As filed with the Securities and Exchange Commission on November 3, 2004
File No. 333-_______
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _______
Post-Effective Amendment No. ______
(Check appropriate box or boxes)
THE WRIGHT MANAGED INCOME TRUST
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(Exact Name of Registrant as Specified in Charter)
(617) 482-8260
--------------------------------
(Area Code and Telephone Number)
255 State Street, Boston, Massachusetts 02109
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(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Alan R. Dynner
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255 State Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copies to: Leonard A. Pierce, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f) of the Investment Company Act of
1940, as amended, which permits registration of an indefinite number of
securities.
Title of Securities Being Registered: Shares of beneficial interest of the
Registrant.
It is proposed that this filing will become effective on December 3, 2004
pursuant to Rule 488.
IMPORTANT INFORMATION
Dear Shareholder:
I am writing to inform you about a reorganization that will affect your
investment in Wright U.S. Government Intermediate Fund ("U.S. Government
Intermediate Fund"). Your fund's investment adviser, Wright Investors' Service,
Inc. ("Wright"), manages two mutual funds that focus on U.S. government
obligations, your fund and Wright Current Income Fund ("Current Income Fund"),
each a series of The Wright Managed Income Trust (the "Trust"). The enclosed
prospectus contains information about the reorganization of your fund into
Current Income Fund. You will become a shareholder of Current Income Fund and
will receive shares of Current Income Fund equal in value to the value of your
shares in U.S. Government Intermediate Fund. The result will be that you become
a shareholder of a fund, the investment goals and focus of which are similar to
your fund, but which is larger in size. Our hope is that this will enable the
fund to invest more efficiently and to have the potential to realize expense
savings in the future.
WHY IS THE REORGANIZATION BEING PROPOSED?
In approving the reorganization, the trustees of the Trust have determined that
the reorganization is in the best interests of your fund. The Trustees believe
that reorganizing your fund into Current Income Fund offers you potential
benefits, including the opportunity to be part of a fund with a larger asset
size that may be better positioned in the market to increase asset size and
achieve increased economies of scale. The larger portfolio of the combined funds
may enable it to achieve better net prices on securities trades. In addition,
each fund incurs substantial operating costs for insurance, accounting, legal,
and custodial services. Because Wright currently limits each fund's expenses,
the combination of the funds is not expected to reduce expenses immediately but
should increase the potential for cost savings in the future as the fixed
expenses are spread over a larger pool of assets, reducing expenses on a per
share basis. Without giving effect to the expense limitations, the combined fund
would have a lower expense ratio than your fund.
NO IMPACT ON FUND'S FEES AND EXPENSES.
No increase in management fees will result from the reorganization. Under a
written agreement in effect for the current fiscal year, Wright limits your
fund's ordinary operating expense to 0.95%, after custodian reductions, if any.
After the reorganization, Wright will apply the same expense limitation to the
combined fund, so your expenses will not increase above this limit. This expense
limitation agreement is voluntary, and Wright may eliminate it in the future.
However, because the combined fund will be larger, its gross expenses per share
will be lower than your fund's gross expenses. That may benefit you if Wright
does terminate the expense limitation agreement in the future.
NO SHAREHOLDER ACTION REQUIRED.
In accordance with the Trust's organizational documents and applicable law, NO
ACTION IS REQUIRED BY SHAREHOLDERS IN ORDER TO EFFECT THE REORGANIZATION. On or
about December 28, 2004, U.S. Government Intermediate Fund will transfer all of
its assets and liabilities to Current Income Fund, and your shares in U.S.
Government Intermediate Fund will be exchanged for shares of Current Income
Fund. THIS WILL NOT BE A TAXABLE TRANSACTION FOR FEDERAL INCOME TAX PURPOSES AND
YOU WILL NOT RECOGNIZE GAIN OR LOSS UPON THE EXCHANGE OF YOUR SHARES AS PART OF
THIS TRANSACTION. The basis of your shares in Current Income Fund will be the
same as the basis of your U.S. Government Intermediate Fund shares surrendered
in the exchange. You will receive confirmation of the transaction.
If you have any questions or need additional information, please contact Wright
Investors' Service Distributors, Inc. at (800) 888-9471.
Sincerely,
Peter Donovan
President and Trustee
THE WRIGHT MANAGED INCOME TRUST
Wright U.S. Government Intermediate Fund
Wright Current Income Fund
PROSPECTUS
December 3, 2004
255 State Street
Boston, MA 02109
(800) 888-9471
This prospectus (the "Prospectus") is being furnished to you because you are a
shareholder of Wright U.S. Government Intermediate Fund ("U.S. Government
Intermediate Fund"), a series of The Wright Managed Income Trust (the "Trust").
In connection with an Agreement and Plan of Reorganization, U.S. Government
Intermediate Fund will be reorganized into another series of the Trust, Wright
Current Income Fund ("Current Income Fund"). You will receive in exchange for
shares of U.S. Government Intermediate Fund shares of Current Income Fund equal
in value to the value of your shares in U.S. Government Intermediate Fund. This
Prospectus is being mailed on or about December 6, 2004 to U.S. Government
Intermediate Fund's shareholders of record as of the close of business on
December 1, 2004 (the "Shareholders").
A copy of the funds' Annual Report for the fiscal year ended December 31, 2003
was previously mailed to the shareholders of the funds' on or about March 9,
2004. A copy of the funds' Semi-Annual Report for the period ended June 30, 2004
was previously mailed to the funds' shareholders on or about September 1, 2004.
Additional copies may be obtained without charge by writing the Trust at 440
Wheelers Farms Road, Milford, Connecticut 06460 or calling (800) 888-9471.
No vote of the Shareholders will be taken with respect to the matters described
in this Prospectus. We are not asking you for a proxy and you are requested not
to send us a proxy.
TABLE OF CONTENTS
Summary..................................................................3
Agreement and Plan of Reorganization....................................10
Capitalization..........................................................12
Board's Evaluation......................................................12
Ownership of Shares of the Funds........................................13
Experts.................................................................13
Available Information...................................................14
Form of Agreement and Plan of Reorganization............................15
Trust's Prospectus, dated May 1, 2004...................................16
SUMMARY
The following is a summary of more complete information appearing later in
this Prospectus or incorporated herein by reference. You should read carefully
the entire Prospectus, including the form of Agreement and Plan of
Reorganization (the "Agreement") attached as Exhibit A.
COMPARISON OF U.S. GOVERNMENT INTERMEDIATE FUND TO CURRENT INCOME FUND
U.S. Government Intermediate Fund Current Income Fund
======================= ========================================== ==========================================
Business Each fund is a diversified series of the Trust, an
open-end investment management company organized as a
Massachusetts business trust.
======================= =====================================================================================
Net assets, as of $8,710,472 $26,693,113
September 30, 2004
======================= ========================================== ==========================================
Investment adviser Wright Investors' Service, Inc. ("Wright"), the funds' investment adviser, selects
and portfolio managers the funds' investments and oversees the funds' operations.
An investment committee of senior officers controls the
investment selections, policies and procedures of the
funds. These officers are experienced analysts with
different areas of expertise, and have over 204 years of
combined service with Wright. The investment committee
consists of the following members:
COMMITTEE MEMBER TITLE JOINED WRIGHT IN
Peter M. Donovan, CFA Chairman and Chief Executive Officer 1966
Chairman of the Investment Committee
Judith R. Corchard Executive Vice President - Investment 1960
Management
Senior Investment Officer
Jatin J. Mehta, CFA Executive Vice President 1969
Michael F. Flament, CFA Senior Vice President - Investment
and Economic Analysis 1972
James P. Fields, CFA Senior Vice President - Fixed Income 1982
Investments
Amit S. Khandwala Senior Vice President - International 1986
Investments
Stanley Kirtman Executive Vice President - Equities 2002
Charles T. Simko, Jr., CFA Senior Vice President - Investment Research 1985
Anthony van Daalen, CFA Senior Vice President - Fixed Income 2002
Investments
======================= ========================================================================================================
Investment objective The fund seeks a high total return with The fund seeks a high level of current
an emphasis on income. income consistent with moderate
fluctuations of principal.
========================================== ==============================================================
Each fund's investment objective is non-fundamental and
may be changed by the trustees without shareholder
approval.
======================= ========================================== ==============================================================
Primary investments The fund invests at least 80% of its The fund invests at least 80% of its
total assets in U.S. government total assets primarily in debt
obligations and maintains an average obligations issued or guaranteed by the
weighted maturity of from two to six U.S. government or any of its agencies
years depending on the economic outlook or instrumentalities, mortgage-related
and expected trend of interest rates. securities of governmental or corporate
The fund will not invest in derivatives. issuers and corporate debt securities.
U.S. government obligations in which the U.S. government securities in which the
fund may invest include: fund may invest include:
o direct obligations of the U.S. o direct obligations of the U.S.
government, such as bills, notes and government, such as bills, notes and
bonds issued by the U.S. Treasury; bonds issued by the U.S. Treasury;
o obligations of U.S. government o obligations of U.S. government
agencies secured by the full faith agencies and instrumentalities
and credit of the U.S. Treasury, secured by the full faith and credit
such as securities, including of the U.S. Treasury, such as
pass-through securities, of the securities of the GNMA or the
Government National Mortgage Export-Import Bank;
Association or securities of the o obligations secured by the
Export-Import Bank; right to borrow from the U.S.
o obligations secured by the Treasury; and
right to borrow from the U.S. o obligations backed only by the
Treasury; and credit of a government agency such
o obligations backed only by the as the Federal Home Loan Bank,
credit of a government agency such Fannie Mae (Federal National
as the Federal Home Loan Bank, Mortgage Association) and Freddie
Fannie Mae (Federal National Mac (Federal Home Loan Mortgage
Mortgage Association) and Freddie Corporation).
Mac (Federal Home Loan Mortgage The corporate debt securities in which
Corporation). the fund may invest include commercial
paper and other short-term instruments
rated A-1 by Standard & Poor's Ratings
Group or P-1 by Moody's Investors
Service, Inc. and comparable unrated
securities.
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Investment strategies Wright allocates the fund's assets based Wright may allocate the fund's assets
on its view of the economic outlook and among different market sectors (such as
expected trend in short-term interest agency securities, U.S. government and
rates. For example, the fund may invest Treasury securities, and corporate debt
more heavily in shorter term securities securities) with different maturities
when it expects an increase in interest based on its view of the relative value
rates. In buying and selling securities of each sector or maturity.
for the fund, Wright analyzes a
security's structural features, current
prices compared with its estimated
value, and the credit quality of its
issuer. The fund's average maturity as
of December 31, 2003 was 2.9 years and
its duration was 2.9 years.
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In buying and selling securities for each fund, Wright
analyzes a security's structural features, current price
compared with its estimated long-term price, and the
credit quality of the issuer.
======================= ========================================== ==========================================
Benchmark Lehman U.S. Government Intermediate Bond Lehman GNMA Backed Bond Index
Index
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Other investments Each fund may purchase when-issued
securities and make contracts to purchase or sell
securities for a fixed price at a future date beyond
customary settlement time. Alternatively, a fund may
enter into offsetting contracts for the forward sale of
other securities that it owns.
Each fund may invest in mortgage related securities,
including collateralized mortgage obligations ("CMOs").
======================= =========================================== ==========================================
Temporary defensive During periods of unusual market conditions, when Wright
strategies believes that investing for temporary defensive purposes
is appropriate, all or a portion of each fund's
assets may be held in cash or invested in short-term
obligations without limit. Although a fund would do this
to reduce losses, defensive investments may conflict
with and hurt the fund's efforts to achieve its
investment objective.
======================= =====================================================================================
Diversification Each fund is diversified, which means that, with respect
to 75% of total assets, the fund cannot invest (i) more
than 5% of total assets in securities of a single issuer
or (ii) in securities representing more than 10% of the
outstanding voting securities of an issuer.
======================= =====================================================================================
Short-term trading The funds do not intend to engage in trading for
short-term profits. However, portfolio turnover rates
will vary.
======================= =====================================================================================
Derivatives The fund may invest in mortgage related The fund may
invest in mortgage related securities, including CMOs
but has never securities, including CMOs and other done
so. derivative mortgage-related securities.
======================= ========================================== ==========================================
SHARES
==========
U.S. GOVERNMENT INTERMEDIATE FUND CURRENT INCOME FUND
============ ==================================================== ============================================
Sales charges The shares of both funds have the same characteristics and fee structure.
and 12b-1
fees o Shares are offered with no sales charges.
o Shares are subject to distribution and service fees of up to 0.25% of average daily net
assets.
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BUYING, SELLING AND EXCHANGING SHARES
============================================================
U.S. Government Intermediate Fund Current Income Fund
=========================================== ==============================================
================== ==========================================================================================
Buying shares The procedures for buying shares of Current Income Fund are identical to those U.S.
Government Intermediate Fund. You may buy shares from any investment firm that has a
sales agreement with Wright Investors' Service Distributors, Inc. ("WISDI"), the funds'
distributor. You can buy shares at the public offering price, which is their net asset
value. You may use securities you own to purchase shares of a fund by delivering to the
funds' custodian securities that meet the fund's investment objectives and policies,
have easily determined market prices and are otherwise acceptable. Exchanged securities
must have a minimum aggregate value of $5,000. Securities are valued at the date they
are received by the funds.
Please refer to your Shareholder Manual for detailed
instructions on how to buy fund shares.
================== ==========================================================================================
Minimum initial The minimum initial investment for buying shares of Current Income Fund is identical to
investment the minimum initial investment for U.S. Government Intermediate Fund. Your initial
investment must be at least $1,000. There is no minimum for subsequent investments.
================== ==========================================================================================
Exchanging shares The procedures for exchanging shares of Current Income
Fund are identical to those of U.S. Government Intermediate
Fund. Shares of the funds may be exchanged for shares of any
other Wright fund described in the funds' combined
prospectus, dated May 1, 2004. Please read that prospectus
carefully before requesting an exchange. The exchange of
shares results in the sale of one fund's shares and the
purchase of another, normally resulting in a gain or loss,
and is therefore a taxable event for you.
You are limited to four "round-trip" exchanges each year. A
round-trip exchange is an exchange of one fund into another
Wright fund and then back into the original fund. You will
receive notice 60 days before the funds materially amend or
terminate the exchange privilege.
================== ==========================================================================================
Selling shares The procedures for selling shares of Current Income
Fund are identical to those of U.S. Government Intermediate
Fund. You may redeem or sell shares of the funds on any
business day. No redemption request will be paid until your
shares have been paid for in full. If the shares to be
redeemed were purchased by check, the redemption payment will
be delayed until the check has been collected, which may take
up to 15 days from the date of purchase. Telephone, mail and
internet redemption procedures are described in your
Shareholder Manual.
================== ==========================================================================================
Net asset value Each fund's net asset value is the value of its
portfolio of securities plus any other assets minus its
operating expenses and any other liabilities. The funds
calculate a net asset value for each class of shares every
day the New York Stock Exchange is open when regular trading
closes (normally 4:00 p.m. Eastern time).
================== ==========================================================================================
COMPARISON OF PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Because the funds have similar investment objectives, investment policies and
strategies, the funds are subject to the same principal risks. Although the
principal risks are the same, the principal risks of U.S. Government
Intermediate Fund are less than those of Current Income Fund because of the
different investment objective, policies and strategies of that fund. The
combined fund will have an investment committee, investment objective,
investment policies and strategies identical to those of Current Income Fund.
The general risks of bond funds are credit and interest rate risks. Because the
U.S. Government Intermediate Fund invests substantially in U.S. government
obligations, credit risk is less than other types of bonds and Current Income
Fund. Although greater than for U.S. Government Intermediate Fund, credit risk
for Current Income Fund is minimal to the extent that the fund concentrates in
mortgage-related securities whose timely payment of interest and principal is
guaranteed by the U.S. government (such as Fannie Maes). Current Income Fund is
currently, and has historically been, invested predominantly in such securities,
although it is not required to do so. However, this does not protect the funds
against interest rate risk or guarantee the value of the funds' shares. Also,
mortgage-related securities (such as Ginnie Maes) are subject to prepayment and
extension risks during times of falling or rising interest rates. These risks
are defined to mean:
o CREDIT OR DEFAULT RISK: An issuer's credit rating may be downgraded or the
issuer may be unable to pay principal and interest obligations.
o INTEREST RATE RISK: Bond prices fall when interest rates rise and vice
versa. The longer the duration of a bond, the greater the potential change
in price.
o PREPAYMENT RISK: When interest rates decline, the issuer of a security may
exercise an option to prepay the principal. This forces the fund to reinvest
in lower yielding securities.
o EXTENSION RISK: When interest rates rise, the life a mortgage-related
security is extended beyond the expected prepayment time, reducing the value
of the security.
The funds cannot eliminate risk or assure achievement of their investment
objectives and you may lose money.
OTHER CONSEQUENCES OF THE REORGANIZATION
THE FUNDS' FEES AND EXPENSES
Shareholders of both funds pay various fees and expenses, either directly or
indirectly. U.S. Government Intermediate Fund and Current Income Fund each pay
monthly management fees equal to 0.45% of average daily net assets. Both funds
also pay a 12b-1 fee at the same rate of 0.25% of average daily net assets. As
discussed below, the pro forma expenses of the combined fund after the
contractual expense limitation will be 0.95%, which is U.S. Government
Intermediate Fund's current contractual expense limitation. The pro forma gross
expenses (i.e., without giving effect to the expense limitations) of the
combined fund are lower than each fund's gross expenses.
The table below shows the fees and expenses that you would pay if you were to
buy and hold shares of each fund. The expenses in the table appearing below are
based on the expenses of each fund for the twelve-month period ended December
31, 2003. Future expenses may be greater or less. The table also shows the
estimated ("pro forma") expenses of the combined fund assuming the
reorganization occurred on December 31, 2003.
Combined Fund
SHAREHOLDER TRANSACTION (PRO FORMA FOR THE
FEES (PAID DIRECTLY FROM U.S. GOVERNMENT PERIOD ENDED DECEMBER
YOUR INVESTMENT) INTERMEDIATE FUND CURRENT INCOME FUND 31, 2003)
- ---------------------------- -------------------------- -------------------------- --------------------------
Maximum sales charge None None None
(load) when you buy shares
as a percentage of
offering price
Maximum deferred sales None None None
charge (load) as a
percentage of offering
price or the amount you
receive when you sell
shares, whichever is less
Redemption fee as a None None None
percentage of amount
redeemed, if applicable
- ---------------------------- -------------------------- -------------------------- --------------------------
ANNUAL FUND OPERATING
EXPENSES (DEDUCTED FROM
FUND ASSETS) AS A % OF
AVERAGE DAILY NET ASSETS
- -------------------------- -------------------------- -------------------------- --------------------------
Management Fee 0.45% 0.45% 0.45%
Distribution and Service 0.25% 0.25% 0.25%
(12b-1) Fee
Other Expenses 0.96% 0.42% 0.40%
- ---------------------------- -------------------------- -------------------------- --------------------------
Total Annual Fund 1.66% 1.12% 1.10%
Operating Expenses
Less: Fee Waiver and (0.71)% (0.17)% 0.15%
Expense Reimbursement
- ---------------------------- -------------------------- -------------------------- --------------------------
Net Operating Expenses 0.95%(1) 0.95%(1) 0.95%(1)
(1) The expenses in the table above reflect the expense limitation in effect
through the fiscal year ending December 31, 2004, under which Wright has
contractually agreed not to impose all or a portion of its management fee and,
if necessary, to limit other ordinary operating expenses to the extent required
to limit expenses to 0.95% of average daily net assets, after custodian fee
reductions, if any. After the reorganization, Wright will apply the same expense
limitation to the combined fund.
The hypothetical example below helps you compare the cost of investing
in each fund. It assumes that: (a) you invest $10,000 in each fund for the time
periods shown, (b) your investment has a 5% return each year, (c) each fund's
operating expenses remain the same, and (e) you redeem your shares after the end
of each period. Pro forma expenses are included assuming a reorganization with
U.S. Government Intermediate Fund and Current Income Fund. The examples are for
comparison purposes only and are not a representation of either fund's actual
expenses or returns, either past or future.
NUMBER OF YEARS U.S. GOVERNMENT INTERMEDIATE COMBINED FUND
YOU OWN YOUR SHARES FUND CURRENT INCOME FUND (PRO FORMA)
=========================== ================================ ====================== ========================
Year 1 $97 $97 $97
Year 3 $303 $303 $303
Year 5 $525 $525 $525
Year 10 $1,166 $1,166 $1,166
=========================== ================================ ====================== ========================
COMPARISON OF FUND PERFORMANCE
Set forth below is performance information for each fund. The following
performance information indicates some of the risks of investing in each fund.
The bar charts show how each fund's total return has varied from year to year
for each full calendar year. The third table shows average annual total return
(before and after taxes) for each fund over time with a broad-based securities
market index. Past performance before and after taxes does not indicate future
results. You should note that the investment committee of the combined fund
after the reorganization will be the same as U.S. Government Intermediate Fund's
investment committee. However, the investment objective and policies of U.S.
Government Intermediate Fund are similar, but not identical, to the investment
objective, policies and strategies of Current Income Fund, which causes the
funds to have different risk/return profiles.
CURRENT INCOME FUND'S ANNUAL RETURN*
(Year ended December 31)
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
30%
- ---------------------------------------------------------------------------------------------------------------
20%
- ---------------------------------------------------------------------------------------------------------------
10% 17.46% 10.31%
- ---------------------------------------------------------------------------------------------------------------
0% 4.35% 8.56% 6.51% 0.52% 7.18% 7.70% 1.73%
- ---------------------------------------------------------------------------------------------------------------
(10)% -3.28%
- ---------------------------------------------------------------------------------------------------------------
(20)%
- ---------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
*Current Income Fund's year-to-date return as of September 30, 2004 was 2.36%.
During the period shown in the bar chart, Current Income Fund's highest
quarterly return was 5.61% for the quarter ended June 30, 1995, and the lowest
quarterly return was -3.21% for the quarter ended March 31, 1994.
