N-CSR 1 eqncsr2-1205.txt COMBINED ANNUAL REPORT - 12/31/05 Form N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number: 811-3489 -------- The Wright Managed Equity Trust --------------------------------- (Exact Name of Registrant as Specified in Charter) The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109 ------------------------------------------------------------------------ (Address of Principal Executive Offices) Alan R. Dynner The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109 ------------------------------------------------------------------------ (Name and Address of Agent for Services) (617) 482-8260 ---------------- (Registrant's Telephone Number) December 31 ------------- Date of Fiscal Year End December 31, 2005 -------------------- Date of Reporting Period ------------------------------------------------------------------------------- Item 1. REPORTS TO STOCKHOLDERS THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS ANNUAL REPORT DECEMBER 31 , 2005 THE WRIGHT MANAGED EQUITY TRUST o Wright Selected Blue Chip Equities Fund o Wright Major Blue Chip Equities Fund o Wright International Blue Chip Equities Fund THE WRIGHT MANAGED INCOME TRUST o Wright U.S. Government Near Term Fund o Wright Total Return Bond Fund o Wright Current Income Fund THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS ------------------------------------------------------------------------------- THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS CONSISTS OF THREE EQUITY FUNDS FROM THE WRIGHT MANAGED EQUITY TRUST AND THREE FIXED INCOME FUNDS FROM THE WRIGHT MANAGED INCOME TRUST. EACH OF THE SIX FUNDS HAVE DISTINCT INVESTMENT OBJECTIVES AND POLICIES. THEY CAN BE USED INDIVIDUALLY OR IN COMBINATION TO ACHIEVE VIRTUALLY ANY OBJECTIVE. FURTHER, AS THEY ARE ALL "NO-LOAD" FUNDS (NO COMMISSIONS OR SALES CHARGES), PORTFOLIO ALLOCATION STRATEGIES CAN BE ALTERED AS DESIRED TO MEET CHANGING MARKET CONDITIONS OR CHANGING REQUIREMENTS WITHOUT INCURRING ANY SALES CHARGES. APPROVED WRIGHT INVESTMENT LIST Securities selected for investment in these funds are chosen mainly from a list of "investment grade" companies maintained by Wright Investors' Service ("Wright" or the "Adviser"). All 25,000 global companies (covering 50 countries) in Wright's database are screened as new data becomes available to determine any eligible additions or deletions to the list. The qualifications for inclusion as "investment grade" are companies that meet Wright's Quality Rating criteria. This rating includes fundamental criteria for investment acceptance, financial strength, profitability & stability and growth. In addition, securities, which are not included in Wright's "investment grade" list, may also be selected from companies in the fund's specific benchmark (up to 20% of the market value of the portfolio) in order to achieve broad diversification. Different quality criteria may apply for the different funds. For example, the companies in the Major Blue Chip Fund would require a higher Investment Acceptance rating than the companies in the Selected Blue Chip Fund. THREE EQUITY FUNDS WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) seeks to enhance total investment return through price appreciation plus income. The fund's portfolio is characterized as a blend of growth and value stocks. The market capitalization of the companies is typically between $1-$10 billion at the time of the fund's investment. The Adviser seeks to outperform the Standard & Poor's 400 Index (S&P 400) by selecting stocks using fundamental company analysis and company specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors. WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) seeks to enhance total investment return through price appreciation plus income by providing management a broadly diversified portfolio of equities of larger well-established companies with market values of $10 billion or more. The Adviser seeks to outperform the Standard & Poor's 500 Index (S&P 500) by selecting stocks, using fundamental company analysis and company specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors. WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) seeks total return consisting of price appreciation plus income by investing in a broadly diversified portfolio of equities of well-established, non-U.S. companies. The portfolio may buy common stocks traded on the securities exchange of the country in which the company is based or it may purchase American Depositary Receipts (ADR's) traded in the United States. The portfolio is denominated in U.S. dollars and investors should understand that fluctuations in foreign exchange rates may impact the value of their investment. The Adviser seeks to outperform the MSCI Developed World ex U.S. Index by selecting stocks using fundamental company analysis and company-specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors. THREE FIXED-INCOME FUNDS WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB) is a diversified portfolio concentrating on bonds and other obligations of the U.S. Government and U.S. Government Agencies with an average weighted maturity of between one and three years. This portfolio is designed to appeal to the investor seeking a high level of income that is normally somewhat less variable and normally somewhat higher than that available from short-term money market instruments and who is also tolerant of modest fluctuation in capital (i.e. compared with somewhat greater fluctuation likely with longer term fixed income securities). Dividends are accrued daily and paid monthly. The fund's benchmark is the Lehman U.S. Government 1-3 Year Bond Index. WRIGHT TOTAL RETURN BOND FUND (WTRB) is a diversified portfolio of investment grade government and corporate bonds and other debt securities of varying maturities which, in the Adviser's opinion, will achieve the portfolio objective of best total return (i.e. the total of ordinary income plus capital appreciation). Accordingly, investment selections and maturities may differ depending on the particular phase of the interest rate cycle. Dividends are accrued daily and paid monthly. The fund's benchmark is the Lehman U.S. Aggregate Bond Index. WRIGHT CURRENT INCOME FUND (WCIF) may be invested in a variety of securities and may use a number of strategies, including GNMAs, to produce a high level of income with reasonable stability of principal. The fund reinvests all principal payments. Dividends are accrued daily and paid monthly. The funds benchmark is the Lehman GNMA Backed Bond Index. TABLE OF CONTENTS Investment Objectives................................inside front & back cover Letter to Shareholders.......................................................2 Management Discussion........................................................3 Performance Summaries........................................................8 Fund Expenses...............................................................14 Management and Organization.................................................61 Board of Trustees Annual Approval of the Investment Advisory Agreement......63 Important Notices Regarding Privacy, Delivery of Shareholder Documents, Portfolio Holdings and Proxy Voting......................................64 FINANCIAL STATEMENTS THE WRIGHT MANAGED EQUITY TRUST WRIGHT SELECTED BLUE CHIP EQUITIES FUND Portfolio of Investments..................16 Statement of Assets & Liabilities.........19 Statement of Operations...................19 Statement of Changes in Net Assets........20 Financial Highlights......................21 WRIGHT MAJOR BLUE CHIP EQUITIES FUND Portfolio of Investments..................22 Statement of Assets & Liabilities.........25 Statement of Operations...................25 Statement of Changes in Net Assets........26 Financial Highlights......................27 WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND Portfolio of Investments..................28 Statement of Assets & Liabilities.........30 Statement of Operations...................30 Statement of Changes in Net Assets........31 Financial Highlights......................32 NOTES TO FINANCIAL STATEMENTS...............33 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......................37 THE WRIGHT MANAGED INCOME TRUST WRIGHT U.S. GOVERNMENT NEAR TERM FUND Portfolio of Investments..................39 Statement of Assets & Liabilities.........40 Statement of Operations...................40 Statement of Changes in Net Assets........41 Financial Highlights......................42 WRIGHT TOTAL RETURN BOND FUND Portfolio of Investments..................43 Statement of Assets & Liabilities.........47 Statement of Operations...................47 Statement of Changes in Net Assets........48 Financial Highlights......................49 WRIGHT CURRENT INCOME FUND Portfolio of Investments..................50 Statement of Assets & Liabilities.........53 Statement of Operations...................53 Statement of Changes in Net Assets........54 Financial Highlights......................55 NOTES TO FINANCIAL STATEMENTS...............56 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......................60 LETTER TO SHAREHOLDERS ------------------------------------------------------------------------------- January 2006 Dear Shareholders: U.S. stocks and bonds limped in with modest returns for the fourth quarter of 2005 (2.1% for the S&P 500 and 0.6% for the Lehman Aggregate), no big departure from the prior three quarters' average returns (0.9%, S&P 500; 0.6%, Lehman Aggregate). For the year, stock returns were modestly ahead of inflation, bond returns modestly behind. In contrast to this low-volatility, low-return environment for the markets, 2005 was marked by the worst natural disasters in U.S. history, disillusionment over the slow progress in Iraq, record energy prices, and Federal Reserve interest rate hikes totaling two percentage points. Still, the U.S. economy did a lot better than limp home in 2005; GDP growth reached and possibly exceeded the nation's long-term trend growth rate of 3.5%, and corporate profits are estimated to have increased 13% to record levels. At the same time, the general level of consumer prices - outside of energy and other commodities - remained under control, increasing only around 2% in 2005, the 13th straight year that the core inflation rate came in under 2.5%. So, with corporate profits up 13% in 2005 but stock prices only 3% (S&P 500), what accounts for this roughly 10% decline in stock P/E multiples? For one thing, it is not unusual following market bubbles (1999-2000) for stock price/value multiples to continue declining well after stock prices themselves have bottomed (October 2002 in the current cycle). Federal Reserve monetary tightening of the magnitude seen in the past 18 months also raises questions about the sustainability of today's record profitability, undermining P/Es. High oil prices also threaten to push inflation and interest rates higher and P/Es lower. In any event, at year-end 2005, the S&P 500 was priced at 15 times forecast year-ahead earnings, a lot closer to its October 2002 low (14) than to the early 2004 high (19) - and a good 10 P/E points below the peak P/E multiples seen in the bubble years of 1999-2000. Considering that the Fed raised short-term interest rates by two percentage points in 2005, the U.S. bond market had a respectable enough performance, managing a small positive return for the year. Despite 2005's energy- and hurricane-related pressures on prices, market estimates of inflation decreased roughly one-third of a percentage point last year. We wouldn't be surprised to see some uptick in inflation expectations this year, but we don't expect more than a modest rise. The Federal Reserve's program of measured interest rate increases is expected to come to a close during the first half of 2006, with the fed funds rate topping out at 4.5% to 4.75%, and longer Treasury yields staying close to their year-end 2005 levels around 4.5%. In contrast to 2005's subdued stock market environment, 2006 has begun with five straight advances and the first reading above 11000 on the Dow Jones Industrial Average since June 2001. What's more, market breadth continued the improvement begun in November, with the NYSE cumulative advance/decline line approaching last summer's post-1998 highs in the first week of January. While such early momentum has often been a positive market indicator in years past, we would be even more encouraged if there were to be a transition in market leadership away from the energy sector, which was the strongest market sector in 2004 and 2005. That is not to say that there weren't other strong performers last year; in fact, mid- and small-cap stocks easily outperformed big-cap U.S. stocks in 2005, as did foreign equities. As 2006 begins, we believe that investors can take encouragement from mounting evidence that the current cycle of Federal Reserve interest rate hikes is coming to an end. That prospect, along with our forecast of a 7%-9% increase in corporate profits, forms the basis for expecting stock and bond returns to reach more normal levels in the year to come. Finally, I would like to express my continuing appreciation for your confidence in Wright Investors' Service and to wish you a happy, healthy and prosperous 2006. As always, I invite your questions as well as suggestions on how we can better serve your investment needs. Sincerely, /s/Peter M. Donovan -------------------- Peter M. Donovan President MANAGEMENT DISCUSSION ------------------------------------------------------------------------------- EQUITY FUNDS FOR EQUITY INVESTORS, 2005 HAD TO BE AT LEAST A LITTLE DISAPPOINTING. WHAT LOOKED LIKE A SOLID FOURTH-QUARTER STOCK MARKET RALLY IN EARLY DECEMBER FIZZLED AS THE YEAR WOUND DOWN. STOCKS WERE STILL UP FOR THE QUARTER AND THE S&P 500 HIT A 54-MONTH HIGH IN DECEMBER, BUT RETURNS FOR THE QUARTER AND FULL YEAR WERE UNIMPRESSIVE. FOR THE YEAR, EQUITY RETURNS PROVIDED A MODEST MARGIN OVER INFLATION. IN THE FOURTH QUARTER, IT BECAME CLEAR THAT THE WORST FEARS ON THE DAMAGE 2005'S DISASTROUS HURRICANES WOULD DO TO THE ECONOMY WOULD NOT BE REALIZED. STILL, THERE WERE SOME LEGITIMATE WORRIES TO KEEP INVESTORS FROM GIVING IN TO FULL-FLEDGED OPTIMISM. THE YIELD CURVE WAS MOVING TOWARD INVERSION, WHICH FINALLY HAPPENED (BARELY) IN THE LAST WEEK OF 2005. THIS IS TRADITIONALLY SEEN AS A HARBINGER OF RECESSION, ALTHOUGH WIS DOESN'T SEE THAT AS THE CASE THIS TIME. THERE WAS DISSATISFACTION WITH THE BUSH ADMINISTRATION ON A NUMBER OF FRONTS, SOME HIGH-PROFILE POLITICAL SCANDALS AND A CHANGE IN ADMINISTRATION LOOMING AT THE FED. THE ADVANCED AGE OF THIS BULL MARKET, NOW IN ITS FOURTH YEAR, MAY ALSO HAVE PLAYED A PART IN DAMPENING RETURNS. STOCKS HUNG ON TO CLOSE HIGHER FOR THE FOURTH QUARTER. THE FOURTH-QUARTER RETURNS FOR THE DOW (2.1%) AND NASDAQ (2.7%) MORE THAN ACCOUNTED FOR THEIR GAINS FOR THE YEAR: 1.7% FOR THE DOW AND 2.1% FOR NASDAQ. THE BROADER S&P 500 RETURNED 2.1% FOR THE FOURTH QUARTER AND 4.9% FOR THE YEAR. FOR THE FIRST NINE MONTHS OF 2005, THE ENERGY SECTOR'S 40%+ RETURN ACCOUNTED FOR ALL OF THE S&P'S 2.8% GAIN. IN Q4, HOWEVER, THE ADVANCE WAS BROADER, ACHIEVED DESPITE A MORE-THAN 7% LOSS IN ENERGY STOCKS. IN THE FOURTH QUARTER, THE S&P MIDCAP 400 OUTPERFORMED THE S&P 500 WHILE THE SMALLCAP 600 LAGGED; FOR THE YEAR, THE MIDCAPS AND SMALLCAPS BOTH OUTPERFORMED. EQUITY INVESTORS WHO LOOKED OUTSIDE THE U.S. TO BOOST THEIR RETURNS WERE REWARDED. IN DOLLARS, THE MSCI WORLD EX U.S. INDEX RETURNED 3.9% IN Q4 AND MORE THAN 14% FOR THE YEAR. LOCAL CURRENCY RETURNS, EVEN BETTER FOR THE QUARTER AND THE YEAR, WERE CUT BY THE DOLLAR'S APPRECIATION. WE LOOK FOR BETTER STOCK RETURNS IN 2006 THAN IN 2005. THE SUPPORT FOR THIS ADVANCE WILL COME PRIMARILY FROM CORPORATE PROFITS. EVEN AFTER FOUR YEARS OF SOLID GROWTH, WE EXPECT PROFITS TO RISE 7%-9% IN 2006, REFLECTING HIGHER DEMAND GENERATED BY A CONTINUATION OF THE ECONOMIC EXPANSION AND THE ONGOING BENEFITS OF PRODUCTIVITY ON PROFIT MARGINS. LAST YEAR'S LACKLUSTER STOCK MARKET TOOK THE S&P 500'S P/E MULTIPLE DOWN BY ABOUT 1.5 POINTS; THIS YEAR STOCKS COULD GET A LITTLE HELP FROM MULTIPLE EXPANSION, ASSUMING AS WE DO THAT MODEST INFLATION AND AN END TO FED TIGHTENING KEEP INTEREST RATES FROM RISING MUCH FROM CURRENT LEVELS. ADD IN DIVIDEND INCOME AND STOCK RETURNS COULD BE IN THE 10% RANGE IN 2006. FOR DIVERSIFIED INVESTMENT PORTFOLIOS (WHICH WE ALWAYS RECOMMEND), WE SEE VALUE BEING ADDED BY THE INCLUSION OF MID-CAP STOCKS. ALSO, FOREIGN STOCKS LOOK TO BE ATTRACTIVELY VALUED WITH IMPROVING EARNINGS PROSPECTS. 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Total Return Year Year Year Year Year Year Year Year Year Year ------------------------------------------------------------------------------------------------------------------ Wright Selected Blue Chip Fund (WSBC) 11.1% 15.7% 30.1% -17.0% -10.2% 10.8% 5.8% 0.1% 32.7% 18.6% Wright Major Blue Chip Fund (WMBC) 6.2% 12.4% 23.2% -24.5% -16.9% -12.5% 24.0% 20.4% 33.9% 17.6% Wright International Blue Chip Fund (WIBC) 21.1% 17.7% 32.0% -14.5% -24.2% -17.6% 34.3% 6.1% 1.5% 20.7%
WRIGHT SELECTED BLUE CHIP EQUITIES FUND The S&P MidCap 400 did better than the S&P 500 in each of the four quarters of 2005. The Wright Selected Blue Chip Fund (WSBC), which is a mid-cap blend fund, outperformed the S&P MidCap 400 in the first half of 2005, but lagged a bit in the second half. Its return of 2.1% in the fourth quarter, though behind the S&P MidCap 400's 3.3%, was in line with the 2.1% return for an average of 79 mid-cap blend funds in the Morningstar database. For all of 2005, the WSBC's 11.1% return lagged the S&P MidCap's 12.6% but topped the Morningstar average's 9.1% return by 200 basis points. In 2005, somewhat perversely, the larger stocks in the S&P MidCap 400 had better returns than the smaller, and this trend worked against the Fund's performance for the period. In the fourth quarter, the company's positive stock selection in the consumer discretionary (e.g., Abercrombie & Fitch +31%) and financial sectors (e.g., Stancorp. +20%) was offset by trailing results in other sectors, particularly energy (e.g., Pogo Producing -15%, Noble Energy -14%) and utilities (e.g. Oneok -21%). For the full year, WSBC's showing relative to the S&P MidCap 400 benefited from strong stock selection in the consumer discretionary, financial, health care and utility sectors, offset by lagging results in consumer staples, energy, industrials and material stocks. Notably, there were three health-care issues in the portfolio with better-than-50% returns (Coventry Health, Intuitive Surgical and PacifiCare Health) for the year. Detractors for the year included Harman International (-23%), Lear (-43%) and Chemtura (-22%). WIS continues to advise diversity in investment portfolios and sees MidCap stocks as likely to make a positive contribution to total portfolio returns going forward. Although valuations for mid-cap stocks are higher than for large-cap stocks, this disadvantage is offset, in our view, by mid-cap's significantly better earnings growth prospects. Moreover, the WSBC Fund's holdings in the aggregate have better earnings growth prospects and a lower forward P/E multiple than the S&P MidCap 400. WRIGHT MAJOR BLUE CHIP EQUITIES FUND The Wright Major Blue Chip Fund (WMBC) is managed as a blend of the large-cap growth and value stocks in the S&P 500 Composite, selected with a bias toward the higher-quality issues in the index. In the fourth quarter and full year of 2005, large-cap U.S. stocks posted modestly positive returns. The WMBC Fund returned 2.4% in the fourth quarter, better than both the S&P 500's 2.1% and the 2.2% return for an average of 152 large-cap blend funds in the Morningstar database. The WMBC Fund also led these two benchmarks for all of 2005, returning 6.2% compared to 4.9% for the S&P 500 and 5.6% for the Morningstar benchmark. For 2005, the WMBC Fund and large-cap stocks in general were ahead of inflation, with the consumer price index up 3.4% for the year. In both the fourth quarter and all of 2005, WMBC's performance was helped by its exposure to the third and fourth market-cap quintiles of the S&P 500, which did better than the biggest and smallest stocks in the index. In the fourth quarter, the WMBC Fund's strong showing relative to the S&P 500 reflected