FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-3489
The Wright Managed Equity Trust
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(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Name and Address of Agent for Services)
(617) 482-8260
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(Registrant's Telephone Number)
December 31
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Date of Fiscal Year End
June 30, 2004
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Date of Reporting Period
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Item 1. REPORTS TO STOCKHOLDERS
THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS
SEMI-ANNUAL REPORT
JUNE 30 , 2004
THE WRIGHT MANAGED EQUITY TRUST
o Wright Selected Blue Chip Equities Fund
o Wright Major Blue Chip Equities Fund
o Wright International Blue Chip Equities Fund
THE WRIGHT MANAGED INCOME TRUST
o Wright U.S. Government Near Term Fund
o Wright U.S. Government Intermediate Fund
o Wright Total Return Bond Fund
o Wright Current Income Fund
THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS
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THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS CONSISTS OF THREE EQUITY FUNDS
FROM THE WRIGHT MANAGED EQUITY TRUST AND FOUR FIXED INCOME FUNDS FROM THE
WRIGHT MANAGED INCOME TRUST. EACH OF THE SEVEN 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" or the "Adviser"). All 25,000 global companies (covering 50 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 Fund would require a higher Investment Acceptance rating than the companies
in the Selected Blue Chip Fund.
THREE EQUITY FUNDS
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) seeks to enhance total investment
return of price appreciation plus income. The funds 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 400 Index (S&P
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) seeks to enhance total investment
return of price appreciation plus income by providing management of a broadly
diversified portfolio of equities of larger well-established companies with
market values of $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) 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
portfolio 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 Developed World ex U.S. Index 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.
FOUR FIXED-INCOME FUNDS
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB) is a diversified portfolio
concentrating on bonds and other obligations of the U.S. Government and U.S.
Government Agencies with an average weighted maturity of between one and three
years. This portfolio is designed to appeal to the investor seeking a high level
of income that is normally somewhat less variable and normally somewhat higher
than that available from short-term money market instruments and who is also
tolerant of modest fluctuation in capital (i.e. compared with somewhat greater
fluctuation likely with longer term fixed income securities). Dividends are
accrued daily and paid monthly. The fund's benchmark is the Lehman U.S.
Government 1-3 Year Bond Index.
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND (WUSGI) seeks a high total return with
an emphasis on income by investing in obligations of the U.S. Government and
U.S. Government Agencies maintaining an average maturity from two to six years.
The fund does not invest in derivatives. Assets are allocated on the basis of
Wright's economic outlook and expected trend in interest rates. Dividends are
accrued daily and paid monthly. The fund's benchmark is the Lehman U.S.
Government Intermediate Bond Index.
WRIGHT TOTAL RETURN BOND FUND (WTRB) 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 best 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 Lehman U.S.
Aggregate Bond Index.
WRIGHT CURRENT INCOME FUND (WCIF) 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 funds benchmark is
the Lehman GNMA Backed Bond Index.
TABLE OF CONTENTS
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INVESTMENT OBJECTIVES...inside front & back cover
LETTER TO SHAREHOLDERS..........................2
MANAGEMENT DISCUSSION...........................3
FINANCIAL STATEMENTS
THE WRIGHT MANAGED EQUITY TRUST
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
Portfolio of Investments..................10
Statement of Assets & Liabilities.........13
Statement of Operations...................13
Statement of Changes in Net Assets........14
Financial Highlights......................15
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
Portfolio of Investments..................16
Statement of Assets & Liabilities.........19
Statement of Operations...................19
Statement of Changes in Net Assets........20
Financial Highlights......................21
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
Portfolio of Investments..................22
Statement of Assets & Liabilities.........24
Statement of Operations...................24
Statement of Changes in Net Assets........25
Financial Highlights......................26
NOTES TO FINANCIAL STATEMENTS...............27
THE WRIGHT MANAGED INCOME TRUST
WRIGHT U.S. GOVERNMENT NEAR TERM FUND
Portfolio of Investments..................32
Statement of Assets & Liabilities.........33
Statement of Operations...................33
Statement of Changes in Net Assets........34
Financial Highlights......................35
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND
Portfolio of Investments..................36
Statement of Assets & Liabilities.........37
Statement of Operations...................37
Statement of Changes in Net Assets........38
Financial Highlights......................39
WRIGHT TOTAL RETURN BOND FUND
Portfolio of Investments..................40
Statement of Assets & Liabilities.........44
Statement of Operations...................44
Statement of Changes in Net Assets........45
Financial Highlights......................46
WRIGHT CURRENT INCOME FUND
Portfolio of Investments..................47
Statement of Assets & Liabilities.........50
Statement of Operations...................50
Statement of Changes in Net Assets........51
Financial Highlights......................52
NOTES TO FINANCIAL STATEMENTS...............53
LETTER TO SHAREHOLDERS
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July 2004
Dear Shareholders:
The relative calm of the stock market in the first half of 2004 has been
a welcome, if not totally satisfying, feature of the investment landscape this
year. Welcome, since it is a big improvement on the extreme volatility of stock
prices in 1998-02; disappointing, because the fundamentals would seem to deserve
better than the 1.3% price increases achieved by the S&P 500 in each of 2004's
first two quarters. (Annualized, with dividend income included, the S&P 500's
first-half total return works out to 6.8%, about one-third short of the market's
10.4% long-term average). Mid-cap stocks fared better than big-caps by 2.6% over
the first six months of 2004, despite lagging by some 75 bps in Q2. Likewise,
foreign equities also averaged a better-than-S&P 500 total return for the first
half in U.S. dollar terms, but lagged in Q2 due to weakness in the Pacific
region and the stronger dollar.
To some extent, the U.S. stock market's first-half shortfall relative to
expectations is the result of uncertainty surrounding Federal Reserve monetary
policy. The Fed's first interest rate hike in four years came on the final day
of the second quarter but was anticipated by the market for most of the quarter
(following the April 2 Labor Department report of 300,000 new jobs created
during March). Concerns that the Fed was about to embark on a protracted
tightening sent the 10-year Treasury bond yield up roughly 75 basis points in
the second quarter. With the market's favorite discount rate rising so
significantly, stock investors grew more cautious, reducing the market P/E
multiple from around 18.5 times 12-month forward earnings at the market's
February high to 16.5 times at midyear.
In the fixed-income arena, the Lehman bond market aggregate lost 2.4% in
Q2 (eking out a 0.2% return YTD), lagging the 0.2% return on three-month
Treasury bills (0.5% YTD). By the measure of the Lehman aggregate, the second
quarter was the worst for bonds in 10 years. The Fed's quarter-point increase in
its fed funds target from a 45-year low of 1.0% is widely seen as the first of
several interest rate hikes over the next 12 months. But the two-to-five year
segment of the Treasury yield curve has seen interest rates rise almost 175
basis points from the June 2003 lows through midyear 2004, suggesting that bond
prices already reflect a lot of Fed tightening to come. The model everyone is
hoping to avoid, of course, is that of 1994, when the Fed launched a
three-percentage-point increase in interest rates, pummeling bonds and
depressing stock prices for much of that year.
Few people actually think that Fed monetary tightening in 2004-05 will
come to that. For one thing, improvement in the jobs market may not be that well
established, as is suggested in the weaker-than-expected 112,000 new jobs
created during June. Add to that the fact that inflation risks are more moderate
today than they were 10 years ago. Labor productivity is trending higher, and as
a result unit labor costs in nonfarm businesses are down 1% over the latest 12
months. Global competition is also more pervasive today, constraining firms'
pricing power, while spare capacity is still more than adequate in most
industries. The U.S. dollar appreciated about 2% against a trade-weighted basket
of major foreign currencies in the second quarter (its second straight quarter
in the black after declining five quarters in a row), which suggests that import
price pressures might recede in the months ahead. Further out, it is hard to
avoid concluding that the dollar will resume its downward trend under the weight
of the U.S.'s half-trillion-dollar trade deficit, another reason to appreciate
what global diversification brings to stock portfolios in the current
environment.
Despite the many missing pieces of the 2004 market puzzle - the Iraq
transition, terrorism, energy prices, the extent of Fed tightening and the
Presidential election - the picture that emerges is nevertheless seen to be
favorable, particularly from the perspective of equity investors. An important
reason for this positive view is the powerful momentum of corporate earnings,
which increased an estimated 20% in the first half of 2004 and stand to increase
another 8%-10% over the coming 12 months. For this period ahead, we continue to
believe that equity returns on the order of the market's 10% long-term norm are
feasible, well ahead of expected bond market returns and returns on short-term
cash equivalents. As always, I invite your questions and suggestions on how we
can better serve your investment needs.
Sincerely,
s/s Peter M. Donovan
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Peter M. Donovan
President
MANAGEMENT DISCUSSION
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EQUITY FUNDS
SEVERAL ISSUES COMBINED TO KEEP THE U.S. STOCK MARKET IN THE DOLDRUMS FOR THE
SECOND STRAIGHT QUARTER. THE S&P 500'S PRICE RISE FOR THE SECOND QUARTER OF 2004
EXACTLY MATCHED THE FIRST-QUARTER'S 1.3%; NASDAQ DOUBLED THAT INCREASE, WHILE
THE DOW EDGED INTO THE BLACK WITH AN 0.8% GAIN. SO FAR THIS YEAR, THE S&P 500
AND NASDAQ HAVE POSTED PRICE GAINS IN THE 2%-3% RANGE, WHILE THE DOW IS JUST
ABOUT UNCHANGED. INVESTORS COULD HAVE DONE BETTER THAN THE MARKET IN THE FIRST
HALF OF 2004 BY CONCENTRATING ON SMALL- AND MID-CAP STOCKS. THE S&P MIDCAP 400
AND SMALLCAP 600 ROSE 5.5% AND 9.6%, RESPECTIVELY, FOR THE SIX MONTHS. IN DOLLAR
TERMS, FOREIGN MARKETS IN THE AGGREGATE LAGGED THE S&P 500 IN THE SECOND QUARTER
WITH A 0.8% DECLINE BUT PERFORMED IN LINE WITH THE U.S. FOR THE FIRST HALF WITH
A 2.9% PRICE RISE.
OF THE SEVERAL ISSUES THAT COMBINED TO KEEP A LID ON STOCK PRICES IN THE SECOND
QUARTER, THE PROSPECT OF A SHIFT IN MONETARY POLICY WAS THE MOST SIGNIFICANT. ON
THE LAST DAY OF THE SECOND QUARTER, THE FEDERAL RESERVE AS EXPECTED RAISED ITS
BENCHMARK FED FUNDS RATE BY 25 BASIS POINTS TO 1.25%, THE FIRST INCREASE IN FOUR
YEARS. FOR ALL OF THE SECOND QUARTER INVESTORS FRETTED ABOUT THE FACT THAT THE
FED WAS ABOUT TO EMBARK ON A TIGHTENING PROGRAM, WITH ALL THAT THE SHIFT IMPLIED
ABOUT MARKET INTEREST RATES, THE STRENGTH OF THE EXPANSION AND THE INFLATION
THREAT. AN ISSUE THAT ALSO COMMANDED A LOT OF ATTENTION WAS THE CONTINUING
TURMOIL IN IRAQ AND THE MIDDLE EAST GENERALLY. PROBLEMS IN THIS REGION
CONTRIBUTED TO ANOTHER CONCERN OF INVESTORS - THE RISE IN OIL PRICES TO A RECORD
LEVEL IN EARLY JUNE. THESE ISSUES, PLUS THE EBB AND FLOW OF ELECTION-YEAR
POLITICS AND THE FACT EQUITY VALUATIONS WEREN'T CHEAP WHEN THE YEAR BEGAN,
OVERSHADOWED THE SIGNIFICANT PLUSES OF A HEALTHY ECONOMY AND STRONG GROWTH IN
CORPORATE PROFITS.
THE U.S. STOCK MARKET STARTED THE THIRD QUARTER ON A WEAK NOTE, BUT WIS EXPECTS
THAT TO CHANGE. WHILE INVESTORS HAVE MANY UNCERTAINTIES TO DEAL WITH THIS YEAR,
AT LEAST AS FAR AS THE ECONOMIC FUNDAMENTALS GO WE EXPECT CONDITIONS TO BE
FAVORABLE FOR EQUITIES. OUR FORECAST CALLS FOR THE ECONOMY TO SETTLE IN A
MODERATE GROWTH PATH, WITH GDP GROWTH IN A 3.5%-4.0% RANGE. WE ALSO EXPECT CORE
INFLATION TO DROP BACK UNDER 2.5%, AND OIL PRICES ARE MORE LIKELY TO MOVE LOWER
THAN HIGHER. THIS MEANS THAT THE FED SHOULD BE ABLE TO STICK TO ITS PLAN OF
"MEASURED" REDUCTION IN MONETARY STIMULATION, AND THAT BOND YIELDS WON'T MOVE
HIGH ENOUGH TO STALL THE RECOVERY. ALTHOUGH RECENT 20%+ GROWTH RATES IN
CORPORATE PROFITS ARE UNSUSTAINABLE, PROFITS ARE EXPECTED TO CONTINUE TO ADVANCE
OVER THE NEXT 12-18 MONTHS. ALSO ON THE PLUS SIDE: THE STOCK MARKET'S P/E
MULTIPLE HAS COME DOWN SINCE THE BEGINNING OF THE YEAR. WITH ALL THIS
CONSIDERED, WE EXPECT THAT STOCK MARKET RETURNS OVER THE NEXT 12 MONTHS COULD BE
CLOSE TO 10%.
2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
Total Return 6 Mos. Year Year Year Year Year Year Year Year Year Year Year Year Year
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Wright Selected Blue Chip
Fund (WSBC) 5.2% 30.1% -17.0%-10.2% 10.8% 5.8% 0.1% 32.7% 18.6% 30.3% -3.5% 2.1% 4.7% 36.0%
Wright Major Blue Chip
Fund (WMBC) 2.2% 23.2% -24.5%-16.9% -12.5% 24.0% 20.4% 33.9% 17.6% 29.0% -0.7% 1.0% 8.0% 38.9%
Wright International Blue Chip
Fund (WIBC) 2.4% 32.0% -14.5%-24.2% -17.6% 34.3% 6.1% 1.5% 20.7% 13.6% -1.6% 28.2% -3.9% 17.2%
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
After four quarters of superiority, the S&P MidCap 400 lagged the S&P 500 in the
second quarter of 2004, although it is still ahead in total return for the year
to date. The Wright Selected Blue Chip Fund (WSBC), which is managed as a
mid-cap blend fund, returned 0.2% in the second quarter of 2004, compared to
1.0% for both the S&P MidCap 400 and an average of 25 mid-cap blend funds in the
Morningstar database. This shortfall offset a first-quarter performance that
just about equaled the S&P MidCaps. For the first half of 2004, the WSBC
returned 5.2%, compared to 6.1% for the S&P benchmark and 5.7% for the
Morningstar average.
For the first half of 2004, WSBC's strong stock selection in the majority of
market sectors was offset by the effect of having underweight positions in
industrials and consumer staples, two of the S&P MidCap's best-performing groups
in the period. A slightly overweight position in energy stocks, another strong
sector, helped performance. In the second quarter of 2004, the underweight
position in industrials continued to be a drag on performance, offsetting
overall good stock selection. Regarding specific issues, the Fund's
second-quarter performance was hurt by the 42% price decline of New York
Community Bank (one of the best stocks in the first quarter), which was hurt in
the latest period by its mortgage exposure. J.B. Hunt Transport, up 37%, was the
Fund's strongest performer in Q2.
The WSBC Fund continues to experience relatively high turnover due to changes
being made in the S&P MidCap 400 index, the WSBC's benchmark. For example, four
of six sales from the Fund in the second quarter were the result of changes in
the index. In adding new securities to the Fund, the Fund's portfolio manager
targets companies with prospects for sustained earnings growth; new companies
being added to the benchmark frequently meet this criteria. As of June 30, the
stocks in the WSBC were on average more profitable and had achieved faster
earnings growth than those in the S&P MidCap index, while still offering better
value as measured by P/E multiple.
WRIGHT MAJOR BLUE CHIP EQUITIES 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, selected with a bias toward the
higher-quality issues in the index. After outperforming the S&P 500 and an
average of its peer group in the first quarter of 2004, the WMBC gave up some
ground in the second quarter with a 0.4% loss compared to returns of 1.7% for
the S&P 500 and 1.5% for an average of 146 large-cap blend funds reported in the
Morningstar database. For the first half of 2004, WMBC returned 2.2%, compared
to 3.4% for the S&P 500 and 2.8% for the Morningstar benchmark.
In the first half of 2004, investors' preference shifted from the marginal
issues favored last year to higher-quality issues. This was a plus for the WMBC,
particularly in the first quarter. In the first half overall, the company also
benefited from good stock selection in the information technology and materials
sectors. For the six months, stock selection was more of a factor in performance
than sector weightings. In the second quarter, however, the Fund's relative
performance compared to the S&P 500 was negatively affected by its overweight
position in financial stocks, the S&P 500's weakest sector for the period.
Problems in specific issues also hurt second-quarter performance. This was
especially apparent in the Fund's health care holdings, with declines in Forest
Laboratories (-11%), Guidant (-12%) and King Pharmaceuticals (-36%).
As the economic recovery matures, we expect investors to favor companies with
prospects for generating solid long-term profit growth, i.e. the types of stocks
held in the WMBC. This switch was already becoming evident in the first half of
2004. Based on portfolio mean and median values, the stocks held in the WMBC are
larger and have a lower debt-to-capitalization ratio than those in the S&P 500.
The WMBC also selects stocks with better earnings momentum, return on equity and
value, which over the long run provide the basis for superior investment
returns.
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
Even with an appreciating dollar working against it, the MSCI World ex U.S.
index (in dollars) edged out the S&P 500 in the first half of 2004, though it
lost some ground in the second quarter. The Wright International Blue Chip Fund
(WIBC) lost 0.5% in the second quarter of 2004, lagging the 0.1% gain for the
MSCI World ex U.S. index but better than the 0.8% loss for an average of 114
international equity funds included in the Morningstar database. For the first
half of 2004, WIBC returned 2.4% compared to 4.3% for the MSCI benchmark and
3.2% for the Morningstar average.
In the first quarter of 2004, WIBC's performance was helped by the strong
performance of the Japanese market and the strong yen. In the second quarter,
the Japanese market was relatively weak and the yen depreciated vs the dollar;
nevertheless, WIBC's performance compared to the MSCI benchmark was helped by
its selection of quality Japanese stocks, which did better than the overall
market. Strong stock selection in the technology sector was also a plus. On the
negative side, WIBC's position in Europe continued to detract from its
performance. In the first quarter, European markets lagged; they strengthened in
the second quarter, but WIBC's relative showing was hurt by its overweight
position in weak European financial stocks. By quarter end, the Fund had moved
to underweight in financials.
WIS continues to view international stock markets as attractive on a valuation
basis. (After their second-quarter plunge, there appear to be some especially
good values among financial issues.) A resumption of the downward correction in
the dollar, which would benefit foreign market returns to U.S. investors, is
also probable. While economic conditions outside of the U.S. are expected to
improve, one caveat is the possible slowdown of economic growth in China, which
could have large ramifications, especially in Asia.
FIXED-INCOME FUNDS
FOLLOWING A POSITIVE FIRST QUARTER, THE BOND MARKET RETREATED IN THE SECOND
QUARTER OF 2004. THE LEHMAN U.S. AGGREGATE BOND MARKET INDEX LOST 2.4% IN THE
SECOND QUARTER, REDUCING THE YEAR-TO DATE RETURN TO 0.2%; BY THIS MEASURE, THE
SECOND QUARTER WAS THE WORST FOR THE U.S. BOND MARKET IN 10 YEARS. BOTH TREASURY
AND CORPORATE ISSUES LOST MORE THAN 3% IN THE QUARTER, AND FOR LONGER MATURITIES
IN BOTH SECTORS THE LOSS WAS MORE THAN 5%. GOVERNMENT AGENCY ISSUES LOST 2.6% IN
THE QUARTER. A GOOD CHOICE FOR FIXED-INCOME INVESTORS IN THE SECOND QUARTER,
BESIDES BEING IN SHORT MATURITY ISSUES, WAS THE MORTGAGE-BACKED SECTOR, WHICH
LOST ONLY ABOUT 1% FOR THE PERIOD AND, UNLIKE THE TREASURY AND CORPORATE
SECTORS, IS IN THE BLACK FOR THE YEAR TO DATE. AMONG INVESTMENT-GRADE
CORPORATES, QUALITY WAS NOT A MAJOR FACTOR IN DETERMINING RETURNS IN THE LATEST
QUARTER.
