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, 2006
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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
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DECEMBER 31, 2006
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 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 CONSIST OF THREE EQUITY FUNDS FROM
THE WRIGHT MANAGED EQUITY TRUST AND TWO FIXED INCOME FUNDS FROM THE WRIGHT
MANAGED INCOME TRUST. EACH OF THE FIVE FUNDS HAVE DISTINCT INVESTMENT OBJECTIVES
AND POLICIES. THEY CAN BE USED INDIVIDUALLY OR IN COMBINATION TO ACHIEVE
VIRTUALLY ANY OBJECTIVE. FURTHER, AS THEY ARE ALL "NO-LOAD" FUNDS (NO
COMMISSIONS OR SALES CHARGES), PORTFOLIO ALLOCATION STRATEGIES CAN BE ALTERED AS
DESIRED TO MEET CHANGING MARKET CONDITIONS OR CHANGING REQUIREMENTS WITHOUT
INCURRING ANY SALES CHARGES.
APPROVED WRIGHT INVESTMENT LIST
Securities selected for investment in these funds are chosen mainly from a list
of "investment grade" companies maintained by Wright Investors' Service
("Wright" 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 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
Fund may buy common stocks traded on the securities exchange of the country
in which the company is based or it may purchase American Depositary Receipts
(ADR's) traded in the United States. The portfolio is denominated in U.S.
dollars and investors should understand that fluctuations in foreign exchange
rates may impact the value of their investment. The Adviser seeks to outperform
the MSCI 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 and
countries.
TWO FIXED-INCOME FUNDS
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 Fund's 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.............................................................13
MANAGEMENT AND ORGANIZATION...............................................57
BOARD OF TRUSTEES ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT....59
IMPORTANT NOTICES REGARDING PRIVACY, DELIVERY OF SHAREHOLDER DOCUMENTS,
PORTFOLIO HOLDINGS AND PROXY VOTING.......................................60
FINANCIAL STATEMENTS
THE WRIGHT MANAGED EQUITY TRUST
Wright Selected Blue Chip Equities Fund
Portfolio of Investments..................15
Statement of Assets & Liabilities.........18
Statement of Operations...................18
Statement of Changes in Net Assets........19
Financial Highlights......................20
Wright Major Blue Chip Equities Fund
Portfolio of Investments..................21
Statement of Assets & Liabilities.........24
Statement of Operations...................24
Statement of Changes in Net Assets........25
Financial Highlights......................26
Wright International Blue Chip Equities Fund
Portfolio of Investments..................27
Statement of Assets & Liabilities.........29
Statement of Operations...................29
Statement of Changes in Net Assets........30
Financial Highlights......................31
Notes to Financial Statements...............32
Report of Independent Registered
Public Accounting Firm....................36
Federal Tax Information.....................37
THE WRIGHT MANAGED INCOME TRUST
Wright Total Return Bond Fund
Portfolio of Investments..................38
Statement of Assets & Liabilities.........42
Statement of Operations...................42
Statement of Changes in Net Assets........43
Financial Highlights......................44
Wright Current Income Fund
Portfolio of Investments..................45
Statement of Assets & Liabilities.........48
Statement of Operations...................48
Statement of Changes in Net Assets........49
Financial Highlights......................50
Notes to Financial Statements...............51
Report of Independent Registered
Public Accounting Firm....................55
Federal Tax Information.....................56
LETTER TO SHAREHOLDERS
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January 2007
Dear Shareholders:
The 2003-06 bull market in stocks showed no sign of stopping as it passed
its fourth anniversary in the fourth quarter. The DJIA pushed its way to an
all-time high of 12500 as 2006 was ending, and the S&P 500 and Nasdaq enjoyed
healthy Q4 returns as well. Corporate profit growth estimated at around 15%
provided the main impetus for what turned out to be a year of
better-than-average returns for stocks. Also worth noting, stock P/E multiples
moved higher in the third and fourth quarters, the first back-to-back quarterly
increases in market valuations since 1999. The Federal Reserve's pause in its
interest rate increases and declining energy prices were additional factors in
the improved investor confidence seen since July. Finishing the year much
stronger than it started it, the U.S. bond market returned 4.3% in 2006, in line
with our 4%-5% projection as 2006 began.
One of the more notable features of the 2006 investment landscape was its
remarkably low volatility. During Q4, the VIX stock volatility measure dropped
below 10% for the first time since 1994. The S&P 500 high/low price range was
less than 17% for a third straight year, something that has happened only once
before (1992-94). While such low volatility is sometimes a sign of investor
complacency, we note that the post-1994 years saw one of the best advances in
history with a compound annual rate of return of 28% for the S&P 500 over five
years. Bond market volatility was also unusually low in 2006.
The Federal Reserve raised interest rates 100 basis points in 2006, one
25-bp bump while Greenspan was chairman and three more hikes under Bernanke. All
of these increases came in 2006's first half. According to the Fed, the
subsequent pause was justified by a moderation of economic growth due to the
cooling housing market and the "lagged effects of increases in interest rates
and energy prices." Weakness in housing and the auto industry is likely to
continue at least through the first half of 2007, but in the end it should not
cause recession. The labor market remains relatively strong, and recent declines
in energy prices are another positive. After fours years of growth in the
3%-3.75% range, real GDP is forecast to rise 2.25%-2.5% in 2007.
The U.S. economy, in our view, is now about midway into the mid-course
slowdown that the Fed has engineered for 2006-07, and we also expect European
and Asian growth to decelerate this year. Still, world output growth should be
quite respectable this year, if not up to the rates of 2004-06. Ongoing dollar
depreciation ought to be expected, keeping some upward pressure on inflation in
the U.S. - and providing a boost to foreign stock returns. Inflation rates are
expected to moderate over 2007, although probably not enough to get the Fed to
lower interest rates by the half percentage point that is currently priced into
the market. By the end of this year, the core PCE price deflator should be
nearing 2%, the presumed top end of the Fed's target range. It may be 12 months
or more before inflation settles back into a non-threatening range where the Fed
can start thinking about cutting interest rates.
With rates at the long end of the yield curve expected to edge only
modestly higher this year, bond returns should range around 5% in 2007. Stock
returns are forecast to fall a bit short of their post-1950 norm of 12%:
earnings growth is likely to slow to the 6%-8% range, dividends will add another
2%, and modest P/E multiple expansion could add a small increment. While market
volatility will almost certainly increase, the anticipated 4%-6% risk premium in
stocks over bonds continues to support a healthy allocation to equities as 2007
gets under way.
Finally, I would like to extend to you best wishes for a happy, healthy and
rewarding New Year. As always, I invite your suggestions on how we can better
serve your investment and wealth management needs.
Sincerely,
/s/ Peter M.Donovan
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Peter M. Donovan
President
MANAGEMENT DISCUSSION
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EQUITY FUNDS
THE FOURTH QUARTER OF 2006 GAVE A STRONG FINISH TO A YEAR THAT PROVIDED SOLID
RETURNS FOR U.S. INVESTORS. FOR STOCKS, 2006 WAS THE BEST YEAR SINCE 2003, WITH
MOST OF THE GAINS COMING IN THE SECOND HALF OF THE YEAR. EARLY IN 2006, STOCK
INVESTORS WORRIED FIRST ABOUT TOO MUCH GROWTH AND HIGHER INFLATION, THEN ABOUT
THE POSSIBILITY THAT THE FED WOULD RAISE INTEREST RATES ENOUGH TO DRIVE THE
ECONOMY INTO RECESSION. IN AUGUST, HOWEVER, THE STOCK MARKET MOVED ONTO A
PERSISTENT UPWARD PATH THAT WOULD CONTINUE FOR THE REST OF THE YEAR. THE FED'S
DECISION IN AUGUST TO HALT ITS TIGHTENING PROGRAM EASED INVESTORS' WORRIES ABOUT
RECESSION. THE THIRD QUARTER'S DECLINE IN INTEREST RATES GAVE SUPPORT TO STOCKS;
EASING ENERGY PRICES, INDICATIONS THAT INFLATION WAS STABILIZING AND SOLID
GROWTH IN CORPORATE PROFITS ALSO CONTRIBUTED TO THE STOCK MARKET'S UPBEAT MOOD
IN THE SECOND HALF OF THE YEAR.
ON OCTOBER 3 THE DOW SET A NEW ALL TIME HIGH - THE FIRST SINCE THE PEAK IT
REACHED IN 2000 - AND KEPT MOVING UP FROM THERE. THE DOW RETURNED MORE THAN 7%
OVER THE LAST THREE MONTHS OF 2006, CLOSING THE YEAR WITHIN 50 POINTS OR 0.4% OF
THE RECORD 12511 SET ON DECEMBER 27. THE S&P 500 REACHED NEW HIGHS FOR THIS BULL
MARKET IN THE QUARTER, CLOSING THE YEAR ABOUT 100 POINTS (7%) BELOW ITS RECORD
HIGH REACHED IN 2000 AND EARNING RETURNS OF NEARLY 7% FOR THE QUARTER AND 16%
FOR THE YEAR. NASDAQ, TOO, HIT A NEW SIX-YEAR HIGH IN THE FOURTH QUARTER AND
GENERATED RETURNS OF 7% FOR THE QUARTER AND 10% FOR THE YEAR. NASDAQ IS STILL
50% BELOW ITS 2000 HIGH - A REMINDER OF JUST HOW INFLATED THE TECH BUBBLE WAS.
MID-CAP AND SMALL-CAP STOCKS LAGGED THE S&P 500 EARLIER IN 2006, BUT NOT IN THE
FOURTH QUARTER AS THE BREADTH OF THE ADVANCE INCREASED. THE S&P MIDCAP 400 JUST
ABOUT MATCHED THE S&P 500 IN Q4 AND RETURNED 10.3% FOR THE YEAR. THE SMALLCAP
600 RETURNED 7.8% FOR THE QUARTER AND 15.1% FOR THE YEAR. FOR THE FOURTH QUARTER
AND THE YEAR, INTERNATIONAL MARKETS ALSO KEPT PACE WITH THE S&P 500 IN LOCAL
CURRENCIES AND EXCEEDED ITS RETURN IN DOLLAR TERMS AS THE DOLLAR LOST GROUND
AGAINST THE CURRENCIES IN THE MSCI INDEX. EACH OF THE 22 MARKETS IN THE MSCI
WORLD EX U.S. INDEX HAD POSITIVE DOLLAR RETURNS IN THE FOURTH QUARTER AND THE
YEAR.
STOCKS WILL GET LESS SUPPORT FROM RISING PROFITS IN 2007 THAN THEY DID OVER THE
LAST FOUR YEARS. WE EXPECT ECONOMIC GROWTH TO CONTINUE IN 2007, BUT AT A
BELOW-TREND RATE. THIS WILL BE REFLECTED IN MODERATION OF PROFIT GROWTH.
ACCORDING TO FIRST CALL, AFTER FOUR YEARS OF DOUBLE-DIGIT GROWTH, WALL STREET IS
EXPECTING EARNINGS GROWTH OF ABOUT 9% FOR S&P 500 COMPANIES IN 2007, AND WE
THINK THIS MAY BE A LITTLE OPTIMISTIC. PROFIT GROWTH AT A HIGH SINGLE-DIGIT RATE
WOULD STILL BE QUITE RESPECTABLE AT THIS STAGE OF AN EXPANSION, BUT IT MIGHT BE
A LITTLE DISAPPOINTING TO INVESTORS WHO HAVE BECOME USED TO SOMETHING MORE
IMPRESSIVE. ALSO, THE STOCK MARKET'S ADVANCE IN THE SECOND HALF OF 2006 HAS
BROUGHT THE MARKET P/E UP BY A POINT AND A HALF; THE CURRENT P/E IS NOT
EXCESSIVE BY RECENT STANDARDS, BUT IT MAY BE HIGH ENOUGH TO LIMIT FURTHER GAINS
IN STOCK PRICES. SLOWER PROFIT GROWTH AND LIMITED P/E EXPANSION WILL PROBABLY
KEEP THE RETURN FROM EQUITIES IN 2007 BELOW LAST YEAR'S NEAR-16% RETURN AND MAY
EVEN PRODUCE A SINGLE-DIGIT RATE OF RETURN. NEVERTHELESS, THE RETURN FROM A
DIVERSIFIED EQUITY PORTFOLIO SHOULD STILL KEEP INVESTORS WELL AHEAD OF
INFLATION. WE CONTINUE TO SEE THE POTENTIAL TO ENHANCE RETURNS BY INCLUDING
INTERNATIONAL STOCKS IN INVESTMENT PORTFOLIOS.
2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Total Return Year Year Year Year Year Year Year Year Year Year
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Wright Selected Blue Chip Fund (WSBC) 3.8% 11.1% 15.7% 30.1% -17.0% -10.2% 10.8% 5.8% 0.1% 32.7%
Wright Major Blue Chip Fund (WMBC) 11.6% 6.2% 12.4% 23.2% -24.5% -16.9% -12.5% 24.0% 20.4% 33.9%
Wright International Blue Chip Fund (WIBC) 28.5% 21.1% 17.7% 32.0% -14.5% -24.2% -17.6% 34.3% 6.1% 1.5%
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
The S&P MidCap 400 outperformed the S&P 500 in the first quarter of 2006, lagged
bigger stocks in the second and third quarters, and just about matched the S&P
500's return in the fourth quarter. For all of 2006, the MidCaps lagged, albeit
with a respectable 10.3% return. The Wright Selected Blue Chip Fund (WSBC),
which is a mid-cap blend fund, returned 3.8% in 2006 compared to S&P MidCap
400's 10.3% return and the 13.5% return for an average of 79 mid-cap blend funds
in the Morningstar database. In the fourth quarter of 2006, the WSBC Fund
returned 5.5% compared to returns of 7.0% for the S&P MidCaps and 7.7% for the
Morningstar average. Over the last three years, WSBC had a 10.1% compound annual
rate of return compared to 13.1% for the S&P benchmark and 12.8% for the
Morningstar average. Last year's bias toward lower-quality stocks was even more
pronounced in the mid-cap area than it was in large-cap stocks. This market
environment was reflected in the fact that stock selection accounted for
virtually all of 2006's underperformance of the WSBC compared to the S&P MidCap
400. This was particularly apparent in the financial sector, where losses from
such stocks as Legg Mason (-6.3%) and Radian Group (-7.9%) hurt the Fund's
performance. The health care and information technology sectors were also among
those lagging for the year, while the Fund was helped by a strong showing in the
consumer discretionary sector (e.g., American Eagle Outfitters +106%). Stock
selection in the financial sector detracted from WSBC's performance in the
fourth quarter. The underperformance of mid-caps for all of 2006 has made their
value more attractive relative to large-cap issues. The S&P MidCap 400's P/E in
terms of forward earnings was about one point higher than the S&P 500's at the
end of 2006, compared to two points higher at the start of the year. With
economic and profit growth slowing, WSBC is well positioned in the mid-cap area
with a tilt toward the more substantial companies in the S&P MidCap 400. WSBC
companies have a higher projected earnings growth than those in the MidCap 400.
Also, the WSBC Fund has a lower forward P/E than the S&P MidCap 400. WIS
continues to advise diversity in investment portfolios and sees mid-cap stocks
as likely to make a positive contribution to risk-adjusted portfolio returns
going forward.
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 2006, large-cap U.S. stocks posted
attractive investment returns. The WMBC Fund returned 11.6% for the year,
lagging the S&P 500's 15.8% and the 14.1% for an average of 152 large-cap blend
funds in the Morningstar database. For the fourth quarter of 2006, WMBC returned
5.3% compared to 6.7% for both the S&P 500 and the Morningstar average. Over the
last three years, WMBC's 10.0% compound annual rate of return was in line with
the S&P 500 (10.4%) and the Morningstar average (9.7%). The strong showing in
stocks during 2006 favored lower-quality issues; in the S&P 500, the bottom two
quality quintiles of stocks (determined by Wright Quality Ratings) outperformed
the top three by a good margin. This pattern was also apparent in the fourth
quarter of the year. For the year and the fourth quarter, this preference for
lower-quality issues detracted from the performance of the WMBC, which is
weighted toward the higher-quality stocks in the S&P 500. For all of 2006,
industry sector weights modestly hurt Fund performance, largely due to an
overweight position in health care, the weakest S&P 500 sector for the year, and
a slight underweight in telecom, which was the strongest. Security selection had
a bigger negative impact on the Fund. Looking at some specific issues, the Fund
was hurt by Progressive Corporation's 17% loss and the 13% loss incurred by
UnitedHealth Group, whose price suffered from accounting and legal issues
related to stock option dating. Among sectors in the Fund with a strong relative
performance for the year were information technologies (e.g., Hewlett Packard
+45%, Nvidia +102%) and materials (e.g., Nucor +71%). For the fourth quarter of
2006, security selection was also the major factor in the Fund's lagging
performance, which relates to the market's favoring of lower-quality issues. The
prospect of slower economic growth points to moderating profit growth in the
year ahead. This ought to favor higher-quality stocks. Moreover, their lagging
performance in 2006 has resulted in relatively attractive values overall for the
quality sector of the market. With its bias toward the more substantial,
higher-quality stocks in the S&P 500, the WMBC is well positioned for such an
environment. As 2007 was getting underway, WMBC's holdings were valued at a
lower forward P/E than the S&P 500 (13.4 vs 15.0) while being in line with the
S&P 500 in forecast earnings growth.
