Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-3489
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The Wright Managed Equity Trust
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(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Name and Address of Agent for Services)
(617) 482-8260
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(Registrant's Telephone Number)
December 31
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Date of Fiscal Year End
December 31, 2005
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Date of Reporting Period
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Item 1. REPORTS TO STOCKHOLDERS
THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS
ANNUAL REPORT
DECEMBER 31 , 2005
THE WRIGHT MANAGED EQUITY TRUST
o Wright Selected Blue Chip Equities Fund
o Wright Major Blue Chip Equities Fund
o Wright International Blue Chip Equities Fund
THE WRIGHT MANAGED INCOME TRUST
o Wright U.S. Government Near Term Fund
o Wright Total Return Bond Fund
o Wright Current Income Fund
THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS
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THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS CONSISTS OF THREE EQUITY FUNDS
FROM THE WRIGHT MANAGED EQUITY TRUST AND THREE FIXED INCOME FUNDS FROM THE
WRIGHT MANAGED INCOME TRUST. EACH OF THE SIX FUNDS HAVE DISTINCT INVESTMENT
OBJECTIVES AND POLICIES. THEY CAN BE USED INDIVIDUALLY OR IN COMBINATION TO
ACHIEVE VIRTUALLY ANY OBJECTIVE. FURTHER, AS THEY ARE ALL "NO-LOAD" FUNDS (NO
COMMISSIONS OR SALES CHARGES), PORTFOLIO ALLOCATION STRATEGIES CAN BE ALTERED AS
DESIRED TO MEET CHANGING MARKET CONDITIONS OR CHANGING REQUIREMENTS WITHOUT
INCURRING ANY SALES CHARGES.
APPROVED WRIGHT INVESTMENT LIST
Securities selected for investment in these funds are chosen mainly from a list
of "investment grade" companies maintained by Wright Investors' Service
("Wright" or the "Adviser"). All 25,000 global companies (covering 50 countries)
in Wright's database are screened as new data becomes available to determine any
eligible additions or deletions to the list. The qualifications for inclusion as
"investment grade" are companies that meet Wright's Quality Rating criteria.
This rating includes fundamental criteria for investment acceptance, financial
strength, profitability & stability and growth. In addition, securities, which
are not included in Wright's "investment grade" list, may also be selected from
companies in the fund's specific benchmark (up to 20% of the market value of the
portfolio) in order to achieve broad diversification. Different quality criteria
may apply for the different funds. For example, the companies in the Major Blue
Chip Fund would require a higher Investment Acceptance rating than the companies
in the Selected Blue Chip Fund.
THREE EQUITY FUNDS
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) seeks to enhance total investment
return through price appreciation plus income. The fund's portfolio is
characterized as a blend of growth and value stocks. The market capitalization
of the companies is typically between $1-$10 billion at the time of the fund's
investment. The Adviser seeks to outperform the Standard & Poor's 400 Index (S&P
400) by selecting stocks using fundamental company analysis and company specific
criteria such as valuation and earnings trends. The portfolio is then
diversified across industries and sectors.
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) seeks to enhance total investment
return through price appreciation plus income by providing management a broadly
diversified portfolio of equities of larger well-established companies with
market values of $10 billion or more. The Adviser seeks to outperform the
Standard & Poor's 500 Index (S&P 500) by selecting stocks, using fundamental
company analysis and company specific criteria such as valuation and earnings
trends. The portfolio is then diversified across industries and sectors.
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) seeks total return
consisting of price appreciation plus income by investing in a broadly
diversified portfolio of equities of well-established, non-U.S. companies. The
portfolio may buy common stocks traded on the securities exchange of the country
in which the company is based or it may purchase American Depositary Receipts
(ADR's) traded in the United States. The portfolio is denominated in U.S.
dollars and investors should understand that fluctuations in foreign exchange
rates may impact the value of their investment. The Adviser seeks to outperform
the MSCI Developed World ex U.S. Index by selecting stocks using fundamental
company analysis and company-specific criteria such as valuation and earnings
trends. The portfolio is then diversified across industries and sectors.
THREE FIXED-INCOME FUNDS
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB) is a diversified portfolio
concentrating on bonds and other obligations of the U.S. Government and U.S.
Government Agencies with an average weighted maturity of between one and three
years. This portfolio is designed to appeal to the investor seeking a high level
of income that is normally somewhat less variable and normally somewhat higher
than that available from short-term money market instruments and who is also
tolerant of modest fluctuation in capital (i.e. compared with somewhat greater
fluctuation likely with longer term fixed income securities). Dividends are
accrued daily and paid monthly. The fund's benchmark is the Lehman U.S.
Government 1-3 Year Bond Index.
WRIGHT TOTAL RETURN BOND FUND (WTRB) is a diversified portfolio of investment
grade government and corporate bonds and other debt securities of varying
maturities which, in the Adviser's opinion, will achieve the portfolio objective
of best total return (i.e. the total of ordinary income plus capital
appreciation). Accordingly, investment selections and maturities may differ
depending on the particular phase of the interest rate cycle. Dividends are
accrued daily and paid monthly. The fund's benchmark is the Lehman U.S.
Aggregate Bond Index.
WRIGHT CURRENT INCOME FUND (WCIF) may be invested in a variety of securities and
may use a number of strategies, including GNMAs, to produce a high level of
income with reasonable stability of principal. The fund reinvests all principal
payments. Dividends are accrued daily and paid monthly. The funds benchmark is
the Lehman GNMA Backed Bond Index.
TABLE OF CONTENTS
Investment Objectives................................inside front & back cover
Letter to Shareholders.......................................................2
Management Discussion........................................................3
Performance Summaries........................................................8
Fund Expenses...............................................................14
Management and Organization.................................................61
Board of Trustees Annual Approval of the Investment Advisory Agreement......63
Important Notices Regarding Privacy, Delivery of Shareholder Documents,
Portfolio Holdings and Proxy Voting......................................64
FINANCIAL STATEMENTS
THE WRIGHT MANAGED EQUITY TRUST
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
Portfolio of Investments..................16
Statement of Assets & Liabilities.........19
Statement of Operations...................19
Statement of Changes in Net Assets........20
Financial Highlights......................21
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
Portfolio of Investments..................22
Statement of Assets & Liabilities.........25
Statement of Operations...................25
Statement of Changes in Net Assets........26
Financial Highlights......................27
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
Portfolio of Investments..................28
Statement of Assets & Liabilities.........30
Statement of Operations...................30
Statement of Changes in Net Assets........31
Financial Highlights......................32
NOTES TO FINANCIAL STATEMENTS...............33
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM......................37
THE WRIGHT MANAGED INCOME TRUST
WRIGHT U.S. GOVERNMENT NEAR TERM FUND
Portfolio of Investments..................39
Statement of Assets & Liabilities.........40
Statement of Operations...................40
Statement of Changes in Net Assets........41
Financial Highlights......................42
WRIGHT TOTAL RETURN BOND FUND
Portfolio of Investments..................43
Statement of Assets & Liabilities.........47
Statement of Operations...................47
Statement of Changes in Net Assets........48
Financial Highlights......................49
WRIGHT CURRENT INCOME FUND
Portfolio of Investments..................50
Statement of Assets & Liabilities.........53
Statement of Operations...................53
Statement of Changes in Net Assets........54
Financial Highlights......................55
NOTES TO FINANCIAL STATEMENTS...............56
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM......................60
LETTER TO SHAREHOLDERS
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January 2006
Dear Shareholders:
U.S. stocks and bonds limped in with modest returns for the fourth
quarter of 2005 (2.1% for the S&P 500 and 0.6% for the Lehman Aggregate), no big
departure from the prior three quarters' average returns (0.9%, S&P 500; 0.6%,
Lehman Aggregate). For the year, stock returns were modestly ahead of inflation,
bond returns modestly behind. In contrast to this low-volatility, low-return
environment for the markets, 2005 was marked by the worst natural disasters in
U.S. history, disillusionment over the slow progress in Iraq, record energy
prices, and Federal Reserve interest rate hikes totaling two percentage points.
Still, the U.S. economy did a lot better than limp home in 2005; GDP growth
reached and possibly exceeded the nation's long-term trend growth rate of 3.5%,
and corporate profits are estimated to have increased 13% to record levels. At
the same time, the general level of consumer prices - outside of energy and
other commodities - remained under control, increasing only around 2% in 2005,
the 13th straight year that the core inflation rate came in under 2.5%.
So, with corporate profits up 13% in 2005 but stock prices only 3% (S&P
500), what accounts for this roughly 10% decline in stock P/E multiples? For one
thing, it is not unusual following market bubbles (1999-2000) for stock
price/value multiples to continue declining well after stock prices themselves
have bottomed (October 2002 in the current cycle). Federal Reserve monetary
tightening of the magnitude seen in the past 18 months also raises questions
about the sustainability of today's record profitability, undermining P/Es. High
oil prices also threaten to push inflation and interest rates higher and P/Es
lower. In any event, at year-end 2005, the S&P 500 was priced at 15 times
forecast year-ahead earnings, a lot closer to its October 2002 low (14) than to
the early 2004 high (19) - and a good 10 P/E points below the peak P/E multiples
seen in the bubble years of 1999-2000.
Considering that the Fed raised short-term interest rates by two
percentage points in 2005, the U.S. bond market had a respectable enough
performance, managing a small positive return for the year. Despite 2005's
energy- and hurricane-related pressures on prices, market estimates of inflation
decreased roughly one-third of a percentage point last year. We wouldn't be
surprised to see some uptick in inflation expectations this year, but we don't
expect more than a modest rise. The Federal Reserve's program of measured
interest rate increases is expected to come to a close during the first half of
2006, with the fed funds rate topping out at 4.5% to 4.75%, and longer Treasury
yields staying close to their year-end 2005 levels around 4.5%.
In contrast to 2005's subdued stock market environment, 2006 has begun
with five straight advances and the first reading above 11000 on the Dow Jones
Industrial Average since June 2001. What's more, market breadth continued the
improvement begun in November, with the NYSE cumulative advance/decline line
approaching last summer's post-1998 highs in the first week of January. While
such early momentum has often been a positive market indicator in years past, we
would be even more encouraged if there were to be a transition in market
leadership away from the energy sector, which was the strongest market sector in
2004 and 2005. That is not to say that there weren't other strong performers
last year; in fact, mid- and small-cap stocks easily outperformed big-cap U.S.
stocks in 2005, as did foreign equities. As 2006 begins, we believe that
investors can take encouragement from mounting evidence that the current cycle
of Federal Reserve interest rate hikes is coming to an end. That prospect, along
with our forecast of a 7%-9% increase in corporate profits, forms the basis for
expecting stock and bond returns to reach more normal levels in the year to
come.
Finally, I would like to express my continuing appreciation for your
confidence in Wright Investors' Service and to wish you a happy, healthy and
prosperous 2006. As always, I invite your questions as well as suggestions on
how we can better serve your investment needs.
Sincerely,
/s/Peter M. Donovan
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Peter M. Donovan
President
MANAGEMENT DISCUSSION
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EQUITY FUNDS
FOR EQUITY INVESTORS, 2005 HAD TO BE AT LEAST A LITTLE DISAPPOINTING. WHAT
LOOKED LIKE A SOLID FOURTH-QUARTER STOCK MARKET RALLY IN EARLY DECEMBER FIZZLED
AS THE YEAR WOUND DOWN. STOCKS WERE STILL UP FOR THE QUARTER AND THE S&P 500 HIT
A 54-MONTH HIGH IN DECEMBER, BUT RETURNS FOR THE QUARTER AND FULL YEAR WERE
UNIMPRESSIVE. FOR THE YEAR, EQUITY RETURNS PROVIDED A MODEST MARGIN OVER
INFLATION. IN THE FOURTH QUARTER, IT BECAME CLEAR THAT THE WORST FEARS ON THE
DAMAGE 2005'S DISASTROUS HURRICANES WOULD DO TO THE ECONOMY WOULD NOT BE
REALIZED. STILL, THERE WERE SOME LEGITIMATE WORRIES TO KEEP INVESTORS FROM
GIVING IN TO FULL-FLEDGED OPTIMISM. THE YIELD CURVE WAS MOVING TOWARD INVERSION,
WHICH FINALLY HAPPENED (BARELY) IN THE LAST WEEK OF 2005. THIS IS TRADITIONALLY
SEEN AS A HARBINGER OF RECESSION, ALTHOUGH WIS DOESN'T SEE THAT AS THE CASE THIS
TIME. THERE WAS DISSATISFACTION WITH THE BUSH ADMINISTRATION ON A NUMBER OF
FRONTS, SOME HIGH-PROFILE POLITICAL SCANDALS AND A CHANGE IN ADMINISTRATION
LOOMING AT THE FED. THE ADVANCED AGE OF THIS BULL MARKET, NOW IN ITS FOURTH
YEAR, MAY ALSO HAVE PLAYED A PART IN DAMPENING RETURNS.
STOCKS HUNG ON TO CLOSE HIGHER FOR THE FOURTH QUARTER. THE FOURTH-QUARTER
RETURNS FOR THE DOW (2.1%) AND NASDAQ (2.7%) MORE THAN ACCOUNTED FOR THEIR GAINS
FOR THE YEAR: 1.7% FOR THE DOW AND 2.1% FOR NASDAQ. THE BROADER S&P 500 RETURNED
2.1% FOR THE FOURTH QUARTER AND 4.9% FOR THE YEAR. FOR THE FIRST NINE MONTHS OF
2005, THE ENERGY SECTOR'S 40%+ RETURN ACCOUNTED FOR ALL OF THE S&P'S 2.8% GAIN.
IN Q4, HOWEVER, THE ADVANCE WAS BROADER, ACHIEVED DESPITE A MORE-THAN 7% LOSS IN
ENERGY STOCKS. IN THE FOURTH QUARTER, THE S&P MIDCAP 400 OUTPERFORMED THE S&P
500 WHILE THE SMALLCAP 600 LAGGED; FOR THE YEAR, THE MIDCAPS AND SMALLCAPS BOTH
OUTPERFORMED. EQUITY INVESTORS WHO LOOKED OUTSIDE THE U.S. TO BOOST THEIR
RETURNS WERE REWARDED. IN DOLLARS, THE MSCI WORLD EX U.S. INDEX RETURNED 3.9% IN
Q4 AND MORE THAN 14% FOR THE YEAR. LOCAL CURRENCY RETURNS, EVEN BETTER FOR THE
QUARTER AND THE YEAR, WERE CUT BY THE DOLLAR'S APPRECIATION.
WE LOOK FOR BETTER STOCK RETURNS IN 2006 THAN IN 2005. THE SUPPORT FOR THIS
ADVANCE WILL COME PRIMARILY FROM CORPORATE PROFITS. EVEN AFTER FOUR YEARS OF
SOLID GROWTH, WE EXPECT PROFITS TO RISE 7%-9% IN 2006, REFLECTING HIGHER DEMAND
GENERATED BY A CONTINUATION OF THE ECONOMIC EXPANSION AND THE ONGOING BENEFITS
OF PRODUCTIVITY ON PROFIT MARGINS. LAST YEAR'S LACKLUSTER STOCK MARKET TOOK THE
S&P 500'S P/E MULTIPLE DOWN BY ABOUT 1.5 POINTS; THIS YEAR STOCKS COULD GET A
LITTLE HELP FROM MULTIPLE EXPANSION, ASSUMING AS WE DO THAT MODEST INFLATION AND
AN END TO FED TIGHTENING KEEP INTEREST RATES FROM RISING MUCH FROM CURRENT
LEVELS. ADD IN DIVIDEND INCOME AND STOCK RETURNS COULD BE IN THE 10% RANGE IN
2006. FOR DIVERSIFIED INVESTMENT PORTFOLIOS (WHICH WE ALWAYS RECOMMEND), WE SEE
VALUE BEING ADDED BY THE INCLUSION OF MID-CAP STOCKS. ALSO, FOREIGN STOCKS LOOK
TO BE ATTRACTIVELY VALUED WITH IMPROVING EARNINGS PROSPECTS.
2005 2004 2003 2002 2001 2000 1999 1998 1997 1996
Total Return Year Year Year Year Year Year Year Year Year Year
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Wright Selected Blue Chip Fund
(WSBC) 11.1% 15.7% 30.1% -17.0% -10.2% 10.8% 5.8% 0.1% 32.7% 18.6%
Wright Major Blue Chip Fund
(WMBC) 6.2% 12.4% 23.2% -24.5% -16.9% -12.5% 24.0% 20.4% 33.9% 17.6%
Wright International Blue Chip Fund
(WIBC) 21.1% 17.7% 32.0% -14.5% -24.2% -17.6% 34.3% 6.1% 1.5% 20.7%
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
The S&P MidCap 400 did better than the S&P 500 in each of the four quarters of
2005. The Wright Selected Blue Chip Fund (WSBC), which is a mid-cap blend fund,
outperformed the S&P MidCap 400 in the first half of 2005, but lagged a bit in
the second half. Its return of 2.1% in the fourth quarter, though behind the S&P
MidCap 400's 3.3%, was in line with the 2.1% return for an average of 79 mid-cap
blend funds in the Morningstar database. For all of 2005, the WSBC's 11.1%
return lagged the S&P MidCap's 12.6% but topped the Morningstar average's 9.1%
return by 200 basis points. In 2005, somewhat perversely, the larger stocks in
the S&P MidCap 400 had better returns than the smaller, and this trend worked
against the Fund's performance for the period. In the fourth quarter, the
company's positive stock selection in the consumer discretionary (e.g.,
Abercrombie & Fitch +31%) and financial sectors (e.g., Stancorp. +20%) was
offset by trailing results in other sectors, particularly energy (e.g., Pogo
Producing -15%, Noble Energy -14%) and utilities (e.g. Oneok -21%). For the full
year, WSBC's showing relative to the S&P MidCap 400 benefited from strong stock
selection in the consumer discretionary, financial, health care and utility
sectors, offset by lagging results in consumer staples, energy, industrials and
material stocks. Notably, there were three health-care issues in the portfolio
with better-than-50% returns (Coventry Health, Intuitive Surgical and PacifiCare
Health) for the year. Detractors for the year included Harman International
(-23%), Lear (-43%) and Chemtura (-22%). WIS continues to advise diversity in
investment portfolios and sees MidCap stocks as likely to make a positive
contribution to total portfolio returns going forward. Although valuations for
mid-cap stocks are higher than for large-cap stocks, this disadvantage is
offset, in our view, by mid-cap's significantly better earnings growth
prospects. Moreover, the WSBC Fund's holdings in the aggregate have better
earnings growth prospects and a lower forward P/E multiple than the S&P MidCap
400.
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
The Wright Major Blue Chip Fund (WMBC) is managed as a blend of the large-cap
growth and value stocks in the S&P 500 Composite, selected with a bias toward
the higher-quality issues in the index. In the fourth quarter and full year of
2005, large-cap U.S. stocks posted modestly positive returns. The WMBC Fund
returned 2.4% in the fourth quarter, better than both the S&P 500's 2.1% and the
2.2% return for an average of 152 large-cap blend funds in the Morningstar
database. The WMBC Fund also led these two benchmarks for all of 2005, returning
6.2% compared to 4.9% for the S&P 500 and 5.6% for the Morningstar benchmark.
For 2005, the WMBC Fund and large-cap stocks in general were ahead of inflation,
with the consumer price index up 3.4% for the year. In both the fourth quarter
and all of 2005, WMBC's performance was helped by its exposure to the third and
fourth market-cap quintiles of the S&P 500, which did better than the biggest
and smallest stocks in the index. In the fourth quarter, the WMBC Fund's strong
showing relative to the S&P 500 reflected superior stock selection; in seven of
10 sectors the Fund's holdings outperformed, and in two others they were
essentially equal. This strong stock selection more than offset the negative
impact of being overweight in energy stocks, which were the weakest S&P sector
for the quarter. Energy stocks had been the S&P 500's strongest sector for the
first three quarters of 2005, and being overweight in energy helped the Fund's
performance for the full year. Stock selection was, however, more important than
sector weights in the Fund's outperformance for the full year 2005, with
especially good results in the consumer discretionary, health care and tech
sectors. Outside of energy stocks, among the biggest positive contributors to
the Fund's good showing for the year were retailer Nordstrom (+62%); financial
stocks Lehman Brothers (+48%) and Progressive (+38%); Humana (+83%) and
UnitedHealth (+41%) in health care; and tech stocks Apple (+85%) and Hewlett
Packard (+38%). Among the biggest losses were financial company Fannie Mae
(-25%) and computer maker Dell (-29%). WIS expects corporate profits to rise in
2006, but the pace of growth is likely to slow. As the expansion continues to
age, we believe that quality of earnings and sustainable growth will become more
important in determining the best-performing stocks. WMBC is positioned to
benefit from that trend, as its holdings on a weighted average basis have a
history of better earnings growth than the S&P 500 companies. The WMBC also
offers better value with a weighted average P/E about two points lower than the
S&P 500's.
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
International stocks outperformed U.S. stocks for the fourth quarter and full
year 2005, with the MSCI World ex U.S. index returning 3.9% for the quarter and
14.5% for the year in dollars. The Wright International Blue Chip Fund (WIBC)
has done better than its benchmark for both periods. For the quarter, WIBC
returned 4.7%, topping the 4.4% for an average of 127 international equity funds
in the Morningstar database (in addition to the MSCI index's 3.9%). For the
year, WIBC's 12-month return of 21.1% topped the 14.5% return for the MSCI
benchmark and 14.6% for the Morningstar average by a wide margin. In the fourth
quarter of 2005, the WIBC Fund benefited from its overweight position in Japan,
which was one of the World's strongest developed markets for the quarter and the
year. The fourth quarter also saw good results from the Fund's holdings in the
U.K. (although the U.K. market overall was not especially strong). The Fund's
telecom, retail and financial holdings did well for the quarter. Results for the
full year also benefited from the Fund's Japanese position, which was increased
in the third and fourth quarters. For the year, an overweight position in energy
stocks was a plus, although energy stocks weakened and detracted from results in
Q4. During the year, the Fund also was helped by its underweight position in
technology. In early 2006, economic and earnings growth prospects outside of the
U.S., especially in Europe and Japan, look promising. WIBC's positions in the
Eurozone and Japan have been increased. The U.K. position has also been
increased (although it is still less than the benchmark's) because of the
attractive value offered by select U.K. issues. Industry sectors that have been
increased are industrials, health care, telecom and consumer staples. To fund
these increases, WIBC has taken some profits in Norway and Canada (i.e., the
energy sector). The Fund has also taken profits in its utility and consumer
discretionary holdings, which did well in the fourth quarter. The Fund's weight
in tech stocks remains below the benchmark's. WIS recommends a substantial
position in international stocks to augment returns in diversified investment
portfolios.