YIELDS ROSE ALONG THE LENGTH OF THE TREASURY YIELD CURVE IN THE SECOND QUARTER,
WITH SOME FLATTENING BETWEEN TWO AND 10 YEARS. ON THE LAST DAY OF THE SECOND
QUARTER, THE FEDERAL RESERVE RAISED THE BENCHMARK FED FUNDS RATE FROM 1% TO
1.25%. THE U.S. SECURITIES MARKETS SPENT THE ENTIRE QUARTER ANTICIPATING THE
MOVE. THE FED MADE CLEAR ITS INTENTIONS TO START MOVING OFF THE MOST
ACCOMMODATIVE MONETARY POLICY IN 40 YEARS, AND EVEN IF IT HADN'T, THE STRENGTH
OF THE ECONOMY AND UPTICK IN INFLATION SIGNALED THE NEED FOR THE MOVE. YIELDS
FOR THE TWO-TO-FIVE-YEAR SEGMENT OF THE TREASURY YIELD CURVE ROSE ALMOST 175
BASIS POINTS FROM THEIR JUNE 2003 LOWS, SUGGESTING THAT THE BOND MARKET WAS
ALREADY REFLECTING MUCH OF THE FED TIGHTENING TO COME. SO FAR THIS YEAR, THE
YIELD ON THE TWO-YEAR TREASURY IS UP almost 90 BASIS POINTS, WHILE THE 10-YEAR
YIELD IS UP OVER 30 BPS.
BOND RETURNS ARE EXPECTED TO BE LIMITED IN THE NEAR-TERM. OUR FORECAST IS FOR
MODERATE GROWTH AND MODERATE INFLATION FOR THE U.S. ECONOMY. WITH THE RETURN OF
DAMAGING INFLATION UNLIKELY, IN OUR VIEW, IT IS POSSIBLE THAT THE WORST OF THE
RISE IN BOND YIELDS IS BEHIND US. OVER THE COMING 12 MONTHS, WE SEE THE YIELD ON
THE 10-YEAR TREASURY IN A RANGE OF 4.25%-5%. STILL, AFTER A RALLY THAT HAS TAKEN
THE YIELD ON THE 10-YEAR TREASURY FROM ITS Q2 PEAK OF NEAR 4.9% TO UNDER 4.5%,
THERE DOES NOT APPEAR TO BE MUCH UPSIDE POTENTIAL FOR BOND PRICES FOR THE REST
OF THIS YEAR. ALTHOUGH CORPORATE SPREADS HAVE TIGHTENED, WE STILL LOOK FOR
CORPORATES AND MORTGAGE-BACKED ISSUES TO MAKE POSITIVE CONTRIBUTIONS TO
FIXED-INCOME PORTFOLIOS IN THE NEAR TERM.
2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
Total Return 6 Mos. Year Year Year Year Year Year Year Year Year Year Year Year Year
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Wright U.S. Gov't. Near-Term
Bond Fund (WNTB) -0.6% 0.6% 5.4% 6.8% 6.9% 1.9% 6.0% 5.9% 3.9% 11.9% -3.1% 8.0% 6.3% 13.1%
Wright U.S. Gov't. Intermed.
Bond Fund (WUSGI) -0.6% 1.4% 8.1% 5.4% 12.6% -4.0% 10.0% 9.1% -1.2% 28.2% -8.6% 15.9% 7.1% 17.6%
Wright Total Return Bond
Fund (WTRB) -0.3% 3.3% 9.0% 5.0% 10.6% -3.9% 9.6% 9.3% 0.9% 22.0% -6.6% 11.0% 7.1% 15.4%
Wright Current Income Fund
(WCIF) 0.5% 1.7% 7.7% 7.2% 10.3% 0.5% 6.5% 8.6% 4.4% 17.5% -3.3% 6.6% 6.7% 15.3%
WRIGHT U.S. GOVERNMENT NEAR TERM FUND
The Wright U.S. Government Near-Term Fund (WNTB) is positioned to offer an
alternative to money market funds with less sensitivity to changes in interest
rates than longer maturity funds. With interest rates in the one-to-two-year
maturity range rising around 100 basis points in the second quarter, WNTB lost
1.2%. This was in line with the loss of 1.1% for the Lehman 1-3 year government
bond index and better than the 1.5% loss for an average of 54 Morningstar
government bond funds with an average maturity between one and three years. For
the first six months of the year, WNTB lost 0.6%, compared to a 0.1% loss for
the Lehman benchmark and a 0.5% loss for the Morningstar average.
WNTB started the second quarter with a slightly short duration compared to the
Lehman benchmark, which served it well as interest rates rose, then moved to
neutral duration, which was a positive when bonds rallied late in the quarter.
In order to pick up extra yield, as of June 30 the WNTB Fund was underweight in
government agency (29% of portfolio holdings) and overweight in mortgage-backed
issues(13%),and underweight in Treasury issues (55%) compared to the Lehman
benchmark. The Fund also held 3% in cash.
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND
The Wright U.S. Government Intermediate Fund (WUSGI) is positioned as an
intermediate maturity fund with little or no credit risk. As bond yields rose in
the second quarter, the WUSGI gave back its first-quarter gain, losing 2.4% for
the April-June period, about the same as the Lehman U.S. government intermediate
index and an average of 138 intermediate government bond funds in the
Morningstar database. For the first half of 2004, WUSGI lost 0.6%, compared to
losses of about 0.2% for both the Lehman benchmark and the Morningstar
peer-group average.
In the first quarter of 2004, the WUSGI lagged the Lehman average due to an
overweight in non-Treasury issues, which underperformed Treasuries, and a short
duration in anticipation of rising interest rates. In the second quarter, this
positioning helped the Fund overcome the effect of fund expenses and just about
match the Lehman index's performance. Intermediate Agency and mortgage-backed
issues outperformed Treasuries of similar maturity in the second quarter.
Following the sharp rise in interest rates early in Q2, which made the Fund's
short-duration an advantage, WUSGI moved to a neutral duration of about 3.4
years, which proved to be positive as bonds rallied late in the quarter. At June
30, the WUSGI Fund was invested 58% in Agency issues, 14% in mortgage-backed
securities and 27% in Treasuries, with a small position in frictional cash.
WRIGHT TOTAL RETURN BOND FUND
As interest rates rose in the second quarter of 2004, the Wright Total Return
Bond Fund (WTRB), a diversified bond fund, lost 2.5%, in line with the losses of
2.4% for the Lehman U.S. Aggregate Bond Composite and 2.5% for an average of 199
total return bond funds in the Morningstar database. In the second quarter, the
WTRB essentially gave back its first-quarter gain; for the first six months of
the year, the Fund lost 0.3%, compared to a positive return of 0.2% for the
Lehman aggregate and a loss 0.1% for the Morningstar average.
In the first quarter, the WTRB Fund's performance relative to the Lehman
Aggregate was hurt by a slightly shorter-than-benchmark maturity and duration
strategy, but this helped in the second quarter as interest rates rose. The
Fund's sector position had a mixed effect in the first half. In the first
quarter, an overweight position in corporates helped performance and
overweighting in mortgages hurt. The Fund maintained this positioning in the
second quarter, with the opposite effect, since mortgages were the
strongest-performing sector of the Lehman aggregate in Q2 and corporates lagged.
We still see mortgage-backed and corporate issues providing incremental return
over the limited returns we anticipate from Treasury issues over the coming year
or so, and remain overweight in these sectors. The position in corporates was
reduced slightly to 33% of assets at June 30 from 36% three months earlier;
Treasuries were increased to account for 12% of assets at quarter end.
Mortgage-backed issues were 41%, agencies 10%, asset-backed issues 4%. The Fund
moved to a neutral duration of 4.6 years after the second quarter's rise in
interest rates.
WRIGHT CURRENT INCOME FUND
The Wright Current Income Fund (WCIF) is almost entirely invested in GNMA issues
(mortgage-based securities, known as Ginnie Mae's, with explicit backing from
the Federal government). The WCIF Fund is actively managed to maximize income
and minimize principal fluctuation. In the second quarter of 2004,
mortgage-backed securities outperformed the Lehman U.S. aggregate bond index as
rising mortgage rates reduced the risk of mortgage prepayment. For the latest
three months, WCIF lost 0.8%, less than the losses of 0.9% for the Lehman Ginnie
Mae index and 1.3% for the average of all 61 Morningstar government mortgage
funds. For the first half of 2004, WCIF returned 0.5%, behind the 0.7% return of
the Lehman benchmark but slightly better than the 0.4% return of the Morningstar
average.
In the first quarter, WCIF's holdings were tilted towards higher coupon issues
in anticipation of rising interest rates, which penalized the Fund's performance
a bit compared to the Lehman benchmark. As interest rates rose in the second
quarter, this positioning worked to the Fund's benefit. Based on our expectation
that rates will be moving higher over the next year, the bias towards higher
coupon issues will be maintained to pick up extra income. At June 30, the WCIF's
indicated annual yield was 4.8%, with minimum credit risk, making it attractive
for income-oriented investors.
U.S. SECURITIES MARKETS -------------------------------------------------------
The Dow Jones Industrial Average chart shows the point changes in the average
which consists of 30 major NYSE industrial companies and is a price-weighted
arithmetic average, with the divisor adjusted for stock splits. The yield
chart shows the basis point changes in the U.S. Treasury bond which is the
benchmark U.S. Treasury bond with a maturity of 10 years.
The following plotting points are used for comparison in the mountain charts.
Date Dow Jones U.S. 10 Year
Industrial Average Treasury Bond Yield
12/31/94 3834.44 7.84%
12/31/95 5117.12 5.58%
12/31/96 6448.27 6.43%
12/31/97 7908.25 5.75%
12/31/98 9181.43 4.65%
12/31/99 11,497.12 6.44%
12/31/00 10,786.85 5.11%
12/31/01 10,021.50 5.00%
12/31/02 8,341.63 3.82%
12/31/03 10,453.92 4.25%
06/30/04 10,435.48 4.62%
- --------------------------------------------------------------------------------
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - June 30, 2004 (unaudited)
Shares Value
EQUITY INTERESTS -- 99.9%
AUTOMOBILES & COMPONENTS -- 3.9%
BorgWarner, Inc..................... 12,670 $ 554,566
Copart Inc.*........................ 16,560 442,152
Lear Corp........................... 9,250 545,657
-----------
$ 1,542,375
-----------
BANKS -- 9.7%
Associated Banc-Corp................ 13,630 $ 403,857
Astoria Financial Corp.............. 6,030 220,577
Banknorth Group Inc................. 14,055 456,506
City National Corp.................. 4,360 286,452
Compass Bancshares, Inc............. 9,615 413,445
Hibernia Corp.-Class A.............. 11,325 275,197
Independence Community Bank......... 8,310 302,484
New York Community Bancorp.......... 21,286 417,844
Silicon Valley Bancshares*.......... 4,460 176,839
Sovereign Bancorp, Inc.............. 27,360 604,656
Webster Financial Corp.............. 6,905 324,673
-----------
$ 3,882,530
-----------
BUILDING MATERIALS -- 1.1%
Cytyc Corp.*........................ 17,255 $ 437,759
-----------
CAPITAL GOODS -- 4.4%
Ametek, Inc......................... 6,520 $ 201,468
Donaldson Co., Inc.................. 4,520 132,436
Jacobs Engineering Group, Inc.*..... 7,535 296,728
L-3 Communications Holdings, Inc.... 4,440 296,592
Pentair, Inc........................ 11,650 391,906
SPX Corp............................ 4,460 207,122
Vishay Intertechnology, Inc.*....... 12,385 230,113
-----------
$ 1,756,365
-----------
CHEMICALS -- 2.2%
Church & Dwight Co., Inc............ 3,220 $ 147,412
Cytec Industries, Inc............... 8,130 369,508
Minerals Technologies, Inc.......... 3,445 199,810
Scotts Company - Class A*........... 2,650 169,282
-----------
$ 886,012
-----------
COMMERCIAL SERVICES & SUPPLIES -- 2.5%
Ceridian Corp.*..................... 8,965 $ 201,712
ITT Educational Services, Inc.*..... 5,970 226,979
Rent-A-Center Inc.*................. 9,185 274,907
United Rentals Inc.*................ 15,525 277,742
-----------
$ 981,340
-----------
COMPUTERS & PERIPHERALS -- 3.8%
CDW Corp............................ 4,725 $ 301,266
Imation Corp........................ 4,215 179,601
Sandisk Corp.*...................... 17,010 368,947
Storage Technology Corp.*........... 13,320 386,280
Tech Data Corp.*.................... 6,825 267,062
-----------
$ 1,503,156
-----------
CONSUMER DURABLES & APPAREL -- 2.3%
Mohawk Industries, Inc.*............ 8,025 $ 588,473
Timberland Co. - Class A*........... 5,010 323,596
-----------
$ 912,069
-----------
DIVERSIFIED FINANCIALS -- 2.9%
AG Edwards, Inc..................... 5,500 $ 187,165
Legg Mason, Inc..................... 7,315 665,738
New Plan Excel Realty Trust REIT.... 13,280 310,221
-----------
$ 1,163,124
-----------
ELECTRIC UTILITIES -- 1.8%
Alliant Energy Corp................. 15,155 $ 395,242
Black Hills Corp.................... 9,880 311,220
-----------
$ 706,462
ELECTRONIC EQUIPMENT & INSTRUMENTS-- 0.5%
Energizer Holdings, Inc.*........... 4,300 $ 193,500
-----------
ELECTRONICS -- 2.7%
Arrow Electronics, Inc.*............ 9,410 $ 252,376
Atmel Corp.*........................ 24,525 145,188
Avnet Inc.*......................... 13,045 296,121
Cree Inc.*.......................... 11,285 262,715
Silicon Laboratories Inc.*.......... 2,220 102,897
-----------
$ 1,059,297
-----------
ENERGY -- 10.0%
Equitable Resources, Inc............ 7,335 $ 379,293
Forrest Oil Corp.*.................. 12,550 342,866
MDU Resources Group Inc............. 14,207 341,394
Murphy Oil Corp..................... 5,705 420,459
Oneok Inc........................... 10,960 241,010
Pogo Producing Co................... 16,295 804,973
Smith International, Inc.*.......... 4,420 246,459
XTO Energy, Inc..................... 23,351 695,626
-----------
$ 3,472,080
-----------
FOOD, BEVERAGE & TOBACCO -- 3.3%
Constellation Brands, Inc.- Class A* 10,155 $ 377,055
Dean Foods Co.*..................... 13,182 491,820
Smithfield Foods Inc.*.............. 9,675 284,445
Universal Corp...................... 3,400 173,196
-----------
$ 1,326,516
-----------
FOREST PRODUCTS & PAPER -- 0.5%
Potlatch Corp....................... 4,785 $ 199,247
-----------
HEALTH CARE EQUIPMENT & SERVICES-- 4.5%
Coventry Health Care, Inc.*......... 14,310 $ 699,759
Health Net, Inc.*................... 11,265 298,523
Henry Schein, Inc.*................. 4,115 259,821
Lincare Holdings Inc.*.............. 8,170 268,466
Renal Care Group Inc.*.............. 8,290 274,648
-----------
$ 1,801,217
-----------
HEAVY CONSTRUCTION -- 0.3%
Hovnanian Enterprises, Inc.- Class A* 3,870 $ 134,328
-----------
HEAVY MACHINERY -- 0.4%
Dycom Industries, Inc.*............. 6,255 $ 175,140
-----------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES-- 4.6%
D.R. Horton, Inc.................... 15,215 $ 432,106
Graco Inc........................... 8,582 266,471
Harman International................ 2,830 257,530
Hillenbrand Industries.............. 6,215 375,697
HNI Corp............................ 3,930 166,357
Lennar Corp......................... 7,580 338,978
-----------
$ 1,837,139
-----------
HOTELS, RESTAURANTS & LEISURE -- 2.8%
Applebee's International, Inc....... 7,700 $ 177,254
Brinker International, Inc.*........ 5,520 188,342
Callaway Golf Company............... 4,805 54,489
Gtech Holdings Corp................. 9,250 428,368
Mandalay Resort Group............... 4,015 275,590
-----------
$ 1,124,043
-----------
INSURANCE -- 6.0%
Allmerica Financial Corp.*.......... 4,420 $ 149,396
American Financial Group, Inc....... 4,135 126,407
Everest Re Group, Ltd............... 3,730 299,743
Fidelity National Financial, Inc.... 8,577 320,265
Old Republic International Corp..... 8,455 200,553
Pacificare Health Systems*.......... 9,390 363,017
Protective Life Corp................ 7,680 296,986
Radian Group, Inc................... 9,760 467,504
Stancorp Financial Group............ 2,365 158,455
-----------
$ 2,382,326
-----------
MATERIALS -- 1.9%
Airgas, Inc......................... 12,100 $ 289,311
Precision Castparts Corp............ 8,965 490,296
-----------
$ 779,607
-----------
MEDIA -- 1.0%
Macrovision Corp.*.................. 5,845 $ 146,300
Reader's Digest Associaition........ 15,340 245,287
-----------
$ 391,587
-----------
OIL & GAS -- 0.8%
Newfield Exploration Company*....... 5,480 $ 305,455
-----------
PHARMACEUTICALS & BIOTECHNOLOGY-- 4.2%
Barr Laboratories, Inc.*............ 7,585 $ 255,615
Beckman Coulter Inc................. 5,560 339,160
Millennium Pharmaceuticals*......... 10,065 138,897
Omnicare, Inc....................... 9,820 420,394
Par Pharmaceutical Cos Inc.*........ 3,300 116,193
Perrigo Company..................... 9,820 186,285
Sepracor Inc.*...................... 3,810 201,549
-----------
$ 1,658,093
-----------
RETAILING -- 8.4%
Abercrombie & Fitch Co. - Class A... 8,210 $ 318,138
Ann Taylor Stores Corp.*............ 6,905 200,107
Barnes & Noble, Inc.*............... 8,660 294,267
Blyth, Inc.......................... 5,970 205,905
Chico's FAS, Inc.*.................. 10,595 478,470
Claire's Stores, Inc................ 11,040 239,568
Michaels Stores, Inc................ 8,900 489,500
Neiman-Marcus Group, Inc. - Class A. 5,440 302,736
Pacific Sunwear of California*...... 7,435 145,503
Pier 1 Imports, Inc................. 8,495 150,277
Ross Stores, Inc.................... 12,305 329,282
Williams-Sonoma, Inc.*.............. 6,580 216,877
-----------
$ 3,370,630
-----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS-- 1.7%
International Rectifier Corp.*...... 6,480 $ 268,402
Lam Research Corp.*................. 9,185 246,158
Semtech Corp.*...................... 6,925 163,015
-----------
$ 677,575
-----------
SOFTWARE & SERVICES -- 5.1%
Activision Inc.*.................... 21,910 $ 348,369
Certegy Inc......................... 2,975 115,430
Fair Isaac, Inc..................... 10,450 348,821
Jack Henry & Associates, Inc........ 5,885 118,289
Macromedia, Inc.*................... 5,520 135,516
Mentor Graphics Corp.*.............. 14,055 217,431
Sybase, Inc.*....................... 18,385 330,930
Synopsys, Inc.*..................... 5,915 168,163
Transaction Sys.Architects,
Inc.-Class A*..................... 12,630 271,924
-----------
$ 2,054,873
-----------
TELECOMMUNICATION SERVICES -- 2.4%
Adtran, Inc......................... 8,190 $ 273,300
Cincinnati Bell, Inc.*.............. 27,140 120,502
Plantronics Inc.*................... 3,930 165,453
Polycom Inc.*....................... 7,800 174,798
Telephone & Data Systems, Inc....... 3,035 216,092
-----------
$ 950,145
-----------
TRANSPORTATION -- 2.3%
J.B. Hunt Transport Services, Inc... 10,375 $ 400,268
Overseas Shipholding Group.......... 5,135 226,608
Thor Industries Inc................. 8,230 275,376
-----------
$ 902,252
-----------
UTILITIES -- 3.2%
Energy East Corp.................... 5,460 $ 132,405
Great Plains Energy, Inc............ 4,565 135,581
Questar Corp........................ 10,795 417,119
SCANA Corp.......................... 6,050 220,039
Wisconsin Energy Corp............... 11,610 378,602
-----------
$ 1,283,746
-----------
TOTAL EQUITY INTERESTS-- 99.9%
(identified cost, $31,832,231) $ 39,849,988
OTHER ASSETS,
LESS LIABILITIES -- 0.1% 40,456
-----------
NET ASSETS -- 100% $ 39,890,444
============
* Non-income-producing security.