U.S. GOVERNMENT INTERMEDIATE FUND'S ANNUAL RETURN**
(Year ended December 31)
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
30%
- ---------------------------------------------------------------------------------------------------------------
20% 28.18%
- ---------------------------------------------------------------------------------------------------------------
10% 12.61%
- ---------------------------------------------------------------------------------------------------------------
0% 9.08% 9.95% 5.40% 8.07% 1.36%
- ---------------------------------------------------------------------------------------------------------------
(10)% -8.62% -1.26% -3.97%
- ---------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
**U.S. Government Intermediate Fund's year-to-date return as of September 30,
2004 was 1.52%. During the period shown in the bar chart, U.S. Government
Intermediate Fund's highest quarterly return was 10.40% for the quarter ended
June 30, 1995, and the lowest quarterly return was -6.28% for the quarter ended
March 31, 1994.
AVERAGE ANNUAL TOTAL RETURN (DECEMBER 31, 2003)
1 Year 5 Years 10 Years
------ ------- --------
CURRENT INCOME FUND
Before Taxes 1.73% 5.42% 5.97%
After Taxes on Distributions (1) -0.13% 3.13% 3.47%
After Taxes on Distributions and Sale of Fund
Shares (1) -0.13% 3.13% 3.47%
Lehman GNMA Backed Bond Index (2) 2.85% 6.50% 6.92%
U.S. GOVERNMENT INTERMEDIATE FUND
Before Taxes 1.36% 4.54% 5.65%
After Taxes on Distribution (1) -0.68% 2.26% 3.21%
After Taxes on Distributions and Sale of Fund
Shares (1) -0.68% 2.26% 3.21%
Lehman U.S. Government Intermediate Bond Index (2)
2.29% 6.18% 6.32%
(1) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on the investor's tax situation and
may differ from those shown. The after-tax returns shown are not relevant to
shareholders who hold their shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
(2) The Lehman GNMA Backed Bond Index, an unmanaged index that generally
indicates the performance of government and corporate mortgage-backed bond
markets, and the Lehman U.S. Government Intermediate Bond Index, an unmanaged
index that generally indicates the performance of the U.S. government bond
market, are for reference only and do not mirror the funds' investments.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
The trustees of the Trust have approved the form of Agreement regarding the
reorganization of U.S. Government Intermediate Fund into Current Income Fund, a
copy of which is attached to this Prospectus as Exhibit A and incorporated
herein by this reference. The description of the Agreement contained herein is
qualified in its entirety by the attached copy.
THE REORGANIZATION
The Agreement provides for the reorganization on the following terms:
o The reorganization is scheduled to occur on the close of business on
December 28, 2004, but may occur on such later date as trustees of the
Trust determine. U.S. Government Intermediate Fund will transfer all of
its assets to Current Income Fund, and Current Income Fund will assume
all of your fund's liabilities. This will result in the addition of
U.S. Government Intermediate Fund's assets to Current Income Fund's
portfolio. The net asset value of both funds will be computed as of the
close of regular trading on the New York Stock Exchange, Inc. on the
reorganization date.
o Current Income Fund will issue to U.S Government Intermediate Fund
shares in an amount equal to the net assets attributable to U.S.
Government Intermediate Fund's shares. As part of the liquidation of
U.S. Government Intermediate Fund, these shares will immediately be
distributed to shareholders of record of U.S. Government Intermediate
Fund in proportion to their holdings on the reorganization date. As a
result, shareholders of U.S. Government Intermediate Fund will become
shareholders of Current Income Fund.
o After the shares are issued, the existence of U.S. Government
Intermediate Fund will be terminated.
REASONS FOR THE PROPOSED REORGANIZATION
The trustees of the Trust believe that the proposed reorganization will be
advantageous to the shareholders of U.S. Government Intermediate Fund for
several reasons. The trustees considered the following matters, among others, in
approving the proposal:
FIRST, after the reorganization, the combined fund will have an asset
size larger than that of U.S. Government Intermediate Fund, which may allow the
combined fund to achieve economies of scale in investments or expenses and be
better positioned in the market to increase asset size.
SECOND, the combined fund will have similar, although different
investment policies and strategies as U.S. Government Intermediate Fund.
The combined fund will have the same investment committee and a similar
portfolio composition to that of U.S. Government Intermediate Fund.
THIRD, no increase in management fee, as a percentage of average daily
net assets, is expected as a result of the reorganization.
FOURTH, the pro forma gross expenses (i.e., without giving effect to
the expense limitation) of the combined fund will be lower than U.S. Government
Intermediate Fund's current gross expenses. Because of the expense limitation,
the pro forma net expenses (i.e., giving effect to the expense limitation) are
the same for both funds.
FIFTH, the reorganization will be accomplished on a tax free basis.
The board of trustees of the Trust considered that Wright will pay all of the
expenses of the funds associated with the preparation, printing and mailing of
any shareholder communications, including this Prospectus, and any filings with
the Securities and Exchange Commission (the "SEC") and other governmental
agencies in connection with the reorganization.
The board of trustees of the Trust also considered that the funds' investment
adviser and principal distributor will benefit from the reorganization. Wright
may be able to increase the combined fund's assets at a faster rate than would
otherwise be possible if it continued to offer Current Income Fund and U.S.
Government Intermediate Fund separately and that the combined fund's gross
expenses are expected to be lower than your fund's gross expenses. Such a growth
in asset size benefits Wright by increasing its management fees and accelerating
the point at which management of the combined fund is profitable to Wright and
lower its cost to cap the funds' expenses.
The board of trustees of the Trust further considered that the reorganization
presents an excellent opportunity for the shareholders of each fund to become
investors in a combined fund that has a larger asset size than either fund
alone, without the obligation to pay commissions or other transaction costs that
a fund normally incurs when purchasing securities. This opportunity provides an
economic benefit to both funds and their shareholders.
TAX STATUS OF THE REORGANIZATION
The reorganization is intended to result in no income, gain or loss for federal
income tax purposes to Current Income Fund, U.S. Government Intermediate Fund or
the shareholders of U.S. Government Intermediate Fund and will not take place
unless the funds receive a satisfactory opinion from Wilmer Cutler Pickering
Hale and Dorr LLP, substantially to the effect that the reorganization will be a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
As a result, with respect to the reorganization, for federal income tax
purposes:
o no gain or loss will be recognized by your fund upon (1) the transfer of all
of its assets to Current Income Fund as described above or (2) the
distribution by Current Income Fund of its shares to your fund's
shareholders;
o no gain or loss will be recognized by Current Income Fund upon the receipt
of your fund's assets solely in exchange for the issuance of Current Income
Fund shares to your fund and the assumption of your fund's liabilities by
Current Income Fund;
o the basis of the assets of your fund acquired by Current Income Fund will be
the same as the basis of those assets in the hands of your fund immediately
before the transfer;
o the tax holding period of the assets of your fund in the hands of Current
Income Fund will include your fund's tax holding period for those assets;
o you will not recognize gain or loss upon the exchange of your shares of your
fund solely for Current Income Fund shares as part of the reorganization;
o the aggregate basis of Current Income Fund shares received by you in the
reorganization will be the same as the aggregate basis of the shares of your
fund you surrender in exchange; and
o the tax holding period of Current Income Fund shares you receive will
include the tax holding period of the shares of your fund that you surrender
in exchange, provided that the shares of your fund were held by you as
capital assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of Current Income Fund and
your fund.
No tax ruling has been or will be received from the Internal Revenue Service
("IRS") in connection with the reorganization. An opinion of counsel is not
binding on the IRS or a court, and no assurance can be given that the IRS would
not assert, or a court would not sustain, a contrary position.
You should consult your tax adviser for the particular tax consequences to you
of the transaction, including the applicability of any state, local or foreign
tax laws.
ADDITIONAL TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION
CONDITIONS TO CLOSING THE REORGANIZATION. The obligation of U.S.
Government Intermediate Fund to consummate the reorganization is subject to the
satisfaction of certain conditions, including the performance by Current Income
Fund of all its obligations under the Agreement, and the receipt of all
consents, orders and permits necessary to consummate the reorganization (see
Agreement, paragraph 7).
The obligation of Current Income Fund to consummate the reorganization is
subject to the satisfaction of certain conditions, including U.S. Government
Intermediate Fund's performance of all of its obligations under the Agreement,
the receipt of certain documents and financial statements from U.S. Government
Intermediate Fund and the receipt of all consents, orders and permits necessary
to consummate the reorganization (see Agreement, paragraph 8).
The funds' obligations are also subject to the receipt of a favorable
opinion of Wilmer Cutler Pickering Hale and Dorr LLP as to the federal income
tax consequences of the reorganization (see Agreement, paragraph 9).
Termination of Agreement. The board of trustees of the Trust may
terminate the Agreement at any time before the reorganization date, if the board
believes that proceeding with the reorganization would no longer be advisable.
Expenses of the Reorganization. Wright will pay the expenses of both
funds in connection with the reorganization, including the costs of printing,
mailing, legal fees and audit fees.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
September 30, 2004, and the pro forma combined capitalization of both funds as
if the reorganization had occurred on that date. When the reorganization is
consummated, the actual exchange ratios on the reorganization date may vary from
the exchange ratios indicated. This is due to changes in the market value of the
portfolio securities of both funds between September 30, 2004 and the
reorganization date, changes in the amount of undistributed net investment
income and net realized capital gains of both funds during that period resulting
from income and distributions, and changes in the accrued liabilities of both
funds during the same period.
SEPTEMBER 30, 2004
U.S. GOVERNMENT CURRENT INCOME
INTERMEDIATE FUND FUND PRO FORMA
==================== ===================== =====================
Net Assets $8,710,472 $26,693,113 $35,403,585
Net Asset Value Per Share $12.94 $10.27 $10.27
Shares Outstanding 673,355 2,598,119 3,445,935
============================= ==================== ===================== =====================
It is impossible to predict how many shares of Current Income Fund will
actually be received and distributed by U.S. Government Intermediate Fund on the
reorganization date. The table should not be relied upon to determine the amount
of Current Income Fund shares that will actually be received and distributed.
BOARD'S EVALUATION
For the reasons described above, the board of trustees of the Trust,
including a majority of the trustees who are not "interested persons" of the
Trust within the meaning of the Investment Company Act of 1940, as amended
("independent trustees"), approved the reorganization. In particular, the board
of trustees of the Trust determined that the reorganization is in the best
interests of U.S. Government Intermediate Fund and that the interests of U.S.
Government Intermediate Fund's shareholders would not be diluted as a result of
the reorganization. Similarly, the board of trustees of the Trust, including the
independent trustees, approved the reorganization on behalf of Current Income
Fund. They also determined that the reorganization is in the best interests of
Current Income Fund and that the interests of Current Income Fund's shareholders
would not be diluted as a result of the reorganization.
OWNERSHIP OF SHARES OF THE FUNDS
To the knowledge of each fund, as of September 30, 2004, the following persons
owned of record or beneficially 5% or more of the outstanding shares of Current
Income Fund or U.S. Government Intermediate Fund:
Current Income Fund
============================
SHAREHOLDER NAME AND ADDRESS ACTUAL PERCENTAGE OWNED IN COMBINED FUND
PERCENTAGE ASSUMING COMPLETION OF THE REORGANIZATION*
OWNED
========================================= ============ ===========================================
Charles Schwab & Co. Inc. 7.39% 5.57%**
Mutual Funds Dept.
San Francisco, CA 94104
========================================= ============ ===========================================
Jupiter & Co. 6.49% 4.89%
c/o Investors Bank & Trust
Boston, MA 02117
========================================= ============ ===========================================
Merctavish & Co. 5.22% 3.94%
Attn Trust Depy
Mercantile Trust & Savings
Quincy, IL 62306
========================================= ============ ===========================================
U.S. GOVERNMENT INTERMEDIATE FUND
====================================
Shareholder Name and Address Actual Percentage owned in Combined Fund
Percentage Assuming Completion of the Reorganization*
Owned
========================================= ============ =======================================
Charles Schwab & Co. Inc. 10.20% 1.58%**
Mutual Funds Dept
San Francisco, CA 94104
========================================= ============ =======================================
FTC & CO 8.15% 1.26%
Denver, CO 80217
========================================= ============ =======================================
First County Bank 7.39% 1.15%
Stamford, CT 06901
========================================= ============ =======================================
Hudson Savings Bank 6.74% 1.05%
Hudson, MA 01749
========================================= ============ =======================================
*Percentage owned assuming completion of proposed reorganization.
**Charles Schwab & Co. Inc. will own a total of 7.15% of the combined funds.
As of September 30, 2004, the trustees and officers owned in the aggregate less
than 1% of the outstanding shares of the funds.
EXPERTS
The financial statements and the financial highlights of the funds for
the fiscal year ended December 31, 2003 are incorporated by reference into this
Prospectus from the combined prospectus of the funds, dated May 1, 2004. The
financial statements and financial highlights for each fund as of and for the
year ended December 31, 2003 have been independently audited by Deloitte &
Touche LLP, independent registered public accounting firm, as stated in their
reports appearing in the statement of additional information. These financial
statements and financial highlights have been included in reliance on their
reports given on their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
Each fund is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended and the Investment Company Act of
1940, as amended, and files reports, prospectuses and other information with the
SEC. These reports, prospectuses and other information filed by the funds can be
inspected and copied (for a duplication fee at prescribed rates) at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C., and
at the Midwest Regional Office (500 West Madison Street, Suite 1400, Chicago,
Illinois). Copies of these materials can also be obtained by mail from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, copies of these documents may be viewed
on-screen or downloaded from the SEC's Internet site at http://www.sec.gov.
Exhibit A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this [ ] day of [_______], 2004, between Wright Current Income Fund (the
"Acquiring Fund") and Wright U.S. Government Intermediate Fund (the "Acquired
Fund"), each a series of The Wright Managed Income Trust (the "Trust"), a
business trust organized under the laws of the Commonwealth of Massachusetts
with its principal place of business at 255 State Street, Boston, MA 02109.
Wright Investors' Service, Inc. (the "Adviser") is a party to this Agreement
solely for the purposes of its obligations set forth in paragraph 10.2.
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
regulations promulgated thereunder. The reorganization (the "Reorganization")
will consist of (a) the transfer of all of the assets of the Acquired Fund to
the Acquiring Fund in exchange solely for (i) the issuance of shares of
beneficial interest of the Acquiring Fund that correspond to the shares of the
Acquired Fund equal to the net asset value represented by such shares
(collectively, the "Acquiring Fund Shares" and each, an "Acquiring Fund Share")
to the Acquired Fund, and (ii) the assumption by the Acquiring Fund of all of
the liabilities of the Acquired Fund (the "Assumed Liabilities"), on the closing
date set forth below (the "Closing Date"), and (b) the distribution by the
Acquired Fund, on the Closing Date, or as soon thereafter as practicable, of the
Acquiring Fund Shares to the shareholders of the Acquired Fund in liquidation
and termination of the Acquired Fund, all upon the terms and conditions
hereinafter set forth in this Agreement.
WHEREAS, Acquiring Fund and the Acquired Fund are each series of the
same registered investment company classified as a management company of the
open-end type, and the Acquired Fund owns securities that generally are assets
of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest;
WHEREAS, the Board of Trustees of the Acquiring Fund has determined
that the exchange of all of the assets of the Acquired Fund for Acquiring Fund
Shares and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquiring Fund shareholders;
WHEREAS, the Board of Trustees of the Acquired Fund has determined that
the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares
and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquired Fund shareholders.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES AND LIQUIDATION
AND TERMINATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions set forth in this Agreement and
on the basis of the representations and warranties contained in this Agreement,
the Acquired Fund agrees to transfer its assets as set forth in paragraph 1.2 to
the Acquiring Fund free and clear of all liens and encumbrances (other than
those arising under the Securities Act of 1933, as amended (the "Securities
Act"), liens for taxes not yet due and payable or being contested in good faith
and contractual restrictions on the transfer of the acquired assets), and the
Acquiring Fund agrees in exchange therefor: (a) to issue to the Acquired Fund
the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares,
determined (to at least two decimal places) by dividing the value of the
Acquired Fund's net assets attributable to its shares and transferred to the
Acquiring Fund, computed in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value (the "NAV") of one Acquiring Fund Share,
computed in the manner and as of the time and date set forth in paragraph 2.2;
and (b) to assume the Assumed Liabilities, as set forth in paragraph 1.3. Such
transactions shall take place at the closing provided for in paragraph 3.1 (the
"Closing").
1.2 (a) The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all of the Acquired Fund's property, including, without
limitation, all portfolio securities and instruments, dividends and interest
receivables, cash, goodwill, contractual rights of the Acquired Fund all other
tangible and intangible property owned by the Acquired Fund and originals or
copies of all books and records of the Acquired Fund.
(b) The Acquired Fund has provided the Acquiring Fund with a
list of all of the Acquired Fund's securities and other assets as of the date of
this Agreement. The Acquiring Fund will, within a reasonable time before the
Closing Date, furnish the Selling Fund with a list of the securities, if any, on
the Selling Fund's list referred to above that do not conform to the Acquiring
Fund's investment objectives, policies, and restrictions. The Selling Fund, if
required by the Acquiring Fund, will dispose of securities on the Acquiring
Fund's list before the Closing Date. In addition, if it is determined that the
portfolios of the Selling Fund and the Acquiring Fund, when aggregated, would
contain investments exceeding certain percentage limitations imposed upon the
Acquiring Fund with respect to such investments, the Selling Fund, if required
by the Acquiring Fund, will dispose of a sufficient amount of such investments
as may be necessary to avoid violating such limitations as of the Closing Date.
The Acquired Fund reserves the right to sell any of these securities and other
assets (except to the extent sales may be limited by representations of the
Acquired Fund made in connection with the issuance of the tax opinion provided
for in paragraph 9.5 hereof) but will not, without the prior approval of the
Acquiring Fund, acquire any additional securities other than securities of the
type in which the Acquiring Fund is permitted to invest and shall not acquire,
without the consent of the Acquiring Fund, any securities that are valued at
"fair value" under the valuation procedures of either the Acquired Fund or the
Acquiring Fund.
1.3 The Acquired Fund will endeavor to discharge all the Acquired
Fund's known liabilities and obligations that are or will become due prior to
the Closing Date. Notwithstanding the foregoing, any liabilities not so
discharged shall be assumed by the Acquiring Fund, which assumed liabilities
shall include all of the Selling Fund's liabilities, debts, obligations, and
duties of whatever kind or nature, whether absolute, accrued, contingent, or
otherwise, whether or not arising in the ordinary course of business, whether or
not determinable at the Closing Date, and whether or not specifically referred
to in this Agreement. The Acquired Fund shall prepare an unaudited statement of
assets and liabilities (the "Closing Statement"), as of the Valuation Date (as
defined in paragraph 2.1), in accordance with U.S. generally accepted accounting
principles (the "GAAP") consistently applied from the prior audited period,
including a calculation of the net assets of the Acquired Fund as of the close
of business on the Closing Date. The Acquiring Fund shall assume the Assumed
Liabilities.
1.4 On the Closing Date or as soon thereafter as is practicable, the
Acquired Fund shall liquidate and distribute pro rata to the Acquired Fund's
shareholders of record determined as of the close of business on the Closing
Date (the "Acquired Fund Shareholders") the Acquiring Fund Shares it receives
pursuant to paragraph 1.1. Such liquidation and distribution will be
accomplished by the Acquired Fund instructing the Acquiring Fund to transfer the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders (as provided to
the Acquiring Fund by the Acquired Fund) and representing the respective pro
rata number of the Acquiring Fund Shares due such shareholders. The Acquired
Fund shall promptly provide the Acquiring Fund with evidence of such liquidation
and distribution. All issued and outstanding shares of the Acquired Fund will
simultaneously be cancelled on the books of the Acquired Fund, although share
certificates representing interests in the Acquired Fund will represent a number
of Acquiring Fund Shares after the Closing Date as determined in accordance with
paragraph 1.1. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.5 Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquired Fund shares on
the books of the Acquired Fund as of the time of issuance shall, as a condition
of such issuance and transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.6 Any reporting responsibility of the Acquired Fund with respect to
the Acquired Fund is and shall remain the responsibility of the Acquired Fund up
to and including the Closing Date and such later date on which the Acquired Fund
is terminated.
1.7 The Acquired Fund shall, following the Closing Date and the making
of all distributions pursuant to paragraph 1.4, be terminated under the laws of
the Commonwealth of Massachusetts and in accordance with the Declaration of
Trust and By-Laws of the Acquired Fund.
2. VALUATION
2.1 The value of the assets of the Acquired Fund to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of the
close of regular trading on the New York Stock Exchange, Inc. on the Closing
Date (such time and date being hereinafter called the "Valuation Date"), using
the valuation procedures set forth in the prospectus or statement of additional
information of the Acquired Fund as in effect on the date hereof.
2.2 The NAV of the Acquiring Fund Shares shall be calculated in
accordance with the valuation procedures described in paragraph 2.1.
2.3 All computations of value shall be made by Wright Investors'
Service, Inc.,or its agent, in accordance with its regular practice as pricing
agent for the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be December 28, 2004, or such later date as
the parties may agree to in writing. All acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00
p.m. (Eastern time) at the offices of [Wilmer Cutler Pickering Hale and Dorr
LLP, 60 State Street, Boston, Massachusetts], or at such other time and/or place
as the parties may agree.
3.2 Portfolio securities shall be presented by the Acquired Fund to
Investors Bank & Trust Company ("IBT") as custodian for the Acquiring Fund for
examination no later than three business days preceding the Valuation Date. The
Acquiring Fund may, in its sole discretion, reject any securities if it
reasonably believes that the ownership of such securities by the Acquired Fund
or the acquisition of such securities by the Acquiring Fund would violate the
investment policies and restrictions of the Acquired Fund and the Acquiring
Fund. The portfolio securities, cash and due bills shall be delivered by the
Acquired Fund to IBT as custodian for the Acquiring Fund for the account of the
Acquiring Fund at the Closing duly endorsed in proper form for transfer in such
condition as to constitute good delivery thereof in accordance with the custom
of brokers. The cash shall be delivered by wire in federal funds to an account
of the Acquiring Fund specified by the Acquiring Fund.