superior stock selection; in seven of 10 sectors the Fund's holdings outperformed, and in two others they were essentially equal. This strong stock selection more than offset the negative impact of being overweight in energy stocks, which were the weakest S&P sector for the quarter. Energy stocks had been the S&P 500's strongest sector for the first three quarters of 2005, and being overweight in energy helped the Fund's performance for the full year. Stock selection was, however, more important than sector weights in the Fund's outperformance for the full year 2005, with especially good results in the consumer discretionary, health care and tech sectors. Outside of energy stocks, among the biggest positive contributors to the Fund's good showing for the year were retailer Nordstrom (+62%); financial stocks Lehman Brothers (+48%) and Progressive (+38%); Humana (+83%) and UnitedHealth (+41%) in health care; and tech stocks Apple (+85%) and Hewlett Packard (+38%). Among the biggest losses were financial company Fannie Mae (-25%) and computer maker Dell (-29%). WIS expects corporate profits to rise in 2006, but the pace of growth is likely to slow. As the expansion continues to age, we believe that quality of earnings and sustainable growth will become more important in determining the best-performing stocks. WMBC is positioned to benefit from that trend, as its holdings on a weighted average basis have a history of better earnings growth than the S&P 500 companies. The WMBC also offers better value with a weighted average P/E about two points lower than the S&P 500's. WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND International stocks outperformed U.S. stocks for the fourth quarter and full year 2005, with the MSCI World ex U.S. index returning 3.9% for the quarter and 14.5% for the year in dollars. The Wright International Blue Chip Fund (WIBC) has done better than its benchmark for both periods. For the quarter, WIBC returned 4.7%, topping the 4.4% for an average of 127 international equity funds in the Morningstar database (in addition to the MSCI index's 3.9%). For the year, WIBC's 12-month return of 21.1% topped the 14.5% return for the MSCI benchmark and 14.6% for the Morningstar average by a wide margin. In the fourth quarter of 2005, the WIBC Fund benefited from its overweight position in Japan, which was one of the World's strongest developed markets for the quarter and the year. The fourth quarter also saw good results from the Fund's holdings in the U.K. (although the U.K. market overall was not especially strong). The Fund's telecom, retail and financial holdings did well for the quarter. Results for the full year also benefited from the Fund's Japanese position, which was increased in the third and fourth quarters. For the year, an overweight position in energy stocks was a plus, although energy stocks weakened and detracted from results in Q4. During the year, the Fund also was helped by its underweight position in technology. In early 2006, economic and earnings growth prospects outside of the U.S., especially in Europe and Japan, look promising. WIBC's positions in the Eurozone and Japan have been increased. The U.K. position has also been increased (although it is still less than the benchmark's) because of the attractive value offered by select U.K. issues. Industry sectors that have been increased are industrials, health care, telecom and consumer staples. To fund these increases, WIBC has taken some profits in Norway and Canada (i.e., the energy sector). The Fund has also taken profits in its utility and consumer discretionary holdings, which did well in the fourth quarter. The Fund's weight in tech stocks remains below the benchmark's. WIS recommends a substantial position in international stocks to augment returns in diversified investment portfolios. FIXED-INCOME FUNDS BOND RETURNS WERE POSITIVE IN THE FOURTH QUARTER AND ALL OF 2005. BUT LIKE STOCK RETURNS, THEY WERE NOTHING TO GET EXCITED ABOUT. FOR THE YEAR AND THE QUARTER, FED TIGHTENING, WHICH BOOSTED THE FED FUNDS RATE TARGET BY 200 BASIS POINTS IN 25 BP INCREMENTS (50 BPS PER QUARTER), PUSHED RATES UP AT THE SHORT END OF THE YIELD CURVE. BUT LONGER YIELDS RESPONDED WITH A SURPRISINGLY SMALL INCREASE. THE RESULT WAS AN ESSENTIALLY FLAT YIELD CURVE AT THE END OF THE YEAR: THE TWO-YEAR TREASURY YIELD AT 4.40% (+23 BPS FOR THE QUARTER, +133 FOR THE YEAR) AND THE 10-YEAR AT 4.39% (+6 BPS FOR THE QUARTER, +17 FOR THE YEAR). A KEY REASON WHY THE LONG END OF THE YIELD CURVE DID NOT RISE MORE LAST YEAR WAS THE BEHAVIOR OF INFLATION. OVERALL INFLATION MOVED SIGNIFICANTLY HIGHER, DRIVEN BY RISING ENERGY PRICES, BUT CORE INFLATION APPEARS ON TRACK TO INCREASE IN THE 2.0% RANGE, A REMARKABLY GOOD SHOWING IN THE FIFTH YEAR OF AN EXPANSION, LET ALONE FOR A YEAR WITH SOARING ENERGY PRICES. STRONG FOREIGN DEMAND FOR LONG-TERM U.S. TREASURIES AND A LIMITED SUPPLY OF SUCH ISSUES ALSO FIGURE IN THE SHAPE OF THE YIELD CURVE, NON-ECONOMIC FACTORS THAT LIMIT THE YIELD CURVE'S USE AS A RECESSION PREDICTOR, IN OUR VIEW. THE LEHMAN U.S. AGGREGATE BOND INDEX RETURNED 0.6% FOR THE FOURTH QUARTER AND 2.4% FOR THE YEAR AS A WHOLE. THESE RETURNS LAGGED THOSE FROM EQUITIES AND DID NOT KEEP PACE WITH INFLATION IN 2005. WITH THE FLATTENING OF THE YIELD CURVE, LONGER MATURITIES DID BETTER THAN SHORT FOR BOTH THE QUARTER AND THE YEAR. TREASURY BONDS RETURNED 0.7% FOR THE FOURTH QUARTER AND 2.8% FOR ALL OF 2005. CORPORATE SPREADS WIDENED A BIT FOR THE YEAR, RESULTING IN RETURNS THAT LAGGED THOSE FROM TREASURYS FOR BOTH THE QUARTER AND THE YEAR. AGENCY AND ASSET-BACKED ISSUES ALSO LAGGED, AS DID THE MORTGAGE-BACKED SECTOR IN TOTAL, THOUGH WITHIN MORTGAGES GNMA'S TOPPED TREASURYS FOR BOTH THE QUARTER AND THE YEAR. OUR FORECAST FOR 2006 ASSUMES THAT THE FED'S TIGHTENING PROGRAM IS DRAWING TO A CLOSE. IN THE STATEMENT AFTER ITS DECEMBER 2005 MEETING, THE FED APPEARED TO SIGNAL THAT FURTHER TIGHTENING WOULD BE LIMITED. THE MARKETS SEE THE FED RAISING INTEREST RATES ANOTHER 25-50 BASIS POINTS THIS YEAR, AN ASSESSMENT WE AGREE WITH. (ALTHOUGH THE CREDENTIALS OF THE NEW FED CHIEF, BEN BERNANKE, ARE IMPRESSIVE, HAVING A NEW CHAIRMAN MAY ADD A LITTLE TO THE UNCERTAINTY ABOUT FED POLICY.) ANOTHER 50 BPS OF TIGHTENING SHOULD NOT DERAIL THE EXPANSION. WE ALSO SEE A STABLE CORE INFLATION RATE OF 2.5% OR LESS IN 2006. UNDER THIS SCENARIO, WE DON'T EXPECT THE LEVEL OF INTEREST RATES TO CHANGE MUCH THIS YEAR; THE SHAPE OF THE YIELD CURVE MAY NOT CHANGE MUCH EITHER, SINCE THE FACTORS THAT HAVE MADE THE YIELD CURVE FLAT ARE STILL IN PLACE. THIS SUGGESTS BOND RETURNS IN THE 4.5%-5.0% RANGE IN 2006, BETTER THAN 2005'S RETURNS AND AHEAD OF INFLATION. IN FIXED-INCOME PORTFOLIOS, ASSET-BACKED, MORTGAGE-BACKED AND CORPORATE ISSUES SHOULD ADD MODEST INCREMENTAL RETURN OVER TREASURYS. 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Total Return Year Year Year Year Year Year Year Year Year Year Year --------------------------------------------------------------------------------------------------------------------------- Wright U.S. Gov't. Near-Term Bond Fund (WNTB) 1.0% 0.4% 0.6% 5.4% 6.8% 6.9% 1.9% 6.0% 5.9% 3.9% 11.9% Wright Total Return Bond Fund (WTRB) 1.5% 3.5% 3.3% 9.0% 5.0% 10.6% -3.9% 9.6% 9.3% 0.9% 22.0% Wright Current Income Fund (WCIF) 1.8% 3.3% 1.7% 7.7% 7.2% 10.3% 0.5% 6.5% 8.6% 4.4% 17.5%
WRIGHT U.S. GOVERNMENT NEAR TERM FUND The Wright U.S. Government Near-Term Fund (WNTB) is positioned to offer an alternative to money market funds. The Fund may experience some mild price fluctuation, but it typically has less sensitivity to changes in interest rates than longer maturity funds. In the one-to-two-year maturity range, where the WNTB is generally positioned, Treasury yields rose around 25 basis points during the fourth quarter and more than 100 bps for the year. This rate rise limited the WNTB's return in 2005. For the fourth quarter, the Fund returned 0.3%, compared to 0.7% for the Lehman 1-3 year government bond index and 0.4% for an average of 54 Morningstar government bond funds with an average maturity between one and three years. For the year, the Fund returned 1.0%, the same as the Morningstar average but behind the Lehman benchmark's 1.7%. The WNTB's duration was extended in the fourth quarter, but it still was positioned with a slightly short duration (1.6 years) compared to the Lehman benchmark. Although durations of WIS's longer maturity portfolios were positioned slightly longer than their benchmarks in the quarter, WNTB was kept short because of our expectation that further rate hikes from the Fed would keep the short end of the yield curve moving higher. To pick up extra yield, the Fund is overweighted in mortgage-backed securities (27% of assets), and Agencys (44%). The Fund is underweighting Treasurys (28%) and is expected to continue to do so. The WNTB Fund had an indicated annual yield of 2.9% at the end of the year. WRIGHT TOTAL RETURN BOND FUND The Wright Total Return Bond Fund (WTRB), a diversified bond fund, returned 0.4% in the fourth quarter of 2005. This was slightly behind the Lehman U.S. Aggregate Bond Composite's 0.6% return but matched the return for an average of 174 total return bond funds in the Morningstar database. For all of 2005, WTRB had a total return of 1.5%, which compares to 1.7% for the Morningstar average and 2.4% for the Lehman Aggregate. At the start of the fourth quarter, WTRB was positioned with a neutral duration compared to the Lehman Benchmark. WTRB's duration was extended modestly around mid-October after an upward move in rates in early October put them closer to the top of our expected short-term trading range. The slightly long positioning (4.7 duration) compared to the Lehman Aggregate was maintained through the end of the year. The duration extension made a positive contribution to the Fund's Q4 performance, as rates were lower at year end than when the duration was lengthened. For all of 2005, the shifts in Fund duration contributed positively to relative performance. Over the course of 2005, the Fund's position in corporate bonds was reduced as spreads looked tight. The corporate position was steady in the fourth quarter, ending the year at 26% of assets, modestly overweight compared to the Lehman index to pick up extra yield. Corporate returns lagged Treasurys for the year and the quarter. This had a negative impact on Fund performance for the year, but in Q4, WTRB's corporate holdings outperformed the Lehman Aggregate corporate sector slightly. The Fund's position in agency issues (about 7% of assets) was reduced in the fourth quarter and is underweight compared to the index because of the tightness of the spreads compared to Treasurys. During the quarter, the Fund increased its overweight position in mortgage-backed securities (42% of assets), which look attractively valued after spreads widened last year. In 2005, the mortgage sector's performance detracted from WTRB's relative return. The Fund also holds small positions in commercial mortgage-backed securities (5%), a plus for Fund performance last year, and asset-backed issues (4%), a slight negative. The 16% position in Treasurys is less than the benchmark weight. The WTRB Fund had an indicated annual yield of 4.4% at the end of the 2005. WRIGHT CURRENT INCOME FUND The Wright Current Income Fund (WCIF) is generally managed to be almost entirely invested in GNMA issues - mortgage-based securities, known as Ginnie Maes, with explicit backing from the Federal government. The WCIF Fund is actively managed to maximize income and minimize principal fluctuation. GNMAs had a better return in the fourth quarter than the Lehman aggregate. For the quarter, the WCIF returned 0.7%, slightly behind the Lehman GNMA bond index's 1.0%, and edging higher than the 0.6% return for the average of all 61 government mortgage funds in the Morningstar database. For 2005, WCIF returned 1.8% compared to 3.2% for the Lehman benchmark and 1.9% for the Morningstar average. In the fourth quarter, WCIF was positioned to be overweight in higher-coupon premium issues. This position, which reflected our expectation that the rise in mortgage rates during 2005 had reduced the risk of mortgage prepayments, allowed the Fund to pick up extra income. This allocation worked in the Fund's favor in the fourth quarter and was being maintained as 2006 got underway. The Fund's duration (3.3) was lengthened in the fourth quarter and started 2006 slightly shorter than the Ginnie Mae benchmark's. At the start of the fourth quarter, the WCIF Fund had an indicated annual yield of 4.6%, making it attractive for income-oriented investors. THE VIEWS EXPRESSED THROUGHOUT THIS REPORT ARE THOSE OF THE PORTFOLIO MANAGERS AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS, AND THE INVESTMENT ADVISOR DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FUND ARE BASED ON MANY FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY OF THE WRIGHT MANAGED INVESTMENT FUNDS. U.S. SECURITIES MARKETS ------------------------------------------------------- The Dow Jones Industrial Average chart shows the point changes in the average which consists of 30 major NYSE industrial companies and is a price-weighted arithmetic average, with the divisor adjusted for stock splits. The yield chart shows the basis point changes in the U.S. Treasury bond which is the benchmark U.S. Treasury bond with a maturity of 10 years. The following plotting points are used for comparison in the mountain charts. Date Dow Jones U.S. 10 Year Industrial Average Treasury Bond Yield 12/31/96 6448.27 6.43% 12/31/97 7908.25 5.75% 12/31/98 9181.43 4.65% 12/31/99 11,497.12 6.44% 12/31/00 10,786.85 5.11% 12/31/01 10,021.50 5.00% 12/31/02 8,341.63 3.82% 12/31/03 10,453.92 4.25% 12/31/04 10,783.01 4.22% 12/31/05 10,717.50 4.39% PERFORMANCE SUMMARIES ------------------------------------------------------------------------------- IMPORTANT The Total Investment Return is the percent return of an initial $10,000 investment made at the beginning of the period to the ending redeemable value assuming all dividends and distributions are reinvested. After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. WRIGHT SELECTED BLUE CHIP EQUITIES FUND Growth of $10,000 Invested 1/1/96 Through 12/31/05 Average Annual Total Return ---------------------------------- Last 1 Yr Last 5 Yrs Last 10 Yrs ----------------------------------------------------------------------------------------------------------------------- WSBC - Return before taxes 11.09% 4.52% 8.69% - Return after taxes on distributions 8.52% 3.33% 6.14% - Return after taxes on distributions and sales of fund shares 6.81% 2.87% 6.14% S&P MidCap 400 12.46% 8.60% 14.36%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT SELECTED BLUE CHIP EQUITIES FUND on 12/31/95 would have grown to $23,017 by December 31, 2005. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Selected S&P MidCap Blue Chip Fund 400 12/31/95 $10,000 $10,000 12/31/96 $11,857 $11,920 12/31/97 $15,734 $15,765 12/31/98 $15,756 $18,778 12/31/99 $16,663 $21,543 12/31/2000 $18,454 $25,314 12/31/2001 $16,581 $25,161 12/31/2002 $13,766 $21,510 12/31/2003 $17,904 $29,171 12/31/2004 $20,720 $33,977 12/31/2005 $23,017 $38,246 ------------------------------------------------------------------------------- INDUSTRY WEIGHTINGS -------------------------------------------------------------------------------- % of net assets @ 12/31/05 Utilities 7.8% Software & Services 3.0% Energy 7.2% Pharmaceuticals 2.7% Insurance 7.2% Chemicals 2.6% Retailing 6.8% Food/Beverage/Tobacco 1.9% Diversified Financials 6.1% Semiconductor Equipment 1.6% Health Care Equipment/Services 6.1% Communications Equipment 1.3% Electronic Equipment 5.5% Hotels/Restaurants/Leisure 1.1% Capital Goods 5.3% Oil & Gas 1.0% Banks 5.2% Textiles/Clothing 1.0% Computers 4.0% Media 0.9% Transportation 4.0% Medical Supplies 0.9% Commercial Services 3.8% Real Estate 0.9% Consumer Durables/Apparel 3.6% Home Construction 0.6% Materials 3.5% Telecommunication Services 0.4% Automobiles/Components 3.3% Airlines 0.3% TEN LARGEST STOCK HOLDINGS -------------------------------------------------------------------------------- % of net assets @ 12/31/05 Legg Mason, Inc. 2.2% Questar Corp. 2.1% Newfield Exploration Co. 2.0% Barr Laboratories, Inc. 1.7% DST Systems, Inc. 1.7% Precision Castparts Corp. 1.6% Hunt, J.B. Transport Services, Inc. 1.6% First American Corp. 1.6% Smithfield Foods, Inc. 1.6% Borg Warner, Inc. 1.6% WRIGHT MAJOR BLUE CHIP EQUITIES FUND Growth of $10,000 Invested 1/1/96 Through 12/31/05 Average Annual Total Return ---------------------------------------------- Last 1 Yr Last 5 Yrs Last 10 Yrs ---------------------------------------------------------------------------------------------------------------------- WMBC - Return before taxes 6.20% -1.60% 6.61% - Return after taxes on distributions 5.90% -1.73% 4.82% - Return after taxes on distributions and sales of fund shares 4.72% -1.73% 4.82% S&P 500 4.91% 0.54% 9.07%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT MAJOR BLUE CHIP EQUITIES FUND on 12/31/95 would have grown to $18,964 by December 31, 2005. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Major Blue Chip Fund S&P 500 12/31/95 $10,000 $10,000 12/31/96 $11,763 $12,296 12/31/97 $15,747 $16,398 12/31/98 $18,963 $21,084 12/31/99 $23,505 $25,522 12/31/2000 $20,554 $23,198 12/31/2001 $17,086 $20,441 12/31/2002 $12,899 $15,923 12/31/2003 $15,892 $20,491 12/31/2004 $17,857 $22,719 12/31/2005 $18,964 $23,836 -------------------------------------------------------------------------------- INDUSTRY WEIGHTINGS ------------------------------------------------------------------------------- % of net assets @ 12/31/05 Health Care Equipment/Services 11.5% Semiconductor Equipment 2.9% Banks 11.1% Capital Goods 2.5% Energy 10.4% Telecommunication Services 2.2% Diversifies Financials 8.2% Hotels/Restaurants/Leisure 2.1% Computers 6.4% Transportation 2.0% Insurance 5.8% Entertainment 1.9% Food/Beverage/Tobacco 4.9% Consumer Durables/Apparel 1.5% Retailing 4.7% Software & Services 1.5% Heavy Machinery 4.2% Commercial Services 1.3% Pharmaceuticals 4.1% Materials 1.3% Utilities 3.9% Communications Equipment 1.0% Automobiles/Components 3.4% Electronic Equipment 0.9% TEN LARGEST STOCK HOLDINGS ------------------------------------------------------------------------------- % of net assets @ 12/31/05 Bank of America Corp. 4.8% Citigroup, Inc. 4.3% Exxon Mobil Corp. 4.2% Exelon Corp. 3.6% UnitedHealth Group, Inc. 3.1% Hewlett-Packard 3.1% Home Depot 3.1% Progressive Corp. 2.8% ConocoPhillips Co. 2.2% Paccar 2.1% WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND Growth of $10,000 Invested 1/1/96 Through 12/31/05 Average Annual Total Return ---------------------------------------------- Last 1 Yr Last 5 Yrs Last 10 Yrs ---------------------------------------------------------------------------------------------------------------------- WIBC - Return before taxes 21.13% 4.05% 5.79% - Return after taxes on distributions 20.63% 3.85% 4.91% - Return after taxes on distributions and sales of fund shares 16.50% 3.13% 4.54% MSCI World ex US Index 14.47% 4.92% 6.22%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT INT'L BLUE CHIP EQUITIES FUND on 12/31/95 would have grown to $17,561 by December 31, 2005. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Int'l Blue Chip MSCI World Ex U.S. Equities Fund Index 12/31/95 $10,000 $10,000 12/31/96 $12,073 $10,687 12/31/97 $12,259 $10,930 12/31/98 $13,011 $12,980 12/31/99 $17,469 $14,385 12/31/2000 $14,397 $11,307 12/31/2001 $10,917 $12,597 12/31/2002 $ 9,333 $ 9,521 12/31/2003 $12,316 $13,274 12/31/2004 $14,497 $15,979 12/31/2005 $17,561 $18,292 -------------------------------------------------------------------------------- COUNTRY WEIGHTINGS -------------------------------------------------------------------------------- % of net assets @ 12/31/05 Japan 23.8% Denmark 2.5% United kingdom 17.2% Norway 2.2% France 7.0% Finland 1.8% Germany 6.5% Switzerland 1.5% Netherlands 6.1% Austria 1.4% Canada 5.2% Belgium 1.3% Spain 5.2% Ireland 1.3% Australia 3.4% Hong kong 1.0% Italy 2.9% Singapore 0.4% Sweden 2.9% Greece 0.0% TEN LARGEST STOCK HOLDINGS -------------------------------------------------------------------------------- % of net assets @ 12/31/05 HBOS PLC 2.9% ING Groep NV-ADR 2.9% E.ON AG 2.9% Eni Spa 2.8% Barclays PLC 2.8% Anglo American PLC 2.7% Danske Bank A/S 2.5% Vivendi Universal SA 2.2% Yamaha Denki Co., Ltd. 2.2% Vinci 2.0% WRIGHT U.S. GOVERNMENT NEAR TERM FUND Growth of $10,000 Invested 1/1/96 Through 12/31/05 Average Annual Total Return ------------------------------------------ Last 1 Yr Last 5 Yrs Last 10 Yrs --------------------------------------------------------------------------------------------------------------------------------- WNTB - Return before taxes 1.01% 2.82% 3.87% - Return after taxes on distributions -0.18% 1.47% 2.06% - Return after taxes on distributions and sales of fund shares -0.18% 1.47% 2.06% Lehman Govt. 1-3 Year 1.73% 3.83% 4.89%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT U.S.GOVERNMENT NEAR TERM FUND on 12/31/95 would have grown to $14,616 by December 31,2005. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright U.S. Government Lehman Gov't Near Term Bond Fund 1-3 Years 12/31/95 $10,000 $10,000 12/31/96 $10,394 $10,508 12/31/97 $11,010 $11,207 12/31/98 $11,668 $11,988 12/31/99 $11,891 $12,344 12/31/2000 $12,716 $13,353 12/31/2001 $13,583 $14,492 12/31/2002 $14,320 $15,363 12/31/2003 $14,407 $15,673 12/31/2004 $14,470 $15,840 12/31/2005 $14,616 $16,114 -------------------------------------------------------------------------------- HOLDINGS BY SECTOR FIVE LARGEST BOND HOLDINGS % of net assets @ 12/31/05 % of net assets @ 12/31/05 -------------------------------------------------------- ---------------------------------------------------------- Mortgage-Backed Securities 27.3% U.S. Treasury Note 3.00% 11/15/07 21.9% U. S. Government Agencies 43.6% FHLMC 3.25% 11/02/07 16.4% U. S. Treasuries 27.8% FNMA 3.00% 11/22/06 11.3% FHLMC 3.03% 06/11/08 7.0% U.S. Treasury Note 3.375%11/15/08 5.2% WEIGHTED AVERAGE MATURITY @12/31/05 1.77 Years