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
For all of 2006, the MSCI World ex U.S. stock index returned 25.7% in dollar
terms, nearly 10 percentage points ahead of the S&P 500. In the fourth quarter,
the MSCI index topped the S&P 500 with a 10.1% return. Local currency returns
for both periods were in line with the S&P 500's, with the dollar's depreciation
accounting for the rest of the return. The Wright International Blue Chip Fund
(WIBC) returned 12.1% in the fourth quarter of 2006 compared to 10.1% for the
MSCI World ex U.S. index and 10.4% for an average of 127 international equity
funds in the Morningstar database. For all of 2006, WIBC returned 28.5%, ahead
of both the MSCI benchmark (25.7%) and the Morningstar average (24.6%). Over the
last three years, WIBC provided a 22.4% compound annual rate of return, compared
to 20.1% for the MSCI index and 18.9% for the Morningstar average. Markets and
currencies in Europe were strong throughout 2006, and the WIBC Fund's relative
performance was helped in each quarter of the year by its overweighting in that
region. The Fund mitigated the effects of market weakness in Japan by good stock
selection in that country for most of the year. In the first half of 2006, the
Fund benefited from the strong performance of its holdings in the energy and
materials sectors. During the second half, the relative underperformance of
these two sectors dampened the return of the Fund. In the fourth quarter, the
Fund's performance was helped by the strong showing of its holdings in the
financial sector. Economic and earnings growth prospects outside of the U.S.
look promising for the coming 12 months. In addition to improving fundamentals,
foreign stocks offer attractive valuations, with an aggregate P/E multiple lower
than the S&P 500's. After its recent weakness, values in the Japanese market in
particular look attractive, and WIBC's position in Japan was increased in the
second half of 2006. In the third quarter, the Fund took some profits in the
Eurozone markets, and then increased its position in the Eurozone in Q4. The
Fund has reduced its holding in energy and ended the year underweight in telecom
after taking profits from strong stock selections in this sector. Holdings were
increased in the financial and utility sectors. We continue to emphasize
diversity in investment programs and expect that a position in international
stocks will augment returns in diversified investment portfolios.
FIXED-INCOME FUNDS
THE FOURTH QUARTER OF 2006 PROVIDED A POSITIVE FINISH TO A YEAR OF SOLID RETURNS
FOR U.S. INVESTORS. AFTER LOSING GROUND IN THE FIRST HALF OF THE YEAR, THE U.S.
BOND MARKET GENERATED POSITIVE RETURNS IN THE SECOND HALF. A KEY DRIVER OF THE
BOND MARKET'S GAINS AFTER MIDYEAR WAS THE FEDERAL RESERVE'S DECISION AT ITS
AUGUST 8 FOMC MEETING TO KEEP THE FED FUNDS TARGET UNCHANGED AT 5.25% AFTER
RAISING THE RATE FROM 1.0% TO 5.25% OVER TWO YEARS. THE TARGET RATE WAS HELD AT
5.25% FOR THE REST OF 2006. THE THIRD QUARTER OF 2006 WAS THE BEST QUARTER FOR
BONDS IN FOUR YEARS. AS THE FOURTH QUARTER PROGRESSED, HOWEVER, IT BECAME CLEAR
THAT THE ECONOMY WAS CONTINUING TO GROW, AND THE FED CONTINUED TO WARN OF
INFLATION RISKS. HOPES FADED THAT THE FED WOULD QUICKLY REVERSE COURSE AND START
TO LOWER RATES. THIS CONTRIBUTED TO HIGHER YIELDS IN THE FOURTH QUARTER.
FOR ALL OF 2006, THE YIELD ON THE 90-DAY TREASURY BILL ROSE ABOUT 90 BASIS
POINTS, TO 5.0%. THE TWO-YEAR TREASURY YIELD ROSE ABOUT 40 BASIS POINTS AND THE
10-YEAR BY 30 BPS. AT THE START OF 2006, THE TREASURY YIELD CURVE WAS ABOUT FLAT
BETWEEN TWO AND 10 YEARS; BY YEAR END, IT WAS INVERTED BY ABOUT 10 BASIS POINTS,
WITH THE TWO-YEAR YIELD AT 4.8% AND THE 10-YEAR AT 4.7%. THE LEHMAN AGGREGATE
U.S. BOND INDEX RETURNED 4.3% FOR ALL OF 2006; IN THE FOURTH QUARTER, THE INDEX
RETURNED 1.2% AS COUPON RETURN MADE UP FOR MOST OF THE PRICE DECLINE FOR THE
QUARTER. IN 2006, THE BEST RETURNS WERE GENERATED BY THE MORTGAGE AND COMMERCIAL
MORTGAGE SECTORS, WHILE THE TREASURY SECTOR HAD THE LOWEST RETURN OF ALL SECTORS
IN THE LEHMAN AGGREGATE.
WE EXPECT THAT THE FED WILL HOLD INTEREST RATES STEADY THROUGH 2007. THE FED
FUNDS FUTURES MARKET IS STILL PRICING IN AT LEAST ONE FED RATE CUT IN 2007, BUT
IN ITS RECENT COMMENTS, THE FED HAS NOT BEEN ENCOURAGING THIS VIEW. WE DON'T SEE
THE INVERTED YIELD CURVE AS FORETELLING A RECESSION IN 2007. OUR FORECAST HAS
ECONOMIC GROWTH CONTINUING, BUT AT BELOW TREND RATES THROUGH MOST OF 2007, WHILE
CORE INFLATION STAYS BELOW ITS PEAK AND SLOWLY MOVES TOWARD THE FED'S TARGET OF
2.0%. THIS APPEARS TO US TO BE A COMBINATION THAT WILL NOT MOVE FED POLICY ONE
WAY OR THE OTHER. WITH THE FED KEEPING INTEREST RATES STEADY IN 2007 AND
INFLATION NOT MOVING MUCH LOWER, WE DON'T SEE A LOT OF ROOM FOR LOWER INTEREST
RATES AND RISING BOND PRICES THIS YEAR. AT CURRENT LEVELS, THERE DOESN'T APPEAR
TO BE MUCH DOWNSIDE RISK FOR BOND PRICES EITHER, BASED ON THE EXPECTED
ENVIRONMENT OF SLOW GROWTH AND MODERATE INFLATION. WE SEE A LOW PROBABILITY FOR
SIGNIFICANT FURTHER TIGHTENING OF ALREADY TIGHT SPREADS ON NON-TREASURY SECTORS
OF THE INVESTMENT-GRADE BOND MARKET. OUR FORECAST, THEREFORE, IS FOR A RETURN OF
ABOUT 5% FOR THE LEHMAN AGGREGATE U.S. BOND INDEX IN 2007, A LITTLE BETTER THAN
COUPON RETURN AND ENOUGH TO KEEP INVESTORS COMFORTABLY AHEAD OF INFLATION.
2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Total Return Year Year Year Year Year Year Year Year Year Year
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Wright Total Return Bond Fund (WTRB) 3.3% 1.5% 3.5% 3.3% 9.0% 5.0% 10.6% -3.9% 9.6% 9.3%
Wright Current Income Fund (WCIF) 3.9% 1.8% 3.3% 1.7% 7.7% 7.2% 10.3% 0.5% 6.5% 8.6%
WRIGHT TOTAL RETURN BOND FUND
Bond yields rose over the course of 2006, with most of the increase coming in
the first half of the year. Yields moved lower in Q3, giving bonds their best
quarterly return in four years, then rose slightly in Q4. The Wright Total
Return Bond Fund (WTRB), a diversified bond fund, returned 1.2% in the fourth
quarter of 2006, as coupon return was enough to offset most of the price decline
accompanying the rise in bond yields during the quarter. The Fund's return was
in line with the Lehman U.S. Aggregate Bond Composite's 1.2% and the 1.3% return
for an average of 174 total return bond funds in the Morningstar database in the
quarter. For all of 2006, WTRB returned 3.3% compared to 4.3% for the Lehman
Aggregate and 4.1% for the Morningstar average. WTRB had a yield of 4.2%,
calculated according to SEC guidelines, at the end of the year. Dividends paid
by this Fund may be more or less than implied by this yield. During 2006, WTRB's
duration ranged from 0.15 year longer than the Lehman Benchmark to 0.4 year
shorter. For 2006, duration calls had a slightly negative effect on performance
compared to the benchmark; for the fourth quarter, the Fund's duration
positioning made a modestly positive contribution to performance As the fourth
quarter of 2006 started, WTRB was positioned with a short duration compared to
the Lehman Aggregate. This reflected our view that the bond market's third
quarter rally had overestimated the potential for Fed rate cuts in the near
term. Bonds did experience a modest correction in the fourth quarter, and Fund
duration was moved back to neutral, where it remained at year end. During the
fourth quarter and for much of the year, the Fund was overweight compared to the
Lehman Aggregate in mortgages (52% of the portfolio including hybrid ARMs at
year-end 2006), asset-backed issues (2% at year end), and commercial
mortgage-backed issues (8% at year end). With corporate spreads looking tight,
for most of the year the Fund was about neutral in corporate bonds, though at
year end it was slightly overweight (24%). The Fund was underweight in
Treasuries and agencies for all of 2006, holding 12% and 1%, respectively, at
year end. For the year, the overweighting in MBS, ABS and CMBS issues was
positive for performance, since these sectors had a larger excess return than
the Lehman Aggregate index as a whole. The underweighting in agencies, which
lagged the Aggregate for the year and the fourth quarter, helped performance in
both periods. For the fourth quarter, however, the Fund's overall sector
positioning detracted from performance because of the overweight in hybrid ARMs
and asset-backed issues, which lagged the Aggregate in excess return for the
quarter. Since all non-Treasury sectors had positive excess return for the
quarter and the year, the underweight in Treasury issues added to performance.
Individual security selection was a plus for the fourth quarter but a slight
drag for the year.
WRIGHT CURRENT INCOME FUND
The Wright Current Income Fund (WCIF) is generally managed to be invested in
GNMA issues (mortgage-based securities, known as Ginnie Maes) and other
mortgage-based securities with explicit backing from the Federal government. The
WCIF Fund is actively managed to maximize income and minimize principal
fluctuation. In December, the Wright U.S. Government Near Term Fund (WNTB) was
merged into the WCIF, resulting in a 4% position in Treasury bonds and a 9%
position in agencies within WCIF at year end as a result of the transition. In
the fourth quarter, the WCIF Fund returned 1.3%, slightly less than the Lehman
GNMA bond index's 1.5% but in line with the 1.3% for the average of all 61
government mortgage funds in the Morningstar database. For all of 2006, WCIF's
return of 3.9% compared to 4.6% for the Lehman benchmark and 4.2% for the
Morningstar average. At the end of 2006, the WCIF Fund had a yield of 4.9% as
calculated by SEC guidelines. Dividends paid by this Fund may be more or less
than implied by this yield. With the risk of prepayment reduced after the rise
in mortgage rates in 2005 and early 2006, WCIF continued to overweight
higher-coupon premium issues for most of 2006 through the fourth quarter. This
allowed the Fund to pick up extra income. Through most of 2006, the Fund's
duration was kept a little shorter than the Ginnie Mae benchmark's.
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
12/31/97 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%
12/31/06 12,463.15 4.71%
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 12/31/06
Average Annual Total Return
-----------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- --------------------------------------------------------------------------------------------------------------------------------
WSBC
- Return before taxes 3.77% 7.57% 7.25%
- Return after taxes on distributions 2.30% 6.57% 5.07%
- Return after taxes on distributions and sales of fund shares 1.96% 5.76% 5.07%
S&P MidCap 400* 10.32% 10.89% 13.47%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT SELECTED
BLUE CHIP EQUITIES FUND on 12/31/96 would have grown to $20,144 by
December 31, 2006.
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
12/31/96 $10,000 $10,000
12/31/97 $13,270 $13,225
12/31/98 $13,288 $15,753
12/31/99 $14,053 $18,073
12/31/2000 $15,563 $21,237
12/31/2001 $13,983 $21,108
12/31/2002 $11,610 $18,045
12/31/2003 $15,100 $24,472
12/31/2004 $17,474 $28,504
12/31/2005 $19,412 $32,085
12/31/2006 $20,144 $35,396
* The Fund's average annual return is compared with that of the S&P Mid-Cap 400,
an unmanaged index of stocks in a broad range of industries with a market
capitalization of a few billion or less. The performance of the S&P Mid-Cap 400,
unlike that of the Fund, reflects no deductions for fees, expenses or taxes.
Industry Weightings
- ------------------------------
% of net assets @ 12/31/06
Diversified Financials 10.3% Semiconductor Equipment 2.0%
Commercial Services & Supplies 7.9% Computers & Peripherals 1.8%
Retailing 7.9% Banks 1.7%
Insurance 6.9% Home Const., Furn. & Appl. 1.4%
Energy 6.3% Automobiles & Components 1.3%
Utilities 6.3% Textiles, Clothing & Fabrics 1.3%
Capital Goods 6.0% Pharmaceuticals & Biotech. 1.2%
Real Estate 5.8% Consumer Durables & Apparel 1.1%
Electronic Equipment & Services 5.7% Heavy Machinery 1.1%
Materials 4.9% Food, Beverage & Tobacco 1.0%
Health Care Equipment/Services 3.9% Hotels, Restaurants & Leisure0.9%
Oil & Gas 3.1% Communications Equipment 0.8%
Transportation 3.0% Medical Supplies 0.4%
Chemicals 2.7% Telecommunication Services 0.3%
Software & Services 2.3%
Ten Largest Stock Holdings
- ------------------------------
% of net assets @ 12/31/06
MDU Res Group Inc. 2.3%
New Plan Excel Realty 2.3%
Precision Castparts Corp. 2.3%
Manpower Inc. 1.9%
W. R.Berkley Corp. 1.9%
Raymond James Finl. 1.8%
Jacobs Engr. Group Inc. 1.8%
Nuveen Invts Inc. 1.8%
Edwards A. G. Inc. 1.8%
Eaton Vance Corp. 1.7%
- -------------------------------------------------------------------------------
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/06
Average Annual Total Return
---------------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- --------------------------------------------------------------------------------------------------------------------------------
WMBC
- Return before taxes 11.57% 4.37% 6.05%
- Return after taxes on distributions 11.38% 4.21% 4.80%
- Return after taxes on distributions and sales of fund shares 9.67% 3.63% 4.62%
S&P 500* 15.80% 6.19% 8.42%
The cumulative total return of a U.S. $10,000 investment in the
WRIGHT MAJOR BLUE CHIP EQUITIES FUND on 12/31/96 would have
grown to $17,986 by December 31, 2006.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Major Blue
Chip Fund S&P 500
12/31/96 $10,000 $10,000
12/31/97 $13,386 $13,336
12/31/98 $16,120 $17,147
12/31/99 $19,981 $20,756
12/31/2000 $17,473 $18,866
12/31/2001 $14,524 $16,624
12/31/2002 $10,965 $12,950
12/31/2003 $13,510 $16,665
12/31/2004 $15,180 $18,478
12/31/2005 $16,121 $19,385
12/31/2006 $17,986 $22,447
* The Fund's average annual return is compared with that of the S&P 500,
an unmanaged index of 500 widely held common stocks that generally indicates the
performance of the market. The performance of the S&P 500, unlike that of the
Fund, reflects no deductions for fees, expenses or taxes.
Industry Weightings
- ----------------------------------
% of net assets @ 12/31/06
Diversified Financials 14.2% Commercial Services & Supplies 2.2%
Energy 12.0% Communications Equipment 2.1%
Pharmaceuticals & Biotechnology 9.2% Heavy Machinery 1.9%
Banks 7.6% Capital Goods 1.5%
Retailing 6.2% Software & Services 1.5%
Computers & Peripherals 5.7% Semiconductor Equip. & Prods. 1.3%
Health Care Equipment & Services5.3% Utilities 1.3%
Telecommunications Services 4.2% Real Estate 1.0%
Automobiles & Components 3.9% Materials 0.9%
Food, Beverages & Tobacco 3.8% Home Const., Furnishings & Appl. 0.7%
Insurance 3.8% Medical Supplies 0.6%
Transportation 3.2% Hotels, Restaurants & Leisure 0.5%
Electronic Equipment & Instrum. 2.3% Metals 0.5%
Entertainment & Leisure 2.3% Consumer Durables & Apparel 0.4%
Ten Largest Stock Holdings
- ---------------------------------
% of net assets @ 12/31/06
Exxon Mobil Corp. 4.8%
Bank of America Corp. 4.3%
Pfizer, Inc. 3.4%
Goldman Sachs Group 3.3%
AT&T Inc. 3.2%
Citigroup Inc. 3.0%
Hewlett-Packard Co. 2.9%
Chevron Corp. 2.4%
Wells Fargo & Co. New 2.3%
Paccar Inc. 2.3%
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/06
Average Annual Total Return
------------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- --------------------------------------------------------------------------------------------------------------------------------
WIBC
- Return before taxes 28.49% 15.63% 6.45%
- Return after taxes on distributions 27.79% 15.30% 5.71%
- Return after taxes on distributions and sales of fund shares 23.81% 13.55% 5.27%
MSCI World ex US Index* 25.71% 15.25% 7.96%
The cumulative total return of a U.S. $10,000 investment in the
WRIGHT INT'L BLUE CHIP EQUITIES FUND on 12/31/96 would have
grown to $18,689 by December 31, 2006.
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
12/31/96 $10,000 $10,000
12/31/97 $10,154 $10,227
12/31/98 $10,777 $12,146
12/31/99 $14,469 $15,538
12/31/2000 $11,925 $13,461
12/31/2001 $ 9,042 $10,580
12/31/2002 $ 7,730 $ 8,909
12/31/2003 $10,201 $12,421
12/31/2004 $12,008 $14,952
12/31/2005 $14,545 $17,116
12/31/2006 $18,689 $21,517
* The Fund's average annual return is compared with that of the MSCI Developed
World ex U.S. Index. While the Fund does not seek to match the returns of this
index, this unmanaged index generally indicates foreign stock market
performance. The performance of the MSCI Developed World ex U.S. Index,
unlike that of the Fund, reflects no deductions for fees, expenses or taxes.