3.3 IBT, custodian for the Acquired Fund, shall deliver at or as soon
as possible after the Closing a certificate of an authorized officer stating
that: (a) the Acquired Fund's assets have been delivered in proper form to the
Acquiring Fund on the Closing Date and (b) all necessary transfer taxes
including all applicable federal and state stock transfer stamps, if any, have
been paid, or provision for payment shall have been made, in conjunction with
the delivery of portfolio securities.
3.4 In the event that on the Valuation Date (a) the primary trading
market for portfolio securities of the Acquired Fund shall be closed to trading
or trading thereon shall be restricted or (b) trading or the reporting of
trading on such market shall be disrupted so that accurate calculation based
upon available market prices of the value of the net assets of the parties
hereto is impracticable, the Closing Date shall be postponed until the first
business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.5 The Acquired Fund shall deliver to the Acquiring Fund at the
Closing (or, if not reasonably available at the Closing, as soon as practicable
thereafter) a list of the names, addresses, taxpayer identification numbers and
backup withholding and nonresident alien withholding status of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding shares owned
by each such shareholder immediately prior to the Closing, certified by the
President, Executive Vice President or Treasurer of the Acquired Fund as being
an accurate record of the information (i) provided by Acquired Fund Shareholders
or (ii) derived from the Acquired Fund's records by such officers or one of the
Acquired Fund's service providers.
3.6 The Acquiring Fund shall issue and deliver a confirmation
evidencing the Acquiring Fund Shares to be credited to the Acquired Fund's
account on the Closing Date to the Secretary of the Acquired Fund, or provide
evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have
been credited to the Acquired Fund's account on the books of the Acquiring Fund.
At the Closing, each party shall deliver to the other such bills of sale,
checks, assignments, share certificates, if any, receipts or other documents as
such other party or its counsel may reasonably request.
4. LIQUIDATION AND TERMINATION OF ACQUIRED FUND
4.1 As soon as practicable after the Closing, the Acquired Fund shall
liquidate the Acquired Fund and distribute pro rata to the Acquired Fund
Shareholders the Acquiring Fund Shares received pursuant to paragraph 1.1. Such
liquidation and distribution will be accomplished by the transfer of the
Acquiring Fund Shares credited to the account of the Acquired Fund to open
accounts on the share records in the names of Acquired Fund Shareholders, as
delivered to the Acquiring Fund prior to the Closing Date in accordance with
paragraph 3.5 and representing the respective pro rata entitlement of each
Acquired Fund Shareholder in the Acquiring Fund Shares held by the Acquired Fund
Shareholder at the time of the Closing.
4.2 In connection with such liquidating distributions, (a) the
Acquiring Fund shall not deliver certificates representing its shares and (b)
the share transfer books of the Acquired Fund shall be permanently closed as of
the Closing Date and arrangements satisfactory to the Acquiring Fund, acting
reasonably, shall be made to restrict the further transfer of the Acquired
Fund's shares.
4.3 As soon as practicable after the liquidation of the Acquired Fund,
the Acquired Fund shall terminate its existence as a series of a business trust
under the laws of the Commonwealth of Massachusetts and in accordance with the
Declaration of Trust and By-Laws of the Acquired Fund.
5. REPRESENTATIONS AND WARRANTIES
5.1 The Acquired Fund represents and warrants to the Acquiring Fund,
which representations and warranties will be true and correct on the date hereof
and on the Closing Date as though made on and as of the Closing Date, as
follows:
(a) The Acquired Fund is a series of the Trust, which is a
business trust validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to own all of its properties and
assets and, subject to approval by the Trust's Board of Trustees, to perform its
obligations under this Agreement. The Acquired Fund is not required to qualify
to do business in any jurisdiction in which it is not so qualified or where
failure to qualify would not subject it to any material liability or disability.
The Acquired Fund has all necessary federal, state and local authorizations to
own all of its properties and assets and to carry on its business as now being
conducted;
(b) The Acquired Fund is a series registered investment
company classified as a management company of the open-end type, and the Trust's
registration with the Securities and Exchange Commission (the "Commission")
under the Investment Company Act of 1940 (the "Investment Company Act") is in
full force and effect;
(c) The Acquired Fund is not, and the execution, delivery and
performance of this Agreement in respect of the Acquired Fund will not result,
in a violation of its Declaration of Trust or By-Laws or in material violation
of any material agreement, indenture, instrument, contract, lease or other
undertaking with respect to the Acquired Fund to which the Acquired Fund is a
party or by which the Acquired Fund or its assets are bound;
(d) Except as specifically disclosed on Schedule 5.1(d) or
included in the calculation of NAV on the Valuation Date, the Acquired Fund has
no material contracts or other commitments (other than this Agreement) with
respect to the Acquired Fund which will be terminated with liability to either
the Acquired Fund or to the Acquired Fund on or prior to the Closing Date;
(e) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any of the Acquired
Fund's properties or assets, except as previously disclosed in writing to, and
acknowledged in writing by, the Acquiring Fund. The Acquired Fund knows of no
facts which might form the basis for institution of such proceedings, and the
Acquiring Fund is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects the Acquired Fund's business or the Acquired Fund's ability to
consummate the transactions herein contemplated;
(f) The financial statements of the Acquired Fund as of
December 31, 2003 and for the fiscal year then ended have been audited by
Deloitte & Touche LLP, a registered independent public accounting firm, have
been prepared in accordance with GAAP consistently applied and fairly reflect
the financial condition of the Acquired Fund as of such date; except for the
Assumed Liabilities, the Acquired Fund will not have any known or contingent
liabilities on the Closing Date;
(g) Since December 31, 2003, except as disclosed on a schedule
to this Agreement or specifically disclosed in the Acquired Fund's prospectus or
statement of additional information as in effect on the date of this Agreement,
there has not been any material adverse change in the Acquired Fund's financial
condition, assets, liabilities, business or prospects, or any incurrence by the
Acquired Fund of indebtedness, except for normal contractual obligations
incurred in the ordinary course of business or in connection with the settlement
of purchases and sales of portfolio securities. For the purposes of this
subparagraph (g), a decline in NAV per share of the Acquired Fund arising out of
its normal investment operations or a decline in net assets of the Acquired Fund
as a result of redemptions shall not constitute a material adverse change;
(h) For each taxable year of its operation, the Acquired Fund
has met the requirements of Subchapter M of the Code for qualification and
favorable tax treatment as a regulated investment company and will qualify as
such as of the Closing Date with respect to its taxable year ending on the
Closing Date. The Acquired Fund has not taken any action, or failed to take any
action, which has caused or will cause the Acquired Fund to fail to qualify for
such favorable tax treatment as a regulated investment company under the Code.
The Acquired Fund has not been notified that any tax return or other filing of
the Acquired Fund has been reviewed or audited by any federal, state, local or
foreign taxing authority. Except as set forth on Schedule 5.1:
(A) The Acquired Fund shall have filed all federal,
state and local tax returns required by law to be
filed, including all information returns and payee
statements, and all tax returns for foreign
countries, provinces and other governing bodies that
have jurisdiction to levy taxes upon it;
(B) The Acquired Fund shall have paid all taxes,
interest, penalties, assessments and deficiencies
which have become due or which have been claimed to
be due or provision shall have been made for the
payment thereof;
(C) All tax returns filed or to be filed by the
Acquired Fund shall constitute complete and accurate
reports of the respective tax liabilities of the
Acquired Fund or, in the case of information returns
and payee statements, the amounts required to be
reported accurately set forth all material items
required to be included or reflected in such returns;
(D) The Acquired Fund has not and will not have
waived or extended any applicable statute of
limitations relating to the assessment of federal,
state, local or foreign taxes; and
(E) The Acquired Fund has not been notified that any
examinations of the federal, state, local or foreign
tax returns of the Acquired Fund are currently in
progress or threatened and no deficiencies have been
asserted or assessed against the Acquired Fund as a
result of any audit by the Internal Revenue Service
or any state, local or foreign taxing authority, and
no such deficiency has been proposed or threatened;
(i) All issued and outstanding shares of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable. To the Acquired Fund's knowledge, all of the
issued and outstanding shares of the Acquired Fund will, at the time of Closing,
be held of record by the persons and in the amounts set forth in the records of
the transfer agent as provided in paragraph 3.5. The Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any shares of the Acquired Fund, nor is there outstanding any security
convertible into any shares of the Acquired Fund;
(j) At the Closing Date, the Acquired Fund will have good and
marketable title to the assets to be transferred to the Acquiring Fund pursuant
to paragraph 1.1 and full right, power and authority to sell, assign, transfer
and deliver such assets hereunder, and, upon delivery and payment for such
assets, the Acquiring Fund will acquire good and marketable title thereto,
subject to no restrictions on the full transfer thereof, except such
restrictions as might arise under the Securities Act, other than as disclosed in
writing to, and acknowledged in writing by, the Acquiring Fund;
(k) The Acquired Fund has the power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement has been duly authorized by all necessary
action on the part of the Acquired Fund's Board of Trustees, and assuming due
authorization, execution and delivery by the Acquiring Fund, this Agreement
constitutes a valid and binding obligation of the Acquired Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(l) Any information furnished by the Acquired Fund for use in
registration statements and any information necessary to compute the total
return of the Acquired Fund shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations applicable thereto or the requirements of any form
for which its use is intended;
(m) Except as set forth on Schedule 5.1 and as will be
obtained on or prior to the Closing Date, no consent, approval, authorization or
order of any court or governmental authority is required for the consummation by
the Acquired Fund of the transactions contemplated by this Agreement;
(n) To the Acquired Fund's knowledge, all of the issued and
outstanding shares of beneficial interest of the Acquired Fund have been offered
for sale and sold in conformity with all applicable federal and state securities
laws;
(o) The Acquired Fund currently complies in all material
respects with and since its organization has complied in all material respects
with all applicable laws, rules adn regulations, including without limitation,
the requirements of, and the rules and regulations under, the Investment Company
Act, the Securities Act, the Securities Exchange Act of 1934 (the "Exchange
Act"), state "Blue Sky" laws and all other applicable federal and state laws or
regulations. The Acquired Fund currently complies in all material respects with,
and since its organization has complied in all material respects with, all
investment objectives, policies, guidelines and restrictions and any compliance
procedures established by the Trust with respect to the Acquired Fund. All
advertising and sales material used by the Acquired Fund complies in all
material respects with and has complied in all material respects with the
applicable requirements of the Securities Act, the rules and regulations of the
Commission, and, to the extent applicable, the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD") and any applicable state
regulatory authority. All registration statements, prospectuses, reports, or
other filings required to be made or filed with the Commission, the NASD or any
state securities authorities by the Acquired Fund have been duly filed and have
been approved or declared effective, if such approval or declaration of
effectiveness is required by law. Such registration statements, prospectuses,
reports, and other filings under the Securities Act, the Exchange Act and the
Investment Company Act (i) are or were in compliance in all material respects
with the requirements of all applicable statutes and the rules and regulations
thereunder and (ii) do not or did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they were
made, not false or misleading;
(p) The Acquired Fund has previously provided to the Acquiring
Fund (and will at the Closing provide an update through the Closing Date of such
information) with data which supports a calculation of the Acquired Fund's total
return and yield for all periods since the organization of the Acquired Fund.
Such data has been prepared in accordance in all material respects with the
requirements of the Investment Company Act and the regulations thereunder and
the rules of the NASD; and
(q) The prospectus of the Acquired Fund dated May 1, 2004, and
any amendments or supplements thereto, previously furnished to the Acquiring
Fund, did not as of their dates or the dates of their distribution to the public
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading.
(r) The Acquired Fund Tax Representation Certificate to be
delivered by the Acquired Fund to the Acquiring Fund and Wilmer Cutler Pickering
Hale and Dorr LLP at the Closing pursuant to paragraph 8.4 (the "Acquired Fund
Tax Representation Certificate") will not on the Closing Date contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading.
5.2 The Acquiring Fund represents and warrants to the Acquired Fund,
which representations and warranties will be true and correct on the date hereof
and on the Closing Date as though made on and as of the Closing Date, as
follows:
(a) The Acquiring Fund is a series of the Trust, a business
trust which is validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to own all of its properties and
assets and to perform its obligations under this Agreement. The Acquiring Fund
is not required to qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would not subject it to any material
liability or disability. The Acquiring Fund has all necessary federal, state and
local authorizations to own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Trust is a series registered investment company
classified as a management company of the open-end type, and the Trust's
registration with the Commission as an investment company under the Investment
Company Act is in full force and effect;
(c) The prospectus and statement of additional information of
the Acquiring Fund included in the Acquiring Fund's registration statement that
will be in effect on the Closing Date will conform in all material respects with
the applicable requirements of the Securities Act and the Investment Company Act
and the rules and regulations of the Commission thereunder and will not as of
its date and as of the Closing Date contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading;
(d) The Acquiring Fund is not, and its execution, delivery and
performance of this Agreement will not result, in violation of its Declaration
of Trust or By-Laws or in material violation of any material agreement,
indenture, instrument, contract, lease or other undertaking with respect to the
Acquiring Fund to which it is a party or by which it is bound;
(e) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any of the
Acquiring Fund's properties or assets, except as previously disclosed in writing
to, and acknowledged in writing by, the Acquired Fund. The Acquiring Fund knows
of no facts which might form the basis for the institution of such proceedings,
and the Acquiring Fund is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which materially and
adversely affects the Acquiring Fund's business or its ability to consummate the
transactions contemplated herein;
(f) The financial statements of the Acquired Fund as of
December 31, 2003 and for the fiscal year then ended have been audited by
Deloitte & Touche LLP, a registered independent public accounting firm, have
been prepared in accordance with GAAP consistently applied and fairly reflect
the financial condition of the Acquired Fund as of such date; except for the
Assumed Liabilities, the Acquired Fund will not have any known or contingent
liabilities on the Closing Date;
(g) Since December 31, 2003, except as disclosed on a schedule
to this Agreement or specifically disclosed in the Acquired Fund's prospectus or
statement of additional information as in effect on the date of this Agreement,
there has not been any material adverse change in the Acquired Fund's financial
condition, assets, liabilities, business or prospects, or any incurrence by the
Acquired Fund of indebtedness, except for normal contractual obligations
incurred in the ordinary course of business or in connection with the settlement
of purchases and sales of portfolio securities. For the purposes of this
subparagraph (g), a decline in NAV per share of the Acquired Fund arising out of
its normal investment operations or a decline in net assets of the Acquired Fund
as a result of redemptions shall not constitute a material adverse change;
(h) The Acquiring Fund has the power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement has been duly authorized by all necessary
action, if any, on the part of the Acquiring Fund's Board of Trustees, and,
assuming due authorization, execution and delivery by the Acquired Fund, this
Agreement constitutes a valid and binding obligation of the Acquiring Fund,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(i) The Acquiring Fund Shares to be issued and delivered to
the Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant
to the terms of this Agreement, will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly issued
Acquiring Fund Shares and will be fully paid and non-assessable; the Acquiring
Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any Acquiring Fund Shares, nor is there outstanding
any security convertible into any of the Acquiring Fund Shares;
(j) The information to be furnished by the Acquiring Fund for
use in the prospectus and other documents which may be necessary in connection
with the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto or the requirements
of any form for which its use is intended;
(k) For each taxable year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for qualification and
favorable tax treatment as a regulated investment company and has elected to be
treated as such and will qualify as such as of the Closing Date. The Acquiring
Fund has not taken any action which has caused or will cause the Acquiring Fund
to fail to qualify as a regulated investment company under the Code. The
Acquiring Fund has not been notified that any tax return or other filing of the
Acquiring Fund has been reviewed or audited by any federal, state, local or
foreign taxing authority. Except as set forth on Schedule 5.1:
(A) The Acquiring Fund shall have filed all federal,
state and local tax returns required to be filed,
including all information returns and payee
statements, and all tax returns for foreign
countries, provinces and other governing bodies that
have jurisdiction to levy taxes upon it;
(B) The Acquiring Fund shall have paid all taxes,
interest, penalties, assessments and deficiencies
which have become due or which have been claimed to
be due or provision shall have been made for the
payment thereof;
(C) All tax returns filed or to be filed by the
Acquiring Fund shall constitute complete and accurate
reports of the respective tax liabilities of the
Acquiring Fund or, in the case of information returns
and payee statements, the amounts required to be
reported accurately set forth all material items
required to be included or reflected in such returns;
(D) The Acquiring Fund has not and will not have
waived or extended any applicable statute of
limitations relating to the assessment of federal,
state, local or foreign taxes; and
(E) The Acquiring Fund has not been notified that any
examinations of the federal, state, local or foreign
tax returns of the Acquiring Fund are currently in
progress or threatened and no deficiencies have been
asserted or assessed against the Acquiring Fund as a
result of any audit by the Internal Revenue Service
or any state, local or foreign taxing authority, and
no such deficiency has been proposed or threatened;
(l) The Acquiring Fund currently complies in all material
respects with and since its organization has complied in all material respects
with all applicable laws, rules and regulations, including, without limitation,
the requirements of, and the rules and regulations under, the Investment Company
Act, the Securities Act, the Exchange Act, state "Blue Sky" laws and all other
applicable federal and state laws or regulations. The Acquiring Fund currently
complies in all material respects with and since its organization has complied
in all material respects with all investment objectives, policies, guidelines
and restrictions and any compliance procedures established by the Trust with
respect to the Acquiring Fund, and, immediately prior to the closing, will have
calculated its NAV in accordance with the Acquiring Fund's registration
statement;
(m) The Acquiring Fund Shares to be issued pursuant to this
Agreement shall on the Closing Date be duly registered under the Securities Act
by a Registration Statement on Form N-14 of the Acquiring Fund then in effect
and qualified for sale under the applicable state securities laws; and
(n) The Acquiring Fund Shares to be issued pursuant to this
Agreement are duly authorized and on the Closing Date will be validly issued and
fully paid and non-assessable and will conform in all material respects to the
description thereof contained in the Acquiring Fund's Registration Statement on
Form N-14. On the Closing Date, the Acquiring Fund shall not, except as provided
herein, have outstanding any warrants, options, convertible securities or any
other type of right pursuant to which any person could acquire Acquiring Fund
Shares.
(o) The Acquiring Fund Tax Representation Certificate to be
delivered by the Acquiring Fund to the Acquired Fund and Wilmer Cutler Pickering
Hale and Dorr LLP at Closing pursuant to paragraph 7.3 (the "Acquiring Fund Tax
Representation Certificate") will not on the Closing Date contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading.
6. COVENANTS OF EACH OF THE PARTIES
6.1 The Acquired Fund and the Acquiring Fund will operate its
respective business in the ordinary course between the date hereof and the
Closing Date. It is understood that such ordinary course of business will
include the declaration and payment of customary dividends and distributions and
any other dividends and distributions necessary or advisable (except to the
extent distributions that are not customary may be limited by representations
made in connection with the issuance of the tax opinion described in paragraph
9.5 hereof), in each case payable either in cash or in additional shares.
6.2 Each of the Acquired Fund and the Acquiring Fund will use
reasonable efforts to promptly prepare and file with the Commission a
Registration Statement on Form N-14 relating to the transactions contemplated by
this Agreement.
6.3 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
6.4 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
6.5 Subject to the provisions of this Agreement, each of the Acquired
Fund and the Acquiring Fund will take, or cause to be taken, all actions, and do
or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
6.6 The Acquired Fund shall furnish to the Acquiring Fund on the
Closing Date the Closing Statement, which statement shall be prepared in
accordance with GAAP consistently applied and shall be certified by the Acquired
Fund's Treasurer or Assistant Treasurer. As promptly as practicable, but in any
case within 90 days after the Closing Date, the Acquired Fund shall furnish to
the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring
Fund, a statement of the earnings and profits of the Acquired Fund for federal
income tax purposes, and of any capital loss carryovers and other items that
will be carried over to the Acquiring Fund as a result of Section 381 of the
Code, and which statement will be certified by the Treasurer of the Acquired
Fund.
6.7 The Acquired Fund shall provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus to be included in the
Acquiring Fund's Registration Statement on Form N-14, in compliance with the
Securities Act, the Exchange Act and the Investment Company Act in connection
with the transactions contemplated herein.
6.8 The Acquired Fund shall maintain errors and omissions insurance
covering management of the Acquired Fund prior to and including the Closing
Date.
6.9 Neither the Acquired Fund not the Acquiring Fund shall take any
action that is inconsistent with the representations set forth in, with respect
to the Acquired Fund, the Acquired Fund Tax Representation Certificate, and with
respect to the Acquiring Fund, the Acquiring Fund Tax Representation
Certificate, to the extent such action would prevent the reorganization from
qualifying as a "reorganization" under Section 368(a) of the Code.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquired Fund in writing:
7.1 All representations and warranties made in this Agreement by the
Acquiring Fund shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
7.2 The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its President, Executive Vice President,
Treasurer or Assistant Treasurer, in form and substance reasonably satisfactory
to the Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties made in this Agreement by the Acquiring Fund are
true and correct in all material respects at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this Agreement; and
7.3 The Acquiring Fund shall have delivered to the Acquired Fund and
Wilmer Cutler Pickering Hale and Dorr LLP an Acquiring Fund Tax Representation
Certificate, satisfactory to the Acquired Fund and Wilmer Cutler Pickering Hale
and Dorr LLP, substantially in the form attached to this Agreement as Annex A,
concerning certain tax-related maters with respect to the Acquiring Fund.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the its obligations hereunder on or before the Closing
Date and, in addition thereto, the following further conditions:
8.1 All representations and warranties made in this Agreement by the
Acquired Fund shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
8.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities showing the federal tax
bases and holding periods as of the Closing Date, certified by the Acquired
Fund's Treasurer or Assistant Treasurer;
8.3 The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President, Executive Vice
President, Treasurer or Assistant Treasurer, in form and substance reasonably
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties made in this Agreement are true
and correct in all material respects at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement; and
8.4 The Acquired Fund shall have delivered to the Acquiring Fund and
Wilmer Cutler Pickering Hale and Dorr LLP an Acquired Fund Tax Representation
Certificate, satisfactory to the Acquiring Fund and Wilmer Cutler Pickering Hale
and Dorr LLP, substantially in the form attached to this Agreement as Annex B,
concerning certain tax-related matters with respect to the Acquired Fund.
9. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE PARTIES
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
9.1 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein;
9.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of
either party hereto, provided that either party may for itself waive any of such
conditions;
9.3 The Acquiring Fund's Registration Statement on Form N-14 shall have
become effective under the Securities Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best knowledge of the
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the Securities Act;
9.4 The parties shall have received a favorable opinion of Wilmer
Cutler Pickering Hale and Dorr LLP, addressed to the Acquiring Fund and the
Acquired Fund and satisfactory to the Acquiring Fund and the Acquired Fund,
substantially to the effect that for federal income tax purposes, on the basis
of the facts, representations and assumptions set forth in such opinion, the
acquisition by the Acquiring Fund of all of the assets of the Acquired Fund
solely in exchange for the issuance of Acquiring Fund Shares to the Acquired
Fund and the assumption of all of the Assumed Liabilities by the Acquiring Fund,
followed by the distribution by the Acquired Fund, in liquidation of the
Acquired Fund, of Acquiring Fund Shares to the Acquired Fund Shareholders in
exchange for their Acquired Fund shares of beneficial interest and the
termination of the Acquired Fund, will constitute a reorganization within the
meaning of Section 368(a) of the Code. Notwithstanding anything herein to the
contrary, neither Acquiring Fund nor Acquired Fund may waive the conditions set
forth in this paragraph 9.5; and
9.5 The Acquired Fund shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for dividends paid
under Section 561 of the Code, all of its investment company taxable income (as
defined in Section 852(b)(2) of the Code determined without regard to Section
852(b)(2)(D) of the Code) for its taxable year ending on the Closing Date, all
of the excess of (i) its interest income excludable from gross income under
Section 103(a) of the Code over (ii) its deductions disallowed under Sections
265 and 171(a)(2) of the Code for its taxable year ending on the Closing Date,
and all of its net capital gain (as such term is used in Sections 852(b)(3)(A)
and (C) of the Code), after reduction by any available capital loss
carryforward, for its taxable year ending on the Closing Date.
10. BROKERAGE FEES AND EXPENSES
10.1 Each party hereto represents and warrants to the other party
hereto that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
10.2 The Adviser will pay all expenses incurred in connection with the
Reorganization (including, but not limited to, the preparation of the
prospectus).]
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The parties hereto agree that no party has made any
representation, warranty or covenant not set forth herein or referred to in
paragraphs 6.9 and 7.3 hereof and that this Agreement constitutes the entire
agreement between the parties.
11.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
12. TERMINATION
12.1 This Agreement may be terminated at any time prior to the Closing
Date by: (a) the mutual agreement of the Acquired Fund and the Acquiring Fund;
(b) any party in the event that the other party hereto shall breach any material
representation, warranty or agreement contained herein to be performed at or
prior to the Closing Date and has not cured such breach within 10 days after of
notice thereof; or (c) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
12.2 In the event of any such termination, there shall be no liability
for damages on the part of any party hereto or the Trust's Trustees or officers
to the other party, but[, except as provided in section 10 hereof, each shall
bear the expenses incurred by it incidental to the preparation and carrying out
of this Agreement.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Acquired Fund and the Acquiring Fund.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Acquired Fund and the
Acquiring Fund at 440 Wheelers Farms Road, Milford, Connecticut 06460.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts
each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
15.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
either party without the written consent of the other party hereto. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm, corporation or other entity, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
15.5 It is expressly agreed that the obligations of the Acquiring Fund
and the Acquired Fund shall not be binding upon any of their respective
Trustees, shareholders, nominees, officers, agents or employees personally, but
bind only the property of the Acquiring Fund or the Acquired Fund, as the case
may be, as provided in the Declaration of Trust of the Acquiring Fund and the
Acquired Fund, respectively. The execution and delivery of this Agreement have
been authorized by the Acquired Trustees of each of the Acquiring Fund and the
Acquired Fund, and this Agreement has been executed by authorized officers of
the Acquiring Fund and the Acquired Fund acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the property of the
Acquiring Fund and the Acquired Fund, as the case may be, as provided in the
Declaration of Trust of the Acquiring Fund and the Acquired Fund, respectively.
[Remainder of page left blank intentionally.]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and attested by its
Secretary or Assistant Secretary.
Attested: The Wright Managed Income Trust,
on behalf of its series
Wright Current Income Fund
By: _________________________________ By: _______________________________
Name: Name:
Title: Title:
Attest: The Wright Managed Income Trust,
on behalf of its series
Wright U.S. Government
Intermediate Fund
By: _________________________________ By: _____________________________
Name: Name:
Title: Title:
Wright Investors' Service,
Inc. is a party to this
Agreement solely for the
purposes of paragraph 10.2
WRIGHT INVESTORS' SERVICE, INC.
By: ______________________________
Name:
Title:
Annex A
TAX REPRESENTATION CERTIFICATE OF
WRIGHT CURRENT INCOME FUND
This certificate is being delivered in connection with the transaction to
be effected pursuant to the Agreement and Plan of Reorganization (the
"Agreement") made as of ________________, 2004 between Wright Current Income
Fund ("Acquiring Fund"), and Wright U.S. Government Intermediate Fund ("Acquired
Fund"), each a series of The Wright Managed Income trust (the "Trust"). Pursuant
to the Agreement, Acquiring Fund will acquire all of the assets of Acquired Fund
in exchange solely for (i) the assumption by Acquiring Fund of the liabilities
of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the issuance of
shares of beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to
Acquired Fund, followed by the distribution by Acquired Fund, in liquidation of
Acquired Fund, of the Acquiring Fund Shares to the shareholders of Acquired Fund
and the termination of Acquired Fund (the foregoing together constituting the
"transaction").
The undersigned officer of the Trust, after consulting with its counsel,
auditors and tax advisers regarding the meaning of and factual support for the
following representations, on behalf of Acquiring Fund, hereby certifies and
represents that the following statements are true, complete and correct and will
be true, complete and correct on the date of the transaction and thereafter as
relevant. Unless otherwise indicated, all capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Agreement.
1. Acquiring Fund is a series of the Trust, a business trust established under
the laws of the Commonwealth of Massachusetts, and Acquiring Fund is, and
has been at all times, treated as a separate corporation for federal income
tax purposes.
2. Neither Acquiring Fund nor any person treated as related to Acquiring Fund
under Treasury Regulation Section 1.368-1(e)(3,) nor any partnership of
which Acquiring Fund or any such related person is a partner, has any plan
or intention to redeem or otherwise acquire any of the Acquiring Fund
Shares received by shareholders of Acquired Fund in the transaction except
in the ordinary course of Acquiring Fund's business in connection with its
legal obligation under Section 22(e) of the Investment Company Act of 1940,
as amended (the "1940 Act"), as a series of a registered open-end
investment company to redeem its own shares.
3. After the transaction, Acquiring Fund will continue the historic business
(as defined in Treasury Regulation Seciton 1.368-1(d)(2)) of Acquired Fund
or will use all or a significant portion of the historic business assets
(as defined in Treasury Regulation Section 1.368-1(d)(3)) of Acquired Fund
in a business. For this purpose, Acquiring Fund shall be treated as
conducting the business and holding the assets of certain related entities,
as described in Treasury Regulation Section 1.368-1(d)(4).
4. Acquiring Fund has no plan or intention to sell or otherwise dispose of any
assets of Acquired Fund acquired in the transaction, except for
dispositions made in the ordinary course of its business or to maintain its
qualification as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and except for
transfers of assets to certain related entities, as described in Section
368(a)(2)(C) of the Code or Treasury Regulation Section 1.368-2(k)(1).
5. Any expenses of Acquired Fund incurred in connection with the transaction
which are paid or assumed by Acquiring Fund will be expenses of Acquired
Fund solely and directly related to the transaction in accordance with Rev.
Rul. 73-54, 1973-1 C.B. 187. Acquiring Fund will not pay or assume the
expenses, if any, of Acquired Fund shareholders in connection with the
transaction.
6. There is no, and never has been any, indebtedness between Acquiring Fund
and Acquired Fund.
7. Acquiring Fund has properly elected to be treated as a regulated investment
company under Subchapter M of the Code, has qualified for the special tax
treatment afforded regulated investment companies under the Code for each
taxable year since inception, qualifies for such treatment as of the date
of the transaction, and intends to qualify for such treatment after the
transaction.
8. Acquiring Fund meets the requirements of an "investment company" in Sectio
368(a)(2)(F) of the Code.
9. Acquiring Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
10. Acquiring Fund does not now own and has never owned, directly or
indirectly, any shares of Acquired Fund.
11. As of the date of the transaction, the fair market value of the Acquiring
Fund Shares issued to Acquired Fund in exchange for the assets of Acquired
Fund will be approximately equal to the fair market value of the assets of
Acquired Fund received by Acquiring Fund, minus the Acquired Fund
Liabilities assumed by Acquiring Fund. Acquiring Fund will not furnish any
consideration in connection with the acquisition of Acquired Fund's assets
other than the assumption of such Acquired Fund Liabilities and the
issuance of such Acquiring Fund Shares.
12. Acquired Fund shareholders will not be in control (within the meaning of
Sections 368(a)(2)(H)(i) and 304(c) of the Code, which generally provide
that control means the ownership of shares possessing at least 50% of the
total combined voting power of all shares that are entitled to vote or at
least 50% of the total value of all shares) of Acquiring Fund after the
transaction.
13. The transaction is being undertaken for valid and substantial business
purposes, including capitalizing on potential economies of scale in
expenses, including the costs of accounting, legal, transfer agency,
insurance, custodial, and administrative services, and increasing
diversification.
14. No Acquired Fund shareholder is acting as agent for Acquiring Fund in
connection with the transaction. Acquiring Fund will not reimburse any
Acquired Fund shareholder for Acquired Fund shares such shareholder may
have purchased or for other obligations such shareholder may have incurred.
The undersigned officer of the Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquiring Fund. The undersigned recognizes that
Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction and rendering its opinion pursuant to Section 9.5 of the
Agreement. If, prior to the date of the transaction, any of the representations
set forth herein ceases to be accurate, the undersigned agrees to deliver to
Wilmer Cutler Pickering Hale and Dorr LLP immediately a written notice to that
effect.
The Wright Managed Income Trust,
on behalf of its series
Wright Current Income Fund
By: _____________________________
Name: _____________________________
Title: __________________________
Dated: _______________, 2004
Annex B
TAX REPRESENTATION CERTIFICATE OF
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND
This certificate is being delivered in connection with the transaction
to be effective pursuant to the Agreement and Plan of Reorganization (the
"Agreement") made as of ___________ , 2004 between Wright Current Income Fund
("Acquiring Fund"), and Wright U.S. Government Intermediate Fund ("Acquired
Fund"), each a series of The Wright Managed Income Trust (the "Trust"). Pursuant
to the Agreement, Acquiring Fund will acquire all of the assets of Acquired Fund
in exchange solely for (i) the assumption by Acquiring Fund of the liabilities
of Acquired Fund (the "Acquired Fund Liabilities") and (ii) the issuance of
shares of beneficial interest of Acquiring Fund (the "Acquiring Fund Shares") to
Acquired Fund, followed by the distribution by Acquired Fund, in liquidation of
Acquired Fund, of the Acquiring Fund Shares to the shareholders of Acquired Fund
and the termination of Acquired Fund (the foregoing together constituting the
"transaction").
The undersigned officer of the Trust, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations, on behalf of Acquired Fund, hereby certifies
and represents that the following statements are true, complete and correct and
will be true, complete and correct on the date of the transaction and thereafter
as relevant. Unless otherwise indicated, all capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Agreement.
1. Acquired Fund is a series of the Trust, a business trust established under
the laws of the Commonwealth of Massachusetts, and Acquired Fund is, and
has been at all times, treated as a separate corporation for federal income
tax purposes.
2. As of the date of the transaction, the fair market value of the Acquiring
Fund Shares received by each shareholder that holds shares of Acquired Fund
(the "Acquired Fund Shares") will be approximately equal to the fair market
value of the Acquired Fund Shares with respect to which such Acquiring Fund
Shares are received, and the aggregate consideration received by Acquired
Fund shareholders in exchange for their Acquired Fund Shares will be
approximately equal to the fair market value of all of the outstanding
Acquired Fund Shares immediately prior to the transaction. No property
other than Acquiring Fund Shares will be distributed to shareholders of
Acquired Fund in exchange for their Acquired Fund Shares, nor will any such
shareholder receive cash or other property as part of the transaction.
3. Neither Acquired Fund nor any person "related" to Acquired Fund (as defined
in Treasury Regulation Section 1.368-1(e)(3)) nor any partnership in which
Acquired Fund or any such related person is a partner has redeemed,
acquired or otherwise made any distributions with respect to any shares of
Acquired Fund as part of the transaction, or otherwise pursuant to a plan
of which the transaction is a part, other than redemptions and
distributions made in the ordinary course of Acquired Fund's business as a
series of an open-end regulated investment company. There is no plan or
intention on the part of any shareholder of Acquired Fund that owns
beneficially 5% or more of the Acquired Fund Shares and, to the best
knowledge of management of Acquired Fund, there is no plan or intention on
the part of the remaining shareholders of Acquired Fund, in connection with
the transaction, to engage in any transaction with Acquired Fund, Acquiring
Fund, or any person treated as related to Acquired Fund or Acquiring Fund
under Treasury Regulation Section 1.368-1(e)(3) or any partnership in which
Acquired Fund, Acquiring Fund, or any person treated as related to Acquired
Fund or Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) is a
partner involving the sale, redemption or exchange of any of the Acquired
Fund Shares or any of the Acquiring Fund Shares to be received in the
transaction, as the case may be.
4. Acquired Fund assets transferred to Acquiring Fund will comprise at least
ninety percent (90%) of the fair market value of the net assets and at
least seventy percent (70%) of the fair market value of the gross
assets held by Acquired Fund immediately prior to the transaction. For
purposes of this representation, amounts used by Acquired Fund to pay
expenses of the transaction and all redemptions and distributions
(except for redemptions in the ordinary course of business upon demand of
a shareholder that Acquired Fund is required to make as a series of an
open-end investment company pursuant to Section 22(e) of the
Investment Company Act of 1940, as amended, and regular, normal dividends)
made by Acquired Fund immediately preceding the transaction are taken into
account as assets of Acquired Fund held immediately prior to the
transaction.
5. As of the date of the transaction, the fair market value of the Acquiring
Fund Shares issued to Acquired Fund in exchange for the assets of Acquired
Fund will be approximately equal to the fair market value of the assets of
Acquired Fund received by Acquiring Fund minus the Acquired Fund
Liabilities assumed by Acquiring Fund. Acquired Fund will not receive any
consideration from the Acquiring Fund in connection with the acquisition of
Acquired Fund's assets other than the assumption of such Acquired Fund
Liabilities and the issuance of such Acquiring Fund Shares.
6. The Acquired Fund Liabilities assumed by Acquiring Fund plus the
liabilities, if any, to which the transferred assets are subject were
incurred by Acquired Fund in the ordinary course of its business.
7. The fair market value of the Acquired Fund assets transferred to Acquiring
Fund will equal or exceed the sum of the Acquired Fund Liabilities assumed
by Acquiring Fund within the meaning of Section 357(d) of the Internal
Revenue Code of 1986, as amended (the "Code").
8. Acquired Fund currently conducts its historic business within the meaning
of Treasury Regulation Section 1.368-1(d)(2), which provides that, in
general, a corporation's historic business is the business it has conducted
most recently, but does not include a business that the corporation enters
into as part of a plan of reorganization. The Acquired Fund assets
transferred to Acquiring Fund will be Acquired Fund's historic business
assets within the meaning of Treasury Regulation Section 1.368-1(d)(3),
which provides that a corporation's historic business assets are the assets
used in its historic business.
9. Acquired Fund will distribute to its shareholders the Acquiring Fund Shares
it receives pursuant to the transaction, and its other properties, if any,
and will be liquidated promptly thereafter.
10. The expenses of Acquired Fund incurred by it in connection with the
transaction which are to be assumed by Acquiring Fund, if any, will be only
such expenses that are solely and directly related to the transaction
in accordance with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquired Fund will
not pay any expenses incurred by its shareholders in connection with the
transaction.
11. There is no, and never has been any, indebtedness between Acquiring Fund
and Acquired Fund.
12. Acquired Fund has properly elected to be treated as a regulated investment
company under Subchapter M of the Code, has qualified for the special tax
treatment afforded regulated investment companies under Subchapter M of the
Code for each taxable year since inception, and qualifies for such
treatment for its taxable year ending on the closing date of the
transaction.
13. Acquired Fund meets the requirements of an "investment company" in Section
368(a)(2)(F) of the Code.
14. Acquired Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
15. Acquired Fund shareholders will not be in control (within the meaning of
Sections 368(a)(2)(H)(i) and 304(c) of the Code, which generally provide
that control means the ownership of shares possessing at least 50% of the
total combined voting power of all shares that are entitled to vote or at
least 50% of the total value of all shares) of Acquiring Fund after the
transaction.
16. Acquired Fund shareholders will not have dissenters' or appraisal rights
in the transaction.
17. The transaction is being undertaken for valid and substantial business
purposes, including capitalizing on potential economies of scale in
expenses, including the costs of accounting, legal, transfer agency,
insurance, custodial, and administrative services, and increasing
diversification.
The undersigned officer of the Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquired Fund. The undersigned recognizes that
Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction and rendering its opinion pursuant to Section 9.5 of the
Agreement. If, prior to the date of the transaction, any of the representations
set forth herein ceases to be accurate, the undersigned agrees to deliver to
Wilmer Cutler Pickering Hale and Dorr LLP immediately a written notice to that
effect.
The Wright Managed Income Trust,
on behalf of its series
Wright U.S. Government Intermediate Fund
By: __________________________________
Name: _________________________
Title: __________________________
Dated: ______________ , 2004
TRUST'S PROSPECTUS, DATED MAY 1, 2004
THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS
PROSPECTUS
MAY 1, 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. Treasury Money Market Fund
o Wright U.S. Government Near Term Fund
o Wright U.S. Government Intermediate Fund
o Wright Current Income Fund
o Wright Total Return Bond Fund
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THE INFORMATION
IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS
COMMITTING A CRIME.
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
OVERVIEW OF PRINCIPAL STRATEGIES AND INFORMATION ABOUT THE FUND............1
Wright Selected Blue Chip Equities Fund...........................2
Wright Major Blue Chip Equities Fund..............................4
Wright International Blue Chip Equities Fund......................6
Wright U.S. Treasury Money Market Fund............................8
Wright U.S. Government Near Term Fund............................10
Wright U.S. Government Intermediate Fund.........................12
Wright Current Income Fund.......................................14
Wright Total Return Bond Fund....................................16
INFORMATION ABOUT YOUR ACCOUNT............................................18
How the Funds Value Their Shares.................................18
Purchasing Shares................................................18
Selling Shares...................................................19
Exchanging Shares................................................20
Privacy Concerns.................................................20
Market Timing and Excessive Trading Policy.......................20
DIVIDENDS AND TAXES.......................................................22
MANAGING THE FUNDS........................................................23
FINANCIAL HIGHLIGHTS......................................................25
Wright Selected Blue Chip Equities Fund..........................25
Wright Major Blue Chip Equities Fund.............................26
Wright International Blue Chip Equities Fund.....................27
Wright U.S. Treasury Money Market Fund...........................28
Wright U.S. Government Near Term Fund............................29
Wright U.S. Government Intermediate Fund.........................30
Wright Current Income Fund.......................................31
Wright Total Return Bond Fund....................................32
HOW TO USE THIS PROSPECTUS
Reading this prospectus will help you decide if investing in the Wright
funds is right for you. Please keep this prospectus for future reference.
Included in this prospectus are descriptions telling you about each fund's:
OBJECTIVE...
what the fund seeks to achieve.
PRINCIPAL INVESTMENT STRATEGIES...
how the fund intends to achieve its investment objective and the
strategies used by Wright Investors' Service, the fund's investment
adviser.
PRINCIPAL RISKS...
the risks associated with the fund's primary investments.
WHO MAY WANT TO INVEST...
decide if the fund is a suitable investment for you.
PAST PERFORMANCE...
the total return on your investment, including income from dividends
and interest, and the increase or decrease in price over various time
periods.
FEES AND EXPENSES...
what overall costs you bear by investing in the fund.
OVERVIEW OF PRINCIPAL STRATEGIES AND INFORMATION ABOUT THE FUNDS
- ------------------------------------------------------------------------------
This prospectus offers a variety of equity, fixed income and money market mutual
funds designed to meet various individual investment objectives. You can use
them singularly or in any combination to meet your objectives.
- -----SIDE BAR TEXT-----
Fundamental Analysis and
"Bottom-up" vs "Top-Down"
Investing
FUNDAMENTAL ANALYSIS is the analysis of company financial statements to
forecast future price movements using past records of assets, earnings, sales,
products, management and markets. It differs from technical analysis which
relies on price and volume movements of stocks and does not concern itself with
company financial statistics.
BOTTOM-UP INVESTING is the analysis of company information before
considering the impact of industry and economic trends. It differs from the
"top-down" approach which looks first at the economy, then the industry and last
the company.
- -----END SIDE BAR TEXT-----
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.
- ----SIDE BAR TEXT----
Blue Chip
Financial dictionaries define Blue Chip as a common stock of a company that has
a long record of profit growth and dividend payment and a reputation for quality
management, products and services. Wright further defines this to include
securities issued by companies that meet its qualitative standards.
- ----END SIDE BAR TEXT----
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
- --------------------------------------------------------------------------------
CUSIP: 8235F107 Ticker Symbol: WSBEX
OBJECTIVE...
The fund seeks to provide long-term total return consisting of price
appreciation and current income.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its assets in a diversified portfolio of equity
securities of well-established companies. The portfolio investments are selected
primarily from companies on the Adviser's "investment grade" list of Approved
companies. 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. The
Adviser believes that the resulting diversified portfolio has better overall
fundamental characteristics than the benchmark, i.e. earnings growth, financial
strength and profitability.
The fund's objective may be changed by the trustees without shareholde
approval.
PRINCIPAL RISKS...