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $31,832,231) (Note 1A). $39,849,988
Cash.................................... 59
Receivable for investments sold......... 432,359
Receivable for fund shares sold......... 35,523
Dividends Receivable.................... 24,274
Prepaid expenses........................ 17,754
------------
Total assets............................ $40,359,957
------------
LIABILITIES:
Payable for investments purchased....... $ 420,853
Payable for fund shares reacquired...... 3,601
Demand note payable..................... 24,000
Payable to affiliate for Trustees' fees. 1,828
Transfer agent fee...................... 1,858
12b-1 fees payable...................... 1,899
Accrued expenses and other liabilities.. 15,474
------------
Total liabilities....................... $ 469,513
------------
NET ASSETS................................ $39,890,444
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 29,124,350
Accumulated undistributed net realized gain
on investments (computed on the basis of
identified cost)....................... 1,851,956
Unrealized appreciation on investments
(computed on the basis of identified cost) 8,017,757
Undistributed net investment income..... 896,381
------------
Net assets applicable to outstanding
shares................................ $ 39,890,444
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 3,193,375
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 12.49
=============
See notes to financial statements
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 207,634
Expenses -
Investment adviser fee (Note 2):........ $ 115,992
Administrator fee (Note 2):............. 23,198
Compensation of Trustees not employees of the
investment adviser or administrator.... 7,686
Custodian fee........................... 32,521
Distribution expenses (Note 3):......... 48,330
Transfer and dividend disbursing agent fees 11,648
Printing................................ 1,736
Interest expense........................ 97
Shareholder communications.............. 4,186
Audit services.......................... 11,927
Legal services.......................... 4,484
Registration costs...................... 9,136
Miscellaneous .......................... 3,274
-------------
Total expenses.......................... $ 274,215
Deduct -
Preliminary Reduction of custodian fee
(Note 1D):............................. $ (971)
Preliminary Reduction of distribution expenses
by principal underwriter (Note 3):..... (31,542)
------------
Total deductions........................ $ (32,513)
------------
Net expenses............................ $ 241,702
------------
Net investment (loss)................... $ (34,068)
------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investment transactions
(identified cost basis)................ $ 2,931,396
Change in unrealized depreciation of
investments............................ (895,447)
------------
Net realized and unrealized gain
of investments......................... $ 2,035,949
------------
Net increase in net assets from operations $ 2,001,881
=============
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 2004 Dec. 31, 2003
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment loss........................................................ $ (34,068) $ (77,006)
Net realized gain (loss) on investments.................................... 2,931,396 (660,788)
Change in unrealized appreciation (depreciation) of investments............ (895,447) 9,657,697
------------ ------------
Net increase in net assets resulting from operations..................... $ 2,001,881 $ 8,919,903
------------ ------------
Distributions to shareholders (Note 1F) -
From net realized gain..................................................... $ - $ (470,550)
------------ ------------
Total distributions...................................................... $ - $ (470,550)
------------ ------------
Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (301,243) $ (3,076,788)
------------ ------------
Net increase (decrease) in net assets........................................ $ 1,700,638 $ 5,372,565
NET ASSETS:
At beginning of period....................................................... 38,189,806 32,817,241
------------ ------------
At end of period............................................................. $ 39,890,444 $ 38,189,806
============== ==============
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF PERIOD................................................................ $ 896,381 $ 930,450
============== ==============
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS June 30, 2004 2003(6) 2002(6) 2001(6) 2000(6) 1999
- -----------------------------------------------------------------------------------------------------------------------------
(unaudited)
Net asset value, beginning of period........ $ 11.870 $ 9.270 $ 11.580 $ 13.430 $ 15.130 $ 17.630
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment (loss) income(1) ....... $ (0.009) $ (0.023) $ (0.046) $ (0.045) $ (0.041) $ 0.181
Net realized and unrealized gain (loss) 0.629 2.756 (1.831) (1.322) 1.638 0.638
-------- -------- -------- -------- -------- --------
Total income (loss)
from investment operations......... $ 0.620 $ 2.733 $ (1.877) $ (1.367) $ 1.597 $ 0.819
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from investment income....... $ - $ - $ - $ - $ - $ (0.055)
Distributions from capital gains....... - (0.133) (0.433) (0.483) (3.297) (3.264)
-------- -------- -------- -------- -------- --------
Total distributions................ $ - $ (0.133) $ (0.433) $ (0.483) $ (3.297) $ (3.319)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 12.490 $ 11.870 $ 9.270 $ 11.580 $ 13.430 $ 15.130
========== ========== ========== ========== ========== ==========
Total return(2) ............................ 5.22% 30.06% (16.98%) (10.15%) 10.75% 5.75%
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted) $ 39,890 $ 38,190 $ 32,817 $ 45,883 $ 51,201 $ 74,547
Ratio of net expenses to average net assets 1.25%(7) 1.25% 1.26%(3) 1.26%(3) 1.26%(3) 1.16%(3)
Ratio of net expenses after custodian fee
reduction to average net assets..... 1.25%(7) 1.25% 1.25%(3)(5) 1.25%(3)(5) 1.25%(3)(5 1.15%(3)(5)
Ratio of net investment income (loss) to average
net assets.......................... (0.18%)(7) (0.23%) (0.44%) (0.38%) (0.28%) 0.36%
Portfolio turnover rate .............. 37% 106% 119%(4) 67%(4) 55%(4) 106%(4)
- ----------------------------------------------------------------------------------------------------------------------------------
(1)The operating expenses of the fund were reduced by an allocation of expenses
to the distributor and/or investment adviser. Had such action not been
undertaken, net investment income (loss) per share and the ratios would have
been as follows:
2004 2003 2002 2001 2000 1999
--------------------------------------------------------------------------
Net investment income (loss) per share. $ (0.190) $ (0.057) $ (0.064) $ (0.057) $ (0.051) $ 0.151
========== ========== ========== ========== ========== ==========
Ratios (As a percentage of average net assets):
Expenses........................... 1.41%(7) 1.59% 1.43%(3) 1.37%(3) 1.33%(3) 1.22%(3)
========== ========== ========== ========== ========== ==========
Expenses after custodian fee reduction 1.41%(7) 1.59% 1.42%(3)(5) 1.36%(3)(5) 1.32%(3)(5) 1.21%(3)(5)
========== ========== ========== ========== ========== ==========
Net investment income (loss)....... (0.34%)(7) (0.57%) (0.61%) (0.49%) (0.35%) 0.30%
========== ========== ========== ========== ========== ==========
- ----------------------------------------------------------------------------------------------------------------------------------
(2)Total investment 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 period reported. Dividends and distributions, if any, are assumed to be
invested at the net asset value on the reinvestment date.
(3)Includes each fund's share of its corresponding portfolio's allocated expenses.
(4)Represents portfolio turnover rate of the fund's corresponding portfolio.
(5)Custodian fees were reduced by credits resulting from cash balances the fund
and/or the portfolio maintained with the custodian (Note 1D). The computation
of net expenses to average daily net assets reported above is computed
without consideration of such credits.
(6)Certain per share amounts are based on average shares outstanding.
(7) Annualized.
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - June 30, 2004 (unaudited)
Shares Value
EQUITY INTERESTS -- 99.4%
ADVERTISING -- 0.5%
Omnicom Group....................... 4,155 $ 315,323
-----------
AEROSPACE & DEFENSE -- 0.9%
Boeing Company...................... 11,130 $ 568,632
-----------
AUTOMOBILES & COMPONENTS -- 3.5%
Ford Motor Company.................. 30,670 $ 479,985
Johnson Controls, Inc............... 13,505 720,897
Paccar Inc.......................... 17,785 1,031,352
-----------
$ 2,232,234
-----------
BANKS -- 10.5%
Bank of America Corp................ 26,649 $ 2,255,038
Capital One Financial Corp.......... 9,455 646,533
Fannie Mae.......................... 8,420 600,851
MBNA Corp........................... 41,960 1,082,148
Washington Mutual, Inc.............. 17,868 690,420
Wells Fargo & Co.................... 25,390 1,453,070
-----------
$ 6,728,060
-----------
CAPITAL GOODS -- 3.8%
3M Co............................... 2,860 $ 257,429
Tyco International, Ltd............. 51,965 1,722,120
United Technologies Corp............ 4,620 422,638
-----------
$ 2,402,187
-----------
COMMERCIAL SERVICES & SUPPLIES -- 3.3%
First Data Corp..................... 28,825 $ 1,283,289
H&R Block, Inc...................... 12,910 615,549
Monsanto Co......................... 6,135 236,197
-----------
$ 2,135,035
-----------
COMMUNICATIONS EQUIPMENT -- 5.2%
Cisco Systems, Inc.*................ 58,781 $ 1,393,110
Qualcomm, Inc....................... 18,607 1,357,939
Scientific-Atlanta Inc.............. 17,245 594,952
-----------
$ 3,346,001
-----------
COMPUTER & PERIPHERALS -- 3.3%
Computer Sciences Corp.*............ 5,375 $ 249,561
Dell Inc.*.......................... 14,214 509,145
Hewlett-Packard Co.................. 42,775 902,552
Lexmark International, Inc.*........ 4,920 474,928
-----------
$ 2,136,186
-----------
DIVERSIFIED FINANCIALS -- 7.3%
Citigroup, Inc...................... 41,239 $ 1,917,613
Countrywide Credit Industries, Inc.. 7,245 508,961
J.P. Morgan Chase & Co.............. 12,995 503,816
Lehman Brothers Holdings, Inc....... 4,205 316,426
Merrill Lynch & Co Inc.............. 5,520 297,970
Morgan Stanley...................... 21,500 1,134,555
-----------
$ 4,679,341
-----------
ELECTRIC UTILITIES -- 0.3%
Edison International................ 6,570 $ 167,995
-----------
ENERGY -- 8.3%
Apache Corp......................... 8,028 $ 349,619
ChevronTexaco Corp.................. 12,270 1,154,730
ConocoPhillips Co................... 24,715 1,885,507
Exxon Mobil Corp.................... 33,100 1,469,971
Occidental Petroleum Corp........... 9,465 458,201
-----------
$ 5,318,028
-----------
ENTERTAINMENT & LEISURE -- 0.3%
Time Warner Inc.*................... 11,420 $ 200,764
-----------
FOOD & DRUG RETAILING -- 0.2%
Sysco Corp.......................... 4,060 $ 145,632
-----------
FOOD, BEVERAGE & TOBACCO -- 4.6%
Altria Group Inc.................... 16,695 $ 835,585
Archer-Daniels-Midland Co........... 14,850 249,183
Brown-Forman Corp. - Class B........ 3,560 171,841
Coors Adolph Co.-Class B............ 4,770 345,062
Kellogg Co.......................... 18,430 771,295
Supervalu Inc....................... 17,890 547,613
-----------
$ 2,920,579
-----------
FOREST PRODUCTS & PAPER -- 0.9%
Georgia-Pacific Corp................ 11,985 $ 443,205
Louisiana Pacific Corp.............. 5,610 132,676
-----------
$ 575,881
-----------
HEALTH CARE EQUIPMENT & SERVICES -- 5.4%
C.R. Bard, Inc...................... 6,499 $ 368,168
Health Management Associates-Class A 13,435 301,213
Quest Diagnostics, Inc.............. 4,925 418,379
UnitedHealth Group, Inc............. 18,248 1,135,938
Wellpoint Health Networks, Inc.*.... 10,965 1,228,190
-----------
$ 3,451,888
-----------
HEAVY MACHINERY -- 2.5%
Black & Decker Corp................. 7,630 $ 474,052
Caterpillar, Inc.................... 7,965 632,740
Centex Corp......................... 3,595 164,471
Ingersoll-Rand Co - Class A......... 4,410 301,247
-----------
$ 1,572,510
-----------
HOTELS, RESTAURANTS & LEISURE -- 3.0%
Cendant Corp........................ 43,410 $ 1,062,677
McDonald's Corp..................... 32,140 835,640
-----------
$ 1,898,317
-----------
HOUSEHOLD & PERSONAL PRODUCTS -- 1.2%
Clorox Co........................... 5,665 $ 304,664
Corning, Inc.*...................... 12,510 163,381
Procter & Gamble Co................. 6,070 330,451
-----------
$ 798,496
-----------
INSURANCE -- 6.3%
AFLAC, Inc.......................... 8,680 $ 354,231
Allstate Corp....................... 5,960 277,438
AMBAC Financial Group, Inc.......... 6,910 507,470
American International Group, Inc... 7,055 502,880
Chubb Corp.......................... 2,870 195,677
Cigna Corp.......................... 1,965 135,212
MBIA Inc............................ 4,185 239,047
MGIC Investment Corp................ 8,765 664,913
Progressive Corp.................... 13,535 1,154,535
-----------
$ 4,031,403
-----------
MATERIALS -- 0.4%
Ball Corp........................... 3,245 $ 233,802
-----------
MEDIA -- 1.5%
Gannett Co., Inc.................... 10,990 $ 932,501
-----------
PHARMACEUTICALS & BIOTECHNOLOGY -- 7.4%
Amgen, Inc.*........................ 8,938 $ 487,747
Becton Dickinson & Co............... 5,260 272,468
Cardinal Health Inc................. 10,230 716,611
Eli Lilly & Co...................... 7,475 522,577
Guidant Corp........................ 11,250 628,650
Johnson & Johnson, Inc.............. 26,101 1,453,826
King Pharmaceuticals Inc.*.......... 16,590 189,955
Merck & Co., Inc.................... 5,441 258,448
Waters Corp.*....................... 4,875 232,928
-----------
$ 4,763,210
-----------
RETAILING -- 7.2%
Autozone, Inc.*..................... 2,340 $ 187,434
Best Buy Co, Inc.................... 12,471 632,779
CVS Corp............................ 11,160 468,943
eBay, Inc.*......................... 7,305 671,695
Federated Department Stores......... 2,155 105,811
Gap (The), Inc...................... 27,925 677,181
Ltd. Brands......................... 17,670 330,429
Staples, Inc........................ 14,395 421,917
Target Corp......................... 26,415 1,121,845
-----------
$ 4,618,034
-----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 3.1%
Intel Corp.......................... 59,788 $ 1,650,149
National Semiconductor Corp.*....... 16,700 367,233
-----------
$ 2,017,382
-----------
SOFTWARE & SERVICES - 3.6%
Autodesk, Inc....................... 7,830 $ 335,202
IMS Health Inc...................... 12,450 291,828
International Business Machines Corp. 4,188 369,172
Microsoft Corp...................... 33,119 945,879
Oracle Corp.*....................... 13,778 164,372
Symantec Corp.*..................... 4,150 181,687
-----------
$ 2,288,140
-----------
TELECOMMUNICATION SERVICES -- 2.8%
Alltel Corp......................... 4,445 $ 225,006
Bellsouth Corp...................... 39,550 1,037,001
Nextel Communications,Inc.-Class A* 14,932 398,087
Sprint Corp. - Fon Group............ 9,160 161,216
-----------
$ 1,821,310
-----------
TRANSPORTATION -- 0.5%
FedEx Corp.......................... 3,929 $ 320,960
-----------
UTILITIES -- 1.6%
Exelon Corp......................... 21,451 $ 714,104
Sempra Energy....................... 9,590 330,184
-----------
$ 1,044,288
-----------
TOTAL EQUITY INTERESTS-- 99.4%
(identified cost, $54,468,233).. $63,664,119
OTHER ASSETS, LESS LIABILITIES -- 0.6% 397,200
-----------
NET ASSETS -- 100% $64,061,319
============
* Non-income-producing security.
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $54,468,233) (Note 1A). $63,664,119
Cash.................................... 350,923
Receivable for fund shares sold......... 14,302
Receivable from investment adviser...... 869
Dividends Receivable.................... 51,329
Prepaid expenses........................ 19,336
------------
Total assets............................ $64,100,878
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 14,600
Payable to affiliate for Trustees' fees. 1,828
Transfer agent fee...................... 2,889
Accrued expenses and other liabilities.. 20,242
------------
Total liabilities....................... $ 39,559
------------
NET ASSETS................................ $64,061,319
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $89,990,084
Accumulated undistributed net realized loss on
investments (computed on the basis
of identified cost).................... (34,956,318)
Unrealized appreciation on investments
(computed on the basis of identified cost) 9,195,886
Distributions in excess of net
investment income...................... (168,333)
------------
Net assets applicable to
outstanding share.................... $64,061,319
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 5,956,688
============
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 10.75
============
See notes to financial statements
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 499,526
------------
Expenses -
Investment adviser fee (Note 2):........ $ 208,135
Administrator fee (Note 2):............. 41,627
Compensation of Trustees not employees of the
investment adviser or administrator.... 7,686
Custodian fee (Note 1D):................ 44,248
Distribution expenses (Note 3):......... 86,723
Transfer and dividend disbursing agent fees 13,104
Printing................................ 2,036
Shareholder communications.............. 7,130
Interest expense........................ 2,678
Audit services.......................... 12,446
Legal services.......................... 5,490
Registration costs...................... 9,784
Miscellaneous .......................... 5,096
------------
Total expenses.......................... $ 446,183
------------
Deduct -
Preliminary Reduction of custodian fee
(Note 1D):............................. $ (748)
Preliminary Allocation of expenses to the
Investment Adviser (Note 2):........... (869)
Preliminary Reduction of distribution expenses
by principal underwriter (Note 3):..... (11,227)
------------
Total deductions........................ $ (12,844)
------------
Net expenses............................ $ 433,339
------------
Net investment income................... $ 66,187
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 2,650,795
Change in unrealized depreciation of
investments............................ (1,216,298)
------------
Net realized and unrealized gain of
investments............................ $ 1,434,497
------------
Net increase in net assets from operations $ 1,500,684
============
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- -------------------------------------------------------------------------------
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 2004 Dec. 31, 2003
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income ..................................................... $ 66,187 $ 214,803
Net realized gain (loss) on investments.................................... 2,650,795 (498,392)
Change in unrealized appreciation (depreciation) on investments............ (1,216,298) 14,590,659
------------ ------------
Net increase in net assets resulting from operations..................... $ 1,500,684 $ 14,307,070
------------ ------------
Distributions to shareholders -
From net investment income................................................. $ (66,466) $ (187,155)
------------ ------------
Total distributions...................................................... $ (66,466) $ (187,155)
------------ ------------
Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (8,911,775) $ (9,190,510)
------------ ------------
Net Increase (decrease) in net assets........................................ $ (7,477,557) $ 4,929,405
NET ASSETS:
At beginning of period....................................................... 71,538,876 66,609,471
------------ ------------
At end of period............................................................. $ 64,061,319 $ 71,538,876
============== ==============
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF PERIOD ............................................................ $ (168,333) $ (168,054)
============== ==============
See notes to financial statements
Wright Major Blue Chip Equities Fund (WMBC)
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS June 30, 2004 2003(4) 2002(4) 2001(4) 2000(4) 1999(4)
- -------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Net asset value, beginning of period........ $ 10.530 $ 8.570 $ 11.380 $ 13.690 $ 16.290 $ 13.670
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)(1) ....... $ 0.010 $ 0.029 $ 0.024 $ (0.009) $ (0.001) $ 0.042
Net realized and unrealized gain (loss) 0.220 1.958 (2.812) (2.301) (2.005) 3.202
-------- -------- -------- -------- -------- --------
Total income (loss)
from investment operations......... $ 0.230 $ 1.987 $ (2.788) $ (2.310) $ (2.006) $ 3.244
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from investment income....... $ (0.010) $ (0.027) $ (0.022) $ - $ (0.010) $ (0.045)
Distributions from capital gains....... - - - - (0.584) (0.579)
-------- -------- -------- -------- -------- --------
Total distributions................ $ (0.010) $ (0.027) $ (0.022) $ - $ (0.594) $ (0.624)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 10.750 $ 10.530 $ 8.570 $ 11.380 $ 13.690 $ 16.290
========== ========== ========== ========== ========== ==========
Total Return(3) ............................ 2.18% 23.20% (24.50%) (16.87%) (12.49%) 23.95%
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted) $ 64,061 $ 71,539 $ 66,609 $ 95,121 $ 135,262 $144,359
Ratio of net expenses to average net assets 1.25%(7) 1.25% 1.22% 1.13% 1.06% 1.05%
Ratio of net expenses after custodian fee
reduction to average net assets(2)(6) 1.25%(7) 1.25% 1.22% 1.13% 1.06% 1.05%
Ratio of net investment income (loss) to
average net assets ................. 0.19%(7) 0.31% 0.25% (0.08%) (0.00%)(5) 0.27%
Portfolio turnover rate................ 34% 143% 130% 78% 88% 59%
- ----------------------------------------------------------------------------------------------------------------------------------
(1)For the six months ended June 30,2004 and for the years ended December 31,
2003, and 1999, the operating expenses of the Fund were reduced by an
allocation of expenses to the distributor and/or investment adviser. Had such
action not been undertaken, net investment income per share and the ratios
would have been as follows:
2004 2003 1999
----------------------------- ---------------
Net investment income per share........ $ 0.008 $ 0.024 $ 0.034
========== ========== ==========
Ratios (As a percentage of average net assets):
Expenses............................. 1.29%(7) 1.31% 1.10%
========== ========== ==========
Expenses after custodian fee reduction(2) 1.29%(7) 1.31% 1.10%
========== ========== ==========
Net investment income................ 0.15%(7) 0.26% 0.22%
========== ========== ==========
- ----------------------------------------------------------------------------------------------------------------------------------
(2)Custodian fees were reduced by credits resulting from cash balances the fund
maintained with the custodian (Note 1D). The computation of net expenses to
average daily net assets reported above is computed without consideration of
such credits.
