LIABILITIES — 0.3% | | | | 84,370 | | | | | | |
| | | | | | | | | | |
NET ASSETS — 100.0% | | | $ | 33,255,754 | | | | | | |
See Notes to Financial Statements. | 30 | |
Wright International Blue Chip Equities Fund (WIBC)
| | | | | | | | | | | | | | |
STATEMENT OF ASSETS AND LIABILITIES | | |
As of December 31, 2012 | | For the Year Ended December 31, 2012 |
| | | | | | | | | | | | | | |
ASSETS: | | | TRUE | | | INVESTMENT INCOME (Note 1C) | | | TRUE | |
| Investments, at value | | | | | | 3.00E+07 | Dividend income (net of foreign taxes $171,304) | $ | 1,185,608 | |
| (identified cost $26,886,594) (Note 1A) | | $ | 33,171,384 | ###### | | | Income from securities lending (net) | | 22,483 | |
| Foreign currency, at value | | | | | | | Total investment income | | $ | 1,208,091 | |
| (identified cost $11,047) (Note 1A) | | | 10,998 | ###### | | | | | | | | |
| Receivable for fund shares sold | | | 10,109 | | | Expenses – | | | | |
| Dividends receivable | | | 22,083 | | | | Investment adviser fee (Note 3) | | $ | 261,343 | |
| Tax reclaims receivable | | | 67,487 | | | | Administrator fee (Note 3) | | | 55,535 | |
| Prepaid expenses and other assets | | | 14,314 | | | | Trustee expense (Note 3) | | | 14,979 | |
| Total assets | | $ | 33,296,375 | | | | Custodian fee | | | 40,915 | |
| | | | | | | | | Accountant fee | | | 62,509 | |
LIABILITIES: | | | | | | | Distribution expenses (Note 4) | | | 81,670 | |
| Payable for fund shares reacquired | | $ | 9,616 | | | | Transfer agent fee | | | 44,059 | |
| Accrued expenses and other liabilities | | | 31,005 | | | | Printing | | | 123 | |
| Total liabilities | | $ | 40,621 | | | | Shareholder communications | | | 5,687 | |
NET ASSETS | | $ | 33,255,754 | | | | Audit services | | | 17,000 | |
| | | | | | | | | Legal services | | | 12,511 | |
NET ASSETS CONSIST OF: | | | | | | | Compliance services | | | 6,022 | |
| Paid-in capital | | $ | 81,408,970 | | | | Registration costs | | | 19,292 | |
| Accumulated net realized loss on investments and foreign currency | | | (54,462,246 | ) | | | Interest expense (Note 8) | | | 3,113 | |
| Undistributed net investment income | | | 25,570 | | | | Miscellaneous | | | 32,754 | |
| Unrealized appreciation on investments and foreign currency | | | 6,283,460 | | | | Total expenses | | $ | 657,512 | |
| Net assets applicable to outstanding shares | | $ | 33,255,754 | | | | | | | | | |
| | | | | | | | Deduct – | | | | |
SHARES OF BENEFICIAL INTEREST OUTSTANDING AT $0.000 PAR VALUE (UNLIMITED SHARES AUTHORIZED) | | | 2,355,918 | | | | Waiver and/or reimbursement by the principal underwriter and/or investment adviser (Note 4) | $ | (50,043 | ) |
| | | | | | | | | Net expenses | | $ | 607,469 | |
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST* | | $ | 14.12 | | | | Net investment income | | $ | 600,622 | |
| | | | | | | | | | | | | | |
* Shares redeemed or exchanges within three months of purchase are charged a 2.00% redemption fee. | | REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | |
| | | | | | | | Net realized loss – | | | | |
| | | | | | | | | Investment transactions | | $ | (1,561,941 | ) |
| | | | | | | | | Foreign currency transactions | | | (4,767 | ) |
| | | | | | | | | Net realized loss | | $ | (1,566,708 | ) |
| | | | | | | | | | | | | | |
| | | | | | | | Change in unrealized appreciation (depreciation) – | | | | |
| | | | | | | | | Investments | | $ | 5,391,018 | |
| | | | | | | | | Foreign currency translations | | | (4,908 | ) |
| | | | | | | | | Net change in unrealized appreciation (depreciation) | | $ | 5,386,110 | |
| | | | | | | | | Net realized and unrealized gain on investments and foreign currency translations | | $ | 3,819,402 | |
| | | | | | | | | Net increase in net assets from operations | | $ | 4,420,024 | |
See Notes to Financial Statements. | 31 | |
Wright International Blue Chip Equities Fund (WIBC)
| | | Years Ended | |
STATEMENTS OF CHANGES IN NET ASSETS | | December 31, 2012 | | December 31, 2011 | |
| | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | |
From operations – | | | | | | | | | |
| Net investment income | | $ | 600,622 | | | $ | 659,056 | | |
-23435 | Net realized gain (loss) on investment and foreign currency transactions | | | (1,566,708 | ) | | | 1,663,058 | | |
| Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | 5,386,110 | | | | (7,926,507 | ) | |
| Net increase (decrease) in net assets from operations | | $ | 4,420,024 | | | $ | (5,604,393 | ) | |
Distributions to shareholders (Note 2) | | | | | | | | | |
| From net investment income | | $ | (631,283 | ) | | $ | (683,131 | ) | |
| Total distributions | | $ | (631,283 | ) | | $ | (683,131 | ) | |
Net decrease in net assets resulting from fund share transactions (Note 6) | | $ | (4,782,584 | ) | | $ | (9,456,804 | ) | |
Net decrease in net assets | | $ | (993,843 | ) | | $ | (15,744,328 | ) | |
## | | | | | | | | | | |
NET ASSETS: | | | | | | | | | |
| At beginning of year | | | 34,249,597 | | | | 49,993,925 | | |
| At end of year | | $ | 33,255,754 | | | $ | 34,249,597 | | |
| | | | | | | | | | |
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR | $ | 25,570 | | | $ | 37,004 | | |
| | | | | | | | | | |
See Notes to Financial Statements. | 32 | |
Wright International Blue Chip Equities Fund (WIBC)
These financial highlights reflect selected data for a share outstanding throughout each year. | | | | |
| | Years Ended December 31, |
FINANCIAL HIGHLIGHTS | | 2012 | 2011 | 2010 | 2009 | 2008 |
| | | | | | | | | | | | | | | | | |
Net asset value, beginning of year | | $ | 12.580 | | $ | 14.860 | | $ | 14.460 | | $ | 10.810 | | $ | 22.470 | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (1) | | | 0.244 | | | 0.224 | | | 0.170 | | | 0.208 | | | 0.483 | |
Net realized and unrealized gain (loss) | | | 1.567 | | | (2.256 | ) | | 0.640 | | | 3.442 | | | (11.002 | ) |
| Total income (loss) from investment operations | | 1.811 | | | (2.032 | ) | | 0.810 | | | 3.650 | | | (10.519 | ) |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.272 | ) | | (0.248 | ) | | (0.410 | ) | | — | | | (0.575 | ) |
From net realized gains | | | — | | | — | | | — | | | — | | | (0.558 | ) |
Tax return of capital | | | — | | | — | | | — | | | — | | | (0.008 | ) |
| Total distributions | | | (0.272 | ) | | (0.248 | ) | | (0.410 | ) | | — | | | (1.141 | ) |
Redemption Fees(1) | | | 0.001 | | | — | (2) | | — | (2) | | — | | | — | |
# | | | | | | | | | | | | | | | | |
Net asset value, end of year | | $ | 14.120 | | $ | 12.580 | | $ | 14.860 | | $ | 14.460 | | $ | 10.810 | |
Total Return(3) | | | 14.45 | % | | (13.65 | )% | | 5.76 | % | | 33.77 | % | | (47.74 | )% |
Ratios/Supplemental Data(4): | | | | | | | | | | | | | | | | |
Net assets, end of year (000 omitted) | | $33,256 | | $34,250 | | $49,994 | | $68,839 | | $67,146 | |
Ratios (As a percentage of average daily net assets): |
Net expenses | | | 1.85 | % | 1.78 | % | 1.74 | % | 1.63 | % | 1.54 | % |
Net expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 1.63 | % | 1.53 | % |
Net investment income | | | 1.84 | % | 1.56 | % | 1.23 | % | 1.75 | % | 2.71 | % |
Portfolio turnover rate | | | 58 | % | 50 | % | 92 | % | 63 | % | 82 | % |
| | | | | | | | | | | | | | | | |
| | | | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | | | | | | | |
(1) | Computed using average shares outstanding. |
(2) | Less than $0.001 per share. |
(3) | Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. |
(4) | For the years ended December 31, 2012 and 2010, the operating expenses of the Fund were reduced by a waiver of fees and/or allocation of expenses to the principal underwriter and/or investment adviser. Had such action not been undertaken, expenses and net investment income ratios would have been as follows: |
| ............................................................ | | 2012 | 2010 | | | | | | | | | |
| |
Ratios (As a percentage of average daily net assets): |
Gross expenses | | | 2.01 | % | | 1.76 | % | | | | | | | | | |
Net investment income | | | 1.68 | % | | 1.22 | % | | | | | | | | | |
| ............................................................ | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
See Notes to Financial Statements. | 33 | |
The Wright Managed Equity Trust
Notes to Financial Statements
1. Significant Accounting Policies
Wright Selected Blue Chip Equities Fund (“WSBC”), Wright Major Blue Chip Equities Fund (“WMBC”), and Wright International Blue Chip Equities Fund (“WIBC”) (each a “Fund” and collectively, the “Funds”) (the Funds constituting Wright Managed Equity Trust (the “Trust”)), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company. The Funds seek to provide total return consisting of price appreciation and current income.
The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
A. Investment Valuations – Equity securities listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by a third party pricing service. Investments in open-end mutual funds are valued at net asset value. Short-term debt securities with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value. If short-term debt securities are acquired with a remaining maturity of more than sixty days, they will be valued by a third party pricing service. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges are monitored by the investment adviser and may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Funds in a manner that most fairly reflects the security’s value, or the amount that the Funds might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies, quotations or relevant information obtained from broker-dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B. Investment Transactions – Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C. Income – Dividend income is recorded on the ex-dividend date. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Funds are informed of the ex-dividend date. Withholding taxes on foreign dividends and capital gains have been provided for in accordance with the Funds’ understanding of applicable countries’ tax rules and rates. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium and accretion of discount.
D. Federal Taxes – Each Fund’s policy is to comply with the provisions of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute to shareholders each year substantially all of its taxable income and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary. Foreign taxes are provided for based on WIBC’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. At December 31,
The Wright Managed Equity Trust
Notes to Financial Statements
2012, WMBC and WIBC, for federal income tax purposes, have capital loss carryforwards of $5,140,711 and $52,085,864, respectively, which will reduce each Fund’s taxable income arising from future net realized gain on investment transactions, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders, which would otherwise be necessary to relieve the Funds of any liability for federal income or excise tax. Pursuant to the Code, such capital loss carryforwards will expire as follows:
December 31, | WMBC | WIBC |
2016 | $ 203,325 | $17,388,448 |
2017 | 4,937,386 | 34,697,416 |
As a result of the Regulated Investment Company Modernization Act of 2010, net capital losses realized on or after January 1, 2011 (effective date) may be carried forward indefinitely to offset future realized capital gains; however, post-effective losses must be used before pre-effective capital loss carryforwards with expiration dates. Therefore, it is possible that all or a portion of a fund’s pre-effective capital loss carryforwards could expire unused. In addition to the amounts noted in the table above, WMBC and WIBC have the following available capital loss carryforwards that have no expiration date:
| WMBC | WIBC |
Short Term | $ 74,698 | $789,467 |
Long Term | - | 845,412 |
As of December 31, 2012, the Funds had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Funds’ federal tax returns filed in the 3-year period ended December 31, 2012, remains subject to examination by the Internal Revenue Service.
E. Expenses – The majority of expenses of the Trust are directly identifiable to an individual Fund. Expenses which are not readily identifiable to a specific Fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the Funds.
F. Redemption Fees – A shareholder who redeems or exchanges shares of WIBC within three months of purchase will incur a redemption fee of 2.00% of the current net asset value of shares redeemed, subject to certain limitations. The fee is charged for the benefit of the remaining shareholders and will be paid to WIBC to help offset transaction costs. The fee is accounted for as an addition to paid-in capital. The Fund reserves the right to modify the terms of or terminate the fee at any time. There are limited exceptions to the imposition of the redemption fee.
G. Foreign Currency Translation – Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds’ books and the U.S. dollar equivalent of the amounts actually received or paid. The portion of unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
H. Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
I. Indemnifications – Under each Fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Funds,
The Wright Managed Equity Trust
Notes to Financial Statements
and shareholders are indemnified against personal liability for the obligations of the Funds. Additionally, in the normal course of business, the Funds enter into agreements with service providers that may contain indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
2. Distributions to Shareholders
It is the present policy of the Trust to make annual distributions of all or substantially all of the net investment income of the Funds and to distribute annually all or substantially all of the net realized capital gains (reduced by available capital loss carryforwards from prior years, if any) of the Funds. Distributions to shareholders are recorded on the ex-dividend date. Shareholders may reinvest income and capital gain distributions in additional shares of the same Fund at the net asset value as of the reinvestment date or, at the election of the shareholder, receive distributions in cash. The Funds distinguish between distributions on a tax basis and a financial reporting basis. GAAP requires that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
The tax character of distributions paid for the year ended December 31, 2012, and December 31, 2011, was as follows:
Year Ended 12/31/12 | | | WSBC | | | WMBC | | | WIBC |
Distributions declared from: | | | | | | | | | |
Ordinary income | | $ | 68,336 | | $ | 111,377 | | $ | 631,283 |
Long-term capital gain | | | 1,149,678 | | | - | | | - |
Year Ended 12/31/11 | | | WSBC | | | WMBC | | | WIBC |
Distributions declared from: | | | | | | | | | |
Ordinary income | | $ | - | | $ | - | | $ | 683,131 |
During the year ended December 31, 2012, the following amounts were reclassified due to foreign currency gain (loss), distributions from real estate investment trusts and passive foreign investment company transactions.
Increase (decrease): | | | WSBC | | | | WIBC | | |
Accumulated net realized gain (loss) | | $ | 11,598 | | | $ | (19,227 | ) | |
Accumulated undistributed net investment income (loss) | | | (11,598 | ) | | | 19,227 | | |
These reclassifications had no effect on the net assets or net asset value per share of the Funds.
As of December 31, 2012, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
| | | WSBC | | | | WMBC | | | | WIBC | |
Undistributed ordinary income | | $ | 78,219 | | | $ | 2,663 | | | $ | 49,510 | |
Undistributed long-term gain | | | 1,608,244 | | | | - | | | | - | |
Capital loss carryforward and post October losses | | | - | | | | (5,215,409 | ) | | | (53,720,743 | ) |
Net unrealized appreciation (depreciation) | | | 5,836,555 | | | | (234,787 | ) | | | 5,518,017 | |
Total | | $ | 7,523,018 | | | $ | (5,447,533 | ) | | $ | (48,153,216 | ) |
The difference between components of distributable earnings (accumulated losses) on a tax basis and the
The Wright Managed Equity Trust
Notes to Financial Statements
amounts reflected in the Statements of Assets and Liabilities are primarily due to wash sales and passive foreign investment company transactions.
3. Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Wright Investor Services, Inc. (“Wright”) as compensation for investment advisory services rendered to the Funds. The fees are computed at annual rates of the Funds' average daily net assets as noted below, and are payable monthly.
Annual Advisory Fee Rates |
Fund | Under $100 Million | $100 Million to $250 Million | $250 Million to $500 Million | $500 Million to $1 Billion | Over $1 Billion |
WSBC | 0.60% | 0.57% | 0.54% | 0.50% | 0.45% |
WMBC | 0.60% | 0.57% | 0.54% | 0.50% | 0.45% |
WIBC | 0.80% | 0.78% | 0.76% | 0.72% | 0.67% |
For the year ended December 31, 2012, the fee and the effective annual rate, as a percentage of average daily net assets for each of the Funds were as follows:
Fund | Investment Adviser Fee | Effective Annual Rate |
WSBC | $205,973 | 0.60% |
WMBC | $107,547 | 0.60% |
WIBC | $261,343 | 0.80% |
The administrator fee is earned by Wright for administering the business affairs of each Fund. The fee is computed at an annual rate of 0.17% of WIBC’s average daily net assets up to $100 million and 0.07% of average daily net assets over $100 million. The fee is computed at an annual rate of 0.12% of WSBC’s and WMBC’s average daily net assets up to $100 million and 0.07% of average daily net assets over $100 million. Atlantic Fund Administration, LLC (d/b/a Atlantic Fund Services) (“Atlantic”) serves as sub-administrator of the Funds to perform certain services of the administrator as may be agreed upon between the administrator and sub-administrator. The sub-administration fee is paid by Wright.
For the year ended December 31, 2012, the administrator fee for WSBC, WMBC and WIBC amounted to $41,195, $21,510 and $55,535, respectively.