Before you invest in any mutual fund, you should understand the risks involved.
There are two basic risks prevalent in mutual funds investing in common stocks,
such as the fund. They are:
o Market risk: when the prices of stocks fall, the value of the fund's
investments may fal
o Management risk: Wright's strategy may not produce
the expected results, causing losses.
In addition to normal market and management risks, fund performance will be
adversely affected if mid-cap stocks fall out of favor with the market and
returns trail the overall stock market, or selected companies remain undervalued
or experience an adverse event, such as an unfavorable earnings report.
The fund cannot eliminate risk or assure achievement of its objective and you
may lose money.
WHO MAY WANT TO INVEST...
You may be interested in the fund if you are seeking an actively managed common
stock investment for total investment return and intend to make a long-term
investment commitment.
PAST PERFORMANCE...
The information on the next page shows the performance of the fund for the
ten-year period through December 31, 2003. These returns include reinvestment of
all dividends and capital gain distributions, and reflect fund expenses. As with
all mutual funds, past performance (before and after taxes) does not guarantee
future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart on the following page illustrates the risk of investing in
the fund by showing how volatile the fund's performance has been for each full
calendar year for the past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
40%
- -------------------------------------------------------------------------------------------------------------------
30% 30.34% 32.70% 30.06%
- -------------------------------------------------------------------------------------------------------------------
20% 18.57%
- -------------------------------------------------------------------------------------------------------------------
10% 0.14% 10.75%
- -------------------------------------------------------------------------------------------------------------------
0% 5.75%
- -------------------------------------------------------------------------------------------------------------------
(10)% -3.52%
- -------------------------------------------------------------------------------------------------------------------
(20)% -10.15% -16.98%
- -------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best Quarter:18.72%(4th quarter 1998) Worst Quarter:-19.20%(3rd quarter 1998)
The fund's annual return shown above does not reflect the impact of taxes. The
table below shows before- and after-tax performance. The fund's average annual
return is compared with that of the S&P Mid-Cap 400, an unmanaged index of
stocks in a broad range of industries with market capitalizations of a few
billion or less. The performance of the S&P Mid-Cap 400, unlike that of the
fund, reflects no deductions for fees, expenses or taxes.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2003
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------
WSBC
- Return before taxes 30.06% 2.59% 8.45%
- Return after taxes on distributions 29.66% 0.40% 5.88%
- Return after taxes on distributions
and sales of fund shares 23.73% 0.40% 5.88%
S&P Mid-Cap 400 35.62% 9.21% 13.93%
- ----SIDE BAR TEXT----
AFTER-TAX RETURN
After-tax performance is computed two ways: "Return after taxes on
distributions" assumes the payment of federal taxes on fund distributions before
their reinvestment and "Return after taxes on distributions and sales of fund
shares" reflects the additional taxable impact of the realized gain or loss if
any, from the sale of fund shares at the end of the holding period. After-tax
returns are calculated using the highest individual federal income tax rates and
do not reflect the impact of state and local taxes. Actual after-tax returns
depend on an investor's tax situation and may differ from those shown. The
after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement
accounts.
- ----END SIDE BAR TEXT----
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
Annual Fund Operating Expenses Standard Shares
- -------------------------------------------------------------------------------------------------
(deducted directly from fund Management fee 0.60%
assets) Distribution and service (12b-1) fees 0.25%
As a shareholder in the fund Other expenses 0.74%
you do not pay any sales charges, --------------------------------------------------------------
redemption or exchange fees. Total Operating Expenses 1.59%
--------------------------------------------------------------
Expense Reimbursement (1) (0.34%)
-------------------------------------------------------------
NET OPERATING EXPENSES 1.25%
- --------------------------------------------------------------------------------------------------
(1) Under a written agreement in effect through the current fiscal year,Wright
waives a portion of its advisory fee and/or distribution fee and assumes
operating expenses to the extent necessary to limit expense ratios to 1.25%
after custodian fee reductions, if any.
Example
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
$127 $397 $686 $1,511
- -----SIDE BAR TEXT-------
Understanding Expenses
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include the
fund's share of the portfolio's expenses,12b-1 fees, an administration fee and
registration fees.
- -----END SIDE BAR TEXT-----
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
- -------------------------------------------------------------------------------
CUSIP: 98235F305 Ticker Symbol: WQCEX
OBJECTIVE...
The fund seeks total return, consisting of price appreciation plus income.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its assets in a diversified portfolio of equity
securities of well-established large capitalization companies. The Adviser
currently defines large companies as those with market values of $10 billion or
more at the time of the fund's investment. The portfolio investments are chosen
primarily from companies on the Advisers "investment grade" list of Approved
companies. 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. The Adviser believes that the
resulting diversified portfolio has better overall fundamental characteristics
than the benchmark, i.e. earnings growth, financial strength and profitability.
The fund's objective may be changed by the trustees without shareholder
approval.
PRINCIPAL RISKS...
Before you invest in any mutual fund, you should understand the risks involved.
There are two basic risks prevalent in mutual funds investing in common stocks,
such as the fund. They are:
o MARKET RISK: when the prices of stocks fall, the value of the fund's
investments may fall
o MANAGEMENT RISK: Wright's strategy may not produce the expected results,
causing losses.
In addition to normal market and management risk, fund performance will be
adversely affected if large capitalization stocks fall out of favor with the
market and their returns trail the overall stock market.
The fund cannot eliminate risk or assure achievement of its objective and
you may lose money.
WHO MAY WANT TO INVEST...
This fund may be suitable for investors seeking a common stock investment for
total investment return or a core equity portfolio for those investing in
several asset classes.
PAST PERFORMANCE...
The information on the next page shows the performance of the fund for the
ten-year period through December 31, 2003. These returns include reinvestment of
all dividends and capital gain distributions, and reflect fund expenses. As with
all mutual funds, past performance (before and after taxes) does not guarantee
future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart on the following page illustrates the risk of investing in
the fund by showing how volatile the fund's Standard Share performance has been
for each full calendar year for the past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
40% 33.86%
- -------------------------------------------------------------------------------------------------------------------
30% 20.43% 23.20%
- -------------------------------------------------------------------------------------------------------------------
20% 28.98% 23.95%
- -------------------------------------------------------------------------------------------------------------------
10% 17.63%
- -------------------------------------------------------------------------------------------------------------------
0%
- -------------------------------------------------------------------------------------------------------------------
(10)% -0.73%
- -------------------------------------------------------------------------------------------------------------------
(20)% -12.49% -16.87% -24.50%
- -------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best quarter:23.71%(4th quarter 1998) Worst quarter:-16.01%(3rd quarter 2002)
The fund's annual return shown above does not reflect the impact of taxes. The
table below shows before- and after-tax performance. The fund's average annual
return is compared with that of the S&P 500, an unmanaged index of 500 widely
held common stocks that generally indicates the performance of the market. The
performance of the S&P 500, unlike that of the fund, reflects no deductions for
fees, expenses or taxes.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2003
1 Year 5 Years 10 Years
- -------------------------------------------------------------------------------
WMBC
- Return before taxes 23.20% -3.47% 7.36%
- Return after taxes on distributions 23.07% -3.92% 4.80%
- Return after taxes on distributions
and sales of fund shares 18.50% -3.92% 4.80%
S&P 500 28.68% -0.57% 11.07%
- ---SIDE BAR TEXT----
AFTER-TAX RETURN
After-tax performance is computed two ways: "Return after taxes on
distributions" assumes the payment of federal taxes on fund distributions before
their reinvestment and "Return after taxes on distributions and sales of fund
shares" reflects the additional taxable impact of the realized gain or loss if
any, from the sale of fund shares at the end of the holding period. After-tax
returns are calculated using the highest individual federal income tax rates and
do not reflect the impact of state and local taxes. Actual after-tax returns
depend on an investor's tax situation and may differ from those shown. The
after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement
accounts.
- ----END SIDE BAR TEXT----
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------------------
deductly directly from fund assets)
As a shareholder in Management fee 0.60%
the fund, you do not Distribution and
pay any sales charges, service (12b-1) fees 0.25%
redemption or exchange Other Expenses 0.46%
fees. -------------------------------------------------
Total Operating Expenses 1.31%
-------------------------------------------------
Expense Reimbursement(1) (0.06%)
-------------------------------------------------
NET OPERATING EXPENSES 1.25%
(1) 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.
Example
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
$127 $397 $686 $1,511
- -----SIDE BAR TEXT-----
UNDERSTANDING EXPENSES
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include
management fees,12b-1 fees and administrative costs, such as shareholder
recordkeeping and reports, custodian and pricing services, and registration
fees.
- -----END SIDE BAR TEXT-----
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
- -------------------------------------------------------------------------------
CUSIP: 98235F404 Ticker Symbol: WIBCX
OBJECTIVE...
The fund seeks total return consisting of price appreciation plus income.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its assets in a diversified portfolio of equity
securities of well-established non-U.S. companies. The portfolio investments are
chosen primarily from companies on the Adviser's "investment grade" list of
Approved companies. Companies may be traded on the securities market of their
own country, on other foreign exchanges or in the U.S. through American
Depository Receipts (ADR's). ADR's represent interest in the underlying
security. 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. The Adviser believes that the
resulting diversified portfolio has better overall fundamental characteristics
than the benchmark, i.e. earnings growth, financial strength and profitability.
The fund's objective may be changed by the trustees without shareholder
approval.
PRINCIPAL RISKS...
Before you invest in any mutual fund, you should understand the risks involved.
There are two basic risks prevalent in mutual funds investing in common stocks,
such as the fund. They are:
o Market risk: when the prices of stocks fall, the value of the fund's
investments may fall
o Management risk: Wright's strategy may not produce
the expected results, causing losses.
In addition to market and management risks, the fund is subject to additional
risks in connection with investing in foreign securities. These include:
currency risk (changes in foreign currency rates reducing the value of the
fund's assets), seizure, expropriation or nationalization of a company's assets,
less publicly available information, and the impact of political, social or
diplomatic events. If an ADR is not sponsored by the issuer of the underlying
security, there may be reduced access to information about the issuer.
The fund cannot eliminate risk or assure achievement of its objective and you
may lose money.
WHO MAY WANT TO INVEST...
The fund may be suitable for investors seeking a diversified portfolio of
quality non-U.S. equities offering ownership in some of the leading companies
throughout the world and who are not adverse to the risks associated with
international investing. Also, because foreign stock prices may not move in
concert with U.S. market prices, the fund may be a useful way for an investor to
diversify equity investments.
PAST PERFORMANCE...
The information in the table on the next page shows the performance of the fund
for the periods indicated through December 31, 2003. These returns include
reinvestment of all dividends and capital gain distributions, and reflect fund
expenses. As with all mutual funds, past performance (before and after taxes)
does not guarantee future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart illustrates the risk of investing in the fund by showing how
volatile the fund's performance has been by illustrating the differences for
each full calendar year for the past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
30% 34.26% 31.96%
- ----------------------------------------------------------------------------------------------------------
20% 20.73%
- ----------------------------------------------------------------------------------------------------------
10% 13.61%
- ----------------------------------------------------------------------------------------------------------
0% 1.54% 6.14%
- ----------------------------------------------------------------------------------------------------------
(10)% -1.64%
- ----------------------------------------------------------------------------------------------------------
(20)% -17.58% -14.51%
- ----------------------------------------------------------------------------------------------------------
(30)% -24.18%
- ----------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best quarter:30.24%(4th quarter 1999) Worst quarter:-18.45%(3rd quarter 2002)
The fund's annual return shown above does not reflect the impact of taxes. The
table below shows before- and after-tax performance. The fund's average annual
return is compared with that of the MSCI Developed World ex U.S. Index. While
the fund does not seek to match the returns of this index, this unmanaged index
generally indicates foreign stock market performance. The performance of the
MSCI Developed World ex U.S. Index, unlike that of the fund, reflects no
deductions for fees, expenses, or taxes.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2003
1 Yr 5 Yrs 10 Yrs
- -------------------------------------------------------------------------------
WIBC
- - Return before taxes 31.96% -1.09% 3.25%
- - Return after taxes on distributions 31.59% -1.74% 2.39%
- - Return after taxes on distributions
and sales of fund shares 25.35% -1.74% 2.39%
MSCI Developed World ex U.S. Index 39.42% -0.45% 4.73%
- ----SIDE BAR TEXT----
AFTER-TAX RETURN
After-tax performance is computed two ways: "Return after taxes on
distributions" assumes the payment of federal taxes on fund distributions before
their reinvestment and "Return after taxes on distributions and sales of fund
shares" reflects the additional taxable impact of the realized gain or loss if
any, from the sale of fund shares at the end of the holding period. After -tax
returns are shown only for Standard Shares and would be different for
Institutional Shares.After-tax returns are calculated using the highest
individual federal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. The after-tax returns shown are not relevant to
investors who hold their shares through tax-deferred arrangements such as 401(k)
plans or individual retirement accounts.
- ----END SIDE BAR TEXT----
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
SHAREHOLDER FEES*
- -------------------------------------------------------------------------------
(paid directly from Maximum redemption fee
your investment) (% of redemption proceeds) 2.00%
- ------------------------------------------------------------------------------
* A redemtion fee applies if you redeem your shares within three months of
purchase.
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------------------
(deductly directly from fund assets)
As a shareholder in Management fee 0.80%
the fund, you do not Distribution and
pay any sales charges service (12b-1) fees 0.25%
or exchange fees. Other Expenses 0.75%
-----------------------------------------------------
TOTAL OPERATING EXPENSES 1.80%
- -------------------------------------------------------------------------------
EXAMPLE
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$183 $566 $975 $2,116
- -----SIDE BAR TEXT-----
Understanding Expenses
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include the
fund's share of the portfolio's expenses,12b-1 fees, an administration fee and
registration fees.
- -----END SIDE BAR TEXT-----
WRIGHT U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
CUSIP: 982349706 Ticker Symbol: WUSXX
OBJECTIVE...
The fund seeks to provide as high a rate of current income as possible
consistent with the preservation of capital and maintenance of liquidity. The
fund also seeks to maintain a stable net asset value per share price (NAV) of
$1.00 per share.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its total assets in securities of the U.S.
government and its agencies that are backed by the full faith and credit of the
U.S. government (U.S. Treasury securities). The fund limits it portfolio to
investments maturing in 13 months or less and maintains a weighted average
maturity of 90 days or less. The fund may also invest in repurchase agreements
which are collateralized by U.S. Treasury securities. The fund may enter into
repurchase agreements only with large, well-capitalized banks or government
securities dealers that meet Wright credit standards.
Wright monitors the daily interest rate yield curve and selects permissible
securities for investment, taking into account the securities' yields and
maturities. Longer maturities are selected when interest rates are expected to
fall and shorter maturities are selected when interest rates are expected to
rise.
The fund may only invest in securities and engages only in investment practices
to the extent that they are legal under applicable Federal law as of the date of
this Prospectus for Federal credit unions described in the Federal Credit Union
Act and the National Credit Union Administration Regulations.
The fund reserves the right to hold up to 20% of its assets in cash or to invest
them in repurchase agreements. Repurchase agreements are collateralized
short-term (usually overnight) debt used to invest cash.
The fund's objective may be changed by the trustees without shareholder
approval.
PRINCIPAL RISKS...
Although the fund invests exclusively in U.S. Treasury bills, notes and bonds,
an investment in the fund is neither insured nor guaranteed by the U.S.
government, the Federal Deposit Insurance Corporation, or any other government
agency. There is no guarantee that the fund will be able to maintain a stable
net asset value of $1.00 per share. The rate of income will vary from day to day
generally reflecting market changes in short-term interest rates.
The fund cannot eliminate risk or assure achievement of its objective .
WHO MAY WANT TO INVEST...
You may be interested in the fund if you seek to earn current income while
preserving the value of your investment. The fund may serve as a temporary
investment vehicle. You may also be interested in the fund if you live in a
state or local jurisdiction that exempts the fund's dividends from taxes.
PAST PERFORMANCE...
The information on the next page shows the fund's performance for the indicated
periods through December 31, 2003. These returns include reinvestment of all
dividends and capital gain distributions, and reflect fund expenses. As with all
mutual funds, past performance does not guarantee future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart shows how the fund's performance has varied by illustrating
the differences for each full calendar year for the past ten years.
15%
- -----------------------------------------------------------------------------------------------------------
10%
- -----------------------------------------------------------------------------------------------------------
5% 5.34% 5.44%
- -----------------------------------------------------------------------------------------------------------
0% 3.56% 4.85% 4.84% 4.73% 4.29% 3.70% 1.61% 0.60%
- -----------------------------------------------------------------------------------------------------------
(5)%
- -----------------------------------------------------------------------------------------------------------
(10)%
- -----------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best quarter:5.63%(4th quarter 2000) Worst quarter:0.48%(4nd quarter 2003)
The fund's 7-day yield on December 31, 2003, was 0.46%. For the fund's current
yield call (800) 232-0013 x4381.
The fund's average annual return is compared with that of 90-day Treasury bills.
While the fund does not seek to match the returns of 90-day Treasury bills, they
generally indicate the performance of money market instruments.
Average Annual Returns as of December 31, 2003
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------
WTMM 0.60% 3.11% 3.88%
90-day Treasury bills 1.14% 3.44% 4.21%
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
ANNUAL FUND OPERATING EXPENSES Money Market Shares
- ----------------------------------------------------------------------------
(deductly directly from fund assets)
As a shareholder in Management fee 0.35%
the fund, you do not Distribution and
pay any sales charges, service (12b-1) fees none
redemption or exchange Other Expenses 1.00%
fees. ----------------------------------------------
Total Operating Expenses 1.35%
Fee Waiver and Expense
Reimbursement(1) (0.90%)
-----------------------------------------------
NET OPERATING EXPENSES 0.45%
(1)Under a written agreement in effect for the current fiscal year, Wright
assumes operating expenses to the extent necessary to limit the expense ratio
to 0.45% after custodian fee reductions, if any.
EXAMPLE
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$46 $144 $252 $567
- -----SIDE BAR TEXT-----
UNDERSTANDING EXPENSES
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include
management fees,12b-1 fees and administrative costs, such as shareholder
recordkeeping and reports, custodian and pricing services, and registration
fees.
- -----END SIDE BAR TEXT-----
WRIGHT U.S. GOVERNMENT NEAR TERM FUND
- --------------------------------------------------------------------------------
CUSIP: 982349201 Ticker Symbol: WNTBX
OBJECTIVE...
The fund seeks a high level of income, which is normally above that available
from short-term money market instruments or funds.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its total assets in U.S. government obligations
and maintains an average weighted maturity of between one and three years. U.S.
government obligations include:
o direct obligations of the U.S. government, such as U.S. Treasury bills,
notes and bonds
o obligations of U.S. government agencies secured by the full faith and
credit of the U.S. Treasury, such as securities, including
pass-through securities, of the Government National Mortgage Association
or securities of the Export-Import Bank
o obligations secured by the right to borrow from the U.S. Treasury
o obligations backed only by the credit of a government agency such as the
Federal Home Loan Bank, Fannie Mae (Federal National Mortgage Association)
and Freddie Mac (Federal Home Loan Mortgage Corporation).
Wright allocates assets among different market sectors and maturities based on
its view of the economic outlook and expected trend in short-term interest
rates. For example, the fund may invest more heavily in shorter term securities
when it expects an increase in interest rates. In buying and selling securities
for the fund, Wright analyzes a security's structural features, current price
compared with its estimated value and the credit quality of its issuer. The
fund's average maturity as of December 31, 2003, was 1.4 years and its duration
was 1.4 years. The fund's benchmark is the Lehman U.S. Government 1-3 Year Bond
Index. The fund's objective may be changed by the trustees without shareholder
approval.
PRINCIPAL RISKS...
The general risks of bond funds are credit and interest rate risks. Because the
fund invests in U.S. government obligations, credit risk is less than other
types of bonds. However, this does not protect the fund against interest rate
risk or guarantee the value of the fund's shares. The fund's yield may decline
during times of falling interest rates. Also, mortgage-related securities (such
as Ginnie Maes) are subject to prepayment and extension risks during times of
falling or rising interest rates. These risks are defined to mean:
o CREDIT OR DEFAULT RISK: An issuer's credit rating may be downgraded or the
issuer may be unable to pay principal and interest obligations.
o INTEREST RATE RISK: Bond prices fall when interest rates rise and vice
versa. The longer the duration of a bond, the greater the potential change
in price.
o PREPAYMENT RISK: When interest rates decline, the issuer of a security may
exercise an option to prepay the principal. This forces the portfolio to
reinvest in lower yielding securities.
o EXTENSION RISK: When interest rates rise, the life of a mortgage-related
security is extended beyond the expected prepayment time, reducing the
value of the security.
The fund cannot eliminate risk or assure achievement of its objective and you
may lose money.
- ----SIDE BAR TEXT-----
UNDERSTANDING DURATION
Duration measures how quickly the principal and interest of a bond is expected
to be paid. It is also used to predict how much a bond's value will rise and
fall in response to small changes in interest rates. Generally, the shorter a
fund's duration is, the less its securities will decline in value when there is
an increase in interest rates.
- -----END SIDE BAR TEXT-----
WHO MAY WANT TO INVEST...
You may be interested in the fund if you seek a higher level of income than is
available from money market instruments and can accept greater fluctuation in
principal. Also, the fund may be suitable if you seek a total return alternative
to a money market investment.
PAST PERFORMANCE...
The information in the table on the next page shows the fund's performance for
the ten-year period through December 31, 2003. These returns include
reinvestment of all dividends and capital gain distributions, and reflect fund
expenses. As with all mutual funds, past performance (before and after taxes)
does not guarantee future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart illustrates the risk of investing in the fund by showing how
volatile the fund's performance has been for each full calendar year for the
past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
20%
- ------------------------------------------------------------------------------------------------------------------
10% 11.93%
- ------------------------------------------------------------------------------------------------------------------
0% 3.94% 5.93% 5.98% 1.91% 6.94% 6.82% 5.42% 0.61%
- ------------------------------------------------------------------------------------------------------------------
(10)% -3.09%
- ------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best quarter:4.14%(2nd quarter 1995) Worst quarter:-2.60%(1st quarter 1994)
The fund's annual return shown above does not reflect the impact of taxes. The
table below shows before and after tax performance. The fund's average annual
return is compared with that of the Lehman U.S. Government 1-3 Year Bond Index.