(3)Total investment 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 period reported. Dividends and distributions, if any, are assumed to be
invested at the net asset value on the reinvestment date.
(4)Certain per share amounts are based on average shares outstanding.
(5)Amount represents less than (0.00%) of average net assets.
(6)Under a written agreement, Wright waives a portion of its advisory fee and
assumes operating expenses to the extent necessary to limit expense ratios to
1.25%.
(7)Annualized.
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - June 30, 2004 (unaudited)
Shares Value
EQUITY INTERESTS -- 99.7%
AUSTRALIA -- 1.5%
Australia & New Zealand Banking
Group.............................. 40,000 $ 510,816
News Corp. LTD...................... 35,935 294,974
-----------
$ 805,790
-----------
BELGIUM -- 1.5%
Colruyt SA.......................... 2,700 $ 334,094
Dexia............................... 26,900 447,307
-----------
$ 781,401
-----------
BRAZIL -- 0.6%
Cia Vale Do Rio Doce - ADR.......... 5,900 $ 280,545
-----------
CANADA -- 2.5%
Canadian Tire Corp.................. 3,634 $ 133,245
-----------
CHINA -- 0.4%
Huaneng Power International Inc.....216,000 $ 192,466
-----------
FRANCE -- 12.6%
Alcatel SA, ADR*.................... 31,314 $ 485,054
Aventis SA.......................... 10,100 764,016
BNP Paribas SA...................... 9,320 574,350
Compagnie De Saint-Gobain........... 7,000 349,626
France Telecom SA................... 12,700 331,637
Renault SA.......................... 4,860 370,894
Schneider Electric SA............... 8,019 548,432
Societe Generale.................... 5,100 434,286
STMicroelectronics NV............... 16,000 351,686
Thomson............................. 14,000 276,663
TotalFinaElf SA..................... 6,200 1,184,404
Veolia Environnement................ 10,000 282,709
Vivendi Universal SA*............... 17,623 489,840
Zodiac SA........................... 6,100 207,999
-----------
$ 6,651,596
-----------
GERMANY -- 6.8%
Allianz AG.......................... 3,500 $ 379,878
BASF AG............................. 7,660 410,792
Bayerische Motoren Werke AG......... 10,000 443,387
Deutsche Bank AG.................... 8,250 649,518
E. On AG............................ 4,700 339,775
SAP AG.............................. 2,633 437,380
Siemens AG.......................... 8,200 590,900
Thyssen Krupp....................... 18,166 310,268
-----------
$ 3,561,898
-----------
HONG KONG -- 2.5%
China Mobile, Ltd................... 77,000 $ 232,980
Esprit Holdings, Ltd................ 89,500 400,465
Hutchison Whampoa, Ltd.............. 57,000 389,145
Techtronic Industries Co., Ltd......170,000 271,353
-----------
$ 1,293,943
-----------
INDIA -- 0.5%
Dr. Reddy's Laboratories Ltd. - ADR. 15,000 $ 260,700
-----------
IRELAND -- 1.9%
Anglo Irish Bank Corp. PLC.......... 41,500 $ 651,426
Bank of Ireland..................... 26,000 348,029
-----------
$ 999,455
-----------
ISRAEL -- 0.6%
Teva Pharmaceutical - Sponsored ADR. 4,687 $ 315,388
-----------
ITALY -- 1.7%
Bulgari Spa......................... 18,000 $ 182,353
Eni Spa............................. 25,000 497,393
Mediaset Spa........................ 21,300 243,309
-----------
$ 923,055
-----------
JAPAN -- 21.7%
Benesse Corp........................ 6,600 $ 217,179
Bridgestone Corp.................... 16,000 301,484
Canon, Inc.......................... 13,000 687,072
Daikin Industries, Ltd.............. 17,000 457,834
Daito Trust Construct Co., Ltd...... 9,100 351,303
Eisai Co., Ltd...................... 10,400 300,161
Gulliver International Co........... 1,600 185,156
Honda Motor Co., Ltd................ 9,260 447,701
Hoya Corp........................... 4,700 493,350
Mitsubishi Tokyo Financial.......... 65 603,428
Nissan Motor Co., Ltd............... 37,400 416,988
Nomura Holdings, Inc................ 24,000 356,266
NTT DoCoMo, Inc..................... 311 557,425
Olympus Corp........................ 6,000 113,608
ORIX Corp........................... 2,900 333,195
Pioneer Corp........................ 9,000 233,283
Promise Co., Ltd.................... 4,000 267,659
Ricoh Co., Ltd...................... 16,000 341,192
Secom Co., Ltd...................... 5,000 212,786
Seven - Eleven Japan Co., Ltd....... 8,000 261,777
Sharp Corp.......................... 26,000 416,545
SMC Corp............................ 3,500 379,613
Sony Corp........................... 10,300 389,108
Sumitomo Trust & Banking............ 53,000 378,519
Takeda Chemicals Industries, Ltd.... 7,800 343,417
Toppan Printing Co., Ltd............ 25,000 283,791
Toyota Motor Corp................... 25,800 1,048,173
USF Holdings Inc.*.................. 45 199,366
USS Co., Ltd........................ 3,160 272,737
Yamaha Motor Co., Ltd............... 18,000 281,097
Yamanouchi Pharmaceutical Co., Ltd.. 8,900 300,225
-----------
$11,431,438
-----------
MEXICO -- 1.8%
America Movil S.A. de C.V. - ADR.... 18,000 $ 654,660
Grupo Televisa SA -Sponsored ADR.... 6,300 285,201
-----------
$ 939,861
-----------
NETHERLANDS -- 6.8%
ABN Amro Holdings NV................ 23,000 $ 504,147
Aegon NV............................ 33,517 404,928
ASML Holdings NV - ADR*............. 31,000 530,410
ING Groep NV........................ 19,000 449,360
Koninklijke Philips Electronics NV.. 19,400 523,386
Royal Dutch Petroleum Co............ 15,340 788,808
TPG NV Post Group................... 16,000 366,315
-----------
$ 3,567,354
-----------
NORWAY -- 1.7%
Norsk Hydro ASA..................... 7,664 $ 498,219
Statoil ASA......................... 27,190 345,272
Yara International ASA*............. 7,664 61,932
-----------
$ 905,423
-----------
SOUTH KOREA -- 0.5%
POSCO - ADR......................... 8,521 $ 285,539
-----------
SPAIN -- 2.6%
Banco Santander Central Hispano SA.. 24,900 $ 258,933
Endesa SA........................... 16,000 308,969
Grupo Ferrovial SA.................. 6,000 250,306
Telefonica SA....................... 39,200 580,633
-----------
$ 1,398,841
-----------
SWEDEN -- 2.2%
Telefon. LM Ericsson, Sponsored ADR* 38,000 $ 1,136,960
-----------
SWITZERLAND -- 11.1%
Cie Finance Richemont-A Unit........ 15,700 $ 410,876
Credit Suisse Group................. 18,400 655,302
Kuoni Reisen Holdings AG............ 570 245,882
Micronas Semiconductor - Registered* 5,700 259,796
Nestle SA........................... 3,488 932,367
Novartis AG......................... 29,476 1,303,361
Rieter Holdings AG.................. 1,000 265,706
SGS SA.............................. 500 273,709
Swiss Reinsurance AG................ 3,300 214,850
UBS AG.............................. 14,160 1,000,096
Zurich Financial Services*.......... 1,800 284,874
-----------
$ 5,846,819
-----------
UNITED KINGDOM -- 20.6%
Anglo American PLC.................. 27,140 $ 556,928
Baa PLC............................. 40,400 406,799
BHP Billiton, Ltd................... 55,800 485,732
Boots Group PLC..................... 33,600 420,541
BP PLC..............................139,000 1,231,471
Diageo PLC.......................... 33,000 446,350
GlaxoSmithkline PLC................. 57,000 1,157,229
HSBC Holdings PLC (HK Registered)... 85,000 1,267,982
Johnson Matthey PLC................. 12,200 204,520
Johnston Press PLC.................. 27,000 278,256
Man Group PLC....................... 12,938 336,106
Royal Bank of Scotland Group PLC.... 43,770 1,264,467
Shell Transport & Trading Co. PLC...101,000 743,225
Tesco PLC...........................131,474 636,810
Vodafone Group PLC..................490,000 1,076,375
WPP Group PLC....................... 33,600 342,301
-----------
$10,855,092
-----------
TOTAL EQUITY INTERESTS-- 99.7%
(identified cost, $42,998,188)... $52,566,809
-----------
OTHER ASSETS, LESS LIABILITIES -- 0.3% 152,606
-----------
NET ASSETS -- 100% $ 52,719,415
============
* Non-income-producing security.
ADR: American Depository Receipts.
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $42,998,188) (Note 1A) $52,566,809
Cash.................................... 344
Foreign currency, at value (cost $21,257)
(Note 1)............................... 21,173
Receivable for investments sold......... 397,101
Receivable for fund shares sold......... 4,668
Dividends Receivable.................... 116,150
Tax reclaim receivable.................. 93,041
Prepaid expenses........................ 28,001
Other assets............................ 5,973
------------
Total assets.......................... $53,233,260
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 22,198
Demand note payable..................... 463,000
Payable to affiliate for Trustees' fees. 1,828
Transfer agent fee...................... 3,436
Accrued expenses and other liabilities.. 23,383
------------
Total liabilities..................... $ 513,845
------------
NET ASSETS................................ $52,719,415
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 68,223,919
Accumulated net realized loss on investments
and foreign currency (computed on the
basis of identified cost).............. (26,956,769)
Unrealized appreciation of investments and
translation of assets and liabilities in foreign
currencies (computed on the basis of
identified cost)....................... 9,577,164
Undistributed net investment income..... 1,875,101
------------
Net assets applicable to outstanding shares $ 52,719,415
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 4,021,731
=============
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 13.11
=============
See notes to financial statements
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 878,441
Less: Foreign Taxes..................... (103,679)
------------
Investment income....................... $ 774,762
------------
Expenses -
Investment adviser fee (Note 2):........ $ 220,116
Administrator fee (Note 2):............. 46,775
Compensation of Trustees not employees of
the investment adviser or administrator 7,686
Custodian fee (Note 1D):................ 73,059
Distribution expenses (Note 3):......... 68,786
Transfer and dividend disbursing agent fees 11,291
Printing................................ 1,982
Interest expense........................ 2,027
Shareholder communications.............. 6,006
Audit services.......................... 13,998
Legal services.......................... 5,105
Registration costs...................... 10,712
Miscellaneous .......................... 3,323
------------
Total expenses.......................... $ 470,866
------------
Deduct -
Preliminary Reduction of custodian fee
(Note 1D):............................. $ (259)
------------
Net expenses............................ $ 470,607
------------
Net investment income................... $ 304,155
------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) -
Investment transactions
(identified cost basis................ $ 1,279,020
Foreign currency transactions.......... (1,632)
------------
Net realized gain....................... $ 1,277,388
Change in unrealized depreciation -
Investments (identified cost basis).... (303,407)
Foreign currency....................... (8,808)
------------
Net change in unrealized depreciation... $ (312,215)
------------
Net realized and unrealized
gain of investments.................... $ 965,173
------------
Net increase in net assets from operations $1,269,328
============
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 2004 Dec. 31, 2003
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
DECREASE IN NET ASSETS:
From operations -
Net investment income ..................................................... $ 304,155 $ 468,757
Net realized gain (loss) on investments and foreign currency transactions.. 1,277,388 (959,406)
Change in unrealized appreciation (depreciation) on investments
and translation of assets and liabilities in foreign currencies ........... (312,215) 15,005,840
------------ ------------
Net increase in net assets resulting from operations..................... $ 1,269,328 $ 14,515,191
------------ ------------
Distributions to shareholders -
From net investment income................................................. $ (376,098)
From net investment income -
Standard shares............................................................ - $ (338,309)
Institutional shares....................................................... - (69,545)
------------ ------------
Total distributions...................................................... $ (376,098) $ (407,854)
------------ ------------
Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (2,759,826)
Net increase (decrease) in net assets from fund share transactions (Note 4) -
Standard shares............................................................ $ _ $ (9,715,249)
Institutional shares ...................................................... - (11,047,783)
------------ ------------
Net decrease in net assets from fund share transactions...................... $ (2,759,826) $(20,763,032)
------------ ------------
Net decrease in net assets................................................... $ (1,866,596) $ (6,655,695)
NET ASSETS:
At beginning of period....................................................... 54,586,011 61,241,706
------------ ------------
At end of period............................................................. $ 52,719,415 $ 54,586,011
============== ==============
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF PERIOD................................................................ $ 1,875,101 $ 1,947,044
============== ==============
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS June 30, 2004 2003(4) 2002(4) 2001(4) 2000(4) 1999(4)
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Net asset value, beginning of period........ $ 12.890 $ 9.840 $11.510 $15.180 $18.900 $16.020
--------- --------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) .......... $ 0.070 $ 0.073 $ 0.070 $ (0.023) $ 0.135 $ (0.004)
Net realized and unrealized gain (loss) 0.238 3.044 (1.740) (3.647) (3.455) 5.181
--------- --------- --------- --------- --------- ---------
Total income (loss)
from investment operations...... $ 0.308 $ 3.117 $ (1.670) $ (3.670) $ (3.320) $ 5.177
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from investment income....... $ (0.088) $ (0.067) $ - $ - $ - $ -
Distributions from capital gains....... - - - - (0.400) (2.297)
--------- --------- --------- --------- --------- ---------
Total distributions................ $ (0.088) $ (0.067) $ - $ - $ (0.400) $ (2.297)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.............. $ 13.110 $12.890 $ 9.840 $11.510 $15.180 $18.900
========== ========== ========== ========== ========== ==========
Total return(1) ............................ 2.40% 31.96% (14.51%) (24.18%) (17.58%) 34.26%
Ratios/Supplemental Data
Net assets, end of period (000 omitted) $ 52,719 $ 54,586 $ 50,835 $ 66,828 $110,868 $147,610
Ratio of net expenses to average net assets 1.71%(6) 1.80% 1.66%(2) 1.56%(2) 1.49%(2) 1.49%(2)
Ratio of net expenses after custodian fee
reduction to average net assets(5) 1.71%(6) 1.80% 1.65% - - -
Ratio of net investment income (loss) to average
net assets 1.11%(6) 0.81% 0.65% (0.18%) 0.76% (0.02%)
Portfolio turnover rate .............. 17% 77% 62%(3) 39%(3) 53%(3) 105%(3)
- ----------------------------------------------------------------------------------------------------------------------------------
(1)Total investment 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 period reported. Dividends and distributions, if any, are assumed to be
invested at the net asset value on the reinvestment date.
(2)Includes each fund's share of its corresponding Portfolio's allocated expenses.
(3)Represents portfolio turnover rate of the fund's corresponding portfolio.
(4)Certain per share amounts are based on average shares outstanding.
(5)Custodian fees were reduced by credits resulting from cash balances the fund
and/or the portfolio maintained with the custodian (Note 1D). The computation
of net expenses to average daily net assets reported above is computed
without consideration of such credits.
(6)Annualized.
See notes to financial statements
WRIGHT MANAGED EQUITY TRUST
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES
The Wright Managed Equity Trust (the Trust), issuer of Wright Selected Blue
Chip Equities Fund (WSBC) series, Wright Major Blue Chip Equities Fund (WMBC)
series, and Wright International Blue Chip Equities Fund (WIBC) series
(collectively, the Funds), is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end, management investment company. The
Funds seek to provide total return consisting of price appreciation and current
income. Prior to December 20, 2002, WSBC and WIBC invested all of their
investable assets in interests in a separate corresponding open-end management
investment company (a Portfolio), a New York Trust, having the same investment
objective as its corresponding fund. Subsequent to December 20, 2002, the Funds
invest directly in securities rather than through the Portfolios and maintain
the same investment objectives.
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.
A. Investment Valuations - Securities listed on securities exchanges or in the
NASDAQ National Market are valued at closing sale prices, if those prices
are deemed to be representative of market values at the close of business.
Unlisted or listed securities for which closing sale prices are not
available are valued at the mean between the latest bid and asked prices.
Short-term obligations maturing in sixty days or less are valued at
amortized cost, which approximates fair value. Securities for which market
quotations are unavailable or deemed not to be representative of market
values at the close of business are appraised at their fair value as
determined in good faith by or at the direction of the Trustees.
B. Foreign Currency Translation - Investment security 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 are translated into U.S. dollars based upon currency exchange
rates prevailing on the respective dates of such transactions.
C. Income - Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Interest income is recorded on the accrual basis.
However, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as the fund is informed of the ex-dividend date.
D. Expense Reduction - Investors Bank & Trust Company (IBT) serves as
custodian to the Funds. Pursuant to the custodian agreement, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balance the Funds maintain with IBT. All credit balances used to reduce the
Fund's custodian fees are reported as a reduction of total expenses on the
Statement of Operations.
E. Federal Taxes - The Trust's policy is to comply with the provisions of
the Internal Revenue Code (the Code) available to regulated investment
companies and distribute to shareholders each year all of its taxable
income, including any net realized gain on investments. Accordingly,
no provision for federal income or excise tax is necessary. At December 31,
2003, the Trust, for federal income tax purposes, had capital loss
carryovers of $28,101,718(WIBC), and $1,112,648(WSBC) and $36,962,750(WMBC)
which will reduce the Funds' 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 distribution to
shareholders which would otherwise be necessary to relieve the respective
fund of any liability for federal income or excise tax. Pursuant to the
Code, such capital loss carryovers will expire as follows:
12/31 WSBC WMBC WIBC
-----------------------------------
2009 - $17,128,584 $12,528,270
2010 - 17,603,398 14,010,156
2011 $1,112,648 2,230,768 1,563,292
At December 31, 2003, net capital losses of $2,972 for WIBC, and $141,920
for WMBC attributable to security transactions incurred after October 31,
2003 are treated as arising on the first day of the fund's current taxable
year. Withholding taxes on foreign dividends have been provided for in
accordance with the Trust's understanding of the applicable country's tax
rules and rates.