Country Weightings
- -------------------------------------
% of net assets @ 12/31/06
United Kingdom 22.8% Denmark 3.0%
Japan 22,0% Switzerland 2.5%
Germany 8.5% Norway 2.4%
France 6.6% Belgium 1.5%
Canada 4.9% Portugal 1.5%
Australia 4.7% Hong Kong 0.9%
Sweden 4.3% Singapore 0.8%
Italy 3.7% Austria 0.6%
Spain 3.6% Finland 0.4%
Netherlands 3.3% Ireland 0.4%
Ten Largest Stock Holdings
- ------------------------------
% of net assets @ 12/31/06
Anglo American PLC 2.9%
Eni Spa 2.8%
ING Groep NV-ADR 2.8%
Danske Bank Ag 2.6%
Man Group PLC 2.4%
BNP Paribas 2.3%
Toyota Motor Corp. 2.3%
Endesa Sa 2.2%
Canon Inc. 2.1%
Persimmon PLC 2.0%
WRIGHT TOTAL RETURN BOND FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/06
Average Annual Total Return
----------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- --------------------------------------------------------------------------------------------------------------------------------
WTRB
- Return before taxes 3.34% 4.11% 5.03%
- Return after taxes on distributions 1.76% 2.46% 3.05%
- Return after taxes on distributions and sales of fund shares 1.49% 2.46% 3.05%
Lehman Aggregate Bond Index* 4.33% 5.06% 6.24%
- --------------------------------------------------------------------------------------------------------------------------------
The cumulative total return of a U.S. $10,000 investment in the
WRIGHT TOTAL RETURN BOND FUND on 12/31/96 would have grown to $16,329 by
December 31, 2006.
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
12/31/96 $10,000 $10,000
12/31/97 $10,925 $10,966
12/31/98 $11,969 $11,918
12/31/99 $11,501 $11,820
12/31/2000 $12,723 $13,194
12/31/2001 $13,353 $14,308
12/31/2002 $14,559 $15,776
12/31/2003 $15,032 $16,423
12/31/2004 $15,561 $17,136
12/31/2005 $15,801 $17,552
12/31/2006 $16,329 $18,313
* The Fund's average annual return is compared with that of the Lehman U.S.
Aggregate Bond Index, an unmanaged index that is a broad representation of the
investment-grade fixed income market in the U.S. The Lehman U.S. Aggregate Bond
Index, unlike that of the Fund, reflects no deductions for fees, expenses
or taxes.
HOLDINGS BY SECTOR
- ----------------------------
% of net assets @ 12/31/06
Asset-backed Securities 11.2%
Corporate Bonds 24.6%
Mortgage-Backed Securities 50.8%
U.S. Treasuries 12.2%
HOLDINGS BY CREDIT QUALITY*
- -----------------------------
% of net assets @ 12/31/06
AAA 12%
AA 2%
A 13%
BBB 8%
<BBB 0%
Mortgage-Backed Securities 51%
U.S. Government Agencies 1%
U.S. Treasuries 13%
*: based on the lower of Standard & Poor's or Moody's
Investors' Service
FIVE LARGEST BOND HOLDINGS
- ----------------------------
% of net assets @ 12/31/06
U.S. Treasury Note 2.000% 01/15/14 4.4%
U.S. Treasury Bond 6.125% 11/15/27 3.9%
FNMA Pool 745467 5.858% 04/01/36 3.8%
FHLMC Gold Pool A35363 5.000% 07/01/35 2.6%
FNMA Pool 781893 4.500% 11/01/31 2.5%
Weighted Average Maturity
- ----------------------------
@12/31/06 6.5 Years
WRIGHT CURRENT INCOME FUND
Growth of $10,000 Invested 1/1/96 Through 12/31/06
Average Annual Total Return
------------------------------------------
Last 1 Yr Last 5 Yrs Last 10 Yrs
- --------------------------------------------------------------------------------------------------------------------------------
WCIF
- Return before taxes 3.92% 3.66% 5.10%
- Return after taxes on distributions 2.19% 1.76% 2.89%
- Return after taxes on distributions and sales of fund shares 1.86% 1.76% 2.89%
Lehman GNMA Index* 4.61% 4.72% 6.10%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT CURRENT
INCOME FUND on 12/31/96 would have grown to $16,448 by December 31, 2006.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Current Lehman GNMA
Income Fund Index
12/31/96 $10,000 $10,000
12/31/97 $10,856 $10,953
12/31/98 $11,563 $11,712
12/31/99 $11,623 $11,937
12/31/2000 $12,821 $13,264
12/31/2001 $13,742 $14,354
12/31/2002 $14,801 $15,601
12/31/2003 $15,058 $16,046
12/31/2004 $15,553 $16,745
12/31/2005 $15,827 $17,281
12/31/2006 $16,448 $18,077
* The Fund's average annual return is compared with that of the Lehman GNMA
Backed Bond Index. While the Fund does not seek to match the returns of the
Lehman GNMA Backed Bond Index, Wright believes that this unmanaged index
generally indicates the performance of government and corporate mortgage-
backed bond markets. The Lehman GNMA Backed Bond Index, unlike the Fund,
reflects no deductions for fees, expenses or taxes.
HOLDINGS BY SECTOR
------------------------
% of net assets @ 12/31/06
Mortgage-Backed Securities 82.5%
Government Interests 12.8%
Asset-Backed Securities 4.2%
WEIGHTED AVERAGE MATURITY
-----------------------------
@12/31/06 3.9 Years
FIVE LARGEST BOND HOLDINGS
-----------------------------
% of net assets @ 12/31/06
FFCB 4.000% 03/10/08 5.9%
GNMA II Pool 3734 4.500% 07/20/35 4.8%
GNMA Pool 3556 5.500% 05/20/34 4.8%
GNMA Series 1999-04 Class ZB 6.000% 02/20/29 4.1%
GNMA II Pool 3747 5.000% 08/20/35 3.8%
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 31, 2006-December 31, 2006).
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 (7/1/06-
(7/1/06) (12/31/06) 12/31/06)
- ------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,018.10 $6.36
- ------------------------------------------------------------------------------
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, 2006.
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/06-
(7/1/06) (12/31/06) 12/31/06)
- -------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,097.60 $6.61
- -------------------------------------------------------------------------------
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, 2006.
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/06-
(7/1/06) (12/31/06) 12/31/06)
- ------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,150.10 $7.37
- -------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,018.30 $6.92
*Expenses are equal to the Fund's annualized expense ratio of 1.36% 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, 2006.
FIXED INCOME FUNDS
-------------------------------
Wright Total Return Bond Fund
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/06-
(7/1/06) (12/31/06) 12/31/06)
- -------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,046,80 $4.95
- -------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,023.40 $4.89
*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, 2006.
WRIGHT CURRENT INCOME FUND
Expenses Paid
Beginning Ending During Period*
Account Value Account Value (7/1/06-
(7/1/06) (12/31/06) 12/31/06)
- -------------------------------------------------------------------------------
Actual Fund Shares $1,000.00 $1,045.40 $5.05
- -------------------------------------------------------------------------------
Hypothetical (5% return per year before expenses)
Fund Shares $1,000.00 $1,020.30 $4.99
*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, 2006.
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - December 31, 2006
Shares Value
EQUITY INTERESTS --99.3%
AUTOMOBILES & COMPONENTS -- 1.3%
BorgWarner, Inc........................8,400 $ 495,768
------------
BANKS -- 1.7%
Associated Banc-Corp..................3,180 $ 110,918
Astoria Financial Corp................2,172 65,508
City National Corp....................3,250 231,400
Wilmington Trust Corp.................6,020 253,863
------------
$ 661,689
------------
CAPITAL GOODS -- 6.0%
Alliant Techsystems, Inc.* ...........5,105 $ 399,160
Graco, Inc............................2,702 107,053
Precision Castparts Corp.............11,310 885,347
SPX Corp..............................8,495 519,554
Thomas & Betts Corp.* ................8,450 399,516
------------
$ 2,310,630
------------
CHEMICALS -- 2.7%
Albemarle Corp........................8,545 $ 613,531
Cytec Industries, Inc...................510 28,820
Lyondell Chemical Co..................4,235 108,289
Scotts Miracle-Gro Co., Class A.......5,150 265,997
------------
$ 1,016,637
------------
COMMERCIAL SERVICES & SUPPLIES -- 7.9%
Ceridian Corp.* ......................4,835 $ 135,283
Harsco Corp...........................2,290 174,269
ITT Educational Services, Inc.* ......1,585 105,196
Jacobs Engineering Group, Inc.* ......8,400 684,936
Manpower, Inc.........................9,795 733,939
MPS Group, Inc.* ....................14,605 207,099
Pharmaceutical Product
Development, Inc.....................10,255 330,416
Plexus Corp.* ........................9,335 222,920
Republic Services, Inc. - Class A.....6,915 281,233
SEI Investments Co....................2,335 139,073
------------
$ 3,014,364
------------
COMMUNICATIONS EQUIPMENT -- 0.8%
Harris Corp...........................6,410 $ 293,963
------------
COMPUTERS & PERIPHERALS -- 1.8%
CSG Systems International, Inc.* .....6,095 $ 162,919
Western Digital Corp.* ..............25,605 523,878
------------
$ 686,797
------------
CONSUMER DURABLES & APPAREL -- 1.1%
Mohawk Industries, Inc.* .............5,200 $ 389,272
Toll Brothers, Inc.* .................1,520 48,990
------------
$ 438,262
------------
DIVERSIFIED FINANCIALS -- 10.3%
Eaton Vance Corp.....................20,315 $ 670,598
Edwards, A.G., Inc...................10,650 674,038
Investors Financial Services Corp.....2,745 117,129
Jefferies Group, Inc.................11,930 319,963
Nuveen Investments, Inc. - Class A...13,195 684,557
Raymond James Financial, Inc.........22,687 687,643
The BISYS Group, Inc.* ..............29,600 382,136
Waddell & Reed Financial, Inc........15,315 419,018
------------
$ 3,955,082
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 5.7%
Ametek, Inc...........................3,795 $ 120,833
Amphenol Corp.........................3,965 246,147
Arrow Electronics, Inc.* ............12,435 392,324
Avnet, Inc.* .........................8,955 228,621
CommScope, Inc.* .....................7,650 233,172
Lincoln Electric Holdings, Inc........6,090 367,958
MEMC Electronic Materials, Inc.* .....8,000 313,120
Tech Data Corp.* .....................3,250 123,077
Vishay Intertechnology, Inc.* .......12,475 168,911
------------
$ 2,194,163
------------
ENERGY -- 6.3%
ENSCO International, Inc..............4,600 $ 230,276
Newfield Exploration Company* .......14,560 669,032
Noble Energy, Inc.....................9,795 480,641
Patterson-UTI Energy, Inc............11,170 259,479
Peabody Energy Corp..................11,805 477,040
Pogo Producing Co.....................6,475 313,649
------------
$ 2,430,117
------------
FOOD, BEVERAGE & TOBACCO -- 1.0%
Hormel Foods Corp.....................5,150 $ 192,301
PepsiAmericas, Inc....................8,310 174,344
------------
$ 366,645
============
HEALTH CARE EQUIPMENT & SERVICES -- 3.9%
Community Health Systems, Inc.* ......3,025 $ 110,473
Covance, Inc.* .......................3,935 231,811
DENTSPLY International, Inc...........5,210 155,518
Health Net, Inc.* ....................6,815 331,618
Hillenbrand Industries, Inc...........3,315 188,723
Lincare Holdings, Inc.* ..............3,200 127,488
Universal Health Services, Inc.* .....3,275 181,533
Varian Medical Systems, Inc.* ........3,890 185,047
------------
$1,512,211
------------
HEAVY MACHINERY -- 1.1%
Cameron International Corp.* .........3,660 $ 194,163
Joy Global, Inc.......................4,925 238,074
------------
$ 432,237
------------
HOME CONSTRUCTION, FURNISHINGS
& APPLIANCES -- 1.4%
Beazer Homes USA, Inc...................520 $ 24,445
Rent-A-Center, Inc.* .................6,995 206,422
Sotheby's.............................9,585 297,327
------------
$ 528,194
------------
HOTELS, RESTAURANTS & LEISURE -- 0.9%
Bob Evans Farms, Inc..................4,575 $ 156,556
Ruby Tuesday, Inc.....................7,245 198,803
------------
$ 355,359
------------
INSURANCE -- 6.9%
American Financial Group, Inc.........4,155 $ 149,206
First American Corp..................12,800 520,704
HCC Insurance Holdings, Inc...........7,555 242,440
Ohio Casualty Corp....................6,020 179,456
Old Republic International Corp.......7,953 185,146
PMI Group Inc., (The)...................590 27,830
Protective Life Corp..................6,455 306,613
Radian Group, Inc.....................1,985 107,011
Stancorp Financial Group..............5,060 227,953
W.R. Berkley Corp....................20,762 716,497
------------
$2,662,856
------------
MATERIALS -- 4.9%
Airgas, Inc...........................5,470 $ 221,644
Commercial Metals Co..................4,835 124,743
Crane Co..............................7,990 292,754
FMC Corp..............................3,800 290,890
Grant Prideco, Inc.* .................7,145 284,157
Martin Marietta Materials, Inc........1,765 183,401
RPM International, Inc................5,210 108,837
Steel Dynamics, Inc...................2,540 82,423
Timken Co., (The)....................10,070 293,843
------------
$ 1,882,692
------------
MEDICAL SUPPLIES -- 0.4%
ResMed, Inc.* ........................3,290 $ 161,934
------------
OIL & GAS -- 3.1%
AGL Resources, Inc....................7,850 $ 305,444
Denbury Resources, Inc.* .............6,650 184,804
FMC Technologies, Inc. * .............5,410 333,418
Helmerich & Payne, Inc................6,320 154,650
Tidewater, Inc........................4,555 220,280
------------
$ 1,198,596
------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 1.2%
Cephalon, Inc. * .....................4,675 $ 329,167
Omnicare, Inc.........................2,910 112,413
------------
$ 441,580
------------
REAL ESTATE -- 5.8%
AMB Property Corp. REIT...............6,220 $ 364,554
Highwoods Properties, Inc. REIT.......3,150 128,394
Hospitality Properties Trust REIT.....2,975 141,402
Liberty Property Trust REIT...........7,460 366,584
New Plan Excel Realty Trust REIT.....32,440 891,451
Regency Centers Corp. REIT............2,440 190,735
United Dominion Realty
Trust, Inc. REIT.....................4,750 151,003
------------
$ 2,234,123
------------
RETAILING -- 7.9%
Abercrombie & Fitch Co. - Class A.....3,125 $ 217,594
American Eagle Outfitters............20,467 638,775
AnnTaylor Stores Corp.* ..............7,830 257,137
CDW Corp..............................3,525 247,878
Claire's Stores, Inc.................13,465 446,230
Dick's Sporting Goods, Inc.* .........2,815 137,907
Dollar Tree Stores, Inc. * ...........8,405 252,991
GameStop Corp. - Class A* ............8,765 483,039
MSC Industrial Direct Co., Inc.
- Class A............................5,200 203,580
Payless ShoeSource, Inc.* ............4,435 145,557
------------
$3,030,688
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS -- 2.0%
Intersil Corp. - Class A..............6,690 $ 160,025
Lam Research Corp.* ..................8,905 450,771
Microchip Technology, Inc.............4,370 142,899
------------
$ 753,695
------------
SOFTWARE & SERVICES -- 2.3%
Activision, Inc. * ..................11,300 $ 194,812
Cognizant Technology Solutions Corp.* 5,470 422,065
Transaction Systems Architects, Inc.* 7,815 254,535
------------
$ 871,412
------------
TELECOMMUNICATION SERVICES -- 0.3%
Cincinnati Bell, Inc.* ..............20,830 $ 95,193
------------
TEXTILES, CLOTHING & FABRICS -- 1.3%
Polo Ralph Lauren Corp................6,595 $ 512,168
------------
TRANSPORTATION -- 3.0%
C.H. Robinson Worldwide, Inc..........2,185 $ 89,345
Hunt, J.B. Transport Services, Inc...25,620 532,127
Swift Transportation Co., Inc.* ......5,955 156,438
Trinity Industries, Inc...............4,325 152,240
YRC Worldwide, Inc.* .................5,360 202,233
------------
$ 1,132,383
------------
UTILITIES -- 6.3%
Alliant Energy Corp...................6,915 $ 261,180
Black Hills Corp.....................10,305 380,667
IDACORP, Inc.........................12,890 498,199
MDU Resources Group, Inc.............35,128 900,682
OGE Energy Corp.......................5,885 235,400
Questar Corp..........................1,225 101,736
Wisconsin Energy Corp.................1,160 55,054
------------
$ 2,432,918
------------
TOTAL EQUITY INTERESTS-- 99.3%
(identified cost, 31,460,648) $ 38,102,356
OTHER ASSETS, LESS LIABILITIES -- 0.7% 249,449
------------
NET ASSETS -- 100% $38,351,805
============
* Non-income-producing security.