While the fund does not seek to match the returns of this Index, this unmanaged
index generally indicates the performance of the U.S. government bond market.
The Lehman U.S. Government 1-3 Year Bond Index, unlike the fund, reflects no
deductions for fees, expenses, or taxes.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2003
1 Yr 5 Yrs 10 Yrs
- --------------------------------------------------------------------------------
WNTB
- Return before taxes 0.61% 4.31% 4.57%
- Return after taxes on distributions -0.53% 2.58% 2.51%
- Return after taxes on distributions
and sales of fund shares -0.53% 2.58% 2.51%
Lehman U.S. Government 1-3 Year Bond Index 2.01% 5.51% 5.73%
- ----SIDE BAR TEXT----
AFTER-TAX RETURN
After-tax performance is computed two ways: "Return after taxes on
distributions" assumes the payment of federal taxes on fund distributions before
their reinvestment and "Return after taxes on distributions and sales of fund
shares" reflects the additional taxable impact of the realized gain or loss if
any, from the sale of fund shares at the end of the holding period. After-tax
returns are calculated using the highest individual federal income tax rates and
do not reflect the impact of state and local taxes. Actual after-tax returns
depend on an investor's tax situation and may differ from those shown. The
after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement
accounts.
- ----END SIDE BAR TEXT
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
ANNUAL FUND OPERATING EXPENSES Standard Shares
- -------------------------------------------------------------------------
(deductly directly from fund assets)
As a shareholder in Management fee 0.45%
the fund, you do not Distribution and
pay any sales charges, service (12b-1) fees 0.25%
redemption or exchange Other Expenses 0.58%
fees. ---------------------------------------------
Total Operating Expenses 1.28%
Expense Reimbursement(1) (0.33%)
---------------------------------------------
NET OPERATING EXPENSES 0.95%
(1)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.
Example
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
$97 $303 $525 $1,166
- -----SIDE BAR TEXT-----
Understanding Expenses
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include the
fund's share of the portfolio's expenses,12b-1 fees, an administration fee and
registration fees.
- -----END SIDE BAR TEXT-----
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND
- -------------------------------------------------------------------------------
CUSIP: 982349102 Ticker Symbol: WGOBX
OBJECTIVE...
The fund seeks a high total return with an emphasis on income.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its total assets in U.S. government obligations
and maintains an average weighted maturity of from two to six years depending
on the economic outlook and expected trend of interest rates. The fund will not
invest in derivatives. U.S. government obligations include:
o direct obligations of the U.S. government, such as U.S. Treasury bills,
notes and bonds
o obligations of U.S. government agencies secured by the full faith and
credit of the U.S. Treasury, such as securities, including pass-through
securities, of the Government National Mortgage Association or securities
of the Export-Import Bank
o obligations secured by the right to borrow from the U.S. Treasury
o obligations backed only by the credit of a government agency such as the
Federal Home Loan Bank, Fannie Mae (Federal National Mortgage Association)
and Freddie Mac (Federal Home Loan Mortgage Corporation).
Wright allocates assets based on its view of the economic outlook and expected
trend in short-term interest rates. For example, the fund may invest more
heavily in shorter term securities when it expects an increase in interest
rates. In buying and selling securities for the fund, Wright analyzes a
security's structural features, current price compared with its estimated value
and the credit quality of its issuer. The fund's average maturity as of December
31, 2003, was 2.9 years and its duration was 2.9 years. The fund's benchmark is
the Lehman U.S. Government Intermediate Bond Index.
The fund's objective may be changed by the trustees without shareholder
approval.
PRINCIPAL RISKS...
The general risks of bond funds are credit and interest rate risks. Because the
fund invests substantially in U.S. government obligations, credit risk is less
than other types of bonds. However, this does not protect the fund against
interest rate risk or guarantee the value of the fund's shares. The fund's yield
may decline during times of falling interest rates. Also, mortgage-related
securities (such as Ginnie Maes) are subject to prepayment and extension risks
during times of falling or rising interest rates. These risks are defined to
mean:
o CREDIT OR DEFAULT RISK: An issuer's credit rating may be downgraded or the
issuer may be unable to pay principal and interest obligations.
o INTEREST RATE RISK: Bond prices fall when interest rates rise and vice
versa. The longer the duration of a bond, the greater the potential change
in price.
o PREPAYMENT RISK: When interest rates decline, the issuer of a security may
exercise an option to prepay the principal. This forces the portfolio to
reinvest in lower yielding securities.
o EXTENSION RISK: When interest rates rise, the life of a mortgage-related
security is extended beyond the expected prepayment time, reducing the
value of the security.
The fund cannot eliminate risk or assure achievement of its objective and you
may lose money.
- -----SIDE BAR TEXT-----
Understanding Duration
Duration measures how quickly the principal and interest of a bond is expected
to be paid. It is also used to predict how much a bond's value will rise or fall
in response to small changes in interest rates. Generally, the shorter a fund's
duration is, the less its securities will decline in value when there is an
increase in interest rates.
- -----END SIDE BAR TEXT-----
WHO MAY WANT TO INVEST...
You may be interested in the fund if you are looking for a higher level of
income than a short-term U.S. Government bond fund.
PAST PERFORMANCE...
The information below shows performance of the ten-year period through December
31, 2003. From September 1995 to April 2002, the fund limited its investments to
U.S. Treasury issues. These returns include reinvestment of all dividends and
capital gain distributions, and reflect fund expenses. As with all mutual funds,
past performance (before and after taxes) does not guarantee future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart illustrates the risk of investing in the fund by showing how
volatile the fund's performance has been for each full calendar year for the
past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
30%
- ---------------------------------------------------------------------------------------------------------------
20% 28.18%
- ---------------------------------------------------------------------------------------------------------------
10% 12.61%
- ---------------------------------------------------------------------------------------------------------------
0% 9.08% 9.95% 5.40% 8.07% 1.36%
- ---------------------------------------------------------------------------------------------------------------
(10)% -8.62% -1.26% -3.97%
- ---------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best quarter:10.40%(2nd quarter 1995) Worst quarter:-6.28%(1st quarter 1994)
The fund's annual return shown above does not reflect the impact of taxes. The
table below shows before and after tax performance. The fund's average annual
return is compared with that of the Lehman U.S. Government Intermediate Bond
Index. While the fund does not seek to match the returns of the index, this
unmanaged index generally indicates the performance of the U.S. government bond
market. The index, unlike the fund, reflects no deductions for fee, expenses, or
taxes.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2003
1 Year 5 Years 10 Years
- -------------------------------------------------------------------------------
WUSGI
- Return before taxes 1.36% 4.54% 5.65%
- Return after taxes on distributions -0.68% 2.26% 3.21%
- Return after taxes on distributions
and sales of fund shares -0.68% 2.26% 3.21%
Lehman U.S. Government Intermediate Bond Index 2.29% 6.18% 6.32%
- ----SIDE BAR TEXT----
AFTER-TAX RETURN
After-tax performance is computed two ways: "Return after taxes on
distributions" assumes the payment of federal taxes on fund distributions before
their reinvestment and "Return after taxes on distributions and sales of fund
shares" reflects the additional taxable impact of the realized gain or loss if
any, from the sale of fund shares at the end of the holding period. After-tax
returns are calculated using the highest individual federal income tax rates and
do not reflect the impact of state and local taxes. Actual after-tax returns
depend on an investor's tax situation and may differ from those shown. The
after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement
accounts.
- ----END SIDE BAR TEXT
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
ANNUAL FUND OPERATING EXPENSES Standard Shares
- -------------------------------------------------------------------------------
(deductly directly from fund assets)
As a shareholder in Management fee 0.45%
the fund, you do not Distribution and
pay any sales charges, service (12b-1) fees 0.25%
redemption or exchange Other Expenses 0.96%
fees. -------------------------------------------------
Total Operating Expenses 1.66%
Expense Reimbursement(1) (0.71%)
--------------------------------------------------
NET OPERATING EXPENSES 0.95%
(1)Under a written agreement, Wright waives a portion of its advisory fee and
assumes operating expenses to the extent necessary to limit the fund's
expense ratio to 0.95% after custodian fee reductions, if any.
EXAMPLE
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
$97 $303 $525 $1,166
- -----SIDE BAR TEXT-----
Understanding Expenses
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include the
fund's share of the portfolio's expenses,12b-1 fees, an administration fee and
registration fees.
- -----END SIDE BAR TEXT-----
WRIGHT CURRENT INCOME FUND
- --------------------------------------------------------------------------------
CUSIP: 982349607 Ticker Symbol: WCIFX
OBJECTIVE...
The fund seeks a high level of current income consistent with moderate
fluctuations of principal.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its total assets primarily in debt obligations
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, mortgage-related securities of governmental or corporate
issuers and corporate debt securities. The U.S. Government securities in which
the fund may invest include direct obligations of the U.S. Government, such as
bills, notes, and bonds issued by the U.S. Treasury; obligations of U.S.
Government agencies and instrumentalities secured by the full faith and credit
of the U.S. Treasury, such as securities of GNMA or the Export-Import Bank;
obligations secured by the right to borrow from the U.S. Treasury; and
obligations backed only by the credit of the government agency itself, such as
securities of Federal Home Loan Bank, FNMA and FHLMC.
Corporate debt securities include commercial paper and other short-term
instruments rated A-1 by Standard & Poor's Ratings Group or P-1 by Moody's
Investors Service, Inc. and comparable unrated securities. The fund reinvests
all principal payments. The fund seeks to outperform the Lehman GNMA Backed Bond
Index.
The fund's objective may be changed by the trustees without shareholder
approval.
PRINCIPAL RISKS...
The general risks of bond funds are credit and interest rate risks. Credit risk
is minimal to the extent the fund concentrates in mortgage-related securities
whose timely payment of interest and principal is guaranteed by the U.S.
government. However, this does not protect the fund against interest rate risk
or guarantee the value of the fund's shares. Securities based on underlying
loans are generally subject to prepayment and extension risks. These risks are
defined to mean:
o Interest rate risk: Bond prices fall when interest rates rise and vice
versa. The longer the duration of a bond, the greater the potential change
in price.
o Credit or default risk: An issuer's credit rating may be downgraded or the
issuer may be unable to pay principal and interest obligations.
o Prepayment risk: When interest rates decline, the issuer of a security may
exercise an option to prepay the principal. This forces the fund to
reinvest in lower yielding securities.
o Extension risk: When interest rates rise, the life of a mortgage-related
security is extended beyond the expected prepayment time, reducing the
value of the security.
Also, the fund's yield may decline during times of falling interest rates. The
fund cannot eliminate risk or assure achievement of its objective and you may
lose money.
WHO MAY WANT TO INVEST...
You may want to invest in the fund if you are seeking a high level of income
over a long period of time. The fund is designed for investors who want to
receive the kind of income that mortgage-related securities provide, but do not
want to bother with the receipt or reinvestment of principal payments.
PAST PERFORMANCE...
The information in the table on the next page shows the fund's performance for
the ten-year period through December 31, 2003. These returns include
reinvestment of all dividends and capital gain distributions, and reflect fund
expenses. As with all mutual funds, past performance (before and after taxes)
does not guarantee future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart illustrates the risk of investing in the fund by showing how
volatile the fund's performance has been for each full calendar year for the
past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
30%
- ---------------------------------------------------------------------------------------------------------------
20%
- ---------------------------------------------------------------------------------------------------------------
10% 17.46% 10.31%
- ---------------------------------------------------------------------------------------------------------------
0% 4.35% 8.56% 6.51% 0.52% 7.18% 7.70% 1.73%
- ---------------------------------------------------------------------------------------------------------------
(10)% -3.28%
- ---------------------------------------------------------------------------------------------------------------
(20)%
- ---------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best quarter:5.61%(2nd quarter 1995) Worst quarter:-3.21%(1st quarter 1994)
The fund's annual return shown above does not reflect the impact of taxes. The
table below shows before- and after-tax performance. The fund's average annual
return is compared with that of the Lehman GNMA Backed Bond Index. While the
fund does not seek to match the returns of the Lehman GNMA Backed Bond Index,
Wright believes that this unmanaged index generally indicates the performance of
government and corporate mortgage-backed bond markets. The Lehman GNMA Backed
Bond Index, unlike the fund, reflects no deductions for fees, expenses, or
taxes.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2003
1 Year 5 Years 10 Years
- -------------------------------------------------------------------------------
WCIF
- Return before taxes 1.73% 5.42% 5.97%
- Return after taxes on distributions -0.13% 3.13% 3.47%
- Return after taxes on distributions
and sales of fund shares -0.13% 3.13% 3.47%
Lehman GNMA Backed Bond Index 2.85% 6.50% 6.92%
- -------------------------------------------------------------------------------
- ----SIDE BAR TEXT----
AFTER-TAX RETURN
After-tax performance is computed two ways: "Return after taxes on
distributions" assumes the payment of federal taxes on fund distributions before
their reinvestment and "Return after taxes on distributions and sales of fund
shares" reflects the additional taxable impact of the realized gain or loss if
any, from the sale of fund shares at the end of the holding period. After-tax
returns are shown only for Standard shares and would be different for
Institutional shares. After-tax returns are calculated using the highest
individual federal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. The after-tax returns shown are not relevant to
investors who hold their shares through tax-deferred arrangements such as 401(k)
plans or individual retirement accounts.
- ----END SIDE BAR TEXT
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
ANNUAL FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------
(deductly directly from fund assets)
As a shareholder in Management fee 0.45%
the fund, you do not Distribution and
pay any sales charges, service (12b-1) fees 0.25%
redemption or exchange Other Expenses 0.42%
fees. --------------------------------------------------
Total Operating Expenses 1.12%
Expense Reimbursement(1) (0.17%)
--------------------------------------------------
NET OPERATING EXPENSES 0.95%
(1)Under a written agreement in effect for the current fiscal year, Wright
assumes operating expenses to the extent necessary to limit expense ratios to
0.95%.
EXAMPLE
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$97 $303 $525 $1,166
- -----SIDE BAR TEXT-----
Understanding Expenses
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include the
fund's share of the portfolio's expenses,12b-1 fees, an administration fee and
registration fees.
- -----END SIDE BAR TEXT-----
WRIGHT TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
CUSIP: 982349300 Ticker Symbol: WTRBX
OBJECTIVE...
The fund seeks a superior rate of total return, consisting of a high level of
income plus price appreciation.
PRINCIPAL INVESTMENT STRATEGIES...
The fund invests at least 80% of its total assets in U.S. government and
investment grade (rated "BBB" or higher or of comparable quality if unrated)
corporate debt securities. These securities meet the Wright Quality Rating
Standards. Investment selections differ depending on the trend in interest
rates. The fund looks for securities that in Wright's judgment will produce the
best total return.
Wright allocates assets among different market sectors (such as U.S. Treasury
securities, U.S. government agency securities and corporate bonds) with
different maturities based on its view of the relative value of each sector or
maturity. There are no limits on the minimum or maximum weighted average
maturity of the fund's portfolio or an individual security. As of December 31,
2003, the fund's average maturity was 6.1 years and its duration was 4.3 years.
The fund seeks to outperform the Lehman U.S. Aggregate Bond Index.
Generally, the fund will sell an individual security if its rating is downgraded
below "BBB" by the major rating services such as Moody's or Standard and Poor's.
The fund's objective may be changed by the trustees without shareholder
approval.
PRINCIPAL RISKS...
The general risks of bond funds are credit and interest rate risks. The fund's
risk profile will vary, depending on the mix of its assets. The fund reduces
credit risk by investing in U.S. government obligations and investment grade or
higher corporate bonds. However, this does not protect the fund against interest
rate risk. Interest rate risk is greater for long-term debt securities than for
short-term debt securities. These risks are defined to mean:
o INTEREST RATE RISK: Bond prices fall when interest rates rise and vice
versa. The longer the duration of a bond, the greater the potential change
in price.
o CREDIT OR DEFAULT RISK: An issuer's credit rating may be downgraded or the
issuer may be unable to pay principal and interest obligations.
o PREPAYMENT RISK: When interest rates decline, the issuer of a security may
exercise an option to prepay the principal. This forces the fund to
reinvest in lower yielding securities. Corporate bonds may have a "call"
feature which gives the issuer the right to redeem outstanding bonds
before their scheduled maturity.
o EXTENSION RISK: When interest rates rise, the life of a mortgage-related
security is extended beyond the expected prepayment time, reducing the
value of the security.
Also, the fund's yield may decline during times of falling interest rates. The
fund cannot eliminate risk or assure achievement of its objective and you may
lose money.
- -----SIDE BAR TEXT-----
UNDERSTANDING DURATION
Duration measures how quickly the principal and interest of a bond is expected
to be paid. It is also used to predict how much a bond's value will rise and
fall in response to small changes in interest rates. Generally, the shorter a
fund's duration is, the less its securities will decline in value when there is
an increase in interest rates.
- -----END SIDE BAR TEXT-----
WHO MAY WANT TO INVEST...
You may be interested in the fund if you seek a level of income consistent with
total return by investing in intermediate and longer term debt and can accept
price fluctuations.
PAST PERFORMANCE...
The information on the following page shows the fund's performance for the
ten-year period through December 31, 2003. These returns include reinvestment of
all dividends and capital gain distributions, and reflect fund expenses. As with
all mutual funds, past performance (before and after taxes) does not guarantee
future results.
Performance is for the stated time periods only. Due to market volatility, the
fund's current performance may be lower or higher than the quoted returns.
The bar chart illustrates the risk of investing in the fund by showing how
volatile the fund's performance has been for each full calendar year for the
past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
30%
- ----------------------------------------------------------------------------------------------------------
20% 21.97%
- ----------------------------------------------------------------------------------------------------------
10% 10.62%
- ----------------------------------------------------------------------------------------------------------
0% 0.90% 9.25% 9.56% 4.96% 9.03% 3.25%
- ----------------------------------------------------------------------------------------------------------
(10)% -6.55% -3.91%
- ----------------------------------------------------------------------------------------------------------
20)%
- ----------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Best quarter:7.69%(2nd quarter 1995) Worst quarter:-4.76%(1st quarter 1994)
The fund's annual return shown above does not reflect the impact of taxes. The
table below shows before- and after-tax performance. The fund's average annual
return is compared with that of the Lehman U.S. Aggregate Bond Index, an
unmanaged index that is a broad representation of the investment-grade fixed
income market in the U.S. The Lehman U.S. Aggregate Bond Index, unlike the fund,
reflects no deductions for fees, expenses, or taxes.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2003
1 Year 5 Years 10 Years
- -------------------------------------------------------------------------------
WTRB
- Return before taxes 3.25% 4.66% 5.63%
- Return after taxes on distributions 1.54% 2.54% 3.35%
- Return after taxes on distributions
and sales of fund shares 1.54% 2.54% 3.35%
Lehman Aggregate Bond Index 4.10% 6.62% 6.95%
- ----SIDE BAR TEXT----
AFTER-TAX RETURN
After-tax performance is computed two ways: "Return after taxes on
distributions" assumes the payment of federal taxes on fund distributions before
their reinvestment and "Return after taxes on distributions and sales of fund
shares" reflects the additional taxable impact of the realized gain or loss if
any, from the sale of fund shares at the end of the holding period. After-tax
returns are calculated using the highest individual federal income tax rates and
do not reflect the impact of state and local taxes. Actual after-tax returns
depend on an investor's tax situation and may differ from those shown. The
after-tax returns shown are not relevant to investors who hold their shares
through tax-deferred arrangements such as 401(k) plans or individual retirement
accounts.
- ----END SIDE BAR TEXT-----
FEES AND EXPENSES...
The table describes the fees and expenses you may pay if you buy and hold shares
of the fund.
ANNUAL FUND OPERATING EXPENSES Standard Shares
- -----------------------------------------------------------------------------
(deductly directly from fund assets)
As a shareholder in Management fee 0.45%
the fund, you do not Distribution and
pay any sales charges, service (12b-1) fees 0.25%
redemption or exchange Other Expenses 0.47%
fees. -------------------------------------------------
Total Operating Expenses 1.17%
Expense Reimbursement(1) (0.22%)
-------------------------------------------------
NET OPERATING EXPENSES 0.95%
(1)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.
EXAMPLE
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$97 $303 $525 $1,166
- -----SIDE BAR TEXT-----
UNDERSTANDING EXPENSES
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include
management fees,12b-1 fees and administrative costs, such as shareholder
recordkeeping and reports, custodian and pricing services, and registration
fees.
- -----END SIDE BAR TEXT-----
INFORMATION ABOUT YOUR ACCOUNT
- -------------------------------------------------------------------------------
HOW THE FUNDS VALUE THEIR SHARES
The price at which you buy, sell or exchange fund shares is the net asset value
per share or NAV.
The NAV for each fund, except Wright U.S. Treasury Money Market Fund, is
calculated at the close of regular trading (normally 4:00 p.m. New York time) on
the New York Stock Exchange (Exchange) each day the Exchange is open. It is not
calculated on days the Exchange is closed. The price for a purchase, redemption
or exchange of fund shares is the next NAV calculated after your order is
received.
Wright U.S. Treasury Money Market Fund's NAV is normally calculated three times
each day the Exchange is open. Calculations are made at noon, 3:00 p.m. and as
of the close of regular trading on the Exchange, normally 4:00 p.m. (in each
case, New York time). The fund's securities are valued at amortized cost, which
approximates market value.
The other funds calculate their share price by valuing their portfolio
securities at the last current sales price on the market where the security is
normally traded or the official closing price in the case of securities traded
on Nasdaq. If security quotations are not readily available, or the value of a
security has been materially affected by events occurring after the close of a
foreign exchange, Wright may value such securities at fair value in accordance
with procedures adopted by the trustees. A security that is fair valued may be
valued at a price higher or lower than actual market quotations or the value
determined by other funds using their own fair valuation procedures.
The value of all assets and liabilities expressed in foreign currencies is
converted into U.S. dollars at the most recent market rates quoted by one or
more major banks shortly before the close of the Exchange. Foreign markets may
be open on days when U.S. markets are closed and the value of foreign securities
owned by Wright International Blue Chip Equities Fund may change on days when
shareholders cannot purchase or redeem shares.