Certain Trustees and officers of the Trust are Trustees or officers of the above organizations and/or of the Funds’ principal underwriter. Except as to Trustees of the Trust who are not employees of Atlantic or Wright, Trustees and officers receive remuneration for their services to the Trust out of the fees paid to Atlantic and Wright. The Trustees are compensated by the Trust in conjunction with the Wright Managed Income Trust, rather than on a per Trust or per Fund basis. Quarterly retainer fees are paid in the amount of $4,000 to the Lead Trustee, $3,500 to the Secretary of Independent Trustees, and $3,000 each to the remaining Trustees. In addition, each Trustee will be paid a fee of $1,500 for each regular Board meeting attended. Each Trustee is also reimbursed for all reasonable out-of-pocket expenses incurred in connection with his duties as a Trustee, including travel and related expenses incurred in attending Board meetings. The amount of Trustees’ fees attributable to each Fund is disclosed in each Fund’s Statement of Operations.
Pursuant to the Letter of Engagement, A M Moody Consulting LLC, an affiliate of the Distributor, provides compliance and administrative consulting services to the Funds. A. M. Moody III, President of A M Moody Consulting LLC, is a control affiliate and an officer of the Distributor. Fees paid to A M Moody Consulting Group LLC pursuant to the Letter of Engagement are reflected on the Statement of Operations within the caption Miscellaneous. Neither the Distributor nor A M Moody Consulting LLC, nor any of their officers or employees who serve as an officer of the Funds, has any role in determining the Funds’ investment policies or which securities are to be purchased or sold by the Funds.
The Wright Managed Equity Trust
Notes to Financial Statements
4. Distribution and Service Plans
The Trust has in effect a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 of the 1940 Act. The Plan provides that each Fund will pay Wright Investors’ Service Distributors, Inc. (“WISDI”), the principal underwriter, a wholly-owned subsidiary of The Winthrop Corporation and an affiliate of Wright, a distribution fee of 0.25% of the average daily net assets of each Fund for distribution services and facilities provided to the Funds by WISDI. Distribution fees paid or accrued to WISDI for the year ended December 31, 2012, for WSBC, WMBC and WIBC were $85,822, $44,811 and $81,670, respectively. In addition, the Trustees have adopted a service plan (the “Service Plan”) which allows the Funds to reimburse the principal underwriter for payments to intermediaries for providing account administration and personal and account maintenance services to their customers who are beneficial owners of each Fund’s shares. The combined amount of service fees payable under the Service Plan and Rule 12b-1 distribution fees may not exceed 0.25% annually of each Fund’s average daily net assets. For the year ended December 31, 2012, the Funds did not accrue or pay any service fees.
Pursuant to an Expense Limitation Agreement, Wright and WISDI have agreed to waive all or a portion of their fees and reimburse expenses to the extent that total annual operating expenses exceed 1.40% of the average daily net assets of each of WSBC and WMBC and 1.85% of the average daily net assets of WIBC through April 30, 2013 (excluding interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund’s business). Thereafter, the waiver and reimbursement may be changed or terminated at any time. Pursuant to this agreement, Wright waived and/or reimbursed investment adviser fees of $32,399 for WMBC. WISDI waived distribution fees of $26,910, $44,811 and $50,043 for WSBC, WMBC and WIBC, respectively.
5. Investment Transactions
Purchases and sales of investments, other than short-term obligations, were as follows:
Year Ended December 31, 2012 |
| WSBC | WMBC | WIBC |
Purchases | $18,449,785 | $13,637,725 | $18,941,373 |
Sales | $25,974,035 | $17,474,168 | $24,140,242 |
6. Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in Fund shares were as follows:
| | December 31, 2013 | 36525 | | | | 41274 | # | # | | | | | 40908 | |
| | | Year Ended December 31, 2012 | | Year Ended December 31, 2011 | | |
| | | Shares | | | | Amount | | | Shares | | | | Amount | | | |
| WSBC | | | | | | | | | | | | | | | | |
| Sold | 651,931 | | | $ | 7,196,342 | | | 1,217,920 | | | $ | 12,601,664 | | | |
| Issued to shareholders in payment of distributions declared | 82,388 | | | | 944,573 | | | - | | | | - | | | |
| Redemptions | (1,286,524 | ) | | | (14,479,497 | ) | | (797,792 | ) | | | (8,104,855 | ) | | |
| Net increase (decrease) | (552,205 | ) | | $ | (6,338,582 | ) | | 420,128 | | | $ | 4,496,809 | | | |
| | December 31, 2013 | 36525 | | | | 41274 | # | # | | | | | 40908 | | | |
The Wright Managed Equity Trust
Notes to Financial Statements
| | | Year Ended December 31, 2012 | | Year Ended December 31, 2011 | |
| | | Shares | | | | Amount | | | Shares | | | | Amount | | |
| WMBC | | | | | | | | | | | | | | | |
| Sold | 75,837 | | | $ | 970,777 | | | 265,696 | | | $ | 3,265,816 | | |
| Issued to shareholders in payment of distributions declared | 8,191 | | | | 103,537 | | | - | | | | - | | |
| Redemptions | (401,489 | ) | | | (5,146,223 | ) | | (491,607 | ) | | | (6,166,377 | ) | |
| Net decrease | (317,461 | ) | | $ | (4,071,909 | ) | | (225,911 | ) | | $ | (2,900,561 | ) | |
| | | Year Ended December 31, 2012 | | Year Ended December 31, 2011 |
| | | Shares | | | | Amount | | | Shares | | | | Amount | |
| WIBC | | | | | | | | | | | | | | |
| Sold | 167,193 | | | $ | 2,284,177 | | | 366,751 | | | $ | 5,165,522 | |
| Issued to shareholders in payment of distributions declared | 42,643 | | | | 590,876 | | | 48,799 | | | | 606,608 | |
| Redemptions | (576,734 | ) | | | (7,659,569 | ) | | (1,056,710 | ) | | | (15,228,963 | ) |
| Redemption fees | - | | | | 1,932 | | | - | | | | 29 | |
| Net decrease | (366,898 | ) | | $ | (4,782,584 | ) | | (641,160 | ) | | $ | (9,456,804 | ) |
7. Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of the investment securities owned at December 31, 2012, as computed on a federal income tax basis, were as follows:
Year Ended December 31, 2012 |
| WSBC | WMBC | WIBC |
Aggregate cost | $ | 23,754,922 | | $ | 15,718,493 | | $ | 27,652,037 | |
Gross unrealized appreciation | $ | 6,228,247 | | $ | 699,487 | | $ | 6,357,982 | |
Gross unrealized depreciation | | (391,692 | ) | | (934,274 | ) | | (838,635 | ) |
Net unrealized appreciation (depreciation) | $ | 5,836,555 | | $ | (234,787 | ) | $ | 5,519,347 | |
8. Line of Credit
The Funds participate with other funds managed by Wright in a committed $10 million unsecured line of credit agreement with Union Bank of California, N.A. (“Union Bank”). The Funds may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each Fund based on its borrowings at an amount above the LIBOR rate. Because the line of credit is not available exclusively to each Fund, they may be unable to borrow some or all of the Funds’ requested amounts at any particular time. At December 31, 2012, WSBC and WMBC had a balance outstanding pursuant to this line of credit of $413,537 and $18,379, respectively, at an interest rate of 1.21%.
The Wright Managed Equity Trust
Notes to Financial Statements
The average borrowings and average interest rate (based on days with outstanding balances) for the year ended December 31, 2012, were as follows:
| WSBC | WMBC | WIBC |
Average borrowings | $471,083 | $157,518 | $385,333 |
Average interest rate | 1.23% | 1.24% | 1.24% |
9. Risks Associated with Foreign Investments
Investing in securities issued by companies whose principal business activities are outside the United States may involve significant risks not present in domestic investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting requirements of the U.S. securities laws. Certain foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on the removal of funds or other assets of the Funds, political or financial instability or diplomatic and other developments which could affect such investments. Foreign stock markets, while growing in volume and sophistication, are generally not as developed as those in the United States, and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies. In general, there is less overall governmental supervision and regulation of foreign securities markets, broker-dealers and issuers than in the United States.
10. Securities Lending Agreement
WIBC has established a securities lending arrangement with Union Bank as securities lending agent in which WIBC lends portfolio securities to a broker in exchange for collateral consisting of cash in an amount at least equal to the market value of the securities on loan. Cash collateral may be invested in government securities. WIBC earns interest on the amount invested in the portfolio, but it must pay to or receive from a broker a rebate fee, depending on the securities loaned, computed as a varying percentage of the collateral received. The broker fee and interest income earned is offset by the broker rebate fees paid of $31,242 for the year ended December 31, 2012. In the event of counterparty default, WIBC is subject to potential loss if it is delayed or prevented from exercising its right to dispose of the collateral. WIBC bears risk in the event that invested collateral is not sufficient to meet obligations due on loans. WIBC has the right under the securities lending agreement to recover the securities from the borrower on demand. As of December 31, 2012, WIBC had no securities on loan.
11. Fair Value Measurements
Under GAAP for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• Level 1 – quoted prices in active markets for identical investments
• Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The Wright Managed Equity Trust
Notes to Financial Statements
At December 31, 2012, the inputs used in valuing each Fund’s investments, which are carried at value, were as follows:
WSBC
Asset Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total |
Equity Interests | $ | 29,591,477 | $ | - | $ | - | $ | 29,591,477 |
Total Investments | $ | 29,591,477 | $ | - | $ | - | $ | 29,591,477 |
WMBC
Asset Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total |
Equity Interests | $ | 15,482,036 | $ | - | $ | - | $ | 15,482,036 |
Short-Term Investments | | - | | 1,670 | | - | | 1,670 |
Total Investments | $ | 15,482,036 | $ | 1,670 | $ | - | $ | 15,483,706 |
WIBC
Asset Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |
Equity Interests | $ | 2,693,289 | $ | 30,079,698* | $ | 5,307 | $ | 32,778,294 | | |
Short-Term Investments | | - | | 393,090 | | - | | 393,090 | | |
| | | | | | | | | |
Total Investments | $ | 2,693,289 | $ | 30,472,788 | $ | 5,307 | $ | 33,171,384 | |
* Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that occurred after the close of trading in their applicable foreign markets.
The Level 1, Level 2 and Level 3 inputs displayed in these tables under Equity Interests are Common Stock and Preferred Stock. Refer to each Fund’s Portfolio of Investments for a further breakout of each security by type.
The Funds utilize the end of period methodology when determining transfers in or out of the Level 2 category. As of December 31, 2012, there was $30,079,698 transferred from Level 1 into Level 2 in WIBC as a result of the Fund’s fair valuation policy.
The security identified below as a transfer into Level 3 represents shares that were received as a result of a corporate action.
The Wright Managed Equity Trust
Notes to Financial Statements
The following is a reconciliation of Level 3 assets for WIBC for which significant unobservable inputs were used to determine fair value.
| | | | Equity Interests |
Balance as of 12/31/11 | | | $ | 16,120 |
Change in Unrealized Appreciation | | | | (16,120) |
Realized Gain (Loss) | | | | 2,597 |
Sales | | | | (2,597) |
Transfers In | | | | 5,307 |
Balance as of 12/31/12 | | | $ | 5,307 |
Net change in unrealized appreciation from investments held as of 12/31/12 ** | | | $ | 5,307 |
** The change in unrealized appreciation (depreciation) is included in net change in unrealized appreciation (depreciation) of investments in the accompanying Statement of Operations.
The Fund utilizes the end of period methodology when determining transfers in or out of the Level 3 category.
12. New Accounting Pronouncement
In December 2011, FASB issued ASU No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” requiring disclosure of both gross and net information related to offsetting and related arrangements enabling users of its financial statements to understand the effect of those arrangements on the entity’s financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRSs. ASU No. 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. Management is evaluating any impact ASU No. 2011-11 may have on each Fund’s financial statements.
13. Review for Subsequent Events
In connection with the preparation of the financial statements of the Funds as of and for the year ended December 31, 2012, events and transactions subsequent to December 31, 2012, have been evaluated by the Funds’ management for possible adjustment and/or disclosure. Management has not identified any subsequent events requiring financial statement disclosure as of the date these financial statements were issued.
The Wright Managed Equity Trust
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of The Wright Managed Equity Trust
and the Shareholders of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund and Wright International Blue Chip Equities Fund
We have audited the accompanying statements of assets and liabilities of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund, and Wright International Blue Chip Equities Fund (the "Funds"), each a series of shares of The Wright Managed Equity Trust, including the portfolios of investments, as of December 31, 2012, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the years in the two-year period ended December 31, 2009 were audited by other auditors whose report dated February 23, 2010, expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2012 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund, and Wright International Blue Chip Equities Fund as of December 31, 2012, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
BBD, LLP
Philadelphia, Pennsylvania
March 1, 2013
The Wright Managed Equity Trust
Federal Tax Information (Unaudited)
The Form 1099-DIV you received in January 2013 showed the tax status of all distributions paid to your account in calendar year 2012. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Funds. As required by the Internal Revenue Code regulations, shareholders must be notified within 60 days of a Fund’s fiscal year end regarding capital gain dividends, and the status of qualified dividend income for individuals, the dividends received deduction for corporations and the foreign tax credit.
Qualified Dividend Income – Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund and Wright International Blue Chip Equities Fund designate 100.00%, 100.00% and 0.15%, respectively, of its income dividend distributed as qualifying for the corporate dividends-received deduction (DRD). Each Fund also designates 100.00% for the qualified dividend rate (QDI) as defined in Section 1(h)(11) of the Internal Revenue Code.