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $31,460,648) (Note 1A). $ 38,102,356
Cash.................................... 258,671
Receivable for fund shares sold......... 2,286
Receivable from investment adviser...... 1,014
Dividends receivable.................... 35,221
Other assets............................ 6,198
------------
Total assets............................ $ 38,405,746
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 11,701
Payable to affiliate for Trustees' fees. 39
Transfer agent fee payable.............. 5,915
Accrued expenses and other liabilities.. 36,286
------------
Total liabilities....................... $ 53,941
------------
NET ASSETS................................ $ 38,351,805
============
NET ASSETS CONSIST OF:
Paid-in capital......................... $ 29,403,152
Accumulated undistributed net realized gain on
investments (computed on the basis of
identified cost)....................... 2,303,087
Unrealized appreciation on investments
(computed on the basis of identified cost) 6,641,708
Accumulated undistributed net investment
income................................. 3,858
------------
Net assets applicable to outstanding
shares............................... $ 38,351,805
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 3,124,559
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 12.27
===============
See notes to financial statements
STATEMENT OF OPERATIONS
Year Ended December 31, 2006
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 432,234
Expenses -
Investment adviser fee (Note 2):........ $ 263,675
Administrator fee (Note 2):............. 52,735
Compensation of Trustees who are not employees
of the investment adviser or administrator 13,037
Custodian fee (Note 1D)................. 85,531
Distribution expenses (Note 3):......... 109,865
Transfer and dividend disbursing agent fees 33,374
Printing................................ 6,840
Interest expense........................ 6.830
Shareholder communications.............. 8,610
Audit services.......................... 27,900
Legal services.......................... 5,753
Registration costs...................... 20,189
Miscellaneous .......................... 5,379
------------
Total expenses.......................... $ 639,718
------------
Deduct -
Reduction of custodian fee (Note 1D):... $ (5,441)
Reduction of investment adviser fee (Note 2) (12,425)
Reduction of distribution expenses
by principal underwriter (Note 3):..... (72,850)
------------
Total deductions........................ $ (90,716)
------------
Net expenses............................ $ 549,002
------------
Net investment loss..................... $ (116,768)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 4,175,456
Change in unrealized depreciation of
investments............................ (2,770,820)
------------
Net realized and unrealized gain
of investments......................... $ 1,404,636
------------
Net increase in net assets from operations $ 1,287,868
==============
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
Year Ended
December 31,
------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2006 2005
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment loss........................................................ $ (116,768) $ (87,194)
Net realized gain on investments........................................... 4,175,456 6,417,438
Change in unrealized depreciation of investments........................... (2,770,820) (1,416,439)
-------------- --------------
Net increase in net assets resulting from operations..................... $ 1,287,868 $ 4,913,805
-------------- --------------
Distributions to shareholders (Note 1F) -
From net realized gain..................................................... $ (4,229,388) $ (5,390,227)
-------------- --------------
Total distributions...................................................... $ (4,229,388) $ (5,390,227)
-------------- --------------
Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (6,358,299) $ 4,630,188
-------------- --------------
Net increase (decrease) in net assets........................................ $ (9,299,819) $ 4,153,766
NET ASSETS:
At beginning of year......................................................... 47,651,624 43,497,858
-------------- --------------
At end of year............................................................... $ 38,351,805 $ 47,651,624
============== ==============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF YEAR.................................................................. $ 3,858 $ 924,429
============== ==============
See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2006(6) 2005 2004 2003(6) 2002(6)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 13.030 $ 13.226 $ 11.870 $ 9.270 $ 11.580
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(1) ................ $ (0.034) $ (0.053) $ (0.028) $ (0.023) $ (0.046)
Net realized and unrealized gain (loss) 0.529 1.476 1.884 2.756 (1.831)
--------- --------- --------- --------- ---------
Total income (loss)
from investment operations......... $ 0.495 $ 1.423 $ 1.856 $ 2.733 $ (1.877)
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Distributions from capital gains....... $ (1.255) $ (1.619) $ (0.500) $ (0.133) $ (0.433)
--------- --------- --------- --------- ---------
Total distributions................ $ (1.255) $ (1.619) $ (0.500) $ (0.133) $ (0.433)
--------- --------- --------- --------- ---------
Net asset value, end of period.............. $ 12.270 $ 13.030 $ 13.226 $ 11.870 $ 9.270
========= ========= ========= ========= =========
TOTAL RETURN(2) ............................ 3.77% 11.09% 15.73% 30.06% (16.98%)
RATIOS/SUPPLEMENTAL DATA(1):
Net assets, end of year (000 omitted).. $ 38,352 $ 47,652 $ 43,498 $ 38,190 $ 32,817
Ratio of net expenses to average net assets 1.26% 1.27% 1.26% 1.25% 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% 1.25%(3)
Ratio of net investment (loss) to average
net assets.......................... (0.27%) (0.18%) (0.23%) (0.23%) (0.44%)
Portfolio turnover rate................ 66% 110% 69% 106% 119%(4)
- --------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2006, 2005, 2004, 2003, and 2002, the
operating expenses of the fund were reduced by a waiver of fees and/or 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:
2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss per share.......... $ (0.058) $ (0.111) $ (0.050) $ (0.057) $ (0.064)
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses........................... 1.46% 1.45% 1.44% 1.59% 1.43%(3)
========= ========= ========= ========= =========
Expenses after custodian fee reduction(5) 1.44% 1.43% 1.43% 1.59% 1.42%(3)
========= ========= ========= ========= =========
Net investment loss................ (0.46%) (0.38%) (0.41%) (0.57%) (0.61%)
========= ========= ========= ========= =========
- --------------------------------------------------------------------------------------------------------------------------------
(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, 2006
Shares Value
EQUITY INTERESTS -- 100.1%
AUTOMOBILES & COMPONENTS -- 3.9%
Johnson Controls, Inc................11,835 $ 1,016,863
Paccar, Inc..........................21,952 1,424,685
------------
$ 2,441,548
------------
BANKS -- 7.6%
Bank of America Corp.................51,255 $ 2,736,504
Capital One Financial Corp............8,235 632,613
Wachovia Corp.............................1 57
Wells Fargo & Co.....................40,140 1,427,378
------------
$ 4,796,552
------------
CAPITAL GOODS -- 1.5%
Cummins, Inc..........................6,625 $ 782,942
Illinois Tool Works, Inc..............3,895 179,910
------------
$ 962,852
------------
COMMERCIAL SERVICES & SUPPLIES -- 2.2%
General Electric Co..................10,560 $ 392,938
United Technologies Corp..............7,990 499,535
Waste Management, Inc................13,965 513,493
------------
$ 1,405,966
------------
COMMUNICATIONS EQUIPMENT -- 2.1%
Cisco Systems, Inc.*.................30,370 $ 830,012
Motorola, Inc........................24,140 496,318
------------
$ 1,326,330
------------
COMPUTERS & PERIPHERALS -- 5.7%
Computer Sciences Corp.*..............5,420 $ 289,265
EMC Corp.*...........................16,230 214,236
Hewlett-Packard Co...................45,090 1,857,257
International Business Machines Corp.10,535 1,023,475
SanDisk Corp.*........................4,545 195,571
------------
$ 3,579,804
------------
CONSUMER DURABLES & APPAREL -- 0.4%
VF Corp...............................3,435 $ 281,945
------------
DIVERSIFIED FINANCIALS -- 14.2%
Bear Stearns Cos., Inc. (The).........1,655 $ 269,401
Citigroup, Inc.......................34,359 1,913,796
Franklin Resources, Inc...............3,075 338,773
Goldman Sachs Group, Inc., (The).....10,330 2,059,285
JPMorgan Chase & Co..................27,580 1,332,114
Lehman Brothers Holdings, Inc........17,990 1,405,379
Merrill Lynch & Co., Inc..............5,895 548,825
Morgan Stanley.......................14,145 1,151,827
------------
$ 9,019,400
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.3%
3M Co.................................4,495 $ 350,295
Agilent Technologies, Inc.*..........11,255 392,237
Nvidia Corp.*........................19,035 704,485
------------
$ 1,447,017
------------
ENERGY -- 12.0%
Apache Corp...........................7,283 $ 484,392
ChevronTexaco Corp...................20,815 1,530,527
ConocoPhillips Co....................15,785 1,135,731
EOG Resources, Inc....................5,635 351,906
Exxon Mobil Corp.....................39,615 3,035,697
Occidental Petroleum Corp............10,900 532,247
TXU Corp..............................4,970 269,424
Valero Energy Corp....................4,495 229,964
------------
$ 7,569,888
------------
ENTERTAINMENT & LEISURE -- 2.3%
CBS Corp. - Class B...................9,930 $ 309,617
Time Warner, Inc.....................22,015 479,487
Walt Disney Co., (The)...............19,110 654,900
-----------
$ 1,444,004
------------
FOOD, BEVERAGE & TOBACCO -- 3.8%
Altria Group, Inc....................15,005 $ 1,287,729
Archer-Daniels-Midland Co............12,525 400,299
PepsiCo, Inc.........................11,060 691,803
------------
$ 2,379,831
------------
HEALTH CARE EQUIPMENT & SERVICES -- 5.3%
AmerisourceBergen Corp................5,605 $ 252,001
Humana, Inc.*.........................8,020 443,586
Laboratory Corp. of America Holdings*.8,525 626,332
UnitedHealth Group, Inc..............15,621 839,316
Wellpoint, Inc.*.....................15,525 1,221,662
------------
$ 3,382,897
------------
HEAVY MACHINERY -- 1.9%
Caterpillar, Inc.....................12,870 $ 789,317
Ingersoll-Rand Co. - Class A.........11,005 430,626
------------
$ 1,219,943
------------
HOME CONSTRUCTION, FURNISHINGS
& APPLIANCES -- 0.7%
Leggett & Platt, Inc.................10,285 $ 245,812
Whirlpool Corp........................2,800 232,456
------------
$ 478,268
------------
HOTELS, RESTAURANTS & LEISURE -- 0.5%
Starwood Hotels & Resorts
Worldwide, Inc.......................4,730 $ 295,625
------------
INSURANCE -- 3.8%
AMBAC Financial Group, Inc............6,390 $ 569,157
Chubb Corp............................4,530 239,682
Progressive Corp.....................30,670 742,827
The St. Paul Travelers Co., Inc......11,030 592,201
Torchmark Corp........................3,810 242,926
------------
$ 2,386,793
------------
MATERIALS -- 0.9%
Nucor Corp............................8,300 $ 453,678
Sigma-Aldrich Corp....................1,420 110,362
------------
$ 564,040
------------
MEDICAL SUPPLIES -- 0.6%
Danaher Corp..........................5,015 $ 363,287
------------
METALS -- 0.5%
Allegheny Technologies, Inc...........1,755 $ 159,143
Phelps Dodge Corp.....................1,175 140,671
-----------
$ 299,814
------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 9.2%
Applera Corp. - Applied Biosystems
Group...............................24,140 $ 885,697
Barr Laboratories, Inc.*.............12,545 628,755
Gilead Sciences, Inc.*................9,470 614,887
Johnson & Johnson, Inc...............14,440 953,329
King Pharmaceuticals Inc.*...........14,020 223,198
Merck & Co., Inc......................8,285 361,226
Pfizer, Inc..........................83,475 2,162,003
------------
$ 5,829,095
------------
REAL ESTATE -- 1.0%
Boston Properties, Inc. REIT..........5,910 $ 661,211
------------
RETAILING -- 6.2%
Best Buy Co., Inc.....................4,735 $ 232,915
Home Depot, Inc......................32,455 1,303,393
J.C. Penney Co., Inc..................5,205 402,659
Limited Brands, Inc..................13,490 390,401
Lowe's Cos., Inc.....................19,385 603,843
Nordstrom, Inc.......................11,285 556,802
Office Depot, Inc.*..................11,625 443,726
------------
$ 3,933,739
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS -- 1.3%
Intel Corp...........................13,510 $ 273,578
Texas Instruments, Inc...............19,170 552,096
------------
$ 825,674
------------
SOFTWARE & SERVICES -- 1.5%
Microsoft Corp.......................20,595 $ 614,967
Oracle Corp.*........................19,565 335,344
------------
$ 950,311
------------
TELECOMMUNICATION SERVICES -- 4.2%
Alltel Corp...........................4,765 $ 288,187
AT&T, Inc............................56,545 2,021,484
Corning, Inc.*.......................19,410 363,161
------------
$ 2,672,832
------------
TRANSPORTATION -- 3.2%
Burlington Northern Santa Fe Corp.....5,875 $ 433,634
CSX Corp..............................5,435 187,127
FedEx Corp............................6,390 694,082
Norfolk Southern Corp.................8,425 423,693
United Parcel Service, Inc. - Class B.3,805 285,299
------------
$ 2,023,835
------------
UTILITIES -- 1.3%
Exelon Corp...........................9,876 $ 611,226
Sempra Energy.........................3,345 187,220
-----------
$ 798,446
-------------
TOTAL EQUITY INTERESTS--100.1%
(identified cost, $52,649,700) $63,340,947
OTHER ASSETS, LESS LIABILITIES -- (0.1%) (65,004)
------------
NET ASSETS -- 100% $63,275,943
=============
* Non-income-producing security.
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $52,649,700) (Note 1A). $ 63,340,947
Cash.................................... 931
Receivable for investments sold......... 200,138
Receivable for fund shares sold......... 10,118
Receivable from investment adviser...... 2,034
Dividends receivable.................... 144,562
Other assets............................ 6,000
------------
Total assets............................ $ 63,704,730
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 81,748
Demand note payable..................... 311,000
Payable to affiliate for Trustees' fees. 39
Transfer agent fee...................... 6,262
Accrued expenses and other liabilities.. 29,738
------------
Total liabilities....................... $ 428,787
------------
NET ASSETS................................ $ 63,275,943
=============
NET ASSETS CONSIST OF:
Paid-in capital......................... $ 73,120,996
Accumulated undistributed net realized loss on
investments (computed on the basis
of identified cost).................... (20,549,695)
Unrealized appreciation on investments
(computed on the basis of identified cost) 10,691,247
Accumulated undistributed net investment
income................................. 13,395
------------
Net assets applicable to outstanding
shares................................ $ 63,275,943
==============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 4,587,192
==============
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 13.79
==============
See notes to financial statements
STATEMENT OF OPERATIONS
Year Ended December 31, 2006
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 1,127,872
------------
Expenses -
Investment adviser fee (Note 2):........ $ 391,257
Administrator fee (Note 2):............. 78,251
Compensation of Trustees not employees of the
investment adviser or administrator.... 13,037
Custodian fee (Note 1D):................ 81,169
Distribution expenses (Note 3):......... 163,024
Transfer and dividend disbursing agent fees 26,583
Printing................................ 3,953
Interest expense........................ 7,883
Shareholder communications.............. 3,793
Audit services.......................... 29,000
Legal services.......................... 6,412
Registration costs...................... 22,879
Miscellaneous .......................... 6,768
------------
Total expenses.......................... $ 834,009
------------
Deduct -
Reduction of custodian fee (Note 1D):... $ (7,123)
Allocation of expenses to the
investment adviser (Note 2):........... (2,034)
Reduction of distribution expenses by principal
underwriter (Note 3):.................. (9,875)
------------
Total deductions........................ $ (19,032)
------------
Net expenses............................ $ 814,977
------------
Net investment income................... $ 312,895
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 9,867,709
Change in unrealized depreciation of
investments............................ (3,314,951)
------------
Net realized and unrealized gain of
investments............................ $ 6,552,758
------------
Net increase in net assets from operations $ 6,865,653
=============
See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC)
- -------------------------------------------------------------------------------
Year Ended
December 31,
-------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2006 2005
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income ..................................................... $ 312,895 $ 431,620
Net realized gain on investments........................................... 9,867,709 3,605,530
Change in unrealized appreciation (depreciation) on investments............ (3,314,951) 59,679
-------------- --------------
Net increase in net assets resulting from operations..................... $ 6,865,653 $ 4,096,829
-------------- --------------
Distributions to shareholders -
From net investment income................................................. $ (314,151) $ (485,388)
-------------- --------------
Total distributions...................................................... $ (314,151) $ (485,388)
-------------- --------------
Net decrease in net assets from fund share transactions (Note 4)............. $(10,017,143) $ (2,372,715)
-------------- --------------
Net increase (decrease) in net assets........................................ $ (3,465,641) $ 1,238,726
NET ASSETS:
At beginning of year......................................................... 66,741,584 65,502,858
-------------- --------------
At end of year............................................................... $ 63,275,943 $ 66,741,584
-------------- --------------
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT END OF YEAR........................................ $ 13,395 $ (187,940)
============== ==============
See notes to financial statements
Wright Major Blue Chip Equities Fund (WMBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2006(4) 2005 2004 2003(4) 2002(4)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 12.420 $ 11.780 $ 10.530 $ 8.570 $ 11.380
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) ....... $ 0.062 $ 0.077 $ 0.053 $ 0.029 $ 0.024
Net realized and unrealized gain (loss) 1.374 0.651 1.247 1.958 (2.812)
--------- --------- --------- --------- ---------
Total income (loss)
from investment operations......... $ 1.436 $ 0.728 $ 1.300 $ 1.987 $ (2.788)
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from investment income....... $ (0.066) $ (0.088) $ (0.050) $ (0.027) $ (0.022)
--------- --------- --------- --------- ---------
Total distributions................ $ (0.066) $ (0.088) $ (0.050) $ (0.027) $ (0.022)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 13.790 $ 12.420 $ 11.780 $ 10.530 $ 8.570
========= ========= ========= ========= =========
TOTAL RETURN(3) ............................ 11.57% 6.20% 12.36% 23.20% (24.50%)
RATIOS/SUPPLEMENTAL DATA(1):
Net assets, end of year (000 omitted).. $ 63,276 $ 66,742 $ 65,503 $ 71,539 $ 66,609
Ratio of net expenses to average net assets 1.26% 1.26% 1.25% 1.25% 1.22%
Ratio of net expenses after custodian fee
reduction to average net assets(2)(5) 1.25% 1.25% 1.25% 1.25% 1.22%
Ratio of net investment income (loss) to
average net assets ................. 0.48% 0.66% 0.49% 0.31% 0.25%
Portfolio turnover rate................ 97% 82% 74% 143% 130%
- --------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2006, 2005, 2004 and 2003, the operating
expenses of the Fund were reduced by fee waivers and/or 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:
2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income per share........ $ 0.062 $ 0.077 $ 0.050 $ 0.024
========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses............................. 1.28% 1.26% 1.28% 1.31%
========= ========= ========= =========
Expenses after custodian fee reduction(2) 1.27% 1.25% 1.28% 1.31%
========= ========= ========= =========
Net investment income................ 0.46% 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)
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - December 31, 2006
Shares Value
EQUITY INTERESTS -- 98.4%
AUSTRALIA -- 4.7%
BHP Billiton, Ltd....................60,304 $ 1,202,550
Coles Group, Ltd....................222,690 2,457,340