WRIGHT TOTAL RETURN BOND FUND Growth of $10,000 Invested 1/1/96 Through 12/31/05 Average Annual Total Return ------------------------------------------ Last 1 Yr Last 5 Yrs Last 10 Yrs -------------------------------------------------------------------------------------------------------------------------- WTRB - Return before taxes 1.54% 4.43% 4.77% - Return after taxes on distributions -0.12% 2.55% 2.67% - Return after taxes on distributions and sales of fund shares -0.12% 2.55% 2.67% Lehman Aggregate Bond Index 2.43% 5.87% 6.16% ---------------------------------------------------------------------------------------------------------------------------
The cumulative total return of a U.S. $10,000 investment in the WRIGHT TOTAL RETURN BOND FUND on 12/31/95 would have grown to $15,943 by December 31, 2005. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Total Retun Lehman Aggregate Bond Bond Fund Index 12/31/95 $10,000 $10,000 12/31/96 $10,090 $10,363 12/31/97 $11,023 $11,364 12/31/98 $12,077 $12,351 12/31/99 $11,604 $12,249 12/31/2000 $12,837 $13,673 12/31/2001 $13,473 $14,828 12/31/2002 $14,690 $16,348 12/31/2003 $15,167 $17,019 12/31/2004 $15,701 $17,758 12/31/2005 $15,943 $18,189 ------------------------------------------------ HOLDINGS BY SECTOR FIVE LARGEST BOND HOLDINGS % of net assets @ 12/31/05 % of net assets @ 12/31/05 --------------------------------------------------- --------------------------------------------------- Asset-backed Securities 9.9% U.S. Treasury Bond 6.125% 11/15/27 5.5% Corporate Bonds 24.9% U.S. Treasury Bond 7.25% 05/15/16 4.6% Mortgage-Backed Securities 41.0% U.S. Treasury Bond 4.375% 05/15/07 3.3% U.S. Government Agencies 6.8% FNMA Pool 254915 4.50% 09/01/23 2.9% U.S. Treasuries 15.5% FNMA 5.00% 04/15/15 2.9% HOLDINGS BY CREDIT QUALITY* WEIGHTED AVERAGE MATURITY % of net assets @ 12/31/05 @12/31/05 6.98 Years --------------------------------------------------- AAA 10.9% AA 1.0% A 15.0% BBB 7.9% WRIGHT CURRENT INCOME FUND Growth of $10,000 Invested 1/1/96 Through 12/31/05
Average Annual Total Return ---------------------------------------- Last 1 Yr Last 5 Yrs Last 10 Yrs ------------------------------------------------------------------------------------------------------------------ WCIF - Return before taxes 1.76% 4.30% 5.14% - Return after taxes on distributions -0.02% 2.11% 2.76% - Return after taxes on distributions and sales of fund shares -0.02% 2.11% 2.76% Lehman GNMA Index 3.21% 5.43% 6.19% -------------------------------------------------------------------------------------------------------------------
The cumulative total return of a U.S. $10,000 investment in the WRIGHT CURRENT INCOME FUND on 12/31/95 would have grown to $16,515 by December 31, 2005. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Current Lehman GNMA Income Fund Index 12/31/95 $10,000 $10,000 12/31/96 $10,435 $10,553 12/31/97 $11,328 $11,559 12/31/98 $12,066 $12,360 12/31/99 $12,128 $12,598 12/31/2000 $13,379 $13,997 12/31/2001 $14,339 $15,148 12/31/2002 $15,444 $16,464 12/31/2003 $15,712 $16,934 12/31/2004 $16,229 $17,671 12/31/2005 $16,515 $18,237 -------------------------------------------------------------------------------- HOLDINGS BY SECTOR FIVE LARGEST BOND HOLDINGS % of net assets @ 12/31/05 % of net assets @ 12/31/05 -------------------------------------------------------- ------------------------------------------- Mortgage-Backed Securities 95.5% GNMA Pool 3556 5.50%05/20/34 7.1% Government Interests 4.7% GNMA Pool 640940 5.50%05/15/35 6.2% GNMA Pool 471369 5.50%05/15/33 5.7% GNMA Pool 781032 6.50%04/15/29 5.2% FNMA Pool 634187 6.00%02/01/22 5.0%
WEIGHTED AVERAGE MATURITY @12/31/05 5.18 Years FUND EXPENSES ------------------------------------------------------------------------------- EXAMPLE: As a shareholder of a fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs including management fees; distribution or service fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2005-December 31, 2005). ACTUAL EXPENSES: The first line of the tables shown on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES: The second line of the tables provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual return of the Fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if payable). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EQUITY FUNDS Wright Selected Blue Chip Equities Fund Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/05- (7/1/05) (12/31/05) 12/31/05) ------------------------------------------------------------------------------ Actual Fund Shares $1,000.00 $1,053.50 $6.47 ------------------------------------------------------------------------------ Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,018.90 $6.36 *Expenses are equal to the Fund's annualized expense ratio of 1.25% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2005. Wright Major Blue Chip Equities Fund Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/05- (7/1/05) (12/31/05) 12/31/05) ------------------------------------------------------------------------------- Actual Fund Shares $1,000.00 $1,077.60 $6.55 ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,018.90 $6.36 *Expenses are equal to the Fund's annualized expense ratio of 1.25% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2005. Wright International Blue Chip Equities Fund Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/05- (7/1/05) (12/31/05) 12/31/05) ------------------------------------------------------------------------------ Actual Fund Shares $1,000.00 $1,170.40 $8.64 ------------------------------------------------------------------------------ Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,017.20 $8.03 *Expenses are equal to the Fund's annualized expense ratio of 1.58% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2005. FIXED INCOME FUNDS Wright U.S. Government Near Term Fund Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/05- (7/1/05) (12/31/05) 12/31/05) ------------------------------------------------------------------------------- Actual Fund Shares $1,000.00 $1,003.50 $4.80 ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,020.40 $4.84 *Expenses are equal to the Fund's annualized expense ratio of 0.95% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2005. Wright Total Return Bond Fund Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/05- (7/1/05) (12/31/05) 12/31/05) ------------------------------------------------------------------------------- Actual Fund Shares $1,000.00 $ 995.10 $4.78 ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,020.40 $4.84 *Expenses are equal to the Fund's annualized expense ratio of 0.95% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2005. Wright Current Income Fund Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/05- (7/1/05) (12/31/05) 12/31/05) ------------------------------------------------------------------------------- Actual Fund Shares $1,000.00 $1,007.30 $4.91 ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,020.30 $4.94 *Expenses are equal to the Fund's annualized expense ratio of 0.97% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2005 WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) ------------------------------------------------------------------------------ PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 Shares Value EQUITY INTERESTS -- 99.7% AIRLINES -- 0.3% Alaska Air Group, Inc.* ............ 3,605 $ 128,771 ------------ AUTOMOBILES & COMPONENTS -- 3.3% ArvinMeritor, Inc................... 6,560 $ 94,398 BorgWarner, Inc..................... 12,195 739,383 Copart, Inc.*....................... 17,685 407,816 Thor Industries, Inc................ 7,920 317,354 ------------ $ 1,558,951 ------------ BANKS -- 5.2% Associated Banc-Corp................ 7,175 $ 233,546 Astoria Financial Corp.............. 17,962 528,083 City National Corp.................. 4,255 308,232 Colonial Bancgroup Inc.............. 12,785 304,539 Commerce Bancorp, Inc............... 17,725 609,917 IndyMac Bancorp, Inc................ 5,040 196,661 Webster Financial Corp.............. 6,765 317,278 ------------ $ 2,498,256 ------------ CAPITAL GOODS -- 5.3% AGCO Corp.* ........................ 11,315 $ 187,490 Alliant Techsystems, Inc.* ......... 7,840 597,173 Graco, Inc.......................... 5,792 211,292 Precision Castparts Corp............ 14,780 765,752 Teleflex Inc........................ 2,970 192,991 Thomas & Betts Corp.* .............. 13,355 560,376 ------------ $ 2,515,074 ------------ CHEMICALS -- 2.6% Chemtura Corp....................... 26,900 $ 341,630 Lubrizol Corp....................... 4,255 184,795 Lyondell Chemical Co................ 17,530 417,565 Scotts Miracle-Gro Co., Class A..... 6,665 301,525 ------------ $ 1,245,515 ------------ COMMERCIAL SERVICES & SUPPLIES -- 3.8% Brink's Co., (The).................. 8,880 $ 425,441 ITT Educational Services, Inc.* .... 3,155 186,492 Jacobs Engineering Group, Inc.* .... 6,520 442,512 Manpower, Inc....................... 8,960 416,640 Republic Services, Inc. - Class A... 9,000 337,950 ------------ $ 1,809,035 ------------ COMMUNICATIONS EQUIPMENT -- 1.3% Harris Corp......................... 8,370 $ 359,994 Plantronics, Inc.................... 5,175 146,452 Polycom, Inc.* ..................... 7,685 117,580 ------------ $ 624,026 ------------ COMPUTERS & PERIPHERALS -- 4.0% DST Systems, Inc.* ................. 13,335 $ 798,900 Imation Corp........................ 4,705 216,759 SanDisk Corp.* ..................... 8,115 509,784 Western Digital Corp.* ............. 20,530 382,063 ------------ $ 1,907,506 ------------ CONSUMER DURABLES & APPAREL -- 3.7% Harman International................ 3,425 $ 335,136 Hovnanian Enterprises, Inc.- Class A* 5,840 289,898 Mohawk Industries, Inc.* ........... 7,900 687,142 Toll Brothers, Inc.* ............... 12,315 426,592 ------------ $ 1,738,768 ------------ DIVERSIFIED FINANCIALS -- 6.1% AmeriCredit Corp.* ................. 17,275 $ 442,758 Edwards, A.G., Inc.................. 7,530 352,856 Jefferies Group, Inc................ 9,210 414,266 Legg Mason, Inc..................... 8,890 1,064,044 Raymond James Financial, Inc........ 9,490 357,488 Ryland Group, Inc................... 4,075 293,930 ------------ $ 2,925,342 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS-- 5.5% Ametek, Inc......................... 10,315 $ 438,800 Arrow Electronics, Inc.* ........... 16,215 519,366 Avnet, Inc.* ....................... 11,785 282,133 Energizer Holdings, Inc.* .......... 11,060 550,677 MEMC Electronic Materials, Inc.* ... 23,905 529,974 Tech Data Corp.* ................... 7,920 314,266 ------------ $ 2,635,216 ------------ ENERGY -- 7.2% Forest Oil Corp.* .................. 3,275 $ 149,242 Newfield Exploration Company* ...... 18,810 941,817 Noble Energy, Inc................... 12,785 515,235 Patterson-UTI Energy, Inc........... 14,570 480,081 Peabody Energy Corp................. 7,000 576,940 Pogo Producing Co................... 11,155 555,631 Western Gas Resources, Inc.......... 4,685 220,617 ------------ $ 3,439,563 ------------ FOOD, BEVERAGE & TOBACCO -- 1.9% PepsiAmericas, Inc.................. 6,510 $ 151,423 Smithfield Foods, Inc.* ............ 24,395 746,487 ------------ $ 897,910 ------------ HEALTH CARE EQUIPMENT & SERVICES-- 6.1% Community Health Systems, Inc.* .... 3,860 $ 147,992 Covance, Inc.* ..................... 5,195 252,217 DENTSPLY International, Inc......... 3,350 179,861 Health Net, Inc.* .................. 10,090 520,139 LifePoint Hospitals, Inc.* ......... 12,060 452,250 Lincare Holdings, Inc.* ............ 11,060 463,525 Renal Care Group, Inc.* ............ 7,980 377,534 Triad Hospitals, Inc.* ............. 13,215 518,424 UnitedHealth Group, Inc............. 1 31 ------------ $ 2,911,973 ------------ HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 0.6% Beazer Homes USA, Inc............... 3,920 $ 285,533 ------------ HOTELS, RESTAURANTS & LEISURE -- 1.1% Boyd Gaming Corp.................... 8,570 $ 408,446 CBRL Group, Inc..................... 3,860 135,679 ------------ $ 544,125 ------------ INSURANCE -- 7.2% AmerUs Group Co..................... 2,625 $ 148,759 Everest Re Group, Ltd............... 2,625 263,419 Fidelity National Financial, Inc.... 4,117 151,464 First American Corp................. 16,665 754,924 HCC Insurance Holdings, Inc......... 10,100 299,768 Old Republic International Corp..... 8,315 218,352 PMI Group Inc., (The)............... 5,900 242,313 Protective Life Corp................ 5,275 230,887 Radian Group, Inc................... 9,570 560,706 Stancorp Financial Group............ 6,625 330,919 W.R. Berkley Corp................... 4,565 217,385 ------------ $ 3,418,896 ------------ MATERIALS -- 3.5% Crane Co............................ 2,665 $ 93,995 Cytec Industries, Inc............... 9,860 469,632 FMC Corp.* ......................... 7,805 414,992 Grant Prideco, Inc.* ............... 5,840 257,661 RPM International, Inc.............. 6,595 114,555 Timken Co., (The)................... 10,390 332,688 ------------ $ 1,683,523 ------------ MEDIA -- 0.9% Catalina Marketing Corp............. 16,525 $ 418,909 ------------ MEDICAL SUPPLIES -- 0.9% Intuitive Surgical, Inc.* .......... 3,725 $ 436,831 ------------ OIL & GAS -- 1.0% Helmerich & Payne, Inc.............. 4,075 $ 252,283 Pioneer Natural Resources Co........ 4,745 243,276 ------------ $ 495,559 ------------ PHARMACEUTICALS & BIOTECHNOLOGY-- 2.7% Barr Laboratories, Inc.* ........... 13,220 $ 823,474 Omnicare, Inc....................... 7,935 454,041 ------------ $ 1,277,515 ------------ REAL ESTATE -- 0.9% New Plan Excel Realty Trust REIT.... 17,950 $ 416,081 ------------ RETAILING -- 6.8% Abercrombie & Fitch Co. - Class A... 7,960 $ 518,833 American Eagle Outfitters........... 17,785 408,699 Barnes & Noble, Inc................. 4,940 210,790 CDW Corp............................ 4,605 265,110 Chico's FAS, Inc.* ................. 7,785 341,995 Claire's Stores, Inc................ 17,550 512,811 Michaels Stores, Inc................ 12,295 434,874 Pacific Sunwear of California,Inc.* 5,820 145,034 Urban Outfitters, Inc.* ............ 16,590 419,893 ------------ $ 3,258,039 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS-- 1.6% Cree, Inc.* ........................ 8,115 $ 204,823 Lam Research Corp.* ................ 10,020 357,514 Microchip Technology, Inc........... 5,510 177,146 ------------ $ 739,483 ------------ SOFTWARE & SERVICES -- 3.0% Activision, Inc.* .................. 25,769 $ 354,066 Cognizant Technology Solutions Corp.* 7,135 359,247 Fair Isaac, Inc..................... 6,370 281,363 McAfee Inc.* ....................... 6,470 175,531 Sybase, Inc.* ...................... 10,845 237,072 ------------ $ 1,407,279 ------------ TELECOMMUNICATION SERVICES -- 0.4% ADTRAN, Inc......................... 3,200 $ 95,168 Cincinnati Bell, Inc.* ............. 26,715 93,770 ------------ $ 188,938 ------------ TEXTILES, CLOTHING & FABRICS -- 1.0% Polo Ralph Lauren Corp.............. 8,595 $ 482,523 ------------ TRANSPORTATION -- 4.0% CNF Transporation, Inc.............. 5,430 $ 303,483 GATX Corp........................... 4,980 179,678 Hunt, J.B. Transport Services, Inc.. 33,425 756,742 Overseas Shipholding Group.......... 3,780 190,474 Yellow Roadway Corp.* .............. 11,040 492,494 ------------ $ 1,922,871 ------------ UTILITIES -- 7.8% Energy East Corp.................... 17,215 $ 392,502 Equitable Resources, Inc............ 4,115 150,979 MDU Resources Group, Inc............ 20,442 669,271 Oneok, Inc.......................... 14,375 382,806 Questar Corp........................ 13,175 997,348 Sierra Pacific Resources* .......... 43,830 571,543 Wisconsin Energy Corp............... 7,920 309,355 WPS Resources Corp.................. 4,370 241,705 ------------ $ 3,715,509 ------------ TOTAL EQUITY INTERESTS-- 99.7% (identified cost, $38,114,992) $47,527,520 OTHER ASSETS, LESS LIABILITIES -- 0.3% 124,104 ------------ NET ASSETS -- 100% $47,651,624 ============ * Non-income-producing security. See notes to financial statements WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2005 ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost $38,114,992) (Note 1A). $ 47,527,520 Cash.................................... 186 Receivable for fund shares sold......... 98,545 Receivable from investment adviser...... 25,969 Dividends receivable.................... 34,056 Other assets............................ 6,045 ------------ Total assets............................ $ 47,692,321 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 7,289 Demand note payable..................... 2,000 Payable to affiliate for Trustees' fees. 2 Transfer agent fee payable.............. 5,176 Accrued expenses and other liabilities.. 26,230 ------------ Total liabilities....................... $ 40,697 ------------ NET ASSETS................................ $ 47,651,624 ============ NET ASSETS CONSIST OF: Proceeds from sales of shares (including the market value of securities received in exchange for fund shares and shares issued to shareholders in payment of distributions declared), less cost of shares reacquired................... $ 34,873,894 Accumulated undistributed net realized gain on investments (computed on the basis of identified cost)....................... 2,440,773 Unrealized appreciation on investments (computed on the basis of identified cost) 9,412,528 Undistributed net investment income..... 924,429 ------------ Net assets applicable to outstanding shares............................... $ 47,651,624 ============ SHARES OF BENEFICIAL INTEREST OUTSTANDING............................ 3,657,041 ============ NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................. $ 13.03 ============ STATEMENT OF OPERATIONS Year Ended December 31, 2005 ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1C): Dividend income......................... $ 509,454 Expenses - Investment adviser fee (Note 2):........ $ 286,362 Administrator fee (Note 2):............. 57,272 Compensation of Trustees who are not employees of the investment adviser or administrator 13,228 Custodian fee (Note 1D)................. 103,334 Distribution expenses (Note 3):......... 119,318 Transfer and dividend disbursing agent fees 27,460 Printing................................ 7,034 Interest expense........................ 10,890 Shareholder communications.............. 10,503 Audit services.......................... 26,341 Legal services.......................... 7,252 Registration costs...................... 18,142 Miscellaneous .......................... 6,082 ------------ Total expenses.......................... $ 693,218 ------------ Deduct - Reduction of custodian fee (Note 1D):... $ (10,942) Allocation of expenses to investment adviser (Note 2):.............................. (25,969) Reduction of distribution expenses by principal underwriter (Note 3):..... (59,659) ------------ Total deductions........................ $ (96,570) ------------ Net expenses............................ $ 596,648 ------------ Net investment loss..................... $ (87,194) ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions (identified cost basis)................ $ 6,417,438 Change in unrealized depreciation of investments............................ (1,416,439) ------------ Net realized and unrealized gain of investments......................... $ 5,000,999 ------------ Net increase in net assets from operations............................ $ 4,913,805 ============ See notes to financial statements WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2005 2004 ----------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment loss........................................................ $ (87,194) $ (89,696) Net realized gain on investments........................................... 6,417,438 4,095,367 Change in unrealized appreciation of investments........................... (1,416,439) 1,915,763 -------------- -------------- Net increase in net assets resulting from operations..................... $ 4,913,805 $ 5,921,434 -------------- -------------- Distributions to shareholders (Note 1F) - From net realized gain..................................................... $ (5,390,227) $ (1,597,259) -------------- -------------- Total distributions...................................................... $ (5,390,227) $ (1,597,259) -------------- -------------- Net increase (decrease) in net assets from fund share transactions (Note 4).. $ 4,630,188 $ 983,877 -------------- -------------- Net increase in net assets................................................... $ 4,153,766 $ 5,308,052 NET ASSETS: At beginning of year......................................................... 43,497,858 38,189,806 -------------- -------------- At end of year............................................................... $ 47,651,624 $ 43,497,858 ============== ============== UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR.................................................................. $ 924,429 $ 936,447 ============== ============== See notes to financial statements
WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------------------------ FINANCIAL HIGHLIGHTS 2005 2004 2003(6) 2002(6) 2001(6) ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 13.226 $ 11.870 $ 9.270 $ 11.580 $ 13.430 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment loss(1) ................ $ (0.053) $ (0.028) $ (0.023) $ (0.046) $ (0.045) Net realized and unrealized gain (loss) 1.476 1.884 2.756 (1.831) (1.322) --------- --------- --------- --------- --------- Total income (loss) from investment operations......... $ 1.423 $ 1.856 $ 2.733 $ (1.877) $ (1.367) --------- --------- --------- --------- --------- Less distributions: Distributions from capital gains....... $ (1.619) $ (0.500) $ (0.133) $ (0.433) $ (0.483) --------- --------- --------- --------- --------- Total distributions................ $ (1.619) $ (0.500) $ (0.133) $ (0.433) $ (0.483) --------- --------- --------- --------- --------- Net asset value, end of year................ $ 13.030 $ 13.226 $ 11.870 $ 9.270 $ 11.580 ========= ========= ========= ========= ========= Total return(2) ............................ 11.09% 15.73% 30.06% (16.98%) (10.15%) Ratios/Supplemental Data(1): Net assets, end of year (000 omitted).. $ 47,652 $ 43,498 $ 38,190 $ 32,817 $ 45,883 Ratio of net expenses to average net assets 1.27% 1.26% 1.25% 1.26%(3) 1.26%(3) Ratio of net expenses after custodian fee reduction to average net assets(5)(7) 1.25% 1.25% 1.25% 1.25%(3) 1.25%(3) Ratio of net investment (loss) to average net assets.......................... (0.18%) (0.23%) (0.23%) (0.44%) (0.38%) Portfolio turnover rate .............. 110% 69% 106% 119%(4) 67%(4) -------------------------------------------------------------------------------------------------------------------------------- (1)The operating expenses of the fund were reduced by an allocation of expenses to the distributor and/or investment adviser. Had such action not been undertaken, net investment loss per share and the ratios would have been as follows: 2005 2004 2003 2002 2001 -------------------------------------------------------------------- Net investment loss per share.......... $ (0.111) $ (0.050) $ (0.057) $ (0.064) $ (0.057) ========= ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses........................... 1.45% 1.44% 1.59% 1.43%(3) 1.37%(3) ========= ========= ========= ========= ========= Expenses after custodian fee reduction(5) 1.43% 1.43% 1.59% 1.42%(3) 1.36%(3) ========= ========= ========= ========= ========= Net investment loss................ (0.38%) (0.41%) (0.57%) (0.61%) (0.49%) ========= ========= ========= ========= ========= ------------------------------------------------------------------------------------------------------------------------------ (2)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be invested at the net asset value on the reinvestment date. (3)Includes each fund's share of its corresponding portfolio's allocated expenses (Note 1). (4)Represents portfolio turnover rate of the fund's corresponding portfolio (Note 1). (5)Custodian fees were reduced by credits resulting from cash balances the fund and/or the portfolio maintained with the custodian (Note 1D). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (6)Certain per share amounts are based on average shares outstanding. (7)Under a written agreement in effect through the current fiscal year, Wright waives a portion of its advisory fee and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 1.25% after custodian fee reductions, if any. See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 Shares Value EQUITY INTERESTS -- 99.7% AUTOMOBILES & COMPONENTS -- 3.4% Johnson Controls, Inc............... 11,560 $ 842,840 Paccar, Inc......................... 20,420 1,413,677 ------------ $ 2,256,517 ------------ BANKS -- 11.1% Bank of America Corp................ 68,963 $ 3,182,642 Capital One Financial Corp.......... 14,625 1,263,600 CIT Group, Inc...................... 4,140 214,369 M&T Bank Corp....................... 2,560 279,168 MBNA Corp........................... 39,225 1,065,351 Wells Fargo & Co.................... 22,040 1,384,773 ------------ $ 7,389,903 ------------ CAPITAL GOODS -- 2.5% Cummins, Inc........................ 8,735 $ 783,792 Deere & Co.......................... 11,365 774,070 ITT Industries, Inc................. 1,145 117,729 ------------ $ 1,675,591 ------------ COMMERCIAL SERVICES & SUPPLIES -- 1.3% H&R Block, Inc...................... 35,890 $ 881,099 ------------ COMMUNICATIONS EQUIPMENT -- 1.0% Motorola, Inc....................... 17,595 $ 397,471 Scientific-Atlanta, Inc............. 6,725 289,646 ------------ $ 687,117 ------------ COMPUTERS & PERIPHERALS -- 6.4% Apple Computer, Inc.* .............. 19,005 $ 1,366,269 Computer Sciences Corp.* ........... 13,555 686,425 Dell, Inc.* ........................ 5,249 157,418 Hewlett-Packard Co.................. 71,655 2,051,483 ------------ $ 4,261,595 ------------ CONSUMER DURABLES & APPAREL-- 1.5%.. Brunswick Corp...................... 1,675 $ 68,105 Centex Corp......................... 3,040 217,330 D.R. Horton, Inc.................... 5,865 209,556 Fortune Brands, Inc................. 1,810 141,216 KB Home Corp........................ 1,080 78,473 Lennar Corp. - Class A.............. 1,295 79,021 Pulte Homes, Inc.................... 5,660 222,778 ------------ $ 1,016,479 ------------ DIVERSIFIED FINANCIALS -- 8.2% Charles Schwab Corp., (The)......... 8,450 $ 123,961 Citigroup, Inc...................... 59,289 2,877,295 Franklin Resources, Inc............. 3,295 309,763 Goldman Sachs Group, Inc., (The).... 5,845 746,465 Lehman Brothers Holdings, Inc....... 11,005 1,410,511 ------------ $ 5,467,995 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS-- 0.9% Nvidia Corp.* ...................... 12,635 $ 461,936 PerkinElmer, Inc.................... 5,825 137,237 ------------ $ 599,173 ------------ ENERGY -- 10.4% Apache Corp......................... 5,298 $ 363,019 ChevronTexaco Corp.................. 20,490 1,163,217 ConocoPhillips Co................... 25,005 1,454,791 Exxon Mobil Corp.................... 49,315 2,770,024 Nabors Industries, Ltd.* ........... 1,225 92,794 Occidental Petroleum Corp........... 8,470 676,584 Praxair, Inc........................ 2,460 130,282 TXU Corp............................ 3,435 172,403 Valero Energy Corp.................. 1,270 65,532 Weatherford International, Ltd.* ... 1,825 66,065 ------------ $ 6,954,711 ------------ ENTERTAINMENT & LEISURE -- 1.9% Time Warner, Inc.................... 72,195 $ 1,259,081 ------------ FOOD, BEVERAGE & TOBACCO -- 4.9% Altria Group, Inc................... 16,810 $ 1,256,043 Archer-Daniels-Midland Co........... 48,615 1,198,846 Constellation Brands, Inc.- Class A* 19,680 516,206 Safeway, Inc........................ 8,460 200,164 Supervalu, Inc...................... 3,525 114,492 ------------ $ 3,285,751 ------------ HEALTH CARE EQUIPMENT & SERVICES-- 11.5% AmerisourceBergen Corp.............. 3,300 $ 136,620 Caremark Rx, Inc.* ................. 3,115 161,326 Cigna Corp.......................... 5,155 575,813 Coventry Health Care, Inc.* ........ 5,435 309,578 Express Scripts, Inc.* ............. 2,850 238,830 HCA, Inc............................ 9,120 460,560 Health Management Associates-Class A 3,900 85,644 Humana, Inc.* ...................... 16,955 921,165 Laboratory Corp.of America Holdings* 2,435 131,125 Manor Care, Inc..................... 2,755 109,566 McKesson Corp....................... 18,770 968,344 Medco Health Solutions, Inc.* ...... 10,510 586,458 Quest Diagnostics, Inc.............. 6,435 331,274 St. Jude Medical, Inc.* ............ 2,325 116,715 UnitedHealth Group, Inc............. 33,686 2,093,248 Wellpoint, Inc.* ................... 5,410 431,664 ------------ $ 7,657,930 ------------ HEAVY MACHINERY -- 4.2% Black & Decker Corp................. 9,030 $ 785,249 Caterpillar, Inc.................... 21,175 1,223,280 Ingersoll-Rand Co. - Class A........ 18,960 765,415 ------------ $ 2,773,944 ------------ HOTELS, RESTAURANTS & LEISURE -- 2.1% Darden Restaurants, Inc............. 1,585 $ 61,625 McDonald's Corp..................... 38,020 1,282,034 Wendy's International, Inc.......... 1,590 87,863 ------------ $ 1,431,522 ------------ INSURANCE -- 5.8% Aetna, Inc.......................... 2,865 $ 270,198 AMBAC Financial Group, Inc.......... 4,375 337,137 Chubb Corp.......................... 4,090 399,388 MetLife, Inc........................ 7,080 346,920 MGIC Investment Corp................ 5,635 370,896 Progressive Corp.................... 15,755 1,839,869 St. Paul Travelers Cos Inc., (The).. 6,540 292,142 ------------ $ 3,856,550 ------------ MATERIALS -- 1.3% Monsanto Co......................... 2,905 $ 225,225 Nucor Corp.......................... 8,305 554,110 Sigma-Aldrich Corp.................. 1,685 106,644 ------------ $ 885,979 ------------ PHARMACEUTICALS & BIOTECHNOLOGY-- 4.1% Amgen, Inc.* ....................... 2,040 $ 160,874 Applera Corp.-Applied Biosystems Group.............................. 4,520 120,051 Gilead Sciences, Inc.* ............. 5,340 281,044 Johnson & Johnson, Inc.............. 19,521 1,173,212 King Pharmaceuticals Inc.* ......... 26,010 440,089 Wyeth............................... 12,680 584,168 ------------ $ 2,759,438 ------------ RETAILING -- 4.7% Home Depot, Inc..................... 50,585 $ 2,047,681 J.C. Penney Co., Inc................ 4,020 223,512 Nike, Inc. - Class B................ 625 54,244 Nordstrom, Inc...................... 13,915 520,421 Office Depot, Inc.* ................ 9,155 287,467 ------------ $ 3,133,325 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS-- 2.9% Advanced Micro Devices, Inc.* ...... 2,695 $ 82,467 Broadcom Corp. - Class A* .......... 1,710 80,626 Freescale Semiconductor, Inc.* ..... 4,835 121,697 Intel Corp.......................... 25,430 634,733 Micron Technology, Inc.* ........... 12,400 165,044 National Semiconductor Corp......... 6,675 173,416 Texas Instruments, Inc.............. 21,775 698,324 ------------ $ 1,956,307 ------------ SOFTWARE & SERVICES -- 1.5% Autodesk, Inc....................... 4,350 $ 186,832 BMC Software, Inc.* ................ 3,855 78,989 Compuware Corp.* ................... 21,710 194,739 Electronic Data Systems Corp........ 6,070 145,923 Microsoft Corp...................... 1,759 45,998 Yahoo!, Inc.* ...................... 8,295 324,998 ------------ $ 977,479 ------------ TELECOMMUNICATION SERVICES -- 2.2% Alltel Corp......................... 9,985 $ 630,053 Corning, Inc.* ..................... 22,475 441,859 Sprint Corp......................... 16,165 377,614 ------------ $ 1,449,526 ------------ TRANSPORTATION -- 2.0% Burlington Northern Santa Fe Corp... 6,810 $ 482,284 FedEx Corp.......................... 2,785 287,941 Norfolk Southern Corp............... 12,180 546,029 ------------ $ 1,316,254 ------------ UTILITIES -- 3.9% Exelon Corp......................... 45,251 $ 2,404,638 Sempra Energy....................... 4,270 191,467 ------------ $ 2,596,105 ------------ TOTAL EQUITY INTERESTS-- 99.7% (identified cost, $52,523,173).... $66,529,371 OTHER ASSETS, LESS LIABILITIES -- 0.3% 212,213 ------------ NET ASSETS -- 100% $66,741,584 ============ * Non-income-producing security. See notes to financial statements WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2005 ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost $52,523,173) (Note 1A). $ 66,529,371 Cash.................................... 404,668 Receivable for fund shares sold......... 184,006 Receivable from investment adviser...... 212 Dividends receivable.................... 106,265 Prepaid expenses........................ 5,616 ------------ Total assets............................ $ 67,230,138 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 461,374 Transfer agent fee...................... 4,244 Accrued expenses and other liabilities.. 22,936 ------------ Total liabilities....................... $ 488,554 ------------ NET ASSETS................................ $ 66,741,584 ============ NET ASSETS CONSIST OF: Proceeds from sales of shares (including the market value of securities received in exchange for fund shares and shares issued to shareholders in payment of distributions declared), less cost of shares reacquired................... $ 83,350,626 Accumulated undistributed net realized loss on investments (computed on the basis of identified cost).................... (30,427,300) Unrealized appreciation on investments (computed on the basis of identified cost) 14,006,198 Distributions in excess of net investment income...................... (187,940) ------------ Net assets applicable to outstanding shares............................... $ 66,741,584 ============ SHARES OF BENEFICIAL INTEREST OUTSTANDING............................ 5,371,852 ============ NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................. $ 12.42 ============ STATEMENT OF OPERATIONS Year Ended December 31, 2005 ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1C): Dividend income......................... $ 1,254,287 ------------ Expenses - Investment adviser fee (Note 2):........ $ 394,885 Administrator fee (Note 2):............. 78,977 Compensation of Trustees not employees of the investment adviser or administrator.... 13,228 Custodian fee (Note 1D):................ 74,204 Distribution expenses (Note 3):......... 164,535 Transfer and dividend disbursing agent fees 25,185 Printing................................ 5,410 Interest expense........................ 3,452 Shareholder communications.............. 4,905 Audit services.......................... 27,447 Legal services.......................... 9,730 Registration costs...................... 19,929 Miscellaneous .......................... 9,088 ------------ Total expenses.......................... $ 830,975 ------------ Deduct - Reduction of custodian fee (Note 1D):... $ (8,096) Allocation of expenses to the investment adviser (Note 2):........... (212) ------------ Total deductions........................ $ (8,308) ------------ Net expenses............................ $ 822,667 ------------ Net investment income................... $ 431,620 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions (identified cost basis)................ $ 3,605,530 Change in unrealized appreciation of investments............................ 59,679 ------------ Net realized and unrealized gain of investments............................ $ 3,665,209 ------------ Net increase in net assets from operations $ 4,096,829 ============ See notes to financial statements WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) ------------------------------------------------------------------------------ Year Ended December 31, -------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2005 2004 -------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income ..................................................... $ 431,620 $ 325,576 Net realized gain on investments........................................... 3,605,530 3,568,382 Change in unrealized appreciation (depreciation) on investments............ 59,679 3,534,335 -------------- -------------- Net increase (decrease) in net assets resulting from operations.......... $ 4,096,829 $ 7,428,293 -------------- -------------- Distributions to shareholders - From net investment income................................................. $ (485,388) $ (289,970) -------------- -------------- Total distributions...................................................... $ (485,388) $ (289,970) -------------- -------------- Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (2,372,715) $(13,174,341) -------------- -------------- Net increase (decrease) in net assets........................................ $ 1,238,726 $ (6,036,018) NET ASSETS: At beginning of year......................................................... 65,502,858 71,538,876 -------------- -------------- At end of year............................................................... $ 66,741,584 $ 65,502,858 -------------- -------------- DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR............................................................... $ (187,940) $ (132,591) ============== ============== See notes to financial statements
WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) ------------------------------------------------------------------------------ Year Ended December 31, ---------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2005 2004 2003(4) 2002(4) 2001(4) ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 11.780 $ 10.530 $ 8.570 $ 11.380 $ 13.690 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income (loss)(1) ....... $ 0.077 $ 0.053 $ 0.029 $ 0.024 $ (0.009) Net realized and unrealized gain (loss) 0.651 1.247 1.958 (2.812) (2.301) --------- --------- --------- --------- --------- Total income (loss) from investment operations......... $ 0.728 $ 1.300 $ 1.987 $ (2.788) $ (2.310) --------- --------- --------- --------- --------- Less distributions: Dividends from investment income....... $ (0.088) $ (0.050) $ (0.027) $ (0.022) $ - --------- --------- --------- --------- --------- Total distributions................ $ (0.088) $ (0.050) $ (0.027) $ (0.022) $ - --------- --------- --------- --------- --------- Net asset value, end of year................ $ 12.420 $ 11.780 $ 10.530 $ 8.570 $ 11.380 ========= ========= ========= ========= ========= Total Return(3) ............................ 6.20% 12.36% 23.20% (24.50%) (16.87%) Ratios/Supplemental Data(1): Net assets, end of year (000 omitted).. $ 66,742 $ 65,503 $ 71,539 $ 66,609 $ 95,121 Ratio of net expenses to average net assets 1.26% 1.25% 1.25% 1.22% 1.13% Ratio of net expenses after custodian fee reduction to average net assets(2)(5) 1.25% 1.25% 1.25% 1.22% 1.13% Ratio of net investment income (loss) to average net assets ................. 0.66% 0.49% 0.31% 0.25% (0.08%) Portfolio turnover rate................ 82% 74% 143% 130% 78% ------------------------------------------------------------------------------------------------------------------------------ (1)For the years ended December 31, 2005, 2004 and 2003, the operating expenses of the Fund were reduced by an allocation of expenses to the distributor and/or investment adviser. Had such action not been undertaken, net investment income per share and the ratios would have been as follows: 2005 2004 2003 ------------------------------------------ Net investment income per share........ $ 0.077 $ 0.050 $ 0.024 ========= ========= ========= Ratios (As a percentage of average net assets): Expenses............................. 1.26% 1.28% 1.31% ========= ========= ========= Expenses after custodian fee reduction(2) 1.25% 1.28% 1.31% ========= ========= ========= Net investment income................ 0.66% 0.46% 0.26% ========= ========= ========= ---------------------------------------------------------------------------------------------------------------- (2)Custodian fees were reduced by credits resulting from cash balances the fund maintained with the custodian (Note 1D). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (3)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be invested at the net asset value on the reinvestment date. (4)Certain per share amounts are based on average shares outstanding. (5)Under a written agreement in effect through the current fiscal year, Wright waives a portion of its advisory fee and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 1.25% after custodian fee reductions, if any. See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 Shares Value EQUITY INTERESTS -- 93.4% AUSTRALIA -- 3.4% BHP Billiton, Ltd................... 68,318 $ 1,140,109 Commonwealth Bank of Australia...... 11,527 361,478 QBE Insurance Group, Ltd............153,164 2,202,128 ------------ $ 3,703,715 ------------ AUSTRIA -- 1.4% OMV AG (Stammaktie)................. 25,886 $ 1,511,425 ------------ BELGIUM -- 1.3% Fortis.............................. 45,123 $ 1,434,409 ------------ CANADA -- 5.2% Encana Corp......................... 37,766 $ 1,699,252 Husky Energy, Inc................... 21,259 1,073,733 Inco, Ltd........................... 9,729 420,592 National Bank of Canada............. 1,867 96,407 Nexen Inc. (Common)................. 19,414 921,049 Power Financial Corp. (Common)...... 23,477 671,259 Rona, Inc.* ........................ 19,002 348,922 Talisman Energy, Inc................ 8,847 466,528 ------------ $ 5,697,742 ------------ DENMARK -- 2.5% Danske Bank A/S..................... 78,061 $ 2,740,520 ------------ FINLAND -- 1.8% Fortum Oyj.......................... 34,175 $ 638,528 Nokian Renkaat Oyj.................. 23,894 300,161 Yit-Yhtyma Oyj...................... 24,277 1,034,616 ------------ $ 1,973,305 ------------ FRANCE -- 6.9% Axa................................. 17,999 $ 578,749 Neopost SA.......................... 12,348 1,233,663 Pernod Ricard SA(Actions Ordinaires) 3,710 645,042 Societe Generale de France (Actions Ordinaires)............... 4,077 499,658 Vinci............................... 26,203 2,245,448 Vivendi Universal SA................ 78,574 2,452,365 ------------ $ 7,654,925 ------------ GERMANY -- 6.5% BASF AG............................. 21,948 $ 1,675,262 Celesio AG.......................... 6,265 536,949 Continental AG (Stammaktie)......... 11,442 1,011,961 Deutsche Boerse AG.................. 7,376 753,103 E. On AG (Stammaktie)............... 30,508 3,144,791 ------------ $ 7,122,066 ------------ GREECE -- 0.0% National Bank of Greece SA.......... 588 $ 24,969 ------------ HONG KONG -- 0.9% Cheung Kong Holdings Ltd.(Ordinary) 92,000 $ 943,903 CLP Holdings, Ltd. (Ordinary)....... 17,500 101,566 ------------ $ 1,045,469 ------------ IRELAND -- 1.3% Bank of Ireland (Cap. Stock)........ 23,296 $ 365,743 CRH PLC (Ordinary).................. 5,323 156,027 DCC PLC............................. 17,535 374,370 Grafton Group PLC* ................. 18,894 205,035 Ryanair Holdings PLC* .............. 30,531 298,907 ------------ $ 1,400,082 ------------ ITALY -- 2.9% Banca Intesa Spa (Azioni Ordinarie). 13,956 $ 73,666 Eni Spa (Azioni Ordinarie)..........112,603 3,111,993 ------------ $ 3,185,659 ------------ JAPAN -- 23.8% Aiful Corp. (Common)................ 4,875 $ 406,835 Bridgestone Corp. (Common).......... 16,000 332,797 Canon, Inc. (Common)................ 24,100 1,408,879 Eisai Co., Ltd. (Common)............ 35,000 1,467,847 Honda Motor Co., Ltd. (Common)...... 29,700 1,693,476 Ibiden Co., Ltd. (Common)........... 29,400 1,574,244 Kawasaki Kisen Kaisha, Ltd..........137,000 858,934 Kddi Corp........................... 219 1,261,713 Mitsui & Co., Ltd................... 86,000 1,103,872 Mitsui Chemicals, Inc............... 82,000 550,928 Mitsui OSK Lines, Ltd...............196,000 1,708,752 Nippon Shokubai Co., Ltd............ 35,000 395,874 Nippon Steel Corp...................218,000 775,735 Nippon Yusen Kabushiki Kaish........ 34,000 232,754 Nissan Chemical Industries, Ltd..... 18,000 255,901 ORIX Corp.(Common).................. 4,900 1,247,522 Osaka Gas Co., Ltd..................180,000 620,690 Sankyo Co., Ltd. ................... 9,400 543,946 Santen Pharmaceutical Co., Ltd...... 26,800 740,219 Sumitomo Corp.......................106,000 1,369,567 Sumitomo Heavy Industries, Ltd......146,000 1,224,604 Takeda Chemicals Ind, Ltd. (Common). 20,600 1,113,513 Toyo Suisan Kaisha, Ltd............. 26,000 419,419 Toyota Motor Corp. (Common)......... 28,800 1,493,315 Yamada Denki Co., Ltd. (Common)..... 19,500 2,438,533 Yamaha Motor Co., Ltd............... 34,900 910,718 ------------ $26,150,587 ------------ NETHERLANDS -- 6.1% ABN Amro Holdings NV (Aandeel)...... 75,964 $ 1,979,339 Aegon NV............................ 30,320 491,754 ING Groep NV - ADR (Aandeel)........ 91,382 3,158,236 Koninklijke Philips Electronics NV.. 25,292 783,121 Royal Dutch Shell PLC............... 10,563 321,208 ------------ $ 6,733,658 ------------ NORWAY -- 2.2% Norsk Hydro ASA (Ordinaere Aksje)... 4,940 $ 505,582 Orkla ASA........................... 3,210 132,501 Statoil ASA......................... 73,118 1,673,737 Telenor ASA......................... 7,569 74,055 ------------ $ 2,385,875 ------------ SINGAPORE -- 0.4% Jardine Cycle & Carriage, Ltd....... 43,000 $ 287,046 Keppel Corp., Ltd................... 18,000 119,076 ------------ $ 406,122 ------------ SPAIN -- 5.2% Acciona SA (Accion)................. 10,128 $ 1,128,345 ACS,Actividades de Construccion y Svcs SA......................... 17,494 561,480 Ebro Puleva SA...................... 20,823 344,602 Fomento de Construcciones y Contratas SA (Accion)........................ 13,743 776,486 Grupo Ferrovial SA (Accion Al Portador)....................... 13,867 956,874 Repsol YPF SA (Accion).............. 63,776 1,855,850 Sociedad Gen. de Aguas de Barcelona SA....................... 3,633 7,135 ------------ $ 5,700,772 ------------ SWEDEN -- 2.9% Capio AB* .......................... 33,187 $ 590,049 Nordea Bank AB...................... 9,496 98,437 SKF AB.............................. 22,904 320,885 TeliaSonera AB......................405,573 2,176,007 ------------ $ 3,185,378 ------------ SWITZERLAND -- 1.5% Syngenta AG* ....................... 4,518 $ 560,486 Zurich Financial Services (Inhaberaktie)*.................... 5,297 1,125,354 ------------ $ 1,685,840 ------------ UNITED KINGDOM -- 17.2% Alliance Unichem PLC (Ordinary)..... 19,776 $ 271,773 Anglo American PLC (Ordinary)....... 87,466 2,971,612 Barclays PLC (Ordinary).............292,734 3,070,587 Barratt Developments PLC............ 66,676 1,128,635 Bellway PLC (Ordinary).............. 2,417 46,847 BHP Billiton PLC.................... 23,195 378,091 BP PLC (Ordinary)................... 29,174 310,023 British American Tobacco PLC........ 57,178 1,276,084 Cable & Wireless PLC (Ordinary).....159,218 325,955 Hanson PLC.......................... 68,862 755,418 HBOS PLC............................186,998 3,187,816 Inchcape PLC........................ 14,450 565,848 Persimmon PLC (Ordinary)............ 85,944 1,856,108 Royal Bank of Scotland Group PLC.... 9,743 293,546 Royal Dutch Shell PLC............... 22,809 727,544 Scottish Power PLC.................. 14,940 139,398 Taylor Woodrow PLC..................106,411 695,101 Tesco PLC (Ordinary)................167,214 951,619 ------------ $18,952,005 ------------ TOTAL EQUITY INTERESTS-- 93.4% (identified cost, $86,155,919)... $102,694,523 ------------ OTHER ASSETS, LESS LIABILITIES -- 6.6% 7,202,855 ------------ NET ASSETS -- 100% $109,897,378 ============ * Non-income-producing security. ADR American Depository Receipts See notes to financial statements WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2005 ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost $86,155,919) (Note 1A) $102,694,523 Cash.................................... 6,874,608 Foreign currency, at value (cost $2,408) (Note 1)............................... 2,386 Receivable for fund shares sold......... 302,410 Dividends receivable.................... 48,212 Tax reclaim receivable.................. 50,230 Prepaid expenses........................ 10,840 Other assets............................ 4,311 ------------ Total assets.......................... $109,987,520 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 46,246 Payable to affiliate for Trustees' fees. 2 Transfer agent fee payable.............. 3,094 Accrued expenses and other liabilities.. 40,800 ------------ Total liabilities..................... $ 90,142 ------------ NET ASSETS................................ $109,897,378 ============ NET ASSETS CONSIST OF: Proceeds from sales of shares (including the market value of securities received in exchange for fund shares and shares issued to shareholders in payment of distributions declared), less cost of shares reacquired................... $102,779,299 Accumulated net realized loss on investments and foreign currency (computed on the basis of identified cost).............. (11,549,838) Unrealized appreciation of investments and translation of assets and liabilities in foreign currencies (computed on the basis of identified cost)....................... 16,542,177 Undistributed net investment income..... 2,125,740 ------------ Net assets applicable to outstanding shares .............................. $109,897,378 ============ SHARES OF BENEFICIAL INTEREST OUTSTANDING............................ 6,083,740 ============ NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................. $ 18.06 ============ STATEMENT OF OPERATIONS Year Ended December 31, 2005 ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1C): Dividend income......................... $ 1,983,490 Less: Foreign Taxes..................... (189,073) ------------ Investment income....................... $ 1,794,417 ------------ Expenses - Investment adviser fee (Note 2):........ $ 589,126 Administrator fee (Note 2):............. 124,778 Compensation of Trustees not employees of the investment adviser or administrator 13,228 Custodian fee (Note 1D):................ 184,062 Distribution expenses (Note 3):......... 184,129 Transfer and dividend disbursing agent fees 24,493 Printing................................ 6,269 Interest expense........................ 6,571 Shareholder communications.............. 6,980 Audit services.......................... 31,181 Legal services.......................... 9,400 Registration costs...................... 33,720 Miscellaneous .......................... 8,100 ------------ Total expenses.......................... $ 1,222,037 ------------ Deduct - Reduction of custodian fee (Note 1D):... $ (23,784) ------------ Net expenses............................ $ 1,198,253 ------------ Net investment income................... $ 596,164 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain - Investment transactions (identified cost basis).......................... $ 7,925,045 Foreign currency transactions.......... (81,061) ------------ Net realized gain....................... $ 7,843,984 Change in unrealized appreciation (depreciation) - Investments (identified cost basis)................ 6,735,432 Foreign currency....................... (9,036) ------------ Net change in unrealized appreciation... $ 6,726,396 ------------ Net realized and unrealized gain of investments............................ $ 14,570,380 ------------ Net increase in net assets from operations $ 15,166,544 ============ See notes to financial statements WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) ------------------------------------------------------------------------------- Year Ended December 31, ----------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2005 2004 ----------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income ..................................................... $ 596,164 $ 534,963 Net realized gain on investments and foreign currency transactions......... 7,843,984 8,968,316 Change in unrealized appreciaiton (depreciation) on investments and translation of assets and liabilities in foreign currencies.......... 6,726,396 (73,598) -------------- -------------- Net increase in net assets resulting from operations..................... $ 15,166,544 $ 9,429,681 -------------- -------------- Distributions to shareholders From net investment income................................................. $ (704,313) $ (376,098) -------------- -------------- Total distributions...................................................... $ (704,313) $ (376,098) -------------- -------------- Net increase (decrease) in net assets from fund share transactions (Note 4) . $ 33,169,454 $ (1,373,901) -------------- -------------- Net increase in net assets................................................... $ 47,631,685 $ 7,679,682 NET ASSETS: At beginning of year......................................................... 62,265,693 54,586,011 -------------- -------------- At end of year............................................................... $109,897,378 $ 62,265,693 ============== ============== UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR.................................................................. $ 2,125,740 $ 2,069,471 ============== ============== See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) ------------------------------------------------------------------------------- Year Ended December 31, -------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2005(1) 2004 2003(1) 2002(1) 2001(1) ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $15.070 $12.890 $ 9.840 $11.510 $15.180 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income (loss) .......... $ 0.129 $ 0.128 $ 0.073 $ 0.070 $ (0.023) Net realized and unrealized gain (loss) 3.028 2.140 3.044 (1.740) (3.647) --------- --------- --------- --------- --------- Total income (loss) from investment operations...... $ 3.157 $ 2.268 $ 3.117 $ (1.670) $ (3.670) --------- --------- --------- --------- --------- Less distributions: Dividends from investment income....... $ (0.167) $ (0.088) $ (0.067) $ - $ - --------- --------- --------- --------- --------- Total distributions................ $ (0.167) $(0.088) $ (0.067) $ - $ - --------- --------- --------- --------- --------- Net asset value, end of year................ $18.060 $15.070 $12.890 $ 9.840 $11.510 ========= ========= ========= ========= ========= Total return(2) ............................ 21.13% 17.71% 31.96% (14.51%) (24.18%) Ratios/Supplemental Data Net assets, end of year (000 omitted).. $109,897 $ 62,266 $ 54,586 $ 50,835 $ 66,828 Ratio of net expenses to average net assets 1.66% 1.72% 1.80% 1.66%(3) 1.56%(3) Ratio of net expenses after custodian fee reduction to average net assets(4) .. 1.62% 1.71% 1.80% 1.65% - Ratio of net investment income (loss) to average net assets.......................... 0.81% 0.97% 0.81% 0.65% (0.18%) Portfolio turnover rate .............. 99% 121% 77% 62%(5) 39%(5) --------------------------------------------------------------------------------------------------------------------------------- (1) Certain per share amounts are based on average shares outstanding. (2)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be invested at the net asset value on the reinvestment date. (3)Includes the fund's share of its corresponding Portfolio's allocated expenses (Note 1). (4)Custodian fees were reduced by credits resulting from cash balances the fund and/or the portfolio maintained with the custodian (Note 1D). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (5)Represents portfolio turnover rate of the fund's corresponding portfolio (Note 1). See notes to financial statements
WRIGHT MANAGED EQUITY TRUST ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (1) SIGNIFICANT ACCOUNTING POLICIES The Wright Managed Equity Trust (the Trust), issuer of Wright Selected Blue Chip Equities Fund (WSBC) series, Wright Major Blue Chip Equities Fund (WMBC) series, and Wright International Blue Chip Equities Fund (WIBC) series (collectively, the Funds), is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end, management investment company. The Funds seek to provide total return consisting of price appreciation and current income. Prior to December 20, 2002, WSBC and WIBC invested all of their investable assets in interests in a separate corresponding open-end management investment company (a Portfolio), a New York Trust, having the same investment objective as its corresponding fund. Subsequent to December 20, 2002, the Funds invest directly in securities rather than through the Portfolios and maintain the same investment objectives. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. A. Investment Valuations - Securities listed on securities exchanges or in the NASDAQ National Market are valued at closing sale prices, if those prices are deemed to be representative of market values at the close of business. Unlisted or listed securities for which closing sale prices are not available are valued at the mean between the latest bid and asked prices. Short-term obligations maturing in sixty days or less are valued at amortized cost, which approximates fair value. Securities for which market quotations are unavailable or deemed not to be representative of market values at the close of business are appraised at their fair value as determined in good faith by or at the direction of the Trustees. B. Foreign Currency Translation - Investment security valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses are translated into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. C. Income - Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the fund is informed of the ex-dividend date. D. Expense Reduction - Investors Bank & Trust (IBT) serves as custodian to the Funds. Pursuant to the custodian agreement, IBT receives a fee reduced by credits which are determined based on the average daily cash balance the Funds maintain with IBT. All credit balances used to reduce the Fund's custodian fees are reported as a reduction of total expenses on the Statement of Operations. E. Federal Taxes - The Trust's policy is to comply with the provisions of the Internal Revenue Code (the Code) available to regulated investment companies and distribute to shareholders each year all of its taxable income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is necessary. At December 31, 2005, the Trust, for federal income tax purposes, had capital loss carryovers of $30,269,711 (WMBC) and $11,465,196 (WIBC) which will reduce the Funds' taxable income arising from future net realized gain on investment transactions, if any, to the extent permitted by the Code, and thus will reduce the amount of the distribution to shareholders which would otherwise be necessary to relieve the respective fund of any liability for federal income or excise tax.Pursuant to the Code, such capital loss carryovers will expire as follows: 12/31 WSBC WMBC WIBC ------------------------------------------------------------------------------- 2009- - $10,435,545 $ - 2010- - 17,603,398 9,901,904 2011- - 2,230,768 1,563,292 ------------------------------------------------------------------------------- At December 31, 2005, net currency losses of $(28,467) for WIBC attributable to security transactions incurred after October 31, 2005 are treated as arising on the first day of the fund's current taxable year. Withholding taxes on foreign dividends have been provided for in accordance with the Trust's understanding of the applicable country's tax rules and rates. F. Distributions - The Trust requires that differences in the recognition or classification of income between the financial statements and tax earnings and profits which result only in temporary overdistributions for financial statement purposes, are classified as distributions in excess of net investment income or accumulated net realized gains. Distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting for certain items may result in reclassification of these items. During the year ended December 31, 2005, the following amounts were reclassified due to differences between book and tax accounting created primarily by the deferral of certain losses for tax purposes and character reclassifications between net investment income and net realized capital gains. Accumulated Undistributed Undistributed Paid-In Net Realized Gain/(Loss) Net Investment Capital on Investments Income ------------------------------------------------------------------------------- WSBC $(98,645) $ 23,469 $ 75,176 WMBC (4,177) 5,758 (1,581) WIBC 1 (164,419) 164,418 ------------------------------------------------------------------------------- The tax character of distributions paid for the years ended December 31, 2005 and December 31, 2004 was as follows: Year Ended 12/31/05 WSBC WMBC WIBC ------------------------------------------------------------------------------- Distributions declared from: Ordinary income - $485,388 $704,313 Long-term capital gain $5,390,227 - - ------------------------------------------------------------------------------- Year Ended 12/31/04 WSBC WMBC WIBC ------------------------------------------------------------------------------- Distributions declared from: Ordinary income - $289,970 $376,098 Long-term capital gain $1,597,259 - - ------------------------------------------------------------------------------- As of December 31, 2005, the components of distributable earnings (accumulated losses) on a tax basis were as follows: WSBC WMBC WIBC ------------------------------------------------------------------------------- Undistributed income - $ 19,381 $ 1,002,787 Undistributed gain $2,512,899 - - Capital loss carryforwards - $(30,269,711) $(11,465,196) Unrealized appreciation $9,340,452 $ 13,853,775 $ 16,025,362 Other temporary differences $924,379 $ (212,487) $ 1,555,126 ------------------------------------------------------------------------------- G. Other - Investment transactions are accounted for on a trade-date basis. H. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. (2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as investment adviser to the Funds pursuant to an Investment Advisory Contract. Wright furnishes the Funds with investment management, investment advisory, and other services. For its services, Wright is compensated based upon a percentage of average daily net assets which rate is adjusted as average daily net assets exceed certain levels. For the year ended December 31, 2005, the effective annual rate was 0.80% for WIBC and 0.60% for WSBC and WMBC. Wright has been allocated expenses of $25,969 and $212 on behalf of WSBC and WMBC, respectively. The Trust also has engaged Eaton Vance Management (Eaton Vance) to act as administrator of the Trust. Under the Administration Agreement, Eaton Vance is responsible for managing the business affairs of the Trust and is compensated based upon a percentage of average daily net assets which rate is reduced as average daily net assets exceed certain levels. For the year ended December 31, 2005, the effective rate was 0.12% for WSBC, 0.12% for WMBC, and 0.17% for WIBC. Certain of the Trustees and officers of the Trust are Trustees or officers of the above organizations. Except as to Trustees of the Trust who are not employees of Eaton Vance or Wright, Trustees and officers receive remuneration for their services to the Trust out of the fees paid to Eaton Vance and Wright. (3) DISTRIBUTION EXPENSES The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule 12b-1 of the Investment Company Act of 1940. The Plan provides that each of the funds will pay Wright Investors' Service Distributors, Inc. (Principal Underwriter), a wholly-owned subsidiary of The Winthrop Corporation, an annual rate of 0.25% of each fund's average daily net assets for activities primarily intended to result in the sale of each fund's shares. Under a written agreement in effect through the current fiscal year, Wright waives a portion of its advisory fee and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 1.25% after custodian fee reductions, if any, for both WSBC and WMBC. Pursuant to this agreement, the principal underwriter made a reduction of its fees of $59,659 on behalf of WSBC. In addition, the Trustees have adopted a service plan (the Service Plan) which allows the funds to reimburse the Principal Underwriter for payments to intermediaries for providing account administration and account maintenance services to their customers who are beneficial owners of shares. The amount of service fee payable under the Service Plan with respect to each class of shares may not exceed 0.25% annually of the average daily net assets attributable to the respective classes. For the year ended December 31, 2005, the funds did not accrue or pay any service fees. (4) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in fund shares were as follows: Year Ended Year Ended December 31, 2005 December 31, 2004 --------------------------------------------------------------- Shares Amount Shares Amount --------------------------------------------------------------------------------------------------------------------------- Wright Selected Blue Chip Equities Fund-- Sold................................................... 1,994,101 $ 26,725,001 923,639 $ 11,222,820 Issued to shareholders in payment of distributions declared.............................................. 362,284 4,698,930 106,988 1,396,188 Redemptions............................................ (1,988,270) (26,793,743) (957,939) (11,635,131) ------------ --------------- ------------ --------------- Net increase ........................................ 368,115 $ 4,630,188 72,688 $ 983,877 ============ =============== ============ =============== Wright Major Blue Chip Equities Fund Sold.................................................. 746,933 $ 8,790,299 898,054 $ 9,604,327 Issued to shareholders in payment of distributions declared............................................. 32,288 390,542 20,569 233,277 Redemptions............................................ (969,256) (11,553,556) (2,151,425) (23,011,945) ------------ --------------- ------------ --------------- Net increase (decrease).............................. (190,035) $ (2,372,715) (1,232,802) $ (13,174,341) ============ =============== ============ =============== Wright International Blue Chip Equities Fund Sold................................................... 2,853,233 $ 47,557,242 792,931 $ 10,418,061 Issued to shareholders in payment of distributions declared............................................. 33,842 523,875 21,458 276,379 Redemptions............................................ (936,442) (14,911,663) (916,122) (12,068,341) ------------ --------------- ------------ --------------- Net increase (decrease).............................. 1,950,633 $ 33,169,454 (101,733) $ (1,373,901) ============ =============== ============ ===============
(5) INVESTMENT TRANSACTIONS Purchases and sales of investments, other than U.S. Government securities and short-term obligations were as follows: Year Ended December 31, 2005 ---------------------------------------------- WSBC WMBC WIBC ------------------------------------------------------------------------------- Purchases..... $ 51,724,386 $ 53,492,901 $ 98,084,417 =========== =========== =========== Sales......... $ 52,883,081 $ 56,360,686 $ 71,927,879 =========== =========== =========== ------------------------------------------------------------------------------- (6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost and unrealized appreciation (depreciation) of the investment securities owned at December 31, 2005, as computed on a federal income tax basis, are as follows: WSBC WMBC WIBC ------------------------------------------------------------------------------- Aggregate cost $ 38,187,068 $52,675,596 $ 86,672,734 =========== =========== =========== Gross unrealized appreciation 10,007,236 14,196,569 16,399,570 Gross unrealized depreciation (666,784) (342,794) (377,781) ----------- ----------- ----------- Net unrealized appreciation $ 9,340,452 $ 13,853,775 $ 16,021,789 =========== =========== =========== ------------------------------------------------------------------------------- The appreciation on currency for WIBC is $3,573. (7) LINE OF CREDIT The funds participate with other funds managed by Wright in a committed $10 million unsecured line of credit agreement with a bank. The funds may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each fund based on its borrowings at an amount above the federal funds rate. In addition, a fee computed at an annual rate of 0.10% on the average daily unused portion of the $10 million line of credit, is allocated among the participating funds at the end of each quarter. WSBC, WMBC, and WIBC did not have significant borrowings or allocated fees during the year ended December 31, 2005. (8) RISKS ASSOCIATED WITH FOREIGN INVESTMENTS Investing in securities issued by companies whose principal business activities are outside the United States may involve significant risks not present in domestic investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting requirements of the U.S. securities laws. Foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on the removal of funds or other assets of the Portfolio, political or financial instability or diplomatic and other developments which could affect such investments. WRIGHT MANAGED EQUITY TRUST ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees and Shareholders of The Wright Managed Equity Trust: We have audited the accompanying statements of assets and liabilities of the Wright Managed Equity Trust (the "Trust"), comprising the Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund, and Wright International Blue Chip Equities Fund (the "Funds"), including the portfolios of investments as of December 31, 2005, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2005 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds constituting the Wright Managed Equity Trust at December 31, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts February 21, 2006 WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB) ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 Face Coupon Maturity Market Current Amount Description Rate Date Price Value Yield ----------------------------------------------------------------------------------------------------------------------------- (unaudited) MORTGAGE-BACKED SECURITIES - 27.3% ------------------------------------ $ 56,554 FHLMC Gold Balloon #M90710 5.000% 03-01-07 $100.14 $ 56,632 5.0% 39,627 FHLMC Gold Balloon #M90724 5.500% 05-01-07 100.65 39,883 5.5% 167,733 FHLMC Gold Balloon #M90767 4.500% 11-01-07 99.39 166,718 4.5% 271,319 FHLMC Gold Balloon #M90802 4.000% 03-01-08 97.69 265,049 4.1% 956,680 FHLMC Gold Balloon #M90937 5.000% 08-01-09 99.89 955,597 5.0% 961,173 FHLMC Gold Balloon #M90941 4.500% 08-01-09 98.60 947,688 4.6% 331,318 FHLMC Gold Pool #M90796 4.000% 02-01-08 97.69 323,662 4.1% 316,085 FHLMC Pool #1B1291 4.397% 11-01-33 98.44 311,170 4.5% 783,366 FHLMC Pool #1G0233 5.018% 05-01-35 99.76 781,451 5.0% 69,567 FNMA Pool #254227 5.000% 02-01-09 99.64 69,315 5.0% 413,729 FNMA Pool #701043 4.052% 04-01-33 98.78 408,680 4.1% 743,012 FNMA Pool #809324 4.880% 02-01-35 99.62 740,215 4.9% U.S. GOVERNMENT AGENCIES - 43.6% -------------------------------- $ 770,000 FFCB 2.500% 03-15-06 $ 99.58 $ 766,781 2.5% 3,135,000 FHLMC 3.250% 11-02-07 97.10 3,044,198 3.3% 1,345,000 FHLMC 3.030% 06-11-08 96.13 1,292,963 3.2% 895,000 FNMA 1.750% 06-16-06 98.74 883,749 1.8% 2,135,000 FNMA 3.000% 11-22-06 98.52 2,103,477 3.0% U.S. TREASURIES - 27.7% ----------------------- $ 125,000 U.S. Treasury Notes 4.375% 05-15-07 $ 99.95 $ 124,937 4.4% 4,160,000 U.S. Treasury Notes 3.000% 11-15-07 97.54 4,057,627 3.1% 1,000,000 U.S. Treasury Notes 3.375% 11-15-08 97.35 973,477 3.5% ----------- Total Investments (identified cost, $18,612,571)-- 98.6% $18,313,269 Other Assets, Less Liabilities-- 1.4% 253,808 ----------- Net Assets-- 100.0% $18,567,077 =========== FFCB - Federal Farm Credit Bank FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association see notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB) ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2005 ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost of $18,612,571)(Note 1A) $ 18,313,269 Cash.................................... 155,898 Receivable for investments sold......... 20,554 Receivable for fund shares sold......... 3,015 Receivable from investment adviser...... 22,470 Interest receivable..................... 77,821 Prepaid expenses........................ 5,309 ------------ Total assets.......................... $ 18,598,336 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 1,991 Distributions payable................... 9,499 Payable to affiliate for Trustees' fees. 11 Transfer agent fee ..................... 3,446 Accrued expenses........................ 16,312 ------------ Total liabilities..................... $ 31,259 ------------ NET ASSETS................................ $ 18,567,077 ============ NET ASSETS CONSIST OF: Proceeds from sales of shares (including the market value of securities received in exchange for Fund shares and shares issued to shareholders in payment of distributions declared), less cost of shares reacquired................... $ 20,471,427 Accumulated undistributed net realized loss on investments (computed on the basis of identified cost)....................... (1,605,146) Unrealized depreciation on investments (computed on the basis of identified cost) (299,302) Undistributed net investment income..... 98 ------------ Net assets applicable to outstanding shares................................ $ 18,567,077 ============ SHARES OF BENEFICIAL INTEREST OUTSTANDING. 1,898,808 ============ NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST.................. $ 9.78 ============ STATEMENT OF OPERATIONS Year Ended December 31, 2005 ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1B): Interest income........................ $ 658,350 ------------ Expenses - Investment adviser fee (Note 3)........ $ 89,871 Administrator fee (Note 3)............. 17,974 Compensation of Trustees not employees of the investment adviser or administrator 13,564 Custodian fee (Note 1C)................ 48,192 Distribution expenses (Note 4)......... 49,928 Transfer and dividend disbursing agent fees 20,613 Printing............................... 3,595 Interest expense....................... 1,730 Shareholder communications............. 5,061 Audit services......................... 31,744 Legal services......................... 4,927 Registration costs..................... 18,398 Miscellaneous.......................... 4,799 ------------ Total expenses........................ $ 310,396 ------------ Deduct - Reduction of custodian fee (Note 1C):.. $ (3,513) Allocation of expenses to the investment adviser (Note 3)........... (22,470) Reduction of investment adviser fee (Note 3).............................. (44,937) Reduction of distribution expenses by principal underwriter (Note 4)..... (49,928) ------------ Total deductions...................... $ (120,848) ------------ Net expenses.......................... $ 189,548 ------------ Net investment income............... $ 468,802 ------------ REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss on investment transactions (identified cost basis)................ $ (126,026) Change in unrealized depreciation of investments......................... (148,967) ------------ Net realized and unrealized loss of investments........................... $ (274,993) ------------ Net increase in net assets from operations $ 193,809 ============ See notes to financial statements WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB) ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2005 2004 --------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income...................................................... $ 468,802 $ 327,655 Net realized loss on investments........................................... (126,026) (42,275) Change in unrealized depreciation on investments........................... (148,967) (185,876) -------------- -------------- Net increase in net assets resulting from operations..................... $ 193,809 $ 99,504 -------------- -------------- Distributions to shareholders (Note 2) - From net investment income................................................. $ (605,643) $ (735,924) -------------- -------------- Total distributions...................................................... $ (605,643) $ (735,924) -------------- -------------- Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (2,593,760) $ (5,348,388) -------------- -------------- Net decrease in net assets............................................... $ (3,005,594) $ (5,984,808) NET ASSETS: At beginning of year......................................................... 21,572,671 27,557,479 -------------- -------------- At end of year............................................................... $ 18,567,077 $ 21,572,671 ============== ============== UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR................................................. $ 98 $ -- ============== ============== See notes to financial statements