Wright Total Return Bond Fund (WTRB)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
FIXED INCOME INVESTMENTS - 96.5% |
ASSET-BACKED SECURITIES - 0.8% |
$ | 195,000 | | PSE&G Transition Funding LLC, Series 2001-1, Class A7 | | 6.750 | % | | | 06/15/16 | | $ | 208,356 | |
Total Asset-Backed Securities (identified cost, $203,096) | | $ | 208,356 | |
COMMERCIAL MORTGAGE-BACKED SECURITIES - 8.9% |
$ | 275,000 | | Citigroup Commercial Mortgage Trust, Series 2004-C2, Class A5 | | 4.733 | % | | | 10/15/41 | | $ | 291,246 | |
| 190,181 | | Credit Suisse First Boston Mortgage Securities Corp., Series 2003-C3, Class A5 | | 3.936 | % | | | 05/15/38 | | | 190,784 | |
| 170,692 | | Credit Suisse First Boston Mortgage Securities Corp., Series 2005-C1, Class A3 | | 4.813 | % | | | 02/15/38 | | | 175,004 | |
| 435,000 | | JPMorgan Chase Commercial Mortgage Securities Corp., Series 2004-C3, Class A5 | | 4.878 | % | | | 01/15/42 | | | 465,009 | |
| 300,000 | | LB-UBS Commercial Mortgage Trust, Series 2006-C6, Class A4 | | 5.372 | % | | | 09/15/39 | | | 345,797 | |
| 315,000 | | Merrill Lynch Mortgage Trust, Series 2005-LC1, Class A4 | | 5.291 | % | (1) | | 01/12/44 | | | 352,299 | |
| 310,000 | | Merrill Lynch/Countrywide Commercial Mortgage Trust, Series 2006-2, Class A4 | | 5.893 | % | (1) | | 06/12/46 | | | 357,917 | |
Total Commercial Mortgage-Backed Securities (identified cost, $2,000,469) | | $ | 2,178,056 | |
RESIDENTIAL MORTGAGE-BACKED SECURITIES - 0.2% |
$ | 41,057 | | Wells Fargo Mortgage Backed Securities Trust, Series 2004-K, Class 1A2 | | 2.615 | % | (1) | | 07/25/34 | | $ | 42,144 | |
Total Residential Mortgage-Backed Securities (identified cost, $34,659) | | $ | 42,144 | |
AUTO MANUFACTURERS - 0.9% |
$ | 200,000 | | Toyota Motor Credit Corp., MTN | | 3.300 | % | | | 01/12/22 | | $ | 216,198 | |
COMMUNICATIONS EQUIPMENT - 0.9% |
$ | 200,000 | | eBay, Inc. | | 3.250 | % | | | 10/15/20 | | $ | 216,078 | |
CONSUMER DURABLES & APPAREL - 0.5% |
$ | 115,000 | | Hasbro, Inc. | | 6.125 | % | | | 05/15/14 | | $ | 123,181 | |
CONSUMER SERVICES - 0.3% |
$ | 60,000 | | Brinker International, Inc. | | 5.750 | % | | | 06/01/14 | | $ | 63,489 | |
DIVERSIFIED FINANCIALS - 12.6% |
$ | 70,000 | | American Express Credit Corp., Series C | | 7.300 | % | | | 08/20/13 | | $ | 73,018 | |
| 55,000 | | Ameriprise Financial, Inc. | | 5.650 | % | | | 11/15/15 | | | 62,299 | |
| 135,000 | | Bank of America Corp., MTN | | 5.000 | % | | | 05/13/21 | | | 154,391 | |
| 140,000 | | Bear Stearns Cos., LLC (The) | | 5.700 | % | | | 11/15/14 | | | 152,202 | |
| 55,000 | | Capital One Financial Corp. | | 7.375 | % | | | 05/23/14 | | | 59,851 | |
| 181,000 | | Citigroup, Inc. | | 6.500 | % | | | 08/19/13 | | | 187,291 | |
| 160,000 | | Cooperatieve Centrale Raiffeisen-Boerenleenbank BA | | 2.125 | % | | | 10/13/15 | | | 165,248 | |
| 160,000 | | Eaton Vance Corp. | | 6.500 | % | | | 10/02/17 | | | 193,245 | |
| 175,000 | | General Electric Capital Corp., MTN, Series A | | 6.750 | % | | | 03/15/32 | | | 227,951 | |
| 100,000 | | Goldman Sachs Group, Inc. (The) | | 0.911 | % | (1) | | 09/29/14 | | | 99,625 | |
| 205,000 | | Goldman Sachs Group, Inc. (The) | | 6.150 | % | | | 04/01/18 | | | 241,103 | |
| 110,000 | | JPMorgan Chase & Co. | | 6.300 | % | | | 04/23/19 | | | 135,896 | |
| 125,000 | | Merrill Lynch & Co., Inc. | | 6.050 | % | | | 05/16/16 | | | 137,713 | |
| 150,000 | | Morgan Stanley | | 5.500 | % | | | 07/28/21 | | | 170,602 | |
| 120,000 | | Nomura Holdings, Inc. | | 5.000 | % | | | 03/04/15 | | | 127,297 | |
| 135,000 | | PNC Funding Corp. | | 4.250 | % | | | 09/21/15 | | | 147,238 | |
| 55,000 | | SunTrust Banks, Inc. | | 6.000 | % | | | 09/11/17 | | | 65,057 | |
| 130,000 | | TD Ameritrade Holding Corp. | | 4.150 | % | | | 12/01/14 | | | 138,612 | |
| 120,000 | | US Bancorp, MTN | | 3.150 | % | | | 03/04/15 | | | 126,524 | |
| 200,000 | | Wells Fargo & Co. | | 3.625 | % | | | 04/15/15 | | | 212,682 | |
| 205,000 | | Westpac Banking Corp. | | 4.200 | % | | | 02/27/15 | | | 220,027 | |
See Notes to Financial Statements. | 45 | |
Wright Total Return Bond Fund (WTRB)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
ENERGY - 1.8% |
$ | 105,000 | | Baker Hughes, Inc. | | 6.875 | % | | | 01/15/29 | | $ | 145,371 | |
| 50,000 | | ONEOK Partners LP | | 6.850 | % | | | 10/15/37 | | | 63,907 | |
| 60,000 | | ONEOK, Inc. | | 5.200 | % | | | 06/15/15 | | | 65,130 | |
| 70,000 | | Peabody Energy Corp. | | 7.375 | % | | | 11/01/16 | | | 80,500 | |
| 55,000 | | Valero Energy Corp. | | 9.375 | % | | | 03/15/19 | | | 75,746 | |
FOOD, BEVERAGE & TOBACCO - 2.0% |
$ | 19,000 | | Altria Group, Inc. | | 9.700 | % | | | 11/10/18 | | $ | 26,630 | |
| 140,000 | | ConAgra Foods, Inc. | | 5.875 | % | | | 04/15/14 | | | 149,003 | |
| 150,000 | | Ingredion, Inc. | | 4.625 | % | | | 11/01/20 | | | 167,764 | |
| 100,000 | | PepsiCo, Inc. | | 7.900 | % | | | 11/01/18 | | | 135,111 | |
HEALTH CARE EQUIPMENT & SERVICES - 3.2% |
$ | 155,000 | | Cigna Corp. | | 2.750 | % | | | 11/15/16 | | $ | 163,201 | |
| 65,000 | | Hospira, Inc. | | 5.900 | % | | | 06/15/14 | | | 69,499 | |
| 75,000 | | Laboratory Corp. of America Holdings | | 3.125 | % | | | 05/15/16 | | | 79,084 | |
| 40,000 | | McKesson Corp. | | 6.500 | % | | | 02/15/14 | | | 42,587 | |
| 100,000 | | Medtronic, Inc. | | 4.500 | % | | | 03/15/14 | | | 104,685 | |
| 130,000 | | UnitedHealth Group, Inc. | | 6.000 | % | | | 02/15/18 | | | 158,413 | |
| 145,000 | | WellPoint, Inc. | | 4.350 | % | | | 08/15/20 | | | 160,306 | |
HOUSEHOLD & PERSONAL PRODUCTS - 0.3% |
$ | 60,000 | | Estee Lauder Cos., Inc. (The) | | 6.000 | % | | | 05/15/37 | | $ | 76,490 | |
INFORMATION SERVICES - 1.0% |
$ | 135,000 | | Equifax, Inc. | | 4.450 | % | | | 12/01/14 | | $ | 142,406 | |
| 100,000 | | Moody's Corp. | | 5.500 | % | | | 09/01/20 | | | 111,688 | |
INSURANCE - 4.4% |
$ | 200,000 | | Loews Corp. | | 5.250 | % | | | 03/15/16 | | $ | 223,070 | |
| 125,000 | | MetLife, Inc. | | 5.000 | % | | | 06/15/15 | | | 137,692 | |
| 205,000 | | PartnerRe Finance B, LLC | | 5.500 | % | | | 06/01/20 | | | 229,129 | |
| 55,000 | | Principal Financial Group, Inc. | | 8.875 | % | | | 05/15/19 | | | 73,896 | |
| 130,000 | | Principal Life Income Funding Trusts, MTN | | 0.492 | % | (1) | | 11/08/13 | | | 130,116 | |
| 90,000 | | Prudential Financial, Inc., MTN | | 4.500 | % | | | 11/15/20 | | | 100,659 | |
| 50,000 | | Prudential Financial, Inc., MTN, Series D | | 7.375 | % | | | 06/15/19 | | | 63,578 | |
| 100,000 | | Travelers Cos., Inc. (The) | | 5.500 | % | | | 12/01/15 | | | 113,261 | |
MATERIALS - 2.1% |
$ | 145,000 | | Airgas, Inc. | | 4.500 | % | | | 09/15/14 | | $ | 153,086 | |
| 120,000 | | Dow Chemical Co. (The) | | 7.375 | % | | | 03/01/23 | | | 151,457 | |
| 70,000 | | Greif, Inc. | | 6.750 | % | | | 02/01/17 | | | 78,400 | |
| 100,000 | | Lubrizol Corp. | | 8.875 | % | | | 02/01/19 | | | 139,709 | |
MEDIA - 3.1% |
$ | 90,000 | | Comcast Cable Communications Holdings, Inc. | | 9.455 | % | | | 11/15/22 | | $ | 136,311 | |
| 150,000 | | DIRECTV Holdings, LLC / DIRECTV Financing Co., Inc. | | 5.000 | % | | | 03/01/21 | | | 168,553 | |
| 95,000 | | McGraw-Hill Cos., Inc. (The) | | 5.900 | % | | | 11/15/17 | | | 110,465 | |
| 50,000 | | Time Warner Cable, Inc. | | 8.250 | % | | | 04/01/19 | | | 66,622 | |
| 115,000 | | Time Warner Cos., Inc. | | 6.950 | % | | | 01/15/28 | | | 150,001 | |
| 120,000 | | Viacom, Inc. | | 4.375 | % | | | 09/15/14 | | | 127,194 | |
MINING - 0.4% |
$ | 40,000 | | Barrick Gold Financeco, LLC | | 6.125 | % | | | 09/15/13 | | $ | 41,495 | |
| 50,000 | | Rio Tinto Finance USA, Ltd. | | 8.950 | % | | | 05/01/14 | | | 55,304 | |
PIPELINES - 1.2% |
$ | 60,000 | | Spectra Energy Capital, LLC | | 5.650 | % | | | 03/01/20 | | $ | 71,448 | |
| 170,000 | | TransCanada PipeLines, Ltd. | | 6.500 | % | | | 08/15/18 | | | 214,353 | |
See Notes to Financial Statements. | 46 | |
Wright Total Return Bond Fund (WTRB)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
REAL ESTATE - 0.8% |
$ | 200,000 | | Simon Property Group LP | | 2.750 | % | | | 02/01/23 | | $ | 200,326 | |
RETAILING - 1.7% |
$ | 55,000 | | AutoZone, Inc. | | 5.750 | % | | | 01/15/15 | | $ | 60,215 | |
| 145,000 | | Kohl's Corp. | | 4.000 | % | | | 11/01/21 | | | 153,630 | |
| 72,000 | | Ltd. Brands, Inc. | | 5.250 | % | | | 11/01/14 | | | 75,960 | |
| 120,000 | | Safeway, Inc. | | 5.000 | % | | | 08/15/19 | | | 129,288 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.8% |
$ | 165,000 | | Applied Materials, Inc. | | 7.125 | % | | | 10/15/17 | | $ | 207,324 | |
SOFTWARE & SERVICES - 3.1% |
$ | 140,000 | | Adobe Systems, Inc. | | 4.750 | % | | | 02/01/20 | | $ | 156,928 | |
| 100,000 | | Ingram Micro, Inc. | | 5.250 | % | | | 09/01/17 | | | 108,712 | |
| 105,000 | | International Business Machines Corp. | | 7.625 | % | | | 10/15/18 | | | 140,420 | |
| 195,000 | | Oracle Corp. | | 5.375 | % | | | 07/15/40 | | | 244,089 | |
| 100,000 | | Symantec Corp. | | 4.200 | % | | | 09/15/20 | | | 105,230 | |
TECHNOLOGY HARDWARE & EQUIPMENT - 1.3% |
$ | 30,000 | | Dell, Inc. | | 5.625 | % | | | 04/15/14 | | $ | 31,854 | |
| 140,000 | | Harris Corp. | | 5.000 | % | | | 10/01/15 | | | 153,616 | |
| 140,000 | | Pitney Bowes, Inc., MTN | | 5.250 | % | | | 01/15/37 | | | 142,946 | |
TELECOMMUNICATIONS - 1.8% |
$ | 105,000 | | BellSouth Corp. | | 6.000 | % | | | 11/15/34 | | $ | 118,122 | |
| 70,000 | | British Telecommunications PLC | | 9.625 | % | | | 12/15/30 | | | 111,499 | |
| 150,000 | | Verizon Global Funding Corp. | | 7.750 | % | | | 12/01/30 | | | 220,227 | |
TRANSPORTATION - 0.6% |
$ | 120,000 | | Burlington Northern Santa Fe, LLC | | 6.200 | % | | | 08/15/36 | | $ | 154,045 | |
UTILITIES - 3.9% |
$ | 110,000 | | Consolidated Edison Co. of New York, Inc. | | 7.125 | % | | | 12/01/18 | | $ | 143,849 | |
| 90,000 | | Dominion Resources, Inc., Series E | | 6.300 | % | | | 03/15/33 | | | 116,297 | |
| 65,000 | | Duke Energy Indiana, Inc. | | 5.000 | % | | | 09/15/13 | | | 67,068 | |
| 80,000 | | Exelon Generation Co., LLC | | 5.200 | % | | | 10/01/19 | | | 90,822 | |
| 115,000 | | NextEra Energy Capital Holdings, Inc., Series D | | 7.300 | % | (1) | | 09/01/67 | | | 127,921 | |
| 50,000 | | Pacific Gas & Electric Co. | | 8.250 | % | | | 10/15/18 | | | 68,159 | |
| 63,000 | | PPL Energy Supply, LLC | | 6.300 | % | | | 07/15/13 | | | 64,884 | |
| 60,000 | | Public Service Electric & Gas Co., MTN | | 5.300 | % | | | 05/01/18 | | | 72,105 | |
| 125,000 | | Sempra Energy | | 6.500 | % | | | 06/01/16 | | | 146,658 | |
| 55,000 | | TransAlta Corp. | | 4.750 | % | | | 01/15/15 | | | 58,309 | |
Total Corporate Bonds (identified cost, $10,740,619) | | $ | 11,940,641 | |
U.S. GOVERNMENT INTERESTS - 37.9% |
AGENCY MORTGAGE-BACKED SECURITIES - 27.5% |
$ | 91,157 | | FHLMC Gold Pool #A32600 | | 5.500 | % | | | 05/01/35 | | $ | 100,685 | |
| 22,882 | | FHLMC Gold Pool #C01646 | | 6.000 | % | | | 09/01/33 | | | 25,448 | |
| 20,722 | | FHLMC Gold Pool #C27663 | | 7.000 | % | | | 06/01/29 | | | 21,483 | |
| 93,415 | | FHLMC Gold Pool #C47318 | | 7.000 | % | | | 09/01/29 | | | 110,432 | |
| 95,081 | | FHLMC Gold Pool #C66878 | | 6.500 | % | | | 05/01/32 | | | 109,758 | |
| 101,027 | | FHLMC Gold Pool #C91046 | | 6.500 | % | | | 05/01/27 | | | 112,658 | |
| 13,936 | | FHLMC Gold Pool #D66753 | | 6.000 | % | | | 10/01/23 | | | 15,242 | |
| 3,242 | | FHLMC Gold Pool #E00903 | | 7.000 | % | | | 10/01/15 | | | 3,495 | |
| 124,760 | | FHLMC Gold Pool #G01035 | | 6.000 | % | | | 05/01/29 | | | 138,753 | |
| 49,304 | | FHLMC Gold Pool #G02478 | | 5.500 | % | | | 12/01/36 | | | 53,363 | |
| 20,853 | | FHLMC Gold Pool #H19018 | | 6.500 | % | | | 08/01/37 | | | 23,133 | |
| 50,295 | | FHLMC Gold Pool #N30514 | | 5.500 | % | | | 11/01/28 | | | 53,979 | |
| 208,998 | | FHLMC Gold Pool #P00024 | | 7.000 | % | | | 09/01/32 | | | 239,537 | |
See Notes to Financial Statements. | 47 | |
Wright Total Return Bond Fund (WTRB)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED) | | | | | | | | | | |
$ | 8,272 | | FHLMC Gold Pool #P50031 | | 7.000 | % | | | 08/01/18 | | $ | 8,654 | |
| 42,183 | | FHLMC Gold Pool #P50064 | | 7.000 | % | | | 09/01/30 | | | 47,878 | |
| 57,635 | | FHLMC Pool #1B1291 | | 2.754 | % | (1) | | 11/01/33 | | | 61,366 | |
| 147,262 | | FHLMC Pool #1G0233 | | 2.829 | % | (1) | | 05/01/35 | | | 157,236 | |
| 19,000 | | FHLMC Pool #781071 | | 5.240 | % | (1) | | 11/01/33 | | | 20,367 | |
| 15,419 | | FHLMC Pool #781804 | | 5.078 | % | (1) | | 07/01/34 | | | 16,644 | |
| 7,826 | | FHLMC Pool #781884 | | 5.164 | % | (1) | | 08/01/34 | | | 8,451 | |
| 23,020 | | FHLMC Pool #782862 | | 5.032 | % | (1) | | 11/01/34 | | | 24,815 | |
| 152,444 | | FHLMC, Series 1983, Class Z | | 6.500 | % | | | 12/15/23 | | | 172,566 | |
| 110,236 | | FHLMC, Series 2044, Class PE | | 6.500 | % | | | 04/15/28 | | | 126,487 | |
| 550,000 | | FHLMC, Series 2627, Class MW | | 5.000 | % | | | 06/15/23 | | | 616,944 | |
| 80,354 | | FNMA Pool #253057 | | 8.000 | % | | | 12/01/29 | | | 97,426 | |
| 1,334 | | FNMA Pool #254845 | | 4.000 | % | | | 07/01/13 | | | 1,405 | |
| 1,686 | | FNMA Pool #254863 | | 4.000 | % | | | 08/01/13 | | | 1,802 | |
| 4,313 | | FNMA Pool #479477 | | 6.000 | % | | | 01/01/29 | | | 4,820 | |
| 10,048 | | FNMA Pool #489357 | | 6.500 | % | | | 03/01/29 | | | 11,633 | |
| 11,933 | | FNMA Pool #535332 | | 8.500 | % | | | 04/01/30 | | | 14,926 | |
| 23,080 | | FNMA Pool #545782 | | 7.000 | % | | | 07/01/32 | | | 26,927 | |
| 12,539 | | FNMA Pool #597396 | | 6.500 | % | | | 09/01/31 | | | 14,818 | |
| 55,014 | | FNMA Pool #621284 | | 6.500 | % | | | 12/01/31 | | | 62,952 | |
| 20,554 | | FNMA Pool #725866 | | 4.500 | % | | | 09/01/34 | | | 22,281 | |
| 73,632 | | FNMA Pool #738630 | | 5.500 | % | | | 11/01/33 | | | 80,935 | |
| 206,194 | | FNMA Pool #745001 | | 6.500 | % | | | 09/01/35 | | | 244,472 | |
| 100,347 | | FNMA Pool #745467 | | 5.239 | % | (1) | | 04/01/36 | | | 107,808 | |