QBE Insurance Group, Ltd............120,560 2,741,483
Rio Tinto Ltd........................21,621 1,266,196
Westfield Group.....................159,975 2,646,677
------------
$10,314,246
------------
AUSTRIA -- 0.6%
Boehler-Uddeholm AG...................7,394 $ 517,730
OMV AG (Stammaktie)..................12,187 690,866
------------
$ 1,208,596
------------
BELGIUM -- 1.5%
Fortis 77,161 $ 3,288,507
------------
CANADA -- 4.9%
Biovail Corp.........................17,058 $ 360,597
Candian National Railway Co..........11,076 476,562
Encana Corp..........................64,568 2,977,330
Husky Energy, Inc....................35,784 2,399,745
IPSCO, Inc............................6,468 609,060
Methanex Corp........................33,144 908,562
Penn West Energy Trust...............15,336 468,765
Talisman Energy, Inc.................44,985 765,406
Teck Cominco Ltd. - Class B..........21,442 1,619,620
------------
$10,585,647
------------
DENMARK -- 3.0%
Danske Bank Ag (Stammaktie).........125,737 $ 5,582,775
Topdanmark A/S*.......................5,883 971,984
---------------
$ 6,554,759
---------------
FINLAND -- 0.4%
Outokumpu Oyj........................18,547 $ 725,395
Yit Oyj...............................3,284 90,723
--------------
$ 816,118
--------------
FRANCE -- 6.6%
Axa (Actions Ordinaires).............30,780 $ 1,244,835
BNP Paribas..........................47,030 5,125,631
Gecina SA.............................4,135 790,630
Schneider Electric SA.................8,323 923,008
Societe Generale de France
(Actions Ord.).......................25,731 4,363,422
Vallourec SA..........................4,008 1,164,318
Vinci.................................5,732 731,663
------------
$ 14,343,507
------------
GERMANY -- 8.5%
Allianz Ag Holding (Namensaktie)......7,676 $ 1,566,474
BASF AG (Stammaktie).................23,103 2,249,823
Continental AG (Stammaktie)..........19,566 2,273,042
DaimlerChrysler AG (Namenaktie)......19,134 1,180,813
Deutsche Bank AG (Stammaktie)........28,458 3,802,899
Deutsche Boerse AG...................17,761 3,265,292
E. On AG (Stammaktie)................26,724 3,623,688
Puma AG...............................1,508 587,947
------------
$18,549,978
------------
HONG KONG -- 0.9%
Sino Land Co........................654,000 $ 1,527,100
Sun Hung Kai Properties Ltd..........37,000 425,080
-------------
$ 1,952,180
-------------
IRELAND -- 0.4%
Bank of Ireland (Cap. Stock).........41,172 $ 950,101
------------
ITALY -- 3.7%
Buzzi Unicem Spa......................7,342 $ 208,443
Eni Spa (Azioni Ordinarie)..........182,995 6,148,486
Intesa Sanpaolo.....................226,400 1,746,473
--------------
$ 8,103,402
-------------
JAPAN -- 22.0%
Aoyama Trading Co., Ltd..............18,900 $ 566,262
Asics Corp...........................79,000 990,525
Brother Industries, Ltd..............86,000 1,162,738
Canon, Inc. (Common).................82,050 4,613,613
CSK Holdings Corp....................15,000 639,503
Daiichi Sanyko Co., Ltd..............62,900 1,963,728
Denso Corp...........................13,200 522,882
Fuji Electric Holdings Co., Ltd......76,000 411,397
Fujikura, Ltd........................28,000 246,033
Honda Motor Co., Ltd. (Common).......60,200 2,374,554
Ibiden Co., Ltd. (Common).............8,000 402,837
Kddi Corp...............................353 2,390,760
Komatsu Ltd.........................122,700 2,486,849
Makita Corp..........................51,900 1,589,820
Marubeni Corp........................76,000 385,246
Mitsubishi Corp......................67,600 1,270,815
Mitsubishi Rayon Co., Ltd...........124,000 832,529
Mitsui OSK Lines, Ltd................62,000 610,868
Nippon Seiki.........................14,000 327,808
Nippon Shokubai Co., Ltd.............65,000 690,068
ORIX Corp.(Common)....................9,600 2,775,544
Pacific Metals Co., Ltd..............77,000 754,135
Ricoh Co., Ltd.......................36,000 734,170
Sankyo Co., Ltd. ....................15,200 840,653
Shinko Electric Industries Co., Ltd..63,600 1,659,989
Sumitomo Chemical Co., Ltd..........116,000 898,561
Sumitomo Corp.......................107,000 1,599,320
Sumitomo Metal Industries, Ltd......255,000 1,106,416
Takeda Chemicals Industries,
Ltd. (Common).......................24,000 1,645,588
Tokyo Steel Mfg Co., Ltd.............54,500 853,485
Tokyo Tatemono Co., Ltd..............58,000 645,445
Toyota Motor Corp. (Common)..........75,000 5,010,281
Toyota Tsusho Corp...................31,000 829,927
Tsumura & CO.........................35,000 816,583
Uny Co., Ltd........................119,000 1,547,984
Yamaha Motor Co., Ltd................59,700 1,873,845
------------
$48,070,761
------------
NETHERLANDS -- 3.3%
Aegon NV.............................65,252 $ 1,242,483
ING Groep NV ADR (Aandeel).........136,295 6,036,976
------------
$ 7,279,459
------------
NORWAY -- 2.4%
Norsk Hydro Asa (Ordinaere Aksje)*...42,230 $ 1,312,407
Orkla ASA............................11,445 648,869
Statoil ASA.........................125,029 3,318,323
------------
$ 5,279,599
------------
PORTUGAL -- 1.5%
Energias de Portugal SA.............302,564 $ 1,532,068
Portugal Telecom, SGPS, SA..........130,154 1,688,815
------------
$ 3,220,883
------------
SINGAPORE -- 0.8%
Capitaland Ltd......................360,000 $ 1,454,735
Singapore Petroleum Co., Ltd........138,000 392,153
------------
$ 1,846,888
------------
SPAIN -- 3.6%
ACS, Actividades de Construccion
y Servicios SA......................18,279 $ 1,029,465
Endesa SA...........................102,166 4,827,060
Repsol YPF SA (Accion)...............27,144 937,788
Union Fenosa, S.A....................20,897 1,033,344
------------
$ 7,827,657
------------
SWEDEN -- 4.3%
Atlas Copco AB - Class A.............22,518 $ 756,852
Boliden AB...........................29,814 766,808
Kungsleden AB*......................112,699 1,729,270
Nobia AB.............................37,108 1,428,899
Scania AB - Class B...................7,655 538,076
TeliaSonera AB......................367,731 3,022,778
Volvo AB - Class B...................15,098 1,040,290
------------
$ 9,282,973
------------
SWITZERLAND -- 2.5%
UBS AG...............................33,691 $ 2,043,761
Zurich Financial Services
(Inhaberaktie.......................12,915 3,470,238
------------
$ 5,513,999
------------
UNITED KINGDOM -- 22.8%
Anglo American PLC (Ordinary).......129,952 $ 6,335,499
AstraZeneca PLC......................41,956 2,253,213
Babcock International Group PLC.....245,916 1,928,788
Barratt Developments PLC............161,393 3,900,998
Bellway PLC (Ordinary)...............79,368 2,398,374
BG Group PLC.........................81,074 1,099,611
BHP Billiton PLC.....................31,842 582,376
BP PLC (Ordinary)...................155,021 1,721,791
British Airways PLC..................38,515 397,628
British American Tobacco PLC........138,242 3,866,307
George Wimpey PLC....................43,085 470,948
Hammerson PLC........................26,580 820,372
Hanson PLC...........................23,993 361,811
HSBC Holdings PLC....................27,270 496,889
Inchape PLC..........................70,656 699,719
Land Securities Group PLC............78,071 3,549,466
Man Group PLC.......................508,451 5,201,963
Marks & Spencer Group PLC...........133,919 1,879,254
Persimmon PLC (Ordinary)............146,962 4,389,183
Rio Tinto PLC........................44,924 2,389,747
Royal Bank of Scotland Group PLC.....51,619 2,013,451
Royal Dutch Shell PLC................39,005 1,366,462
Taylor Woodrow PLC..................181,961 1,517,983
------------
$49,641,833
------------
TOTAL EQUITY INTERESTS-- 98.4%
(identified cost, $170,074,990) $214,631,093
------------
OTHER ASSETS, LESS LIABILITIES -- 1.6% 3,570,079
------------
NET ASSETS -- 100% $218,201,172
=============
* Non-income-producing security.
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost $170,074,990) (Note 1A) $ 214,631,093
Cash.................................... 2,447,846
Foreign currency, at value (cost $28,865)
(Note 1)............................... 28,857
Receivable for fund shares sold......... 945,565
Dividends receivable.................... 199,821
Other assets............................ 11,426
Tax reclaim receivable.................. 92,477
------------
Total assets.......................... $218,357,085
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 73,704
Payable to affiliate for Trustees' fees. 34
Transfer agent fee...................... 8,402
Accrued expenses and other liabilities.. 73,773
------------
Total liabilities..................... $ 155,913
------------
NET ASSETS................................ $218,201,172
=============
NET ASSETS CONSIST OF:
Paid-in capital......................... $173,070,143
Accumulated undistributed net realized gain on
investments and foreign currency (computed on
the basis of identified cost).......... 509,265
Unrealized appreciation of investments
(computed on the basis of identified cost) 44,566,283
Accumulated undistributed net investment
income................................. 55,481
------------
Net assets applicable to
outstanding shares............ $218,201,172
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 9,558,662
==============
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $ 22.83
==============
See notes to financial statements
STATEMENT OF OPERATIONS
Year Ended December 31, 2006
- -----------------------------------------------------------------------------
INVESTMENT INCOME (Note 1C):
Dividend income......................... $ 5,004,980
Less: Foreign Taxes..................... (479,675)
------------
Investment income....................... $ 4,525,305
------------
Expenses -
Investment adviser fee (Note 2):........ $ 1,360,190
Administrator fee (Note 2):............. 220,273
Compensation of Trustees not employees of
the investment adviser or administrator 13,032
Custodian fee (Note 1D):................ 306,356
Distribution expenses (Note 3):......... 429,548
Transfer and dividend disbursing agent fees 45,763
Printing................................ 14,584
Interest expense........................ 27,299
Shareholder communications.............. 11,600
Audit services.......................... 32,861
Legal services.......................... 7,300
Registration costs...................... 29,879
Miscellaneous .......................... 10,299
------------
Total expenses.......................... $ 2,508,984
------------
Deduct -
Reduction of custodian fee (Note 1D):... $ (145,076)
------------
Net expenses............................ $ 2,363,908
------------
Net investment income................... $ 2,161,397
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain -
Investment transactions
(identified cost basis).............. $ 12,337,126
Foreign currency transactions.......... (95,804)
------------
Net realized gain....................... $ 12,241,322
Change in unrealized appreciation of
Investments (identified cost basis).... 28,017,500
Foreign currency....................... 6,606
------------
Net realized and unrealized gain of
investments............................ $ 40,265,428
------------
Net increase in net assets from operations $ 42,426,825
=============
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -----------------------------------------------------------------------------
Year Ended
December 31,
--------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2006 2005
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income ..................................................... $ 2,161,397 $ 596,164
Net realized gain on investments and foreign currency transactions......... 12,241,322 7,843,984
Change in unrealized appreciatIon on investments and translation of assets
and liabilities in foreign currencies.................................... 28,024,106 6,726,396
--------------- ---------------
Net increase in net assets resulting from operations..................... $ 42,426,825 $ 15,166,544
--------------- ---------------
Distributions to shareholders
From net investment income................................................. $ (2,603,140) $ (704,313)
From net realized gain..................................................... (227,144)
--------------- ---------------
Total distributions...................................................... $ (2,830,284) $ (704,313)
--------------- ---------------
Net increase in net assets from fund share transactions (Note 4) ............ $ 68,707,253 $ 33,169,454
--------------- ---------------
Net increase in net assets................................................... $ 108,303,794 $ 47,631,685
NET ASSETS:
At beginning of year......................................................... 109,897,378 62,265,693
--------------- --------------
At end of yeare.............................................................. $ 218,201,172 $109,897,378
=============== ===============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS
AT END OF YEAR.................................................................. $ 55,481 $ 2,125,740
=============== ===============
See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC)
- -------------------------------------------------------------------------------
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2006(1) 2005(1) 2004 2003(1) 2002(1)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $18.060 $15.070 $12.890 $ 9.840 $11.510
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income...... .......... $ 0.255 $ 0.129 $ 0.128 $ 0.073 $ 0.070
Net realized and unrealized gain (loss) 4.859 3.028 2.140 3.044 (1.740)
--------- --------- --------- --------- ---------
Total income (loss)
from investment operations...... $ 5.114 $ 3.157 $ 2.268 $ 3.117 $ (1.670)
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Distributions from investment income... $ (0.320) $ (0.167) $ (0.088) $ (0.067) $ -
Distributions from capital gains....... (0.024) - - - -
--------- --------- --------- --------- ---------
Total distributions................ $ (0.344) $ (0.167) $(0.088) $ (0.067) $ -
--------- --------- --------- --------- ---------
Net asset value, end of year................ $22.830 $18.060 $15.070 $12.890 $ 9.840
========= ========= ========= ========= =========
TOTAL RETURN(2) ............................ 28.49% 21.13% 17.71% 31.96% (14.51%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted).. $218,201 $109,897 $ 62,266 $ 54,586 $ 50,835
Ratio of net expenses to average net assets 1.46% 1.66% 1.72% 1.80% 1.66%(3)
Ratio of net expenses after custodian fee
reduction to average net assets(4) ... 1.37% 1.62% 1.71% 1.80% 1.65%
Ratio of net investment income to average
net assets.......................... 1.26% 0.81% 0.97% 0.81% 0.65%
Portfolio turnover rate................ 116% 99% 121% 77% 62%(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 Global 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 funds are 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 Funds'
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,
2006, the Trust, for federal income tax purposes, had capital loss
carryovers of $20,503,370 (WMBC) which will reduce the respective 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 WMBC
- -------------------------------------------------------------------------------
2009 $ 669,204
2010 17,603,398
2011 2,230,768
- -------------------------------------------------------------------------------
At December 31, 2006, net currency losses of $19,651 for WIBC attributable
to security transactions incurred after October 31, 2006 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 over distributions 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, 2006, 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 Net Net
Paid-In Realized Gain Investment
Capital on Investments Income
- ------------------------------------------------------------------------------
WSBC $ 887,557 $ 83,754 $ 803,803
WMBC 212,487 9,896 202,591
WIBC 1,583,591 44,924 1,538,667
- ------------------------------------------------------------------------------
The tax character of distributions paid for the year ended December 31,
2006 and December 31, 2005 was as follows:
Year Ended 12/31/06 WSBC WMBC WIBC
- ------------------------------------------------------------------------------
Distributions declared from:
Ordinary income - $314,151 $2,603,140
Capital gains $4,229,388 - $227,144
- ------------------------------------------------------------------------------
Year Ended 12/31/05 WSBC WMBC WIBC
- ------------------------------------------------------------------------------
Distributions declared from:
Ordinary income - $485,388 $704,313
Capital gains $5,390,227 - -
- -------------------------------------------------------------------------------
As of December 31, 2006, the components of distributable earnings
(accumulated losses) on a tax basis were as follows:
WSBC WMBC WIBC
- ------------------------------------------------------------------------------
Undistributed income - $ 7,906 $ 2,129,170
Undistributed gain $2,362,201 - $1,295,828
Capital loss
carryforwards - ($20,503,370) -
Unrealized appreciation $6,586,452 $10,650,410 $41,725,680
Other temporary
differences - - $19,651
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, 2006, the effective
annual rate was 0.79% for WIBC and 0.60% for WSBC and WMBC. Wright waived
adviser fees of $12,425 on behalf of WSBC and was allocated expenses of $2,034
on behalf of WMBC. The Trust also has engaged Eaton Vance Management (Eaton
Vance) to act as administrator of the Trust. Under the Administration Agreement,
Eaton Vance is responsible for managing the business affairs of the Trust and is
compensated based upon a percentage of average daily net assets which rate is
reduced as average daily net assets exceed certain levels. For the year ended
December 31, 2006, the effective rate was 0.12% for WSBC and WMBC, and 0.13% 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 $72,850 and $9,875 on behalf of WSBC and WMBC,
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 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, 2006, 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, 2006 December 31, 2005
----------------- -----------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
WRIGHT SELECTED BLUE CHIP EQUITIES FUND
Sold................................................... 536,776 $ 6,889,335 1,994,101 $ 26,725,001
Issued to shareholders in payment of distributions
declared....................................... 297,905 3,759,968 362,284 4,698,930
Redemptions............................................ (1,367,163) (17,007,602) (1,988,270) (26,793,743)
------------ ---------------- ------------ ----------------
Net increase (decrease).............................. (532,482) $ (6,358,299) 368,115 $ 4,630,188
============ ================ ============ ================
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
Sold.................................................. 600,054 $ 7,758,465 746,933 $ 8,790,299
Issued to shareholders in payment of distributions
declared ............................................ 18,825 257,085 32,288 390,542
Redemptions........................................... (1,403,539) (18,032,693) (969,256) (11,553,556)
------------ ---------------- ------------ ----------------
Net decrease........................................ (784,660) $ (10,017,143) (190,035) $ (2,372,715)
============ ================ ============ ================
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND
Sold................................................... 6,330,093 $ 126,455,231 2,853,233 $ 47,557,242
Issued to shareholders in payment of distributions
declared............................................. 109,592 2,341,138 33,842 523,875
Redemptions............................................ (2,964,763) (60,089,116) (936,442) (14,911,663)
------------ ---------------- ------------ ----------------
Net increase......................................... 3,474,922 $ 68,707,253 1,950,633 $ 33,169,454
============ =============== ============ ================
(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, 2006
-----------------------------------------------------
WSBC WMBC WIBC
- --------------------------------------------------------------------------------------------------------------------------------
Purchases.............................. $ 29,036,902 $ 63,803,744 $ 275,663,985
============ ============ ============
Sales.................................. $ 39,866,702 $ 74,460,330 $ 204,082,031
============ ============ ============
- --------------------------------------------------------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) of the investment securities
owned at December 31, 2006, as computed on a federal income tax basis, are as
follows:
WSBC WMBC WIBC
- -------------------------------------------------------------------------------
Aggregate cost $ 31,515,904 $52,690,536 $172,915,593
=========== =========== ============
Gross unrealized
appreciation 7,398,099 11,340,343 43,264,597
Gross unrealized
depreciation (811,647) (689,932) (1,549,097)
----------- ----------- -----------
Net unrealized
appreciation $ 6,586,452 $10,650,411 $ 41,715,5000
=========== =========== ===========
- -------------------------------------------------------------------------------
The appreciation on currency for WIBC is $10,180.