FIXED-INCOME FUNDS
BOND RETURNS WERE POSITIVE IN THE FOURTH QUARTER AND ALL OF 2005. BUT LIKE STOCK
RETURNS, THEY WERE NOTHING TO GET EXCITED ABOUT. FOR THE YEAR AND THE QUARTER,
FED TIGHTENING, WHICH BOOSTED THE FED FUNDS RATE TARGET BY 200 BASIS POINTS IN
25 BP INCREMENTS (50 BPS PER QUARTER), PUSHED RATES UP AT THE SHORT END OF THE
YIELD CURVE. BUT LONGER YIELDS RESPONDED WITH A SURPRISINGLY SMALL INCREASE. THE
RESULT WAS AN ESSENTIALLY FLAT YIELD CURVE AT THE END OF THE YEAR: THE TWO-YEAR
TREASURY YIELD AT 4.40% (+23 BPS FOR THE QUARTER, +133 FOR THE YEAR) AND THE
10-YEAR AT 4.39% (+6 BPS FOR THE QUARTER, +17 FOR THE YEAR). A KEY REASON WHY
THE LONG END OF THE YIELD CURVE DID NOT RISE MORE LAST YEAR WAS THE BEHAVIOR OF
INFLATION. OVERALL INFLATION MOVED SIGNIFICANTLY HIGHER, DRIVEN BY RISING ENERGY
PRICES, BUT CORE INFLATION APPEARS ON TRACK TO INCREASE IN THE 2.0% RANGE, A
REMARKABLY GOOD SHOWING IN THE FIFTH YEAR OF AN EXPANSION, LET ALONE FOR A YEAR
WITH SOARING ENERGY PRICES. STRONG FOREIGN DEMAND FOR LONG-TERM U.S. TREASURIES
AND A LIMITED SUPPLY OF SUCH ISSUES ALSO FIGURE IN THE SHAPE OF THE YIELD CURVE,
NON-ECONOMIC FACTORS THAT LIMIT THE YIELD CURVE'S USE AS A RECESSION PREDICTOR,
IN OUR VIEW.
THE LEHMAN U.S. AGGREGATE BOND INDEX RETURNED 0.6% FOR THE FOURTH QUARTER AND
2.4% FOR THE YEAR AS A WHOLE. THESE RETURNS LAGGED THOSE FROM EQUITIES AND DID
NOT KEEP PACE WITH INFLATION IN 2005. WITH THE FLATTENING OF THE YIELD CURVE,
LONGER MATURITIES DID BETTER THAN SHORT FOR BOTH THE QUARTER AND THE YEAR.
TREASURY BONDS RETURNED 0.7% FOR THE FOURTH QUARTER AND 2.8% FOR ALL OF 2005.
CORPORATE SPREADS WIDENED A BIT FOR THE YEAR, RESULTING IN RETURNS THAT LAGGED
THOSE FROM TREASURYS FOR BOTH THE QUARTER AND THE YEAR. AGENCY AND ASSET-BACKED
ISSUES ALSO LAGGED, AS DID THE MORTGAGE-BACKED SECTOR IN TOTAL, THOUGH WITHIN
MORTGAGES GNMA'S TOPPED TREASURYS FOR BOTH THE QUARTER AND THE YEAR.
OUR FORECAST FOR 2006 ASSUMES THAT THE FED'S TIGHTENING PROGRAM IS DRAWING TO A
CLOSE. IN THE STATEMENT AFTER ITS DECEMBER 2005 MEETING, THE FED APPEARED TO
SIGNAL THAT FURTHER TIGHTENING WOULD BE LIMITED. THE MARKETS SEE THE FED RAISING
INTEREST RATES ANOTHER 25-50 BASIS POINTS THIS YEAR, AN ASSESSMENT WE AGREE
WITH. (ALTHOUGH THE CREDENTIALS OF THE NEW FED CHIEF, BEN BERNANKE, ARE
IMPRESSIVE, HAVING A NEW CHAIRMAN MAY ADD A LITTLE TO THE UNCERTAINTY ABOUT FED
POLICY.) ANOTHER 50 BPS OF TIGHTENING SHOULD NOT DERAIL THE EXPANSION. WE ALSO
SEE A STABLE CORE INFLATION RATE OF 2.5% OR LESS IN 2006. UNDER THIS SCENARIO,
WE DON'T EXPECT THE LEVEL OF INTEREST RATES TO CHANGE MUCH THIS YEAR; THE SHAPE
OF THE YIELD CURVE MAY NOT CHANGE MUCH EITHER, SINCE THE FACTORS THAT HAVE MADE
THE YIELD CURVE FLAT ARE STILL IN PLACE. THIS SUGGESTS BOND RETURNS IN THE
4.5%-5.0% RANGE IN 2006, BETTER THAN 2005'S RETURNS AND AHEAD OF INFLATION. IN
FIXED-INCOME PORTFOLIOS, ASSET-BACKED, MORTGAGE-BACKED AND CORPORATE ISSUES
SHOULD ADD MODEST INCREMENTAL RETURN OVER TREASURYS.
2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995
Total Return Year Year Year Year Year Year Year Year Year Year Year
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Wright U.S. Gov't. Near-Term Bond Fund
(WNTB) 1.0% 0.4% 0.6% 5.4% 6.8% 6.9% 1.9% 6.0% 5.9% 3.9% 11.9%
Wright Total Return Bond Fund
(WTRB) 1.5% 3.5% 3.3% 9.0% 5.0% 10.6% -3.9% 9.6% 9.3% 0.9% 22.0%
Wright Current Income Fund
(WCIF) 1.8% 3.3% 1.7% 7.7% 7.2% 10.3% 0.5% 6.5% 8.6% 4.4% 17.5%
WRIGHT U.S. GOVERNMENT NEAR TERM FUND
The Wright U.S. Government Near-Term Fund (WNTB) is positioned to offer an
alternative to money market funds. The Fund may experience some mild price
fluctuation, but it typically has less sensitivity to changes in interest rates
than longer maturity funds. In the one-to-two-year maturity range, where the
WNTB is generally positioned, Treasury yields rose around 25 basis points during
the fourth quarter and more than 100 bps for the year. This rate rise limited
the WNTB's return in 2005. For the fourth quarter, the Fund returned 0.3%,
compared to 0.7% for the Lehman 1-3 year government bond index and 0.4% for an
average of 54 Morningstar government bond funds with an average maturity between
one and three years. For the year, the Fund returned 1.0%, the same as the
Morningstar average but behind the Lehman benchmark's 1.7%. The WNTB's duration
was extended in the fourth quarter, but it still was positioned with a slightly
short duration (1.6 years) compared to the Lehman benchmark. Although durations
of WIS's longer maturity portfolios were positioned slightly longer than their
benchmarks in the quarter, WNTB was kept short because of our expectation that
further rate hikes from the Fed would keep the short end of the yield curve
moving higher. To pick up extra yield, the Fund is overweighted in
mortgage-backed securities (27% of assets), and Agencys (44%). The Fund is
underweighting Treasurys (28%) and is expected to continue to do so. The WNTB
Fund had an indicated annual yield of 2.9% at the end of the year.
WRIGHT TOTAL RETURN BOND FUND
The Wright Total Return Bond Fund (WTRB), a diversified bond fund, returned 0.4%
in the fourth quarter of 2005. This was slightly behind the Lehman U.S.
Aggregate Bond Composite's 0.6% return but matched the return for an average of
174 total return bond funds in the Morningstar database. For all of 2005, WTRB
had a total return of 1.5%, which compares to 1.7% for the Morningstar average
and 2.4% for the Lehman Aggregate. At the start of the fourth quarter, WTRB was
positioned with a neutral duration compared to the Lehman Benchmark. WTRB's
duration was extended modestly around mid-October after an upward move in rates
in early October put them closer to the top of our expected short-term trading
range. The slightly long positioning (4.7 duration) compared to the Lehman
Aggregate was maintained through the end of the year. The duration extension
made a positive contribution to the Fund's Q4 performance, as rates were lower
at year end than when the duration was lengthened. For all of 2005, the shifts
in Fund duration contributed positively to relative performance. Over the course
of 2005, the Fund's position in corporate bonds was reduced as spreads looked
tight. The corporate position was steady in the fourth quarter, ending the year
at 26% of assets, modestly overweight compared to the Lehman index to pick up
extra yield. Corporate returns lagged Treasurys for the year and the quarter.
This had a negative impact on Fund performance for the year, but in Q4, WTRB's
corporate holdings outperformed the Lehman Aggregate corporate sector slightly.
The Fund's position in agency issues (about 7% of assets) was reduced in the
fourth quarter and is underweight compared to the index because of the tightness
of the spreads compared to Treasurys. During the quarter, the Fund increased its
overweight position in mortgage-backed securities (42% of assets), which look
attractively valued after spreads widened last year. In 2005, the mortgage
sector's performance detracted from WTRB's relative return. The Fund also holds
small positions in commercial mortgage-backed securities (5%), a plus for Fund
performance last year, and asset-backed issues (4%), a slight negative. The 16%
position in Treasurys is less than the benchmark weight. The WTRB Fund had an
indicated annual yield of 4.4% at the end of the 2005.
WRIGHT CURRENT INCOME FUND
The Wright Current Income Fund (WCIF) is generally managed to be almost entirely
invested in GNMA issues - mortgage-based securities, known as Ginnie Maes, with
explicit backing from the Federal government. The WCIF Fund is actively managed
to maximize income and minimize principal fluctuation. GNMAs had a better return
in the fourth quarter than the Lehman aggregate. For the quarter, the WCIF
returned 0.7%, slightly behind the Lehman GNMA bond index's 1.0%, and edging
higher than the 0.6% return for the average of all 61 government mortgage funds
in the Morningstar database. For 2005, WCIF returned 1.8% compared to 3.2% for
the Lehman benchmark and 1.9% for the Morningstar average. In the fourth
quarter, WCIF was positioned to be overweight in higher-coupon premium issues.
This position, which reflected our expectation that the rise in mortgage rates
during 2005 had reduced the risk of mortgage prepayments, allowed the Fund to
pick up extra income. This allocation worked in the Fund's favor in the fourth
quarter and was being maintained as 2006 got underway. The Fund's duration (3.3)
was lengthened in the fourth quarter and started 2006 slightly shorter than the
Ginnie Mae benchmark's. At the start of the fourth quarter, the WCIF Fund had an
indicated annual yield of 4.6%, making it attractive for income-oriented
investors.
THE VIEWS EXPRESSED THROUGHOUT THIS REPORT ARE THOSE OF THE PORTFOLIO
MANAGERS AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT
AS STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
UPON MARKET OR OTHER CONDITIONS, AND THE INVESTMENT ADVISOR DISCLAIMS ANY
RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS
INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FUND ARE BASED ON
MANY FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY OF THE WRIGHT MANAGED INVESTMENT FUNDS.
U.S. SECURITIES MARKETS -------------------------------------------------------
The Dow Jones Industrial Average chart shows the point changes in the average
which consists of 30 major NYSE industrial companies and is a price-weighted
arithmetic average, with the divisor adjusted for stock splits. The yield
chart shows the basis point changes in the U.S. Treasury bond which is the
benchmark U.S. Treasury bond with a maturity of 10 years.
The following plotting points are used for comparison in the mountain charts.
Date Dow Jones U.S. 10 Year
Industrial Average Treasury Bond Yield
12/31/96 6448.27 6.43%
12/31/97 7908.25 5.75%
12/31/98 9181.43 4.65%
12/31/99 11,497.12 6.44%
12/31/00 10,786.85 5.11%
12/31/01 10,021.50 5.00%
12/31/02 8,341.63 3.82%
12/31/03 10,453.92 4.25%
12/31/04 10,783.01 4.22%
12/31/05 10,717.50 4.39%
PERFORMANCE SUMMARIES
- -------------------------------------------------------------------------------
IMPORTANT
The Total Investment Return is the percent return of an initial $10,000
investment made at the beginning of the period to the ending redeemable value
assuming all dividends and distributions are reinvested. After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates, and do not reflect the impact of state and local taxes. Actual after-tax
returns depend on the investor's tax situation and may differ from those shown.
After-tax returns are not relevant to investors who hold their fund shares
through tax-deferred arrangements such as 401(k) plans or individual retirement
accounts. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/05
Average Annual Total Return
----------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- -----------------------------------------------------------------------------------------------------------------------
WSBC
- Return before taxes 11.09% 4.52% 8.69%
- Return after taxes on distributions 8.52% 3.33% 6.14%
- Return after taxes on distributions and sales of fund shares 6.81% 2.87% 6.14%
S&P MidCap 400 12.46% 8.60% 14.36%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT SELECTED
BLUE CHIP EQUITIES FUND on 12/31/95 would have grown to $23,017 by
December 31, 2005.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Selected S&P MidCap
Blue Chip Fund 400
12/31/95 $10,000 $10,000
12/31/96 $11,857 $11,920
12/31/97 $15,734 $15,765
12/31/98 $15,756 $18,778
12/31/99 $16,663 $21,543
12/31/2000 $18,454 $25,314
12/31/2001 $16,581 $25,161
12/31/2002 $13,766 $21,510
12/31/2003 $17,904 $29,171
12/31/2004 $20,720 $33,977
12/31/2005 $23,017 $38,246
- -------------------------------------------------------------------------------
INDUSTRY WEIGHTINGS
- --------------------------------------------------------------------------------
% of net assets @ 12/31/05
Utilities 7.8% Software & Services 3.0%
Energy 7.2% Pharmaceuticals 2.7%
Insurance 7.2% Chemicals 2.6%
Retailing 6.8% Food/Beverage/Tobacco 1.9%
Diversified Financials 6.1% Semiconductor Equipment 1.6%
Health Care Equipment/Services 6.1% Communications Equipment 1.3%
Electronic Equipment 5.5% Hotels/Restaurants/Leisure 1.1%
Capital Goods 5.3% Oil & Gas 1.0%
Banks 5.2% Textiles/Clothing 1.0%
Computers 4.0% Media 0.9%
Transportation 4.0% Medical Supplies 0.9%
Commercial Services 3.8% Real Estate 0.9%
Consumer Durables/Apparel 3.6% Home Construction 0.6%
Materials 3.5% Telecommunication Services 0.4%
Automobiles/Components 3.3% Airlines 0.3%
TEN LARGEST STOCK HOLDINGS
- --------------------------------------------------------------------------------
% of net assets @ 12/31/05
Legg Mason, Inc. 2.2%
Questar Corp. 2.1%
Newfield Exploration Co. 2.0%
Barr Laboratories, Inc. 1.7%
DST Systems, Inc. 1.7%
Precision Castparts Corp. 1.6%
Hunt, J.B. Transport Services, Inc. 1.6%
First American Corp. 1.6%
Smithfield Foods, Inc. 1.6%
Borg Warner, Inc. 1.6%
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/05
Average Annual Total Return
----------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- ----------------------------------------------------------------------------------------------------------------------
WMBC
- Return before taxes 6.20% -1.60% 6.61%
- Return after taxes on distributions 5.90% -1.73% 4.82%
- Return after taxes on distributions and sales of fund shares 4.72% -1.73% 4.82%
S&P 500 4.91% 0.54% 9.07%
The cumulative total return of a U.S. $10,000 investment in the
WRIGHT MAJOR BLUE CHIP EQUITIES FUND on 12/31/95 would have
grown to $18,964 by December 31, 2005.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Major Blue
Chip Fund S&P 500
12/31/95 $10,000 $10,000
12/31/96 $11,763 $12,296
12/31/97 $15,747 $16,398
12/31/98 $18,963 $21,084
12/31/99 $23,505 $25,522
12/31/2000 $20,554 $23,198
12/31/2001 $17,086 $20,441
12/31/2002 $12,899 $15,923
12/31/2003 $15,892 $20,491
12/31/2004 $17,857 $22,719
12/31/2005 $18,964 $23,836
- --------------------------------------------------------------------------------
INDUSTRY WEIGHTINGS
- -------------------------------------------------------------------------------
% of net assets @ 12/31/05
Health Care Equipment/Services 11.5% Semiconductor Equipment 2.9%
Banks 11.1% Capital Goods 2.5%
Energy 10.4% Telecommunication Services 2.2%
Diversifies Financials 8.2% Hotels/Restaurants/Leisure 2.1%
Computers 6.4% Transportation 2.0%
Insurance 5.8% Entertainment 1.9%
Food/Beverage/Tobacco 4.9% Consumer Durables/Apparel 1.5%
Retailing 4.7% Software & Services 1.5%
Heavy Machinery 4.2% Commercial Services 1.3%
Pharmaceuticals 4.1% Materials 1.3%
Utilities 3.9% Communications Equipment 1.0%
Automobiles/Components 3.4% Electronic Equipment 0.9%
TEN LARGEST STOCK HOLDINGS
- -------------------------------------------------------------------------------
% of net assets @ 12/31/05
Bank of America Corp. 4.8%
Citigroup, Inc. 4.3%
Exxon Mobil Corp. 4.2%
Exelon Corp. 3.6%
UnitedHealth Group, Inc. 3.1%
Hewlett-Packard 3.1%
Home Depot 3.1%
Progressive Corp. 2.8%
ConocoPhillips Co. 2.2%
Paccar 2.1%
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/05
Average Annual Total Return
----------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- ----------------------------------------------------------------------------------------------------------------------
WIBC
- Return before taxes 21.13% 4.05% 5.79%
- Return after taxes on distributions 20.63% 3.85% 4.91%
- Return after taxes on distributions and sales of fund shares 16.50% 3.13% 4.54%
MSCI World ex US Index 14.47% 4.92% 6.22%
The cumulative total return of a U.S. $10,000 investment in the
WRIGHT INT'L BLUE CHIP EQUITIES FUND on 12/31/95 would have
grown to $17,561 by December 31, 2005.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Int'l Blue Chip MSCI World Ex U.S.
Equities Fund Index
12/31/95 $10,000 $10,000
12/31/96 $12,073 $10,687
12/31/97 $12,259 $10,930
12/31/98 $13,011 $12,980
12/31/99 $17,469 $14,385
12/31/2000 $14,397 $11,307
12/31/2001 $10,917 $12,597
12/31/2002 $ 9,333 $ 9,521
12/31/2003 $12,316 $13,274
12/31/2004 $14,497 $15,979
12/31/2005 $17,561 $18,292
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
- --------------------------------------------------------------------------------
% of net assets @ 12/31/05
Japan 23.8% Denmark 2.5%
United kingdom 17.2% Norway 2.2%
France 7.0% Finland 1.8%
Germany 6.5% Switzerland 1.5%
Netherlands 6.1% Austria 1.4%
Canada 5.2% Belgium 1.3%
Spain 5.2% Ireland 1.3%
Australia 3.4% Hong kong 1.0%
Italy 2.9% Singapore 0.4%
Sweden 2.9% Greece 0.0%
TEN LARGEST STOCK HOLDINGS
- --------------------------------------------------------------------------------
% of net assets @ 12/31/05
HBOS PLC 2.9%
ING Groep NV-ADR 2.9%
E.ON AG 2.9%
Eni Spa 2.8%
Barclays PLC 2.8%
Anglo American PLC 2.7%
Danske Bank A/S 2.5%
Vivendi Universal SA 2.2%
Yamaha Denki Co., Ltd. 2.2%
Vinci 2.0%
WRIGHT U.S. GOVERNMENT NEAR TERM FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/05
Average Annual Total Return
------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- ---------------------------------------------------------------------------------------------------------------------------------
WNTB
- Return before taxes 1.01% 2.82% 3.87%
- Return after taxes on distributions -0.18% 1.47% 2.06%
- Return after taxes on distributions and sales of fund shares -0.18% 1.47% 2.06%
Lehman Govt. 1-3 Year 1.73% 3.83% 4.89%
The cumulative total return of a U.S. $10,000 investment in the
WRIGHT U.S.GOVERNMENT NEAR TERM FUND on 12/31/95 would have grown to $14,616
by December 31,2005.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright U.S. Government Lehman Gov't
Near Term Bond Fund 1-3 Years
12/31/95 $10,000 $10,000
12/31/96 $10,394 $10,508
12/31/97 $11,010 $11,207
12/31/98 $11,668 $11,988
12/31/99 $11,891 $12,344
12/31/2000 $12,716 $13,353
12/31/2001 $13,583 $14,492
12/31/2002 $14,320 $15,363
12/31/2003 $14,407 $15,673
12/31/2004 $14,470 $15,840
12/31/2005 $14,616 $16,114
- --------------------------------------------------------------------------------
HOLDINGS BY SECTOR FIVE LARGEST BOND HOLDINGS
% of net assets @ 12/31/05 % of net assets @ 12/31/05
- -------------------------------------------------------- ----------------------------------------------------------
Mortgage-Backed Securities 27.3% U.S. Treasury Note 3.00% 11/15/07 21.9%
U. S. Government Agencies 43.6% FHLMC 3.25% 11/02/07 16.4%
U. S. Treasuries 27.8% FNMA 3.00% 11/22/06 11.3%
FHLMC 3.03% 06/11/08 7.0%
U.S. Treasury Note 3.375%11/15/08 5.2%
WEIGHTED AVERAGE MATURITY
@12/31/05 1.77 Years
WRIGHT TOTAL RETURN BOND FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/05
Average Annual Total Return
------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- --------------------------------------------------------------------------------------------------------------------------
WTRB
- Return before taxes 1.54% 4.43% 4.77%
- Return after taxes on distributions -0.12% 2.55% 2.67%
- Return after taxes on distributions and sales of fund shares -0.12% 2.55% 2.67%
Lehman Aggregate Bond Index 2.43% 5.87% 6.16%
- ---------------------------------------------------------------------------------------------------------------------------
The cumulative total return of a U.S. $10,000 investment in the
WRIGHT TOTAL RETURN BOND FUND on 12/31/95 would have grown to $15,943 by
December 31, 2005.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Total Retun Lehman Aggregate Bond
Bond Fund Index
12/31/95 $10,000 $10,000
12/31/96 $10,090 $10,363
12/31/97 $11,023 $11,364
12/31/98 $12,077 $12,351
12/31/99 $11,604 $12,249
12/31/2000 $12,837 $13,673
12/31/2001 $13,473 $14,828
12/31/2002 $14,690 $16,348
12/31/2003 $15,167 $17,019
12/31/2004 $15,701 $17,758
12/31/2005 $15,943 $18,189
- ------------------------------------------------
HOLDINGS BY SECTOR FIVE LARGEST BOND HOLDINGS
% of net assets @ 12/31/05 % of net assets @ 12/31/05
- --------------------------------------------------- ---------------------------------------------------
Asset-backed Securities 9.9% U.S. Treasury Bond 6.125% 11/15/27 5.5%
Corporate Bonds 24.9% U.S. Treasury Bond 7.25% 05/15/16 4.6%
Mortgage-Backed Securities 41.0% U.S. Treasury Bond 4.375% 05/15/07 3.3%
U.S. Government Agencies 6.8% FNMA Pool 254915 4.50% 09/01/23 2.9%
U.S. Treasuries 15.5% FNMA 5.00% 04/15/15 2.9%
HOLDINGS BY CREDIT QUALITY* WEIGHTED AVERAGE MATURITY
% of net assets @ 12/31/05 @12/31/05 6.98 Years
- ---------------------------------------------------
AAA 10.9%
AA 1.0%
A 15.0%
BBB 7.9%
<BBB 0.0%
Mortgage-Backed Securities 41.1%
U.S. Government Agencies 6.8%
U.S. Treasuries 15.5%
*: based on the lower of Standard & Poor's or Moody's
Investors' Service
WRIGHT CURRENT INCOME FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/05
Average Annual Total Return
----------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- ------------------------------------------------------------------------------------------------------------------
WCIF
- Return before taxes 1.76% 4.30% 5.14%
- Return after taxes on distributions -0.02% 2.11% 2.76%
- Return after taxes on distributions and sales of fund shares -0.02% 2.11% 2.76%
Lehman GNMA Index 3.21% 5.43% 6.19%
- -------------------------------------------------------------------------------------------------------------------
The cumulative total return of a U.S. $10,000 investment in the WRIGHT CURRENT
INCOME FUND on 12/31/95 would have grown to $16,515 by December 31, 2005.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Current Lehman GNMA
Income Fund Index
12/31/95 $10,000 $10,000
12/31/96 $10,435 $10,553
12/31/97 $11,328 $11,559
12/31/98 $12,066 $12,360
12/31/99 $12,128 $12,598
12/31/2000 $13,379 $13,997
12/31/2001 $14,339 $15,148
12/31/2002 $15,444 $16,464
12/31/2003 $15,712 $16,934
12/31/2004 $16,229 $17,671
12/31/2005 $16,515 $18,237
- --------------------------------------------------------------------------------
HOLDINGS BY SECTOR FIVE LARGEST BOND HOLDINGS
% of net assets @ 12/31/05 % of net assets @ 12/31/05
- -------------------------------------------------------- -------------------------------------------
Mortgage-Backed Securities 95.5% GNMA Pool 3556 5.50%05/20/34 7.1%
Government Interests 4.7% GNMA Pool 640940 5.50%05/15/35 6.2%
GNMA Pool 471369 5.50%05/15/33 5.7%
GNMA Pool 781032 6.50%04/15/29 5.2%
FNMA Pool 634187 6.00%02/01/22 5.0%
WEIGHTED AVERAGE MATURITY
@12/31/05 5.18 Years
FUND EXPENSES
- -------------------------------------------------------------------------------
EXAMPLE:
As a shareholder of a fund, you incur two types of costs: (1) transaction costs,
including sales charges (loads) on purchases and redemption fees (if
applicable); and (2) ongoing costs including management fees; distribution or
service fees; and other fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in a fund and to compare
these costs with the ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (July 1, 2005-December 31, 2005).