| 168,751 | | FNMA Pool #745755 | | 5.000 | % | | | 12/01/35 | | | 183,459 | |
| 63,625 | | FNMA Pool #747529 | | 4.500 | % | | | 10/01/33 | | | 69,089 | |
| 419,483 | | FNMA Pool #781893 | | 4.500 | % | | | 11/01/31 | | | 465,863 | |
| 27,649 | | FNMA Pool #809888 | | 4.500 | % | | | 03/01/35 | | | 29,919 | |
| 440,425 | | FNMA Pool #888366 | | 7.000 | % | | | 04/01/37 | | | 507,821 | |
| 398,609 | | FNMA Pool #888367 | | 7.000 | % | | | 03/01/37 | | | 459,620 | |
| 216,464 | | FNMA Pool #888417 | | 6.500 | % | | | 01/01/36 | | | 254,292 | |
| 27,262 | | FNMA Pool #906455 | | 5.963 | % | (1) | | 01/01/37 | | | 29,591 | |
| 23,586 | | GNMA I Pool #374892 | | 7.000 | % | | | 02/15/24 | | | 27,689 | |
| 22,262 | | GNMA I Pool #376400 | | 6.500 | % | | | 02/15/24 | | | 25,308 | |
| 22,256 | | GNMA I Pool #379982 | | 7.000 | % | | | 02/15/24 | | | 26,127 | |
| 132,130 | | GNMA I Pool #393347 | | 7.500 | % | | | 02/15/27 | | | 158,409 | |
| 50,291 | | GNMA I Pool #410081 | | 8.000 | % | | | 08/15/25 | | | 60,687 | |
| 31,439 | | GNMA I Pool #427199 | | 7.000 | % | | | 12/15/27 | | | 34,230 | |
| 34,444 | | GNMA I Pool #448490 | | 7.500 | % | | | 03/15/27 | | | 37,819 | |
| 42,715 | | GNMA I Pool #458762 | | 6.500 | % | | | 01/15/28 | | | 50,215 | |
| 32,821 | | GNMA I Pool #460726 | | 6.500 | % | | | 12/15/27 | | | 37,983 | |
| 14,167 | | GNMA I Pool #488924 | | 6.500 | % | | | 11/15/28 | | | 16,654 | |
| 11,797 | | GNMA I Pool #510706 | | 8.000 | % | | | 11/15/29 | | | 14,546 | |
| 24,197 | | GNMA I Pool #581536 | | 5.500 | % | | | 06/15/33 | | | 26,739 | |
| 71,855 | | GNMA II Pool #002630 | | 6.500 | % | | | 08/20/28 | | | 82,320 | |
| 3,917 | | GNMA II Pool #002909 | | 8.000 | % | | | 04/20/30 | | | 4,987 | |
| 9,459 | | GNMA II Pool #002972 | | 7.500 | % | | | 09/20/30 | | | 11,572 | |
| 3,436 | | GNMA II Pool #002973 | | 8.000 | % | | | 09/20/30 | | | 4,375 | |
| 32,871 | | GNMA II Pool #003095 | | 6.500 | % | | | 06/20/31 | | | 38,982 | |
| 221,726 | | GNMA II Pool #004841 | | 8.000 | % | | | 08/20/31 | | | 269,780 | |
| 783,653 | | GNMA, Series 2010-44, Class NK | | 4.000 | % | | | 10/20/37 | | | 831,664 | |
See Notes to Financial Statements. | 48 | |
Wright Total Return Bond Fund (WTRB)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
U.S. TREASURIES - 10.4% |
$ | 1,030,000 | | U.S. Treasury Bond | | 3.125 | % | | | 02/15/42 | | $ | 1,077,155 | |
| 650,000 | | U.S. Treasury Note | | 3.875 | % | | | 05/15/18 | | | 755,473 | |
| 305,000 | | U.S. Treasury Note | | 2.125 | % | | | 08/15/21 | | | 320,679 | |
| 470,000 | | U.S. Treasury Strip Coupon | | 1.690 | % | (2) | | 05/15/22 | | | 399,002 | |
Total U.S. Government Interests (identified cost, $8,856,760) | | $ | 9,273,628 | |
TOTAL FIXED INCOME INVESTMENTS (identified cost, $21,835,603) — 96.5% | | $ | 23,642,825 | |
SHORT-TERM INVESTMENTS - 4.0% |
$ | 976,521 | | Fidelity Government Money Market Fund, 0.01% | | | | | | | | $ | 976,521 | |
TOTAL SHORT-TERM INVESTMENTS (identified cost, $976,521) — 4.0% | | $ | 976,521 | |
TOTAL INVESTMENTS (identified cost, $22,812,124) — 100.5% | | $ | 24,619,346 | |
LIABILITIES, IN EXCESS OF OTHER ASSETS — (0.5)% | | | (133,473 | ) |
NET ASSETS — 100.0% | | $ | 24,485,873 | |
FHLMC — Federal Home Loan Mortgage Corporation
FNMA — Federal National Mortgage Association
GNMA — Government National Mortgage Association
LLC — Limited Liability Company
LP — Limited Partnership
MTN — Medium Term Note
PLC — Public Limited Company
(1) | Variable rate security. Rate presented is as of December 31, 2012. |
(2) | Rate presented is yield to maturity. |
See Notes to Financial Statements. | 49 | |
Wright Total Return Bond Fund (WTRB)
| STATEMENT OF ASSETS AND LIABILITIES | | |
| As of December 31, 2012 | | For the Year Ended December 31, 2012 |
| | | | | | | | | | | | | | | |
| ASSETS: | | | TRUE | | | INVESTMENT INCOME (Note 1C) | | | TRUE | |
| | Investments, at value | | | | | | 2.00E+07 | Interest income | $ | 1,129,557 | |
| | (identified cost $22,812,124) (Note 1A) | | $ | 24,619,346 | ###### | | | Dividend income | | 35 | |
| | Receivable for fund shares sold | | | 9,070 | | | | Total investment income | $ | 1,129,592 | |
| | Receivable for investment securities sold | | | 1,325,746 | | | | | | | | | |
| | Dividends and interest receivable | | | 193,308 | | | Expenses – | | | | |
| | Prepaid expenses and other assets | | | 16,204 | | | | Investment adviser fee (Note 3) | $ | 145,420 | |
| | Total assets | | $ | 26,163,674 | | | | Administrator fee (Note 3) | | 22,621 | |
| | | | | | | | | | Trustee expense (Note 3) | | 14,979 | |
| LIABILITIES: | | | | | | | Custodian fee | | | 3,228 | |
| | Payable for fund shares reacquired | | $ | 301,258 | | | | Accountant fee | | | 38,484 | |
| | Payable for investment securities purchased | | | 1,321,413 | | | | Pricing | | | 35,435 | |
| | Distributions payable | | | 35,942 | | | | Distribution expenses (Note 4) | | 80,789 | |
| | Accrued expenses and other liabilities | | | 19,188 | | | | Transfer agent fee | | | 22,763 | |
| | Total liabilities | | $ | 1,677,801 | | | | Printing | | | 122 | |
| NET ASSETS | | $ | 24,485,873 | | | | Shareholder communications | | | 5,598 | |
| | | | | | | | | | Audit services | | | 20,000 | |
| NET ASSETS CONSIST OF: | | | | | | | Legal services | | | 12,912 | |
| | Paid-in capital | $ | 24,351,638 | | | | Compliance services | | | 6,005 | |
| | Accumulated net realized loss on investments | | (1,672,987 | ) | | | Registration costs | | | 21,913 | |
| | Unrealized appreciation on investments | | 1,807,222 | | | | Interest expense (Note 8) | | | 457 | |
| | Net assets applicable to outstanding shares | $ | 24,485,873 | | | | Miscellaneous | | | 25,469 | |
| | | | | | | | | | Total expenses | | $ | 456,195 | |
| SHARES OF BENEFICIAL INTEREST OUTSTANDING AT $0.000 PAR VALUE (UNLIMITED SHARES AUTHORIZED) | | 1,840,506 | | | | | | | | | |
| | | | | | | | | Deduct – | | | | |
| NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST | | $ | 13.3 | | | | Waiver and/or reimbursement by the principal underwriter and/or investment adviser (Note 4) | $ | (148,741 | ) |
| | | | | | | | | | Net expenses | $ | 307,454 | |
| | | | | | | | | | Net investment income | $ | 822,138 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | |
| | | | | | | | | | Net realized gain on investment transactions | $ | 658,964 | |
| | | | | | | | | | Net change in unrealized appreciation (depreciation) on investments | | (128,057 | ) |
| | | | | | | | | | Net realized and unrealized gain on investments | $ | 530,907 | |
| | | | | | | | | | Net increase in net assets from operations | $ | 1,353,045 | |
| | | | | | | | | | | | | | | |
See Notes to Financial Statements. | 50 | |
Wright Total Return Bond Fund (WTRB)
| | | Years Ended | |
STATEMENTS OF CHANGES IN NET ASSETS | | December 31, 2012 | | December 31, 2011 | |
| | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | |
From operations – | | | | | | | | | |
| Net investment income | | $ | 822,138 | | | $ | 989,900 | | |
0 | Net realized gain on investment transactions | | | 658,964 | | | | 211,660 | | |
| Net change in unrealized appreciation (depreciation) on investments | | | (128,057 | ) | | | 788,844 | | |
| Net increase in net assets from operations | | $ | 1,353,045 | | | $ | 1,990,404 | | |
Distributions to shareholders (Note 2) | | | | | | | | | |
| From net investment income | | $ | (1,124,326 | ) | | $ | (1,214,917 | ) | |
| Total distributions | | $ | (1,124,326 | ) | | $ | (1,214,917 | ) | |
Net decrease in net assets resulting from fund share transactions (Note 6) | | $ | (6,366,170 | ) | | $ | (1,682,358 | ) | |
Net decrease in net assets | | $ | (6,137,451 | ) | | $ | (906,871 | ) | |
## | | | | | | | | | | |
NET ASSETS: | | | | | | | | | |
| At beginning of year | | | 30,623,324 | | | | 31,530,195 | | |
| At end of year | | $ | 24,485,873 | | | $ | 30,623,324 | | |
| | | | | | | | | | |
See Notes to Financial Statements | 51 | |
Wright Total Return Bond Fund (WTRB)
These financial highlights reflect selected data for a share outstanding throughout each year. | | | | |
| | Years Ended December 31, |
FINANCIAL HIGHLIGHTS | | 2012 | 2011 | 2010 | 2009 | 2008 |
| | | | | | | | | | | | | | | | | |
Net asset value, beginning of year | | $ | 13.220 | | $ | 12.890 | | $ | 12.620 | | $ | 11.990 | | $ | 12.390 | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (1) | | | 0.339 | | | 0.420 | | | 0.437 | | | 0.558 | | | 0.573 | |
Net realized and unrealized gain (loss) | | | 0.206 | | | 0.425 | | | 0.336 | | | 0.676 | | | (0.373 | ) |
| Total income from investment operations | | 0.545 | | | 0.845 | | | 0.773 | | | 1.234 | | | 0.200 | |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.465 | ) | | (0.515 | ) | | (0.503 | ) | | (0.604 | ) | | (0.600 | ) |
Net asset value, end of year | | $ | 13.300 | | $ | 13.220 | | $ | 12.890 | | $ | 12.620 | | $ | 11.990 | |
Total Return(2) | | | 4.16 | % | | 6.68 | % | | 6.18 | % | | 10.53 | % | | 1.69 | % |
Ratios/Supplemental Data(3): | | | | | | | | | | | | | | | | |
Net assets, end of year (000 omitted) | | $24,486 | | $30,623 | | $31,530 | | $24,556 | | $23,262 | |
Ratios (As a percentage of average daily net assets): |
Net expenses | | | 0.95 | % | 0.95 | % | 0.83 | % | 0.70 | % | 0.71 | % |
Net expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 0.70 | % | 0.70 | % |
Net investment income | | | 2.54 | % | 3.22 | % | 3.38 | % | 4.53 | % | 4.73 | % |
Portfolio turnover rate | | | 68 | % | 55 | % | 119 | % | 61 | % | 125 | % |
| | | | | | | | | | | | | | | | |
| | | | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | | | | | | | |
(1) | Computed using average shares outstanding. |
(2) | Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. |
(3) | For each of the years presented, the operating expenses of the Fund were reduced by a waiver of fees and/or allocation of expenses to the principal underwriter and/or investment adviser. Had such action not been undertaken, expenses and net investment income ratios would have been as follows: |
| ............................................................ | | 2012 | 2011 | 2010 | 2009 | 2008 |
| |
Ratios (As a percentage of average daily net assets): |
Expenses | | | 1.41 | % | | 1.37 | % | | 1.43 | % | | 1.55 | % | | 1.52 | % |
Expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 1.55 | % | | 1.51 | % |
Net investment income | | | 2.08 | % | | 2.80 | % | | 2.78 | % | | 3.68 | % | | 3.93 | % |
| ............................................................ | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
See Notes to Financial Statements. | 52 | |
Wright Current Income Fund (WCIF)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
FIXED INCOME INVESTMENTS - 97.4% |
AGENCY MORTGAGE-BACKED SECURITIES - 97.4% |
$ | 420,832 | | FHLMC Gold Pool #A85905 | | 5.000 | % | | | 05/01/39 | | $ | 458,845 | |
| 206,505 | | FHLMC Gold Pool #A90393 | | 5.000 | % | | | 12/01/39 | | | 227,923 | |
| 17,160 | | FHLMC Gold Pool #C00548 | | 7.000 | % | | | 08/01/27 | | | 20,453 | |
| 50,148 | | FHLMC Gold Pool #C00778 | | 7.000 | % | | | 06/01/29 | | | 59,747 | |
| 108,532 | | FHLMC Gold Pool #C01375 | | 6.500 | % | | | 07/01/32 | | | 125,084 | |
| 191,311 | | FHLMC Gold Pool #C91034 | | 6.000 | % | | | 06/01/27 | | | 211,243 | |
| 547,959 | | FHLMC Gold Pool #C91347 | | 3.500 | % | | | 12/01/30 | | | 585,889 | |
| 554,617 | | FHLMC Gold Pool #C91408 | | 3.500 | % | | | 11/01/31 | | | 593,008 | |
| 27,405 | | FHLMC Gold Pool #D81642 | | 7.500 | % | | | 08/01/27 | | | 29,784 | |
| 56,638 | | FHLMC Gold Pool #D82572 | | 7.000 | % | | | 09/01/27 | | | 67,508 | |
| 11,612 | | FHLMC Gold Pool #E00678 | | 6.500 | % | | | 06/01/14 | | | 12,087 | |
| 11,696 | | FHLMC Gold Pool #E00721 | | 6.500 | % | | | 07/01/14 | | | 12,199 | |
| 24,869 | | FHLMC Gold Pool #E81704 | | 8.500 | % | | | 05/01/15 | | | 26,511 | |
| 261,186 | | FHLMC Gold Pool #G00892 | | 6.500 | % | | | 12/01/27 | | | 304,741 | |
| 472,063 | | FHLMC Gold Pool #G02791 | | 5.500 | % | | | 04/01/37 | | | 510,033 | |
| 177,159 | | FHLMC Gold Pool #G02809 | | 6.500 | % | | | 05/01/36 | | | 203,054 | |
| 136,245 | | FHLMC Gold Pool #G04710 | | 6.000 | % | | | 09/01/38 | | | 149,805 | |
| 139,326 | | FHLMC Gold Pool #G08012 | | 6.500 | % | | | 09/01/34 | | | 159,186 | |
| 310,382 | | FHLMC Gold Pool #G08022 | | 6.000 | % | | | 11/01/34 | | | 344,409 | |
| 241,785 | | FHLMC Gold Pool #G08047 | | 6.000 | % | | | 03/01/35 | | | 268,538 | |
| 997,408 | | FHLMC Gold Pool #G08081 | | 6.000 | % | | | 09/01/35 | | | 1,115,484 | |
| 830,581 | | FHLMC Gold Pool #G08378 | | 6.000 | % | | | 10/01/39 | | | 936,546 | |
| 196,483 | | FHLMC Gold Pool #G80111 | | 7.300 | % | | | 12/17/22 | | | 226,115 | |
| 247,087 | | FHLMC Gold Pool #H09054 | | 4.500 | % | | | 03/01/37 | | | 262,445 | |
| 78,889 | | FHLMC Gold Pool #H09098 | | 6.500 | % | | | 10/01/37 | | | 87,428 | |
| 208,998 | | FHLMC Gold Pool #P00024 | | 7.000 | % | | | 09/01/32 | | | 239,537 | |
| 186,186 | | FHLMC Gold Pool #P50019 | | 7.000 | % | | | 07/01/24 | | | 217,838 | |
| 615,983 | | FHLMC Gold Pool #T30126 | | 5.550 | % | | | 07/01/37 | | | 703,330 | |
| 515,787 | | FHLMC Gold Pool #T30133 | | 5.550 | % | | | 07/01/37 | | | 589,000 | |
| 583,859 | | FHLMC Gold Pool #U30400 | | 5.550 | % | | | 06/01/37 | | | 666,597 | |
| 549,605 | | FHLMC, Series 2097, Class PZ | | 6.000 | % | | | 11/15/28 | | | 623,090 | |
| 77,978 | | FHLMC, Series 2176, Class OJ | | 7.000 | % | | | 08/15/29 | | | 90,104 | |
| 54,526 | | FHLMC, Series 2201, Class C | | 8.000 | % | | | 11/15/29 | | | 64,983 | |
| 265,214 | | FHLMC, Series 2218, Class ZB | | 6.000 | % | | | 03/15/30 | | | 298,366 | |
| 118,074 | | FHLMC, Series 2259, Class ZM | | 7.000 | % | | | 10/15/30 | | | 138,791 | |
| 77,542 | | FHLMC, Series 2576, Class HC | | 5.500 | % | | | 03/15/33 | | | 87,673 | |