When purchasing or redeeming fund shares, your order must be communicated
to the principal underwriter by a specific time each day in order for the
purchase price or the redemption price to be based on that day's net asset value
per share. An investment dealer has a responsibility to transmit orders
promptly. Each fund may accept purchase and redemption orders as of the time of
their receipt by certain investment dealers (or their designated
intermediaries).
- -----SIDE BAR TEXT-----
Determining NAV
Share price is determined by adding the value of a fund's cash and other
assets, deducting liabilities, and then dividing that amount by the total number
of shares outstanding.
- -----END SIDE BAR TEXT-----
PURCHASING SHARES
PURCHASING SHARES OF WRIGHT U.S. TREASURY MONEY MARKET FUND
The fund's transactions in money market instruments normally require immediate
settlement in federal funds. Accordingly, purchase orders for the fund are
executed at the NAV next calculated after payment in cash or federal funds is
received. Shares purchased before 3:00 p.m. receive that day's dividends. Shares
purchased between 3:00 p.m. and 4:00 p.m. start to earn dividends the next
business day.
If you pay by personal check, your purchase will be executed at the close of the
second business day in Boston. The minimum initial investment is $1,000. There
is no minimum for subsequent investments.
PURCHASING SHARES FOR CASH NON-MONEY MARKET FUNDS
Shares of each fund may be purchased without a sales charge at NAV. The
minimum initial investment is $1,000. There are no minimums for subsequent
investments.
WAIVER OF THE MINIMUM INITIAL INVESTMENT: The minimums may be waived for
investments by bank trust departments, 401(k) tax-sheltered retirement plans and
automatic investment program accounts. The minimum initial investment will be
reduced to $500 for shares purchased through certain investment advisers,
financial planners, brokers or other intermediaries that charge a fee for their
services.
- -----SIDE BAR TEXT-----
Paying for Shares
You may pay for shares by wire, check or Federal Reserve draft payable
in U.S. dollars and drawn on U.S banks. Third party checks will not be accepted.
A charge is imposed on any returned checks.
- -----END SIDE BAR TEXT-----
Authorized dealers, including investment dealers, banks or other institutions,
may impose investment minimums higher than those imposed by the funds. They may
also charge for their services. There are no transaction charges if you purchase
your shares directly from the funds.
Procedures for Opening New Accounts: To help the government fight the funding of
terrorism and money laundering activities, federal law requires the fund to
obtain, verify and record information that identifies each person who opens a
fund account. When you open an account, you will be asked for your name,
address, date of birth and other identifying information. You also may be asked
to produce a copy of your driver's license and other identifying documents. If a
person fails to provide the information requested, any application by that
person to open a new account will be rejected. Moreover, if unable to verify the
identity of a person based on information provided by that person, additional
steps may be taken including, but not limited to, requesting additional
information from the person, closing the person's account or reporting the
matter to the appropriate federal authorities.
The funds have the right to reject any purchase order, or limit or suspend
the offering of their shares.
BUYING FUND SHARES
o If you are buying shares directly from the funds, please refer to your
Shareholder Manual for additional instructions on how to buy fund shares.
o If you buy shares through bank trust departments or other fiduciary
institutions, please consult your trust or investment officer.
o If you buy shares through a broker, please consult your broker for
purchase instructions.
o If you buy shares through an account with a registered investment adviser
or financial planner, please consult your investment adviser or planner.
o If you buy shares of the funds through a retirement plan, please consult
your plan documents or speak with your plan administrator.
PURCHASING SHARES THROUGH EXCHANGE OF SECURITIES
You may buy shares by delivering to the funds' custodian securities that meet
that fund's investment objective and policies, have easily determined market
prices and are otherwise acceptable. Exchanged securities must have a minimum
aggregate value of $5,000. Securities are valued as of the date they are
received by the funds. If you want to exchange securities for fund shares you
should furnish a list with a full description of these securities. See the
Shareholder Manual for detailed instructions.
DISTRIBUTION AND SERVICE PLANS
The funds have adopted a 12b-1 plan permitting them to pay a fee to finance
the distribution of their shares. Wright Investors' Service Distributors, Inc.
(WISDI), the principal underwriter and distributor of the funds' shares,
receives a distribution fee of 0.25% of the average daily net assets of each
fund's average daily net assets. Because this fee is paid on an ongoing basis,
it may cost you more than other types of sales charges over time.
- -----SIDE BAR TEXT-----
Service Plans
Each fund, except for Wright U.S. Treasury Money Market Fund, has adopted a
service plan. This plan allows each fund to reimburse WISDI for payments to
intermediaries for providing account administration and personal and account
maintenance services to shareholders of the funds. The combined annual service
and 12b-1 plan fee may not exceed 0.25% of the average daily net assets of each
class of shares.
- -----END SIDE BAR TEXT-----
SELLING SHARES
You may redeem or sell shares of the funds on any business day. NO REDEMPTION
REQUEST WILL BE PAID UNTIL YOUR SHARES HAVE BEEN PAID FOR IN FULL. IF THE SHARES
TO BE REDEEMED WERE PURCHASED BY CHECK, THE REDEMPTION PAYMENT WILL BE DELAYED
UNTIL THE CHECK HAS BEEN COLLECTED, WHICH MAY TAKE UP TO 15 DAYS FROM THE DATE
OF PURCHASE. Telephone, mail and internet redemption procedures are described in
the Shareholder Manual.
- -----SIDE BAR TEXT-----
Redemption Proviso
In times of drastic economic or market conditions, you may have difficulty
selling shares by telephone or the internet. These redemption options may be
modified or terminated without notice to shareholders.
- -----END SIDE BAR TEXT-----
Redemption requests received by the funds or their authorized agents in "proper
form" before 4:00 p.m. New York time will be processed at that day's NAV.
"Proper form" means that the fund has received your request, all shares are paid
for, and all documentation along with any required signature guarantee, are
included. The funds normally pay redemption proceeds by check on the next
business day to the address of record. Payment will be by wire if you specified
this option on your account application. Wire redemptions from Wright U.S.
Treasury Money Market Fund received before noon will be forwarded that
afternoon. If you redeem shares of Wright International Blue Chip Equities Fund
within three months after purchase, you will pay a redemption fee of 2.00%.
These redemption fees may be waived on shares purchased for Wright's investment
advisory clients and 401(k) or similar plans.
For more information about selling your shares, please refer to your Shareholder
Manual or consult your trust officer, adviser or plan administrator.
REDEMPTIONS IN-KIND
Although the funds expect to pay redemptions in cash, they reserve the
right to redeem shares in-kind by giving shareholders readily marketable
portfolio securities instead of cash. This is done to protect the interests of
remaining shareholders. If this occurs, you will incur transaction costs and may
incur tax liability if you sell the securities.
INVOLUNTARY REDEMPTION
If your account falls below $500 a fund may involuntarily redeem your shares.
You will receive notice 60 days before this happens. Your account will not be
redeemed if the balance is below the minimum due to investment losses.
EXCHANGING SHARES
Shares of the funds may be exchanged for shares of any other fund described in
this prospectus. The exchange of shares results in the sale of one fund's shares
and the purchase of another, normally resulting in a gain or loss, and is
therefore a taxable event for you.
You are limited to four "round-trip" exchanges each year. A round-trip
exchange is an exchange of one fund into another Wright fund, and then back
into the original fund. You will receive notice 60 days before the fund
materially amends or terminates the exchange privilege.
For more information on exchanging shares please see the Shareholder Manual or
consult your adviser.
PRIVACY CONCERNS
We respect and protect your privacy. We collect nonpublic personal information
about you from the information we receive from you on application or other forms
and information about your transactions with us, our affiliates, or others. We
do not disclose any nonpublic personal information about our customers or former
customers to anyone except as permitted by law. However, we may disclose your
name and address to affiliated companies who perform marketing services on our
behalf. We restrict access to nonpublic personal information about you to those
employees who need to know that information to provide products or services to
you. We maintain physical, electronic, and procedural safeguards that comply
with federal standards to guard your nonpublic personal information.
MARKET TIMING AND EXCESSIVE TRADING POLICY
Purchases and exchanges should be made for investment purposes only.
Frequent trades in your account or accounts controlled by you can disrupt
portfolio investment strategies and increase fund expenses for all shareholders.
To deter such activity, the funds and their agents reserve the right to refuse
any purchase or exchange request, including those from any person or group who,
in the funds' view, is likely to engage in excessive trading. In determining
whether to accept or reject a purchase or exchange request, the funds consider
the historical trading activity of the account making the trade, as well as the
potential impact of any specific transaction on the funds and their
shareholders.
The fund and its principal underwriter cannot ensure that they will be able to
identify all cases of market timing and excessive trading, although they believe
they have adequate procedures in place to attempt to do so. Inability to curtail
market timing could result in additional transactional expenses and/or the fund
maintaining a higher level of cash to fund share activity. The fund or its
principal underwriter may also reject or cancel any purchase order (including an
exchange) from an investor or group of investors for any other reason. The funds
also reserve the right to suspend redemptions or postpone payment dates as
permitted by law.
DIVIDENDS AND TAXES
- -------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
Unless you tell us that you want to receive your distributions in cash, they are
reinvested automatically in fund shares. The funds generally make two different
kinds of distributions:
o CAPITAL GAINS FROM THE SALE OF PORTFOLIO SECURITIES HELD BY A FUND. Each
fund will distribute any net realized capital gains annually, normally in
December. Capital gains are the main source of distributions paid by the
equity funds.
o NET INVESTMENT INCOME FROM INTEREST OR DIVIDENDS RECEIVED ON SECURITIES
HELD BY A FUND. Net investment income is the primary source of dividends
paid by the bond and money market funds.
The funds will distribute their investment income as follows:
Distributions of
Fund Net Investment Income
- -------------------------------------------------------------------------------
Wright Selected Blue Chip Equities Fun Quarterly
Wright Major Blue Chip Equities Fund Quarterly
- -------------------------------------------------------------------------------
Wright International Blue Chip Equities Fund Annually
- -------------------------------------------------------------------------------
Wright U.S. Treasury Money Market Fund Declared Daily - Paid Monthly
Wright U.S. Government Near Term Fund Declared Daily - Paid Monthly
Wright U.S. Government Intermediate Fund Declared Daily - Paid Monthly
Wright Current Income Fund Declared Daily - Paid Monthly
Wright Total Return Bond Fund Declared Daily - Paid Monthly
- -----SIDE BAR TEXT-----
TAX CONSIDERATIONS
Unless your investment is in a tax-deferred account you may want to avoid:
o Investing in a fund near the end of its fiscal year. If the fund makes a
capital gains distribution you will receive some of your investment back as a
taxable distribution.
o Selling shares at a loss for tax purposes and then making an identical
investment within 30 days before or after the sale. This results in a "wash
sale" and you will not be allowed to claim a tax loss.
- -----END SIDE BAR TEXT-----
TAX CONSEQUENCES
Selling or exchanging mutual fund shares generally is a taxable event and may
result in a capital gain or loss. Distributions, whether received in cash or
additional fund shares, are subject to federal income tax.
DISTRIBUTION TAX STATUS
- ------------------------------------------------------------------------------
Income dividends Ordinary income or
"qualified dividend income"(1)
Short-term capital gains Ordinary income
Long-term capital gains Long-term capital gains
(1) Income dividends designated by a fund as "qualified dividend income" are
taxable to an individual shareholder at a maximum 15% U.S. federal income tax
rate, provided that certain conditions, including holding period requirements,
are met by the fund and the shareholder.
Wright International Blue Chip Equities Fund may be subject to foreign
withholding taxes or other foreign taxes on some of its foreign investments.
This will reduce the yield or total return on those investments.
Your investment in the funds could have additional tax consequences. Please
consult your tax advisor on state, local, foreign or other applicable tax laws.
MANAGING THE FUNDS
Wright Investors' Service, Inc. is a leading independent international
investment management and advisory firm with more than 35 years experience.
Wright manages approximately $2.2 billion of assets in portfolios of all sizes
and styles as well as a family of mutual funds. Wright developed Worldscope(R),
one of the world's largest and most complete databases of financial information,
which currently includes more than 25,000 companies in more than 50 nations.
Wright manages the investments of the funds and portfolios. Wright is located at
440 Wheelers Farms Road, Milford, CT 06460. Wright receives a monthly advisory
fee for its services. The table below lists the effective annual advisory fee
rates paid for the fiscal year ended December 31, 2003:
Fee Paid
Fund (as a % of average daily net assets)
- -------------------------------------------------------------------------------
Wright Selected Blue Chip Equities Fund 0.60%
Wright Major Blue Chip Equities Fund 0.60%
Wright International Blue Chip Equities Fund 0.80%
Wright U.S. Treasury Money Market Fund 0.35%
Wright U.S. Government Near Term Fund 0.45%
Wright U.S. Government Intermediate Fund 0.45%
Wright Current Income Fund 0.45%
Wright Total Return Bond Fund 0.45%
- -------------------------------------------------------------------------------
INVESTMENT COMMITTEE
An investment committee of senior officers controls the investment selections,
policies and procedures of the funds and the portfolios. These officers are
experienced analysts with different areas of expertise, and have over 204 years
of combined service with Wright. The investment committee consists of the
following members:
Committee Member Title Joined Wright in
- ----------------------------------------------------------------------------------------------------
Peter M. Donovan, CFA Chairman and Chief Executive Officer 1966
Chairman of the Investment Committee
Judith R. Corchard Executive Vice President - Investment Management 1960
Senior Investment Officer
Jatin J. Mehta, CFA Executive Vice President 1969
Michael F. Flament, CFA Senior Vice President - Investment
and Economic Analysis 1972
James P. Fields, CFA Senior Vice President - Fixed Income Investments 1982
Amit S. Khandwala Senior Vice President - International Investments 1986
Stanley Kirtman Executive Vice President - Equities 2002
Charles T. Simko, Jr., CFA Senior Vice President - Investment Research 1985
Anthony van Daalen, CFA Senior Vice President - Fixed Income Investments 2002
The investment adviser, principal underwriter, and each fund have adopted codes
of ethics governing personal securities transactions. Under the codes, Wright
employees may purchase and sell securities subject to certain pre-clearance and
reporting requirements and other procedures.
- -----SIDE BAR TEXT-----
ADMINISTRATOR
Eaton Vance Management ("Eaton Vance")serves as the funds' administrator
and is responsible for managing their daily business affairs. Eaton Vance's
services include recordkeeping, preparing and filing documents required to
comply with federal and state securities laws, supervising the activities of the
funds' custodian , providing assistance in connection with the trustees' and
shareholders' meetings and other necessary administrative services.
- -----END SIDE BAR TEXT-----
PORTFOLIO TURNOVER
The funds may sell a portfolio security regardless of how long the security has
been held. The funds do not intend to engage in trading for short-term profits.
However, portfolio turnover rates will vary. In the past turnover rates have
exceeded and in the future may exceed 100%. A turnover rate of 100% means the
securities owned by a fund were replaced once during the year. Higher turnover
rates may result in higher brokerage costs to the funds and in higher net
taxable gains for you as an investor, and will reduce the funds' returns.
FINANCIAL HIGHLIGHTS
These financial highlights will help you understand each fund's financial
performance for the periods indicated. Certain information reflects financial
results for a single fund share. Total return shows how much your investment in
the fund increased or decreased during each period, assuming you reinvested all
dividends and distributions. Deloitte & Touche LLP, independent certified public
accountants, audited this information. Their reports and the funds' financial
statements are incorporated herein by reference and are included in the funds'
annual report, which is available upon request.
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003(6) 2002(6) 2001(6) 2000(6) 1999
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 9.270 $ 11.580 $ 13.430 $ 15.130 $ 17.630
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment (loss) income(1) ....... $ (0.023) $ (0.046) $ (0.045) $ (0.041) $ 0.181
Net realized and unrealized gain (loss) 2.756 (1.831) (1.322) 1.638 0.638
-------- -------- -------- -------- --------
Total income (loss)
from investment operations......... $ 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 year................ $ 11.870 $ 9.270 $ 11.580 $ 13.430 $ 15.130
========= ========== ========== ========== ==========
Total return(2) ............................ 30.06% (16.98%) (10.15%) 10.75% 5.75%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).. $ 38,190 $ 32,817 $ 45,883 $ 51,201 $ 74,547
Ratio of net expenses to average net assets 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% 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.......................... (0.23%) (0.44%) (0.38%) (0.28%) 0.36%
Portfolio turnover rate .............. 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:
2003 2002 2001 2000 1999
--------------------------------------------------------------------
Net investment income (loss) per share. $ (0.057) $ (0.064) $ (0.057) $ (0.051) $ 0.151
========== ========== ========== ========== ==========
Ratios (As a percentage of average net assets):
Expenses........................... 1.59% 1.43%(3) 1.37%(3) 1.33%(3) 1.22%(3)
========== ========== ========== ========== ==========
Expenses after custodian fee reduction 1.59% 1.42%(3)(5) 1.36%(3)(5) 1.32%(3)(5) 1.21%(3)(5)
========== ========== ========== ========== ==========
Net investment income (loss)....... (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.
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003(4) 2002(4) 2001(4) 2000(4) 1999(4)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 8.570 $ 11.380 $ 13.690 $ 16.290 $ 13.670
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)(1) ....... $ 0.029 $ 0.024 $ (0.009) $ (0.001) $ 0.042
Net realized and unrealized gain (loss) 1.958 (2.812) (2.301) (2.005) 3.202
-------- -------- -------- -------- --------
Total income (loss)
from investment operations......... $ 1.987 $ (2.788) $ (2.310) $ (2.006) $ 3.244
-------- -------- -------- -------- --------
Less distributions:
Dividends from investment income....... $ (0.027) $ (0.022) $ - $ (0.010) $ (0.045)
Distributions from capital gains....... - - - (0.584) (0.579)
-------- -------- -------- -------- --------
Total distributions................ $ (0.027) $ (0.022) $ - $ (0.594) $ (0.624)
-------- -------- -------- -------- --------
Net asset value, end of year................ $ 10.530 $ 8.570 $ 11.380 $ 13.690 $ 16.290
========== ========== ========== ========== ==========
Total Return(3) ............................ 23.20% (24.50%) (16.87%) (12.49%) 23.95%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).. $ 71,539 $ 66,609 $ 95,121 $ 135,262 $144,359
Ratio of net expenses to average net assets 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% 1.22% 1.13% 1.06% 1.05%
Ratio of net investment income (loss) to
average net assets ................. 0.31% 0.25% (0.08%) (0.00%)(5) 0.27%
Portfolio turnover rate................ 143% 130% 78% 88% 59%
- --------------------------------------------------------------------------------------------------------------------------------
(1)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:
2003 1999
-------- -------
Net investment income per share........ $ 0.024 $ 0.034
======== ==========
Ratios (As a percentage of average net assets):
Expenses............................. 1.31% 1.10%
========= ==========
Expenses after custodian fee reduction(2) 1.31% 1.10%
========== ==========
Net investment income................ 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%.
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003(4) 2002(4) 2001(4) 2000(4) 1999(4)
- ----------------------------------------------------------------------------------------------------------------------------
Standard shares:
Net asset value, beginning of year.......... $ 9.840 $11.510 $15.180 $18.900 $16.020
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) .......... $ 0.073 $ 0.070 $ (0.023) $ 0.135 $ (0.004)
Net realized and unrealized gain (loss) 3.044 (1.740) (3.647) (3.455) 5.181
--------- --------- --------- --------- ---------
Total income (loss)
from investment operations...... $ 3.117 $ (1.670) $ (3.670) $ (3.320) $ 5.177
--------- --------- --------- --------- ---------
Less distributions:
Dividends from investment income....... $ (0.067) $ - $ - $ - $ -
Distributions from capital gains....... - - - (0.400) (2.297)
--------- --------- --------- --------- ---------
Total distributions................ $ (0.067) $ - $ - $ (0.400) $ (2.297)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $12.890 $ 9.840 $11.510 $15.180 $18.900
========== ========== ========== ========== ==========
Total return(1) ............................ 31.96% (14.51%) (24.18%) (17.58%) 34.26%
Ratios/Supplemental Data
Net assets, end of year (000 omitted).. $ 54,586 $ 50,835 $ 66,828 $110,868 $147,610
Ratio of net expenses to average net assets 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) 1.80% 1.65% - - -
Ratio of net investment income (loss) to average
net assets 0.81% 0.65% (0.18%) 0.76% (0.02%)
Portfolio turnover rate .............. 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.
WRIGHT U.S. TREASURY MONEY MARKET FUND (WTMM)
- -------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003 2002(5) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year............. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Income from investment operations:
Net investment income(1) ................. $ 0.0060 0.0130 0.0359 0.0530 0.0420
Net realized gain on investments sold....... - (6) 0.0263(+) 0.0004 -- --
-------- -------- -------- -------- --------
Total income from investment operations..... $ 0.0060 $ 0.0393 $ 0.0363 $ 0.0530 $ 0.0420
Less distributions:
Distributions from net investment income.... $ (0.0060) $ (0.0393) $ (0.0359) $ (0.0530) $ (0.0420)
Distributions from net realized gain........ - -- (0.0004) -- --
-------- -------- -------- -------- --------
Total distributions......................... $ (0.0060) $ (0.0393) $ (0.0363) $ (0.0530) $ (0.0420)
-------- -------- -------- -------- --------
Net asset value, end of year................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total return(2) ............................... 0.60% 1.61% 3.70% 5.44% 4.29%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted)....... $ 13,097 $ 17,369 $ 18,584 $43,608 $62,527
Ratio of net expenses to average net assets 0.45% 0.46% 0.47% 0.46% 0.45%
Ratio of net expenses after custodian fee
reduction to average net assets(3)(4) .... 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment income to average net assets 0.60% 1.28% 3.93% 5.33% 4.19%
- ----------------------------------------------------------------------------------------------------------------------------------
(1)During each of the above periods, the investment adviser voluntarily reduced
its fee and in certain periods was allocated a portion of the operating
expenses. Had such actions not been undertaken, net investment income per
share and the ratios would have been as follows:
2003 2002 2001 2000 1999
--------------------------------------------------------------------
Net investment income (loss) per share......... $ (0.0030) $ 0.0056 $ 0.0330 $ 0.0505 $ 0.0402
========= ========= ========= ========= =========
Ratios (as a percentage of average net assets):
Expenses.................................... 1.35% 1.18% 0.88% 0.71% 0.63%
========= ========= ========= ========= =========
Expenses after custodian fee reduction ..... 1.35% 1.17%(3) 0.86%(3) 0.70%(3) 0.63%(3)
========= ========= ========= ========= =========
Net investment income (loss) ............... (0.30%) 0.55% 3.52% 5.08% 4.01%
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------
(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)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)Under a written agreement in effect for the current fiscal year, Wright
waives advisory fees and/or assumes operating expenses to the extent
necessary to limit the expense ratio to 0.45% after custodian fee credits are
applied.