ACTUAL EXPENSES:
The first line of the tables shown on the following page provides information
about actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading entitled "Expenses Paid
During Period" to estimate the expenses you paid on your account during this
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES:
The second line of the tables provides information about hypothetical account
values and hypothetical expenses based on the actual Fund expense ratio and an
assumed rate of return of 5% per year (before expenses), which is not the actual
return of the Fund. The hypothetical account values and expenses may not be used
to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in your Fund and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees (if payable). Therefore, the second line of
the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
EQUITY FUNDS
Wright Selected Blue Chip Equities Fund
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/05-
(7/1/05) (12/31/05) 12/31/05)
- ------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,053.50 $6.47
- ------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,018.90 $6.36
*Expenses are equal to the Fund's annualized expense ratio of 1.25% multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period). The example assumes that the $1,000 was
invested at the net asset value per share determined at the close of business
on June 30, 2005.
Wright Major Blue Chip Equities Fund
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/05-
(7/1/05) (12/31/05) 12/31/05)
- -------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,077.60 $6.55
- -------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,018.90 $6.36
*Expenses are equal to the Fund's annualized expense ratio of 1.25% multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period). The example assumes that the $1,000 was
invested at the net asset value per share determined at the close of business
on June 30, 2005.
Wright International Blue Chip Equities Fund
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/05-
(7/1/05) (12/31/05) 12/31/05)
- ------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,170.40 $8.64
- ------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,017.20 $8.03
*Expenses are equal to the Fund's annualized expense ratio of 1.58% multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period). The example assumes that the $1,000 was
invested at the net asset value per share determined at the close of business
on June 30, 2005.
FIXED INCOME FUNDS
Wright U.S. Government Near Term Fund
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/05-
(7/1/05) (12/31/05) 12/31/05)
- -------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,003.50 $4.80
- -------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,020.40 $4.84
*Expenses are equal to the Fund's annualized expense ratio of 0.95% multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period). The example assumes that the $1,000 was
invested at the net asset value per share determined at the close of business
on June 30, 2005.
Wright Total Return Bond Fund
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/05-
(7/1/05) (12/31/05) 12/31/05)
- -------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $ 995.10 $4.78
- -------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,020.40 $4.84
*Expenses are equal to the Fund's annualized expense ratio of 0.95% multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period). The example assumes that the $1,000 was
invested at the net asset value per share determined at the close of business
on June 30, 2005.
Wright Current Income Fund
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/05-
(7/1/05) (12/31/05) 12/31/05)
- -------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,007.30 $4.91
- -------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,020.30 $4.94
*Expenses are equal to the Fund's annualized expense ratio of 0.97% multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period). The example assumes that the $1,000 was
invested at the net asset value per share determined at the close of business
on June 30, 2005
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
Shares Value
EQUITY INTERESTS -- 99.7%
AIRLINES -- 0.3%
Alaska Air Group, Inc.* ............ 3,605 $ 128,771
------------
AUTOMOBILES & COMPONENTS -- 3.3%
ArvinMeritor, Inc................... 6,560 $ 94,398
BorgWarner, Inc..................... 12,195 739,383
Copart, Inc.*....................... 17,685 407,816
Thor Industries, Inc................ 7,920 317,354
------------
$ 1,558,951
------------
BANKS -- 5.2%
Associated Banc-Corp................ 7,175 $ 233,546
Astoria Financial Corp.............. 17,962 528,083
City National Corp.................. 4,255 308,232
Colonial Bancgroup Inc.............. 12,785 304,539
Commerce Bancorp, Inc............... 17,725 609,917
IndyMac Bancorp, Inc................ 5,040 196,661
Webster Financial Corp.............. 6,765 317,278
------------
$ 2,498,256
------------
CAPITAL GOODS -- 5.3%
AGCO Corp.* ........................ 11,315 $ 187,490
Alliant Techsystems, Inc.* ......... 7,840 597,173
Graco, Inc.......................... 5,792 211,292
Precision Castparts Corp............ 14,780 765,752
Teleflex Inc........................ 2,970 192,991
Thomas & Betts Corp.* .............. 13,355 560,376
------------
$ 2,515,074
------------
CHEMICALS -- 2.6%
Chemtura Corp....................... 26,900 $ 341,630
Lubrizol Corp....................... 4,255 184,795
Lyondell Chemical Co................ 17,530 417,565
Scotts Miracle-Gro Co., Class A..... 6,665 301,525
------------
$ 1,245,515
------------
COMMERCIAL SERVICES & SUPPLIES -- 3.8%
Brink's Co., (The).................. 8,880 $ 425,441
ITT Educational Services, Inc.* .... 3,155 186,492
Jacobs Engineering Group, Inc.* .... 6,520 442,512
Manpower, Inc....................... 8,960 416,640
Republic Services, Inc. - Class A... 9,000 337,950
------------
$ 1,809,035
------------
COMMUNICATIONS EQUIPMENT -- 1.3%
Harris Corp......................... 8,370 $ 359,994
Plantronics, Inc.................... 5,175 146,452
Polycom, Inc.* ..................... 7,685 117,580
------------
$ 624,026
------------
COMPUTERS & PERIPHERALS -- 4.0%
DST Systems, Inc.* ................. 13,335 $ 798,900
Imation Corp........................ 4,705 216,759
SanDisk Corp.* ..................... 8,115 509,784
Western Digital Corp.* ............. 20,530 382,063
------------
$ 1,907,506
------------
CONSUMER DURABLES & APPAREL -- 3.7%
Harman International................ 3,425 $ 335,136
Hovnanian Enterprises, Inc.- Class A* 5,840 289,898
Mohawk Industries, Inc.* ........... 7,900 687,142
Toll Brothers, Inc.* ............... 12,315 426,592
------------
$ 1,738,768
------------
DIVERSIFIED FINANCIALS -- 6.1%
AmeriCredit Corp.* ................. 17,275 $ 442,758
Edwards, A.G., Inc.................. 7,530 352,856
Jefferies Group, Inc................ 9,210 414,266
Legg Mason, Inc..................... 8,890 1,064,044
Raymond James Financial, Inc........ 9,490 357,488
Ryland Group, Inc................... 4,075 293,930
------------
$ 2,925,342
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS-- 5.5%
Ametek, Inc......................... 10,315 $ 438,800
Arrow Electronics, Inc.* ........... 16,215 519,366
Avnet, Inc.* ....................... 11,785 282,133
Energizer Holdings, Inc.* .......... 11,060 550,677
MEMC Electronic Materials, Inc.* ... 23,905 529,974
Tech Data Corp.* ................... 7,920 314,266
------------
$ 2,635,216
------------
ENERGY -- 7.2%
Forest Oil Corp.* .................. 3,275 $ 149,242
Newfield Exploration Company* ...... 18,810 941,817
Noble Energy, Inc................... 12,785 515,235
Patterson-UTI Energy, Inc........... 14,570 480,081
Peabody Energy Corp................. 7,000 576,940
Pogo Producing Co................... 11,155 555,631
Western Gas Resources, Inc.......... 4,685 220,617
------------
$ 3,439,563
------------
FOOD, BEVERAGE & TOBACCO -- 1.9%
PepsiAmericas, Inc.................. 6,510 $ 151,423
Smithfield Foods, Inc.* ............ 24,395 746,487
------------
$ 897,910
------------
HEALTH CARE EQUIPMENT & SERVICES-- 6.1%
Community Health Systems, Inc.* .... 3,860 $ 147,992
Covance, Inc.* ..................... 5,195 252,217
DENTSPLY International, Inc......... 3,350 179,861
Health Net, Inc.* .................. 10,090 520,139
LifePoint Hospitals, Inc.* ......... 12,060 452,250
Lincare Holdings, Inc.* ............ 11,060 463,525
Renal Care Group, Inc.* ............ 7,980 377,534
Triad Hospitals, Inc.* ............. 13,215 518,424
UnitedHealth Group, Inc............. 1 31
------------
$ 2,911,973
------------
HOME CONSTRUCTION, FURNISHINGS
& APPLIANCES -- 0.6%
Beazer Homes USA, Inc............... 3,920 $ 285,533
------------
HOTELS, RESTAURANTS & LEISURE -- 1.1%
Boyd Gaming Corp.................... 8,570 $ 408,446
CBRL Group, Inc..................... 3,860 135,679
------------
$ 544,125
------------
INSURANCE -- 7.2%
AmerUs Group Co..................... 2,625 $ 148,759
Everest Re Group, Ltd............... 2,625 263,419
Fidelity National Financial, Inc.... 4,117 151,464
First American Corp................. 16,665 754,924
HCC Insurance Holdings, Inc......... 10,100 299,768
Old Republic International Corp..... 8,315 218,352
PMI Group Inc., (The)............... 5,900 242,313
Protective Life Corp................ 5,275 230,887
Radian Group, Inc................... 9,570 560,706
Stancorp Financial Group............ 6,625 330,919
W.R. Berkley Corp................... 4,565 217,385
------------
$ 3,418,896
------------
MATERIALS -- 3.5%
Crane Co............................ 2,665 $ 93,995
Cytec Industries, Inc............... 9,860 469,632
FMC Corp.* ......................... 7,805 414,992
Grant Prideco, Inc.* ............... 5,840 257,661
RPM International, Inc.............. 6,595 114,555
Timken Co., (The)................... 10,390 332,688
------------
$ 1,683,523
------------
MEDIA -- 0.9%
Catalina Marketing Corp............. 16,525 $ 418,909
------------
MEDICAL SUPPLIES -- 0.9%
Intuitive Surgical, Inc.* .......... 3,725 $ 436,831
------------
OIL & GAS -- 1.0%
Helmerich & Payne, Inc.............. 4,075 $ 252,283
Pioneer Natural Resources Co........ 4,745 243,276
------------
$ 495,559
------------
PHARMACEUTICALS & BIOTECHNOLOGY-- 2.7%
Barr Laboratories, Inc.* ........... 13,220 $ 823,474
Omnicare, Inc....................... 7,935 454,041
------------
$ 1,277,515
------------
REAL ESTATE -- 0.9%
New Plan Excel Realty Trust REIT.... 17,950 $ 416,081
------------
RETAILING -- 6.8%
Abercrombie & Fitch Co. - Class A... 7,960 $ 518,833
American Eagle Outfitters........... 17,785 408,699
Barnes & Noble, Inc................. 4,940 210,790
CDW Corp............................ 4,605 265,110
Chico's FAS, Inc.* ................. 7,785 341,995
Claire's Stores, Inc................ 17,550 512,811
Michaels Stores, Inc................ 12,295 434,874
Pacific Sunwear of California,Inc.* 5,820 145,034
Urban Outfitters, Inc.* ............ 16,590 419,893
------------
$ 3,258,039
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS-- 1.6%
Cree, Inc.* ........................ 8,115 $ 204,823
Lam Research Corp.* ................ 10,020 357,514
Microchip Technology, Inc........... 5,510 177,146
------------
$ 739,483
------------
SOFTWARE & SERVICES -- 3.0%
Activision, Inc.* .................. 25,769 $ 354,066
Cognizant Technology Solutions Corp.* 7,135 359,247
Fair Isaac, Inc..................... 6,370 281,363
McAfee Inc.* ....................... 6,470 175,531
Sybase, Inc.* ...................... 10,845 237,072
------------
$ 1,407,279
------------
TELECOMMUNICATION SERVICES -- 0.4%
ADTRAN, Inc......................... 3,200 $ 95,168
Cincinnati Bell, Inc.* ............. 26,715 93,770
------------
$ 188,938
------------
TEXTILES, CLOTHING & FABRICS -- 1.0%
Polo Ralph Lauren Corp.............. 8,595 $ 482,523
------------
TRANSPORTATION -- 4.0%
CNF Transporation, Inc.............. 5,430 $ 303,483
GATX Corp........................... 4,980 179,678
Hunt, J.B. Transport Services, Inc.. 33,425 756,742
Overseas Shipholding Group.......... 3,780 190,474
Yellow Roadway Corp.* .............. 11,040 492,494
------------
$ 1,922,871
------------
UTILITIES -- 7.8%
Energy East Corp.................... 17,215 $ 392,502
Equitable Resources, Inc............ 4,115 150,979
MDU Resources Group, Inc............ 20,442 669,271
Oneok, Inc.......................... 14,375 382,806
Questar Corp........................ 13,175 997,348
Sierra Pacific Resources* .......... 43,830 571,543
Wisconsin Energy Corp............... 7,920 309,355
WPS Resources Corp.................. 4,370 241,705
------------
$ 3,715,509
------------
TOTAL EQUITY INTERESTS-- 99.7%
(identified cost, $38,114,992) $47,527,520
OTHER ASSETS, LESS LIABILITIES -- 0.3% 124,104
------------
NET ASSETS -- 100% $47,651,624
============
* Non-income-producing security.
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $38,114,992) (Note 1A). $ 47,527,520
Cash.................................... 186
Receivable for fund shares sold......... 98,545
Receivable from investment adviser...... 25,969
Dividends receivable.................... 34,056
Other assets............................ 6,045
------------
Total assets............................ $ 47,692,321
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 7,289
Demand note payable..................... 2,000
Payable to affiliate for Trustees' fees. 2
Transfer agent fee payable.............. 5,176
Accrued expenses and other liabilities.. 26,230
------------
Total liabilities....................... $ 40,697
------------
NET ASSETS................................ $ 47,651,624
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 34,873,894
Accumulated undistributed net realized gain on
investments (computed on the basis of
identified cost)....................... 2,440,773
Unrealized appreciation on investments
(computed on the basis of identified cost) 9,412,528
Undistributed net investment income..... 924,429
------------
Net assets applicable to outstanding
shares............................... $ 47,651,624
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 3,657,041
============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 13.03
============
STATEMENT OF OPERATIONS
Year Ended December 31, 2005
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 509,454
Expenses -
Investment adviser fee (Note 2):........ $ 286,362
Administrator fee (Note 2):............. 57,272
Compensation of Trustees who are not employees
of the investment adviser or administrator 13,228
Custodian fee (Note 1D)................. 103,334
Distribution expenses (Note 3):......... 119,318
Transfer and dividend disbursing agent fees 27,460
Printing................................ 7,034
Interest expense........................ 10,890
Shareholder communications.............. 10,503
Audit services.......................... 26,341
Legal services.......................... 7,252
Registration costs...................... 18,142
Miscellaneous .......................... 6,082
------------
Total expenses.......................... $ 693,218
------------
Deduct -
Reduction of custodian fee (Note 1D):... $ (10,942)
Allocation of expenses to investment adviser
(Note 2):.............................. (25,969)
Reduction of distribution expenses
by principal underwriter (Note 3):..... (59,659)
------------
Total deductions........................ $ (96,570)
------------
Net expenses............................ $ 596,648
------------
Net investment loss..................... $ (87,194)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 6,417,438
Change in unrealized depreciation of
investments............................ (1,416,439)
------------
Net realized and unrealized gain
of investments......................... $ 5,000,999
------------
Net increase in net assets from
operations............................ $ 4,913,805
============
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
Year Ended
December 31,
-------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2005 2004
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment loss........................................................ $ (87,194) $ (89,696)
Net realized gain on investments........................................... 6,417,438 4,095,367
Change in unrealized appreciation of investments........................... (1,416,439) 1,915,763
-------------- --------------
Net increase in net assets resulting from operations..................... $ 4,913,805 $ 5,921,434
-------------- --------------
Distributions to shareholders (Note 1F) -
From net realized gain..................................................... $ (5,390,227) $ (1,597,259)
-------------- --------------
Total distributions...................................................... $ (5,390,227) $ (1,597,259)
-------------- --------------
Net increase (decrease) in net assets from fund share transactions (Note 4).. $ 4,630,188 $ 983,877
-------------- --------------
Net increase in net assets................................................... $ 4,153,766 $ 5,308,052
NET ASSETS:
At beginning of year......................................................... 43,497,858 38,189,806
-------------- --------------
At end of year............................................................... $ 47,651,624 $ 43,497,858
============== ==============
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF YEAR.................................................................. $ 924,429 $ 936,447
============== ==============
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2005 2004 2003(6) 2002(6) 2001(6)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 13.226 $ 11.870 $ 9.270 $ 11.580 $ 13.430
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment loss(1) ................ $ (0.053) $ (0.028) $ (0.023) $ (0.046) $ (0.045)
Net realized and unrealized gain (loss) 1.476 1.884 2.756 (1.831) (1.322)
--------- --------- --------- --------- ---------
Total income (loss)
from investment operations......... $ 1.423 $ 1.856 $ 2.733 $ (1.877) $ (1.367)
--------- --------- --------- --------- ---------
Less distributions:
Distributions from capital gains....... $ (1.619) $ (0.500) $ (0.133) $ (0.433) $ (0.483)
--------- --------- --------- --------- ---------
Total distributions................ $ (1.619) $ (0.500) $ (0.133) $ (0.433) $ (0.483)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 13.030 $ 13.226 $ 11.870 $ 9.270 $ 11.580
========= ========= ========= ========= =========
Total return(2) ............................ 11.09% 15.73% 30.06% (16.98%) (10.15%)
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).. $ 47,652 $ 43,498 $ 38,190 $ 32,817 $ 45,883
Ratio of net expenses to average net assets 1.27% 1.26% 1.25% 1.26%(3) 1.26%(3)
Ratio of net expenses after custodian fee
reduction to average net assets(5)(7) 1.25% 1.25% 1.25% 1.25%(3) 1.25%(3)
Ratio of net investment (loss) to average
net assets.......................... (0.18%) (0.23%) (0.23%) (0.44%) (0.38%)
Portfolio turnover rate .............. 110% 69% 106% 119%(4) 67%(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 loss per share and the ratios would have been as
follows:
2005 2004 2003 2002 2001
--------------------------------------------------------------------
Net investment loss per share.......... $ (0.111) $ (0.050) $ (0.057) $ (0.064) $ (0.057)
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses........................... 1.45% 1.44% 1.59% 1.43%(3) 1.37%(3)
========= ========= ========= ========= =========
Expenses after custodian fee reduction(5) 1.43% 1.43% 1.59% 1.42%(3) 1.36%(3)
========= ========= ========= ========= =========
Net investment loss................ (0.38%) (0.41%) (0.57%) (0.61%) (0.49%)
========= ========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------
(2)Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each 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 (Note 1).
(4)Represents portfolio turnover rate of the fund's corresponding portfolio (Note 1).
(5)Custodian fees were reduced by credits resulting from cash balances the fund
and/or the portfolio maintained with the custodian (Note 1D). The computation
of net expenses to average daily net assets reported above is computed
without consideration of such credits.
(6)Certain per share amounts are based on average shares outstanding.
(7)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.
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
Shares Value
EQUITY INTERESTS -- 99.7%
AUTOMOBILES & COMPONENTS -- 3.4%
Johnson Controls, Inc............... 11,560 $ 842,840
Paccar, Inc......................... 20,420 1,413,677
------------
$ 2,256,517
------------
BANKS -- 11.1%
Bank of America Corp................ 68,963 $ 3,182,642
Capital One Financial Corp.......... 14,625 1,263,600
CIT Group, Inc...................... 4,140 214,369
M&T Bank Corp....................... 2,560 279,168
MBNA Corp........................... 39,225 1,065,351
Wells Fargo & Co.................... 22,040 1,384,773
------------
$ 7,389,903
------------
CAPITAL GOODS -- 2.5%
Cummins, Inc........................ 8,735 $ 783,792
Deere & Co.......................... 11,365 774,070
ITT Industries, Inc................. 1,145 117,729
------------
$ 1,675,591
------------
COMMERCIAL SERVICES & SUPPLIES -- 1.3%
H&R Block, Inc...................... 35,890 $ 881,099
------------
COMMUNICATIONS EQUIPMENT -- 1.0%
Motorola, Inc....................... 17,595 $ 397,471
Scientific-Atlanta, Inc............. 6,725 289,646
------------
$ 687,117
------------
COMPUTERS & PERIPHERALS -- 6.4%
Apple Computer, Inc.* .............. 19,005 $ 1,366,269
Computer Sciences Corp.* ........... 13,555 686,425
Dell, Inc.* ........................ 5,249 157,418
Hewlett-Packard Co.................. 71,655 2,051,483
------------
$ 4,261,595
------------
CONSUMER DURABLES & APPAREL-- 1.5%..