(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. At December 31, 2006, WMBC had a balance
outstanding pursuant to this line of credit of $311,000. WSBC and WIBC did not
have significant borrowings or allocated fees during the year ended December 31,
2006.
(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.
(9) FINANCIAL INSTRUMENTS
The Funds may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities and to assist in managing exposure to
various market risks. These financial instruments include written options,
financial futures contracts, forward foreign currency contracts, credit default
swaps, and interest rate swaps and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes. The
notional or contractual amounts of these instruments represent the investment
the Portfolio has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered.
(10) RECENTLY ISSUED ACCOUNTING PRONUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, ("FIN 48") "Accounting for Uncertainty in Income Taxes -
an interpretation of FASB Statement No. 109". FIN 48 clarifies the accounting
for uncertainty in income taxes recognized in accordance with FASB Statement No.
109, "Accounting for Income Taxes." This interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. It
also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 is
effective during the first required financial reporting period for fiscal years
beginning after December 15, 2006. Management is currently evaluating the impact
of applying the various provisions of FIN 48.
In September 2006, FASB issued Statement of Financial Accounting Standards No.
157, ("FAS 157") "Fair Value Measurements". FAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles and expands disclosure about fair value
measurements. FAS 157 is effective for fiscal years beginning after November 15,
2007. Management is currently evaluating the impact the adoption of FAS 157 will
have on the Funds' financial statement disclosures.
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, 2006, and
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 audit 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 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, 2006 by correspondence with the
custodian and brokers. 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, 2006, 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 16, 2007
WRIGHT MANAGED EQUITY TRUST AS OF DECEMBER 31, 2006
- ------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (Unaudited)
The Form 1099-DIV you received in January 2007 showed the tax status of all
distributions paid to your account in calendar 2006. Shareholders are advised to
consult their own tax adviser with respect to the tax consequences of their
investment in the Fund. As required by the Internal Revenue Code regulations,
shareholders must be notified within 60 days of the Fund's fiscal year end
regarding capital gains dividends, the status of the qualified dividend income
for individuals and the foreign tax credit.
CAPITAL GAINS DIVIDENDS - The Wright Selected Blue Chip Equities Fund and Wright
International Blue Chip Equities Fund designates $4,229,388 and $227,145,
respectively, as a capital gain dividend.
FOREIGN TAX CREDIT. The Wright International Blue Chip Equities Fund designates
a foreign tax credit of $479,675 and recognizes foreign source income of
$5,003,207.
QUALIFIED DIVIDEND INCOME. The Wright Major Blue Chip Equities Fund and Wright
International Blue Chip Equities Fund designates approximately $945,082 and
$4,610,360, respectively, or up to the maximum amount of such dividends
allowable pursuant to the Internal Revenue Code, as qualified dividend income
eligible for the reduced tax rate of 15%.
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2006
Face Coupon Maturity Current
Amount Description Rate Date Value Yield
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSET-BACKED SECURITIES - 2.4%
$ 335,000 Credit-Based Asset Servicing and Securities,
Series 2005-CB7 AF2 5.147% 11-25-35 $ 333,117 5.2%
405,000 Structured Asset Securities Corp.,
Series 2004-23XS 1A4 4.930% 01-25-35 395,930 5.0%
------------
Total Asset-Backed Securities (identified cost, $732,035) $ 729,047
------------
COMMERCIAL MORTGAGE-BACKED SECURITIES - 7.9%
$ 340,000 Citigroup Commercial Mortgage Trust,
Series 2004-C2 A5 4.733% 10-15-41 $ 327,750 4.9%
440,000 CS First Boston Mortgage Securities Corp.,
Series 2003-C3 A5 3.936% 05-15-38 408,895 4.2%
565,000 JP Morgan Chase Commercial Mortgage Securities,
Series 2004-C3 A5 4.878% 01-15-42 547,691 5.0%
425,000 Merrill Lynch Mortgage Trust,
Series 2005-LC1 A4 5.291% 01-12-44 423,627 5.3%
420,000 Merrill Lynch/Countrywide Commercial Mortgage Trust,
Series 2006-2 A4 5.910% 06-12-46 439,185 5.7%
281,241 Salomon Brothers Mortage Securities VII,
Series 2002-KEY2 A2 4.467% 03-18-36 274,725 4.6%
------------
Total Commercial Mortgage-Backed Securities (identified cost, $2,426,391) $ 2,421,873
------------
NON-AGENCY MORTGAGE-BACKED SECURITIES - 1.0%
$ 325,712 First Horizon Alternative Mortgage Securities,
Series 2005-AA10 1A2 5.776% 12-25-35 $ 322,455 5.8%
------------
Total Non-Agency Mortgage-Backed Securities (identified cost, $325,712)
CORPORATE BONDS - 23.3%
AUTO - 0.5%
- ------------
$ 160,000 DaimlerChrysler North America Holding Co. 7.200% 09-01-09 $ 166,077 6.9%
BANKS -4.1%
- ------------
$ 320,000 HSBC Finance Corp. 4.125% 11-16-09 $ 311,316 4.2%
330,000 JP Morgan Chase & Co. 5.150% 10-01-15 324,396 5.2%
295,000 Royal Bank of Scotland Group PLC 7.648% 08-31-49 347,398 6.5%
290,000 Wachovia Capital Trust 111 5.800% 03-15-42 292,663 5.7%
BLDG - RESIDENTIAL/COMMER - 0.5%
- --------------------------------
$ 145,000 Centex Corp. 7.875% 02-01-11 $ 156,452 7.3%
CABLE TV - 0.5%
- ---------------
$ 160,000 Comcast Corp. 5.875% 02-15-18 $ 158,600 5.9%
COMMUNICATIONS EQUIPMENT - 1.6%
- -------------------------------
$ 330,000 Cisco Systems, Inc. 5.500% 02-22-16 $ 330,798 5.5%
170,000 Harris Corp. 5.000% 10-01-15 160,150 5.3%
DIVERSIFIED FINANCIALS - 4.9%
- -----------------------------
$ 285,000 CIT Group, Inc. 7.750% 04-02-12 $ 314,555 7.0%
225,000 Countrywide Home Loans 6.250% 04-15-09 229,165 6.1%
305,000 General Electric Capital Corp. 5.875% 02-15-12 313,980 5.7%
325,000 Goldman Sachs Group, Inc. 5.350% 01-15-16 321,352 5.4%
315,000 International Lease Finance Corp. 5.875% 05-01-13 322,062 5.7%
ELECTRIC UTILITIES - 1.1%
- --------------------------
$ 175,000 American Electric Power 5.250% 06-01-15 $ 171,123 5.4%
170,000 Dominion Resources, Inc. 6.300% 03-15-33 175,304 6.1%
FOOD - RETAIL - 0.6%
- -----------------------
$ 170,000 Safeway, Inc., Note 5.800% 08-15-12 $ 170,523 5.8%
INSURANCE - 1.9%
- ------------------
$ 175,000 Fund American Cos., Inc., Guaranteed Sr. Note 5.875% 05-15-13 $ 174,183 5.9%
155,000 Partnerre Finance 6.440% 12-01-66 155,855 6.4%
240,000 St. Paul Travelers 5.500% 12-01-15 239,492 5.5%
OIL & GAS - 1.1%
- --------------------
$ 170,000 Oneok, Inc. 5.510% 02-16-08 $ 169,925 5.5%
155,000 Sempra Energy 6.000% 02-01-13 158,282 5.9%
PHARMACEUTICALS & BIOTECHNOLOGY - 0.5%
- --------------------------------------
$ 170,000 Hospira, Inc. 4.950% 06-15-09 $ 166,746 5.0%
PIPELINES - 0.5%
- ------------------------
$ 155,000 Duke Capital Corp., Senior Note 7.500% 10-01-09 $ 163,188 7.1%
RETAIL - 1.0%
- -----------------
$ 195,000 Autozone, Inc. 4.375% 06-01-13 $ 179,964 4.7%
120,000 TJX Cos., Inc. 7.450% 12-15-09 127,674 7.0%
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 0.6%
- -----------------------------------------
$ 170,000 Applied Material, Inc. 7.125% 10-15-17 $ 186,634 6.5%
SOFTWARE & SERVICES - 0.8%
- -----------------------------
$ 260,000 Oracle Corp. 5.000% 01-15-11 $ 257,615 5.0%
TELECOM - 3.1%
- --------------------
$ 150,000 AT&T Wireless 7.875% 03-01-11 $ 163,761 7.2%
125,000 British Telecom PLC 8.875% 12-15-30 171,479 6.5%
150,000 Deutsche Telekom International Finance 8.000% 06-15-10 162,547 7.4%
140,000 France Telecom SA 7.750% 03-01-11 152,634 7.1%
270,000 Verizon Global Funding Corp. 7.750% 12-01-30 317,637 6.6%
------------
Total Corporate Bonds (identified cost, $7,214,136) -- 23.3% $ 7,213,530
------------
GOVERNMENT INTERESTS - 64.2%
MORTGAGE-BACKED SECURITIES - 50.8%
- ----------------------------------
$ 821,885 FHLMC Gold Pool # A35363 5.000% 07-01-35 $ 793,554 5.2%
251,781 FHLMC Gold Pool #A32600 5.500% 05-01-35 249,130 5.6%
85,832 FHLMC Gold Pool #C01646 6.000% 09-01-33 86,638 5.9%
52,845 FHLMC Gold Pool #C01702 6.500% 10-01-33 54,125 6.3%
187,756 FHLMC Gold Pool #C47318 7.000% 09-01-29 195,920 6.7%
664,268 FHLMC Gold Pool #C55780 6.000% 01-01-29 673,244 5.9%
151,373 FHLMC Gold Pool #D66753 6.000% 10-01-23 152,644 6.0%
23,511 FHLMC Gold Pool #E00903 7.000% 10-01-15 24,154 6.8%
318,650 FHLMC Gold Pool #E01425 4.500% 08-01-18 308,039 4.7%
477,177 FHLMC Gold Pool #G01035 6.000% 05-01-29 482,783 5.9%
190,961 FHLMC Gold Pool #G01842 4.500% 06-01-35 179,007 4.8%
168,462 FHLMC Gold Pool #G08088 6.500% 10-01-35 171,666 6.4%
202,230 FHLMC Gold Pool #GO1349 5.000% 12-01-31 195,714 5.2%
194,147 FHLMC Gold Pool #N30514 5.500% 11-01-28 195,054 5.5%
131,885 FHLMC Pool # 781804 5.079% 07-01-34 129,862 5.2%
67,633 FHLMC Pool # 781884 5.155% 08-01-34 66,768 5.2%
157,027 FHLMC Pool # 782862 5.009% 11-01-34 154,379 5.1%
242,315 FHLMC Pool #1B1291 4.401% 11-01-33 241,284 4.4%
740,561 FHLMC Pool #1G0233 5.018% 05-01-35 740,157 5.0%
47,337 FHLMC Pool #27663 7.000% 06-01-29 48,798 6.8%
173,358 FHLMC Pool #781071 5.194% 11-01-33 172,175 5.2%
244,452 FNMA Pool # 709423 4.523% 06-01-33 240,961 4.6%
167,585 FNMA Pool #253057 8.000% 12-01-29 177,598 7.5%
72,128 FNMA Pool #254845 4.000% 07-01-13 69,813 4.1%
71,301 FNMA Pool #254863 4.000% 08-01-13 68,996 4.1%
189,824 FNMA Pool #254865 4.500% 09-01-18 183,628 4.7%
509,505 FNMA Pool #254904 5.500% 10-01-33 504,470 5.6%
365,067 FNMA Pool #255747 4.500% 04-01-25 346,474 4.7%
40,867 FNMA Pool #479477 6.000% 01-01-29 41,346 5.9%
44,401 FNMA Pool #489357 6.500% 03-01-29 45,555 6.3%
37,738 FNMA Pool #535332 8.500% 04-01-30 40,592 7.9%
194,222 FNMA Pool #545317 5.500% 11-01-16 194,840 5.5%
250,093 FNMA Pool #545407 5.500% 01-01-32 247,918 5.5%
60,625 FNMA Pool #545782 7.000% 07-01-32 62,618 6.8%
526,359 FNMA Pool #576524 5.500% 01-01-29 523,121 5.5%
53,726 FNMA Pool #597396 6.500% 09-01-31 55,019 6.3%
34,352 FNMA Pool #634823 6.500% 03-01-32 35,150 6.4%
266,569 FNMA Pool #701043 4.029% 04-01-33 262,184 4.1%
74,880 FNMA Pool #725866 4.500% 09-01-34 70,294 4.8%
350,710 FNMA Pool #730505 4.500% 08-01-33 329,605 4.8%
201,522 FNMA Pool #738630 5.500% 11-01-33 199,531 5.6%
317,877 FNMA Pool #739372 4.121% 09-01-33 311,321 4.2%
1,164,552 FNMA Pool #745467 5.858% 04-01-36 1,170,375 5.8%
229,711 FNMA Pool #747529 4.500% 10-01-33 215,888 4.8%
146,665 FNMA Pool #750859 6.500% 10-01-32 150,476 6.3%
305,070 FNMA Pool #753189 4.000% 12-01-33 278,031 4.4%
321,485 FNMA Pool #755749 5.500% 01-01-29 319,716 5.5%
814,535 FNMA Pool #781893 4.500% 11-01-31 767,703 4.8%
292,675 FNMA Pool #807804 5.500% 03-01-35 289,423 5.6%
661,470 FNMA Pool #809324 4.880% 02-01-35 657,598 4.9%
88,581 FNMA Pool #809888 4.500% 03-01-35 83,061 4.8%
429,146 FNMA Pool #849893 4.000% 11-01-23 398,596 4.3%
301,343 Freddie Mac, Series 1983 Z 6.500% 12-15-23 311,474 6.3%
68,601 GNMA II Pool #2671 6.000% 11-20-28 69,579 5.9%
10,278 GNMA II Pool #2909 8.000% 04-20-30 10,853 7.6%
28,577 GNMA II Pool #2972 7.500% 09-20-30 29,720 7.2%
10,491 GNMA II Pool #2973 8.000% 09-20-30 11,078 7.6%
370,077 GNMA Pool #374892 7.000% 02-15-24 382,562 6.8%
62,168 GNMA Pool #376400 6.500% 02-15-24 63,931 6.3%
86,719 GNMA Pool #379982 7.000% 02-15-24 89,644 6.8%
288,262 GNMA Pool #393347 7.500% 02-15-27 301,508 7.2%
102,128 GNMA Pool #410081 8.000% 08-15-25 108,214 7.6%
37,658 GNMA Pool #427199 7.000% 12-15-27 38,972 6.8%
37,070 GNMA Pool #436214 6.500% 02-15-13 37,990 6.3%
29,039 GNMA Pool #442996 6.000% 06-15-13 29,565 5.9%
107,482 GNMA Pool #448490 7.500% 03-15-27 112,421 7.2%
78,887 GNMA Pool #458762 6.500% 01-15-28 81,199 6.3%
99,511 GNMA Pool #460726 6.500% 12-15-27 102,425 6.3%
38,013 GNMA Pool #463839 6.000% 05-15-13 38,702 5.9%
56,867 GNMA Pool #478072 6.500% 05-15-28 58,534 6.3%
27,570 GNMA Pool #488924 6.500% 11-15-28 28,378 6.3%
20,295 GNMA Pool #510706 8.000% 11-15-29 21,531 7.5%
101,459 GNMA Pool #581536 5.500% 06-15-33 101,120 5.5%
U.S. GOVERNMENT AGENCIES - 1.2%
- -------------------------------
$ 375,000 Federal Home Loan Bank 4.500% 09-10-10 $ 369,287 4.6%
U.S. TREASURIES - 12.2%
- ------------------------
$ 1,045,000 U.S. Treasury Bonds 6.125% 11-15-27 $ 1,212,772 5.3%
510,000 U.S. Treasury Notes 5.000% 08-15-11 517,291 4.9%
1,409,609 U.S. Treasury Notes 2.000% 01-15-14 1,369,983 2.1%
510,000 U.S. Treasury Bond 8.125% 08-15-19 666,466 6.2%
------------
Total Government Interests (identified cost, $19,876,985)-- 64.2% $19,822,195
------------
Total Investments (identified cost, $30,575,259)-- 98.8% $30,509,100
Other Assets, Less Liabilities-- 1.2% 356,619
------------
Net Assets-- 100.0% $30,865,719
============
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, 2006
- -----------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of $30,575,259)(Note 1A) $ 30,509,100
Cash.................................... 137,740
Receivable for investments sold......... 25,978
Receivable for fund shares sold......... 38
Interest receivable..................... 245,430
Prepaid expenses........................ 5,500
------------
Total assets.......................... $ 30,923,786
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 2,078
Distributions payable................... 25,393
Payable to affiliate for distribution fees 80
Transfer agent fee ..................... 3,411
Accrued expenses and other liabilities.. 27,105
------------
Total liabilities..................... $ 58,067
------------
NET ASSETS................................ $ 30,865,719
==============
NET ASSETS CONSIST OF:
Paid-in capital......................... $ 34,192,621
Accumulated net realized loss on investments
(computed on the basis of identified cost) (3,253,660)
Unrealized depreciation on investments
(computed on the basis of identified cost) (66,159)
Distributions in excess of net
investment income...................... (7,083)
------------
Net assets applicable to
outstanding shares.................... $ 30,865,719
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................. 2,512,149
==============
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE OF
BENEFICIAL INTEREST..................... $ 12.29
===============
See notes to financial statements
STATEMENT OF OPERATIONS
Year Ended December 31, 2006
- ------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 1,802,569
------------
Expenses -
Investment adviser fee (Note 3)........ $ 165,521
Administrator fee (Note 3)............. 25,726
Compensation of Trustees not employees of
the investment adviser or administrator 13,072
Custodian fee (Note 1C)................ 66,570
Distribution expenses (Note 4)......... 91,879
Transfer and dividend disbursing agent fees 20,300
Printing............................... 5,020
Interest expense....................... 2,193
Shareholder communications............. 2,727
Audit services......................... 28,400
Legal services......................... 5,683
Registration costs..................... 20,024
Miscellaneous.......................... 4,038
------------
Total expenses........................ $ 451,153
------------
Deduct -
Reduction of custodian fee (Note 1C):.. $ (12,864)
Reduction of investment adviser fee
(Note 3)............................ (3,284)
Reduction of distribution expenses
by principal underwriter (Note 4)..... $ (86,128)
------------
Total deductions....................... $ (102,276)
------------
Net expenses.......................... $ 348,877
------------
Net investment income................ $ 1,453,692
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis)................ $ (647,060)
Change in unrealized appreciation
of investments......................... 193,494
------------
Net realized and unrealized loss of
investments........................... $ (453,566)
------------
Net increase in net assets from
operations........................... $ 1,000,126
=============
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- --------------------------------------------------------------------------------
Year Ended
December 31,
- --------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2006 2005
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 1,453,692 $ 1,475,641
Net realized loss on investments........................................... (647,060) (272,363)
Change in unrealized appreciation (depreciation) of investments............ 193,494 (584,766)
--------------- ---------------
Net increase in net assets resulting from operations..................... $ 1,000,126 $ 618,512