F. Distributions - The Trust requires that differences in the recognition or
classification of income between the financial statements and tax earnings
and profits which result only in temporary overdistributions for financial
statement purposes, are classified as distributions in excess of net
investment income or accumulated net realized gains. Distributions in
excess of tax basis earnings and profits are reported in the financial
statements as a return of capital. Permanent differences between book and
tax accounting for certain items may result in reclassification of these
items.
G. Other - Investment transactions are accounted for on a trade-date basis.
H. Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
I. Interim Financial Information- The interim financial statements relating to
June 30, 2004 and for the six month period then ended have not been audited
by independent certified public accountants, but in the opinion of the
Trust's management, reflect all adjustments, consisting only of normally
recurring adjustments, necessary for the fair presentation of the financial
statements.
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as
investment adviser to the Funds pursuant to an Investment Advisory Contract.
Wright furnishes the Funds with investment management, investment advisory, and
other services. For its services, Wright is compensated based upon a percentage
of average daily net assets which rate is adjusted as average daily net assets
exceed certain levels. For the six months ended June 30, 2004, the effective
annual rate was 0.80% for WIBC and 0.60% for WSBC and WMBC. Wright has been
allocated expenses of $869 on a preliminary basis on behalf of WMBC. The Trust
also has engaged Eaton Vance Management (Eaton Vance) to act as administrator of
the Trust. Under the Administration Agreement, Eaton Vance is responsible for
managing the business affairs of the Trust and is compensated based upon a
percentage of average daily net assets which rate is reduced as average daily
net assets exceed certain levels. For the six months ended June 30, 2004, the
effective rate was 0.12% for WSBC, 0.12% for WMBC, and 0.17% for WIBC. Certain
of the Trustees and officers of the Trust are Trustees or officers of the above
organizations. Except as to Trustees of the Trust who are not employees of Eaton
Vance or Wright, Trustees and officers receive remuneration for their services
to the Trust out of the fees paid to Eaton Vance and Wright.
(3) DISTRIBUTION EXPENSES
The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Plan provides that each of the
funds will pay Wright Investors' Service Distributors, Inc. (Principal
Underwriter), a wholly-owned subsidiary of The Winthrop Corporation, an annual
rate of 0.25% of each fund's average daily net assets for activities primarily
intended to result in the sale of each fund's shares. Under a written agreement
in effect through the current fiscal year, Wright waives a portion of its
advisory fee and/or distribution fees and assumes operating expenses to the
extent necessary to limit expense ratios to 1.25% after custodian fee
reductions, if any, for both WSBC and WMBC. Pursuant to this agreement, the
principal underwriter made a preliminary reduction of its fees of $31,542 and
$11,227 on behalf of WSBC and WMBC, respectively. The investment adviser also
assumed on a preliminary basis $869 of expenses on behalf of WMBC. 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 account maintenance services to their
customers who are beneficial owners of shares. The amount of service fee payable
under the Service Plan with respect to each class of shares may not exceed 0.25%
annually of the average daily net assets attributable to the respective classes.
For the six months ended June 30, 2004, the funds did not accrue or pay any
service fees.
(4) 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:
For the
Six Months Ended Year Ended
June 30, 2004 December 31, 2003
------------------ -------------------
(unaudited)
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Wright Selected Blue Chip Equities Fund--
Sold................................................... 495,745 $ 6,013,651 1,288,153 $ 12,745,026
Issued to shareholders in payment of distributions declared - - 47,582 403,022
Redemptions............................................ (518,608) (6,314,894) (1,659,851) (16,224,836)
----------- -------------- ----------- --------------
Net decrease......................................... (22,863) $ (301,243) (324,116) $ (3,076,788)
============= =============== ============ ===============
Wright Major Blue Chip Equities Fund
Sold.................................................. 637,886 $ 6,812,181 1,487,609 $ 13,724,956
Issued to shareholders in payment of distributions declared 5,045 53,816 14,951 150,707
Redemptions............................................ (1,480,932) (15,777,772) (2,481,862) (23,066,173)
----------- -------------- ----------- --------------
Net decrease......................................... (838,001) $ (8,911,775) (979,302) $ (9,190,510)
=========== ============== ============ ===============
Wright International Blue Chip Equities Fund-- Standard Shares:
Sold................................................... 298,269 $ 3,906,966 1,000,262 $ 10,448,947
Issued to shareholders in payment of distributions declared 21,458 276,379 25,450 231,084
Redemptions............................................ (532,836) (6,943,171) (1,956,708) (20,395,280)
----------- -------------- ----------- --------------
Net decrease......................................... (213,109) $ (2,759,826) (930,996) $ (9,715,249)
=========== ============== ========== = ==============
Wright International Blue Chip Equities Fund-- Institutional Shares:
Issued to shareholders in payment of distributions declared - $ - 16,247 $ 69,545
Redemptions............................................ - - (2,259,640) (11,117,328)
----------- -------------- ----------- --------------
Net decrease........................................... - $ - (2,243,393) $ (11,047,783)
=========== ============== ============= ===============
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than U.S. Government securities
and short-term obligations were as follows:
Six Months Ended June 30, 2004 (unaudited)
-----------------------------------------------------------
WSBC WMBC WIBC
- ------------------------------------------------------------------------------
Purchases..... $ 14,334,284 $ 23,724,455 $ 9,390,770
============== ============== ==============
Sales......... $ 14,22,039 $ 33,213,324 $ 12,785,465
============== ============== ==============
- ------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) of the investment
securities owned at June 30, 2004, as computed on a federal income tax basis,
are as follows:
WSBC WMBC WIBC
- -------------------------------------------------------------------------------
Aggregate cost $ 31,832,23 $54,468,233 42,998,188
============ ============ ============
Gross unrealized
appreciation 8,528,096 9,891,326 10,713,963
Gross unrealized
depreciation (510,339) (695,440) (1,145,342)
------------- ------------- -------------
Net unrealized
appreciation $ 8,017,757 $ 9,195,886 $ 9,568,621
============== ============== ==============
- -------------------------------------------------------------------------------
The appreciation on currency for WIBC is $8,543.
(7) LINE OF CREDIT
The funds participate with other funds managed by Wright in a committed $20
million unsecured line of credit agreement with a 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 federal funds rate. In addition, a fee
computed at an annual rate of 0.10% on the average daily unused portion of the
$20 million line of credit, is allocated among the participating funds at the
end of each quarter. WSBC, WMBC, and WIBC did not have significant borrowings or
allocated fees during the year ended June 30, 2004. WSBC and WIBC have $24,000
and $463,000 outstanding, respectively, at June 30, 2004.
(8) CLASS ELIMINATION
The Institutional Share class of International Blue Chip Equities Fund was
fully liquidated on May 20, 2003.
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - June 30, 2004 (unaudited)
Face Coupon Maturity Market Current
Amount Description Rate Date Price Value Yield
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
MORTAGE-BACKED SECURITIES
$ 122,768 FHLMC Gold Balloon #M90710 5.000% 03-01-07 $101.88 $ 125,080 4.9%
83,721 FHLMC Gold Balloon #M90724 5.500% 05-01-07 102.54 85,848 5.4%
330,067 FHLMC Gold Pool #M90767 4.500% 11-01-07 101.34 334,507 4.4%
566,577 FHLMC Gold Pool #M90796 4.000% 02-01-08 100.02 566,687 4.0%
472,659 FHLMC Gold Pool #M90802 4.000% 03-01-08 100.02 472,751 4.0%
540,848 FHLMC Pool #1B1291 4.397% 11-01-33 100.61 544,126 4.4%
132,097 FNMA Pool #254227 5.000% 02-01-09 101.53 134,118 4.9%
696,353 FNMA Pool #701043 4.056% 04-01-33 99.11 690,148 4.1%
U.S. GOVERNMENT AGENCIES
$ 770,000 FFCB 2.500% 03-15-06 $ 99.53 $ 766,348 2.5%
2,105,000 FHLMC 2.875% 11-03-06 99.00 2,083,859 2.9%
3,095,000 FNMA 3.000% 02-03-06 100.27 3,103,437 3.0%
795,000 FNMA 1.750% 06-16-06 97.67 776,469 1.8%
U.S. TREASURIES
$ 3,025,000 U.S. Treasury Notes 6.750% 05-15-05 $104.08 $ 3,148,484 6.5%
6,335,000 U.S. Treasury Notes 4.625% 05-15-06 103.57 6,561,432 4.5%
3,000,000 U.S. Treasury Notes 4.375% 05-15-07 103.39 3,101,721 4.2%
-----------
TOTAL INVESTMENTS (identified cost, $22,697,847) - 96.9% $22,495,015
Other Assets, Less Liabilities -- 3.1% 716,755
-----------
Net Assets -- 100.0% $23,211,770
============
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
FFCB - Federal Farm Credit Bank
See notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of $22,697,847) (Note 1A) $ 22,495,015
Cash.................................... 587,294
Receivable for investments sold......... 20,952
Receivable for fund shares sold......... 132
Receivable from investment adviser...... 7,074
Interest receivable..................... 146,716
Prepaid expenses........................ 17,731
------------
Total assets.......................... $ 23,274,914
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 31,035
Distributions payable................... 14,621
Payable to affiliate for Trustees' fees. 1,224
Transfer agent fee ..................... 1,865
Accrued expenses........................ 14,399
------------
Total liabilities..................... $ 63,144
------------
NET ASSETS................................ $ 23,211,770
=============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for Fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $24,600,615
Accumulated undistributed net realized
loss on investments (computed on the
basis of identified cost).............. (919,204)
Unrealized depreciation on investments
(computed on the basis of identified cost) (202,832)
Distributions in excess of net investment
income................................. (266,809)
------------
Net assets applicable to outstanding
shares................................ $23,211,770
=============
SHARES OF BENEFICIAL INTEREST OUTSTANDING. 2,313,123
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST.................. $ 10.03
==============
See notes to financial statements
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 260,849
------------
Expenses -
Investment adviser fee (Note 3)........ $ 56,201
Administrator fee (Note 3)............. 11,240
Compensation of Trustees not employees of
the investment adviser or administrator 5,024
Custodian fee (Note 1C)................ 24,410
Distribution expenses (Note 4)......... 31,223
Transfer and dividend disbursing agent fees 10,374
Printing............................... 2,002
Interest expense....................... 390
Shareholder communications............. 3,822
Audit services......................... 12,156
Legal services......................... 2,862
Registration costs..................... 8,032
Miscellaneous.......................... 2,982
------------
Total expenses........................ $ 170,718
------------
Deduct -
Preliminary reduction of custodian
fee (Note 3).......................... $ (612)
Preliminary reduction of investment
adviser fee(Note 3)................... (20,350)
Preliminary reduction of distribution
expenses by principal underwriter
(Note 4).............................. (31,223)
------------
Total deductions...................... $ (52,185)
------------
Net expenses.......................... $ 118,533
------------
Net investment income............... $ 142,316
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis)................ $ (27,567)
Change in unrealized depreciation
of investments......................... (238,373)
------------
Net realized and unrealized loss of
investments........................... $ (265,940)
------------
Net decrease in net assets from operations $ (123,624)
=============
See notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 2004 Dec. 31, 2003
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 142,316 $ 545,906
Net realized gain (loss) on investments.................................... (27,567) 699,197
Change in unrealized appreciation (deprecation) on investments............. (238,373) (1,048,933)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......... $ (123,624) $ 196,170
------------ ------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (391,243) $ (914,896)
------------ ------------
Total distributions...................................................... $ (391,243) $ (914,896)
------------ ------------
Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (3,830,842) $ (5,563,259)
------------ ------------
Net decrease in net assets............................................... $ (4,345,709) $ (6,281,985)
NET ASSETS:
At beginning of period....................................................... 27,557,479 33,839,464
------------ ------------
At end of period............................................................. $ 23,211,770 $ 27,557,479
============= =============
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED
IN NET ASSETS AT END OF PERIOD............................................... $ (266,809) $ (17,880)
============= =============
See notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS June 30, 2004 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
(unaudited)
Net asset value, beginning of period........ $ 10.250 $ 10.490 $ 10.290 $ 10.080 $ 9.930 $ 10.270
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ............... $ 0.049 $ 0.165 $ 0.349 $ 0.480(7) $ 0.525 $ 0.534
Net realized and unrealized gain (loss).. (0.111) (0.102) 0.200 0.195(7) 0.143 (0.343)
-------- -------- -------- -------- -------- --------
Total income from investment operations $ (0.062) $ 0.063 $ 0.549 $ 0.675 $ 0.668 $ 0.191
-------- -------- -------- -------- -------- --------
Less distributions:
Distributions from investment income... $ (0.158) $ (0.303) $ (0.349) $ (0.465) $ (0.518) $ (0.531)
-------- -------- -------- -------- -------- --------
Total distributions.................... $ (0.158) $ (0.303) $ (0.349) $ (0.465) $ (0.518) $ (0.531)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 10.030 $ 10.250 $ 10.490 $ 10.290 $ 10.080 $ 9.930
========= ========= ========= ========= ========= ========
Total return(2) ............................ (0.61%) 0.61% 5.42% 6.82% 6.94% 1.91%
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted).. $ 23,212 $ 27,557 $ 33,839 $ 36,025 $ 39,198 $ 52,825
Ratio of net expenses to average net assets 0.95%(8) 0.95% 0.97%(3) 0.97%(3) 0.98%(3) 0.91%(3)
Ratio of net expenses after custodian fee
reduction to average net assets ...... 0.95%(8) 0.95%(6) 0.95%(3)(4)(6) 0.95%(3)(4)(6)0.95%(3)(4)(6) 0.90%(3)(4)
Interest expense ....................... _ 0.01% - - - -
Ratio of net investment income to average
net assets............................ 1.14%(8) 1.75% 3.10% 4.40% 5.27% 5.27%
Portfolio turnover rate ................ 79% 165% 64%(5) 92%(5) 65%(5) 0%(5)
- ---------------------------------------------------------------------------------------------------------------------------------
(1)For certain periods presented, the operating expenses of the fund were
reduced by an allocation of expenses to the investment adviser, a reduction
in distribution fees by the principal underwriter, a reduction in
administrator fees, or a combination thereof. Had such action not been
undertaken, net investment income per share and the ratios would have been as
follows:
2004 2003 2002 2001 2000 1999
----------------------------------------------------------------------------
Net investment income per share........ $ 0.037 $ 0.134 $ 0.323 $ 0.452 $ 0.511 $ 0.526
========= ========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses ............................ 1.36%(8) 1.28% 1.20%(3) 1.22%(3) 1.13%(3) 0.99%(3)
========= ========= ========= ========= ========= =========
Expenses after custodian fee reduction 1.36%(8) 1.28% 1.18%(3)(4) 1.20%(3)(4) 1.10%(3)(4) 0.98%(3)(4)
========= ========= ========= ========= ========= =========
Interest expense..................... - 0.01% - - - -
========= ========= ========= ========= ========= =========
Net investment income................ 0.73%(8) 1.42% 2.87% 4.15% 5.13% 5.19%
========= ========= ========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------------------------
(2)Total investment 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)Includes each fund's share of its corresponding portfolio's allocated expenses.
(4)Custodian fees were reduced by credits resulting from cash balances the fund
maintained with the custodian (Note 1C). The computation of net expenses to
average daily net assets reported above is computed without consideration of
such credits.
(5)Represents portfolio turnover rate of the fund's corresponding portfolio.
(6)Under a written agreement, Wright waives all or a portion of either its
advisory and/or distribution fees and assumes operating expenses to the
extent necessary to limit expense ratios to 0.95% after custodian fee credits
are applied.
(7)Reporting guidelines require the funds to disclose the effects of
implementing the change in accounting for amortization of premium and
discount on debt securities. If adjustments were not made, net investment
income per share would have been $0.491 and net realized and unrealized gain
(loss) per share would have been $0.184.
(8)Annualized.