| 472,671 | | FHLMC, Series 3004, Class HK | | 5.500 | % | | | 07/15/35 | | | 481,322 | |
| 755,667 | | FHLMC, Series 3033, Class WY | | 5.500 | % | | | 09/15/35 | | | 814,628 | |
| 200,000 | | FHLMC, Series 3072, Class DL | | 6.000 | % | | | 02/15/35 | | | 235,149 | |
| 73,857 | | FHLMC, Series 3217, Class PD | | 6.000 | % | | | 11/15/34 | | | 75,752 | |
| 125,000 | | FHLMC, Series 3255, Class QE | | 5.500 | % | | | 12/15/36 | | | 141,261 | |
| 565,000 | | FHLMC, Series 3605, Class NC | | 5.500 | % | | | 06/15/37 | | | 682,429 | |
| 150,000 | | FHLMC, Series 3641, Class TB | | 4.500 | % | | | 03/15/40 | | | 163,264 | |
| 1,000,000 | | FHLMC, Series 3662, Class PJ | | 5.000 | % | | | 04/15/40 | | | 1,132,722 | |
| 160,502 | | FHLMC-GNMA, Series 15, Class L | | 7.000 | % | | | 07/25/23 | | | 183,664 | |
| 58,292 | | FHLMC-GNMA, Series 23, Class KZ | | 6.500 | % | | | 11/25/23 | | | 67,345 | |
| 100,297 | | FHLMC-GNMA, Series 4, Class D | | 8.000 | % | | | 12/25/22 | | | 115,718 | |
| 452,240 | | FNMA Pool #252034 | | 7.000 | % | | | 09/01/28 | | | 539,897 | |
| 927,642 | | FNMA Pool #256182 | | 6.000 | % | | | 03/01/36 | | | 1,007,186 | |
| 165,828 | | FNMA Pool #256972 | | 6.000 | % | | | 11/01/37 | | | 179,529 | |
| 654,361 | | FNMA Pool #257138 | | 5.000 | % | | | 03/01/38 | | | 701,474 | |
See Notes to Financial Statements. | 53 | |
Wright Current Income Fund (WCIF)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
| | | | | | | | | | | | |
AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED) | | | | | | | | | | |
$ | 25,669 | | FNMA Pool #535131 | | 6.000 | % | | | 03/01/29 | | $ | 28,684 | |
| 129,983 | | FNMA Pool #594207 | | 6.500 | % | | | 02/01/31 | | | 150,913 | |
| 48,006 | | FNMA Pool #673315 | | 5.500 | % | | | 11/01/32 | | | 52,767 | |
| 1,092,667 | | FNMA Pool #689108 | | 5.500 | % | | | 02/01/33 | | | 1,212,747 | |
| 402,357 | | FNMA Pool #721255 | | 5.500 | % | | | 07/01/33 | | | 442,265 | |
| 57,736 | | FNMA Pool #733750 | | 6.310 | % | | | 10/01/32 | | | 65,043 | |
| 705,378 | | FNMA Pool #735415 | | 6.500 | % | | | 12/01/32 | | | 817,964 | |
| 248,941 | | FNMA Pool #735861 | | 6.500 | % | | | 09/01/33 | | | 293,716 | |
| 413,174 | | FNMA Pool #745001 | | 6.500 | % | | | 09/01/35 | | | 489,876 | |
| 718,934 | | FNMA Pool #745318 | | 5.000 | % | | | 12/01/34 | | | 789,993 | |
| 58,177 | | FNMA Pool #745630 | | 5.500 | % | | | 01/01/29 | | | 63,801 | |
| 116,337 | | FNMA Pool #801357 | | 5.500 | % | | | 08/01/34 | | | 127,876 | |
| 554,795 | | FNMA Pool #809974 | | 4.500 | % | | | 03/01/35 | | | 600,359 | |
| 139,639 | | FNMA Pool #813839 | | 6.000 | % | | | 11/01/34 | | | 156,042 | |
| 759,820 | | FNMA Pool #851655 | | 6.000 | % | | | 12/01/35 | | | 854,366 | |
| 114,409 | | FNMA Pool #871394 | | 7.000 | % | | | 04/01/21 | | | 124,991 | |
| 374,828 | | FNMA Pool #879922 | | 5.000 | % | | | 11/01/35 | | | 404,391 | |
| 258,796 | | FNMA Pool #888211 | | 7.000 | % | | | 08/01/36 | | | 309,215 | |
| 89,815 | | FNMA Pool #888367 | | 7.000 | % | | | 03/01/37 | | | 103,562 | |
| 187,330 | | FNMA Pool #888534 | | 5.000 | % | | | 08/01/37 | | | 200,817 | |
| 501,904 | | FNMA Pool #908160 | | 5.500 | % | | | 12/01/36 | | | 538,903 | |
| 440,765 | | FNMA Pool #930504 | | 5.000 | % | | | 02/01/39 | | | 480,894 | |
| 144,032 | | FNMA Pool #930664 | | 6.500 | % | | | 03/01/39 | | | 163,584 | |
| 86,181 | | FNMA Pool #954957 | | 6.000 | % | | | 10/01/37 | | | 93,301 | |
| 188,333 | | FNMA Pool #995346 | | 6.500 | % | | | 09/01/36 | | | 212,253 | |
| 371,418 | | FNMA Pool #995656 | | 7.000 | % | | | 06/01/33 | | | 444,305 | |
| 328,221 | | FNMA Pool #AA9347 | | 5.000 | % | | | 08/01/39 | | | 364,417 | |
| 606,854 | | FNMA Pool #AB1231 | | 5.000 | % | | | 07/01/40 | | | 668,051 | |
| 115,165 | | FNMA Pool #AB2265 | | 4.000 | % | | | 02/01/41 | | | 128,329 | |
| 1,021,874 | | FNMA Pool #AB3223 | | 4.000 | % | | | 07/01/41 | | | 1,121,816 | |
| 206,206 | | FNMA Pool #AD0756 | | 6.500 | % | | | 11/01/28 | | | 232,439 | |
| 441,658 | | FNMA Pool #AD6420 | | 5.000 | % | | | 06/01/40 | | | 487,051 | |
| 210,439 | | FNMA Pool #AE0995 | | 4.000 | % | | | 02/01/41 | | | 234,494 | |
| 281,323 | | FNMA Pool #AH8932 | | 4.500 | % | | | 04/01/41 | | | 308,297 | |
| 507,064 | | FNMA Pool #AL0657 | | 5.000 | % | | | 08/01/41 | | | 553,633 | |
| 428,480 | | FNMA Pool #AL0886 | | 6.500 | % | | | 10/01/38 | | | 497,155 | |
| 1,439,031 | | FNMA Pool #MA0641 | | 4.000 | % | | | 02/01/31 | | | 1,549,561 | |
| 860,381 | | FNMA Pool #MA0919 | | 3.500 | % | | | 12/01/31 | | | 920,173 | |
| 189,000 | | FNMA Whole Loan, Series 2003-W17, Class 1A7 | | 5.750 | % | | | 08/25/33 | | | 221,419 | |
| 137,352 | | FNMA Whole Loan, Series 2003-W18, Class 1A6 | | 5.370 | % | | | 08/25/43 | | | 141,297 | |
| 262,686 | | FNMA Whole Loan, Series 2004-W1, Class 2A2 | | 7.000 | % | | | 12/25/33 | | | 315,539 | |
| 394,079 | | FNMA Whole Loan, Series 2004-W11, Class 1A1 | | 6.000 | % | | | 05/25/44 | | | 484,694 | |
| 302,273 | | FNMA, Series 1993-23, Class PZ | | 7.500 | % | | | 03/25/23 | | | 349,000 | |
| 299,863 | | FNMA, Series 2001-52, Class XZ | | 6.500 | % | | | 10/25/31 | | | 350,391 | |
| 153,950 | | FNMA, Series 2001-52, Class YZ | | 6.500 | % | | | 10/25/31 | | | 175,913 | |
| 125,000 | | FNMA, Series 2002-15, Class QH | | 6.000 | % | | | 04/25/32 | | | 142,983 | |
| 693,132 | | FNMA, Series 2002-77, Class Z | | 5.500 | % | | | 12/25/32 | | | 773,820 | |
| 692,018 | | FNMA, Series 2003-32, Class BZ | | 6.000 | % | | | 11/25/32 | | | 798,233 | |
| 231,824 | | FNMA, Series 2004-17, Class H | | 5.500 | % | | | 04/25/34 | | | 262,675 | |
| 285,000 | | FNMA, Series 2004-25, Class LC | | 5.500 | % | | | 04/25/34 | | | 315,466 | |
| 256,000 | | FNMA, Series 2004-25, Class UC | | 5.500 | % | | | 04/25/34 | | | 282,190 | |
| 339,858 | | FNMA, Series 2004-90, Class D | | 4.000 | % | | | 11/25/34 | | | 373,431 | |
| 204,627 | | FNMA, Series 2005-106, Class UK | | 5.500 | % | | | 12/25/35 | | | 222,805 | |
| 300,000 | | FNMA, Series 2005-58, Class BC | | 5.500 | % | | | 07/25/25 | | | 339,590 | |
| 534,000 | | FNMA, Series 2007-76, Class PE | | 6.000 | % | | | 08/25/37 | | | 613,934 | |
See Notes to Financial Statements. | 54 | |
Wright Current Income Fund (WCIF)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
| | | | | | | | | | | | |
AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED) | | | | | | | | | | |
$ | 800,000 | | FNMA, Series 2007-81, Class GE | | 6.000 | % | | | 08/25/37 | | $ | 963,085 | |
| 127,853 | | FNMA, Series 2008-46, Class JN | | 5.500 | % | | | 06/25/38 | | | 130,118 | |
| 850,000 | | FNMA, Series 2008-60, Class JC | | 5.000 | % | | | 07/25/38 | | | 979,607 | |
| 88,282 | | FNMA, Series 2008-86, Class GD | | 6.000 | % | | | 03/25/36 | | | 98,131 | |
| 150,000 | | FNMA, Series 2009-50, Class AX | | 5.000 | % | | | 07/25/39 | | | 179,719 | |
| 390,000 | | FNMA, Series 2009-96, Class DB | | 4.000 | % | | | 11/25/29 | | | 424,216 | |
| 312,805 | | FNMA, Series G92-43, Class Z | | 7.500 | % | | | 07/25/22 | | | 361,353 | |
| 204,524 | | FNMA, Series G93-5, Class Z | | 6.500 | % | | | 02/25/23 | | | 236,461 | |
| 694 | | GNMA I Pool #177784 | | 8.000 | % | | | 10/15/16 | | | 698 | |
| 6,251 | | GNMA I Pool #192357 | | 8.000 | % | | | 04/15/17 | | | 6,283 | |
| 1,390 | | GNMA I Pool #194287 | | 9.500 | % | | | 03/15/17 | | | 1,399 | |
| 543 | | GNMA I Pool #196063 | | 8.500 | % | | | 03/15/17 | | | 595 | |
| 726 | | GNMA I Pool #212601 | | 8.500 | % | | | 06/15/17 | | | 730 | |
| 992 | | GNMA I Pool #220917 | | 8.500 | % | | | 04/15/17 | | | 1,039 | |
| 1,262 | | GNMA I Pool #223348 | | 10.000 | % | | | 08/15/18 | | | 1,270 | |
| 1,756 | | GNMA I Pool #230223 | | 9.500 | % | | | 04/15/18 | | | 1,767 | |
| 2,536 | | GNMA I Pool #260999 | | 9.500 | % | | | 09/15/18 | | | 2,668 | |
| 3,805 | | GNMA I Pool #263439 | | 10.000 | % | | | 02/15/19 | | | 3,831 | |
| 1,059 | | GNMA I Pool #265267 | | 9.500 | % | | | 08/15/20 | | | 1,066 | |
| 549 | | GNMA I Pool #266983 | | 10.000 | % | | | 02/15/19 | | | 552 | |
| 580 | | GNMA I Pool #286556 | | 9.000 | % | | | 03/15/20 | | | 584 | |
| 643 | | GNMA I Pool #301366 | | 8.500 | % | | | 06/15/21 | | | 667 | |
| 3,483 | | GNMA I Pool #302933 | | 8.500 | % | | | 06/15/21 | | | 4,137 | |
| 1,475 | | GNMA I Pool #314222 | | 8.500 | % | | | 04/15/22 | | | 1,488 | |
| 1,382 | | GNMA I Pool #315187 | | 8.000 | % | | | 06/15/22 | | | 1,389 | |
| 18,459 | | GNMA I Pool #319441 | | 8.500 | % | | | 04/15/22 | | | 18,792 | |
| 4,689 | | GNMA I Pool #325165 | | 8.000 | % | | | 06/15/22 | | | 5,545 | |
| 5,432 | | GNMA I Pool #335950 | | 8.000 | % | | | 10/15/22 | | | 5,460 | |
| 85,143 | | GNMA I Pool #346987 | | 7.000 | % | | | 12/15/23 | | | 99,314 | |
| 32,210 | | GNMA I Pool #352001 | | 6.500 | % | | | 12/15/23 | | | 36,567 | |
| 10,543 | | GNMA I Pool #352110 | | 7.000 | % | | | 08/15/23 | | | 12,298 | |
| 40,467 | | GNMA I Pool #368238 | | 7.000 | % | | | 12/15/23 | | | 47,203 | |
| 22,181 | | GNMA I Pool #372379 | | 8.000 | % | | | 10/15/26 | | | 23,454 | |
| 37,454 | | GNMA I Pool #399726 | | 7.490 | % | | | 05/15/25 | | | 44,920 | |
| 89,871 | | GNMA I Pool #399788 | | 7.490 | % | | | 09/15/25 | | | 107,787 | |
| 25,653 | | GNMA I Pool #399958 | | 7.490 | % | | | 02/15/27 | | | 31,093 | |
| 24,200 | | GNMA I Pool #399964 | | 7.490 | % | | | 04/15/26 | | | 29,187 | |
| 38,752 | | GNMA I Pool #410215 | | 7.500 | % | | | 12/15/25 | | | 46,235 | |
| 3,313 | | GNMA I Pool #414736 | | 7.500 | % | | | 11/15/25 | | | 3,976 | |
| 12,991 | | GNMA I Pool #420707 | | 7.000 | % | | | 02/15/26 | | | 15,415 | |
| 9,924 | | GNMA I Pool #421829 | | 7.500 | % | | | 04/15/26 | | | 11,853 | |
| 3,317 | | GNMA I Pool #431036 | | 8.000 | % | | | 07/15/26 | | | 3,490 | |
| 12,941 | | GNMA I Pool #431612 | | 8.000 | % | | | 11/15/26 | | | 13,257 | |
| 4,174 | | GNMA I Pool #442190 | | 8.000 | % | | | 12/15/26 | | | 4,837 | |
| 38,620 | | GNMA I Pool #448970 | | 8.000 | % | | | 08/15/27 | | | 47,250 | |
| 7,346 | | GNMA I Pool #449176 | | 6.500 | % | | | 07/15/28 | | | 8,636 | |
| 19,957 | | GNMA I Pool #462623 | | 6.500 | % | | | 03/15/28 | | | 23,161 | |
| 54,230 | | GNMA I Pool #471369 | | 5.500 | % | | | 05/15/33 | | | 59,960 | |
| 145,365 | | GNMA I Pool #487108 | | 6.000 | % | | | 04/15/29 | | | 164,480 | |
| 96,612 | | GNMA I Pool #489377 | | 6.375 | % | | | 03/15/29 | | | 109,317 | |
| 293,563 | | GNMA I Pool #503405 | | 6.500 | % | | | 04/15/29 | | | 346,202 | |
| 125,796 | | GNMA I Pool #509930 | | 5.500 | % | | | 06/15/29 | | | 138,656 | |
| 202,625 | | GNMA I Pool #509965 | | 5.500 | % | | | 06/15/29 | | | 223,593 | |
| 13,137 | | GNMA I Pool #538314 | | 7.000 | % | | | 02/15/32 | | | 15,629 | |
| 30,539 | | GNMA I Pool #595606 | | 6.000 | % | | | 11/15/32 | | | 34,441 | |
See Notes to Financial Statements. | 55 | |
Wright Current Income Fund (WCIF)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
| | | | | | | | | | | | |
AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED) | | | | | | | | | | |
$ | 7,624 | | GNMA I Pool #602377 | | 4.500 | % | | | 06/15/18 | | $ | 8,143 | |
| 13,869 | | GNMA I Pool #603377 | | 4.500 | % | | | 01/15/18 | | | 14,711 | |
| 122,615 | | GNMA I Pool #615403 | | 4.500 | % | | | 08/15/33 | | | 136,530 | |
| 80,191 | | GNMA I Pool #616829 | | 5.500 | % | | | 01/15/25 | | | 88,439 | |
| 82,719 | | GNMA I Pool #623190 | | 6.000 | % | | | 12/15/23 | | | 92,821 | |
| 340,001 | | GNMA I Pool #624600 | | 6.150 | % | | | 01/15/34 | | | 394,934 | |
| 60,290 | | GNMA I Pool #640940 | | 5.500 | % | | | 05/15/35 | | | 68,507 | |
| 27,255 | | GNMA I Pool #658267 | | 6.500 | % | | | 02/15/22 | | | 30,263 | |
| 79,344 | | GNMA I Pool #677162 | | 5.500 | % | | | 08/15/23 | | | 85,734 | |
| 813,897 | | GNMA I Pool #711286 | | 6.500 | % | | | 10/15/32 | | | 953,485 | |
| 669,117 | | GNMA I Pool #733602 | | 5.000 | % | | | 04/15/40 | | | 759,406 | |
| 27,052 | | GNMA I Pool #780429 | | 7.500 | % | | | 09/15/26 | | | 29,798 | |
| 154,442 | | GNMA I Pool #780492 | | 7.000 | % | | | 09/15/24 | | | 181,146 | |
| 73,260 | | GNMA I Pool #780685 | | 6.500 | % | | | 12/15/27 | | | 83,242 | |
| 93,997 | | GNMA I Pool #780977 | | 7.500 | % | | | 12/15/28 | | | 113,190 | |
| 236,629 | | GNMA I Pool #781120 | | 7.000 | % | | | 12/15/29 | | | 283,537 | |
| 284,387 | | GNMA I Pool #782771 | | 4.500 | % | | | 09/15/24 | | | 309,220 | |
| 13,724 | | GNMA II Pool #000723 | | 7.500 | % | | | 01/20/23 | | | 16,050 | |
| 1,201 | | GNMA II Pool #001596 | | 9.000 | % | | | 04/20/21 | | | 1,435 | |
| 19,960 | | GNMA II Pool #002268 | | 7.500 | % | | | 08/20/26 | | | 24,950 | |
| 55,933 | | GNMA II Pool #002442 | | 6.500 | % | | | 06/20/27 | | | 63,808 | |
| 3,467 | | GNMA II Pool #002855 | | 8.500 | % | | | 12/20/29 | | | 4,326 | |
| 83,339 | | GNMA II Pool #003284 | | 5.500 | % | | | 09/20/32 | | | 92,093 | |
| 148,935 | | GNMA II Pool #003346 | | 5.500 | % | | | 02/20/33 | | | 164,626 | |
| 51,392 | | GNMA II Pool #003401 | | 4.500 | % | | | 06/20/33 | | | 56,759 | |
| 336,204 | | GNMA II Pool #003403 | | 5.500 | % | | | 06/20/33 | | | 371,625 | |
| 80,531 | | GNMA II Pool #003554 | | 4.500 | % | | | 05/20/34 | | | 88,914 | |
| 218,996 | | GNMA II Pool #003689 | | 4.500 | % | | | 03/20/35 | | | 241,795 | |
| 512,761 | | GNMA II Pool #003931 | | 6.000 | % | | | 12/20/36 | | | 573,698 | |
| 16,883 | | GNMA II Pool #004149 | | 7.500 | % | | | 05/20/38 | | | 20,834 | |
| 586,009 | | GNMA II Pool #004260 | | 6.000 | % | | | 10/20/38 | | | 630,930 | |
| 79,181 | | GNMA II Pool #004284 | | 5.500 | % | | | 11/20/38 | | | 83,750 | |
| 434,336 | | GNMA II Pool #004291 | | 6.000 | % | | | 11/20/38 | | | 484,868 | |
| 230,479 | | GNMA II Pool #004308 | | 5.000 | % | | | 12/20/38 | | | 242,301 | |
| 317,810 | | GNMA II Pool #004412 | | 5.000 | % | | | 04/20/39 | | | 337,090 | |
| 516,245 | | GNMA II Pool #004561 | | 6.000 | % | | | 10/20/39 | | | 577,597 | |
| 438,325 | | GNMA II Pool #004751 | | 7.000 | % | | | 12/20/38 | | | 522,716 | |