--------------- ---------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (1,629,189) $ (1,706,230)
--------------- ---------------
Total distributions...................................................... $ (1,629,189) $ (1,706,230)
--------------- ---------------
Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (9,793,330) $ 4,162,659
--------------- ---------------
Net increase (decrease) in net assets.................................... $(10,422,393) $ 3,074,941
NET ASSETS:
At beginning of year......................................................... 41,288,112 38,213,171
--------------- ---------------
At end of year............................................................... $ 30,865,719 $ 41,288,112
=============== ===============
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT END OF YEAR........................................ $ (7,083) $ (9,599)
=============== ===============
See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB)
- -------------------------------------------------------------------------------
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 12.430 $ 12.770 $ 12.870 $ 13.010 $ 12.550
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1) ................ $ 0.483 $ 0.465 $ 0.453 $ 0.483 $ 0.639
Net realized and unrealized gain (loss).. (0.082) (0.271) (0.011) (0.066) 0.461
--------- --------- --------- --------- ---------
Total income from investment operations $ 0.401 $ 0.194 $ 0.442 $ 0.417 $ 1.100
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Distributions from investment income..... $ (0.541) $ (0.534) $ (0.542) $ (0.557) $ (0.640)
--------- --------- --------- --------- ---------
Total distributions.................... $ (0.541) $ (0.534) $ (0.542) $ (0.557) $ (0.640)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 12.290 $ 12.430 $ 12.770 $ 12.870 $ 13.010
========= ========= ========= ========= =========
TOTAL RETURN(2) ............................ 3.34% 1.54% 3.52% 3.25% 9.03%
RATIOS/SUPPLEMENTAL DATA(1):
Net assets, end of year (000 omitted).... $ 30,866 $ 41,288 $ 38,213 $ 42,317 $ 39,404
Ratio of net expenses to average net assets 0.99% 0.98% 0.96% 0.95% 0.96%
Ratio of net expenses after custodian fee
reduction to average net assets(3)(4) . 0.95% 0.95% 0.95% 0.95% 0.95%
Ratio of net investment income to average
net assets............................ 3.96% 3.66% 3.58% 3.67% 4.92%
Portfolio turnover rate.................. 90% 86% 64% 131% 68%
- --------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2006, 2005, 2004, 2003, and 2002, 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:
2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income per share.......... $ 0.453 $ 0.439 $ 0.429 $ 0.455 $ 0.621
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses............................... 1.23%(3) 1.18% 1.18% 1.17% 1.09%
========= ========= ========= ========= =========
Expenses after custodian fee reduction(4) 1.19%(3) 1.15% 1.17% 1.17% 1.08%
========= ========= ========= ========= =========
Net investment income.................. 3.72%(3) 3.46% 3.36% 3.46% 4.78%
========= ========= ========= ========= =========
- --------------------------------------------------------------------------------------------------------------------------------
(2)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each year reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date.
(3)Custodian fees were reduced by credits resulting from cash balances the fund
maintained with the custodian (Note 1C). The computation of net expenses to
average daily net assets reported above is computed without consideration of
such credits.
(4)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, 2006
Face Coupon Maturity Current
Amount Description Rate Date Value Yield
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSET-BACKED SECURITIES - 4.2%
- ------------------------------
$ 301,103 Bear Sterns Adjustable Rate Motage,
Series 2003-4, Class 3A1 4.955% 07-25-33 $ 295,267 5.1%
830,448 Chase Mortgage Finance Corporation,
Series 2003-S3, Class A16 5.000% 11-25-33 802,607 5.2%
613,802 Countrywide Home Loans, Series 2006-J1,
Class 3A1 6.000% 02-25-36 614,473 6.0%
MORTGAGE-BACKED SECURITIES - 82.5%
- ----------------------------------
$ 31,990 FHLMC Gold Balloon #M90710 5.000% 03-01-07 $ 31,869 5.0%
28,488 FHLMC Gold Balloon #M90724 5.500% 05-01-07 28,489 5.5%
238,451 FHLMC Gold Balloon #M90767 4.500% 11-01-07 236,913 4.5%
272,677 FHLMC Gold Balloon #M90802 4.000% 03-01-08 269,423 4.0%
774,466 FHLMC Gold Balloon #M90937 5.000% 08-01-09 771,437 5.0%
756,914 FHLMC Gold Balloon #M90941 4.500% 08-01-09 748,495 4.6%
164,679 FHLMC Gold Pool #C00778 7.000% 06-01-29 169,761 6.8%
231,934 FHLMC Gold Pool #C47318 7.000% 09-01-29 242,019 6.7%
152,573 FHLMC Gold Pool #E00678 6.500% 06-01-14 156,165 6.4%
155,810 FHLMC Gold Pool #E00721 6.500% 07-01-14 159,491 6.3%
139,795 FHLMC Gold Pool #G00812 6.500% 04-01-26 143,299 6.3%
381,923 FHLMC Gold Pool #G01842 4.500% 06-01-35 358,013 4.8%
261,350 FHLMC Gold Pool #M90796 4.000% 02-01-08 258,352 4.0%
240,361 FHLMC Pool #1B1291 4.401% 11-01-33 239,338 4.4%
623,244 FHLMC Pool #1G0233 5.018% 05-01-35 622,904 5.0%
129,172 FHLMC Pool #765183 5.818% 08-01-24 131,073 5.7%
55,168 FHLMC Pool #C00548 7.000% 08-01-27 56,969 6.8%
216,146 FHLMC Pool #D82572 7.000% 09-01-27 223,204 6.8%
476,305 FHLMC, Series 15, Class L 7.000% 07-25-23 490,255 6.8%
77,579 FNMA Pool #254227 5.000% 02-01-09 77,394 5.0%
25,519 FNMA Pool #254505 5.000% 11-01-09 25,458 5.0%
1,115,996 FNMA Pool #255669 4.500% 02-01-35 1,046,457 4.8%
117,121 FNMA Pool #535131 6.000% 03-01-29 118,492 5.9%
154,211 FNMA Pool #545133 6.500% 12-01-28 158,083 6.3%
111,099 FNMA Pool #663689 5.000% 01-01-18 109,499 5.1%
547,114 FNMA Pool #673315 5.500% 11-01-32 541,820 5.6%
472,090 FNMA Pool #701043 4.029% 04-01-33 464,324 4.1%
64,544 FNMA Pool #733750 6.310% 10-01-32 65,727 6.2%
464,935 FNMA Pool #745467 5.858% 04-01-36 467,260 5.8%
528,692 FNMA Pool #801357 5.500% 08-01-34 523,577 5.6%
943,613 FNMA Pool #809324 4.880% 02-01-35 938,090 4.9%
572,202 FNMA Pool #816108 5.500% 05-01-35 565,846 5.6%
342,985 FNMA Pool #825395 4.851% 07-01-35 342,051 4.9%
592,590 FNMA Pool #871394 7.000% 04-01-21 608,614 6.8%
899,588 FNMA Pool #892522 6.187% 08-01-36 909,665 6.1%
581,359 FNMA, Series G93-5, Class Z 6.500% 02-25-23 592,272 6.4%
281,094 GNMA II Pool # 3388 4.500% 05-20-33 263,980 4.8%
3,454 GNMA II Pool #1596 9.000% 04-20-21 3,712 8.4%
61,225 GNMA II Pool #2268 7.500% 08-20-26 63,768 7.2%
6,960 GNMA II Pool #2855 8.500% 12-20-29 7,448 7.9%
564,448 GNMA II Pool #3259 5.500% 07-20-32 561,449 5.5%
349,586 GNMA II Pool #3284 5.500% 09-20-32 347,728 5.5%
142,093 GNMA II Pool #3401 4.500% 06-20-33 133,442 4.8%
111,643 GNMA II Pool #3484 3.500% 09-20-33 95,193 4.1%
220,689 GNMA II Pool #3554 4.500% 05-20-34 207,022 4.8%
335,559 GNMA II Pool #3567 4.500% 06-20-34 314,778 4.8%
1,586,006 GNMA II Pool #3747 5.000% 08-20-35 1,536,677 5.2%
319,502 GNMA II Pool #3920 6.000% 11-20-36 323,258 5.9%
115,566 GNMA II Pool #601135 6.310% 09-20-32 117,551 6.2%
132,975 GNMA II Pool #601255 6.310% 01-20-33 135,162 6.2%
112,833 GNMA II Pool #608120 6.310% 01-20-33 114,689 6.2%
40,929 GNMA II Pool #723 7.500% 01-20-23 42,565 7.2%
2,080,713 GNMA II Pool# 3734 4.500% 07-20-35 1,950,757 4.8%
605,983 GNMA II Pool# 648541 6.000% 10-20-35 612,260 5.9%
92,097 GNMA Pool #081161 5.500% 11-20-34 91,147 5.6%
2,213 GNMA Pool #176992 8.000% 11-15-16 2,328 7.6%
2,576 GNMA Pool #177784 8.000% 10-15-16 2,710 7.6%
12,172 GNMA Pool #192357 8.000% 04-15-17 12,837 7.6%
18,543 GNMA Pool #194057 8.500% 04-15-17 19,841 7.9%
5,102 GNMA Pool #194287 9.500% 03-15-17 5,549 8.7%
1,471 GNMA Pool #196063 8.500% 03-15-17 1,574 7.9%
7,493 GNMA Pool #211231 8.500% 05-15-17 8,018 7.9%
4,448 GNMA Pool #212601 8.500% 06-15-17 4,760 7.9%
3,254 GNMA Pool #220917 8.500% 04-15-17 3,482 7.9%
8,325 GNMA Pool #223348 10.000% 08-15-18 9,243 9.0%
12,728 GNMA Pool #228308 10.000% 01-15-19 14,135 9.0%
2,930 GNMA Pool #230223 9.500% 04-15-18 3,195 8.7%
678 GNMA Pool #247473 10.000% 09-15-18 704 9.6%
3,602 GNMA Pool #247872 10.000% 09-15-18 3,999 9.0%
4,145 GNMA Pool #251241 9.500% 06-15-18 4,520 8.7%
5,602 GNMA Pool #260999 9.500% 09-15-18 6,109 8.7%
5,810 GNMA Pool #263439 10.000% 02-15-19 6,452 9.0%
1,485 GNMA Pool #265267 9.500% 08-15-20 1,627 8.7%
1,887 GNMA Pool #266983 10.000% 02-15-19 2,095 9.0%
3,077 GNMA Pool #273690 9.500% 08-15-19 3,363 8.7%
1,481 GNMA Pool #286556 9.000% 03-15-20 1,595 8.4%
4,824 GNMA Pool #301366 8.500% 06-15-21 5,193 7.9%
5,835 GNMA Pool #302933 8.500% 06-15-21 6,282 7.9%
11,413 GNMA Pool #308792 9.000% 07-15-21 12,311 8.3%
3,553 GNMA Pool #314222 8.500% 04-15-22 3,830 7.9%
3,727 GNMA Pool #315187 8.000% 06-15-22 3,953 7.5%
13,599 GNMA Pool #315754 8.000% 01-15-22 14,421 7.5%
28,546 GNMA Pool #319441 8.500% 04-15-22 30,772 7.9%
9,567 GNMA Pool #325165 8.000% 06-15-22 10,146 7.5%
15,235 GNMA Pool #335950 8.000% 10-15-22 16,156 7.5%
191,180 GNMA Pool #346987 7.000% 12-15-23 197,535 6.8%
107,968 GNMA Pool #352001 6.500% 12-15-23 110,956 6.3%
42,992 GNMA Pool #352110 7.000% 08-15-23 44,420 6.8%
1,953,449 GNMA Pool #3556 5.500% 05-20-34 1,940,997 5.5%
52,373 GNMA Pool #368238 7.000% 12-15-23 54,114 6.8%
50,929 GNMA Pool #372379 8.000% 10-15-26 53,996 7.5%
61,753 GNMA Pool #396537 7.490% 03-15-25 64,519 7.2%
69,260 GNMA Pool #399964 7.490% 04-15-26 72,394 7.2%
83,639 GNMA Pool #410215 7.500% 12-15-25 87,408 7.2%
14,910 GNMA Pool #414736 7.500% 11-15-25 15,583 7.2%
54,732 GNMA Pool #420707 7.000% 02-15-26 56,626 6.8%
32,057 GNMA Pool #421829 7.500% 04-15-26 33,517 7.2%
18,969 GNMA Pool #431036 8.000% 07-15-26 20,111 7.5%
51,574 GNMA Pool #431612 8.000% 11-15-26 54,679 7.5%
63,567 GNMA Pool #438004 7.490% 11-15-26 66,444 7.2%
15,051 GNMA Pool #442190 8.000% 12-15-26 15,957 7.5%
23,091 GNMA Pool #449176 6.500% 07-15-28 23,767 6.3%
57,363 GNMA Pool #462623 6.500% 03-15-28 59,044 6.3%
383,540 GNMA Pool #471369 5.500% 05-15-33 382,260 5.5%
106,147 GNMA Pool #475149 6.500% 05-15-13 108,780 6.3%
144,607 GNMA Pool #489377 6.375% 03-15-29 148,116 6.2%
44,085 GNMA Pool #538314 7.000% 02-15-32 45,567 6.8%
339,820 GNMA Pool #595606 6.000% 11-15-32 345,137 5.9%
50,350 GNMA Pool #602377 4.500% 06-15-18 48,869 4.6%
668,825 GNMA Pool #603250 5.500% 04-15-34 666,234 5.5%
52,022 GNMA Pool #603377 4.500% 01-15-18 50,491 4.6%
955,169 GNMA Pool #608639 5.500% 07-15-24 953,502 5.5%
215,575 GNMA Pool #609452 4.000% 08-15-33 195,899 4.4%
445,377 GNMA Pool #616829 5.500% 01-15-25 448,094 5.5%
712,521 GNMA Pool #631623 5.500% 08-15-34 709,761 5.5%
744,516 GNMA Pool #640225 5.500% 04-15-35 741,348 5.5%
161,465 GNMA Pool #640940 5.500% 05-15-35 160,778 5.5%
75,835 GNMA Pool #780429 7.500% 09-15-26 79,271 7.2%
46,005 GNMA Pool# 399726 7.490% 05-15-25 48,065 7.2%
178,977 GNMA Pool# 399788 7.490% 09-15-25 186,995 7.2%
30,917 GNMA Pool# 399958 7.490% 02-15-27 32,329 7.2%
137,675 GNMA Pool# 524811 6.375% 09-15-29 141,016 6.2%
486,790 GNMA Pool# 624600 6.150% 01-15-34 493,490 6.1%
1,209,639 GNMA Pool# 651026 5.500% 12-15-25 1,207,520 5.5%
1,646,969 GNMA Series 1999-4, Class ZB 6.000% 02-20-29 1,667,456 5.9%
400,000 GNMA Series 2002-40, Class UK 6.500% 06-20-32 413,035 6.3%
750,000 GNMA Series 2002-47, Class PG 6.500% 07-16-32 773,360 6.3%
315,442 GNMA Series 2002-7, Class PG 6.500% 01-20-32 323,036 6.3%
U.S. GOVERNMENT AGENCIES - 9.1%
- -------------------------------
$2,415,000 FFCB 4.000% 03-10-08 $ 2,383,221 4.1%
1,345,000 FHLMC 3.030% 06-11-08 1,307,218 3.1%
U.S. TREASURIES - 3.7%
- ----------------------
$ 100,000 U.S. Treasury Bonds 3.000% 11-15-07 $ 98,316 3.1%
1,450,000 U.S. Treasury Bonds 3.625% 01-15-10 1,405,708 3.7%
------------
TOTAL INVESTMENTS (identified cost, 39,859,152)-- 99.5% $40,285,170
OTHER ASSETS, LESS LIABILITIES-- 0.5% 189,240
------------
NET ASSETS-- 100.0% $40,474,410
==============
FFCB - Federal Farm Credit Bank
FHLB - Federal Home Loan Bank
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, 2006
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value
(identified cost of ($39,859,152)(Note 1A) $ 40,285,170
Cash.................................... 45,721
Receivable for investments sold......... 17,026
Receivable for fund shares sold......... 1,648
Interest receivable..................... 223,842
Prepaid expenses........................ 6,602
------------
Total assets.......................... $ 40,580,009
------------
LIABILITIES:
Payable for fund shares reacquired...... $ 14,783
Distributions payable................... 47,703
Payable to affiliate for Trustees' fees. 74
Transfer agent fee ..................... 5,524
Accrued expenses and other liabilities.. 37,515
------------
Total liabilities..................... $ 105,599
------------
NET ASSETS................................ $ 40,474,410
=============
NET ASSETS CONSIST OF:
Paid-in capital......................... $ 41,452,309
Accumulated net realized loss on
investments (computed on the basis of
identified cost)....................... (1,475,135)
Unrealized appreciation on investments
(computed on the basis of identified cost) 426,018
Accumulated undistributed net investment
income................................. 71,218
------------
Net assets applicable to
outstanding shares.................... $ 40,474,410
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING........................... 4,256,550
=============
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PRICE PER SHARE OF
BENEFICIAL INTEREST................... $ 9.51
=============
See notes to financial statements
STATEMENT OF OPERATIONS
Year Ended December 31, 2006
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest income........................ $ 1,786,059
------------
Expenses -
Investment adviser fee (Note 3)........ $ 148,408
Administrator fee (Note 3)............. 29,664
Compensation of Trustees not employees of
the investment adviser or administrator 13,037
Custodian fee (Note 1C)................ 58,029
Distribution expenses (Note 4)......... 82,401
Transfer and dividend disbursing agent fees 18,830
Printing............................... 4,933
Interest expense....................... 5,338
Shareholder communications............. 2,100
Audit services......................... 34,671
Legal services......................... 5,110
Registration costs..................... 21,635
Miscellaneous.......................... 3,734
------------
Total expenses........................ $ 427,890
------------
Deduct -
Reduction of custodian fee (Note 1C):.. $ (4,855)
Reduction of investment adviser fee
(Note 3)............................. (27,661)
Reduction of distribution expenses
by principal underwriter (Note 4)..... (82,073)
------------
Total deductions...................... $ (114,589)
------------
Net expenses.......................... $ 313,301
------------
Net investment income................ $ 1,472,758
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis)................ $ 161,110
Change in unrealized appreciation
of investments......................... (511,826)
------------
Net realized and unrealized loss
of investments........................ $ (350,716)
------------
Net increase in net assets from
operations........................... $ 1,122,042
=============
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Year Ended
December 31,
- --------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2006 2005
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income...................................................... $ 1,472,758 $ 1,454,647
Net realized gain on investments........................................... 161,110 404,721
Change in unrealized appreciation on investments........................... (511,826) (1,232,166)
-------------- --------------
Net increase in net assets resulting from operations..................... $ 1,122,042 $ 627,202
-------------- --------------
Distributions to shareholders (Note 2) -
From net investment income................................................. $ (1,548,362) $ (1,558,214)
From net realized gain..................................................... (59,861) (69,145)
-------------- --------------
Total distributions...................................................... $ (1,608,223) $ (1,627,359)
-------------- --------------
Net increase in net assets from fund share transactions (Note 5) $ 7,099,679 $ (151,834)
-------------- --------------
Net increase (decrease) in net assets.................................... $ 6,613,498 $ (1,151,991)
NET ASSETS:
At beginning of year......................................................... 33,860,912 35,012,903
-------------- --------------
At end of year............................................................... $ 40,474,410 $ 33,860,912
============== ==============
ACCUMULATED UNDISTRIBUTED INVESTMENT INCOME INCLUDED
IN NET ASSETS AT END OF YEAR................................................. $ 71,218 $ 50,242