Brunswick Corp...................... 1,675 $ 68,105
Centex Corp......................... 3,040 217,330
D.R. Horton, Inc.................... 5,865 209,556
Fortune Brands, Inc................. 1,810 141,216
KB Home Corp........................ 1,080 78,473
Lennar Corp. - Class A.............. 1,295 79,021
Pulte Homes, Inc.................... 5,660 222,778
------------
$ 1,016,479
------------
DIVERSIFIED FINANCIALS -- 8.2%
Charles Schwab Corp., (The)......... 8,450 $ 123,961
Citigroup, Inc...................... 59,289 2,877,295
Franklin Resources, Inc............. 3,295 309,763
Goldman Sachs Group, Inc., (The).... 5,845 746,465
Lehman Brothers Holdings, Inc....... 11,005 1,410,511
------------
$ 5,467,995
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS-- 0.9%
Nvidia Corp.* ...................... 12,635 $ 461,936
PerkinElmer, Inc.................... 5,825 137,237
------------
$ 599,173
------------
ENERGY -- 10.4%
Apache Corp......................... 5,298 $ 363,019
ChevronTexaco Corp.................. 20,490 1,163,217
ConocoPhillips Co................... 25,005 1,454,791
Exxon Mobil Corp.................... 49,315 2,770,024
Nabors Industries, Ltd.* ........... 1,225 92,794
Occidental Petroleum Corp........... 8,470 676,584
Praxair, Inc........................ 2,460 130,282
TXU Corp............................ 3,435 172,403
Valero Energy Corp.................. 1,270 65,532
Weatherford International, Ltd.* ... 1,825 66,065
------------
$ 6,954,711
------------
ENTERTAINMENT & LEISURE -- 1.9%
Time Warner, Inc.................... 72,195 $ 1,259,081
------------
FOOD, BEVERAGE & TOBACCO -- 4.9%
Altria Group, Inc................... 16,810 $ 1,256,043
Archer-Daniels-Midland Co........... 48,615 1,198,846
Constellation Brands, Inc.- Class A* 19,680 516,206
Safeway, Inc........................ 8,460 200,164
Supervalu, Inc...................... 3,525 114,492
------------
$ 3,285,751
------------
HEALTH CARE EQUIPMENT & SERVICES-- 11.5%
AmerisourceBergen Corp.............. 3,300 $ 136,620
Caremark Rx, Inc.* ................. 3,115 161,326
Cigna Corp.......................... 5,155 575,813
Coventry Health Care, Inc.* ........ 5,435 309,578
Express Scripts, Inc.* ............. 2,850 238,830
HCA, Inc............................ 9,120 460,560
Health Management Associates-Class A 3,900 85,644
Humana, Inc.* ...................... 16,955 921,165
Laboratory Corp.of America Holdings* 2,435 131,125
Manor Care, Inc..................... 2,755 109,566
McKesson Corp....................... 18,770 968,344
Medco Health Solutions, Inc.* ...... 10,510 586,458
Quest Diagnostics, Inc.............. 6,435 331,274
St. Jude Medical, Inc.* ............ 2,325 116,715
UnitedHealth Group, Inc............. 33,686 2,093,248
Wellpoint, Inc.* ................... 5,410 431,664
------------
$ 7,657,930
------------
HEAVY MACHINERY -- 4.2%
Black & Decker Corp................. 9,030 $ 785,249
Caterpillar, Inc.................... 21,175 1,223,280
Ingersoll-Rand Co. - Class A........ 18,960 765,415
------------
$ 2,773,944
------------
HOTELS, RESTAURANTS & LEISURE -- 2.1%
Darden Restaurants, Inc............. 1,585 $ 61,625
McDonald's Corp..................... 38,020 1,282,034
Wendy's International, Inc.......... 1,590 87,863
------------
$ 1,431,522
------------
INSURANCE -- 5.8%
Aetna, Inc.......................... 2,865 $ 270,198
AMBAC Financial Group, Inc.......... 4,375 337,137
Chubb Corp.......................... 4,090 399,388
MetLife, Inc........................ 7,080 346,920
MGIC Investment Corp................ 5,635 370,896
Progressive Corp.................... 15,755 1,839,869
St. Paul Travelers Cos Inc., (The).. 6,540 292,142
------------
$ 3,856,550
------------
MATERIALS -- 1.3%
Monsanto Co......................... 2,905 $ 225,225
Nucor Corp.......................... 8,305 554,110
Sigma-Aldrich Corp.................. 1,685 106,644
------------
$ 885,979
------------
PHARMACEUTICALS & BIOTECHNOLOGY-- 4.1%
Amgen, Inc.* ....................... 2,040 $ 160,874
Applera Corp.-Applied Biosystems
Group.............................. 4,520 120,051
Gilead Sciences, Inc.* ............. 5,340 281,044
Johnson & Johnson, Inc.............. 19,521 1,173,212
King Pharmaceuticals Inc.* ......... 26,010 440,089
Wyeth............................... 12,680 584,168
------------
$ 2,759,438
------------
RETAILING -- 4.7%
Home Depot, Inc..................... 50,585 $ 2,047,681
J.C. Penney Co., Inc................ 4,020 223,512
Nike, Inc. - Class B................ 625 54,244
Nordstrom, Inc...................... 13,915 520,421
Office Depot, Inc.* ................ 9,155 287,467
------------
$ 3,133,325
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS-- 2.9%
Advanced Micro Devices, Inc.* ...... 2,695 $ 82,467
Broadcom Corp. - Class A* .......... 1,710 80,626
Freescale Semiconductor, Inc.* ..... 4,835 121,697
Intel Corp.......................... 25,430 634,733
Micron Technology, Inc.* ........... 12,400 165,044
National Semiconductor Corp......... 6,675 173,416
Texas Instruments, Inc.............. 21,775 698,324
------------
$ 1,956,307
------------
SOFTWARE & SERVICES -- 1.5%
Autodesk, Inc....................... 4,350 $ 186,832
BMC Software, Inc.* ................ 3,855 78,989
Compuware Corp.* ................... 21,710 194,739
Electronic Data Systems Corp........ 6,070 145,923
Microsoft Corp...................... 1,759 45,998
Yahoo!, Inc.* ...................... 8,295 324,998
------------
$ 977,479
------------
TELECOMMUNICATION SERVICES -- 2.2%
Alltel Corp......................... 9,985 $ 630,053
Corning, Inc.* ..................... 22,475 441,859
Sprint Corp......................... 16,165 377,614
------------
$ 1,449,526
------------
TRANSPORTATION -- 2.0%
Burlington Northern Santa Fe Corp... 6,810 $ 482,284
FedEx Corp.......................... 2,785 287,941
Norfolk Southern Corp............... 12,180 546,029
------------
$ 1,316,254
------------
UTILITIES -- 3.9%
Exelon Corp......................... 45,251 $ 2,404,638
Sempra Energy....................... 4,270 191,467
------------
$ 2,596,105
------------
TOTAL EQUITY INTERESTS-- 99.7%
(identified cost, $52,523,173).... $66,529,371
OTHER ASSETS, LESS LIABILITIES -- 0.3% 212,213
------------
NET ASSETS -- 100% $66,741,584
============
* Non-income-producing security.
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $52,523,173) (Note 1A). $ 66,529,371
Cash.................................... 404,668
Receivable for fund shares sold......... 184,006
Receivable from investment adviser...... 212
Dividends receivable.................... 106,265
Prepaid expenses........................ 5,616
------------
Total assets............................ $ 67,230,138
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 461,374
Transfer agent fee...................... 4,244
Accrued expenses and other liabilities.. 22,936
------------
Total liabilities....................... $ 488,554
------------
NET ASSETS................................ $ 66,741,584
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 83,350,626
Accumulated undistributed net realized loss on
investments (computed on the basis
of identified cost).................... (30,427,300)
Unrealized appreciation on investments
(computed on the basis of identified cost) 14,006,198
Distributions in excess of net
investment income...................... (187,940)
------------
Net assets applicable to outstanding
shares............................... $ 66,741,584
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 5,371,852
============
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 12.42
============
STATEMENT OF OPERATIONS
Year Ended December 31, 2005
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 1,254,287
------------
Expenses -
Investment adviser fee (Note 2):........ $ 394,885
Administrator fee (Note 2):............. 78,977
Compensation of Trustees not employees of the
investment adviser or administrator.... 13,228
Custodian fee (Note 1D):................ 74,204
Distribution expenses (Note 3):......... 164,535
Transfer and dividend disbursing agent fees 25,185
Printing................................ 5,410
Interest expense........................ 3,452
Shareholder communications.............. 4,905
Audit services.......................... 27,447
Legal services.......................... 9,730
Registration costs...................... 19,929
Miscellaneous .......................... 9,088
------------
Total expenses.......................... $ 830,975
------------
Deduct -
Reduction of custodian fee (Note 1D):... $ (8,096)
Allocation of expenses to the
investment adviser (Note 2):........... (212)
------------
Total deductions........................ $ (8,308)
------------
Net expenses............................ $ 822,667
------------
Net investment income................... $ 431,620
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 3,605,530
Change in unrealized appreciation of
investments............................ 59,679
------------
Net realized and unrealized gain of
investments............................ $ 3,665,209
------------
Net increase in net assets from operations $ 4,096,829
============
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- ------------------------------------------------------------------------------
Year Ended
December 31,
--------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2005 2004
- --------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income ..................................................... $ 431,620 $ 325,576
Net realized gain on investments........................................... 3,605,530 3,568,382
Change in unrealized appreciation (depreciation) on investments............ 59,679 3,534,335
-------------- --------------
Net increase (decrease) in net assets resulting from operations.......... $ 4,096,829 $ 7,428,293
-------------- --------------
Distributions to shareholders -
From net investment income................................................. $ (485,388) $ (289,970)
-------------- --------------
Total distributions...................................................... $ (485,388) $ (289,970)
-------------- --------------
Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (2,372,715) $(13,174,341)
-------------- --------------
Net increase (decrease) in net assets........................................ $ 1,238,726 $ (6,036,018)
NET ASSETS:
At beginning of year......................................................... 65,502,858 71,538,876
-------------- --------------
At end of year............................................................... $ 66,741,584 $ 65,502,858
-------------- --------------
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF YEAR............................................................... $ (187,940) $ (132,591)
============== ==============
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- ------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2005 2004 2003(4) 2002(4) 2001(4)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 11.780 $ 10.530 $ 8.570 $ 11.380 $ 13.690
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss)(1) ....... $ 0.077 $ 0.053 $ 0.029 $ 0.024 $ (0.009)
Net realized and unrealized gain (loss) 0.651 1.247 1.958 (2.812) (2.301)
--------- --------- --------- --------- ---------
Total income (loss)
from investment operations......... $ 0.728 $ 1.300 $ 1.987 $ (2.788) $ (2.310)
--------- --------- --------- --------- ---------
Less distributions:
Dividends from investment income....... $ (0.088) $ (0.050) $ (0.027) $ (0.022) $ -
--------- --------- --------- --------- ---------
Total distributions................ $ (0.088) $ (0.050) $ (0.027) $ (0.022) $ -
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 12.420 $ 11.780 $ 10.530 $ 8.570 $ 11.380
========= ========= ========= ========= =========
Total Return(3) ............................ 6.20% 12.36% 23.20% (24.50%) (16.87%)
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).. $ 66,742 $ 65,503 $ 71,539 $ 66,609 $ 95,121
Ratio of net expenses to average net assets 1.26% 1.25% 1.25% 1.22% 1.13%
Ratio of net expenses after custodian fee
reduction to average net assets(2)(5) 1.25% 1.25% 1.25% 1.22% 1.13%
Ratio of net investment income (loss) to
average net assets ................. 0.66% 0.49% 0.31% 0.25% (0.08%)
Portfolio turnover rate................ 82% 74% 143% 130% 78%
- ------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2005, 2004 and 2003, 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:
2005 2004 2003
------------------------------------------
Net investment income per share........ $ 0.077 $ 0.050 $ 0.024
========= ========= =========
Ratios (As a percentage of average net assets):
Expenses............................. 1.26% 1.28% 1.31%
========= ========= =========
Expenses after custodian fee reduction(2) 1.25% 1.28% 1.31%
========= ========= =========
Net investment income................ 0.66% 0.46% 0.26%
========= ========= =========
- ----------------------------------------------------------------------------------------------------------------
(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 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)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.
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
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PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
Shares Value
EQUITY INTERESTS -- 93.4%
AUSTRALIA -- 3.4%
BHP Billiton, Ltd................... 68,318 $ 1,140,109
Commonwealth Bank of Australia...... 11,527 361,478
QBE Insurance Group, Ltd............153,164 2,202,128
------------
$ 3,703,715
------------
AUSTRIA -- 1.4%
OMV AG (Stammaktie)................. 25,886 $ 1,511,425
------------
BELGIUM -- 1.3%
Fortis.............................. 45,123 $ 1,434,409
------------
CANADA -- 5.2%
Encana Corp......................... 37,766 $ 1,699,252
Husky Energy, Inc................... 21,259 1,073,733
Inco, Ltd........................... 9,729 420,592
National Bank of Canada............. 1,867 96,407
Nexen Inc. (Common)................. 19,414 921,049
Power Financial Corp. (Common)...... 23,477 671,259
Rona, Inc.* ........................ 19,002 348,922
Talisman Energy, Inc................ 8,847 466,528
------------
$ 5,697,742
------------
DENMARK -- 2.5%
Danske Bank A/S..................... 78,061 $ 2,740,520
------------
FINLAND -- 1.8%
Fortum Oyj.......................... 34,175 $ 638,528
Nokian Renkaat Oyj.................. 23,894 300,161
Yit-Yhtyma Oyj...................... 24,277 1,034,616
------------
$ 1,973,305
------------
FRANCE -- 6.9%
Axa................................. 17,999 $ 578,749
Neopost SA.......................... 12,348 1,233,663
Pernod Ricard SA(Actions Ordinaires) 3,710 645,042
Societe Generale de France
(Actions Ordinaires)............... 4,077 499,658
Vinci............................... 26,203 2,245,448
Vivendi Universal SA................ 78,574 2,452,365
------------
$ 7,654,925
------------
GERMANY -- 6.5%
BASF AG............................. 21,948 $ 1,675,262
Celesio AG.......................... 6,265 536,949
Continental AG (Stammaktie)......... 11,442 1,011,961
Deutsche Boerse AG.................. 7,376 753,103
E. On AG (Stammaktie)............... 30,508 3,144,791
------------
$ 7,122,066
------------
GREECE -- 0.0%
National Bank of Greece SA.......... 588 $ 24,969
------------
HONG KONG -- 0.9%
Cheung Kong Holdings Ltd.(Ordinary) 92,000 $ 943,903
CLP Holdings, Ltd. (Ordinary)....... 17,500 101,566
------------
$ 1,045,469
------------
IRELAND -- 1.3%
Bank of Ireland (Cap. Stock)........ 23,296 $ 365,743
CRH PLC (Ordinary).................. 5,323 156,027
DCC PLC............................. 17,535 374,370
Grafton Group PLC* ................. 18,894 205,035
Ryanair Holdings PLC* .............. 30,531 298,907
------------
$ 1,400,082
------------
ITALY -- 2.9%
Banca Intesa Spa (Azioni Ordinarie). 13,956 $ 73,666
Eni Spa (Azioni Ordinarie)..........112,603 3,111,993
------------
$ 3,185,659
------------
JAPAN -- 23.8%
Aiful Corp. (Common)................ 4,875 $ 406,835
Bridgestone Corp. (Common).......... 16,000 332,797
Canon, Inc. (Common)................ 24,100 1,408,879
Eisai Co., Ltd. (Common)............ 35,000 1,467,847
Honda Motor Co., Ltd. (Common)...... 29,700 1,693,476
Ibiden Co., Ltd. (Common)........... 29,400 1,574,244
Kawasaki Kisen Kaisha, Ltd..........137,000 858,934
Kddi Corp........................... 219 1,261,713
Mitsui & Co., Ltd................... 86,000 1,103,872
Mitsui Chemicals, Inc............... 82,000 550,928
Mitsui OSK Lines, Ltd...............196,000 1,708,752
Nippon Shokubai Co., Ltd............ 35,000 395,874
Nippon Steel Corp...................218,000 775,735
Nippon Yusen Kabushiki Kaish........ 34,000 232,754
Nissan Chemical Industries, Ltd..... 18,000 255,901
ORIX Corp.(Common).................. 4,900 1,247,522
Osaka Gas Co., Ltd..................180,000 620,690
Sankyo Co., Ltd. ................... 9,400 543,946
Santen Pharmaceutical Co., Ltd...... 26,800 740,219
Sumitomo Corp.......................106,000 1,369,567
Sumitomo Heavy Industries, Ltd......146,000 1,224,604
Takeda Chemicals Ind, Ltd. (Common). 20,600 1,113,513
Toyo Suisan Kaisha, Ltd............. 26,000 419,419
Toyota Motor Corp. (Common)......... 28,800 1,493,315
Yamada Denki Co., Ltd. (Common)..... 19,500 2,438,533
Yamaha Motor Co., Ltd............... 34,900 910,718
------------
$26,150,587
------------
NETHERLANDS -- 6.1%
ABN Amro Holdings NV (Aandeel)...... 75,964 $ 1,979,339
Aegon NV............................ 30,320 491,754
ING Groep NV - ADR (Aandeel)........ 91,382 3,158,236
Koninklijke Philips Electronics NV.. 25,292 783,121
Royal Dutch Shell PLC............... 10,563 321,208
------------
$ 6,733,658
------------
NORWAY -- 2.2%
Norsk Hydro ASA (Ordinaere Aksje)... 4,940 $ 505,582
Orkla ASA........................... 3,210 132,501
Statoil ASA......................... 73,118 1,673,737
Telenor ASA......................... 7,569 74,055
------------
$ 2,385,875
------------
SINGAPORE -- 0.4%
Jardine Cycle & Carriage, Ltd....... 43,000 $ 287,046
Keppel Corp., Ltd................... 18,000 119,076
------------
$ 406,122
------------
SPAIN -- 5.2%
Acciona SA (Accion)................. 10,128 $ 1,128,345
ACS,Actividades de Construccion
y Svcs SA......................... 17,494 561,480
Ebro Puleva SA...................... 20,823 344,602
Fomento de Construcciones y Contratas
SA (Accion)........................ 13,743 776,486
Grupo Ferrovial SA (Accion
Al Portador)....................... 13,867 956,874
Repsol YPF SA (Accion).............. 63,776 1,855,850
Sociedad Gen. de Aguas de
Barcelona SA....................... 3,633 7,135
------------
$ 5,700,772
------------
SWEDEN -- 2.9%
Capio AB* .......................... 33,187 $ 590,049
Nordea Bank AB...................... 9,496 98,437
SKF AB.............................. 22,904 320,885
TeliaSonera AB......................405,573 2,176,007
------------
$ 3,185,378
------------
SWITZERLAND -- 1.5%
Syngenta AG* ....................... 4,518 $ 560,486
Zurich Financial Services
(Inhaberaktie)*.................... 5,297 1,125,354
------------
$ 1,685,840
------------
UNITED KINGDOM -- 17.2%
Alliance Unichem PLC (Ordinary)..... 19,776 $ 271,773
Anglo American PLC (Ordinary)....... 87,466 2,971,612
Barclays PLC (Ordinary).............292,734 3,070,587
Barratt Developments PLC............ 66,676 1,128,635
Bellway PLC (Ordinary).............. 2,417 46,847
BHP Billiton PLC.................... 23,195 378,091
BP PLC (Ordinary)................... 29,174 310,023
British American Tobacco PLC........ 57,178 1,276,084
Cable & Wireless PLC (Ordinary).....159,218 325,955
Hanson PLC.......................... 68,862 755,418
HBOS PLC............................186,998 3,187,816
Inchcape PLC........................ 14,450 565,848
Persimmon PLC (Ordinary)............ 85,944 1,856,108
Royal Bank of Scotland Group PLC.... 9,743 293,546
Royal Dutch Shell PLC............... 22,809 727,544
Scottish Power PLC.................. 14,940 139,398
Taylor Woodrow PLC..................106,411 695,101
Tesco PLC (Ordinary)................167,214 951,619
------------
$18,952,005
------------
TOTAL EQUITY INTERESTS-- 93.4%
(identified cost, $86,155,919)... $102,694,523
------------
OTHER ASSETS, LESS LIABILITIES -- 6.6% 7,202,855
------------
NET ASSETS -- 100% $109,897,378
============
* Non-income-producing security.