| 68,613 | | GNMA II Pool #004752 | | 7.500 | % | | | 11/20/38 | | | 83,266 | |
| 389,919 | | GNMA II Pool #004753 | | 8.000 | % | | | 08/20/30 | | | 483,388 | |
| 331,272 | | GNMA II Pool #004805 | | 6.500 | % | | | 09/20/40 | | | 379,311 | |
| 115,889 | | GNMA II Pool #004808 | | 8.000 | % | | | 01/20/31 | | | 142,834 | |
| 1,624,596 | | GNMA II Pool #004828 | | 4.500 | % | | | 10/20/40 | | | 1,765,295 | |
| 639,556 | | GNMA II Pool #004838 | | 6.500 | % | | | 10/20/40 | | | 732,301 | |
| 936,675 | | GNMA II Pool #004848 | | 3.500 | % | | | 11/20/40 | | | 986,748 | |
| 281,926 | | GNMA II Pool #004993 | | 7.000 | % | | | 03/20/41 | | | 339,520 | |
| 267,293 | | GNMA II Pool #005053 | | 5.000 | % | | | 05/20/41 | | | 281,003 | |
| 338,678 | | GNMA II Pool #005257 | | 4.000 | % | | | 12/20/41 | | | 360,658 | |
| 752,140 | | GNMA II Pool #005294 | | 7.000 | % | | | 11/20/40 | | | 895,413 | |
| 92,523 | | GNMA II Pool #575787 | | 5.760 | % | | | 03/20/33 | | | 104,988 | |
| 99,723 | | GNMA II Pool #608120 | | 6.310 | % | | | 01/20/33 | | | 112,447 | |
| 281,023 | | GNMA II Pool #610116 | | 5.760 | % | | | 04/20/33 | | | 317,926 | |
| 66,679 | | GNMA II Pool #610143 | | 5.760 | % | | | 06/20/33 | | | 73,787 | |
| 161,940 | | GNMA II Pool #612121 | | 5.760 | % | | | 07/20/33 | | | 179,203 | |
| 215,724 | | GNMA II Pool #648541 | | 6.000 | % | | | 10/20/35 | | | 240,859 | |
| 497,388 | | GNMA II Pool #719213 | | 6.500 | % | | | 02/20/33 | | | 571,614 | |
See Notes to Financial Statements. | 56 | |
Wright Current Income Fund (WCIF)
Portfolio of Investments – As of December 31, 2012
| Face Amount | | Description | | Coupon Rate | | | Maturity Date | | | Value | |
| | | | | | | | | | | | |
AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED) | | | | | | | | | | |
$ | 143,335 | | GNMA II Pool #748939 | | 4.000 | % | | | 09/20/40 | | $ | 158,807 | |
| 647,172 | | GNMA, Series 1998-21, Class ZB | | 6.500 | % | | | 09/20/28 | | | 763,464 | |
| 153,126 | | GNMA, Series 1999-25, Class TB | | 7.500 | % | | | 07/16/29 | | | 185,672 | |
| 555,502 | | GNMA, Series 1999-4, Class ZB | | 6.000 | % | | | 02/20/29 | | | 635,790 | |
| 211,516 | | GNMA, Series 2000-14, Class PD | | 7.000 | % | | | 02/16/30 | | | 251,030 | |
| 163,719 | | GNMA, Series 2001-4, Class PM | | 6.500 | % | | | 03/20/31 | | | 192,442 | |
| 383,432 | | GNMA, Series 2002-22, Class GF | | 6.500 | % | | | 03/20/32 | | | 455,889 | |
| 144,163 | | GNMA, Series 2002-40, Class UK | | 6.500 | % | | | 06/20/32 | | | 171,290 | |
| 111,404 | | GNMA, Series 2002-45, Class QE | | 6.500 | % | | | 06/20/32 | | | 130,146 | |
| 188,053 | | GNMA, Series 2002-6, Class GE | | 6.500 | % | | | 01/20/32 | | | 219,156 | |
| 94,131 | | GNMA, Series 2002-7, Class PG | | 6.500 | % | | | 01/20/32 | | | 111,963 | |
| 214,000 | | GNMA, Series 2003-103, Class PC | | 5.500 | % | | | 11/20/33 | | | 250,993 | |
| 154,000 | | GNMA, Series 2003-46, Class HA | | 4.500 | % | | | 06/20/33 | | | 180,037 | |
| 179,000 | | GNMA, Series 2003-46, Class MA | | 5.000 | % | | | 05/20/33 | | | 208,168 | |
| 503,000 | | GNMA, Series 2003-46, Class ND | | 5.000 | % | | | 06/20/33 | | | 563,382 | |
| 575,000 | | GNMA, Series 2003-57, Class C | | 4.500 | % | | | 04/20/33 | | | 661,890 | |
| 117,000 | | GNMA, Series 2004-16, Class GB | | 5.500 | % | | | 06/20/33 | | | 125,194 | |
| 125,000 | | GNMA, Series 2004-63, Class AG | | 6.000 | % | | | 07/20/32 | | | 147,174 | |
| 211,000 | | GNMA, Series 2005-13, Class BE | | 5.000 | % | | | 09/20/34 | | | 240,842 | |
| 895,942 | | GNMA, Series 2005-17, Class GE | | 5.000 | % | | | 02/20/35 | | | 992,497 | |
| 227,000 | | GNMA, Series 2005-51, Class DC | | 5.000 | % | | | 07/20/35 | | | 253,397 | |
| 100,000 | | GNMA, Series 2005-93, Class BH | | 5.500 | % | | | 06/20/35 | | | 117,468 | |
| 809,000 | | GNMA, Series 2006-17, Class TW | | 6.000 | % | | | 04/20/36 | | | 967,667 | |
| 90,205 | | GNMA, Series 2007-18, Class B | | 5.500 | % | | | 05/20/35 | | | 104,019 | |
| 525,000 | | GNMA, Series 2007-6, Class LE | | 5.500 | % | | | 02/20/37 | | | 623,511 | |
| 250,000 | | GNMA, Series 2007-68, Class NA | | 5.000 | % | | | 11/20/37 | | | 285,833 | |
| 120,000 | | GNMA, Series 2007-70, Class PE | | 5.500 | % | | | 11/20/37 | | | 138,498 | |
| 300,000 | | GNMA, Series 2008-35, Class EH | | 5.500 | % | | | 03/20/38 | | | 362,959 | |
| 757,000 | | GNMA, Series 2008-65, Class PG | | 6.000 | % | | | 08/20/38 | | | 924,809 | |
| 1,158,784 | | GNMA, Series 2009-14, Class AG | | 4.500 | % | | | 03/20/39 | | | 1,265,760 | |
| 157,000 | | GNMA, Series 2009-47, Class LT | | 5.000 | % | | | 06/20/39 | | | 179,251 | |
| 592,665 | | GNMA, Series 2009-57, Class VB | | 5.000 | % | | | 06/16/39 | | | 702,238 | |
| 194,000 | | GNMA, Series 2009-93, Class AY | | 5.000 | % | | | 10/20/39 | | | 221,792 | |
| 2,000,000 | | GNMA, Series 2010-116, Class PB | | 5.000 | % | | | 06/16/40 | | | 2,441,156 | |
| 350,000 | | GNMA, Series 2010-89, Class BG | | 4.000 | % | | | 07/20/40 | | | 382,894 | |
| 53,745 | | GNMA, Series 2011-32, Class TA | | 4.000 | % | | | 05/16/40 | | | 53,943 | |
| 289,348 | | Vendee Mortgage Trust, Series 1996-1, Class 1Z | | 6.750 | % | | | 02/15/26 | | | 338,229 | |
| 232,171 | | Vendee Mortgage Trust, Series 1998-1, Class 2E | | 7.000 | % | | | 03/15/28 | | | 278,538 | |
Total Agency Mortgage-Backed Securities (identified cost, $74,406,977) | | $ | 77,396,619 | |
TOTAL FIXED INCOME INVESTMENTS (identified cost, $74,406,977) — 97.4% | | $ | 77,396,619 | |
SHORT-TERM INVESTMENTS - 6.3% |
$ | 5,022,467 | | Fidelity Government Money Market Fund, 0.01% (1) | | | | | | | | $ | 5,022,467 | |
TOTAL SHORT-TERM INVESTMENTS (identified cost, $5,022,467) — 6.3% | | $ | 5,022,467 | |
TOTAL INVESTMENTS (identified cost, $79,429,444) — 103.7% | | $ | 82,419,086 | |
LIABILITIES, IN EXCESS OF OTHER ASSETS — (3.7)% | | | (2,965,052 | ) |
NET ASSETS — 100.0% | | $ | 79,454,034 | |
FHLMC — Federal Home Loan Mortgage Corporation
FNMA — Federal National Mortgage Association
GNMA — Government National Mortgage Association
(1) | Variable rate security. Rate presented is as of December 31, 2012. |
See Notes to Financial Statements. | 57 | |
Wright Current Income Fund (WCIF)
STATEMENT OF ASSETS AND LIABILITIES | | |
As of December 31, 2012 | | For the Year Ended December 31, 2012 |
| | | | | | | | | | | | | | |
ASSETS: | | | TRUE | | | INVESTMENT INCOME (Note 1C) | | | TRUE | |
| Investments, at value | | | | | | 8.00E+07 | Interest income | | $ | 2,156,795 | |
| (identified cost $79,429,444) (Note 1A) | | $ | 82,419,086 | ###### | | | Dividend income | | | 270 | |
| Receivable for fund shares sold | | | 55,048 | | | | Total investment income | | $ | 2,157,065 | |
| Dividends and interest receivable | | | 304,320 | | | | | | | | | |
| Prepaid expenses and other assets | | | 18,559 | | | Expenses – | | | | |
| Total assets | | $ | 82,797,013 | | | | Investment adviser fee (Note 3) | $ | 310,088 | |
| | | | | | | | | Administrator fee (Note 3) | | 62,017 | |
LIABILITIES: | | | | | | | Trustee expense (Note 3) | | 14,979 | |
| Payable for fund shares reacquired | | $ | 15,150 | | | | Custodian fee | | | 6,930 | |
| Payable for investment securities purchased | | | 3,169,723 | | | | Accountant fee | | | 41,296 | |
| Distributions payable | | | 129,942 | | | | Pricing | | | 41,290 | |
| Accrued expenses and other liabilities | | | 28,164 | | | | Distribution expenses (Note 4) | | | 172,271 | |
| Total liabilities | | $ | 3,342,979 | | | | Transfer agent fee | | | 28,800 | |
NET ASSETS | | $ | 79,454,034 | | | | Printing | | | 253 | |
| | | | | | | | | Shareholder communications | | | 7,711 | |
NET ASSETS CONSIST OF: | | | | | | | Audit services | | | 20,000 | |
| Paid-in capital | | $ | 78,242,512 | | | | Legal services | | | 27,537 | |
| Accumulated net realized loss on investments | | | (1,778,191 | ) | | | Compliance services | | | 7,027 | |
| Undistributed net investment income | | | 71 | | | | Registration costs | | | 24,473 | |
| Unrealized appreciation on investments | | | 2,989,642 | | | | Interest expense (Note 8) | | | 697 | |
| Net assets applicable to outstanding shares | | $ | 79,454,034 | | | | Miscellaneous | | | 34,024 | |
| | | | | | | | | Total expenses | | $ | 799,393 | |
SHARES OF BENEFICIAL INTEREST OUTSTANDING AT $0.000 PAR VALUE (UNLIMITED SHARES AUTHORIZED) | | | 7,940,496 | | | | | | | | | |
| | | | | | | | Deduct – | | | | |
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST | | $ | 10.01 | | | | Waiver and/or reimbursement by the principal underwriter and/or investment adviser (Note 4) | $ | (178,553 | ) |
| | | | | | | | | Net expenses | | $ | 620,840 | |
| | | | | | | | | Net investment income | | $ | 1,536,225 | |
| | | | | | | | | | | | | | |
| | | | | | | | REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | |
| | | | | | | | | Net realized gain on investment transactions | $ | 71,311 | |
| | | | | | | | | Net change in unrealized appreciation (depreciation) on investments | | 347,133 | |
| | | | | | | | | Net realized and unrealized gain on investments | $ | 418,444 | |
| | | | | | | | | Net increase in net assets from operations | $ | 1,954,669 | |
See Notes to Financial Statements. | 58 | |
Wright Current Income Fund (WCIF)
| | | Years Ended | |
STATEMENTS OF CHANGES IN NET ASSETS | | December 31, 2012 | | December 31, 2011 | |
| | | | | | | | | | |
INCREASE (DECREASE) IN NET ASSETS: | | | | | | | | | |
From operations – | | | | | | | | | |
| Net investment income | | $ | 1,536,225 | | | $ | 1,473,024 | | |
0 | Net realized gain on investment transactions | | | 71,311 | | | | 251,314 | | |
| Net change in unrealized appreciation (depreciation) on investments | | | 347,133 | | | | 1,174,061 | | |
| Net increase in net assets from operations | | $ | 1,954,669 | | | $ | 2,898,399 | | |
Distributions to shareholders (Note 2) | | | | | | | | | |
| From net investment income | | $ | (2,698,291 | ) | | $ | (1,997,208 | ) | |
| Total distributions | | $ | (2,698,291 | ) | | $ | (1,997,208 | ) | |
Net increase in net assets resulting from fund share transactions (Note 6) | | $ | 18,872,240 | | | $ | 19,839,935 | | |
Net increase in net assets | | $ | 18,128,618 | | | $ | 20,741,126 | | |
## | | | | | | | | | | |
NET ASSETS: | | | | | | | | | |
| At beginning of year | | | 61,325,416 | | | | 40,584,290 | | |
| At end of year | | $ | 79,454,034 | | | $ | 61,325,416 | | |
| | | | | | | | | | |
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR | | $ | 71 | | | $ | 22 | | |
| | | | | | | | | | |
See Notes to Financial Statements. | 59 | |
Wright Current Income Fund (WCIF)
These financial highlights reflect selected data for a share outstanding throughout each year. | | | | |
| | Years Ended December 31, |
FINANCIAL HIGHLIGHTS | | 2012 | 2011 | 2010 | 2009 | 2008 |
| | | | | | | | | | | | | | | | | |
Net asset value, beginning of year | | $ | 10.100 | | $ | 9.910 | | $ | 9.830 | | $ | 9.700 | | $ | 9.590 | |
Income from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (1) | | | 0.225 | | | 0.303 | | | 0.377 | | | 0.472 | | | 0.447 | |
Net realized and unrealized gain | | | 0.081 | | | 0.302 | | | 0.175 | | | 0.118 | | | 0.122 | |
| Total income from investment operations | | 0.306 | | | 0.605 | | | 0.552 | | | 0.590 | | | 0.569 | |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
From net investment income | | | (0.396 | ) | | (0.415 | ) | | (0.472 | ) | | (0.460 | ) | | (0.459 | ) |
Net asset value, end of year | | $ | 10.010 | | $ | 10.100 | | $ | 9.910 | | $ | 9.830 | | $ | 9.700 | |
Total Return(2) | | | 3.06 | % | | 6.22 | % | | 5.70 | % | | 6.20 | % | | 6.10 | % |
Ratios/Supplemental Data(3): | | | | | | | | | | | | | | | | |
Net assets, end of year (000 omitted) | | $79,454 | | $61,325 | | $40,584 | | $33,029 | | $38,806 | |
Ratios (As a percentage of average daily net assets): |
Net expenses | | | 0.90 | % | 0.90 | % | 0.90 | % | 0.92 | % | 0.96 | % |
Net expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 0.92 | % | 0.95 | % |
Net investment income | | | 2.23 | % | 3.03 | % | 3.79 | % | 4.81 | % | 4.66 | % |
Portfolio turnover rate | | | 27 | % | 50 | % | 54 | % | 57 | % | 57 | % |
| | | | | | | | | | | | | | | | |
| | | | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | For the years ended December 31, 2012, 2011, 2010, 2009 and 2008 | | | | | | | |
(1) | Computed using average shares outstanding. |
(2) | Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. |
(3) | For each of the years presented, the operating expenses of the Fund were reduced by a waiver of fees and/or allocation of expenses to the principal underwriter and/or investment adviser. Had such action not been undertaken, expenses and net investment income ratios would have been as follows: |
| ............................................................ | | 2012 | 2011 | 2010 | 2009 | 2008 |
| |
Ratios (As a percentage of average daily net assets): |
Expenses | | | 1.16 | % | | 1.19 | % | | 1.33 | % | | 1.32 | % | | 1.24 | % |
Expenses after custodian fee reduction | | | N/A | | | N/A | | | N/A | | | 1.32 | % | | 1.23 | % |
Net investment income | | | 1.97 | % | | 2.74 | % | | 3.36 | % | | 4.41 | % | | 4.38 | % |
| ............................................................ | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
See Notes to Financial Statements. | 60 | |
The Wright Managed Income Trust
Notes to Financial Statements
1. Significant Accounting Policies
Wright Total Return Bond Fund (“WTRB”) and Wright Current Income Fund (“WCIF”) (each a “Fund” and collectively, the “Funds”) (the Funds constituting Wright Managed Income Trust (the “Trust”)), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company. WTRB seeks a superior rate of total return, consisting of a high level of income plus price appreciation. WCIF seeks a high level of current income consistent with moderate fluctuations of principal.