============== ==============
See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF)
- -------------------------------------------------------------------------------
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 9.610 $ 9.890 $ 10.490 $ 10.810 $ 10.580
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1) ................ $ 0.427 $ 0.400 $ 0.447 $ 0.417 $ 0.565
Net realized and unrealized gain (loss).. (0.063) (0.230) (0.112) (0.235) 0.231
--------- --------- --------- --------- ---------
Total income from investment operations $ 0.364 $ 0.170 $ 0.335 $ 0.182 $ 0.796
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Distributions from investment income..... $ (0.447) $ (0.430) $ (0.482) $ (0.502) $ (0.555)
Distributions from capital gains......... (0.017) (0.020) (0.453) - -
Tax return of capital.................... - - - - (0.011)
--------- --------- --------- --------- ---------
Total distributions.................. $ (0.464) $ (0.450) $ (0.935) $ (0.502) $ (0.566)
--------- --------- --------- --------- ---------
Net asset value, end of year................ $ 9.510 $ 9.610 $ 9.890 $ 10.490 $ 10.810
========= ========= ========= ========= =========
TOTAL RETURN(2) ............................ 3.92% 1.76% 3.29% 1.73% 7.70%
RATIOS/SUPPLEMENTAL DATA(1):
Net assets, end of year (000 omitted).... $ 40,474 $ 33,861 $ 35,013 $ 36,332 $ 59,077
Ratio of net expenses to average net assets 0.96% 0.97% 0.97% 0.95% 0.97%(4)
Ratio of net expenses after custodian fee
reduction to average net assets(5) (6) 0.95% 0.95% 0.95% 0.95% 0.95%(4)
Interest expense......................... 0.02% 0.01% 0.02% 0.01% --
Ratio of net investment income
to average net assets................. 4.47% 4.12% 4.29% 4.43% 5.28%
Portfolio turnover rate ................. 75% 103% 27% 20% 36%(3)
- --------------------------------------------------------------------------------------------------------------------------------
(1)For the years ended December 31, 2006, 2005, 2004, 2003, and 2002, 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:
2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income per share........... $ 0.391 $ 0.369 $ 0.410 $ 0.401 $ 0.555
========= ========= ========= ========= =========
Ratios (As a percentage of average net assets):
Expenses............................... 1.31% 1.30% 1.28% 1.12% 1.06%(4)
========= ========= ========= ========= =========
Expenses after custodian fee reduction.... 1.30%(6) 1.28%(6) 1.25%(6) 1.12% 1.04%(4)(6)
========= ========= ========= ========= =========
Interest expense....................... 0.02% 0.01% 0.02% 0.01% --
========= ========= ========= ========= =========
Net investment income..................... 4.13% 3.80% 3.99% 4.26% 5.19%
========= ========= ========= ========= =========
- --------------------------------------------------------------------------------------------------------------------------------
(2)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date.
(3)Represents portfolio turnover rate at the fund's corresponding portfolio (Note 1).
(4)Includes each fund's share of its corresponding portfolio's allocated expenses (Note 1).
(5)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.
(6)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 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.
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, WCIF
invested all of its investable assets in interest in a separate corresponding
open-end management investment company (a Portfolio), a New York Trust, having
the same investment objective as the fund. Subsequent to December 20, 2002, the
Fund invests 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, 2006, the Trust, for federal income tax
purposes, had capital loss carryovers of $3,112,804 (WTRB) and
$1,445,202 (WCIF) 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 WTRB WCIF
- -------------------------------------------------------------------------------
2007 $ - $273,806
2008 1,244,473 -
2010 508,606 -
2011 - 505,639
2012 - 469,640
2013 270,953 196,117
2014 1,088,772 -
- ------------------------------------------------------------------------------
At December 31, 2006, net capital losses of $23,801 for WTRB and $3,456
for WCIF, attributable to security transactions incurred after October
31, 2006, 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 over distributions 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, if any, 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, 2006, 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 $ - $(146,364) $146,364
WCIF 1,498,903 (1,595,483) 96,580
The tax character of distributions paid for the year ended December 31, 2006 and
December 31, 2005 was as follows:
Year Ended 12/31/06 WTRB WCIF
- -------------------------------------------------------------------------------
Distributions declared from:
Ordinary income $1,629,188 $1,548,362
Capital gains - 59,861
- -------------------------------------------------------------------------------
Year Ended 12/31/05 WTRB WCIF
- -------------------------------------------------------------------------------
Distributions declared from:
Ordinary income $1,706,230 $1,558,214
Capital gains - 69,145
- -------------------------------------------------------------------------------
As of December 31, 2006, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
WTRB WCIF
- -------------------------------------------------------------------------------
Undistributed income $ 18,310 $ 71,218
Undistributed capital gains - 36,685
Capital loss carryforward (3,112,804) (1,445,202)
Unrealized gains/(loss) (183,214) 362,856
Other temporary differences (49,194) (3,456)
(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, 2006, the
effective annual rate for WCIF and WTRB was 0.45%. Under a written agreement,
Wright Investors' Service and/or Wright Investors' Service Distributors, Inc.,
waive a portion of their advisory fee and/or distribution fees and assume
operating expenses to the extent necessary to limit each Fund's expense ratios
to 0.95% after custodian fee reductions, if any. Accordingly, Wright made a
reduction of its investment adviser fee by $3,284 and $27,661 on behalf of WTRB
and WCIF, respectively (Note 4).
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 of each Fund which rate is
reduced as average daily net assets exceed certain levels. For the year ended
December 31, 2006 the effective annual rate was 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 The Winthrop Corporation, 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 $86,128 and
$82,073 for the benefit of 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, 2006, 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, 2006 December 31, 2005
----------------- -----------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
WRIGHT TOTAL RETURN BOND FUND--
Sold................................................. 483,580 $ 5,863,658 652,090 $ 8,236,968
Issued to shareholders in payment of
distributions declared............................. 98,578 1,246,056 106,865 1,346,413
Redemptions.......................................... (1,391,653) (16,903,044) (430,129) (5,420,722)
------------ --------------- ------------ ---------------
Net increase (decrease).......................... (809,495) $ (9,793,330) 328,826 $ 4,162,659
============ =============== ============ ===============
WRIGHT CURRENT INCOME FUND--
Sold................................................. 747,630 $ 7,169,560 1,064,067 $ 10,372,941
Issued to shareholders in payment of
distributions declared............................. 108,681 1,028,796 102,779 998,494
Redemptions.......................................... (1,351,796) (12,808,666) (1,183,110) (11,523,269)
Issued to Wright U.S. Government Near Term Fund...... 1,227,175 11,709,989 - -
------------ --------------- ------------ ---------------
Net increase (decrease).......................... 731,690 $ 7,099,679 (16,264) $ (151,834)
============ =============== ============ ===============
(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, 2006
- -------------------------------------------------------------------------------
WTRB WCIF
- -------------------------------------------------------------------------------
Purchases--
Non-U.S. Obligations $ 5,147,139 $ 3,218,471
=========== ============
U.S. Gov't Obligations $27,302,559 $23,259,834
=========== ============
Sales--
Non-U.S. Obligations $ 8,627,953 $ 1,555,026
============ =============
U.S. Gov't Obligations $33,212,186 $23,096,796
============ ============
- -------------------------------------------------------------------------------
(7) FEDERAL INCOME TAX BASIS OF INVESTMENT
SECURITIES
The cost and unrealized appreciation (depreciation) of the investment
securities owned at December 31, 2006, as computed on a federal income tax
basis, are as follows:
WTRB WCIF
- -------------------------------------------------------------------------------
Aggregate cost $30,692,314 $39,922,314
============ ============
Gross unrealized
appreciation 103,150 753,632
Gross unrealized
depreciation (286,364) (390,776)
============= ============
Net unrealized
appreciation
(depreciation) $ (183,214) $ 362,856
============= ============
- -------------------------------------------------------------------------------
(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, 2006.
(9) TRANSFER OF NET ASSETS
Prior to the opening of business on December 9, 2006, the Wright Current
Income Fund (WCIF) acquired the net assets of Wright U.S. Government Near Term
Fund (WNTB) pursuant to an Agreement and Plan of Reorganization dated December
20, 2004. In accordance with the agreement, WCIF issued 1,227,175 shares having
a value of $11,709,989. As a result, WCIF issued 1.028 shares for each share of
WNTB. The transaction was structured for tax purposes to qualify as a tax free
reorganization under the Internal Revenue Code. WNTB's net assets at the date of
the transaction was $11,709,989, including $(88,124) of unrealized depreciation.
Directly after the merger, the combined net assets of WCIF were $43,266,523 with
a net asset value of $9.54.
(10) RECENTLY ISSUED ACCOUNTING PRONUNCEMENTS
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, (FIN 48) "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109". FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in accordance with FASB Statement No.
109, "Accounting for Income Taxes." This interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. It
also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 is
effective during the first required financial reporting period for fiscal years
beginning after December 15, 2006. Management is currently evaluating the impact
of applying the various provisions of FIN 48.
In September 2006, FASB issued Statement of Financial Accounting Standards
No. 157, (FAS 157) "Fair Value Measurements". FAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles and expands disclosure about fair value
measurements. FAS 157 is effective for fiscal years beginning after November 15,
2007. Management is currently evaluating the impact the adoption of FAS 157 will
have on the Funds' financial statement disclosures.
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
Total Return Bond Fund and Wright Current Income Fund (the "Funds"),
including the portfolios of investments as of December 31, 2006, and
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 audit 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 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, 2006 by
correspondence with the custodian and brokers. 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, 2006, 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 16, 2007
WRIGHT MANAGED INCOME TRUST AS OF DECEMBER 31, 2006
- ------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED)
The Form 1099-DIV you received in January 2007 showed the tax status of all
distributions paid to your account in calendar 2006. Shareholders are advised to
consult their own tax adviser with respect to the tax consequences of their
investment in the Fund. As required by the Internal Revenue Code regulations,
shareholders must be notified within 60 days of the Fund's fiscal year end
regarding capital gains dividends.
CAPITAL GAINS DIVIDENDS - The Wright Current Income Fund designates $59,861 as a
capital gain dividend.
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* Funds 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, Chief Executive Officer 5 Director of
Age 63 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; Authorized Representative of
Cheswick Wright Wealth Management LLC;
President of 5 funds managed by Wright
- --------------------------------------------------------------------------------------------------------------------------------
A.M. Moody, III*** Vice President Vice President President, AM Moody Consulting LLC 5 None
Age 70 and of the Trusts (compliance and administrative services
Trustee since December, to the mutual fund industry)since
1990; Trustee of July 1,2003; President and Director
the Trusts since of the WISDI since 2005; Vice President
January 1990 of 5 funds 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 Director of WISDI.
*** Mr. Moody is an interested person of the Trusts because of his positions
as Vice President of the Trusts, President and Director of WISDI, and his
affiliation as a consultant to Wright.
- --------------------------------------------------------------------------------------------------------------------------------
Number of Other Trustee/
Term* Funds 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
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
James J. Clarke Trustee Trustee President, Clarke Consulting (bank 5 None
Age 65 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 5 None
Age 60 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 5 None
Age 58 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 68 of the Trusts Management; Senior Investment Officer
since June, 1998 and
Director of Wright and
Winthrop; Vice
President of 5 funds
managed by Wright,
Fund Chief Compliance
Officer since 2004
- --------------------------------------------------------------------------------------------------------------------------------
Janet E. Sanders Secretary Secretary of the Vice President Eaton Vance Management,
Age 71 and Assistant Trusts since Administrator for the funds; Officer of
Treasurer March 17, 2005, 5 funds managed by Wright and 170
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 49 the Trusts Administrator for the funds; Officer of
since 2005 5 funds managed by Wright and 170
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
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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 REGISTERED PUBLIC ACCOUNTING FIRM
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
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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: 2006: $77,100 and 2005: $74,100.
(b) Audit-Related Fees
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None.
(c) Tax Fees
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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 2006: $12,585 and 2005: $12,100. 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 INVESTMEN
COMPANY AND AFFILIATED PURCHASERS.
Not required in Filing
Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which a Fund's
shareholders may recommend nominees to the registrant's board of Trustees, where
those changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A(17
CFR240.14a-101), or this item.
Item 11. CONTROLS AND PROCEDURES
a) It is the conclusion of the registrant's principal executive officer and
principal financial officer that the effectiveness of the registrant's current
disclosure controls and procedures (such disclosure controls and procedures
having been evaluated within 90 days of the date of this filing) provide
reasonable assurance that the information required to be disclosed by the
registrant has been recorded, processed, summarized and reported within the time
period specified 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
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Fund, Wright Major Blue Chip Equities Fund and
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Wright International Blue Chip Equities Fund)
- ---------------------------------------------
By: /S/ Peter M. Donovan
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Peter M. Donovan
President
Date: February 22, 2007
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 26, 2007
By: Peter M. Donovan
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Peter M. Donovan
President
Date: February 22, 2007