ADR American Depository Receipts
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $86,155,919) (Note 1A) $102,694,523
Cash.................................... 6,874,608
Foreign currency, at value (cost $2,408)
(Note 1)............................... 2,386
Receivable for fund shares sold......... 302,410
Dividends receivable.................... 48,212
Tax reclaim receivable.................. 50,230
Prepaid expenses........................ 10,840
Other assets............................ 4,311
------------
Total assets.......................... $109,987,520
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 46,246
Payable to affiliate for Trustees' fees. 2
Transfer agent fee payable.............. 3,094
Accrued expenses and other liabilities.. 40,800
------------
Total liabilities..................... $ 90,142
------------
NET ASSETS................................ $109,897,378
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $102,779,299
Accumulated net realized loss on investments
and foreign currency (computed on the
basis of identified cost).............. (11,549,838)
Unrealized appreciation of investments and
translation of assets and liabilities in foreign
currencies (computed on the basis of
identified cost)....................... 16,542,177
Undistributed net investment income..... 2,125,740
------------
Net assets applicable to outstanding
shares .............................. $109,897,378
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 6,083,740
============
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 18.06
============
STATEMENT OF OPERATIONS
Year Ended December 31, 2005
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 1,983,490
Less: Foreign Taxes..................... (189,073)
------------
Investment income....................... $ 1,794,417
------------
Expenses -
Investment adviser fee (Note 2):........ $ 589,126
Administrator fee (Note 2):............. 124,778
Compensation of Trustees not employees of
the investment adviser or administrator 13,228
Custodian fee (Note 1D):................ 184,062
Distribution expenses (Note 3):......... 184,129
Transfer and dividend disbursing agent fees 24,493
Printing................................ 6,269
Interest expense........................ 6,571
Shareholder communications.............. 6,980
Audit services.......................... 31,181
Legal services.......................... 9,400
Registration costs...................... 33,720
Miscellaneous .......................... 8,100
------------
Total expenses.......................... $ 1,222,037
------------
Deduct -
Reduction of custodian fee (Note 1D):... $ (23,784)
------------
Net expenses............................ $ 1,198,253
------------
Net investment income................... $ 596,164
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain -
Investment transactions (identified
cost basis).......................... $ 7,925,045
Foreign currency transactions.......... (81,061)
------------
Net realized gain....................... $ 7,843,984
Change in unrealized appreciation
(depreciation) - Investments
(identified cost basis)................ 6,735,432
Foreign currency....................... (9,036)
------------
Net change in unrealized appreciation... $ 6,726,396
------------
Net realized and unrealized gain of
investments............................ $ 14,570,380
------------
Net increase in net assets from operations $ 15,166,544
============
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
Year Ended
December 31,
-----------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2005 2004
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income ..................................................... $ 596,164 $ 534,963
Net realized gain on investments and foreign currency transactions......... 7,843,984 8,968,316
Change in unrealized appreciaiton (depreciation) on investments
and translation of assets and liabilities in foreign currencies.......... 6,726,396 (73,598)
-------------- --------------
Net increase in net assets resulting from operations..................... $ 15,166,544 $ 9,429,681
-------------- --------------
Distributions to shareholders
From net investment income................................................. $ (704,313) $ (376,098)
-------------- --------------
Total distributions...................................................... $ (704,313) $ (376,098)
-------------- --------------
Net increase (decrease) in net assets from fund share transactions (Note 4) . $ 33,169,454 $ (1,373,901)
-------------- --------------
Net increase in net assets................................................... $ 47,631,685 $ 7,679,682
NET ASSETS:
At beginning of year......................................................... 62,265,693 54,586,011
-------------- --------------
At end of year............................................................... $109,897,378 $ 62,265,693
============== ==============
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF YEAR.................................................................. $ 2,125,740 $ 2,069,471
============== ==============
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2005(1) 2004 2003(1) 2002(1) 2001(1)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $15.070 $12.890 $ 9.840 $11.510 $15.180
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) .......... $ 0.129 $ 0.128 $ 0.073 $ 0.070 $ (0.023)
Net realized and unrealized gain (loss) 3.028 2.140 3.044 (1.740) (3.647)
--------- --------- --------- --------- ---------
Total income (loss)
from investment operations...... $ 3.157 $ 2.268 $ 3.117 $ (1.670) $ (3.670)
--------- --------- --------- --------- ---------
Less distributions:
Dividends from investment income....... $ (0.167) $ (0.088) $ (0.067) $ - $ -
--------- --------- --------- --------- ---------
Total distributions................ $ (0.167) $(0.088) $ (0.067) $ - $ -
--------- --------- --------- --------- ---------
Net asset value, end of year................ $18.060 $15.070 $12.890 $ 9.840 $11.510
========= ========= ========= ========= =========
Total return(2) ............................ 21.13% 17.71% 31.96% (14.51%) (24.18%)
Ratios/Supplemental Data
Net assets, end of year (000 omitted).. $109,897 $ 62,266 $ 54,586 $ 50,835 $ 66,828
Ratio of net expenses to average net assets 1.66% 1.72% 1.80% 1.66%(3) 1.56%(3)
Ratio of net expenses after custodian fee
reduction to average net assets(4) .. 1.62% 1.71% 1.80% 1.65% -
Ratio of net investment income (loss) to average
net assets.......................... 0.81% 0.97% 0.81% 0.65% (0.18%)
Portfolio turnover rate .............. 99% 121% 77% 62%(5) 39%(5)
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Certain per share amounts are based on average shares outstanding.
(2)Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period
reported. Dividends and distributions, if any, are assumed to be invested at
the net asset value on the reinvestment date.
(3)Includes the fund's share of its corresponding Portfolio's allocated
expenses (Note 1).
(4)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.
(5)Represents portfolio turnover rate of the fund's corresponding portfolio
(Note 1).
See notes to financial statements
WRIGHT MANAGED EQUITY TRUST
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
The Wright Managed Equity Trust (the Trust), issuer of Wright Selected Blue
Chip Equities Fund (WSBC) series, Wright Major Blue Chip Equities Fund (WMBC)
series, and Wright International Blue Chip Equities Fund (WIBC) series
(collectively, the Funds), is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end, management investment company. The
Funds seek to provide total return consisting of price appreciation and current
income. Prior to December 20, 2002, WSBC and WIBC invested all of their
investable assets in interests in a separate corresponding open-end management
investment company (a Portfolio), a New York Trust, having the same investment
objective as its corresponding fund. Subsequent to December 20, 2002, the Funds
invest directly in securities rather than through the Portfolios and maintain
the same investment objectives.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America.
A. Investment Valuations - Securities listed on securities exchanges or in the
NASDAQ National Market are valued at closing sale prices, if those prices
are deemed to be representative of market values at the close of business.
Unlisted or listed securities for which closing sale prices are not
available are valued at the mean between the latest bid and asked prices.
Short-term obligations maturing in sixty days or less are valued at
amortized cost, which approximates fair value. Securities for which market
quotations are unavailable or deemed not to be representative of market
values at the close of business are appraised at their fair value as
determined in good faith by or at the direction of the Trustees.
B. Foreign Currency Translation - Investment security valuations, other
assets, and liabilities initially expressed in foreign currencies are
translated each business day into U.S. dollars based upon current exchange
rates. Purchases and sales of foreign investment securities and income and
expenses are translated into U.S. dollars based upon currency exchange
rates prevailing on the respective dates of such transactions.
C. Income - Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Interest income is recorded on the accrual basis.
However, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as the fund is informed of the ex-dividend date.
D. Expense Reduction - Investors Bank & Trust (IBT) serves as custodian to the
Funds. Pursuant to the custodian agreement, IBT receives a fee reduced by
credits which are determined based on the average daily cash balance the
Funds maintain with IBT. All credit balances used to reduce the Fund's
custodian fees are reported as a reduction of total expenses on the
Statement of Operations.
E. Federal Taxes - The Trust's policy is to comply with the provisions of
the Internal Revenue Code (the Code) available to regulated
investment companies and distribute to shareholders each year all of its
taxable income, including any net realized gain on investments.
Accordingly, no provision for federal income or excise tax is necessary.
At December 31, 2005, the Trust, for federal income tax purposes, had
capital loss carryovers of $30,269,711 (WMBC) and $11,465,196 (WIBC)
which will reduce the Funds' taxable income arising from future net
realized gain on investment transactions, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distribution
to shareholders which would otherwise be necessary to relieve the
respective fund of any liability for federal income or excise tax.Pursuant
to the Code, such capital loss carryovers will expire as follows:
12/31 WSBC WMBC WIBC
- -------------------------------------------------------------------------------
2009- - $10,435,545 $ -
2010- - 17,603,398 9,901,904
2011- - 2,230,768 1,563,292
- -------------------------------------------------------------------------------
At December 31, 2005, net currency losses of $(28,467) for WIBC
attributable to security transactions incurred after October 31, 2005 are
treated as arising on the first day of the fund's current taxable year.
Withholding taxes on foreign dividends have been provided for in accordance
with the Trust's understanding of the applicable country's tax rules and
rates.
F. Distributions - The Trust requires that differences in the recognition or
classification of income between the financial statements and tax earnings
and profits which result only in temporary overdistributions for financial
statement purposes, are classified as distributions in excess of net
investment income or accumulated net realized gains. Distributions in
excess of tax basis earnings and profits are reported in the financial
statements as a return of capital. Permanent differences between book and
tax accounting for certain items may result in reclassification of these
items.
During the year ended December 31, 2005, the following amounts were
reclassified due to differences between book and tax accounting created
primarily by the deferral of certain losses for tax purposes and character
reclassifications between net investment income and net realized capital
gains.
Accumulated Undistributed Undistributed
Paid-In Net Realized Gain/(Loss) Net Investment
Capital on Investments Income
- -------------------------------------------------------------------------------
WSBC $(98,645) $ 23,469 $ 75,176
WMBC (4,177) 5,758 (1,581)
WIBC 1 (164,419) 164,418
- -------------------------------------------------------------------------------
The tax character of distributions paid for the years ended December 31, 2005
and December 31, 2004 was as follows:
Year Ended 12/31/05 WSBC WMBC WIBC
- -------------------------------------------------------------------------------
Distributions declared from:
Ordinary income - $485,388 $704,313
Long-term capital gain $5,390,227 - -
- -------------------------------------------------------------------------------
Year Ended 12/31/04 WSBC WMBC WIBC
- -------------------------------------------------------------------------------
Distributions declared from:
Ordinary income - $289,970 $376,098
Long-term capital gain $1,597,259 - -
- -------------------------------------------------------------------------------
As of December 31, 2005, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
WSBC WMBC WIBC
- -------------------------------------------------------------------------------
Undistributed income - $ 19,381 $ 1,002,787
Undistributed gain $2,512,899 - -
Capital loss carryforwards - $(30,269,711) $(11,465,196)
Unrealized appreciation $9,340,452 $ 13,853,775 $ 16,025,362
Other temporary differences $924,379 $ (212,487) $ 1,555,126
- -------------------------------------------------------------------------------
G. Other - Investment transactions are accounted for on a trade-date basis.
H. Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as
investment adviser to the Funds pursuant to an Investment Advisory Contract.
Wright furnishes the Funds with investment management, investment advisory, and
other services. For its services, Wright is compensated based upon a percentage
of average daily net assets which rate is adjusted as average daily net assets
exceed certain levels. For the year ended December 31, 2005, the effective
annual rate was 0.80% for WIBC and 0.60% for WSBC and WMBC. Wright has been
allocated expenses of $25,969 and $212 on behalf of WSBC and WMBC, respectively.
The Trust also has engaged Eaton Vance Management (Eaton Vance) to act as
administrator of the Trust. Under the Administration Agreement, Eaton Vance is
responsible for managing the business affairs of the Trust and is compensated
based upon a percentage of average daily net assets which rate is reduced as
average daily net assets exceed certain levels. For the year ended December 31,
2005, the effective rate was 0.12% for WSBC, 0.12% for WMBC, and 0.17% for WIBC.
Certain of the Trustees and officers of the Trust are Trustees or officers of
the above organizations. Except as to Trustees of the Trust who are not
employees of Eaton Vance or Wright, Trustees and officers receive remuneration
for their services to the Trust out of the fees paid to Eaton Vance and Wright.
(3) DISTRIBUTION EXPENSES
The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule 12b-1
of the Investment Company Act of 1940. The Plan provides that each of the funds
will pay Wright Investors' Service Distributors, Inc. (Principal Underwriter), a
wholly-owned subsidiary of The Winthrop Corporation, an annual rate of 0.25% of
each fund's average daily net assets for activities primarily intended to result
in the sale of each fund's shares. Under a written agreement in effect through
the current fiscal year, Wright waives a portion of its advisory fee and/or
distribution fees and assumes operating expenses to the extent necessary to
limit expense ratios to 1.25% after custodian fee reductions, if any, for both
WSBC and WMBC. Pursuant to this agreement, the principal underwriter made a
reduction of its fees of $59,659 on behalf of WSBC. In addition, the Trustees
have adopted a service plan (the Service Plan) which allows the funds to
reimburse the Principal Underwriter for payments to intermediaries for providing
account administration and account maintenance services to their customers who
are beneficial owners of shares. The amount of service fee payable under the
Service Plan with respect to each class of shares may not exceed 0.25% annually
of the average daily net assets attributable to the respective classes. For the
year ended December 31, 2005, the funds did not accrue or pay any service fees.
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in fund shares were as follows:
Year Ended Year Ended
December 31, 2005 December 31, 2004
---------------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
Wright Selected Blue Chip Equities Fund--
Sold................................................... 1,994,101 $ 26,725,001 923,639 $ 11,222,820
Issued to shareholders in payment of distributions
declared.............................................. 362,284 4,698,930 106,988 1,396,188
Redemptions............................................ (1,988,270) (26,793,743) (957,939) (11,635,131)
------------ --------------- ------------ ---------------
Net increase ........................................ 368,115 $ 4,630,188 72,688 $ 983,877
============ =============== ============ ===============
Wright Major Blue Chip Equities Fund
Sold.................................................. 746,933 $ 8,790,299 898,054 $ 9,604,327
Issued to shareholders in payment of distributions
declared............................................. 32,288 390,542 20,569 233,277
Redemptions............................................ (969,256) (11,553,556) (2,151,425) (23,011,945)
------------ --------------- ------------ ---------------
Net increase (decrease).............................. (190,035) $ (2,372,715) (1,232,802) $ (13,174,341)
============ =============== ============ ===============
Wright International Blue Chip Equities Fund
Sold................................................... 2,853,233 $ 47,557,242 792,931 $ 10,418,061
Issued to shareholders in payment of distributions
declared............................................. 33,842 523,875 21,458 276,379
Redemptions............................................ (936,442) (14,911,663) (916,122) (12,068,341)
------------ --------------- ------------ ---------------
Net increase (decrease).............................. 1,950,633 $ 33,169,454 (101,733) $ (1,373,901)
============ =============== ============ ===============
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than U.S. Government securities
and short-term obligations were as follows:
Year Ended December 31, 2005
----------------------------------------------
WSBC WMBC WIBC
- -------------------------------------------------------------------------------
Purchases..... $ 51,724,386 $ 53,492,901 $ 98,084,417
=========== =========== ===========
Sales......... $ 52,883,081 $ 56,360,686 $ 71,927,879
=========== =========== ===========
- -------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) of the investment
securities owned at December 31, 2005, as computed on a federal income tax
basis, are as follows:
WSBC WMBC WIBC
- -------------------------------------------------------------------------------
Aggregate cost $ 38,187,068 $52,675,596 $ 86,672,734
=========== =========== ===========
Gross unrealized
appreciation 10,007,236 14,196,569 16,399,570
Gross unrealized
depreciation (666,784) (342,794) (377,781)
----------- ----------- -----------
Net unrealized
appreciation $ 9,340,452 $ 13,853,775 $ 16,021,789
=========== =========== ===========
- -------------------------------------------------------------------------------
The appreciation on currency for WIBC is $3,573.
(7) LINE OF CREDIT
The funds participate with other funds managed by Wright in a committed $10
million unsecured line of credit agreement with a bank. The funds may
temporarily borrow from the line of credit to satisfy redemption requests or
settle investment transactions. Interest is charged to each fund based on its
borrowings at an amount above the federal funds rate. In addition, a fee
computed at an annual rate of 0.10% on the average daily unused portion of the
$10 million line of credit, is allocated among the participating funds at the
end of each quarter. WSBC, WMBC, and WIBC did not have significant borrowings or
allocated fees during the year ended December 31, 2005.
(8) RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less publicly
available information about foreign companies, particularly those not subject to
the disclosure and reporting requirements of the U.S. securities laws. Foreign
issuers are generally not bound by uniform accounting, auditing, and financial
reporting requirements and standards of practice comparable to those applicable
to domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Portfolio, political or financial instability or diplomatic
and other developments which could affect such investments.
WRIGHT MANAGED EQUITY TRUST
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of
The Wright Managed Equity Trust:
We have audited the accompanying statements of assets and liabilities of
the Wright Managed Equity Trust (the "Trust"), comprising the Wright
Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund, and
Wright International Blue Chip Equities Fund (the "Funds"), including the
portfolios of investments as of December 31, 2005, the related statements
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether
the financial statements and financial highlights are free of material
misstatement. The Funds are not required to have, nor were we engaged to
perform, an audit of their internal control over financial reporting. Our
audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2005 by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of each of the Funds constituting the Wright Managed Equity Trust at
December 31, 2005, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 21, 2006
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
Face Coupon Maturity Market Current
Amount Description Rate Date Price Value Yield
- -----------------------------------------------------------------------------------------------------------------------------
(unaudited)
MORTGAGE-BACKED SECURITIES - 27.3%
- ------------------------------------
$ 56,554 FHLMC Gold Balloon #M90710 5.000% 03-01-07 $100.14 $ 56,632 5.0%
39,627 FHLMC Gold Balloon #M90724 5.500% 05-01-07 100.65 39,883 5.5%
167,733 FHLMC Gold Balloon #M90767 4.500% 11-01-07 99.39 166,718 4.5%
271,319 FHLMC Gold Balloon #M90802 4.000% 03-01-08 97.69 265,049 4.1%
956,680 FHLMC Gold Balloon #M90937 5.000% 08-01-09 99.89 955,597 5.0%
961,173 FHLMC Gold Balloon #M90941 4.500% 08-01-09 98.60 947,688 4.6%
331,318 FHLMC Gold Pool #M90796 4.000% 02-01-08 97.69 323,662 4.1%
316,085 FHLMC Pool #1B1291 4.397% 11-01-33 98.44 311,170 4.5%
783,366 FHLMC Pool #1G0233 5.018% 05-01-35 99.76 781,451 5.0%
69,567 FNMA Pool #254227 5.000% 02-01-09 99.64 69,315 5.0%
413,729 FNMA Pool #701043 4.052% 04-01-33 98.78 408,680 4.1%
743,012 FNMA Pool #809324 4.880% 02-01-35 99.62 740,215 4.9%
U.S. GOVERNMENT AGENCIES - 43.6%
- --------------------------------
$ 770,000 FFCB 2.500% 03-15-06 $ 99.58 $ 766,781 2.5%
3,135,000 FHLMC 3.250% 11-02-07 97.10 3,044,198 3.3%
1,345,000 FHLMC 3.030% 06-11-08 96.13 1,292,963 3.2%
895,000 FNMA 1.750% 06-16-06 98.74 883,749 1.8%
2,135,000 FNMA 3.000% 11-22-06 98.52 2,103,477 3.0%
U.S. TREASURIES - 27.7%
- -----------------------
$ 125,000 U.S. Treasury Notes 4.375% 05-15-07 $ 99.95 $ 124,937 4.4%
4,160,000 U.S. Treasury Notes 3.000% 11-15-07 97.54 4,057,627 3.1%
1,000,000 U.S. Treasury Notes 3.375% 11-15-08 97.35 973,477 3.5%
-----------
Total Investments (identified cost, $18,612,571)-- 98.6% $18,313,269
Other Assets, Less Liabilities-- 1.4% 253,808
-----------
Net Assets-- 100.0% $18,567,077
===========
FFCB - Federal Farm Credit Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
see notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of $18,612,571)(Note 1A) $ 18,313,269
Cash.................................... 155,898
Receivable for investments sold......... 20,554
Receivable for fund shares sold......... 3,015
Receivable from investment adviser...... 22,470
Interest receivable..................... 77,821
Prepaid expenses........................ 5,309
------------
Total assets.......................... $ 18,598,336
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 1,991
Distributions payable................... 9,499
Payable to affiliate for Trustees' fees. 11
Transfer agent fee ..................... 3,446
Accrued expenses........................ 16,312
------------
Total liabilities..................... $ 31,259
------------
NET ASSETS................................ $ 18,567,077
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for Fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 20,471,427
Accumulated undistributed net realized loss
on investments (computed on the basis of
identified cost)....................... (1,605,146)
Unrealized depreciation on investments
(computed on the basis of identified cost) (299,302)
Undistributed net investment income..... 98
------------
Net assets applicable to outstanding
shares................................ $ 18,567,077
============
SHARES OF BENEFICIAL INTEREST OUTSTANDING. 1,898,808
============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST.................. $ 9.78
============
STATEMENT OF OPERATIONS
Year Ended December 31, 2005
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 658,350
------------
Expenses -
Investment adviser fee (Note 3)........ $ 89,871
Administrator fee (Note 3)............. 17,974
Compensation of Trustees not employees of
the investment adviser or administrator 13,564
Custodian fee (Note 1C)................ 48,192
Distribution expenses (Note 4)......... 49,928
Transfer and dividend disbursing agent fees 20,613
Printing............................... 3,595
Interest expense....................... 1,730
Shareholder communications............. 5,061
Audit services......................... 31,744
Legal services......................... 4,927
Registration costs..................... 18,398
Miscellaneous.......................... 4,799
------------
Total expenses........................ $ 310,396
------------
Deduct -
Reduction of custodian fee (Note 1C):.. $ (3,513)
Allocation of expenses to the
investment adviser (Note 3)........... (22,470)
Reduction of investment adviser fee
(Note 3).............................. (44,937)
Reduction of distribution expenses
by principal underwriter (Note 4)..... (49,928)
------------
Total deductions...................... $ (120,848)
------------
Net expenses.......................... $ 189,548
------------
Net investment income............... $ 468,802
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis)................ $ (126,026)
Change in unrealized depreciation
of investments......................... (148,967)
------------
Net realized and unrealized loss of
investments........................... $ (274,993)
------------
Net increase in net assets from operations $ 193,809
============
See notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
Year Ended
December 31,
-------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2005 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 468,802 $ 327,655
Net realized loss on investments........................................... (126,026) (42,275)
Change in unrealized depreciation on investments........................... (148,967) (185,876)
-------------- --------------
Net increase in net assets resulting from operations..................... $ 193,809 $ 99,504
-------------- --------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (605,643) $ (735,924)
-------------- --------------
Total distributions...................................................... $ (605,643) $ (735,924)
-------------- --------------
Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (2,593,760) $ (5,348,388)
-------------- --------------
Net decrease in net assets............................................... $ (3,005,594) $ (5,984,808)
NET ASSETS:
At beginning of year......................................................... 21,572,671 27,557,479
-------------- --------------
At end of year............................................................... $ 18,567,077 $ 21,572,671
============== ==============
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED
IN NET ASSETS AT END OF YEAR................................................. $ 98 $ --
============== ==============
See notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB)
- -------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 9.980 $ 10.250 $ 10.490 $ 10.290 $ 10.080
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income(1) ............... $ 0.227 $ 0.123 $ 0.165 $ 0.349 $ 0.480(7)
Net realized and unrealized gain (loss).. (0.128) (0.080) (0.102) 0.200 0.195(7)
--------- --------- --------- --------- ---------
Total income from investment operations $ 0.099 $ 0.043 $ 0.063 $ 0.549 $ 0.675
--------- --------- --------- --------- ---------
Less distributions:
Distributions from investment income... $ (0.299) $ (0.313) $ (0.303) $ (0.349) $ (0.465)
--------- --------- --------- --------- ---------
Total distributions.................... $ (0.299) $ (0.313) $ (0.303) $ (0.349) $ (0.465)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 9.780 $ 9.980 $ 10.250 $ 10.490 $ 10.290
========= ========= ========= ========= =========
Total return(2) ............................ 1.01% 0.43% 0.61% 5.42% 6.82%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).... $ 18,567 $ 21,573 $ 27,557 $ 33,839 $ 36,025
Ratio of net expenses to average net assets 0.97% 0.96% 0.95% 0.97%(3) 0.97%(3)
Ratio of net expenses after custodian fee
reduction to average net assets(4)(6) 0.95% 0.95% 0.95% 0.95%(3) 0.95%(3)
Interest expense ....................... 0.01% _ 0.01% - -
Ratio of net investment income to average
net assets............................ 2.35% 1.38% 1.75% 3.10% 4.40%
Portfolio turnover rate ................ 109% 138% 165% 64%(5) 92%(5)
- ---------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2005, 2004, 2003, 2002, and 2001, 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 administration fees, or a combination thereof.