See notes to financial statements
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND (WUSGI)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - June 30, 2004 (unaudited)
Face Coupon Maturity Market Current
Amount Description Rate Date Price Value Yield
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
MORTAGE-BACKED SECURITIES
$ 16,744 FHLMC Gold Pool #M90724 5.500% 05-01-07 $102.54 $ 17,170 5.4%
330,067 FHLMC Gold Pool #M90767 4.500% 11-01-07 101.34 334,507 4.4%
157,553 FHLMC Gold Pool #M90802 4.000% 03-01-08 100.02 157,584 4.0%
285,814 FHLMC Pool #1B1291 4.397% 11-01-33 100.61 287,546 4.4%
66,049 FNMA Pool #254227 5.000% 02-01-09 101.53 67,059 4.9%
194,523 FNMA Pool #254546 5.500% 12-01-17 102.60 199,580 5.4%
189,159 FNMA Pool #663689 5.000% 01-01-18 100.39 189,891 5.0%
301,588 FNMA Pool #701043 4.056% 04-01-33 99.11 298,901 4.1%
U.S. GOVERNMENT AGENCIES
$ 1,030,000 FFCB 2.500% 03-15-06 $ 99.53 $1,025,115 2.5%
1,070,000 FHLMC 2.875% 11-03-06 99.00 1,059,254 2.9%
755,000 FNMA 3.000% 02-03-06 100.27 757,058 3.0%
1,175,000 FNMA 2.875% 05-19-08 96.36 1,132,198 3.0%
1,875,000 FNMA 3.875% 11-17-08 98.67 1,850,121 3.9%
390,000 Tennessee Valley Authority 6.000% 03-15-13 106.88 416,847 5.6%
U.S. TREASURIES
$ 380,000 U.S. Treasury Notes 6.750% 05-15-05 $ 104.08 $ 395,512 6.5%
170,000 U.S. Treasury Notes 4.625% 05-15-06 103.57 176,076 4.5%
480,000 U.S. Treasury Notes 3.000% 11-15-07 99.09 475,613 3.0%
1,940,000 U.S. Treasury Notes 3.875% 02-15-13 95.63 1,855,203 4.1%
-----------
Total Investments (identified cost, $10,870,948) - 98.% $10,695,235
Other Assets, less Liabilities - 1.1% 117,311
-----------
Net Assets - 100.0% $10,812,546
============
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
FFCB - Federal Farm Credit Bank
See notes to financial statements
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND (WUSGI)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of $10,870,948)(Note 1A) $ 10,695,235
Cash.................................... 20,080
Receivable for investments sold......... 11,072
Receivable for fund shares sold......... 2,294
Receivable from investment adviser...... 9,432
Interest receivable..................... 82,861
Prepaid expenses........................ 14,428
------------
Total assets.......................... $ 10,835,402
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 700
Distributions payable................... 5,169
Payable to affiliate for Trustees' fees. 1,272
Transfer agent fee payable.............. 1,539
Accrued expenses and other liabilities.. 14,176
------------
Total liabilities..................... $ 22,856
------------
NET ASSETS................................ $ 10,812,546
=============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 11,150,950
Accumulated undistributed net realized loss
on investments (computed on the basis
of identified cost).................... (107,232)
Unrealized appreciation on investments
(computed on the basis of identified cost) (175,713)
Distributions in excess of net investment
income................................. (55,459)
------------
Net assets applicable to outstanding
shares................................ $ 10,812,546
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 847,740
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 12.75
=============
See notes to financial statements
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income ....................... $ 197,150
------------
Expenses -
Investment adviser fee (Note 3)........ $ 29,279
Administration fee (Note 3)............ 5,856
Compensation of Trustees not employees of
the investment adviser or administrator 5,024
Custodian fee (Note 1C)................ 23,731
Distribution expenses (Note 4)......... 16,266
Transfer and dividend disbursing agent fees 8,554
Printing............................... 1,320
Interest expense....................... 386
Shareholder communications............. 2,002
Audit services......................... 10,940
Legal services......................... 2,537
Registration costs..................... 8,732
Miscellaneous.......................... 2,225
------------
Total expenses........................ $ 116,852
------------
Deduct -
Preliminary reduction of custodian fee
(Note 3).............................. $ (146)
Preliminary allocation of expenses to
investment adviser (Note 3)........... (9,432)
Preliminary reduction of investment adviser fee
(Note 3).............................. (29,279)
Preliminary reduction of distribution expenses
by principal underwriter (Note 4)..... (16,266)
------------
Total deductions...................... $ (55,123)
------------
Net expenses.......................... $ 61,729
------------
Net investment income............... $ 135,421
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis)................ $ (16,819)
Change in unrealized depreciation
of investments......................... (195,056)
------------
Net realized and unrealized loss of
investments........................... $ (211,875)
------------
Net decrease in net assets from
operations........................... $ (76,454)
=============
See notes to financial statements
Wright U.S. Government Intermediate Fund (WUSGI)
- -------------------------------------------------------------------------------
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 2004 Dec. 31,2003
- -------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 135,421 $ 481,595
Net realized gain (loss) on investments.................................... (16,819) 725,050
Change in unrealized appreciation (depreciation) on investments............ (195,056) (1,003,483)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......... $ (76,454) $ 203,162
------------ ------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (189,685) $ (509,316)
From net realized gain..................................................... - (525,743)
------------ ------------
Total distributions...................................................... $ (189,685) $ (1,035,059)
------------ ------------
Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (2,875,521) $ (729,294)
------------ ------------
Net decrease in net assets............................................... $ (3,141,660) $ (1,561,191)
NET ASSETS:
At beginning of period....................................................... 13,954,206 15,515,397
------------ ------------
At end of period............................................................. $ 10,812,546 $ 13,954,206
============= =============
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED
IN NET ASSETS AT END OF PERIOD............................................... $ (55,459) $ (1,194)
============= =============
See notes to financial statements
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND (WUSGI)
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
---------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS June 30, 2004 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Net asset value, beginning of period........ $ 13.020 $ 13.790 $ 13.630 $ 13.750 $ 12.890 $ 14.400
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ................ $ 0.124 $ 0.422 $ 0.575 $ 0.651(7) $ 0.737 $ 0.722
Net realized and unrealized gain (loss).. (0.206) (0.235) 0.496 0.006(7) 0.842 (1.282)
-------- -------- -------- -------- -------- --------
Total income (loss)
from investment operations............. $ (0.082) $ 0.187 $ 1.071 $ 0.657 $ 1.579 $ (0.560)
-------- -------- -------- -------- -------- --------
Less distributions:
Distributions from investment income..... $ (0.188) $ (0.451) $ (0.605) $ (0.701) $ (0.719) $ (0.716)
Distributions from capital gains......... - (0.506) (0.306) (0.076) - (0.234)
-------- -------- -------- -------- -------- --------
Total distributions.................... $ (0.188) $ (0.957) $ (0.911) $ (0.777) $ (0.719) $ (0.950)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 12.750 $ 13.020 $ 13.790 $ 13.630 $ 13.750 $ 12.890
======== ========= ========= ========= ========= =========
Total return(2) ............................ (0.64%) 1.36% 8.07% 5.40% 12.61% (3.97%)
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted).. $ 10,813 $ 13,954 $ 15,515 $ 10,169 $ 16,498 $ 31,192
Ratio of net expenses to average net asset 0.95%(8) 0.95% 1.01%(3) 1.02%(3) 0.97%(3) 0.92%(3)
Ratio of net expenses after custodian fee
reduction to average net assets..... 0.95%(6)(8) 0.95%(6) 0.95%(3)(4)(6) 0.95%(3)(4)(6) 0.95%(3)(4)(6)0.90%(3)(4)
Interest expense....................... 0.01% 0.01% - - - -
Ratio of net investment income
to average net assets............... 2.08%(8) 3.13% 3.95% 5.11% 5.55% 5.26%
Portfolio turnover rate ................ 33% 167% 98%(5) 27%(5) 74%(5) 0%(5)
- ----------------------------------------------------------------------------------------------------------------------------------
(1)For each of the periods presented, the operating expenses of the fund were
reduced by an allocation of expenses to the investment adviser, a reduction
in investment adviser fees, a reduction in distribution fees by the
distributor, a reduction in administrator fees, or a combination thereof. Had
such action not been undertaken, the net investment income per share and the
ratios would have been as follows:
2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income per share............. $ 0.073 $ 0.326 $ 0.477 $ 0.547 $ 0.700 $ 0.703
========= ========= ========= ========= ========= =========
Ratios (as a percentage of average net assets):
Expenses ................................ 1.80%(8) 1.66% 1.62%(3) 1.84%(3) 1.26%(3) 1.06%(3)
========= ========= ========= ========= ========= =========
Expenses after custodian fee reduction... 1.80%(8) 1.66% 1.56%(3)(4) 1.77%(3)(4) 1.24%(3)(4) 1.04%(3)(4)
========= ========= ========= ========= ========= =========
Interest expense......................... 0.01% 0.01% - - - -
========= ========= ========= ========= ========= =========
Net investment income.................... 1.24%(8) 2.42% 3.28% 4.29% 5.27% 5.12%
========= ========= ========= ========= ========= =========
- --------------------------------------------------------------------------------------------------------------------------------
(2)Total investment 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)Includes each fund's share of its corresponding portfolio's allocated expenses.
(4)Custodian fees were reduced by credits resulting from cash balances the fund
and the portfolio maintained with the custodian (Note 1C). The computation of
net expenses to average daily net assets reported above is computed without
consideration of such credits.
(5)Represents portfolio turnover rate at the fund's corresponding portfolio.
(6)Under a written agreement, Wright waives all or a portion of either its
advisory and/or distribution fees and assumes operating expenses to the
extent necessary to limit expense ratios to 0.95% after custodian fee credits
are applied.
(7)Reporting guidelines require the fund to disclose the effects of
implementing the change in accounting for the amortization of premium and
discount on debt securities. If the adjustments were not made, net investment
income per share would have been $0.713 and net realized and unrealized gain
(loss) per share would have been $(0.056).
(8)Annualized.
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - June 30, 2004 (unaudited)
Face Coupon Maturity Market Current
Amount Description Rate Date Price Value Yield
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSET-BACKED SECURITIES
FINANCIAL SERVICES
$ 430,000 Citibank Credit Card Master Trust 6.900% 10-15-07 $ 105.44 $453,387 6.5%
380,000 Citibank Credit Card Master Trust 5.875% 03-10-11 106.97 406,503 5.5%
610,000 MBNA Master Credit Card Trust
Ser. 1999-BA 5.900% 08-15-11 107.21 654,006 5.5%
140,000 MBNA Master Credit Card Trust,
Ser. 2000-AA 7.350% 07-16-07 103.35 144,692 7.1%
----------
Total Asset-Backed Securities (identified cost, $1,1,661,891) - 4.3% $ 1,658,588
----------
CORPORATE BONDS
AUTO
$ 190,000 DaimlerChrysler North America
Holding Co. 7.200% 09-01-09 $ 108.97 $ 207,049 6.6%
195,000 General Motors Corp. 8.800% 03-01-21 109.86 214,227 8.0%
BANKS
$ 205,000 Bank One Corp., Note 2.625% 06-30-08 $ 94.26 $ 193,233 2.8%
390,000 Bayerische Landesbank, MTN 2.600% 10-16-06 98.65 384,746 2.6%
335,000 CIT Group, Inc. 7.750% 04-02-12 114.21 382,618 6.8%
320,000 National Rural Utilities 7.250% 03-01-12 113.73 363,939 6.4%
325,000 Royal Bank of Scotland 7.648% 08-31-49 112.62 366,007 6.8%
360,000 U.S. Bancorp 5.100% 07-15-07 104.31 375,513 4.9%
BLDG - RESIDENTIAL/COMMER
$ 170,000 Centex Corp. 7.875% 02-01-11 $ 113.23 $ 192,493 7.0%
BUILDING MATERIALS
$ 95,000 Lowes Co., Inc. 8.250% 06-01-10 $ 118.90 $ 112,958 6.9%
CABLE TV
$ 170,000 AT&T Broadband Corp. 8.375% 03-15-13 $ 117.58 $ 199,889 7.1%
180,000 Cox Communications, Inc. 7.125% 10-01-12 109.77 197,582 6.5%
DIVERSIFIED FINANCIALS
$ 375,000 Bear Stearns Co., Inc. 1.770% 09-27-07 $ 101.35 $ 380,063 1.7%
340,000 Boeing Capital Corp., Senior Note 7.375% 09-27-10 113.22 384,937 6.5%
230,000 Cendant Corp. 6.250% 01-15-08 106.73 245,469 5.9%
190,000 First Union Corp. 6.400% 04-01-08 107.84 204,897 5.9%
200,000 Ford Motor Credit Co. 7.375% 10-28-09 106.84 213,680 6.9%
415,000 General Electric Cap Corp. 6.125% 02-22-11 107.24 445,047 5.7%
300,000 Goldman Sachs Group, Inc. 6.600% 01-15-12 107.77 323,308 6.1%
390,000 SLM Corp. 1.390% 07-25-07 100.24 390,952 1.4%
ELECTRIC - INTEGRATED
$ 190,000 American Electric Power Co., Inc. 6.125% 05-15-06 $ 105.02 $ 199,543 5.8%
205,000 Dominion Resources, Inc. 6.300% 03-15-33 95.30 195,359 6.6%
190,000 PPL Electric Utilities 5.875% 08-15-07 105.88 201,167 5.5%
185,000 Progress Energy, Inc. 7.100% 03-01-11 109.73 202,992 6.5%
210,000 Scana Corp. 1.700% 11-15-06 100.12 210,254 1.6%
FOOD-RETAIL
$ 180,000 Albertson's, Inc. 7.500% 02-15-11 $ 112.84 $ 203,109 6.6%
200,000 Safeway, Inc., Note 5.800% 08-15-12 100.97 201,948 5.7%
FOOD, BEVERAGE & TOBACCO
$ 380,000 Pepsico, Inc. 3.200% 05-15-07 $ 99.50 $ 378,086 3.2%
INSTRUMENTS-CONTROLS
$ 345,000 Honeywell International, Inc. 7.000% 03-15-07 $108.81 $ 375,378 6.4%
MEDICAL
$ 110,000 Amgen, Inc. 6.500% 12-01-07 $109.12 $ 120,036 6.0%
205,000 Wyeth 5.500% 03-15-13 96.67 198,184 5.7%
MEDICAL-HMO
$ 380,000 UnitedHealth Group, Inc. 4.875% 04-01-13 $ 97.77 $ 371,518 5.0%
MULTIMEDIA
$ 185,000 AOL Time Warner, Inc. 6.750% 04-15-11 $107.85 $ 199,516 6.3%
OIL & GAS
$ 460,000 BP Capital Markets Plc 2.750% 12-29-06 $ 98.79 $ 454,412 2.8%
320,000 Phillips Petroleum 6.650% 07-15-18 109.34 349,890 6.1%
190,000 Repsol International Finance 7.450% 07-15-05 105.04 199,567 7.1%
180,000 Transocean Sedco Forex 7.500% 04-15-31 114.20 205,565 6.6%
PAPER & RELATED PRODUCTS
$ 190,000 Meadwestvaco Corp. 6.850% 04-01-12 $107.43 $ 204,123 6.4%
PIPELINES
$ 185,000 Duke Capital Corp., Senior Note 7.500% 10-01-09 $110.41 $ 204,261 6.8%
PROPERTY/CASUALTY INSURANCE
$ 205,000 Fund American Cos., Inc.,
Guar. Senior Note 5.875% 05-15-13 $ 99.96 $ 204,913 5.9%
RETAIL
$ 135,000 TJX Cos., Inc. 7.450% 12-15-09 $114.23 $ 154,205 6.5%
TELECOM
$ 165,000 Ameritech Capital Corp. 7.500% 04-01-05 $103.60 $ 170,935 7.2%
180,000 AT&T Wireless 7.875% 03-01-11 113.90 205,013 6.9%
145,000 British Telecom Plc 8.875% 12-15-30 123.73 179,402 7.2%
170,000 Deutsche Telekom International Finance 8.500% 06-15-10 117.00 198,892 7.3%
170,000 France Telecom SA 8.750% 03-01-11 116.03 197,255 8.0%
150,000 SBC Communications, Inc. 7.000% 07-15-04 100.13 150,201 7.0%
190,000 Sprint Capital Corp. 6.125% 11-15-08 105.21 199,903 5.8%
325,000 Verizon Global Funding Corp. 7.750% 12-01-30 112.65 366,126 6.9%
----------
Total Corporate Bonds (identified cost, $12,615,798) - 32.6% $12,480,360
----------
GOVERNMENT INTERESTS
MORTGAGE-BACKED SECURITIES
$ 228,065 FHLMC Gold Pool #A10798 5.500% 05-01-33 $ 99.90 $ 227,840 5.5%
722,607 FHLMC Gold Pool #A13645 6.000% 09-01-33 102.29 739,180 5.9%
174,166 FHLMC Gold Pool #C01646 6.000% 09-01-33 102.29 178,160 5.9%
146,048 FHLMC Gold Pool #C01702 6.500% 10-01-33 104.71 152,928 6.2%
72,729 FHLMC Gold Pool #E00903 7.000% 10-01-15 106.14 77,193 6.6%
545,245 FHLMC Pool #1B1291 4.397% 11-01-33 100.61 548,550 4.4%
133,898 FHLMC Pool #27663 7.000% 06-01-29 105.89 141,790 6.6%
650,446 FNMA Pool #254865 4.500% 08-01-18 98.02 637,549 4.6%
1,336,097 FNMA Pool #254904 5.500% 09-01-33 99.84 1,333,982 5.5%
91,971 FNMA Pool #479477 6.000% 01-01-29 102.62 94,385 5.8%
77,079 FNMA Pool #489357 6.500% 03-01-29 104.38 80,456 6.2%
103,567 FNMA Pool #535332 8.500% 04-01-30 108.82 112,704 7.8%
369,252 FNMA Pool #545317 5.500% 11-01-16 102.66 379,078 5.4%
426,249 FNMA Pool #545407 5.500% 01-01-32 100.05 426,459 5.5%
124,465 FNMA Pool #545782 7.000% 07-01-32 105.57 131,401 6.6%
937,615 FNMA Pool #545993 6.000% 11-01-32 102.30 959,189 5.9%
608,661 FNMA Pool #555531 5.500% 06-01-33 99.84 607,698 5.5%
674,402 FNMA Pool #576524 5.500% 01-01-29 100.28 676,313 5.5%
137,616 FNMA Pool #597396 6.500% 09-01-31 104.32 143,557 6.2%
86,124 FNMA Pool #634823 6.500% 03-01-32 104.23 89,767 6.2%
567,476 FNMA Pool #663689 5.000% 01-01-18 100.39 569,674 5.0%
563,494 FNMA Pool #701043 4.056% 04-01-33 99.11 558,473 4.1%
284,688 FNMA Pool #725550 5.000% 05-01-19 100.39 285,790 5.0%
352,937 FNMA Pool #738630 5.500% 11-01-33 99.84 352,378 5.5%
600,452 FNMA Pool #739319 6.000% 10-01-33 102.24 613,903 5.9%
155,975 GNMA II Pool #2671 6.000% 11-20-28 102.74 160,254 5.8%
30,697 GNMA II Pool #2909 8.000% 04-20-30 109.26 33,539 7.3%
87,844 GNMA II Pool #2972 7.500% 09-20-30 107.81 94,704 7.0%
34,405 GNMA II Pool #2973 8.000% 09-20-30 109.26 37,591 7.3%
1,138,654 GNMA II Pool #3442 5.000% 09-20-33 97.11 1,105,726 5.1%
1,279,254 GNMA II Pool #3530 5.500% 03-20-34 99.95 1,278,588 5.5%
535,265 GNMA Pool #374892 7.000% 02-15-24 106.82 571,795 6.6%
112,944 GNMA Pool #376400 6.500% 02-15-24 105.24 118,864 6.2%
169,057 GNMA Pool #379982 7.000% 02-15-24 106.82 180,594 6.6%
214,415 GNMA Pool #410081 8.000% 08-15-25 110.15 236,180 7.3%
95,109 GNMA Pool #427199 7.000% 12-15-27 106.57 101,358 6.6%
101,478 GNMA Pool #436214 6.500% 02-15-13 106.21 107,784 6.1%
78,863 GNMA Pool #442996 6.000% 06-15-13 104.89 82,722 5.7%
208,302 GNMA Pool #448490 7.500% 03-15-27 108.00 224,966 6.9%
255,603 GNMA Pool #458762 6.500% 01-15-28 104.79 267,851 6.2%
185,776 GNMA Pool #460726 6.500% 12-15-27 104.90 194,882 6.2%
237,183 GNMA Pool #463839 6.000% 05-15-13 104.89 248,788 5.7%
179,597 GNMA Pool #478072 6.500% 05-15-28 104.79 188,203 6.2%
81,867 GNMA Pool #488924 6.500% 11-15-28 104.79 85,790 6.2%
58,137 GNMA Pool #510706 8.000% 11-15-29 109.73 63,791 7.3%
178,622 GNMA Pool #581536 5.500% 06-15-33 100.13 178,850 5.5%
U.S. GOVERNMENT AGENCIES
$ 415,000 FFCB 2.500% 03-15-06 $ 99.53 $ 413,032 2.5%
870,000 FHLMC 2.875% 11-03-06 99.00 861,263 2.9%
405,000 FNMA 3.000% 02-03-06 100.27 406,104 3.0%
900,000 FNMA 2.875% 05-19-08 96.36 867,216 3.0%
770,000 FNMA 3.875% 11-17-08 98.67 759,783 3.9%
275,000 FNMA 6.250% 05-15-29 105.54 290,230 5.9%
320,000 Tennessee Valley Authority 6.000% 03-15-13 106.88 342,028 5.6%
U.S. TREASURIES
$ 890,000 U.S. Treasury Bonds 7.250% 05-15-16 $ 120.93 $ 1,076,240 6.0%
1,355,000 U.S. Treasury Bonds 6.125% 11-15-27 109.61 1,485,260 5.6%
2,015,000 U.S. Treasury Notes 3.875% 02-15-13 95.63 1,926,924 4.1%
-----------
Total Government Interests (identified cost, $24,215,394) - 63.0% $24,109,297
-----------
Total Investments (identified cost, $38,493,083) - 99.9% $38,248,245
Other assets, Less liabilities - 0.1% 38,723
-----------
Net Assets -- 100.0% $38,286,968
============
FFCB - Federal Farm Credit Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments at value
(identified cost, $38,493,083) (Note 1A) $ 38,248,245
Cash.................................... 4
Receivable for investments sold......... 21,123
Receivable for fund shares sold......... 233
Receivable from investment adviser...... 6,727
Interest receivable..................... 355,681
Prepaid expenses........................ 16,272
------------
Total assets.......................... $ 38,648,285
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 254,100
Demand note payable..................... 63,000
Distributions payable................... 26,812
Payable to affiliate for Trustees' fees. 1,302
Transfer agent fee ..................... 2,027
Accrued expenses and other liabilities.. 14,076
------------
Total liabilities..................... $ 361,317
------------
NET ASSETS................................ $ 38,286,968
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 40,539,900
Accumulated net realized loss on investments
(computed on the basis of identified cost) (1,836,911)
Unrealized depreciation on investments
(computed on the basis of identified cost) (244,838)
Distributions in excess of net investment
income................................. (171,183)
------------
Net assets applicable to outstanding
shares................................ $ 38,286,968
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................. 3,049,227
============
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE OF
BENEFICIAL INTEREST..................... $ 12.56
============
See notes to financial statements
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 928,066
------------
Expenses -
Investment adviser fee (Note 3)........ $ 92,757
Administrator fee (Note 3)............. 14,429
Compensation of Trustees not employees of
the investment adviser or administrator 4,854
Custodian fee (Note 1C)................ 30,057
Distribution expenses (Note 4)......... 51,532
Transfer and dividend disbursing agent fees 10,328
Printing............................... 2,120
Interest expense....................... 756
Shareholder communications............. 2,368
Audit services......................... 12,156
Legal services......................... 2,943
Registration costs..................... 10,972
Miscellaneous.......................... 2,795
------------
Total expenses........................ $ 238,067
------------
Deduct -
Preliminary reduction of custodian fee. $ (687)
Preliminary allocation of expenses to the
investment adviser (Note 3)........... (6,727)
Preliminary reduction of distribution expenses
by principal underwriter (Note 4)..... $ (34,933)
------------
Total deductions....................... $ (42,347)
------------
Net expenses.......................... $ 195,720
------------
Net investment income............... $ 732,346
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 34,734
Change in unrealized depreciation
of investments......................... (889,444)
------------
Net realized and unrealized loss of
investments........................... $ (854,710)
------------
Net decrease in net assets from
operations........................... $ (122,364)
============
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 2004 Dec. 31, 2003
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 732,346 $ 1,491,343
Net realized gain on investments........................................... 34,734 1,652,885
Change in unrealized appreciation (depreciation) of investments............ (889,444) (1,854,914)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......... $ (122,364) $ 1,289,314
------------ ------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (893,856) $ (1,734,662)
------------ ------------
Total distributions...................................................... $ (893,856) $ (1,734,662)
------------ ------------
Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (3,013,833) $ 3,358,788
------------ ------------
Net increase (decrease) in net assets.................................... $ (4,030,053) $ 2,913,440
NET ASSETS:
At beginning of period....................................................... 42,317,021 39,403,581
------------ ------------
At end of period............................................................. $ 38,286,968 $ 42,317,021
============= =============
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT END OF PERIOD...................................... $ (171,183) $ (9,673)
============= =============
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS June 30, 2004 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
(unaudited)
Net asset value, beginning of period........ $ 12.870 $ 13.010 $ 12.550 $ 12.630 $ 12.100 $ 13.310
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ................ $ 0.226 $ 0.483 $ 0.639 $ 0.709 (4)$ 0.712 $ 0.679
Net realized and unrealized gain (loss).. (0.260) (0.066) 0.461 (0.090)(4) 0.530 (1.190)
-------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations........................... $ (0.034) $ 0.417 $ 1.100 $ 0.619 $ 1.242 $ (0.511)
-------- -------- -------- -------- -------- --------
Less distributions:
Distributions from investment income..... $ (0.276) $ (0.557) $ (0.640) $ (0.699) $ (0.712) $ (0.680)
Distributions from capital gains......... - - - - - (0.019)
-------- -------- -------- -------- -------- --------
Total distributions.................... $ (0.276) $ (0.557) $ (0.640) $ (0.699) $ (0.712) $ (0.699)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 12.560 $ 12.870 $ 13.010 $ 12.550 $ 12.630 $ 12.100
========= ========= ========= ========= ========= =========
Total return(2) ............................ (0.28%) 3.25% 9.03% 4.96% 10.62% (3.91%)
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted).. $ 38,287 $ 42,317 $ 39,404 $ 50,620 $ 65,775 $ 87,336
Ratio of net expenses to average net assets 0.95%(6) 0.95% 0.96% 0.96% 0.96% 0.90%
Ratio of net expenses after custodian fee
reduction to average net assets........ 0.95%(3)(5)(6)0.95%(5) 0.95%(3)(5) 0.95%(3)(5) 0.95%(3)(5) 0.90%(3)
Ratio of net investment income to average
net assets............................ 3.55%(6) 3.67% 4.92% 5.44% 5.84% 5.36%
Portfolio turnover rate.................. 36% 131% 68% 38% 61% 31%
- ----------------------------------------------------------------------------------------------------------------------------------
(1)For the six months ended June 30, 2004 and for the years ended December 31,
2003, 2002, 2001 and 1999, the operating expenses of the fund were reduced by
an allocation of expenses to the investment adviser, and/or a reduction in
distribution expenses by the distributor. Had such action not been
undertaken, net investment income per share and the ratios would have been as
follows:
2004 2003 2002 2001 1999
--------------------------------------------------------------------------
Net investment income per share.......... $ 0.213 $ 0.455 $ 0.621 $ 0.701 $ 0.678
========== ========== ========== ========== ==========
Ratios (As a percentage of average net assets):
Expenses............................... 1.15%(6) 1.17% 1.09% 1.02% 0.91%
========== ========== ========== ========== ==========
Expenses after custodian fee reduction. 1.15%(3)(6) 1.17% 1.08%(3) 1.01%(3) 0.91%(3)
========== ========== ========== ========== ==========
Net investment income.................. 3.35%(6) 3.46% 4.78% 6.38% 5.35%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------------
(2)Total investment 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)Custodian fees were reduced by credits resulting from cash balances the fund
maintained with the custodian (Note 1C). The computation of net expenses to
average daily net assets reported above is computed without consideration of
such credits.