The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
A. Investment Valuations – Debt obligations, including listed securities and securities for which quotations are readily available, will normally be valued on the basis of reported trades or market quotations provided by third party pricing services, when these prices are representative of the securities’ market values. For debt securities where market quotations are not readily available, the pricing services will use various techniques that consider factors including, but not limited to, prices or yields of securities with similar characteristics, benchmark yields, broker/dealer quotes, issuer spreads, as well as industry and economic events. Short-term debt securities with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value. If short-term debt securities are acquired with a remaining maturity of more than sixty days, they will be valued by a pricing service as described above. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Funds in a manner that most fairly reflects the security’s value, or the amount that the Funds might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies, quotations or relevant information obtained from broker-dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B. Investment Transactions – Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C. Income – Dividend income is recorded on the ex-dividend date. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Funds are informed of the ex-dividend date. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium and accretion of discount.
Paydown gains and losses are included in interest income.
D. Federal Taxes – Each Fund’s policy is to comply with the provisions of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary. At December 31, 2012, WTRB and WCIF, for federal income tax purposes, had capital loss carryforwards subject to expiration of $1,479,549 and $356,458, respectively, which will reduce each Fund’s taxable income arising from future net realized gain on investment transactions, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders, which would otherwise be necessary to relieve the Funds of any liability for federal income or excise tax. Pursuant to the Code, such capital loss carryforwards will expire as follows:
The Wright Managed Income Trust
Notes to Financial Statements
December 31, | WTRB | WCIF |
2013 | $ - | $196,117 |
2014 | 981,419 | - |
2015 | 199,047 | 160,341 |
2017 | 299,083 | - |
As a result of the Regulated Investment Company Modernization Act of 2010, net capital losses realized on or after January 1, 2011 (effective date) may be carried forward indefinitely to offset future realized capital gains; however, post-effective losses must be used before pre-effective capital loss carryforwards with expiration dates. Therefore, it is possible that all or a portion of a fund’s pre-effective capital loss carryforwards could expire unused. In addition to the amounts noted in the table above, WCIF has $776,237 available short term capital loss carryforwards and $476,174 available long term capital loss carryforwards that have no expiration date.
A capital loss carryover of $196,117, included in WCIF’s amount in the table above, is available to the Fund as a result of the reorganization of Wright U.S. Government Near Term Fund on December 9, 2006. Utilization of this capital loss carryover may be limited in accordance with certain income tax regulations.
As of December 31, 2012, the Funds had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Funds’ federal tax returns filed in the 3-year period ended December 31, 2012, remains subject to examination by the Internal Revenue Service.
E. Expenses – The majority of expenses of the Trust are directly identifiable to an individual Fund. Expenses which are not readily identifiable to a specific Fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the Funds.
F. Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
G. Indemnifications – Under each Fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Funds, and shareholders are indemnified against personal liability for the obligations of the Funds. Additionally, in the normal course of business, the Funds enter into agreements with service providers that may contain indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
2. Distributions to Shareholders
The net investment income of each Fund is determined daily, and substantially all of the net investment income so determined is declared daily as a dividend to shareholders of record at the time of declaration. Distributions are generally paid monthly. Distributions of net realized capital gains (reduced by available capital loss carryforwards from prior years, if any) are made at least annually. Shareholders may reinvest income and capital gain distributions in additional shares of the same Fund at the net asset value as of the reinvestment date or, at the election of the shareholder, receive distributions in cash. The Funds distinguish between distributions on a tax basis and a financial reporting basis. GAAP requires that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital.
The Wright Managed Income Trust
Notes to Financial Statements
The tax character of distributions paid for the year ended December 31, 2012, and December 31, 2011, was as follows:
Year Ended 12/31/12 | | | WTRB | | | WCIF | |
Distributions declared from: | | | | | | | |
Ordinary income | | $ | 1,124,326 | | $ | 2,698,291 | |
| | | | | | | |
Year Ended 12/31/11 | | | | | | | |
Distributions declared from: | | | | | | | |
Ordinary income | | $ | 1,214,917 | | $ | 1,997,208 | |
During the year ended December 31, 2012, the following amounts were reclassified due to premium amortization, paydown gain (loss) and expiring capital loss carryovers.
Increase (decrease): | | | WTRB | | | | WCIF | | |
Paid-in capital | | $ | (66 | ) | | $ | (248,470 | ) | |
Accumulated net realized gain (loss) | | | (302,122 | ) | | | (913,645 | ) | |
Accumulated undistributed net investment income (loss) | | | 302,188 | | | | 1,162,115 | | |
These reclassifications had no effect on the net assets or net asset value per share of the Funds.
As of December 31, 2012, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
| | | WTRB | | | | WCIF | |
Undistributed ordinary income | | $ | - | | | $ | 71 | |
Capital loss carryforward | | | (1,479,549 | ) | | | (1,608,869 | ) |
Unrealized appreciation | | | 1,613,784 | | | | 2,820,320 | |
Total | | $ | 134,235 | | | $ | 1,211,522 | |
The difference between components of distributable earnings (accumulated losses) on a tax basis and the amounts reflected in the Statements of Assets and Liabilities are primarily due to wash sales, premium amortization and paydown gain (loss).
3. Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Wright Investor Services, Inc. (“Wright”) as compensation for investment advisory services rendered to the Funds. The fees are computed at annual rates of the Funds' average daily net assets as noted below, and are payable monthly.
Annual Advisory Fee Rates |
Fund | Under $100 Million | $100 Million to $250 Million | $250 Million to $500 Million | $500 Million to $1 Billion | Over $1 Billion |
WTRB | 0.45% | 0.44% | 0.42% | 0.40% | 0.35% |
WCIF | 0.45% | 0.44% | 0.42% | 0.40% | 0.35% |
For the year ended December 31, 2012, the fee and the effective annual rate, as a percentage of average daily net assets for each of the Funds were as follows:
Fund | Investment Adviser Fee | Effective Annual Rate |
WTRB | $145,420 | 0.45% |
WCIF | $310,088 | 0.45% |
The Wright Managed Income Trust
Notes to Financial Statements
The administrator fee is earned by Wright for administering the business affairs of each Fund. The fee is computed at an annual rate of 0.07% of the average daily net assets up to $100 million for WTRB and an annual rate of 0.09% of the average daily net assets up to $100 million for WCIF, and 0.05% of average daily net assets over $100 million. Atlantic Fund Administration, LLC (d/b/a Atlantic Fund Services) (“Atlantic”) serves as sub-administrator of the Funds to perform certain services of the administrator as may be agreed upon between the administrator and sub-administrator. The sub-administration fee is paid by Wright.
For the year ended December 31, 2012, the administrator fee for WTRB and WCIF amounted to $22,621 and $62,017, respectively.
Certain Trustees and officers of the Trust are Trustees or officers of the above organizations and/or of the Funds’ principal underwriter. Except as to Trustees of the Trust who are not employees of Atlantic or Wright, Trustees and officers receive remuneration for their services to the Trust out of the fees paid to Atlantic and Wright. The Trustees are compensated by the Trust in conjunction with the Wright Managed Equity Trust, rather than on a per Trust or per Fund basis. Quarterly retainer fees are paid in the amount of $4,000 to the Lead Trustee, $3,500 to the Secretary of Independent Trustees, and $3,000 each to the remaining Trustees. In addition, each Trustee will be paid a fee of $1,500 for each regular Board meeting attended. Each Trustee is also reimbursed for all reasonable out-of-pocket expenses incurred in connection with his duties as a Trustee, including travel and related expenses incurred in attending Board meetings. The amount of Trustees’ fees attributable to each Fund is disclosed in each Fund’s Statement of Operations.
Pursuant to the Letter of Engagement, A M Moody Consulting LLC, an affiliate of the Distributor, provides compliance and administrative consulting services to the Funds. A. M. Moody III, President of A M Moody Consulting LLC, is a control affiliate and an officer of the Distributor. Fees paid to A M Moody Consulting Group LLC pursuant to the Letter of Engagement are reflected on the Statement of Operations within the caption Miscellaneous. Neither the Distributor nor A M Moody Consulting LLC, nor any of their officers or employees who serve as an officer of the Funds, has any role in determining the Funds’ investment policies or which securities are to be purchased or sold by the Funds.
4. Distribution and Service Plans
The Trust has in effect a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 of the 1940 Act. The Plan provides that each Fund will pay Wright Investors’ Service Distributors, Inc. (“WISDI”), the principal underwriter, a wholly-owned subsidiary of The Winthrop Corporation and an affiliate of Wright, a distribution fee of 0.25% of the average daily net assets of each Fund for distribution services and facilities provided to the Funds by WISDI. Distribution fees paid or accrued to WISDI for the year ended December 31, 2012, for WTRB and WCIF were $80,789 and $172,271, respectively. In addition, the Trustees have adopted a service plan (the “Service Plan”) which allows the Funds to reimburse the principal underwriter for payments to intermediaries for providing account administration and personal and account maintenance services to their customers who are beneficial owners of each Fund’s shares. The combined amount of service fees payable under the Service Plan and Rule 12b-1 distribution fees may not exceed 0.25% annually of each Fund’s average daily net assets. For the year ended December 31, 2012, the Funds did not accrue or pay any service fees.
Pursuant to an Expense Limitation Agreement, Wright and WISDI have agreed to waive all or a portion of their fees and reimburse expenses to the extent that total annual operating expenses exceed 0.95% and 1.00% of the average daily net assets of WTRB and WCIF, respectively, through April 30, 2013 (excluding interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, and other extraordinary expenses not incurred in the ordinary course of the Fund’s business). Thereafter, the waiver and reimbursement may be changed or terminated at any time. In addition, Wright and WISDI have voluntarily agreed to further limit the total annual expenses of WCIF to 0.90% of its average daily net assets. Such voluntary limitation may be terminated at any time. Pursuant to these agreements and voluntary limitation, Wright waived and/or reimbursed investment adviser fees of $67,952 and $6,282 for WTRB and
The Wright Managed Income Trust
Notes to Financial Statements
WCIF, respectively. WISDI waived distribution fees of $80,789 and $172,271 for WTRB and WCIF, respectively.
5. Investment Transactions
Purchases and sales (including maturities and paydowns) of investments, other than short-term obligations, were as follows:
Year Ended December 31, 2012 |
| WTRB | WCIF |
Purchases - | | |
Non-U.S. Government & Agency Obligations | $ 1,196,999 | $ - |
U.S. Government & Agency Obligations | 20,175,504 | 36,119,546 |
Sales - | | |
Non-U.S. Government & Agency Obligations | $ 4,467,418 | $ 64,424 |
U.S. Government & Agency Obligations | 23,389,193 | 18,084,691 |
6. Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in Fund shares were as follows:
| | | Year Ended December 31, 2012 | | Year Ended December 31, 2011 | | |
| | | Shares | | | | Amount | | | Shares | | | | Amount | | | |
| WTRB | | | | | | | | | | | | | | | | |
| Sold | 780,654 | | | $ | 10,400,804 | | | 620,725 | | | $ | 8,102,660 | | | |
| Issued to shareholders in payment of distributions declared | 43,663 | | | | 582,172 | | | 56,493 | | | | 737,603 | | | |
| Redemptions | (1,301,080 | ) | | | (17,349,146 | ) | | (806,155 | ) | | | (10,522,621 | ) | | |
| Net decrease | (476,763 | ) | | $ | (6,366,170 | ) | | (128,937 | ) | | $ | (1,682,358 | ) | | |
| | | Year Ended December 31, 2012 | | Year Ended December 31, 2011 |
| | | Shares | | | | Amount | | | Shares | | | | Amount | |
| WCIF | | | | | | | | | | | | | | |
| Sold | 3,809,266 | | | $ | 38,430,259 | | | 4,106,579 | | | $ | 41,203,680 | |
| Issued to shareholders in payment of distributions declared | 134,887 | | | | 1,362,875 | | | 108,804 | | | | 1,090,141 | |
| Redemptions | (2,073,456 | ) | | | (20,920,894 | ) | | (2,239,228 | ) | | | (22,453,886 | ) |
| Net increase | 1,870,697 | | | $ | 18,872,240 | | | 1,976,155 | | | $ | 19,839,935 | |
The Wright Managed Income Trust
Notes to Financial Statements
7. Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of the investment securities owned at December 31, 2012, as computed on a federal income tax basis, were as follows:
Year Ended December 31, 2012 | |
| WTRB | WCIF |
Aggregate cost | $ | 23,005,562 | | $ | 79,598,766 | |
Gross unrealized appreciation | $ | 1,669,319 | | $ | 2,942,297 | |
Gross unrealized depreciation | | (55,535 | ) | | (121,977 | ) |
Net unrealized appreciation | $ | 1,613,784 | | $ | 2,820,320 | |
8. Line of Credit
The Funds participate with other funds managed by Wright in a committed $10 million unsecured line of credit agreement with Union Bank of California, N.A. (“Union Bank”). The Funds may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each Fund based on its borrowings at an amount above the LIBOR rate. Because the line of credit is not available exclusively to each Fund, they may be unable to borrow some or all of the Funds’ requested amounts at any particular time. At December 31, 2012, the Funds had no outstanding balances pursuant to this line of credit.