Had such action not been undertaken, net investment income per share and the
ratios would have been as follows:
2005 2004 2003 2002 2001
--------------------------------------------------------------------
Net investment income per share........ $ 0.170 $ 0.097 $ 0.134 $ 0.323 $ 0.452
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses ............................ 1.56% 1.38% 1.28% 1.20%(3) 1.22%(3)
========= ========= ========= ========= =========
Expense after custodian fee reduction(4) 1.54% 1.37% 1.28% 1.18%(3) 1.20%(3)
========= ========= ========= ========= =========
Interest expense..................... 0.01% - 0.01% - -
========= ========= ========= ========= =========
Net investment income................ 1.76% 0.96% 1.42% 2.87% 4.15%
========= ========= ========= ========= =========
- ---------------------------------------------------------------------------------------------------------------------------------
(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 (Note 1).
(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
(Note 1).
(6)Under a written agreement, Wright waives all or a portion of 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.
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
Face Coupon Maturity Market Current
Amount Description Rate Date Price Value Yield
- ------------------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSET-BACKED SECURITIES - 9.9%
FINANCIAL SERVICES
$ 380,000 Citibank Credit Card Master Trust 5.875% 03-10-11 $103.12 $ 391,837 5.7%
340,000 Citigroup Commercial Mortgage Trust,
Series 2004-C2 A5 4.733% 10-15-41 97.17 330,394 4.9%
335,000 Credit-Based Asset Servicing and Securities,
Series 2005-CB7 AF2 5.147% 11-25-35 99.74 334,126 5.2%
440,000 CS First Boston Mortgage Securities Corp.,
Series 2003-C3 A5 3.936% 05-15-38 92.89 408,730 4.2%
414,187 First Horizon Alternative Mortgage Securities,
Series 2005-AA10 1A2 5.776% 12-25-35 99.94 413,928 5.8%
565,000 JP Morgan Chase Commercial Mortgage Securities,
Series 2004-C3 A5 4.878% 01-15-42 97.85 552,854 5.0%
220,000 JP Morgan Chase Commercial Mortgage Securities,
Series 2004-CBX A6 4.899% 01-12-37 98.19 216,023 5.0%
610,000 MBNA Master Credit Card Trust,
Series 1999-BA 5.900% 08-15-11 103.38 630,630 5.7%
405,000 Salomon Brothers Mortage Securities VII,
Series 2002-KEY2 A2 4.467% 03-18-36 98.23 397,817 4.5%
405,000 Structured Asset Securities Corp.,
Series 2004-23XS 1A4 4.930% 01-25-35 97.49 394,832 5.1%
-----------
Total Asset Backed Securities (identified cost, $4,173,042) $ 4,071,171
-----------
CORPORATE BONDS - 24.9%
AUTO - 0.5%
$ 190,000 DaimlerChrysler North America
Holding Co. 7.200% 09-01-09 $105.84 $ 201,095 6.8%
BANKS - 4.5%
$ 335,000 CIT Group, Inc. 7.750% 04-02-12 $113.56 $ 380,411 6.8%
320,000 National Rural Utilities 7.250% 03-01-12 111.67 357,340 6.5%
325,000 Royal Bank of Scotland 7.648% 08-31-49 121.14 393,715 6.3%
390,000 SLM Corp 4.823% 01-26-09 100.31 391,217 4.4%
360,000 U.S. Bancorp 5.100% 07-15-07 100.43 361,553 5.1%
BLDG - RESIDENTIAL/COMMER - 0.4%
$ 170,000 Centex Corp. 7.875% 02-01-11 $109.90 $ 186,830 7.2%
BUILDING MATERIALS - 0.2%
$ 95,000 Lowes Co., Inc. 8.250% 06-01-10 $113.26 $ 107,601 7.3%
CABLE TV - 0.5%
$ 170,000 Comcast Cable Comm HLDGS 8.375% 03-15-13 $115.91 $ 197,043 7.2%
DIVERSIFIED FINANCIALS - 6.6%
$ 375,000 Bear Stearns Co., Inc. 5.119% 09-27-07 $101.01 $ 378,783 5.1%
340,000 Boeing Capital Corp., Senior Note 7.375% 09-27-10 110.15 374,499 6.7%
230,000 Cendant Corp. 6.250% 01-15-08 101.85 234,259 6.1%
190,000 First Union Corp. 6.400% 04-01-08 103.40 196,463 6.2%
415,000 General Electric Cap Corp. 6.125% 02-22-11 105.32 437,081 5.8%
300,000 Goldman Sachs Group, Inc. 6.600% 01-15-12 107.55 322,658 6.1%
375,000 International Lease Finance Corp. 5.875% 05-01-13 103.64 388,640 5.7%
410,000 JP Morgan Chase & Co. 5.150% 10-01-15 98.77 404,952 5.2%
ELECTRIC - INTEGRATED - 1.0%
$ 205,000 Dominion Resources, Inc. 6.300% 03-15-33 $102.08 $ 209,260 6.2%
190,000 PPL Electric Utilities 5.875% 08-15-07 101.43 192,722 5.8%
FOOD - RETAIL - 0.5%
$ 200,000 Safeway, Inc., Note 5.800% 08-15-12 $100.65 $ 201,293 5.8%
FOOD, BEVERAGE & TOBACCO - 1.4%
$ 190,000 HJ Heinz Finance Co. 6.000% 03-15-12 $102.85 $ 195,422 5.8%
380,000 Pepsico, Inc. 3.200% 05-15-07 98.10 372,777 3.3%
INSTRUMENTS - CONTROLS - 0.8%
$ 345,000 Honeywell International, Inc. 7.000% 03-15-07 $102.31 $ 352,969 6.8%
MEDICAL - 0.8%
$ 110,000 Amgen, Inc. 6.500% 12-01-07 $103.07 $ 113,381 6.3%
205,000 Wyeth 5.500% 03-15-13 101.53 208,129 5.4%
OIL & GAS - 3.0%
$ 460,000 BP Capital Markets PLC 2.750% 12-29-06 $ 98.14 $ 451,459 2.8%
320,000 Phillips Petroleum 6.650% 07-15-18 113.08 361,846 5.9%
175,000 Sempra Energy 6.000% 02-01-13 103.54 181,190 5.8%
180,000 Transocean Sedco Forex 7.500% 04-15-31 126.40 227,515 5.9%
PIPELINES - 0.5%
$ 185,000 Duke Capital Corp., Senior Note 7.500% 10-01-09 $107.47 $ 198,822 7.0%
PROPERTY/CASUALTY INSURANCE - 0.5%
$ 205,000 Fund American Cos., Inc.,
Guaranteed Senior Note 5.875% 05-15-13 $101.06 $ 207,164 5.8%
RETAIL - 0.4%
$ 135,000 TJX Cos., Inc. 7.450% 12-15-09 $109.16 $ 147,370 6.8%
TELECOM - 3.3%
$ 180,000 AT&T Wireless 7.875% 03-01-11 $112.33 $ 202,186 7.0%
145,000 British Telecom PLC 8.875% 12-15-30 134.19 194,575 6.6%
170,000 Deutsche Telekom International Finance 8.000% 06-15-10 113.48 192,922 7.0%
170,000 France Telecom SA 7.750% 03-01-11 111.81 190,083 6.9%
190,000 Sprint Capital Corp. 6.125% 11-15-08 102.90 195,507 6.0%
325,000 Verizon Global Funding Corp. 7.750% 12-01-30 119.22 387,479 6.5%
-----------
Total Corporate Bonds (identified cost, $10,359,685) $10,298,211
-----------
GOVERNMENT INTERESTS - 63.3%
MORTGAGE-BACKED SECURITIES - 41.0%
$ 142,326 FHLMC Gold Pool #A10798 5.500% 05-01-33 $ 99.36 $ 141,413 5.5%
346,899 FHLMC Gold Pool #A32600 5.500% 05-01-35 99.14 343,899 5.5%
104,450 FHLMC Gold Pool #C01646 6.000% 09-01-33 101.15 105,649 5.9%
66,597 FHLMC Gold Pool #C01702 6.500% 10-01-33 102.98 68,579 6.3%
222,251 FHLMC Gold Pool #C47318 7.000% 09-01-29 105.47 234,398 6.6%
219,554 FHLMC Gold Pool #C90493 6.500% 11-01-21 103.29 226,771 6.3%
32,701 FHLMC Gold Pool #E00903 7.000% 10-01-15 103.82 33,950 6.7%
368,531 FHLMC Gold Pool #E01425 4.500% 08-01-18 97.58 359,599 4.6%
204,670 FHLMC Gold Pool #G01842 4.500% 06-01-35 94.11 192,624 4.8%
220,047 FHLMC Gold Pool #G08088 6.500% 10-01-35 102.52 225,594 6.3%
270,678 FHLMC Gold Pool #N30514 5.500% 11-01-28 100.37 271,683 5.5%
318,654 FHLMC Pool #1B1291 4.401% 11-01-33 98.44 313,699 4.5%
930,823 FHLMC Pool #1G0233 5.018% 05-01-35 99.76 928,548 5.0%
48,131 FHLMC Pool #27663 7.000% 06-01-29 104.25 50,179 6.7%
315,533 FNMA Pool #253057 8.000% 12-01-29 106.92 337,358 7.5%
203,320 FNMA Pool #253925 7.000% 05-01-31 104.66 212,791 6.7%
226,189 FNMA Pool #254375 6.500% 07-01-22 103.37 233,816 6.3%
91,198 FNMA Pool #254845 4.000% 07-01-13 96.78 88,261 4.1%
89,958 FNMA Pool #254863 4.000% 08-01-13 96.78 87,062 4.1%
509,256 FNMA Pool #254865 4.500% 09-01-18 97.56 496,845 4.6%
598,624 FNMA Pool #254904 5.500% 10-01-33 99.30 594,421 5.5%
1,259,845 FNMA Pool #254915 4.500% 09-01-23 95.80 1,206,984 4.7%
401,910 FNMA Pool #255747 4.500% 04-01-25 95.58 384,159 4.7%
48,954 FNMA Pool #479477 6.000% 01-01-29 101.30 49,591 5.9%
52,776 FNMA Pool #489357 6.500% 03-01-29 103.01 54,366 6.3%
51,663 FNMA Pool #535332 8.500% 04-01-30 108.40 56,000 7.8%
351,606 FNMA Pool #535934 7.000% 05-01-31 104.42 367,151 6.7%
243,329 FNMA Pool #545317 5.500% 11-01-16 100.76 245,188 5.5%
291,854 FNMA Pool #545407 5.500% 01-01-32 99.34 289,942 5.5%
75,298 FNMA Pool #545782 7.000% 07-01-32 104.86 78,957 6.7%
540,873 FNMA Pool #576524 5.500% 01-01-29 99.30 537,100 5.5%
77,313 FNMA Pool #597396 6.500% 09-01-31 102.82 79,497 6.3%
40,712 FNMA Pool #634823 6.500% 03-01-32 102.80 41,853 6.3%
394,316 FNMA Pool #648465 6.500% 06-01-32 103.54 408,283 6.3%
402,541 FNMA Pool #663689 5.000% 01-01-18 99.11 398,938 5.0%
334,792 FNMA Pool #701043 4.056% 04-01-33 98.78 330,707 4.1%
210,540 FNMA Pool #725550 5.000% 05-01-19 99.11 208,656 5.0%
244,908 FNMA Pool #738630 5.500% 11-01-33 99.30 243,189 5.5%
428,115 FNMA Pool #739372 4.121% 09-01-33 97.45 417,199 4.2%
311,662 FNMA Pool #753189 4.000% 12-01-33 91.14 284,055 4.4%
373,735 FNMA Pool #755749 5.500% 01-01-29 99.36 371,333 5.5%
906,721 FNMA Pool #781893 4.500% 11-01-31 94.50 856,875 4.8%
296,932 FNMA Pool #807804 5.500% 03-01-35 99.07 294,179 5.6%
880,761 FNMA Pool #809324 4.880% 02-01-35 99.62 877,446 4.9%
473,466 FNMA Pool #849893 4.000% 11-01-23 93.39 442,192 4.3%
85,909 GNMA II Pool #2671 6.000% 11-20-28 102.37 87,947 5.9%
13,865 GNMA II Pool #2909 8.000% 04-20-30 106.59 14,779 7.5%
38,660 GNMA II Pool #2972 7.500% 09-20-30 104.72 40,484 7.2%
14,703 GNMA II Pool #2973 8.000% 09-20-30 106.59 15,672 7.5%
859,930 GNMA II Pool #3442 5.000% 09-20-33 98.45 846,606 5.1%
381,012 GNMA Pool #374892 7.000% 02-15-24 105.33 401,324 6.6%
73,458 GNMA Pool #376400 6.500% 02-15-24 104.72 76,928 6.2%
109,501 GNMA Pool #379982 7.000% 02-15-24 105.33 115,338 6.6%
348,463 GNMA Pool #393347 7.500% 02-15-27 105.38 367,212 7.1%
128,132 GNMA Pool #410081 8.000% 08-15-25 107.21 137,375 7.5%
38,389 GNMA Pool #427199 7.000% 12-15-27 105.20 40,386 6.7%
49,284 GNMA Pool #436214 6.500% 02-15-13 103.35 50,933 6.3%
34,423 GNMA Pool #442996 6.000% 06-15-13 102.71 35,355 5.8%
154,442 GNMA Pool #448490 7.500% 03-15-27 105.38 162,752 7.1%
97,366 GNMA Pool #458762 6.500% 01-15-28 104.74 101,981 6.2%
108,461 GNMA Pool #460726 6.500% 12-15-27 104.75 113,618 6.2%
42,724 GNMA Pool #463839 6.000% 05-15-13 102.71 43,881 5.8%
75,012 GNMA Pool #478072 6.500% 05-15-28 104.74 78,567 6.2%
28,131 GNMA Pool #488924 6.500% 11-15-28 104.74 29,464 6.2%
29,595 GNMA Pool #510706 8.000% 11-15-29 107.12 31,701 7.5%
114,801 GNMA Pool #581536 5.500% 06-15-33 100.82 115,740 5.5%
U.S. GOVERNMENT AGENCIES - 6.8%
- -------------------------------
$ 535,000 FNMA 3.875% 11-17-08 $ 97.56 $ 521,957 4.0%
1,165,000 FNMA 5.000% 04-15-15 101.70 1,184,756 4.9%
625,000 FNMA 6.250% 05-15-29 118.19 738,663 5.3%
320,000 Tennessee Valley Authority 6.000% 03-15-13 107.46 343,868 5.6%
U.S. TREASURIES - 15.5%
- -----------------------
$ 1,370,000 U.S. Treasury Bonds 4.375% 05-15-07 $ 99.95 $ 1,369,305 4.4%
200,000 U.S. Treasury Bonds 3.250% 08-15-08 97.26 194,524 3.3%
290,000 U.S. Treasury Bonds 5.000% 08-15-11 103.25 299,414 4.8%
350,000 U.S. Treasury Bonds 3.875% 02-15-13 96.96 339,350 4.0%
1,545,000 U.S. Treasury Bonds 7.250% 05-15-16 122.82 1,897,575 5.9%
1,890,000 U.S. Treasury Bonds 6.125% 11-15-27 120.70 2,281,290 5.1%
-----------
Total Government Interests (identified cost, $26,246,032) $26,149,724
-----------
Total Investments (identified cost, $40,778,759)-- 98.1% $40,519,106
Other Assets, Less Liabilities-- 1.9% 769,006
-----------
Net Assets-- 100.0% $41,288,112
===========
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of $40,778,759)(Note 1A) $ 40,519,106
Cash.................................... 446,838
Receivable for investments sold......... 25,524
Receivable for fund shares sold......... 82,728
Interest receivable..................... 334,384
Prepaid expenses........................ 6,813
------------
Total assets.......................... $ 41,415,393
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 53,751
Distributions payable................... 33,916
Payable to affiliate for distribution fees 18,364
Transfer agent fee ..................... 3,489
Accrued expenses and other liabilities.. 17,761
------------
Total liabilities..................... $ 127,281
------------
NET ASSETS................................ $ 41,288,112
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 43,985,951
Accumulated undistributed net realized loss on
investments (computed on the basis of
identified cost)....................... (2,428,587)
Unrealized depreciation on investments
(computed on the basis of identified cost) (259,653)
Distributions in excess of net investment
income................................ (9,599)
------------
Net assets applicable to outstanding
shares................................ $ 41,288,112
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................. 3,321,644
============
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE OF
BENEFICIAL INTEREST..................... $ 12.43
============
STATEMENT OF OPERATIONS
Year Ended December 31, 2005
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 1,858,467
------------
Expenses -
Investment adviser fee (Note 3)........ $ 181,335
Administrator fee (Note 3)............. 28,208
Compensation of Trustees not employees of
the investment adviser or administrator 13,563
Custodian fee (Note 1C)................ 63,454
Distribution expenses (Note 4)......... 100,742
Transfer and dividend disbursing agent fees 20,325
Printing............................... 3,834
Interest expense....................... 1,736
Shareholder communications............. 4,572
Audit services......................... 26,744
Legal services......................... 6,483
Registration costs..................... 19,226
Miscellaneous.......................... 5,376
------------
Total expenses........................ $ 475,598
------------
Deduct -
Reduction of custodian fee (Note 1C):.. $ (10,394)
Reduction of distribution expenses
by principal underwriter (Note 4)..... $ (82,378)
------------
Total deductions....................... $ (92,772)
------------
Net expenses.......................... $ 382,826
------------
Net investment income............... $ 1,475,641
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis)................ $ (272,363)
Change in unrealized depreciation
of investments......................... (584,766)
------------
Net realized and unrealized loss of
investments........................... $ (857,129)
------------
Net increase in net assets from
operations........................... $ 618,512
============
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
Year Ended
December 31,
------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 1,475,641 $ 1,429,546
Net realized gain (loss) on investments.................................... (272,363) 212,872
Change in unrealized depreciation of investments........................... (584,766) (319,493)
--------------- ---------------
Net increase in net assets resulting from operations..................... $ 618,512 $ 1,322,925
--------------- ---------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (1,706,230) $ (1,696,335)
--------------- ---------------
Total distributions...................................................... $ (1,706,230) $ (1,696,335)
--------------- ---------------
Net increase (decrease) in net assets from fund share transactions (Note 5).. $ 4,162,659 $ (3,730,440)
--------------- ---------------
Net increase (decrease) in net assets.................................... $ 3,074,941 $ (4,103,850)
NET ASSETS:
At beginning of year......................................................... 38,213,171 42,317,021
--------------- ---------------
At end of year............................................................... $ 41,288,112 $ 38,213,171
=============== ===============
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT END OF YEAR........................................ $ (9,599) $ (9,672)
=============== ===============
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 12.770 $ 12.870 $ 13.010 $ 12.550 $ 12.630
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income(1) ................ $ 0.465 $ 0.453 $ 0.483 $ 0.639 $ 0.709 (2)
Net realized and unrealized gain (loss).. (0.271) (0.011) (0.066) 0.461 (0.090)(2)
--------- --------- --------- --------- ---------
Total income from investment operations $ 0.194 $ 0.442 $ 0.417 $ 1.100 $ 0.619
--------- --------- --------- --------- ---------
Less distributions:
Distributions from investment income..... $ (0.534) $ (0.542) $ (0.557) $ (0.640) $ (0.699)
--------- --------- --------- --------- ---------
Total distributions.................... $ (0.534) $ (0.542) $ (0.557) $ (0.640) $ (0.699)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 12.430 $ 12.770 $ 12.870 $ 13.010 $ 12.550
========= ========= ========= ========= =========
Total return(3) ............................ 1.54% 3.52% 3.25% 9.03% 4.96%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).... $ 41,288 $ 38,213 $ 42,317 $ 39,404 $ 50,620
Ratio of net expenses to average net assets 0.98% 0.96% 0.95% 0.96% 0.96%
Ratio of net expenses after custodian fee
reduction to average net assets(4)(5) . 0.95% 0.95% 0.95% 0.95% 0.95%
Ratio of net investment income to average
net assets............................ 3.66% 3.58% 3.67% 4.92% 5.44%
Portfolio turnover rate.................. 86% 64% 131% 68% 38%
- --------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2005, 2004, 2003, 2002, and 2001, 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:
2005 2004 2003 2002 2001
--------------------------------------------------------------------
Net investment income per share.......... $ 0.439 $ 0.429 $ 0.455 $ 0.621 $ 0.701
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses............................... 1.18% 1.18% 1.17% 1.09% 1.02%
========= ========= ========= ========= =========
Expenses after custodian fee reduction(4) 1.15% 1.17% 1.17% 1.08% 1.01%
========= ========= ========= ========= =========
Net investment income.................. 3.46% 3.36% 3.46% 4.78% 6.38%
========= ========= ========= ========= =========
- ---------------------------------------------------------------------------------------------------------------------------------
(2)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).
(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 year reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date.
(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)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.