(4)Reporting guidelines require the funds to disclose the effects of
implementing the change in accounting for amortization of premium and
discount on debt securities. If adjustments were not made, net investment
income per share would have been $0.716 and net realized and unrealized gain
(loss) per share would have been $(0.097).
(5)Under a written agreement, Wright waives all or a portion of either its
advisory and/or distribution fees and assumes operating expenses to the
extent necessary to limit expense ratios to 0.95% after custodian fee credits
are applied.
(6)Annualized.
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Portfolio of Investments - June 30, 2004 (unaudited)
Face Coupon Maturity Market Current
Amount Description Rate Date Price Value Yield
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
MORTGAGE-BACKED SECURITIES - 99.4%
$1,472,681 FHLMC Pool #11636 5.000% 01-01-19 $100.35 $ 1,477,899 5.0%
181,157 FHLMC Pool #27663 7.000% 06-01-29 105.89 191,835 6.6%
875,353 FNMA Pool #254546 5.500% 12-01-17 102.60 898,111 5.4%
235,320 FNMA Pool #535131 6.000% 03-01-29 102.62 241,497 5.8%
968,127 FNMA Pool #673315 5.500% 11-01-32 99.90 967,143 5.5%
949,103 FNMA Pool #696828 5.000% 04-01-18 100.39 952,778 5.0%
814,175 FNMA Pool #729950 6.000% 12-01-33 102.24 832,413 5.9%
121,222 GNMA II Pool #1268 8.000% 07-20-23 110.15 133,521 7.3%
8,915 GNMA II Pool #1596 9.000% 04-20-21 112.65 10,042 8.0%
57,398 GNMA II Pool #1788 7.000% 07-20-24 106.70 61,244 6.6%
56,834 GNMA II Pool #2218 7.500% 05-20-26 107.94 61,344 6.9%
152,715 GNMA II Pool #2268 7.500% 08-20-26 107.94 164,833 6.9%
25,395 GNMA II Pool #2855 8.500% 12-20-29 109.48 27,803 7.8%
345,774 GNMA II Pool #3228 6.500% 04-20-32 104.39 360,960 6.2%
1,083,538 GNMA II Pool #3259 5.500% 07-20-32 100.03 1,083,842 5.5%
1,528,136 GNMA II Pool #3284 5.500% 09-20-32 100.03 1,528,564 5.5%
95,825 GNMA II Pool #545 7.500% 12-20-22 108.34 103,820 6.9%
128,519 GNMA II Pool #723 7.500% 01-20-23 108.24 139,106 6.9%
15 GNMA Pool #004433 9.000% 11-15-04 101.30 15 8.9%
105 GNMA Pool #005466 8.500% 03-15-05 102.95 108 8.3%
7 GNMA Pool #005687 7.250% 02-15-05 102.15 7 7.1%
52 GNMA Pool #005910 7.250% 02-15-05 102.15 53 7.1%
614 GNMA Pool #007003 8.000% 07-15-05 102.59 630 7.8%
413 GNMA Pool #009106 8.250% 05-15-06 104.63 432 7.9%
552 GNMA Pool #009889 7.250% 02-15-06 103.51 571 7.0%
600 GNMA Pool #012526 8.000% 11-15-06 104.30 625 7.7%
23,362 GNMA Pool #151443 10.000% 03-15-16 111.98 26,161 8.9%
2,836 GNMA Pool #153564 10.000% 04-15-16 111.98 3,175 8.9%
13,238 GNMA Pool #172558 9.500% 08-15-16 112.87 14,942 8.4%
17,970 GNMA Pool #176992 8.000% 11-15-16 110.19 19,801 7.3%
4,288 GNMA Pool #177784 8.000% 10-15-16 110.19 4,725 7.3%
207 GNMA Pool #190959 8.500% 02-15-17 111.54 231 7.6%
13,898 GNMA Pool #192357 8.000% 04-15-17 110.47 15,353 7.2%
21,047 GNMA Pool #194057 8.500% 04-15-17 111.54 23,475 7.6%
11,888 GNMA Pool #194287 9.500% 03-15-17 113.01 13,436 8.4%
68,442 GNMA Pool #194926 8.500% 02-15-17 111.54 76,338 7.6%
1,711 GNMA Pool #196063 8.500% 03-15-17 111.54 1,909 7.6%
47,471 GNMA Pool #206762 9.000% 04-15-21 113.05 53,667 8.0%
14,067 GNMA Pool #207019 8.000% 03-15-17 110.47 15,540 7.2%
1,036 GNMA Pool #208076 8.000% 04-15-17 110.47 1,144 7.2%
16,358 GNMA Pool #211013 9.000% 01-15-20 112.97 18,480 8.0%
16,948 GNMA Pool #211231 8.500% 05-15-17 111.54 18,904 7.6%
8,297 GNMA Pool #212601 8.500% 06-15-17 111.54 9,255 7.6%
32,254 GNMA Pool #219335 8.000% 05-15-17 110.47 35,631 7.2%
55,744 GNMA Pool #220703 8.000% 05-15-17 110.47 61,580 7.2%
7,270 GNMA Pool #220917 8.500% 04-15-17 111.54 8,109 7.6%
189,867 GNMA Pool #222112 8.000% 01-15-22 110.60 209,996 7.2%
21,872 GNMA Pool #223126 10.000% 08-15-17 112.10 24,519 8.9%
11,950 GNMA Pool #223133 9.500% 07-15-17 113.01 13,505 8.4%
10,075 GNMA Pool #223348 10.000% 08-15-18 112.23 11,307 8.9%
$1,602 GNMA Pool #223588 10.000% 12-15-18 $112.23 $ 1,798 8.9%
14,486 GNMA Pool #228308 10.000% 01-15-19 112.32 16,271 8.9%
6,442 GNMA Pool #230223 9.500% 04-15-18 113.11 7,286 8.4%
1,543 GNMA Pool #247473 10.000% 09-15-18 108.37 1,672 9.2%
20,463 GNMA Pool #247681 9.000% 11-15-19 112.87 23,097 8.0%
4,028 GNMA Pool #247872 10.000% 09-15-18 112.23 4,520 8.9%
2,241 GNMA Pool #250412 8.000% 03-15-18 110.63 2,480 7.2%
5,263 GNMA Pool #251241 9.500% 06-15-18 113.11 5,953 8.4%
8,459 GNMA Pool #258911 9.500% 09-15-18 113.11 9,568 8.4%
15,531 GNMA Pool #260999 9.500% 09-15-18 113.11 17,567 8.4%
9,642 GNMA Pool #263439 10.000% 02-15-19 112.32 10,830 8.9%
1,803 GNMA Pool #265267 9.500% 08-15-20 113.14 2,040 8.4%
5,803 GNMA Pool #266983 10.000% 02-15-19 112.32 6,518 8.9%
3,562 GNMA Pool #273690 9.500% 08-15-19 113.11 4,029 8.4%
7,182 GNMA Pool #274489 9.500% 12-15-19 113.11 8,123 8.4%
28,024 GNMA Pool #285744 9.000% 05-15-20 112.97 31,658 8.0%
11,227 GNMA Pool #286556 9.000% 03-15-20 112.97 12,683 8.0
6,935 GNMA Pool #289092 9.000% 04-15-20 112.97 7,835 8.0%
9,494 GNMA Pool #301366 8.500% 06-15-21 111.48 10,584 7.6%
1,909 GNMA Pool #302723 8.500% 05-15-21 111.48 2,128 7.6%
9,376 GNMA Pool #302933 8.500% 06-15-21 111.48 10,453 7.6%
25,240 GNMA Pool #304512 8.500% 05-15-21 111.48 28,138 7.6%
61,547 GNMA Pool #305091 9.000% 07-15-21 113.05 69,581 8.0%
6,317 GNMA Pool #306693 8.500% 09-15-21 111.48 7,043 7.6%
12,229 GNMA Pool #308792 9.000% 07-15-21 113.05 13,825 8.0%
3,917 GNMA Pool #314222 8.500% 04-15-22 111.43 4,365 7.6%
17,697 GNMA Pool #315187 8.000% 06-15-22 110.60 19,573 7.2%
158,858 GNMA Pool #315388 8.000% 02-15-22 110.60 175,700 7.2%
16,336 GNMA Pool #315754 8.000% 01-15-22 110.60 18,068 7.2%
45,560 GNMA Pool #316240 8.000% 01-15-22 110.60 50,391 7.2%
5,037 GNMA Pool #317351 8.000% 05-15-22 110.60 5,571 7.2%
32,004 GNMA Pool #319441 8.500% 04-15-22 111.43 35,661 7.6%
21,079 GNMA Pool #321806 8.000% 05-15-22 110.60 23,314 7.2%
51,938 GNMA Pool #321807 8.000% 05-15-22 110.60 57,444 7.2%
29,645 GNMA Pool #321976 8.500% 01-15-22 111.43 33,032 7.6%
83,227 GNMA Pool #323226 8.000% 06-15-22 110.60 92,051 7.2%
68,550 GNMA Pool #323929 8.000% 02-15-22 110.60 75,818 7.2%
21,991 GNMA Pool #325165 8.000% 06-15-22 110.60 24,322 7.2%
21,713 GNMA Pool #325651 8.000% 06-15-22 110.60 24,015 7.2%
77,043 GNMA Pool #329540 7.500% 08-15-22 108.47 83,568 6.9%
216,959 GNMA Pool #329982 7.500% 02-15-23 108.36 235,103 6.9%
39,910 GNMA Pool #331361 8.000% 11-15-22 110.60 44,141 7.2%
27,090 GNMA Pool #335950 8.000% 10-15-22 110.60 29,962 7.2%
40,956 GNMA Pool #348213 6.500% 08-15-23 105.39 43,165 6.2%
34,755 GNMA Pool #350659 7.500% 06-15-23 108.36 37,662 6.9%
268,986 GNMA Pool #350938 6.500% 08-15-23 105.39 283,496 6.2%
220,228 GNMA Pool #352001 6.500% 12-15-23 105.39 232,107 6.2%
104,260 GNMA Pool #352110 7.000% 08-15-23 106.82 111,374 6.6%
3,192,192 GNMA Pool #3556 5.500% 05-20-34 99.95 3,190,529 5.5%
193,877 GNMA Pool #367806 6.500% 09-15-23 105.39 204,335 6.2%
132,103 GNMA Pool #368238 7.000% 12-15-23 106.82 141,117 6.6%
370,789 GNMA Pool #372050 6.500% 02-15-24 105.24 390,223 6.2%
$ 53,431 GNMA Pool #372379 8.000% 10-15-26 $110.02 $ 58,785 7.3%
60,420 GNMA Pool #394805 7.500% 02-15-26 108.06 65,290 6.9%
93,198 GNMA Pool #405558 7.500% 01-15-26 108.06 100,710 6.9%
209,750 GNMA Pool #410215 7.500% 12-15-25 108.18 226,915 6.9%
50,046 GNMA Pool #414736 7.500% 11-15-25 108.18 54,141 6.9%
69,918 GNMA Pool #417225 7.500% 01-15-26 108.06 75,553 6.9%
169,533 GNMA Pool #420707 7.000% 02-15-26 106.67 180,839 6.6%
73,136 GNMA Pool #421829 7.500% 04-15-26 108.06 79,031 6.9%
72,580 GNMA Pool #424173 7.500% 03-15-26 108.06 78,430 6.9%
34,666 GNMA Pool #431036 8.000% 07-15-26 110.02 38,140 7.3%
211,977 GNMA Pool #431612 8.000% 11-15-26 110.02 233,219 7.3%
50,926 GNMA Pool #442190 8.000% 12-15-26 110.02 56,029 7.3%
273,148 GNMA Pool #448490 7.500% 03-15-27 108.00 295,000 6.9%
123,894 GNMA Pool #449176 6.500% 07-15-28 104.79 129,831 6.2%
480,846 GNMA Pool #457100 6.500% 11-15-28 104.79 503,887 6.2%
383,405 GNMA Pool #458762 6.500% 01-15-28 104.79 401,776 6.2%
185,776 GNMA Pool #460726 6.500% 12-15-27 104.90 194,882 6.2%
92,887 GNMA Pool #462444 6.500% 12-15-27 104.90 97,440 6.2%
127,231 GNMA Pool #462623 6.500% 03-15-28 104.79 133,328 6.2%
116,296 GNMA Pool #469226 6.500% 03-15-28 104.79 121,869 6.2%
295,120 GNMA Pool #469615 6.500% 10-15-28 104.79 309,261 6.2%
2,632,844 GNMA Pool #471369 5.500% 05-15-33 100.13 2,636,206 5.5%
306,203 GNMA Pool #472028 6.500% 05-15-28 104.79 320,875 6.2%
322,906 GNMA Pool #480030 6.500% 06-15-28 104.79 338,379 6.2%
1,141,243 GNMA Pool #486482 6.500% 09-15-28 104.79 1,195,928 6.2%
482,611 GNMA Pool #523002 6.500% 02-15-32 104.64 505,012 6.2%
185,275 GNMA Pool #538314 7.000% 02-15-32 106.29 196,936 6.6%
342,918 GNMA Pool #547605 6.500% 01-15-31 104.66 358,913 6.2%
299,376 GNMA Pool #552393 6.500% 02-15-32 104.64 313,273 6.2%
171,603 GNMA Pool #554203 7.000% 12-15-31 106.33 182,460 6.6%
330,922 GNMA Pool #570141 6.500% 12-15-31 104.66 346,357 6.2%
1,365,807 GNMA Pool #585467 6.000% 08-15-32 102.71 1,402,864 5.8%
677,784 GNMA Pool #587080 6.500% 05-15-32 104.64 709,245 6.2%
1,735,026 GNMA Pool #589580 5.500% 11-15-32 100.15 1,737,681 5.5%
1,338,626 GNMA Pool #595207 5.500% 12-15-32 100.15 1,340,674 5.5%
1,044,206 GNMA Pool #595455 5.500% 11-15-32 100.15 1,045,804 5.5%
1,345,641 GNMA Pool #595606 6.000% 11-15-32 102.71 1,382,151 5.8%
998,743 GNMA Pool #619718 6.000% 05-15-34 102.66 1,025,293 5.8%
179,720 GNMA Pool #780429 7.500% 09-15-26 108.12 194,314 6.9%
-----------
TOTAL INVESTMENTS (identified cost, $31,497,810) - 99.4% $34,568,887
-----------
Other Assets, less Liabilities - 0.6% 212,872
-----------
Net Assets - 100.0% $34,781,759
============
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of ($31,497,810) (Note 1A) $ 34,568,887
Cash.................................... 103,396
Receivable for fund shares sold......... 585
Receivable from investment adviser...... 15,957
Interest receivable..................... 170,173
Prepaid expenses........................ 15,772
------------
Total assets.......................... $ 34,874,770
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 9,791
Distributions payable................... 67,819
Payable to affiliate for Trustees' fees. 2,199
Transfer agent fee payable.............. 1,933
Accrued expenses and other liabilities.. 11,269
------------
Total liabilities..................... $ 93,011
------------
NET ASSETS................................ $ 34,781,759
=============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 31,893,765
Accumulated net realized loss on investments
(computed on the basis of identified cost) (98,521)
Unrealized appreciation on investments
(computed on the basis of identified cost) 3,071,077
Distributions in excess of net investment
incom.................................. (84,562)
------------
Net assets applicable to outstanding
shares................................ $ 34,781,759
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING........................... 3,411,488
============
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE OF
BENEFICIAL INTEREST................... $ 10.20
============
See notes to financial statements
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 970,452
------------
Expenses -
Investment adviser fee (Note 3)........ $ 76,567
Administrator fee (Note 3)............. 15,313
Compensation of Trustees not employees of
the investment adviser or administrator 5,999
Custodian fee (Note 1C)................ 29,974
Distribution expenses (Note 4)......... 42,537
Transfer and dividend disbursing agent fees 6,953
Printing............................... 1,257
Interest expense....................... 997
Shareholder communications............. 2,824
Audit services......................... 12,156
Legal services......................... 3,086
Registration costs..................... 9,100
Miscellaneous.......................... 2,550
------------
Total expenses........................ $ 209,313
------------
Deduct -
Preliminary reduction of custodian fee. $ (3,354)
Preliminary allocation of expenses to
investment adviser (Note 3)........... (15,957)
Preliminary reduction of distribution expenses
by principal underwriter (Note 4)..... (28,397)
------------
Total deductions...................... $ (47,708)
------------
Net expenses.......................... $ 161,605
------------
Net investment income............... $ 808,847
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis)................ $ (97,012)
Change in unrealized appreciation (depreciation)
of investments......................... (517,466)
------------
Net realized and unrealized loss
of investments........................ (614,478)
------------
Net increase in net assets from
operations........................... $ 194,369
============
(1) The Institutional share class of Current Income Fund was fully liquidated on
May 20, 2003.