(5)Certain of the per share data are based on average shares outstanding.
(6)Represents less than 0.0000.
+ Per share amount is not in accordance with the net realized and unrealized
gain (loss) for the period because of the timing of sales of fund shares and
the amounts per share of realized and unrealized gains and losses at such
times.
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 10.490 $ 10.290 $ 10.080 $ 9.930 $ 10.270
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ............... $ 0.165 $ 0.349 $ 0.480(7) $ 0.525 $ 0.534
Net realized and unrealized gain (loss).. (0.102) 0.200 0.195(7) 0.143 (0.343)
-------- -------- -------- -------- --------
Total income from investment operations $ 0.063 $ 0.549 $ 0.675 $ 0.668 $ 0.191
-------- -------- -------- -------- --------
Less distributions:
Distributions from investment income... $ (0.303) $ (0.349) $ (0.465) $ (0.518) $ (0.531)
-------- -------- -------- -------- --------
Total distributions.................... $ (0.303) $ (0.349) $ (0.465) $ (0.518) $ (0.531)
-------- -------- -------- -------- --------
Net asset value, end of year................ $ 10.250 $ 10.490 $ 10.290 $ 10.080 $ 9.930
========= ========= ========= ========= ========
Total return(2) ............................ 0.61% 5.42% 6.82% 6.94% 1.91%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).... $ 27,557 $ 33,839 $ 36,025 $ 39,198 $ 52,825
Ratio of net expenses to average net assets 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%(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............................ 1.75% 3.10% 4.40% 5.27% 5.27%
Portfolio turnover rate ................ 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:
2003 2002 2001 2000 1999
--------------------------------------------------------------------
Net investment income per share........ $ 0.134 $ 0.323 $ 0.452 $ 0.511 $ 0.526
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses ............................ 1.28% 1.20%(3) 1.22%(3) 1.13%(3) 0.99%(3)
========= ========= ========= ========= =========
Expenses after custodian fee reduction 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................ 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.
WRIGHT U.S. GOVERNMENT INTERMEDIATE FUND (WUSGI)
- -------------------------------------------------------------------------------
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 13.790 $ 13.630 $ 13.750 $ 12.890 $ 14.400
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ................ $ 0.422 $ 0.575 $ 0.651(7) $ 0.737 $ 0.722
Net realized and unrealized gain (loss).. (0.235) 0.496 0.006(7) 0.842 (1.282)
-------- -------- -------- -------- --------
Total income (loss)
from investment operations............. $ 0.187 $ 1.071 $ 0.657 $ 1.579 $ (0.560)
-------- -------- -------- -------- --------
Less distributions:
Distributions from investment income..... $ (0.451) $ (0.605) $ (0.701) $ (0.719) $ (0.716)
Distributions from capital gains......... (0.506) (0.306) (0.076) - (0.234)
-------- -------- -------- -------- --------
Total distributions.................... $ (0.957) $ (0.911) $ (0.777) $ (0.719) $ (0.950)
-------- -------- -------- -------- --------
Net asset value, end of year................ $ 13.020 $ 13.790 $ 13.630 $ 13.750 $ 12.890
========= ========= ========= ========= =========
Total return(2) ............................ 1.36% 8.07% 5.40% 12.61% (3.97%)
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).... $ 13,954 $ 15,515 $ 10,169 $ 16,498 $ 31,192
Ratio of net expenses to average net assets 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) 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............... 3.13% 3.95% 5.11% 5.55% 5.26%
Portfolio turnover rate ................ 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 or a
reduction in the investment adviser fee, 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:
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income per share............. $ 0.326 $ 0.477 $ 0.547 $ 0.700 $ 0.703
========= ========= ========= ========= =========
Ratios (as a percentage of average net assets):
Expenses ................................ 1.66% 1.62%(3) 1.84%(3) 1.26%(3) 1.06%(3)
========= ========= ========= ========= =========
Expenses after custodian fee reduction... 1.66% 1.56%(3)(4) 1.77%(3)(4) 1.24%(3)(4)1.04%(3)(4)
========= ========= ========= ========= =========
Interest expense......................... 0.01% - - - -
========= ========= ========= ========= =========
Net investment income.................... 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).
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003 2002 2001(4) 2000(4) 1999(4)
- -----------------------------------------------------------------------------------------------------------------------------
Standard Shares
Net asset value, beginning of year.......... $ 10.810 $ 10.580 $ 10.460 $ 10.090 $ 10.660
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ............... $ 0.417 $ 0.565 $ 0.616 $ 0.631 $ 0.620
Net realized and unrealized gain (loss).. (0.235) 0.231 0.120 0.372 (0.570)
-------- -------- -------- -------- --------
Total income from
investment operations............. $ 0.182 $ 0.796 $ 0.736 $ 1.003 $ 0.050
-------- -------- -------- -------- --------
Less distributions:
Distributions from net investment income. $ (0.502) $ (0.555) $ (0.616) $ (0.633) $ (0.620)
Tax return of capital.................... - (0.011) -- -- --
-------- -------- -------- -------- --------
Total distributions.................. $ (0.502) $ (0.566) $ (0.616) $ (0.633) $ (0.620)
-------- -------- -------- -------- --------
Net asset value, end of year................ $ 10.490 $ 10.810 $ 10.580 $ 10.460 $ 10.090
========= ========= ========= ========= =========
Total return(2) ............................ 1.73% 7.70% 7.18% 10.31% 0.52%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).... $ 36,332 $ 59,077 $ 54,966 $ 68,015 $76,452
Ratio of net expenses to average net assets 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% 0.95%(3)(7) -- -- --
Interest expense......................... 0.01% -- -- -- --
Ratio of net investment income
to average net assets................. 4.43% 5.28% 5.83% 6.22% 6.02%
Portfolio turnover rate ................. 20% 36%(5) 4%(5) 6%(5) 0%(5)
- -----------------------------------------------------------------------------------------------------------------------------------
(1)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:
2003 2002 2001 2000 1999
------------------------------------------------------------------------
Net investment income per share........ $ 0.401 $ 0.555 $ 0.609 $ 0.629 $ 0.615
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses ............................ 1.12% 1.06%(3) 1.02%(3) 0.97%(3) 0.96%(3)
========= ========= ========= ========= =========
Expenses after custodian fee reduction(7) 1.12% 1.04%(3) -- -- --
========= ========= ========= ========= =========
Interest expense..................... 0.01% -- -- -- --
========= ========= ========= ========= =========
Net investment income................ 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.
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 13.010 $ 12.550 $ 12.630 $ 12.100 $ 13.310
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(1) ................ $ 0.483 $ 0.639 $ 0.709 (4)$ 0.712 $ 0.679
Net realized and unrealized gain (loss).. (0.066) 0.461 (0.090)(4) 0.530 (1.190)
-------- -------- -------- -------- --------
Total income (loss) from investment operations $ 0.417 $ 1.100 $ 0.619 $ 1.242 $ (0.511)
-------- -------- -------- -------- --------
Less distributions:
Distributions from investment income..... $ (0.557) $ (0.640) $ (0.699) $ (0.712) $ (0.680)
Distributions from capital gains......... - -- - - (0.019)
-------- -------- -------- -------- --------
Total distributions.................... $ (0.557) $ (0.640) $ (0.699) $ (0.712) $ (0.699)
-------- -------- -------- -------- --------
Net asset value, end of year................ $ 12.870 $ 13.010 $ 12.550 $ 12.630 $ 12.100
========= ========= ========= ========= =========
Total return(2) ............................ 3.25% 9.03% 4.96% 10.62% (3.91%)
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).... $ 42,317 $ 39,404 $ 50,620 $ 65,775 $ 87,336
Ratio of net expenses to average net assets 0.95% 0.96% 0.96% 0.96% 0.90%
Ratio of net expenses after custodian fee
reduction to average net assets........ 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............................ 3.67% 4.92% 5.44% 5.84% 5.36%
Portfolio turnover rate.................. 131% 68% 38% 61% 31%
- --------------------------------------------------------------------------------------------------------------------------------
(1)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:
2003 2002 2001 1999
-----------------------------------------------------------------------
Net investment income per share.......... $ 0.455 $ 0.621 $ 0.701 $ 0.678
========== ========== ========== ==========
Ratios (As a percentage of average net assets):
Expenses............................... 1.17% 1.09% 1.02% 0.91%
========== ========== ========== ==========
Expenses after custodian fee reduction. 1.17% 1.08%(3) 1.01%(3) 0.91%(3)
========== ========== ========== ==========
Net investment income.................. 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.
FOR MORE INFORMATION
Additional information about the funds' investments is available in the funds'
semi-annual and annual reports to shareholders. The funds' annual report
contains a discussion of the market conditions and investment strategies that
affected the funds' performance over the past year.
You may want to read the statement of additional information (SAI) for more
information on the funds and the securities they invest in. The SAI is
incorporated into this prospectus by reference, which means that it is legally
considered to be part of the prospectus. You can get free copies of the
semi-annual and annual reports and the SAI, request other information or get
answers to your questions about the funds by writing, calling, or e-mailing:
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road
Milford, CT 06460
(800) 888-9471
E-mail: funds@wrightinvestors.com
Copies of documents and application forms can be viewed and downloaded from
Wright's web site: www.wrightinvestors.com.
Text-only versions of fund documents can be viewed on-line or downloaded
from the SEC's web site at http://www.sec.gov. You can also obtain copies by
visiting the SEC's Public Reference Room in Washington DC. For information on
the operation of the Public Reference Room, call (202) 942-8090. Copies of
documents may also be obtained by sending your request and the appropriate
duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-0102
or by electronic mail at publicinfo@sec.gov. Investment Company Act file
numbers:
The Wright Managed Equity Trust..........................811-03489
The Wright Managed Income Trust..........................811-03668
WRIGHT CURRENT INCOME FUND
(a series of The Wright Managed Income Trust)
STATEMENT OF ADDITIONAL INFORMATION
December 3, 2004
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the related Prospectus (also dated December 3,
2004), which covers shares of Wright Current Income Fund, to be issued in
exchange for shares of Wright U.S. Government Intermediate Fund. Please retain
this Statement of Additional Information for further reference.
The Prospectus is available to you free of charge (please call
1-800-888-9471).
INTRODUCTION............................................................2
EXHIBITS................................................................2
ADDITIONAL INFORMATION ABOUT WRIGHT CURRENT INCOME FUND.................2
FUND HISTORY...................................................2
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS...............2
MANAGEMENT OF THE FUND.........................................2
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES............3
INVESTMENT ADVISORY AND OTHER SERVICES.........................3
BROKERAGE ALLOCATION AND OTHER PRACTICES.......................3
CAPITAL STOCK AND OTHER SECURITIES.............................3
PURCHASE, REDEMPTION AND PRICING OF SHARES.....................3
TAXATION OF THE FUND...........................................3
UNDERWRITERS...................................................3
CALCULATION OF PERFORMANCE DATA................................3
FINANCIAL STATEMENTS...........................................3
INTRODUCTION
This Statement of Additional Information is intended to supplement the
information provided in the Prospectus, dated December 3, 2004 (the
"Statement"), relating to the proposed reorganization of Wright U.S. Government
Intermediate Fund into Wright Current Income Fund, each a series of The Wright
Managed Income Trust.
EXHIBITS AND DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference, unless
otherwise indicated. Shareholders will receive a copy of each document that is
incorporated by reference upon any request to receive a copy of this Statement
of Additional Information.
1. Statement of additional information of The Wright Managed Income Trust,
dated May 1, 2004 (the "SAI") (File No. 2-81915), as filed with the
Securities and Exchange Commission on April 29, 2004 (Accession No.
0000715165-04-000007), is incorporated herein by reference.
2. Annual Report of The Wright Managed Income Trust for the fiscal year
ended December 31, 2003 (File No.811-3668), as filed with the
Securities and Exchange Commission on March 2, 2004 (Accession No.
0000940394-04-000233), is incorporated herein by reference.
4. Semiannual Report of The Wright Managed Income Trust for the period
ended June 30, 2004 (the "Semiannual Report") (File No. 811-3668), as
filed with the Securities and Exchange Commission on August 27, 2004
(Accession No. 0000940394-04-000778), is incorporated herein by
reference.
ADDITIONAL INFORMATION ABOUT
WRIGHT CURRENT INCOME FUND
FUND HISTORY
For additional information about Wright Current Income Fund generally,
see "Additional Information About the Trusts" in the SAI.
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS
For additional information about Wright Current Income Fund's
investment objective, policies, risks and restrictions, see "The Fund's and
their Investment Policies - The Wright Managed Income Trust" and "Investment
Policies and Other Information" in the SAI.
MANAGEMENT OF THE FUND
For additional information about Wright Current Income Fund's Board of
Trustees and officers, see "Management and Organization" in the SAI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
For additional information, see "Control Persons and Principal Holders
of Shares" "Custodian and Transfer Agent," and "Independent Certified Public
Accountants" in Wright Current Income Fund's SAI.
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information, see "Investment Advisory and Administrative
Services," "Custodian and Transfer Agent," and "Independent Certified Public
Accountants" in Wright Current Income Fund's SAI.
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about the Wright Current Income Fund's
brokerage allocation practices, see "Brokerage Allocation" in the SAI.
CAPITAL STOCK AND OTHER SECURITIES
For additional information about the voting rights and other
characteristics of shares of beneficial interest of Wright Current Income Fund,
see "Pricing of Shares" in the SAI.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For additional information about purchase, redemption and pricing of
shares of Wright Current Income Fund, see "Pricing of Shares" in the SAI.
TAXATION OF THE FUND
For additional information about tax matters related to an investment
in Wright Current Income Fund, see "Taxes" in the SAI.
UNDERWRITERS
For additional information about the Wright Current Income Fund's
principal underwriter and distribution plans, see "Principal Underwriter" and
"Service Plans" in the SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of Wright
Current Income Fund, see "Investment Results" in the SAI.
FINANCIAL STATEMENTS
For additional information, see "Financial Statements" in the SAI and
the Semiannual Report.
PART C
OTHER INFORMATION
THE WRIGHT MANAGED INCOME TRUST
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 25 of the most recently filed
Registration Statement of The Wright Managed Income Trust (the "Registrant") on
Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940 (File Nos. 2-81915 and 811-03668) as filed with the Securities and Exchange
Commission on April 29, 2004 (Accession No. 0000715165-04-000007), which
information is incorporated herein by reference.
ITEM 16. EXHIBITS
(1)(a) Amended and Restated Declaration of Trust dated April 28, 1997
filed as Exhibit (1) to Post-Effective Amendment No.22 to the
Registrant's Registration Statement on Form N-1A filed April 29,
1997 and incorporated herein by reference.
(1)(b) Amended Establishment and Designation of Series dated June 12,
2003 filed as Exhibit (a)(3) to Post-Effective Amendment No. 33
to the Registrant's Registration Statement on Form N-1A filed
April 29, 2004 and incorporated herein by reference.
(2) Amended and Restated By-Laws dated March 18, 1997 filed as
Exhibit(2) to Post-Effective Amendment No.22 to the Registrant's
Registration Statement on Form N-1A filed April 29, 1997 and
incorporated herein by reference.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization filed herewith as
Exhibit A to the Prospectus included as Part A of this
Registration Statement.
(5) Reference is made to Exhibits (1) and (2) hereof
(6)(a) Investment Advisory Contract dated September 23, 1998 with Wright
Investors' Service, Inc., on behalf of Wright U.S.Treasury Money
Market Fund, filed as Exhibit(d)(1) to Post-Effective Amendment
No. 24 to the Registrant's Registration Statement on Form N-1A
filed February 24, 1999 and incorporated herein by reference.
(6)(b) Investment Advisory Contract dated September 1, 2000 with Wrigh
Investors' Service, Inc.,on behalf of: Wright U.S. Treasury Fund,
Wright U.S. Government Near Term Fund, Wright Total Return Bond
Fund and Wright Current Income Fund, filed as Exhibit (d)(2) to
Post-Effective Amendment No. 28 to the Registrant's Registration
Statement on Form N-1A filed February 28, 2001 and incorporated
herein by reference.
(7) Distribution Contract with MFBT Corporation dated December 19,
1984 filed as Exhibit (6) to Post-Effective Amendment No. 20 to
the Registrant's Registration Statement on Form N-1A
filed February 29, 1996 and incorporated herein by reference.
(8) Not applicable.
(9) Custodian Agreement with Investors Bank & Trust Company dated
December 19, 1990 filed as Exhibit (8)(a) to Post-Effective
Amendment No. 20 to the Registrant's Registration Statement on
Form N-1A filed February 29, 1996 and incorporated herein by
reference.
(9)(b) Amendment dated September 20, 1995 to Master Custodian Agreement
filed as Exhibit (8)(b) to Post-Effective Amendment No. 20 to the
Registrant's Registration Statement on Form N-1A filed February
29, 1996 and incorporated herein by reference.
(9)(c) Amendment dated September 24, 1997 to Master Custodian Agreement
filed as Exhibit (g)(3) to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A filed February
24, 1999 and incorporated herein by reference.
(9)(d) Extension Agreement dated January 9, 2001 to the Custodian
Agreement with Investors Bank & Trust Company dated December 19,
1990 filed as Exhibit (g)(4) to Post-Effective Amendment No. 28
to the Registrant's Registration Statement on Form N-1A filed
February 28, 2001 and incorporated herein by reference.
(9)(e) Amendment Agreement dated June 16, 2003 to the Custodian
Agreement with Investors Bank & Trust Company dated December 19,
1990 filed as Exhibit (g)(5) to Post-Effective Amendment No. 33
to the Registrant's Registration Statement on Form N-1A filed
April 29, 2004 and incorporated herein by reference.
(10)(a) Rule 18f-3 Plan dated May 1, 1997 for Standard and Institutional
Shares filed as Exhibit (18) to Post-Effective Amendment No. 22
to the Registrant's Registration Statement on Form N-1A filed
April 29, 1997 and incorporated herein by reference.
(10)(b) Standard Shares Distribution Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 dated May 1, 1997 filed as
Exhibit (15)(c) to Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on Form N-1A filed April 29,
1997 and incorporated herein by reference.
(11) Opinion of Counsel (legality of securities being offered) filed
herewith as Exhibit (11).
(12) Form of opinion as to tax matters and consent filed herewith as
Exhibit (12).
(13)(a) Transfer Agency and Services Agreement dated June 14, 2002
between the Registrant and Forum Shareholder Services, LLC, filed
as Exhibit (h)(1) to Post-Effective Amendment No. 31 to the
Registrant's Registration Statement on Form N-1A filed April 29,
2002 and incorporated herein by reference.
(13)(b) Service Plan dated May 1, 1997 filed as Exhibit (9)(c) to Post-
Effective Amendment No. 22 to the Registrant's Registration
Statement on Form N-1A filed April 29, 1997 and
incorporated herein by reference.
(13)(c) Amended and Restated Administration Agreement with Eaton Vance
Management dated February 1, 1998 filed as Exhibit (5)(b)(1) to
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement on Form N-1A filed April 29, 1998 and incorporated
herein by reference.
(13)(d) Amendment dated June 6, 2000 to Amended and Restated
Administration Agreement with Eaton Vance Management dated
February 1, 1998 filed as Exhibit (d)(4) to Post-Effective
Amendment No. 28 to the Registrant's Registration Statement on
Form N-1A on February 28, 2001 and incorporated herein by
reference.
(13)(e) Amendment dated December 20, 2002 to Amended and Restated
Administration Agreement with Eaton Vance Management dated
February 1, 1998, filed as Exhibit (d)(5) to Post-Effective
Amendment No. 32 to the Registrant's Registration Statement on
Form N-1A on April 28, 2003 and incorporated herein by reference.
(14) Consent of Independent Registered Public Accounting Firm filed
herewith as Exhibit (14).
(15) Not applicable
(16) Power of Attorney filed herewith as Exhibit (16).
(17)(a) Code of Ethics filed as Exhibit (q) to Post-Effective Amendment
No. 27 to the Registrant's Registration Statement on Form N-1A
on April 28, 2000 and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of this
Registration Statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for by the applicable
registration form for the reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the Registration
Statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-14 has been signed on behalf of the
Registrant, in the City of Milford and the State of Connecticut, on the 3rd day
of November, 2004.
The Wright Managed Income Trust
By: /s/ Peter M. Donovan
---------------------
Peter M. Donovan
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Peter M. Donovan President, Principal Executive November 3, 2004
- --------------------------- Officer and Trustee
Peter M. Donovan
James L. O'Connor * Treasurer, Principal Financial
- --------------------------- and Accounting Officer
James L. O'Connor
H. Day Brigham, Jr. *
- ----------------------- Trustee
H. Day Brigham, Jr.
- ---------------------- Trustee
James J. Clarke
Dorcas R. Hardy *
- ---------------------- Trustee
Dorcas R. Hardy
Leland Miles *
- -------------------- Trustee
Leland Miles
A. M. Moody III *
- -------------------- Trustee
A. M. Moody III
Richard E. Taber *
- -------------------- Trustee
Richard E. Taber
* By: /s/ Peter M. Donovan November 3, 2004
-----------------------------------
Peter M. Donovan, Attorney-in-Fact
Exhibit Index
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
(12) Form of Opinion as to Tax Matters and Consent
(14) Consent of Independent Registered Public Accounting Firm
(16) Power of Attorney