The average borrowings and average interest rate (based on days with outstanding balances) for the year ended December 31, 2012, were as follows:
| WTRB | WCIF |
Average borrowings | $379,714 | $198,211 |
Average interest rate | 1.23% | 1.24% |
9. Fair Value Measurements
Under GAAP for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• Level 1 – quoted prices in active markets for identical investments
• Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At December 31, 2012, the inputs used in valuing each Fund’s investments, which are carried at value, were as follows:
The Wright Managed Income Trust
Notes to Financial Statements
WTRB
Asset Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total |
Asset-Backed Securities | $ | - | $ | 208,356 | $ | - | $ | 208,356 |
Commerical Mortgage-Backed Securities | | - | | 2,178,056 | | - | | 2,178,056 |
Residential Mortgage-Backed Securities | | - | | 42,144 | | - | | 42,144 |
Corporate Bonds | | - | | 11,940,641 | | - | | 11,940,641 |
U.S. Government Interests | | - | | 9,273,628 | | - | | 9,273,628 |
Short-Term Investments | | - | | 976,521 | | - | | 976,521 |
Total Investments | $ | - | $ | 24,619,346 | $ | - | $ | 24,619,346 |
WCIF
Asset Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total |
Agency Mortgage-Backed Securities | $ | - | $ | 77,396,619 | $ | - | $ | 77,396,619 |
Short-Term Investments | | - | | 5,022,467 | | - | | 5,022,467 |
Total Investments | $ | - | $ | 82,419,086 | $ | - | $ | 82,419,086 |
The level classification by major category of investments is the same as the category presentation in each Fund’s Portfolio of Investments.
There were no transfers between Level 1 and Level 2 for the year ended December 31, 2012.
10. New Accounting Pronouncement
In December 2011, FASB issued ASU No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” requiring disclosure of both gross and net information related to offsetting and related arrangements enabling users of its financial statements to understand the effect of those arrangements on the entity’s financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRSs. ASU No. 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. Management is evaluating any impact ASU No. 2011-11 may have on each Fund’s financial statements.
11. Review for Subsequent Events
In connection with the preparation of the financial statements of the Funds as of and for the year ended December 31, 2012, events and transactions subsequent to December 31, 2012, have been evaluated by the Funds’ management for possible adjustment and/or disclosure. Management has not identified any subsequent events requiring financial statement disclosure as of the date these financial statements were issued.
The Wright Managed Income Trust
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of The Wright Managed Income Trust
and the Shareholders of Wright Total Return Bond Fund and Wright Current Income Fund
We have audited the accompanying statements of assets and liabilities of Wright Total Return Bond Fund and Wright Current Income Fund, each a series of shares of The Wright Managed Income Trust (the "Funds"), including the portfolios of investments, as of December 31, 2012, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the years in the two-year period ended December 31, 2009 were audited by other auditors whose report dated February 23, 2010, expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2012 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wright Total Return Bond Fund and Wright Current Income Fund as of December 31, 2012, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
BBD, LLP
Philadelphia, Pennsylvania
March 1, 2013
The Wright Managed Income Trust
Federal Tax Information (Unaudited)
The Form 1099-DIV you received in January 2013 showed the tax status of all distributions paid to your account in calendar year 2012. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Funds.
Qualified Interest Income – Wright Total Return Bond Fund and Wright Current Income Fund designate 96.43% and 99.99%, respectively, as qualified interest income exempt from U.S. tax for foreign shareholders (QII).
Management and Organization (Unaudited)
_____________________________________________________________________
Fund Management. The Trustees of the Trust are responsible for the overall management and supervision of the affairs of the Trust. The Trustees and principal officers of the Trusts are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. The business address of each Trustee and principal officer is 440 Wheelers Farms Road, Milford, Connecticut 06461.
Definitions:
“WISDI” means Wright Investors’ Service Distributors, Inc., the principal underwriter of the Funds.
“Winthrop” means The Winthrop Corporation, a holding company which owns all of the shares of Wright and WISDI.
Name, Address and Age | Position(s) with the Trust | Term* of Office and Length of Service | Principal Occupation(s) During Past Five Years | Number of Funds in Fund Complex Overseen by Trustee | Other Trustee/ Director/ Partnership/ Employment Positions Held |
Interested Trustees |
Peter M. Donovan** Age 70 | President and Trustee | President and Trustee since Inception | Chairman, Chief Executive Officer, President, and Director of Wright and Winthrop; Chief Investment Officer and Chairman of the Investment committee; a director of WISDI; President of 5 funds managed by Wright. | 5 | Director, National Patent Development Corporation |
Independent Trustees |
James J. Clarke Age 71 | Trustee | Trustee since December, 2002 | President, Clarke Consulting (bank consultant - financial management and strategic planning); Director - Reliance Bank, Altoona, PA since August 1995; Director - Quaint Oak Bank, Southampton, PA since March 2007; Director – Phoenixville Federal Bank & Trust, Phoenixville, PA since 2011. | 5 | None |
Dorcas R. Hardy Age 66 | Trustee | Trustee since December, 1998 | President, Dorcas R. Hardy & Associates ( a public policy and government relations firm) Spotsylvania, VA; Director, First Coast Service Options since 1998 to 2009. | 5 | None |
Richard E. Taber Age 64 | Trustee | Trustee since March, 1997 | Retired; Chairman and Chief Executive Officer of First Country Bank, Stamford, CT through 2011. | 5 | None |
Principal Officers who are not Trustees |
A.M. Moody, III Age 76 | Vice President | Vice President of the Trusts since December, 1990 | President, AM Moody Consulting LLC (compliance and administrative services to the mutual fund industry) since July 1, 2003; President of WISDI since 2005; Vice President of 5 funds managed by Wright; Trustee of the Trusts, 1990 to 2012; Retired Senior Vice Presdient of Wright and Winthrop. | | |
Michael J. McKeen Age 41 | Treasurer | Treasurer since December, 2010 | Senior Vice President, Atlantic Fund Services, LLC 2008 to present; 2003 to 2008 Citigroup Fund Services, LLC; Officer of 5 funds managed by Wright. | | |
Christopher A. Madden Age 45 | Secretary | Secretary since December 1, 2009 | Counsel at Atlantic Fund Services, LLC 2009 to present; 2005 to 2009 Citigroup Fund Services, LLC; 1997 to 2005 State Street Bank and Trust Company; Officer of 5 funds managed by Wright. | | |
* | Trustees serve an indefinite term. Officers are elected annually. |
** | Mr. Donovan is an interested person of the Trusts because of his positions as President of the Trusts, Chairman, Chief Executive Officer and Director of Wright and Winthrop and Director of WISDI. |
Board of Trustees
Annual Approval of the Investment Advisory Agreement (Unaudited)
In evaluating the Investment Advisory Contracts, the Independent Trustees met separately from the Interested Trustees and reviewed and considered materials furnished by Wright, including information regarding Wright, its affiliates and personnel, operations and financial condition. The Independent Trustees discussed with representatives of Wright the portfolio management and operations of the funds and the capabilities of Wright to provide advisory and other services to each fund. The Independent Trustees considered, among other things, the following:
1. Performance and Quality of Services. The Trustees considered the quality of services provided by Wright as well as Wright’s oversight of vendors. The Trustees also considered the resources devoted to Wright’s compliance efforts and their record of compliance. The Trustees concluded that the services being provided by Wright are as agreed to in the Advisory Contracts and that the quality of service is good.
The Trustees relied on market comparisons and Morningstar data to assess the performance of each Fund over one, three, five and ten year periods. The Trustees noted that Wright Selected Blue Chip Equities Fund (WSBC) outperformed its benchmark in 2011 but underperformed its benchmark in the three to ten year time frames. They also observed that WSBC outperformed its peer group over each time period.
The Trustees saw that Wright Major Blue Chip Equities Fund (WMBC) outperformed its peer group in 2011 but underperformed its peer group over the three to ten year time frames. They also noted that WMBC generally underperformed its benchmark across all time periods.
The Trustees observed that Wright International Blue Chip Equities Fund (WIBC) underperformed its benchmark across all time periods. They noted that WIBC outperformed its peer group in 2011 but underperformed that group in the three to ten year time periods.
The Trustees noted that the performance of Wright Total Return Bond Fund (WTRB) was generally comparable to its benchmark and its peer group. They observed that WTRB underperformed its benchmark in 2011 and over five and ten years, but outperformed the benchmark for the three year period. The Trustees then noted that WTRB outperformed its peer group in 2011 and over five and ten years, but underperformed its peer group for the three year period.
The Trustees observed that Wright Current Income Fund (WCIF) underperformed its benchmark across all periods. They also noted that WCIF performed comparably to its peer group, with underperformance in 2011 and over three years while outperforming the peer group over the five and ten year periods.
2. Fees and expense ratios. The Trustees noted that the Funds’ expense ratios exceed those of some of their peers, but are reasonably similar and that the expense ratios for both WSBC and WTRB are equal to or lower than the median for their respective peer groups. The Trustees noted that the Funds’ expense ratios remain generally unchanged from the prior year, although they specifically noted that WIBC’s expense ratio had increased. They also considered the contractual expense limitations in place for each Fund. The Trustees concluded that, based upon the information provided by Wright, the compensation paid by the Funds to Wright is in the average range of compensation charged by other advisers for similar services and appear fair, and also that the Funds’ expenses do not appear excessive.
3. Relationship of fees and performance. The Trustees observed that performance in 2011 fell below the Funds’ respective benchmarks, with the exception of WSBC which outperformed its benchmark. They also noted, however, that performance in 2011 for the Funds exceeded that of their respective peer groups, in some cases significantly, with the exception of WIBC which underperformed but was comparable. The Trustees assessed each Fund’s fee structure against those of its peer group, as well as in comparison to the fee structure for private accounts. The Trustees concluded that, based on the overall short-term and long-term performance of the Funds, the fee structure appears to be fair and reasonable.
4. Profitability and Economies of Scale. The Trustees assessed the level of profitability to Wright as adviser to each Fund and concluded that such was reasonable and not excessive. The Trustees also considered Wright’s financial condition, and noted that continuing subsidies by Wright to the majority of the Funds limited the overall profitability of those Funds to Wright. The Trustees observed that the Funds have breakpoints which appear to be typical and serve to limit concerns over economies of scale. The Trustees concluded that economies of scale are not a major concern at the Funds’ current asset levels.
Important Notices Regarding Delivery of Shareholder
Documents, Portfolio Holdings and Proxy Voting (Unaudited)
The Wright Managed Blue Chip Investment Funds
Wright Investors’ Service, Inc.
Wright Investors’ Service Distributors, Inc.
Important Notice Regarding Delivery of Shareholders Documents
The Securities and Exchange Commission (the “SEC”) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders.
Wright, or your financial adviser, may household the mailing of your documents indefinitely unless you instruct Wright, or your financial adviser, otherwise.
If you would prefer that your Wright documents not be householded, please contact Wright at (800) 888-9471, or your financial adviser.
Your instructions that householding not apply to delivery of your Wright documents will be effective within 30 days of receipt by Wright or your financial adviser.
Portfolio Holdings
In accordance with rules established by the SEC, the Funds send semi-annual and annual reports to shareholders that contain a complete list of portfolio holdings as of the end of the second and fourth quarters, respectively, within 60 days of quarter-end and after filing with the SEC. The Funds also disclose complete portfolio holdings as of the end of the first and third fiscal quarters on Form N-Q, which is filed with the SEC within 60 days of quarter-end. The Funds’ complete portfolio holdings as reported in annual and semi-annual reports and on Form N-Q are available for viewing on the SEC website at http://www.sec.gov and may be reviewed and copied at the SEC’s public reference room (information on the operation and terms of usage of the SEC public reference room is available at http://sec.gov/info/edgar/prrules.htm or by calling (800) SEC-0330). After filing, the Funds’ portfolio holdings as reported in annual and semi-annual reports are also available on Wright’s website at www.wrightinvestors.com and are available upon request at no additional cost by contacting Wright at (800) 888-9471.
Shareholder Proxy Vote
At a special meeting of shareholders, held on September 14, 2012, shares were voted as follows on the proposal presented to shareholders to approve a new Investment Advisory Agreement between each Fund and Wright Investors’ Service, Inc.:
| | For | | Against | | Abstain |
WSBC | | 2,261,655 | | 6,110 | | 2,677 |
| | | | | | |
WMBC | | 795,075 | | 807 | | 5,854 |
| | | | | | |
WIBC | | 1,725,524 | | 2,132 | | 3,403 |
| | | | | | |
WTRB | | 1,675,515 | | 0 | | 5,278 |
| | | | | | |
WCIF | | 4,807,519 | | 2,256 | | 19,341 |
Important Notices Regarding Delivery of Shareholder
Documents, Portfolio Holdings and Proxy Voting (Unaudited)
Proxy Voting Policies and Procedures
From time to time funds are required to vote proxies related to the securities held by the funds. The Wright Managed Blue Chip Investment Funds vote proxies according to a set of policies and procedures approved by the Funds’ Board. You may obtain a description of these policies and procedures and information on how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 without charge, upon request, by calling (800) 888-9471. This description is also available on the SEC website at http://www.sec.gov.
The Wright Managed Blue Chip Investment Funds
(continued from inside front cover)
Two Fixed-Income Funds
Wright Total Return Bond Fund (WTRB) (the “Fund”) is a diversified portfolio of investment grade government and corporate bonds and other debt securities of varying maturities which, in the Adviser’s opinion, will achieve the portfolio objective of best total return (i.e. the total of ordinary income plus capital appreciation). Accordingly, investment selections and maturities may differ depending on the particular phase of the interest rate cycle. Dividends are accrued daily and paid monthly. The Fund’s benchmark is the Barclays U.S. Aggregate Bond Index.
Wright Current Income Fund (WCIF) (the “Fund”) may be invested in a variety of securities and may use a number of strategies, including GNMAs, to produce a high level of income with reasonable stability of principal. The Fund reinvests all principal payments. Dividends are accrued daily and paid monthly. The Fund’s benchmark is the Barclays GNMA Backed Bond Index.
ITEM 2. CODE OF ETHICS.
(a) | As of the end of the period covered by this report, The Wright Managed Equity Trust (the “Registrant”) has adopted a code of ethics, which applies to its Principal Executive Officer and Principal Financial Officer (the “Code of Ethics”). |
(c) | The Code of Ethics has been amended to remove requirements to report under the former administrator’s code of ethics, provide for independent review of access person reports made by the review officer, add affiliated distributor reporting and review requirements, and replace references to the adviser’s code of ethics with descriptions of trust-specific prohibited conduct and access person reporting requirements. |
(d) | There have been no waivers to the Registrant’s Code of Ethics during the period covered by this report. |
(f) (3) The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-888-9471.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant’s Board has designated James J. Clarke, an independent trustee, as its audit committee financial expert. Mr. Clarke is the Principal of Clarke Consulting, a financial management and strategic planning firm.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the principal accountant in connection with the statutory and filings or engagements for those fiscal years were, $42,000 in 2011 and $42,000 in 2012.
(b) Audit-Related Fees
None.
(c) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning were $9,000 in 2011 and $9,000 in 2012. The nature of the services comprising these fees were tax compliance, tax advice and tax planning including fees for tax return preparation.
(d) All Other Fees
None.
(e) (1) The registrant’s audit committee has adopted an Audit Committee Charter which contains policies and procedures relating to the pre-approval of services provided by the registrant’s principal accountant (the “Pre-Approval Policies”). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee, and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees with the exception of any de minimus engagement meeting applicable requirements. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the registrant’s audit committee. The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant’s audit committee at least annually. The registrant’s audit committee maintains full responsibility for the appointment, compensation and oversight of the registrant’s principal accountant.
(2) Not applicable.
(f) Not applicable
(g) Not applicable.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) | Included as part of report to stockholders under Item 1. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which a Fund’s shareholder may recommend nominees to the registrant’s board of Trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A(17 CFR240 14a-101), or this item.
ITEM 11. CONTROLS AND PROCEDURES
(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified to the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS.
(a)(1) Registrant’s Code of Ethics – Not applicable (please see Item 2)
(a)(2) Treasurer’s and President’s Section 302 certification
(a)(3) Not applicable.
(b) Combined 906 certification
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant The Wright Managed Equity Trust (On behalf of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund and Wright International Blue Chip Equities Fund)
By /s/ Peter M. Donovan
Peter M. Donovan
President
Date Febraury 28, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Peter M. Donovan
Peter M. Donovan
President
Date February 28, 2013
By /s/ Michael J. McKeen
Michael J. McKeen
Treasurer
Date February 28, 2013