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
Face Coupon Maturity Market Current
Amount Description Rate Date Price Value Yield
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
MORTGAGE-BACKED SECURITIES - 98.6%
$ 7,925 FHLMC Gold Balloon #M90724 5.500% 05-01-07 $100.65 $ 7,977 5.5%
167,733 FHLMC Gold Balloon #M90767 4.500% 11-01-07 99.39 166,718 4.5%
90,440 FHLMC Gold Balloon #M90802 4.000% 03-01-08 97.69 88,350 4.1%
203,290 FHLMC Gold Pool #C00778 7.000% 06-01-29 104.25 211,937 6.7%
274,545 FHLMC Gold Pool #C47318 7.000% 09-01-29 105.47 289,551 6.6%
199,434 FHLMC Gold Pool #E00678 6.500% 06-01-14 102.78 204,970 6.3%
204,361 FHLMC Gold Pool #E00721 6.500% 07-01-14 102.78 210,033 6.3%
172,318 FHLMC Gold Pool #G00812 6.500% 04-01-26 102.96 177,418 6.3%
1,028,576 FHLMC Pool #11636 5.000% 01-01-19 99.18 1,020,114 5.0%
142,402 FHLMC Pool #765183 5.818% 08-01-24 100.26 142,775 5.8%
70,514 FHLMC Pool #C00548 7.000% 08-01-27 104.36 73,591 6.7%
267,569 FHLMC Pool #D82572 7.000% 09-01-27 104.36 279,247 6.7%
612,061 FHLMC, Series 15, Class L 7.000% 07-25-23 103.74 634,929 6.7%
34,783 FNMA Pool #254227 5.000% 02-01-09 99.64 34,657 5.0%
32,586 FNMA Pool #254505 5.000% 11-01-09 99.64 32,468 5.0%
843,555 FNMA Pool #254686 5.500% 04-01-18 100.70 849,419 5.5%
650,558 FNMA Pool #254907 5.000% 10-01-18 99.11 644,736 5.0%
140,879 FNMA Pool #535131 6.000% 03-01-29 101.30 142,714 5.9%
195,539 FNMA Pool #545133 6.500% 12-01-28 103.13 201,666 6.3%
1,659,511 FNMA Pool #634187 6.000% 02-01-22 101.79 1,689,188 5.9%
134,180 FNMA Pool #663689 5.000% 01-01-18 99.11 132,979 5.0%
615,161 FNMA Pool #673315 5.500% 11-01-32 99.33 611,022 5.5%
179,185 FNMA Pool #701043 4.056% 04-01-33 98.78 176,998 4.1%
445,135 FNMA Pool #729950 6.000% 12-01-33 101.08 449,922 5.9%
1,258,892 FNMA Pool #730936 4.500% 08-01-33 94.56 1,190,442 4.8%
65,433 FNMA Pool #733750 6.310% 10-01-32 102.17 66,853 6.2%
745,126 FNMA Pool #801357 5.500% 08-01-34 99.33 740,113 5.5%
964,879 FNMA Pool #816108 5.500% 05-01-35 99.07 955,934 5.6%
433,610 FNMA Pool #816468 5.000% 03-01-20 98.97 429,130 5.1%
688,058 FNMA Pool #821574 6.000% 06-01-35 100.98 694,795 5.9%
4,368 GNMA II Pool #1596 9.000% 04-20-21 108.94 4,759 8.3%
77,333 GNMA II Pool #2268 7.500% 08-20-26 104.96 81,168 7.1%
7,075 GNMA II Pool #2855 8.500% 12-20-29 107.70 7,619 7.9%
691,529 GNMA II Pool #3259 5.500% 07-20-32 100.58 695,537 5.5%
430,758 GNMA II Pool #3284 5.500% 09-20-32 100.58 433,255 5.5%
117,167 GNMA II Pool #601135 6.310% 09-20-32 103.07 120,761 6.1%
134,798 GNMA II Pool #601255 6.310% 01-20-33 103.04 138,897 6.1%
114,545 GNMA II Pool #608120 6.310% 01-20-33 103.04 118,028 6.1%
51,208 GNMA II Pool #723 7.500% 01-20-23 105.40 53,972 7.1%
41 GNMA Pool #009106 8.250% 05-15-06 101.15 41 8.2%
186 GNMA Pool #012526 8.000% 11-15-06 100.98 188 7.9%
325,186 GNMA Pool #081161 5.500% 11-20-34 100.25 325,996 5.5%
6,111 GNMA Pool #172558 9.500% 08-15-16 109.75 6,707 8.7%
2,583 GNMA Pool #176992 8.000% 11-15-16 106.80 2,759 7.5%
2,768 GNMA Pool #177784 8.000% 10-15-16 106.80 2,956 7.5%
12,925 GNMA Pool #192357 8.000% 04-15-17 107.05 13,836 7.5%
19,621 GNMA Pool #194057 8.500% 04-15-17 108.23 21,234 7.9%
5,380 GNMA Pool #194287 9.500% 03-15-17 110.07 5,922 8.6%
1,587 GNMA Pool #196063 8.500% 03-15-17 108.23 1,717 7.9%
7,915 GNMA Pool #211231 8.500% 05-15-17 108.23 8,566 7.9%
4,704 GNMA Pool #212601 8.500% 06-15-17 108.23 5,091 7.9%
4,456 GNMA Pool #220917 8.500% 04-15-17 108.23 4,822 7.9%
5,240 GNMA Pool #223133 9.500% 07-15-17 110.07 5,767 8.6%
9,123 GNMA Pool #223348 10.000% 08-15-18 111.75 10,195 8.9%
13,495 GNMA Pool #228308 10.000% 01-15-19 111.80 15,088 8.9%
3,067 GNMA Pool #230223 9.500% 04-15-18 110.34 3,384 8.6%
1,047 GNMA Pool #247473 10.000% 09-15-18 104.79 1,097 9.5%
3,763 GNMA Pool #247872 10.000% 09-15-18 111.75 4,206 9.0%
4,626 GNMA Pool #251241 9.500% 06-15-18 110.34 5,105 8.6%
7,882 GNMA Pool #260999 9.500% 09-15-18 110.34 8,697 8.6%
6,037 GNMA Pool #263439 10.000% 02-15-19 111.80 6,750 8.9%
1,535 GNMA Pool #265267 9.500% 08-15-20 110.79 1,700 8.6%
1,997 GNMA Pool #266983 10.000% 02-15-19 111.80 2,232 8.9%
3,289 GNMA Pool #273690 9.500% 08-15-19 110.58 3,637 8.6%
3,890 GNMA Pool #286556 9.000% 03-15-20 109.20 4,247 8.2%
5,370 GNMA Pool #301366 8.500% 06-15-21 108.92 5,849 7.8%
6,404 GNMA Pool #302933 8.500% 06-15-21 108.92 6,975 7.8%
6,060 GNMA Pool #306693 8.500% 09-15-21 108.92 6,600 7.8%
11,766 GNMA Pool #308792 9.000% 07-15-21 109.34 12,865 8.2%
3,678 GNMA Pool #314222 8.500% 04-15-22 109.04 4,011 7.8%
8,927 GNMA Pool #315187 8.000% 06-15-22 107.08 9,559 7.5%
14,762 GNMA Pool #315754 8.000% 01-15-22 107.08 15,808 7.5%
15,749 GNMA Pool #316240 8.000% 01-15-22 107.08 16,864 7.5%
30,329 GNMA Pool #319441 8.500% 04-15-22 109.04 33,070 7.8%
11,075 GNMA Pool #325165 8.000% 06-15-22 107.08 11,859 7.5%
16,004 GNMA Pool #335950 8.000% 10-15-22 107.08 17,138 7.5%
250,618 GNMA Pool #346987 7.000% 12-15-23 105.33 263,973 6.6%
134,279 GNMA Pool #352001 6.500% 12-15-23 104.75 140,658 6.2%
60,647 GNMA Pool #352110 7.000% 08-15-23 105.33 63,878 6.6%
2,381,885 GNMA Pool #3556 5.500% 05-20-34 100.47 2,393,042 5.5%
100,390 GNMA Pool #368238 7.000% 12-15-23 105.33 105,740 6.6%
52,052 GNMA Pool #372379 8.000% 10-15-26 107.21 55,804 7.5%
104,930 GNMA Pool #410215 7.500% 12-15-25 105.56 110,761 7.1%
26,361 GNMA Pool #414736 7.500% 11-15-25 105.56 27,826 7.1%
79,507 GNMA Pool #420707 7.000% 02-15-26 105.30 83,722 6.6%
42,389 GNMA Pool #421829 7.500% 04-15-26 105.46 44,702 7.1%
20,069 GNMA Pool #431036 8.000% 07-15-26 107.21 21,516 7.5%
73,970 GNMA Pool #431612 8.000% 11-15-26 107.21 79,301 7.5%
23,075 GNMA Pool #442190 8.000% 12-15-26 107.21 24,738 7.5%
23,843 GNMA Pool #449176 6.500% 07-15-28 104.74 24,973 6.2%
146,049 GNMA Pool #458762 6.500% 01-15-28 104.74 152,971 6.2%
58,720 GNMA Pool #462623 6.500% 03-15-28 104.74 61,504 6.2%
114,616 GNMA Pool #469615 6.500% 10-15-28 104.74 120,048 6.2%
1,920,431 GNMA Pool #471369 5.500% 05-15-33 100.82 1,936,125 5.5%
180,737 GNMA Pool #472028 6.500% 05-15-28 104.74 189,304 6.2%
148,300 GNMA Pool #475149 6.500% 05-15-13 103.35 153,263 6.3%
318,634 GNMA Pool #486482 6.500% 09-15-28 104.74 333,736 6.2%
147,311 GNMA Pool #489377 6.375% 03-15-29 104.18 153,469 6.1%
215,476 GNMA Pool #492705 6.500% 02-15-29 104.67 225,549 6.2%
65,733 GNMA Pool #538314 7.000% 02-15-32 105.01 69,028 6.7%
144,603 GNMA Pool #570141 6.500% 12-15-31 104.55 151,184 6.2%
336,343 GNMA Pool #587080 6.500% 05-15-32 104.52 351,558 6.2%
1,028,694 GNMA Pool #595606 6.000% 11-15-32 102.55 1,054,883 5.9%
66,242 GNMA Pool #602377 4.500% 06-15-18 98.15 65,018 4.6%
762,829 GNMA Pool #603250 5.500% 04-15-34 100.72 768,309 5.5%
57,349 GNMA Pool #603377 4.500% 01-15-18 98.15 56,290 4.6%
1,051,365 GNMA Pool #608639 5.500% 07-15-24 100.68 1,058,463 5.5%
289,578 GNMA Pool #609452 4.000% 08-15-33 92.28 267,216 4.3%
664,454 GNMA Pool #616829 5.500% 01-15-25 101.85 676,719 5.4%
768,261 GNMA Pool #619718 6.000% 05-15-34 102.44 787,007 5.9%
891,662 GNMA Pool #631623 5.500% 08-15-34 100.72 898,067 5.5%
904,004 GNMA Pool #640225 5.500% 04-15-35 100.72 910,502 5.5%
2,069,523 GNMA Pool #640940 5.500% 05-15-35 100.72 2,084,398 5.5%
97,947 GNMA Pool #780429 7.500% 09-15-26 105.51 103,341 7.1%
186,377 GNMA Pool #780845 6.500% 08-15-28 104.74 195,215 6.2%
113,437 GNMA Pool #781029 6.500% 05-15-29 104.72 118,789 6.2%
1,689,156 GNMA Pool #781032 6.500% 04-15-29 104.72 1,768,845 6.2%
427,016 GNMA Series 2002-7, Class PG 6.500% 01-20-32 103.03 439,972 6.3%
GOVERNMENT INTERESTS - 1.6%
$ 200,000 FHLMC 3.550% 01-06-06 $99.95 $ 199,901 3.6%
330,000 FHLMC 4.110% 01-24-06 99.74 329,134 4.1%
-----------
Total Investments (identified cost, $32,999,778)-- 100.2% $33,937,622
Other Assets, Less Liabilities-- (0.2%) (76,710)
-----------
Net Assets-- 100.0% $33,860,912
===========
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of ($32,999,778) (Note 1A) $ 33,937,622
Cash.................................... 112,580
Receivable for investments sold......... 1,050
Receivable for fund shares sold......... 62,507
Receivable from investment adviser...... 25,154
Interest receivable..................... 159,400
Prepaid expenses........................ 10,342
------------
Total assets.......................... $ 34,308,655
------------
LIABILITIES:
Payable for investments purchased....... $ 327,142
Payable for fund shares reacquired...... 45,565
Distributions payable................... 52,732
Payable to affiliate for Trustees' fees. 38
Transfer agent fee ..................... 3,412
Accrued expenses and other liabilities.. 18,854
------------
Total liabilities..................... $ 447,743
------------
NET ASSETS................................ $ 33,860,912
============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including the market
value of securities received in exchange for fund
shares and shares issued to shareholders in
payment of distributions declared), less cost
of shares reacquired................... $ 32,853,727
Accumulated undistributed net realized gain on
investments (computed on the basis of
identified cost)....................... 19,099
Unrealized appreciation on investments
(computed on the basis of identified cost) 937,844
Accumulated undistributed net investment
income................................. 50,242
------------
Net assets applicable to outstanding
shares................................ $ 33,860,912
============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING........................... 3,524,860
============
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE OF
BENEFICIAL INTEREST................... $ 9.61
============
STATEMENT OF OPERATIONS
Year Ended December 31, 2005
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 1,789,827
------------
Expenses -
Investment adviser fee (Note 3)........ $ 158,813
Administrator fee (Note 3)............. 31,762
Compensation of Trustees not employees of
the investment adviser or administrator 13,407
Custodian fee (Note 1C)................ 67,946
Distribution expenses (Note 4)......... 88,229
Transfer and dividend disbursing agent fees 19,314
Printing............................... 2,790
Interest expense....................... 4,243
Shareholder communications............. 3,387
Audit services......................... 26,678
Legal services......................... 5,610
Registration costs..................... 27,478
Miscellaneous.......................... 5,585
------------
Total expenses........................ $ 455,242
------------
Deduct -
Reduction of custodian fee (Note 1C):.. $ (6,679)
Allocation of expenses to
investment adviser (Note 3)........... (25,154)
Reduction of distribution expenses
by principal underwriter (Note 4)..... (88,229)
------------
Total deductions...................... $ (120,062)
------------
Net expenses.......................... $ 335,180
------------
Net investment income............... $ 1,454,647
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 404,721
Change in unrealized depreciation
of investments......................... (1,232,166)
------------
Net realized and unrealized loss
of investments........................ $ (827,445)
------------
Net increase in net assets from
operations........................... $ 627,202
============
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Year Ended
December 31,
----------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2005 2004
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 1,454,647 $ 1,366,512
Net realized gain on investments........................................... 404,721 1,091,575
Change in unrealized depreciation on investments........................... (1,232,166) (1,418,533)
-------------- --------------
Net increase in net assets resulting from operations..................... $ 627,202 $ 1,039,554
-------------- --------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (1,558,214) $ (1,491,857)
From net realized gain..................................................... (69,145) (1,243,047)
-------------- --------------
Total distributions...................................................... $ (1,627,359) $ (2,734,904)
-------------- --------------
Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (151,834) $ 376,737
-------------- --------------
Net decrease in net assets............................................... $ (1,151,991) $ (1,318,613)
NET ASSETS:
At beginning of year......................................................... 35,012,903 36,331,516
-------------- --------------
At end of year............................................................... $ 33,860,912 $ 35,012,903
============== ==============
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED
IN NET ASSETS AT END OF YEAR................................................. $ 50,242 $ 6,318
============== ==============
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2005 2004 2003 2002 2001(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 9.890 $ 10.490 $ 10.810 $ 10.580 $ 10.460
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income(1) ............... $ 0.400 $ 0.447 $ 0.417 $ 0.565 $ 0.616
Net realized and unrealized gain (loss).. (0.230) (0.112) (0.235) 0.231 0.120
--------- --------- --------- --------- ---------
Total income from investment operations $ 0.170 $ 0.335 $ 0.182 $ 0.796 $ 0.736
--------- --------- --------- --------- ---------
Less distributions:
Distributions from investment income..... $ (0.430) $ (0.482) $ (0.502) $ (0.555) $ (0.616)
Distributions from capital gains......... (0.020) (0.453) - - --
Tax return of capital.................... - - - (0.011) --
--------- --------- --------- --------- ---------
Total distributions.................. $ (0.450) $ (0.935) $ (0.502) $ (0.566) $ (0.616)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 9.610 $ 9.890 $ 10.490 $ 10.810 $ 10.580
========= ========= ========= ========= =========
Total return(3) ............................ 1.76% 3.29% 1.73% 7.70% 7.18%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted).... $ 33,861 $ 35,013 $ 36,332 $ 59,077 $54,966
Ratio of net expenses to average net assets 0.97% 0.97% 0.95% 0.97%(5) 0.95%(5)
Ratio of net expenses after custodian fee
reduction to average net assets(6) (7) 0.95% 0.95% 0.95% 0.95%(5) --
Interest expense......................... 0.01% 0.02% 0.01% -- --
Ratio of net investment income
to average net assets................. 4.12% 4.29% 4.43% 5.28% 5.83%
Portfolio turnover rate ................. 103% 27% 20% 36%(4) 4%(4)
- ---------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2005, 2004, 2003, 2002, and 2001, 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:
2005 2004 2003 2002 2001
--------------------------------------------------------------------
Net investment income per share........ $ 0.369 $ 0.410 $ 0.401 $ 0.555 $ 0.609
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses ............................ 1.30% 1.28% 1.12% 1.06%(5) 1.02%(5)
========= ========= ========= ========= =========
Expenses after custodian fee reduction 1.28%(7) 1.25%(7) 1.12% 1.04%(5)(7) --
========= ========= ========= ========= =========
Interest expense..................... 0.01% 0.02% 0.01% -- --
========= ========= ========= ========= =========
Net investment income................ 3.80% 3.99% 4.26% 5.19% 5.76%
========= ========= ========= ========= =========
- ---------------------------------------------------------------------------------------------------------------------------------
(2 Certain of the per share data are based on average shares outstanding.
(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
reinvested at the net asset value on the reinvestment date.
(4)Represents portfolio turnover rate at the fund's corresponding portfolio (Note 1).
(5)Includes each fund's share of its corresponding portfolio's allocated expenses (Note 1).
(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.
See notes to financial statements
WRIGHT MANAGED INCOME TRUST
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1)SIGNIFICANT ACCOUNTING POLICIES
The Wright Managed Income Trust (the Trust), issuer of Wright U.S.
Government Near Term Fund (WNTB) series, Wright Total Return Bond Fund (WTRB)
series, and Wright Current Income Fund (WCIF) series (collectively, the Funds),
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end, management investment company. WNTB seeks a high level of
income, which is normally above that available from short-term money market
instruments or funds. WTRB seeks a superior rate of total return, consisting of
a high level of income plus price appreciation. WCIF seeks a high level of
current income consistent with moderate fluctuations of principal. Prior to
December 20, 2002, WNTB and WCIF invested all of their investable assets in
interests in a separate corresponding open-end management investment company (a
Portfolio), a New York Trust, having the same investment objective as its
corresponding fund. Subsequent to December 20, 2002, the Funds invest directly
in securities rather than through the Portfolio and maintain the same investment
objective.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America.
A. Investment Valuations - Investments for which market quotations are readily
available are valued at current market value as furnished by a pricing
service. Investments for which valuations are not readily available will be
appraised at their fair value as determined in good faith by or at the
direction of the Trustees. Short-term obligations maturing in sixty days or
less are valued at amortized cost, which approximates market value.
B. Interest Income - Interest income consists of interest accrued and discount
earned (including both original issue and market discount) and amortization
of premium or discount on long-term debt securities. The income is accrued
ratably to the date of maturity on the investments of the funds.
C. Expense Reduction - Investors Bank & Trust Company (IBT) serves as
custodian to the Funds. Pursuant to the custodian agreement, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balance the Funds maintain with IBT. All credit balances used to reduce the
Fund's custodian fees are reported as a reduction of total expenses on the
Statement of Operations.
D. Federal Taxes - The Trust's policy is to comply with the provisions of the
Internal Revenue Code (the Code) available to regulated investment
companies and to distribute to shareholders each year all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is necessary. At December 31,
2005, the Trust, for federal income tax purposes, had capital loss
carryovers of $1,584,491 (WNTB) and $2,024,032 (WTRB) which will reduce
taxable income arising from future net realized gain on investments, if
any, to the extent permitted by the Code, and thus will reduce the amount
of the distribution to shareholders which would otherwise be necessary to
relieve the respective fund of any liability for federal income or excise
tax. Pursuant to the Code, such capital loss carryovers will expire as
follows:
12/31 WNTB WTRB WCIF
- -------------------------------------------------------------------------------
2006 $ 37,825 - -
2007 $297,581 - -
2008 $273,806 $1,244,473 -
2010 - 508,606 -
2012 $505,639 - -
2013 $469,640 270,953 -
At December 31, 2005, net capital losses of $9,094 for WNTB, $136,116 for
WTRB and $38,352 for WCIF, attributable to security transactions incurred
after October 31, 2005, are treated as arising on the first day of the
fund's current taxable year.
E. Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
F. Other - Investment transactions are accounted for on the date the
investments are purchased or sold.
(2) DISTRIBUTIONS
Each fund's policy is to determine net income once daily, as of the close
of the New York Stock Exchange and the net income so determined is substantially
declared as a dividend to shareholders of record at the time of such
determination. Distributions of realized capital gains are made at least
annually. Shareholders may reinvest capital gain distributions in additional
shares of the same fund at the net asset value as of the ex-dividend date.
Dividends may be reinvested in additional shares of the same fund at the net
asset value as of the payable date.
The Trust requires that differences in the recognition or classification of
income between the financial statements and tax earnings and profits which
result in temporary overdistributions for financial statement purposes be
classified as distributions in excess of net investment income or accumulated
net realized gains.
Distributions in excess of tax basis earnings and profits are reported in
the financial statements as a return of capital. Permanent differences between
book and tax accounting for certain items may result in reclassification of
these items.
During the year ended December 31, 2005, the following amounts were
reclassified due to differences between book and tax accounting created
primarily by the deferral of certain losses for tax purposes and character
reclassifications between net investment income and net realized capital gain.
Accumulated Undistributed
Undistributed Net Net
Paid-In Realized Gain Investment
Capital on Investments Income
- -------------------------------------------------------------------------------
WTRB $ - $(230,662) $230,662
WCIF (50,000) (97,491) 147,491
WNTB - (136,939) 136,939
- -------------------------------------------------------------------------------
The tax character of distributions paid for the year ended December 31,
2005 and December 31, 2004 was as follows:
Year Ended 12/31/05 WTRB WCIF WNTB
- -------------------------------------------------------------------------------
Distributions declared from:
Ordinary income $1,706,230 $1,558,214 $605,643
Capital gains - 69,145 -
- -------------------------------------------------------------------------------
Year Ended 12/31/04 WTRB WCIF WNTB
- -------------------------------------------------------------------------------
Distributions declared from:
Ordinary income $1,696,335 $1,491,857 $735,924
Capital gains - $1,243,047 -
- -------------------------------------------------------------------------------
As of December 31, 2005, the components of distributable earnings
(accumulated losses) on a tax basis were as follows:
WTRB WCIF WNTB
- -------------------------------------------------------------------------------
Undistributed income $ 24,317 $ 50,242 $ 98
Undistributed capital gains - 57,451 -
Capital loss carryforward (2,024,032) - (1,584,491)
Unrealized gains/(loss) (528,092) 937,844 (310,863)
Other temporary differences (170,032) (38,352) (9,094)
- -------------------------------------------------------------------------------
(3) INVESTMENT ADVISER FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as
investment adviser to the funds pursuant to the respective Investment Advisory
Contracts. Wright furnishes each fund with investment management, investment
advisory, and other services. For its services, Wright is compensated based upon
a percentage of average daily net assets which rate is adjusted as average daily
net assets exceed certain levels. For the year ended December 31, 2005, the
effective annual rate for WNTB, WCIF, and WTRB was 0.45 %. Under a written
agreement, Wright waives a portion of its advisory fee and/or distribution fees
and assumes operating expenses to the extent necessary to limit expense ratios
to 0.95% after custodian fee reductions, if any. Accordingly, Wright made a
reduction of its investment adviser fee by $44,937 on behalf of WNTB. In
addition, Wright has been allocated expenses of $22,470 and $25,154 on behalf of
WNTB and WCIF, respectively.