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 2004 Dec. 31, 2003
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 808,847 $ 2,448,956
Net realized gain (loss) on investments.................................... (97,012) 1,664,914
Change in unrealized appreciation (depreciation) on investments............ (517,466) (3,218,260)
------------ ------------
Net increase in net assets resulting from operations..................... $ 194,369 $ 895,610
------------ ------------
Distributions to shareholders (Note 2) -
From net investment income -
Standard shares.......................................................... $ (808,849) $ (2,349,214)
Institutional shares..................................................... - (333,233)
From net realized gain..................................................... (297,830) --
------------ ------------
Total distributions...................................................... $ (1,106,679) $ (2,682,447)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions (Note 5) -
Standard shares............................................................ $ (637,447) $(21,111,610)
Institutional shares....................................................... - (15,550,021)
------------ ------------
Net decrease in net assets from fund share transactions.................. $ (637,447) $(36,661,631)
------------ ------------
Net decrease in net assets............................................... $(1,549,757) $(38,448,468)
NET ASSETS:
At beginning of period....................................................... 36,331,516 74,779,984
------------ ------------
At end of period............................................................. $ 34,781,759 $ 36,331,516
============= =============
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED
IN NET ASSETS AT END OF PERIOD............................................... $ (84,562) $ (84,560)
============= =============
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
---------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS June 30, 2004 2003 2002 2001(4) 2000(4) 1999(4)
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Net asset value, beginning of period........ $ 10.490 $ 10.810 $ 10.580 $ 10.460 $ 10.090 $ 10.660
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ............... $ 0.245 $ 0.417 $ 0.565 $ 0.616 $ 0.631 $ 0.620
Net realized and unrealized gain (loss).. (0.197) (0.235) 0.231 0.120 0.372 (0.570)
-------- -------- -------- -------- -------- --------
Total income from
investment operations............. $ 0.048 $ 0.182 $ 0.796 $ 0.736 $ 1.003 $ 0.050
-------- -------- -------- -------- -------- --------
Less distributions:
Distributions from investment income..... $ (0.245) $ (0.502) $ (0.555) $ (0.616) $ (0.633) $ (0.620)
Distributions from capital gains......... (0.093) - - -- -- --
Tax return of capital.................... - - (0.011) -- -- --
-------- -------- -------- -------- -------- --------
Total distributions.................. $ (0.338) $ (0.502) $ (0.566) $ (0.616) $ (0.633) $ (0.620)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 10.200 $ 10.490 $ 10.810 $ 10.580 $ 10.460 $ 10.090
========= ========= ========= ========= ========= =========
Total return(2) ............................ 0.45% 1.73% 7.70% 7.18% 10.31% 0.52%
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted).. $ 34,782 $ 36,332 $ 59,077 $ 54,966 $ 68,015 $76,452
Ratio of net expenses to average net assets 0.97%(8) 0.95% 0.97%(3) 0.95%(3)(6) 0.95%(3)(6)0.91%(3)
Ratio of net expenses after custodian fee
reduction to average net assets(6) .... 0.95%(7)(8) 0.95% 0.95%(3)(7) -- --
Interest expense......................... - 0.01% -- -- -- --
Ratio of net investment income
to average net assets................. 4.75%(8) 4.43% 5.28% 5.83% 6.22% 6.02%
Portfolio turnover rate ................. 19% 20% 36%(5) 4%(5) 6%(5) 0%(5)
- ----------------------------------------------------------------------------------------------------------------------------------
(1)For the six months ended June 30, 2004 and for the years ended December 31,
2003, 2002, 2001, 2000, and 1999, the operating expenses of the fund were
reduced by an allocation of expenses to the investment adviser or a reduction
in distribution expense by the distributor. Had such action not been
undertaken, net investment income per share and the ratios would have been as
follows:
2004 2003 2002 2001 2000 1999
-------------------------------------------------------------------------
Net investment income per share........ $ 0.232 $ 0.401 $ 0.555 $ 0.609 $ 0.629 $ 0.615
========= ========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses ............................ 1.25%(8) 1.12% 1.06%(3) 1.02%(3) 0.97%(3) 0.96%(3)
========= ========= ========= ========= ========= =========
Expenses after custodian fee reduction 1.23%(7)(8) 1.12% 1.04%(3)(7) -- -- --
========= ========= ========= ========= ========= =========
Interest expense..................... - 0.01% -- -- -- --
========= ========= ========= ========= ========= =========
Net investment income................ 4.49%(8) 4.26% 5.19% 5.76% 6.20% 5.97%
========= ========= ========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------------------------
(2)Total investment 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 period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date.
(3)Includes each fund's share of its corresponding portfolio's allocated expenses.
(4)Certain of the per share data are based on average shares outstanding.
(5)Represents portfolio turnover rate at the fund's corresponding portfolio.
(6)Under a written agreement in effect for the current fiscal year, Wright
waives all or a portion of either its advisory and/or distribution fees and
assumes operating expenses to the extent necessary to limit expense ratios to
0.95% after custodian fee credits are applied.
(7)Custodian fees were reduced by credits resulting from cash balances the fund
and/or the portfolio maintained with the custodian (Note 1C). The computation
of net expenses to average daily net assets reported above is computed
without consideration of such credits.
(8)Annualized.
See notes to financial statements
Wright Managed Income Trust
- -------------------------------------------------------------------------------
Notes to Financial Statements
(1)SIGNIFICANT ACCOUNTING POLICIES
The Wright Managed Income Trust (the Trust), issuer of Wright U.S.
Government Near Term Fund (WNTB) series, Wright U.S. Government Intermediate
Fund (WUSGI) series, Wright Total Return Bond Fund (WTRB) series, and Wright
Current Income Fund (WCIF) series (collectively, the Funds), is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end,
management investment company. WNTB seeks a high level of income, which is
normally above that available from short-term money market instruments or funds.
WUSGI seeks a high total return with an emphasis on income. 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. Prior to December 20, 2002, WNTB, WUSGI, and WCIF
invested all of their investable assets in interests in a separate corresponding
open-end management investment company (a Portfolio), a New York Trust, having
the same investment objective as its corresponding fund. Subsequent to December
20, 2002, the Funds invest directly in securities rather than through the
Portfolio and maintain the same investment objective.
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.
A. Investment Valuations - Investments for which market quotations are readily
available are valued at current market value as furnished by a pricing
service. Investments for which valuations are not readily available will be
appraised at their fair value as determined in good faith by or at the
direction of the Trustees. Short-term obligations maturing in sixty days or
less are valued at amortized cost, which approximates market value.
B. Interest Income - Interest income consists of interest accrued and discount
earned (including both original issue and market discount) and amortization
of premium or discount on long-term debt securities. The income is accrued
ratably to the date of maturity on the investments of the funds.
C. Expense Reduction - Investors Bank & Trust Company (IBT) serves as
custodian to the Funds. Pursuant to the custodian agreement, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balance the Funds maintain with IBT. All credit balances used to reduce the
Fund's custodian fees are reported as a reduction of total expenses on the
Statement of Operations.
D. Federal Taxes - The Trust's policy is to comply with the provisions of the
Internal Revenue Code (the Code) available to regulated investment
companies and to distribute to shareholders each year all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is necessary. At December 31,
2003, the Trust, for federal income tax purposes, had capital loss
carryovers of $609,212 (WNTB) and $1,759,664 (WTRB) which will reduce
taxable income arising from future net realized gain on investments, if
any, to the extent permitted by the Code, and thus will reduce the amount
of the distribution to shareholders which would otherwise be necessary to
relieve the respective fund of any liability for federal income or excise
tax. Pursuant to the Code, such capital loss carryovers will expire as
follows:
12/31 WNTB WTRB
- -------------------------------------------------------------------------------
2004 - -
2005 - -
2006 $37,825 -
2007 297,581 -
2008 273,806 $1,251,058
2009 - -
2010 508,606 -
At December 31, 2003, net capital losses of $18,591 for WNTB and $25,907
for WUSGI attributable to security transactions incurred after October 31,
2003 are treated as arising on the first day of the fund's current taxable
year.
E. Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
F. Other - Investment transactions are accounted for on the date the
investments are purchased or sold.
G. Interim Financial Statements - The interim financial statements relating to
June 30, 2004 and for the period then ended have not be audited by an
independent certified public accountants, but in the opinion of the Trust's
management reflect all recurring adjustments, necessary for the fair
presentation of the financial statements.
(2)DISTRIBUTIONS
Each fund's policy is to determine net income once daily, as of the close
of the New York Stock Exchange and the net income so determined is substantially
declared as a dividend to shareholders of record at the time of such
determination. Distributions of realized capital gains are made at least
annually. Shareholders may reinvest capital gain distributions in additional
shares of the same fund at the net asset value as of the ex-dividend date.
Dividends may be reinvested in additional shares of the same fund at the net
asset value as of the payable date.
The Trust requires that differences in the recognition or classification of
income between the financial statements and tax earnings and profits which
result in temporary overdistributions for financial statement purposes be
classified as distributions in excess of net investment income or accumulated
net realized gains.
Distributions in excess of tax basis earnings and profits are reported in
the financial statements as a return of capital. Permanent differences between
book and tax accounting for certain items may result in reclassification of
these items.
(3)INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as
investment adviser to the funds pursuant to the respective Investment Advisory
Contracts. Wright furnishes each fund with investment management, investment
advisory, and other services. For its services, Wright is compensated based upon
a percentage of average daily net assets which rate is adjusted as average daily
net assets exceed certain levels. For the six months ended June 30, 2004, the
effective annual rate for WNTB, WUSGI, WCIF, and WTRB was 0.45 %. Under a
written agreement, Wright waives a portion of its advisory fee and/or
distribution fees and assumes operating expenses to the extent necessary to
limit expense ratios to 0.95% after custodian fee reductions, if any.
Accordingly, Wright made a reduction of its investment adviser fee by $20,350
and $29,279 on behalf of WNTB and WUSGI, respectively. In addition, Wright has
been allocated expenses of $9,432, $6,727, and $15,957 on behalf of WUSGI, WTRB
and WCIF, respectively.
The Trust also has engaged Eaton Vance Management (Eaton Vance) to act as
administrator of the Trust. Under the Administration Agreement, Eaton Vance is
responsible for managing the business affairs of the Trust and is compensated
based upon a percentage of average daily net assets which rate is reduced as
average daily net assets exceed certain levels. For the six months ended June
30, 2004, the effective annual rate was 0.09% for WNTB, 0.09% for WUSGI, 0.07%
for WTRB, and 0.09% for WCIF. Certain of the Trustees and officers of the Trust
are directors/trustees and/or officers of the above organizations. Except as to
Trustees of the Trust who are not employees of Eaton Vance or Wright, Trustees
and officers received remuneration for their services to the Trust out of fees
paid to Eaton Vance and Wright.
(4)DISTRIBUTION EXPENSES
The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Plan provides that each of the
funds will pay Wright Investors' Service Distributors, Inc. (Principal
Underwriter), a wholly-owned subsidiary of Winthrop, a distribution fee at an
annual rate of 0.25% of the average daily net assets of each fund for activities
primarily intended to result in the sale of each fund's shares. Pursuant to a
written agreement (Note 3), the Principal Underwriter made a reduction of its
fee by $31,223, $16,266, $34,933, and $28,397 for the benefit of WNTB, WUSGI,
WTRB, and WCIF, 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 amount of service fee payable under the Service Plan may not exceed
0.25% annually of each fund's average daily net assets. For the six months ended
June 30, 2004, the funds did not accrue or pay any service fees.
(5) 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:
Six Months Ended Year Ended
June 30, 2004 December 31, 2003
------------------ ---------------------
(unaudited)
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
Wright U.S. Government Near Term Fund--
Sold................................................. 282,879 $ 2,863,423 1,235,965 $ 12,845,606
Issued to shareholders in payment of distributions
declared............................................ 26,775 271,973 61,296 635,839
Redemptions.......................................... (685,834) (6,966,238) (1,835,158) (19,044,704)
----------- -------------- ----------- --------------
Net decrease..................................... (376,180) $ (3,830,842) (537,897) $ (5,563,259)
============= =============== =========== ==============
Wright U.S. GOVERNMENT INTERMEDIATE Fund--
Sold................................................. 131,587 $ 1,696,674 339,323 $ 4,638,610
Issued to shareholders in payment of distributions
declared............................................ 11,900 154,046 62,991 838,112
Redemptions.......................................... (367,629) (4,726,241) (455,254) (6,206,016)
----------- -------------- ----------- --------------
Net increase/(decrease).......................... (224,142) $ (2,875,521) (52,940) $ (729,294)
=========== ============== =========== ==============
Wright Total Return Bond Fund--
Sold................................................. 417,836 $ 5,340,263 1,205,393 $ 15,614,387
Issued to shareholders in payment of distributions
declared............................................ 57,292 731,968 106,037 1,375,694
Redemptions.......................................... (714,837) (9,086,064) (1,051,037) (13,631,293)
----------- -------------- ----------- --------------
Net increase/(decrease).......................... (239,709) $ (3,013,833) 260,393 $ 3,358,788
=========== ============== =========== ==============
Wright Current Income Fund -- Standard Shares
Sold................................................. 820,161 $ 8,426,511 1,044,836 $ 11,086,467
Issued to shareholders in payment of distributions
declare............................................. 55,251 572,363 103,674 1,101,063
Redemptions.......................................... (928,981) (9,636,321) (3,146,463) (33,299,140)
----------- -------------- ----------- --------------
Net increase/(decrease).......................... (53,569) $ (637,447) (1,997,953) $ (21,111,610)
=========== ============= =========== ==============
Wright Current Income Fund -- Institutional Shares
Sold................................................. - $ - 394,118 $ 4,020,000
Issued to shareholders in payment of distributions
declared............................................ - - 27,597 282,568
Redemptions.......................................... - - (1,948,242) (19,852,589)
----------- -------------- ----------- --------------
Net decrease..................................... - $ - (1,526,527) $ (15,550,021)
============ ============== =========== ==============
(6) INVESTMENT TRANSACTIONS
The Trust invests primarily in debt securities. The ability of the issuers
of the debt securities held by the Trust to meet their obligations may be
affected by economic developments in a specific industry or municipality.
Purchases and sales and maturities of investments, other than short-term
obligations, were as follows:
Six Months Ended June 30, 2004
-----------------------------------------
WNTB WUSGI WTRB WCIF
- ----------------------------------------------------------------------------
Purchases--
Non-U.S.
Obligations $ - $ - $ 2,852,360 $ -
=========== =========== =========== ===========
U.S. Gov't
Obligations$19,728,286 $ 4,240,290 $11,745,671 $ 6,578,795
=========== =========== =========== ===========
Sales --
Non-U.S. Gov't
Obligation $ - $ - $ 5,412,014 $ -
=========== =========== =========== ===========
U.S. Gov't
Obligations$24,128,564 $ 7,030,941 $11,763,773 $ 7,375,401
=========== =========== =========== ===========
- ----------------------------------------------------------------------------
(7)FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) of the investment
securities owned at June 30, 2004, as computed on a federal income tax basis,
are as follows:
WNTB WUSGI WTRB WCIF
- ------------------------------------------------------------------------------
Aggregate
cost.........$22,800,783 $10,885,324 $38,622,468 $31,497,810
=========== =========== =========== ===========
Gross unrealized
appreciation. 6,612 15,217 376,596 3,189,184
Gross unrealized
depreciation. (312,380) (205,306) (750,819) (118,107)
---------- ---------- ---------- ----------
Net unrealized
depreciation.$ (305,768) $ (190,089) $ (374,223) $3,071,077
============ ============ ========== ============
(8)LINE OF CREDIT
The funds participate with other funds managed by Wright in a committed $20
million unsecured line of credit agreement with a 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 federal funds rate. In addition, a fee
computed at an annual rate of 0.10% on the average daily unused portion of the
$20 million line of credit, is allocated among the participating funds at the
end of each quarter. At June 30, 2004, WTRB had a balance outstanding of $63,000
pursuant to this line of credit. The funds did not have significant borrowings
or allocated fees during the six months ended June 30, 2004.
(9)CLASS ELIMINATION
The Institutional Share class of the Current Income Fund was fully
liquidated on May 20, 2003.
WRIGHT INVESTORS' SERVICE DISTRIBUTORS, INC.
440 Wheelers Farms Road, Milford, CT 06460
SEMI-ANNUAL REPORT
OFFICERS AND TRUSTEES OF THE FUNDS
Peter M. Donovan, President and Trustee
H. Day Brigham, Jr., Vice President , Secretary and Trustee
A. M. Moody III, Vice President and Trustee
Judith R. Corchard, Vice President
James J. Clarke, Trustee
Dorcas R. Hardy, Trustee
Leland Miles, Trustee
Richard E. Taber, Trustee
James L. O'Connor, Treasurer
William J. Austin, Jr., Assistant Treasurer
ADMINISTRATOR
Eaton Vance Management
255 State Street
Boston, Massachusetts 02109
INVESTMENT ADVISER
Wright Investors' Service
440 Wheelers Farms Road
Milford, Connecticut 06460
PRINCIPAL UNDERWRITER
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road
Milford, Connecticut 06460
(800) 888-9471
e-mail: funds@wrightinvestors.com
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
Two Portland Square
Portland, ME 04101
THIS REPORT IS NOT AUTHORIZED FOR USE AS AN OFFER OF SALE OR A
SOLICITATION OF AN OFFER TO BUY SHARES OF A MUTUAL FUND UNLESS
ACCOMPANIED OR PRECEDED BY A FUND'S CURRENT PROSPECTUS.
Item 2. CODE OF ETHICS
Not Required in Filing.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not Required in Filing.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not Required in Filing.
Items 5.AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Required in Filing.
Item 6. SCHEDULE OF INVESTMENTS
Included in Financial Statements
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not Required in Filing.
Item 8. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Required in Filing.
Item 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors, 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 10. 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 in 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 11. EXHIBITS
(a)(1) Code of Ethics
Not required in Filing
(a)(2) Certification of Principal Executive Officer and Principal Financial
Officer of the Registrant as required by Rule 30a-2(a) under the Investment
Company Act of 1940(17CFR 270.30a-2(a)) is attached hereto as Exhibit 99Cert.
(a)(3)
Not required in Filing
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 as
required by Rule 30a-2(b), under the Investment Company Act of 1940 (17 CFR
270.30a-2(b)), Rule 15d-14(b) under the Securities Exchange Act of 1934 (17 CFR
240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States
Code (18 U.S.C. 1350) is attached hereto as Exhibit 99.906Cert.
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.
The Wright Managed Equity Trust (On behalf of Wright Selected Blue Chip Equities
- --------------------------------------------------------------------------------
Find, Wright Major Blue Chip Equities Fund, and Wright International Blue Chip
- --------------------------------------------------------------------------------
Equities Fund.
- ---------------
By: /s/ Peter m. Donovan
--------------------
Peter M. Donovan
President
Date: August 23, 2004
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/ James L. O'Connor
----------------------
James L. O'Connor
Treasurer
Date: August 24, 2004
By: /s/ Peter M. Donovan
----------------------
Peter M. Donovan
President
Date: August 23, 2004