The Trust also has engaged Eaton Vance Management (Eaton Vance) to act as
administrator of the Trust. Under the Administration Agreement, Eaton Vance is
responsible for managing the business affairs of the Trust and is compensated
based upon a percentage of average daily net assets which rate is reduced as
average daily net assets exceed certain levels. For the year ended December 31,
2005, the effective annual rate was 0.09% for WNTB, 0.07% for WTRB, and 0.09%
for WCIF. Certain of the Trustees and officers of the Trust are
directors/trustees and/or officers of the above organizations. Except as to
Trustees of the Trust who are not employees of Eaton Vance or Wright, Trustees
and officers received remuneration for their services to the Trust out of fees
paid to Eaton Vance and Wright.
(4) DISTRIBUTION EXPENSES
The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Plan provides that each of the
funds will pay Wright Investors' Service Distributors, Inc. (Principal
Underwriter), a wholly-owned subsidiary of Winthrop, at an annual rate of 0.25%
of the average daily net assets of each fund for activities primarily intended
to result in the sale of each fund's shares. Pursuant to a written agreement
(Note 3), the Principal Underwriter made a reduction of its fee by $49,928,
$82,378, and $88,229 for the benefit of WNTB, WTRB and WCIF, respectively.
In addition, the Trustees have adopted a service plan (the Service Plan) which
allows the funds to reimburse the Principal Underwriter for payments to
intermediaries for providing account administration and personal and account
maintenance services to their customers who are beneficial owners of each fund's
shares. The amount of service fee payable under the Service Plan may not exceed
0.25% annually of each fund's average daily net assets. For the year ended
December 31, 2005, the funds did not accrue or pay any service fees.
(5) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in fund shares were as follows:
Year Ended Year Ended
December 31, 2005 December 31, 2004
------------------------- --------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
Wright U.S. Government Near Term Fund--
Sold................................................. 308,569 $ 3,047,973 499,602 $ 5,040,521
Issued to shareholders in payment of distributions
declared........................................... 47,224 465,559 52,428 529,329
Redemptions.......................................... (618,843) (6,107,292) (1,079,475) (10,918,238)
----------- -------------- ----------- --------------
Net decrease..................................... (263,050) $ (2,593,760) (527,445) $ (5,348,388)
=========== ============== =========== ==============
Wright Total Return Bond Fund--
Sold................................................. 652,090 $ 8,236,968 673,399 $ 8,596,949
Issued to shareholders in payment of distributions
declared........................................... 106,865 1,346,413 108,451 1,384,717
Redemptions.......................................... (430,129) (5,420,722) (1,077,968) (13,712,106)
----------- -------------- ----------- --------------
Net increase/(decrease).......................... 328,826 $ 4,162,659 (296,118) $ (3,730,440)
=========== ============== =========== ==============
Wright Current Income Fund--
Sold................................................. 1,064,067 $ 10,372,941 1,231,990 $ 12,684,308
Issued to shareholders in payment of distributions
declared .......................................... 102,779 998,494 159,979 1,619,251
Redemptions.......................................... (1,183,110) (11,523,269) (2,153,390) (22,192,828)
Issued to Wright U.S. Govt. Intermediate Fund
shareholders....................................... - _ 837,488 8,266,006
----------- -------------- ----------- --------------
Net increase /(decrease)......................... (16,264) $ (151,834) 76,067 $ 376,737
=========== ============== =========== ==============
(6) INVESTMENT TRANSACTIONS
The Trust invests primarily in debt securities. The ability of the issuers
of the debt securities held by the Trust to meet their obligations may be
affected by economic developments in a specific industry or municipality.
Purchases and sales and maturities of investments, other than short-term
obligations, were as follows:
Year Ended December 31, 2005
----------------------------------
WNTB WTRB WCIF
- -----------------------------------------------------------------------------
Purchases--
Non-U.S. Obligations - $ 3,147,172 -
========== ========== ==========
U.S. Gov't Obligations $21,366,295 $34,730,967 $35,487,035
========== ========== ===========
Sales--
Non-U.S. Obligations $ 1,823,890 $ 5,396,814 -
========== =========== ==========
U.S. Gov't Obligations $22,165,444 $28,559,312 $35,699,792
=========== =========== ==========
- ----------------------------------------------------------------------------
(7)FEDERAL INCOME TAX BASIS OF INVESTMENT
SECURITIES
The cost and unrealized appreciation (depreciation) of the investment
securities owned at December 31, 2005, as computed on a federal income tax
basis, are as follows:
WNTB WTRB WCIF
- ------------------------------------------------------------------------------
Aggregate cost $18,624,132 $41,047,198 $32,999,778
=========== =========== ===========
Gross unrealized
appreciation - 1,688 1,293,051
Gross unrealized
depreciation (310,863) (529,780) (355,207)
----------- ----------- -----------
Net unrealized
appreciation/
(depreciation) $ (310,863) $ (528,092) $ 937,844
=========== =========== ===========
- -------------------------------------------------------------------------------
(8) LINE OF CREDIT
The funds participate with other funds managed by Wright in a committed $10
million unsecured line of credit agreement with a bank. The funds may
temporarily borrow from the line of credit to satisfy redemption requests or
settle investment transactions. Interest is charged to each fund based on its
borrowings at an amount above the federal funds rate. In addition, a fee
computed at an annual rate of 0.10% on the average daily unused portion of the
$10 million line of credit, is allocated among the participating funds at the
end of each quarter. The funds did not have significant borrowings or allocated
fees during the year ended December 31, 2005.
(9) TRANSFER OF NET ASSETS
Prior to the opening of business on December 29, 2004, the Wright Current
Income Fund (WCIF) acquired the net assets of Wright U.S. Government
Intermediate Fund (WUSGI) pursuant to an Agreement and Plan of Reorganization
dated December 20, 2004. In accordance with the agreement, WCIF issued 837,488
shares having a value of $8,266,006. As a result, WCIF issued 1.303 shares for
each share of WUSGI. The transaction was structured for tax purposes to qualify
as a tax free reorganization under the Internal Revenue Code. WUSGI's net assets
at the date of the transaction was $8,266,006, including $(41,372) of unrealized
depreciation. Directly after the merger, the combined net assets of WCIF were
$34,959,687 with a net asset value of $9.87.
WRIGHT MANAGED INCOME TRUST
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of
The Wright Managed Income Trust:
We have audited the accompanying statements of assets and liabilities
of the Wright Managed Income Trust (the "Trust"), comprising the Wright
U.S. Government Near Term Fund, Wright Total Return Bond Fund, and
Wright Current Income Fund (the "Funds"), including the portfolios of
investments as of December 31, 2005, the related statements of
operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements and financial
highlights are free of material misstatement. The Funds' are not
required to have, nor were we engaged to perform, an audit of their
internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. Our
procedures included confirmation of the securities owned at December
31, 2005 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing
procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of each of the Funds constituting the Wright Managed
Income Trust at December 31, 2005, the results of their operations for
the year then ended, the changes in their net assets for each of the
two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 21, 2006
MANAGEMENT AND ORGANIZATION (unaudited)
- -------------------------------------------------------------------------------
Fund Management. The Trustees of the Trust are responsible for the overall
management and supervision of the affairs of the Trust. The Trustees and
principal officers of the Trusts are listed below. Except as indicated, each
individual has held the office shown or other offices in the same company for
the last five years. The business address of each Trustee and principal officer
is 255 State Street, Boston, Massachusetts 02109.
Definitions:
- -----------
"WISDI" means Wright Investors' Service Distributors, Inc., the principal
underwriter of the fund.
"Winthrop" means The Winthrop Corporation, a holding company which owns all of
the shares of Wright and WISDI.
Number of Other Trustee/
Term* Portfolios in Director/
Name, Position(s) of Office Fund Complex Partnership/
Address with the and Length Principal Occupation Overseen Employment
and Age [Trust/Fund] of Service During Past Five Years By Trustee Positions Held
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
Peter M. Donovan** President President Chairman and Chief Executive Officer 6 Director of
Age 62 and and Trustee and Director of Wright and Winthrop; Wright and
Trustee since Chief Investment Officer and Chairman Winthrop
Inception of the Investment Committee; Director
of WISDI; President of 6 funds managed
by Wright
- -----------------------------------------------------------------------------------------------------------------------------------
A.M. Moody, III*** Vice President Vice President President, AM Moody Consulting LLC 6 None
Age 69 and of the Trusts (compliance and administrative services
Trustee since December, to the mutual fund industry)since
1990; Trustee of July 1,2003;President of WISDI since
the Trusts since 2005; Vice President of 6 funds
January, 1990 managed by Wright; Retired Senior Vice
President of Wright and Winthrop; Retired
President of WISDI June 30, 2003
to May 2005
- ---------------------------------------------------------------------------------------------------------------------------------
* Trustees serve an indefinite term. Officers are elected annually.
** Mr. Donovan is an interested person of the Trusts because of his positions
as President of the Trusts, Chairman, Chief Executive Officer and Director
of Wright and Winthrop and Vice President, Treasurer and a Director of
WISDI.
*** Mr. Moody is an interested person of the Trusts because of his positions
as Vice President of the Trusts and his affiliation as a consultant to
Wright.
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
James J. Clarke Trustee Trustee President, Clarke Consulting (bank 6 None
Age 64 since consultant - financial management and
December, 2002 strategic planning); Director - Chester
Valley Bancorp, Inc., Downingtown, PA
since April 2004, Director - Reliance
Bank, Altoona PA since August 1995;
Director - First Financial Bank, Downingtown,
PA since April 2004, Associate Professor of
Finance at Villanova University 1972-2002
- -----------------------------------------------------------------------------------------------------------------------------------
Dorcas R. Hardy Trustee Trustee President, Dorcas R. Hardy & Associates 6 None
Age 59 since (a public policy and government relations
December, 1998 firm) Spotsylvania, VA; Director, The
Options Clearing Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Richard E. Taber Trustee Trustee since Chairman and Chief Executive 6 None
Age 57 March, 1997 Officer of First County Bank,
Stamford, CT
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
Judith R. Corchard Vice President Vice President Executive Vice President, Investment
Age 67 of the Trusts Management; Senior Investment Officer
since June,1998 and Director of Wright and Winthrop;
Vice President of 6 funds managed by
Wright, fund Chief Compliance Officer
since 2004
- -----------------------------------------------------------------------------------------------------------------------------------
Janet E. Sanders Secretary Secretary of the Vice President Eaton Vance Management,
Age 70 and Assistant Trusts since Administrator for the funds; Officer of
Treasurer March 17, 2005, 6 funds managed by Wright and 161
Ass't. Secretary funds managed by Eaton Vance and
1983 to 2005, its affiliates
Ass't. Treasurer
since 1989
- -----------------------------------------------------------------------------------------------------------------------------------
Barbara E. Campbell Treasurer Treasurer of Vice President Eaton Vance Management;
Age 48 the Trusts Administrator for the funds; Officer of
since 2005 6 funds managed by Wright and 161
funds managed by Eaton Vance and
its affiliates
- -----------------------------------------------------------------------------------------------------------------------------------
* Trustees serve an indefinite term. Officers are elected annually.
Additional information about the Funds' Trustees is available in the Statement
of Additional Information, which is available without charge, upon request, by
calling 1-800-888-9471.
BOARD OF TRUSTEES
ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT
IN EVALUATING THE INVESTMENT ADVISORY CONTRACTS, THE INDEPENDENT TRUSTEES
MET SEPARATELY FROM THE INTERESTED TRUSTEES AND REVIEWED AND CONSIDERED
MATERIALS FURNISHED BY WRIGHT, INCLUDING INFORMATION REGARDING WRIGHT, ITS
AFFILIATES AND PERSONNEL, OPERATIONS AND FINANCIAL CONDITION. THE INDEPENDENT
TRUSTEES DISCUSSED WITH REPRESENTATIVES OF WRIGHT THE PORTFOLIO MANAGEMENT AND
OPERATIONS OF THE FUNDS AND THE CAPABILITIES OF WRIGHT TO PROVIDE ADVISORY AND
OTHER SERVICES TO EACH FUND. THE INDEPENDENT TRUSTEES CONSIDERED, AMONG OTHER
THINGS, THE FOLLOWING:
EQUITY FUNDS AND INCOME FUNDS
- -------------------------------------------------------------------------------
o Whether the advisory arrangements are fair and reasonable relative to
possible alternative arrangements. The Trustees concluded that the
advisory fees paid by the funds are reasonable.
o Whether advisory services are being provided as agreed to. The Trustees
concluded that the services being provided by the adviser are as agreed
to in the advisory contract.
o Whether compensation paid by a Fund to the adviser is fair and
reasonable in relation to the services provided and the charges by
other advisers for similar services. The Trustees concluded that the
compensation paid by the funds to the adviser is in the average range
of compensation charged by other advisers for similar services and is
reasonable.
o Fees and expense ratios compared to similar funds. The Trustees
concluded that the expense ratios of the funds are lower than the
average for similar funds.
o Performance and relationship of fees and performance. The Trustees
concluded that in most cases the performance results of the funds were
at least in the mid-range of similar funds while their expense ratios
were generally lower.
o Analysis of each Fund's profitability to the adviser. The Trustees
concluded that the profitability to the adviser of each fund was
reasonable and not excessive.
o The adviser's financial condition and the overall organization of the
adviser.
o Sales and redemption data. The Trustees reviewed the information which
had been provided to them relating to sales and redemptions and
Wright's marketing strategies to try to increase assets under
management.
o The economic outlook and the general investment outlook in the relevant
investment markets. The Trustees have received a presentation on the
overall economic outlook and investment outlook of both equity and
income markets at each Board meeting.
o The resources devoted to compliance efforts undertaken by the adviser
and the record of compliance with investment policies and restrictions
and with policies on personal securities transactions. The Trustees
have approved and met separately with the fund's Chief Compliance
Officer.
ADDITIONAL CONSIDERATIONS FOR EQUITY FUNDS
- -------------------------------------------------------------------------------
o The allocation of brokerage and any benefits received by the adviser as
a result of brokerage allocation. The Trustees reviewed the Trading
Analysis included in the material provided in advance of the meeting.
The Independent Trustees' Committee did not consider any single factor as
controlling in their consideration of the renewal of the Investment Advisory
Contracts, nor are the considerations described above all encompassing. Based on
their consideration of all factors which they considered material, and with the
assistance of independent counsel, the Independent Trustees' Committee concluded
that the renewal of the Investment Advisory Contract with its current fee
structure is in the interests of the shareholders.
IMPORTANT NOTICES REGARDING PRIVACY, DELIVERY OF
SHAREHOLDER DOCUMENTS, PORTFOLIO HOLDINGS AND PROXY VOTING
---------------------------------------------------------------
WRIGHT MANAGED INVESTMENT FUNDS
WRIGHT INVESTORS SERVICE, INC.
WRIGHT INVESTORS' SERVICE DISTRIBUTORS, INC.
EATON VANCE MANAGEMENT
PRIVACY POLICY
----------------------
Wright is committed to ensuring your financial privacy. Each of the above
financial institutions has the following policy in effect with respect to
nonpublic personal information about its customers:
o The only such information we collect is information received from
customers, through application forms or otherwise, and information
which we necessarily receive in connection with your Wright fund
transactions.
o We will not disclose this information to anyone except as required or
permitted by law. Such disclosure includes that made to other companies
such as transfer agents and their employees and to our employees, in
each case as necessary to service your account.
o We have adopted policies and procedures (including physical, electronic
and procedural safeguards) that are designed to protect the
confidentiality of this information.
For more information about Wright's privacy policies please feel free to
call 1-800-888-9471.
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDERS DOCUMENTS
---------------------------------------------------------------------
The Securities and Exchange Commission permits funds to deliver only one
copy of shareholder documents, including prospectuses, proxy statements and
shareholder reports, to fund investors with multiple accounts at the same
residential or post office box address. This practice is often called
"householding" and it helps eliminate duplicate mailings to shareholders.
Wright, or your financial adviser, may household the mailing of your
documents indefinitely unless you instruct Wright, or your financial adviser,
otherwise.
If you would prefer that your Wright documents not be householded, please
contact Wright at 1-800-888-9471, or your financial adviser.
Your instructions that householding not apply to delivery of your Wright
documents will be effective within 30 days of receipt by Wright or your
financial adviser.
PORTFOLIO HOLDINGS
---------------------------
Each Wright Fund will file a schedule of its portfolio holdings on Form N-Q
with the SEC for the first and third quarters of each fiscal year. The Form N-Q
will be available on the Wright website www.wisi.com, by calling Wright at
1-800-888-9471 or in the EDGAR database on the SEC's website at www.sec.gov.
Form N-Q may also be reviewed and copied at the SEC's public reference room in
Washingto, D.C. (call 1-800-732-0330 or informaiton on the operation of the
public reference room).
PROXY VOTING POLICIES AND PROCEDURES
---------------------------------------------------
From time to time funds are required to vote proxies related to the
securities held by the funds. The Wright Managed Funds vote proxies according to
a set of policies and procedures approved by the Funds' Board. You may obtain a
description of these policies and procedures and information on how the Funds
voted proxies relating to Portfolio securities during the most recent 12-month
period ended June 30 without charge, upon request, by calling 1-800-888-9471.
This description is also available on the Securities and Exchange Commissions
website at http://www.sec.gov.
ANNUAL REPORT
OFFICERS AND TRUSTEES OF THE FUNDS
Peter M. Donovan, President and Trustee
A. M. Moody III, Vice President and Trustee
Judith R. Corchard, Vice President
James J. Clarke, Trustee
Dorcas R. Hardy, Trustee
Richard E. Taber, Trustee
Janet Sanders, Secretary
Barbara E. Campbell, Treasurer
William J. Austin, Jr., Assistant Treasurer
ADMINISTRATOR
Eaton Vance Management
255 State Street
Boston, Massachusetts 02109
INVESTMENT ADVISER
Wright Investors' Service
440 Wheelers Farms Road
Milford, Connecticut 06461
PRINCIPAL UNDERWRITER
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road
Milford, Connecticut 06461
(800) 888-9471
e-mail: funds@wrightinvestors.com
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
TRANSFER AND DIVIDEND DISBURSING AGENT
Citigroup Fund Services, LLC
Two Portland Square
Portland, ME 04101
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of a mutual fund unless
accompanied or preceded by a Fund's current prospectus.
Item 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer and Principal Financial Officer. The registrant undertakes to
provide a copy of such code of ethics to any person upon request, without
charge, by calling 1-800-888-9471.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated James J. Clarke, an independent
trustee, as its audit committee financial expert. Mr. Clarke is the Principal of
Clarke Consulting, a financial management and strategic planning firm.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
-----------
The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of the
registrant's annual financial statements or services that are normally provided
by the accountant in connection with statutory and filings or engagements for
those fiscal years were as follows: 2005: $74,100 and 2004: $74,100.
(b) Audit-Related Fees
--------------------
None.
(c) Tax Fees
-----------
The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning were 2005: $12,100 and 2004: $11,000. The nature of
the services comprising these fees was tax compliance, tax advice and tax
planning including fees for tax return preparation.
(d) All Other Fees
---------------
None.
(e) (1) The registrant's audit committee has adopted an Audit Committee
Charter which contains policies and procedures relating to the pre-approval of
services provided by the registrant's principal accountant (the "Pre-Approval
Policies"). The Pre-Approval Policies establish a framework intended to assist
the audit committee in the proper discharge of its pre-approval
responsibilities. As a general matter, the Pre-Approval Policies (i) specify
certain types of audit, audit-related, tax, and other services determined to be
pre-approved by the audit committee; and (ii) delineate specific procedures
governing the mechanics of the pre-approval process, including the approval and
monitoring of audit and non-audit service fees with the exception of any de
minimus engagement meeting applicable requirements. Unless a service is
specifically pre-approved under the Pre-Approval Policies, it must be separately
pre-approved by the registrant's audit committee. The Pre-Approval Policies and
the types of audit and non-audit services pre-approved therein must be reviewed
and ratified by the registrant's audit committee at least annually. The
registrant's audit committee maintains full responsibility for the appointment,
compensation, and oversight of the work of the registrant's principal
accountant.
(2) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
Items 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not required in Filing
Item 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not required in Filing.
Item 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not required in Filing
Item 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not required in Filing
Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective March 17,2005, the Governance Committee of the Board of Trustees
revised the procedures by which a Fund's shareholders may recommend nominees to
the registrant's board of Trustees to add the following (highlighted):
The Governance Committee shall, when identifying candidates for the position of
Independent Trustee, consider any such candidate recommended by a shareholder of
a Fund if such recommendation contains (i) sufficient background information
concerning the candidate, INCLUDING EVIDENCE THE CANDIDATE IS WILLING TO SERVE
AS AN INDEPENDENT TRUSTEE IF SELECTED FOR THE POSITION; AND (ii) is received in
a sufficiently timely manner (and in any event no later than the date specified
for receipt of shareholder proposals in any applicable proxy statement with
respect to a Fund). Shareholders shall be directed to address any such
recommendations IN WRITING to the attention of the Governance Committee, c/o the
Secretary of the Fund. THE SECRETARY SHALL RETAIN COPIES OF ANY SHAREHOLDER
RECOMMENDATIONS WHICH MEET THE FOREGOING REQUIREMENTS FOR A PERIOD OF NOT MORE
THAN 12 MONTHS FOLLOWING RECEIPT. THE SECRETARY SHALL HAVE NO OBLIGATION TO
ACKNOWLEDGE RECEIPT OF ANY SHAREHOLDER RECOMMENDATIONS.
Item 11. CONTROLS AND PROCEDURES
a) It is the conclusion of the registrant's principal executive officer and
principal financial officer that the effectiveness of the registrant's current
disclosure controls and procedures (such disclosure controls and procedures
having been evaluated within 90 days of the date of this filing) provide
reasonable assurance that the information required to be disclosed by the
registrant has been recorded, processed, summarized and reported within the time
period specified in the Commission's rules and forms and that the information
required to be disclosed by the registrant has been accumulated and communicated
to the registrant's principal executive officer and principal financial officer
in order to allow timely decisions regarding required disclosure.
(b) There have been no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Item 12. EXHIBITS
(a) (1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a) (2) Treasurer's and President's Section 302 certification.
(b) Combined 906 certification.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Wright Managed Equity Trust (On behalf of Wright Selected Blue Chip
- -------------------------------------------------------------------------
Equities Fund, Wright Major Blue Chip Equities Fund and
- -------------------------------------------------------------------------
Wright International Blue Chip Equities Fund)
- ---------------------------------------------
By: /s/ Peter M. Donovan
---------------------
Peter M. Donovan
President
Date: February 24, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Barbara E. Campbell
------------------------
Barbara E. Campbell
Treasurer
Date: February 24, 2006
By: /s/Peter M. Donovan
------------------------
Peter M. Donovan
President
Date: February 24, 2006