WRIGHT U.S. GOVERNMENT NEAR TERM FUND (WNTB) ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------------------------ FINANCIAL HIGHLIGHTS 2005 2004 2003 2002 2001 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 9.980 $ 10.250 $ 10.490 $ 10.290 $ 10.080 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income(1) ............... $ 0.227 $ 0.123 $ 0.165 $ 0.349 $ 0.480(7) Net realized and unrealized gain (loss).. (0.128) (0.080) (0.102) 0.200 0.195(7) --------- --------- --------- --------- --------- Total income from investment operations $ 0.099 $ 0.043 $ 0.063 $ 0.549 $ 0.675 --------- --------- --------- --------- --------- Less distributions: Distributions from investment income... $ (0.299) $ (0.313) $ (0.303) $ (0.349) $ (0.465) --------- --------- --------- --------- --------- Total distributions.................... $ (0.299) $ (0.313) $ (0.303) $ (0.349) $ (0.465) --------- --------- --------- --------- --------- Net asset value, end of year................ $ 9.780 $ 9.980 $ 10.250 $ 10.490 $ 10.290 ========= ========= ========= ========= ========= Total return(2) ............................ 1.01% 0.43% 0.61% 5.42% 6.82% Ratios/Supplemental Data(1): Net assets, end of year (000 omitted).... $ 18,567 $ 21,573 $ 27,557 $ 33,839 $ 36,025 Ratio of net expenses to average net assets 0.97% 0.96% 0.95% 0.97%(3) 0.97%(3) Ratio of net expenses after custodian fee reduction to average net assets(4)(6) 0.95% 0.95% 0.95% 0.95%(3) 0.95%(3) Interest expense ....................... 0.01% _ 0.01% - - Ratio of net investment income to average net assets............................ 2.35% 1.38% 1.75% 3.10% 4.40% Portfolio turnover rate ................ 109% 138% 165% 64%(5) 92%(5) --------------------------------------------------------------------------------------------------------------------------------- (1)For the years ended December 31, 2005, 2004, 2003, 2002, and 2001, the operating expenses of the fund were reduced by an allocation of expenses to the investment adviser, a reduction in distribution fees by the principal underwriter, a reduction in administration fees, or a combination thereof. Had such action not been undertaken, net investment income per share and the ratios would have been as follows: 2005 2004 2003 2002 2001 -------------------------------------------------------------------- Net investment income per share........ $ 0.170 $ 0.097 $ 0.134 $ 0.323 $ 0.452 ========= ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses ............................ 1.56% 1.38% 1.28% 1.20%(3) 1.22%(3) ========= ========= ========= ========= ========= Expense after custodian fee reduction(4) 1.54% 1.37% 1.28% 1.18%(3) 1.20%(3) ========= ========= ========= ========= ========= Interest expense..................... 0.01% - 0.01% - - ========= ========= ========= ========= ========= Net investment income................ 1.76% 0.96% 1.42% 2.87% 4.15% ========= ========= ========= ========= ========= --------------------------------------------------------------------------------------------------------------------------------- (2)Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. (3)Includes each fund's share of its corresponding portfolio's allocated expenses (Note 1). (4)Custodian fees were reduced by credits resulting from cash balances the fund maintained with the custodian (Note 1C). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (5) Represents portfolio turnover rate of the fund's corresponding portfolio (Note 1). (6)Under a written agreement, Wright waives all or a portion of its advisory and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 0.95% after custodian fee credits are applied. (7)Reporting guidelines require the funds to disclose the effects of implementing the change in accounting for amortization of premium and discount on debt securities. If adjustments were not made, net investment income per share would have been $0.491 and net realized and unrealized gain (loss) per share would have been $0.184. See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB) ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 Face Coupon Maturity Market Current Amount Description Rate Date Price Value Yield ------------------------------------------------------------------------------------------------------------------------------ (unaudited) ASSET-BACKED SECURITIES - 9.9% FINANCIAL SERVICES $ 380,000 Citibank Credit Card Master Trust 5.875% 03-10-11 $103.12 $ 391,837 5.7% 340,000 Citigroup Commercial Mortgage Trust, Series 2004-C2 A5 4.733% 10-15-41 97.17 330,394 4.9% 335,000 Credit-Based Asset Servicing and Securities, Series 2005-CB7 AF2 5.147% 11-25-35 99.74 334,126 5.2% 440,000 CS First Boston Mortgage Securities Corp., Series 2003-C3 A5 3.936% 05-15-38 92.89 408,730 4.2% 414,187 First Horizon Alternative Mortgage Securities, Series 2005-AA10 1A2 5.776% 12-25-35 99.94 413,928 5.8% 565,000 JP Morgan Chase Commercial Mortgage Securities, Series 2004-C3 A5 4.878% 01-15-42 97.85 552,854 5.0% 220,000 JP Morgan Chase Commercial Mortgage Securities, Series 2004-CBX A6 4.899% 01-12-37 98.19 216,023 5.0% 610,000 MBNA Master Credit Card Trust, Series 1999-BA 5.900% 08-15-11 103.38 630,630 5.7% 405,000 Salomon Brothers Mortage Securities VII, Series 2002-KEY2 A2 4.467% 03-18-36 98.23 397,817 4.5% 405,000 Structured Asset Securities Corp., Series 2004-23XS 1A4 4.930% 01-25-35 97.49 394,832 5.1% ----------- Total Asset Backed Securities (identified cost, $4,173,042) $ 4,071,171 ----------- CORPORATE BONDS - 24.9% AUTO - 0.5% $ 190,000 DaimlerChrysler North America Holding Co. 7.200% 09-01-09 $105.84 $ 201,095 6.8% BANKS - 4.5% $ 335,000 CIT Group, Inc. 7.750% 04-02-12 $113.56 $ 380,411 6.8% 320,000 National Rural Utilities 7.250% 03-01-12 111.67 357,340 6.5% 325,000 Royal Bank of Scotland 7.648% 08-31-49 121.14 393,715 6.3% 390,000 SLM Corp 4.823% 01-26-09 100.31 391,217 4.4% 360,000 U.S. Bancorp 5.100% 07-15-07 100.43 361,553 5.1% BLDG - RESIDENTIAL/COMMER - 0.4% $ 170,000 Centex Corp. 7.875% 02-01-11 $109.90 $ 186,830 7.2% BUILDING MATERIALS - 0.2% $ 95,000 Lowes Co., Inc. 8.250% 06-01-10 $113.26 $ 107,601 7.3% CABLE TV - 0.5% $ 170,000 Comcast Cable Comm HLDGS 8.375% 03-15-13 $115.91 $ 197,043 7.2% DIVERSIFIED FINANCIALS - 6.6% $ 375,000 Bear Stearns Co., Inc. 5.119% 09-27-07 $101.01 $ 378,783 5.1% 340,000 Boeing Capital Corp., Senior Note 7.375% 09-27-10 110.15 374,499 6.7% 230,000 Cendant Corp. 6.250% 01-15-08 101.85 234,259 6.1% 190,000 First Union Corp. 6.400% 04-01-08 103.40 196,463 6.2% 415,000 General Electric Cap Corp. 6.125% 02-22-11 105.32 437,081 5.8% 300,000 Goldman Sachs Group, Inc. 6.600% 01-15-12 107.55 322,658 6.1% 375,000 International Lease Finance Corp. 5.875% 05-01-13 103.64 388,640 5.7% 410,000 JP Morgan Chase & Co. 5.150% 10-01-15 98.77 404,952 5.2% ELECTRIC - INTEGRATED - 1.0% $ 205,000 Dominion Resources, Inc. 6.300% 03-15-33 $102.08 $ 209,260 6.2% 190,000 PPL Electric Utilities 5.875% 08-15-07 101.43 192,722 5.8% FOOD - RETAIL - 0.5% $ 200,000 Safeway, Inc., Note 5.800% 08-15-12 $100.65 $ 201,293 5.8% FOOD, BEVERAGE & TOBACCO - 1.4% $ 190,000 HJ Heinz Finance Co. 6.000% 03-15-12 $102.85 $ 195,422 5.8% 380,000 Pepsico, Inc. 3.200% 05-15-07 98.10 372,777 3.3% INSTRUMENTS - CONTROLS - 0.8% $ 345,000 Honeywell International, Inc. 7.000% 03-15-07 $102.31 $ 352,969 6.8% MEDICAL - 0.8% $ 110,000 Amgen, Inc. 6.500% 12-01-07 $103.07 $ 113,381 6.3% 205,000 Wyeth 5.500% 03-15-13 101.53 208,129 5.4% OIL & GAS - 3.0% $ 460,000 BP Capital Markets PLC 2.750% 12-29-06 $ 98.14 $ 451,459 2.8% 320,000 Phillips Petroleum 6.650% 07-15-18 113.08 361,846 5.9% 175,000 Sempra Energy 6.000% 02-01-13 103.54 181,190 5.8% 180,000 Transocean Sedco Forex 7.500% 04-15-31 126.40 227,515 5.9% PIPELINES - 0.5% $ 185,000 Duke Capital Corp., Senior Note 7.500% 10-01-09 $107.47 $ 198,822 7.0% PROPERTY/CASUALTY INSURANCE - 0.5% $ 205,000 Fund American Cos., Inc., Guaranteed Senior Note 5.875% 05-15-13 $101.06 $ 207,164 5.8% RETAIL - 0.4% $ 135,000 TJX Cos., Inc. 7.450% 12-15-09 $109.16 $ 147,370 6.8% TELECOM - 3.3% $ 180,000 AT&T Wireless 7.875% 03-01-11 $112.33 $ 202,186 7.0% 145,000 British Telecom PLC 8.875% 12-15-30 134.19 194,575 6.6% 170,000 Deutsche Telekom International Finance 8.000% 06-15-10 113.48 192,922 7.0% 170,000 France Telecom SA 7.750% 03-01-11 111.81 190,083 6.9% 190,000 Sprint Capital Corp. 6.125% 11-15-08 102.90 195,507 6.0% 325,000 Verizon Global Funding Corp. 7.750% 12-01-30 119.22 387,479 6.5% ----------- Total Corporate Bonds (identified cost, $10,359,685) $10,298,211 ----------- GOVERNMENT INTERESTS - 63.3% MORTGAGE-BACKED SECURITIES - 41.0% $ 142,326 FHLMC Gold Pool #A10798 5.500% 05-01-33 $ 99.36 $ 141,413 5.5% 346,899 FHLMC Gold Pool #A32600 5.500% 05-01-35 99.14 343,899 5.5% 104,450 FHLMC Gold Pool #C01646 6.000% 09-01-33 101.15 105,649 5.9% 66,597 FHLMC Gold Pool #C01702 6.500% 10-01-33 102.98 68,579 6.3% 222,251 FHLMC Gold Pool #C47318 7.000% 09-01-29 105.47 234,398 6.6% 219,554 FHLMC Gold Pool #C90493 6.500% 11-01-21 103.29 226,771 6.3% 32,701 FHLMC Gold Pool #E00903 7.000% 10-01-15 103.82 33,950 6.7% 368,531 FHLMC Gold Pool #E01425 4.500% 08-01-18 97.58 359,599 4.6% 204,670 FHLMC Gold Pool #G01842 4.500% 06-01-35 94.11 192,624 4.8% 220,047 FHLMC Gold Pool #G08088 6.500% 10-01-35 102.52 225,594 6.3% 270,678 FHLMC Gold Pool #N30514 5.500% 11-01-28 100.37 271,683 5.5% 318,654 FHLMC Pool #1B1291 4.401% 11-01-33 98.44 313,699 4.5% 930,823 FHLMC Pool #1G0233 5.018% 05-01-35 99.76 928,548 5.0% 48,131 FHLMC Pool #27663 7.000% 06-01-29 104.25 50,179 6.7% 315,533 FNMA Pool #253057 8.000% 12-01-29 106.92 337,358 7.5% 203,320 FNMA Pool #253925 7.000% 05-01-31 104.66 212,791 6.7% 226,189 FNMA Pool #254375 6.500% 07-01-22 103.37 233,816 6.3% 91,198 FNMA Pool #254845 4.000% 07-01-13 96.78 88,261 4.1% 89,958 FNMA Pool #254863 4.000% 08-01-13 96.78 87,062 4.1% 509,256 FNMA Pool #254865 4.500% 09-01-18 97.56 496,845 4.6% 598,624 FNMA Pool #254904 5.500% 10-01-33 99.30 594,421 5.5% 1,259,845 FNMA Pool #254915 4.500% 09-01-23 95.80 1,206,984 4.7% 401,910 FNMA Pool #255747 4.500% 04-01-25 95.58 384,159 4.7% 48,954 FNMA Pool #479477 6.000% 01-01-29 101.30 49,591 5.9% 52,776 FNMA Pool #489357 6.500% 03-01-29 103.01 54,366 6.3% 51,663 FNMA Pool #535332 8.500% 04-01-30 108.40 56,000 7.8% 351,606 FNMA Pool #535934 7.000% 05-01-31 104.42 367,151 6.7% 243,329 FNMA Pool #545317 5.500% 11-01-16 100.76 245,188 5.5% 291,854 FNMA Pool #545407 5.500% 01-01-32 99.34 289,942 5.5% 75,298 FNMA Pool #545782 7.000% 07-01-32 104.86 78,957 6.7% 540,873 FNMA Pool #576524 5.500% 01-01-29 99.30 537,100 5.5% 77,313 FNMA Pool #597396 6.500% 09-01-31 102.82 79,497 6.3% 40,712 FNMA Pool #634823 6.500% 03-01-32 102.80 41,853 6.3% 394,316 FNMA Pool #648465 6.500% 06-01-32 103.54 408,283 6.3% 402,541 FNMA Pool #663689 5.000% 01-01-18 99.11 398,938 5.0% 334,792 FNMA Pool #701043 4.056% 04-01-33 98.78 330,707 4.1% 210,540 FNMA Pool #725550 5.000% 05-01-19 99.11 208,656 5.0% 244,908 FNMA Pool #738630 5.500% 11-01-33 99.30 243,189 5.5% 428,115 FNMA Pool #739372 4.121% 09-01-33 97.45 417,199 4.2% 311,662 FNMA Pool #753189 4.000% 12-01-33 91.14 284,055 4.4% 373,735 FNMA Pool #755749 5.500% 01-01-29 99.36 371,333 5.5% 906,721 FNMA Pool #781893 4.500% 11-01-31 94.50 856,875 4.8% 296,932 FNMA Pool #807804 5.500% 03-01-35 99.07 294,179 5.6% 880,761 FNMA Pool #809324 4.880% 02-01-35 99.62 877,446 4.9% 473,466 FNMA Pool #849893 4.000% 11-01-23 93.39 442,192 4.3% 85,909 GNMA II Pool #2671 6.000% 11-20-28 102.37 87,947 5.9% 13,865 GNMA II Pool #2909 8.000% 04-20-30 106.59 14,779 7.5% 38,660 GNMA II Pool #2972 7.500% 09-20-30 104.72 40,484 7.2% 14,703 GNMA II Pool #2973 8.000% 09-20-30 106.59 15,672 7.5% 859,930 GNMA II Pool #3442 5.000% 09-20-33 98.45 846,606 5.1% 381,012 GNMA Pool #374892 7.000% 02-15-24 105.33 401,324 6.6% 73,458 GNMA Pool #376400 6.500% 02-15-24 104.72 76,928 6.2% 109,501 GNMA Pool #379982 7.000% 02-15-24 105.33 115,338 6.6% 348,463 GNMA Pool #393347 7.500% 02-15-27 105.38 367,212 7.1% 128,132 GNMA Pool #410081 8.000% 08-15-25 107.21 137,375 7.5% 38,389 GNMA Pool #427199 7.000% 12-15-27 105.20 40,386 6.7% 49,284 GNMA Pool #436214 6.500% 02-15-13 103.35 50,933 6.3% 34,423 GNMA Pool #442996 6.000% 06-15-13 102.71 35,355 5.8% 154,442 GNMA Pool #448490 7.500% 03-15-27 105.38 162,752 7.1% 97,366 GNMA Pool #458762 6.500% 01-15-28 104.74 101,981 6.2% 108,461 GNMA Pool #460726 6.500% 12-15-27 104.75 113,618 6.2% 42,724 GNMA Pool #463839 6.000% 05-15-13 102.71 43,881 5.8% 75,012 GNMA Pool #478072 6.500% 05-15-28 104.74 78,567 6.2% 28,131 GNMA Pool #488924 6.500% 11-15-28 104.74 29,464 6.2% 29,595 GNMA Pool #510706 8.000% 11-15-29 107.12 31,701 7.5% 114,801 GNMA Pool #581536 5.500% 06-15-33 100.82 115,740 5.5% U.S. GOVERNMENT AGENCIES - 6.8% ------------------------------- $ 535,000 FNMA 3.875% 11-17-08 $ 97.56 $ 521,957 4.0% 1,165,000 FNMA 5.000% 04-15-15 101.70 1,184,756 4.9% 625,000 FNMA 6.250% 05-15-29 118.19 738,663 5.3% 320,000 Tennessee Valley Authority 6.000% 03-15-13 107.46 343,868 5.6% U.S. TREASURIES - 15.5% ----------------------- $ 1,370,000 U.S. Treasury Bonds 4.375% 05-15-07 $ 99.95 $ 1,369,305 4.4% 200,000 U.S. Treasury Bonds 3.250% 08-15-08 97.26 194,524 3.3% 290,000 U.S. Treasury Bonds 5.000% 08-15-11 103.25 299,414 4.8% 350,000 U.S. Treasury Bonds 3.875% 02-15-13 96.96 339,350 4.0% 1,545,000 U.S. Treasury Bonds 7.250% 05-15-16 122.82 1,897,575 5.9% 1,890,000 U.S. Treasury Bonds 6.125% 11-15-27 120.70 2,281,290 5.1% ----------- Total Government Interests (identified cost, $26,246,032) $26,149,724 ----------- Total Investments (identified cost, $40,778,759)-- 98.1% $40,519,106 Other Assets, Less Liabilities-- 1.9% 769,006 ----------- Net Assets-- 100.0% $41,288,112 =========== FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB) ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2005 ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost of $40,778,759)(Note 1A) $ 40,519,106 Cash.................................... 446,838 Receivable for investments sold......... 25,524 Receivable for fund shares sold......... 82,728 Interest receivable..................... 334,384 Prepaid expenses........................ 6,813 ------------ Total assets.......................... $ 41,415,393 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 53,751 Distributions payable................... 33,916 Payable to affiliate for distribution fees 18,364 Transfer agent fee ..................... 3,489 Accrued expenses and other liabilities.. 17,761 ------------ Total liabilities..................... $ 127,281 ------------ NET ASSETS................................ $ 41,288,112 ============ NET ASSETS CONSIST OF: Proceeds from sales of shares (including the market value of securities received in exchange for fund shares and shares issued to shareholders in payment of distributions declared), less cost of shares reacquired................... $ 43,985,951 Accumulated undistributed net realized loss on investments (computed on the basis of identified cost)....................... (2,428,587) Unrealized depreciation on investments (computed on the basis of identified cost) (259,653) Distributions in excess of net investment income................................ (9,599) ------------ Net assets applicable to outstanding shares................................ $ 41,288,112 ============ SHARES OF BENEFICIAL INTEREST OUTSTANDING............................. 3,321,644 ============ NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST..................... $ 12.43 ============ STATEMENT OF OPERATIONS Year Ended December 31, 2005 ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1B): Interest income........................ $ 1,858,467 ------------ Expenses - Investment adviser fee (Note 3)........ $ 181,335 Administrator fee (Note 3)............. 28,208 Compensation of Trustees not employees of the investment adviser or administrator 13,563 Custodian fee (Note 1C)................ 63,454 Distribution expenses (Note 4)......... 100,742 Transfer and dividend disbursing agent fees 20,325 Printing............................... 3,834 Interest expense....................... 1,736 Shareholder communications............. 4,572 Audit services......................... 26,744 Legal services......................... 6,483 Registration costs..................... 19,226 Miscellaneous.......................... 5,376 ------------ Total expenses........................ $ 475,598 ------------ Deduct - Reduction of custodian fee (Note 1C):.. $ (10,394) Reduction of distribution expenses by principal underwriter (Note 4)..... $ (82,378) ------------ Total deductions....................... $ (92,772) ------------ Net expenses.......................... $ 382,826 ------------ Net investment income............... $ 1,475,641 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investment transactions (identified cost basis)................ $ (272,363) Change in unrealized depreciation of investments......................... (584,766) ------------ Net realized and unrealized loss of investments........................... $ (857,129) ------------ Net increase in net assets from operations........................... $ 618,512 ============ See notes to financial statements WRIGHT TOTAL RETURN BOND FUND (WTRB) ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------ STATEMENTS OF CHANGES IN NET ASSETS 2005 2004 ------------------------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income...................................................... $ 1,475,641 $ 1,429,546 Net realized gain (loss) on investments.................................... (272,363) 212,872 Change in unrealized depreciation of investments........................... (584,766) (319,493) --------------- --------------- Net increase in net assets resulting from operations..................... $ 618,512 $ 1,322,925 --------------- --------------- Distributions to shareholders (Note 2) - From net investment income................................................. $ (1,706,230) $ (1,696,335) --------------- --------------- Total distributions...................................................... $ (1,706,230) $ (1,696,335) --------------- --------------- Net increase (decrease) in net assets from fund share transactions (Note 5).. $ 4,162,659 $ (3,730,440) --------------- --------------- Net increase (decrease) in net assets.................................... $ 3,074,941 $ (4,103,850) NET ASSETS: At beginning of year......................................................... 38,213,171 42,317,021 --------------- --------------- At end of year............................................................... $ 41,288,112 $ 38,213,171 =============== =============== DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR........................................ $ (9,599) $ (9,672) =============== =============== See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB) ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------------------------------ FINANCIAL HIGHLIGHTS 2005 2004 2003 2002 2001 --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 12.770 $ 12.870 $ 13.010 $ 12.550 $ 12.630 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income(1) ................ $ 0.465 $ 0.453 $ 0.483 $ 0.639 $ 0.709 (2) Net realized and unrealized gain (loss).. (0.271) (0.011) (0.066) 0.461 (0.090)(2) --------- --------- --------- --------- --------- Total income from investment operations $ 0.194 $ 0.442 $ 0.417 $ 1.100 $ 0.619 --------- --------- --------- --------- --------- Less distributions: Distributions from investment income..... $ (0.534) $ (0.542) $ (0.557) $ (0.640) $ (0.699) --------- --------- --------- --------- --------- Total distributions.................... $ (0.534) $ (0.542) $ (0.557) $ (0.640) $ (0.699) --------- --------- --------- --------- --------- Net asset value, end of year................ $ 12.430 $ 12.770 $ 12.870 $ 13.010 $ 12.550 ========= ========= ========= ========= ========= Total return(3) ............................ 1.54% 3.52% 3.25% 9.03% 4.96% Ratios/Supplemental Data(1): Net assets, end of year (000 omitted).... $ 41,288 $ 38,213 $ 42,317 $ 39,404 $ 50,620 Ratio of net expenses to average net assets 0.98% 0.96% 0.95% 0.96% 0.96% Ratio of net expenses after custodian fee reduction to average net assets(4)(5) . 0.95% 0.95% 0.95% 0.95% 0.95% Ratio of net investment income to average net assets............................ 3.66% 3.58% 3.67% 4.92% 5.44% Portfolio turnover rate.................. 86% 64% 131% 68% 38% -------------------------------------------------------------------------------------------------------------------------------- (1)For the years ended December 31, 2005, 2004, 2003, 2002, and 2001, the operating expenses of the fund were reduced by an allocation of expenses to the investment adviser, and/or a reduction in distribution expenses by the distributor. Had such action not been undertaken, net investment income per share and the ratios would have been as follows: 2005 2004 2003 2002 2001 -------------------------------------------------------------------- Net investment income per share.......... $ 0.439 $ 0.429 $ 0.455 $ 0.621 $ 0.701 ========= ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses............................... 1.18% 1.18% 1.17% 1.09% 1.02% ========= ========= ========= ========= ========= Expenses after custodian fee reduction(4) 1.15% 1.17% 1.17% 1.08% 1.01% ========= ========= ========= ========= ========= Net investment income.................. 3.46% 3.36% 3.46% 4.78% 6.38% ========= ========= ========= ========= ========= --------------------------------------------------------------------------------------------------------------------------------- (2)Reporting guidelines require the funds to disclose the effects of implementing the change in accounting for amortization of premium and discount on debt securities. If adjustments were not made, net investment income per share would have been $0.716 and net realized and unrealized gain (loss) per share would have been $(0.097). (3)Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. (4)Custodian fees were reduced by credits resulting from cash balances the fund maintained with the custodian (Note 1C). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (5)Under a written agreement, Wright waives all or a portion of either its advisory and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 0.95% after custodian fee credits are applied. See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF) ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 Face Coupon Maturity Market Current Amount Description Rate Date Price Value Yield -------------------------------------------------------------------------------------------------------------------------------- (unaudited) MORTGAGE-BACKED SECURITIES - 98.6% $ 7,925 FHLMC Gold Balloon #M90724 5.500% 05-01-07 $100.65 $ 7,977 5.5% 167,733 FHLMC Gold Balloon #M90767 4.500% 11-01-07 99.39 166,718 4.5% 90,440 FHLMC Gold Balloon #M90802 4.000% 03-01-08 97.69 88,350 4.1% 203,290 FHLMC Gold Pool #C00778 7.000% 06-01-29 104.25 211,937 6.7% 274,545 FHLMC Gold Pool #C47318 7.000% 09-01-29 105.47 289,551 6.6% 199,434 FHLMC Gold Pool #E00678 6.500% 06-01-14 102.78 204,970 6.3% 204,361 FHLMC Gold Pool #E00721 6.500% 07-01-14 102.78 210,033 6.3% 172,318 FHLMC Gold Pool #G00812 6.500% 04-01-26 102.96 177,418 6.3% 1,028,576 FHLMC Pool #11636 5.000% 01-01-19 99.18 1,020,114 5.0% 142,402 FHLMC Pool #765183 5.818% 08-01-24 100.26 142,775 5.8% 70,514 FHLMC Pool #C00548 7.000% 08-01-27 104.36 73,591 6.7% 267,569 FHLMC Pool #D82572 7.000% 09-01-27 104.36 279,247 6.7% 612,061 FHLMC, Series 15, Class L 7.000% 07-25-23 103.74 634,929 6.7% 34,783 FNMA Pool #254227 5.000% 02-01-09 99.64 34,657 5.0% 32,586 FNMA Pool #254505 5.000% 11-01-09 99.64 32,468 5.0% 843,555 FNMA Pool #254686 5.500% 04-01-18 100.70 849,419 5.5% 650,558 FNMA Pool #254907 5.000% 10-01-18 99.11 644,736 5.0% 140,879 FNMA Pool #535131 6.000% 03-01-29 101.30 142,714 5.9% 195,539 FNMA Pool #545133 6.500% 12-01-28 103.13 201,666 6.3% 1,659,511 FNMA Pool #634187 6.000% 02-01-22 101.79 1,689,188 5.9% 134,180 FNMA Pool #663689 5.000% 01-01-18 99.11 132,979 5.0% 615,161 FNMA Pool #673315 5.500% 11-01-32 99.33 611,022 5.5% 179,185 FNMA Pool #701043 4.056% 04-01-33 98.78 176,998 4.1% 445,135 FNMA Pool #729950 6.000% 12-01-33 101.08 449,922 5.9% 1,258,892 FNMA Pool #730936 4.500% 08-01-33 94.56 1,190,442 4.8% 65,433 FNMA Pool #733750 6.310% 10-01-32 102.17 66,853 6.2% 745,126 FNMA Pool #801357 5.500% 08-01-34 99.33 740,113 5.5% 964,879 FNMA Pool #816108 5.500% 05-01-35 99.07 955,934 5.6% 433,610 FNMA Pool #816468 5.000% 03-01-20 98.97 429,130 5.1% 688,058 FNMA Pool #821574 6.000% 06-01-35 100.98 694,795 5.9% 4,368 GNMA II Pool #1596 9.000% 04-20-21 108.94 4,759 8.3% 77,333 GNMA II Pool #2268 7.500% 08-20-26 104.96 81,168 7.1% 7,075 GNMA II Pool #2855 8.500% 12-20-29 107.70 7,619 7.9% 691,529 GNMA II Pool #3259 5.500% 07-20-32 100.58 695,537 5.5% 430,758 GNMA II Pool #3284 5.500% 09-20-32 100.58 433,255 5.5% 117,167 GNMA II Pool #601135 6.310% 09-20-32 103.07 120,761 6.1% 134,798 GNMA II Pool #601255 6.310% 01-20-33 103.04 138,897 6.1% 114,545 GNMA II Pool #608120 6.310% 01-20-33 103.04 118,028 6.1% 51,208 GNMA II Pool #723 7.500% 01-20-23 105.40 53,972 7.1% 41 GNMA Pool #009106 8.250% 05-15-06 101.15 41 8.2% 186 GNMA Pool #012526 8.000% 11-15-06 100.98 188 7.9% 325,186 GNMA Pool #081161 5.500% 11-20-34 100.25 325,996 5.5% 6,111 GNMA Pool #172558 9.500% 08-15-16 109.75 6,707 8.7% 2,583 GNMA Pool #176992 8.000% 11-15-16 106.80 2,759 7.5% 2,768 GNMA Pool #177784 8.000% 10-15-16 106.80 2,956 7.5% 12,925 GNMA Pool #192357 8.000% 04-15-17 107.05 13,836 7.5% 19,621 GNMA Pool #194057 8.500% 04-15-17 108.23 21,234 7.9% 5,380 GNMA Pool #194287 9.500% 03-15-17 110.07 5,922 8.6% 1,587 GNMA Pool #196063 8.500% 03-15-17 108.23 1,717 7.9% 7,915 GNMA Pool #211231 8.500% 05-15-17 108.23 8,566 7.9% 4,704 GNMA Pool #212601 8.500% 06-15-17 108.23 5,091 7.9% 4,456 GNMA Pool #220917 8.500% 04-15-17 108.23 4,822 7.9% 5,240 GNMA Pool #223133 9.500% 07-15-17 110.07 5,767 8.6% 9,123 GNMA Pool #223348 10.000% 08-15-18 111.75 10,195 8.9% 13,495 GNMA Pool #228308 10.000% 01-15-19 111.80 15,088 8.9% 3,067 GNMA Pool #230223 9.500% 04-15-18 110.34 3,384 8.6% 1,047 GNMA Pool #247473 10.000% 09-15-18 104.79 1,097 9.5% 3,763 GNMA Pool #247872 10.000% 09-15-18 111.75 4,206 9.0% 4,626 GNMA Pool #251241 9.500% 06-15-18 110.34 5,105 8.6% 7,882 GNMA Pool #260999 9.500% 09-15-18 110.34 8,697 8.6% 6,037 GNMA Pool #263439 10.000% 02-15-19 111.80 6,750 8.9% 1,535 GNMA Pool #265267 9.500% 08-15-20 110.79 1,700 8.6% 1,997 GNMA Pool #266983 10.000% 02-15-19 111.80 2,232 8.9% 3,289 GNMA Pool #273690 9.500% 08-15-19 110.58 3,637 8.6% 3,890 GNMA Pool #286556 9.000% 03-15-20 109.20 4,247 8.2% 5,370 GNMA Pool #301366 8.500% 06-15-21 108.92 5,849 7.8% 6,404 GNMA Pool #302933 8.500% 06-15-21 108.92 6,975 7.8% 6,060 GNMA Pool #306693 8.500% 09-15-21 108.92 6,600 7.8% 11,766 GNMA Pool #308792 9.000% 07-15-21 109.34 12,865 8.2% 3,678 GNMA Pool #314222 8.500% 04-15-22 109.04 4,011 7.8% 8,927 GNMA Pool #315187 8.000% 06-15-22 107.08 9,559 7.5% 14,762 GNMA Pool #315754 8.000% 01-15-22 107.08 15,808 7.5% 15,749 GNMA Pool #316240 8.000% 01-15-22 107.08 16,864 7.5% 30,329 GNMA Pool #319441 8.500% 04-15-22 109.04 33,070 7.8% 11,075 GNMA Pool #325165 8.000% 06-15-22 107.08 11,859 7.5% 16,004 GNMA Pool #335950 8.000% 10-15-22 107.08 17,138 7.5% 250,618 GNMA Pool #346987 7.000% 12-15-23 105.33 263,973 6.6% 134,279 GNMA Pool #352001 6.500% 12-15-23 104.75 140,658 6.2% 60,647 GNMA Pool #352110 7.000% 08-15-23 105.33 63,878 6.6% 2,381,885 GNMA Pool #3556 5.500% 05-20-34 100.47 2,393,042 5.5% 100,390 GNMA Pool #368238 7.000% 12-15-23 105.33 105,740 6.6% 52,052 GNMA Pool #372379 8.000% 10-15-26 107.21 55,804 7.5% 104,930 GNMA Pool #410215 7.500% 12-15-25 105.56 110,761 7.1% 26,361 GNMA Pool #414736 7.500% 11-15-25 105.56 27,826 7.1% 79,507 GNMA Pool #420707 7.000% 02-15-26 105.30 83,722 6.6% 42,389 GNMA Pool #421829 7.500% 04-15-26 105.46 44,702 7.1% 20,069 GNMA Pool #431036 8.000% 07-15-26 107.21 21,516 7.5% 73,970 GNMA Pool #431612 8.000% 11-15-26 107.21 79,301 7.5% 23,075 GNMA Pool #442190 8.000% 12-15-26 107.21 24,738 7.5% 23,843 GNMA Pool #449176 6.500% 07-15-28 104.74 24,973 6.2% 146,049 GNMA Pool #458762 6.500% 01-15-28 104.74 152,971 6.2% 58,720 GNMA Pool #462623 6.500% 03-15-28 104.74 61,504 6.2% 114,616 GNMA Pool #469615 6.500% 10-15-28 104.74 120,048 6.2% 1,920,431 GNMA Pool #471369 5.500% 05-15-33 100.82 1,936,125 5.5% 180,737 GNMA Pool #472028 6.500% 05-15-28 104.74 189,304 6.2% 148,300 GNMA Pool #475149 6.500% 05-15-13 103.35 153,263 6.3% 318,634 GNMA Pool #486482 6.500% 09-15-28 104.74 333,736 6.2% 147,311 GNMA Pool #489377 6.375% 03-15-29 104.18 153,469 6.1% 215,476 GNMA Pool #492705 6.500% 02-15-29 104.67 225,549 6.2% 65,733 GNMA Pool #538314 7.000% 02-15-32 105.01 69,028 6.7% 144,603 GNMA Pool #570141 6.500% 12-15-31 104.55 151,184 6.2% 336,343 GNMA Pool #587080 6.500% 05-15-32 104.52 351,558 6.2% 1,028,694 GNMA Pool #595606 6.000% 11-15-32 102.55 1,054,883 5.9% 66,242 GNMA Pool #602377 4.500% 06-15-18 98.15 65,018 4.6% 762,829 GNMA Pool #603250 5.500% 04-15-34 100.72 768,309 5.5% 57,349 GNMA Pool #603377 4.500% 01-15-18 98.15 56,290 4.6% 1,051,365 GNMA Pool #608639 5.500% 07-15-24 100.68 1,058,463 5.5% 289,578 GNMA Pool #609452 4.000% 08-15-33 92.28 267,216 4.3% 664,454 GNMA Pool #616829 5.500% 01-15-25 101.85 676,719 5.4% 768,261 GNMA Pool #619718 6.000% 05-15-34 102.44 787,007 5.9% 891,662 GNMA Pool #631623 5.500% 08-15-34 100.72 898,067 5.5% 904,004 GNMA Pool #640225 5.500% 04-15-35 100.72 910,502 5.5% 2,069,523 GNMA Pool #640940 5.500% 05-15-35 100.72 2,084,398 5.5% 97,947 GNMA Pool #780429 7.500% 09-15-26 105.51 103,341 7.1% 186,377 GNMA Pool #780845 6.500% 08-15-28 104.74 195,215 6.2% 113,437 GNMA Pool #781029 6.500% 05-15-29 104.72 118,789 6.2% 1,689,156 GNMA Pool #781032 6.500% 04-15-29 104.72 1,768,845 6.2% 427,016 GNMA Series 2002-7, Class PG 6.500% 01-20-32 103.03 439,972 6.3% GOVERNMENT INTERESTS - 1.6% $ 200,000 FHLMC 3.550% 01-06-06 $99.95 $ 199,901 3.6% 330,000 FHLMC 4.110% 01-24-06 99.74 329,134 4.1% ----------- Total Investments (identified cost, $32,999,778)-- 100.2% $33,937,622 Other Assets, Less Liabilities-- (0.2%) (76,710) ----------- Net Assets-- 100.0% $33,860,912 =========== FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF) ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2005 ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost of ($32,999,778) (Note 1A) $ 33,937,622 Cash.................................... 112,580 Receivable for investments sold......... 1,050 Receivable for fund shares sold......... 62,507 Receivable from investment adviser...... 25,154 Interest receivable..................... 159,400 Prepaid expenses........................ 10,342 ------------ Total assets.......................... $ 34,308,655 ------------ LIABILITIES: Payable for investments purchased....... $ 327,142 Payable for fund shares reacquired...... 45,565 Distributions payable................... 52,732 Payable to affiliate for Trustees' fees. 38 Transfer agent fee ..................... 3,412 Accrued expenses and other liabilities.. 18,854 ------------ Total liabilities..................... $ 447,743 ------------ NET ASSETS................................ $ 33,860,912 ============ NET ASSETS CONSIST OF: Proceeds from sales of shares (including the market value of securities received in exchange for fund shares and shares issued to shareholders in payment of distributions declared), less cost of shares reacquired................... $ 32,853,727 Accumulated undistributed net realized gain on investments (computed on the basis of identified cost)....................... 19,099 Unrealized appreciation on investments (computed on the basis of identified cost) 937,844 Accumulated undistributed net investment income................................. 50,242 ------------ Net assets applicable to outstanding shares................................ $ 33,860,912 ============ SHARES OF BENEFICIAL INTEREST OUTSTANDING........................... 3,524,860 ============ NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................... $ 9.61 ============ STATEMENT OF OPERATIONS Year Ended December 31, 2005 ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1B): Interest income........................ $ 1,789,827 ------------ Expenses - Investment adviser fee (Note 3)........ $ 158,813 Administrator fee (Note 3)............. 31,762 Compensation of Trustees not employees of the investment adviser or administrator 13,407 Custodian fee (Note 1C)................ 67,946 Distribution expenses (Note 4)......... 88,229 Transfer and dividend disbursing agent fees 19,314 Printing............................... 2,790 Interest expense....................... 4,243 Shareholder communications............. 3,387 Audit services......................... 26,678 Legal services......................... 5,610 Registration costs..................... 27,478 Miscellaneous.......................... 5,585 ------------ Total expenses........................ $ 455,242 ------------ Deduct - Reduction of custodian fee (Note 1C):.. $ (6,679) Allocation of expenses to investment adviser (Note 3)........... (25,154) Reduction of distribution expenses by principal underwriter (Note 4)..... (88,229) ------------ Total deductions...................... $ (120,062) ------------ Net expenses.......................... $ 335,180 ------------ Net investment income............... $ 1,454,647 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions (identified cost basis)................ $ 404,721 Change in unrealized depreciation of investments......................... (1,232,166) ------------ Net realized and unrealized loss of investments........................ $ (827,445) ------------ Net increase in net assets from operations........................... $ 627,202 ============ See notes to financial statements WRIGHT CURRENT INCOME FUND (WCIF) ------------------------------------------------------------------------------- Year Ended December 31, ---------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2005 2004 ---------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income...................................................... $ 1,454,647 $ 1,366,512 Net realized gain on investments........................................... 404,721 1,091,575 Change in unrealized depreciation on investments........................... (1,232,166) (1,418,533) -------------- -------------- Net increase in net assets resulting from operations..................... $ 627,202 $ 1,039,554 -------------- -------------- Distributions to shareholders (Note 2) - From net investment income................................................. $ (1,558,214) $ (1,491,857) From net realized gain..................................................... (69,145) (1,243,047) -------------- -------------- Total distributions...................................................... $ (1,627,359) $ (2,734,904) -------------- -------------- Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (151,834) $ 376,737 -------------- -------------- Net decrease in net assets............................................... $ (1,151,991) $ (1,318,613) NET ASSETS: At beginning of year......................................................... 35,012,903 36,331,516 -------------- -------------- At end of year............................................................... $ 33,860,912 $ 35,012,903 ============== ============== UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR................................................. $ 50,242 $ 6,318 ============== ============== See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF) ------------------------------------------------------------------------------- Year Ended December 31, ---------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2005 2004 2003 2002 2001(2) ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 9.890 $ 10.490 $ 10.810 $ 10.580 $ 10.460 --------- --------- --------- --------- --------- Income (loss) from investment operations: Net investment income(1) ............... $ 0.400 $ 0.447 $ 0.417 $ 0.565 $ 0.616 Net realized and unrealized gain (loss).. (0.230) (0.112) (0.235) 0.231 0.120 --------- --------- --------- --------- --------- Total income from investment operations $ 0.170 $ 0.335 $ 0.182 $ 0.796 $ 0.736 --------- --------- --------- --------- --------- Less distributions: Distributions from investment income..... $ (0.430) $ (0.482) $ (0.502) $ (0.555) $ (0.616) Distributions from capital gains......... (0.020) (0.453) - - -- Tax return of capital.................... - - - (0.011) -- --------- --------- --------- --------- --------- Total distributions.................. $ (0.450) $ (0.935) $ (0.502) $ (0.566) $ (0.616) --------- --------- --------- --------- --------- Net asset value, end of year................ $ 9.610 $ 9.890 $ 10.490 $ 10.810 $ 10.580 ========= ========= ========= ========= ========= Total return(3) ............................ 1.76% 3.29% 1.73% 7.70% 7.18% Ratios/Supplemental Data(1): Net assets, end of year (000 omitted).... $ 33,861 $ 35,013 $ 36,332 $ 59,077 $54,966 Ratio of net expenses to average net assets 0.97% 0.97% 0.95% 0.97%(5) 0.95%(5) Ratio of net expenses after custodian fee reduction to average net assets(6) (7) 0.95% 0.95% 0.95% 0.95%(5) -- Interest expense......................... 0.01% 0.02% 0.01% -- -- Ratio of net investment income to average net assets................. 4.12% 4.29% 4.43% 5.28% 5.83% Portfolio turnover rate ................. 103% 27% 20% 36%(4) 4%(4) --------------------------------------------------------------------------------------------------------------------------------- (1)For the years ended December 31, 2005, 2004, 2003, 2002, and 2001, the operating expenses of the fund were reduced by an allocation of expenses to the investment adviser or a reduction in distribution expense by the distributor. Had such action not been undertaken, net investment income per share and the ratios would have been as follows: 2005 2004 2003 2002 2001 -------------------------------------------------------------------- Net investment income per share........ $ 0.369 $ 0.410 $ 0.401 $ 0.555 $ 0.609 ========= ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses ............................ 1.30% 1.28% 1.12% 1.06%(5) 1.02%(5) ========= ========= ========= ========= ========= Expenses after custodian fee reduction 1.28%(7) 1.25%(7) 1.12% 1.04%(5)(7) -- ========= ========= ========= ========= ========= Interest expense..................... 0.01% 0.02% 0.01% -- -- ========= ========= ========= ========= ========= Net investment income................ 3.80% 3.99% 4.26% 5.19% 5.76% ========= ========= ========= ========= ========= --------------------------------------------------------------------------------------------------------------------------------- (2 Certain of the per share data are based on average shares outstanding. (3)Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. (4)Represents portfolio turnover rate at the fund's corresponding portfolio (Note 1). (5)Includes each fund's share of its corresponding portfolio's allocated expenses (Note 1). (6)Under a written agreement in effect for the current fiscal year, Wright waives all or a portion of either its advisory and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 0.95% after custodian fee credits are applied. (7)Custodian fees were reduced by credits resulting from cash balances the fund and/or the portfolio maintained with the custodian (Note 1C). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. See notes to financial statements
WRIGHT MANAGED INCOME TRUST ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (1)SIGNIFICANT ACCOUNTING POLICIES The Wright Managed Income Trust (the Trust), issuer of Wright U.S. Government Near Term Fund (WNTB) series, Wright Total Return Bond Fund (WTRB) series, and Wright Current Income Fund (WCIF) series (collectively, the Funds), is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end, management investment company. WNTB seeks a high level of income, which is normally above that available from short-term money market instruments or funds. WTRB seeks a superior rate of total return, consisting of a high level of income plus price appreciation. WCIF seeks a high level of current income consistent with moderate fluctuations of principal. Prior to December 20, 2002, WNTB and WCIF invested all of their investable assets in interests in a separate corresponding open-end management investment company (a Portfolio), a New York Trust, having the same investment objective as its corresponding fund. Subsequent to December 20, 2002, the Funds invest directly in securities rather than through the Portfolio and maintain the same investment objective. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. A. Investment Valuations - Investments for which market quotations are readily available are valued at current market value as furnished by a pricing service. Investments for which valuations are not readily available will be appraised at their fair value as determined in good faith by or at the direction of the Trustees. Short-term obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. B. Interest Income - Interest income consists of interest accrued and discount earned (including both original issue and market discount) and amortization of premium or discount on long-term debt securities. The income is accrued ratably to the date of maturity on the investments of the funds. C. Expense Reduction - Investors Bank & Trust Company (IBT) serves as custodian to the Funds. Pursuant to the custodian agreement, IBT receives a fee reduced by credits which are determined based on the average daily cash balance the Funds maintain with IBT. All credit balances used to reduce the Fund's custodian fees are reported as a reduction of total expenses on the Statement of Operations. D. Federal Taxes - The Trust's policy is to comply with the provisions of the Internal Revenue Code (the Code) available to regulated investment companies and to distribute to shareholders each year all of its taxable income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is necessary. At December 31, 2005, the Trust, for federal income tax purposes, had capital loss carryovers of $1,584,491 (WNTB) and $2,024,032 (WTRB) which will reduce taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distribution to shareholders which would otherwise be necessary to relieve the respective fund of any liability for federal income or excise tax. Pursuant to the Code, such capital loss carryovers will expire as follows: 12/31 WNTB WTRB WCIF ------------------------------------------------------------------------------- 2006 $ 37,825 - - 2007 $297,581 - - 2008 $273,806 $1,244,473 - 2010 - 508,606 - 2012 $505,639 - - 2013 $469,640 270,953 - At December 31, 2005, net capital losses of $9,094 for WNTB, $136,116 for WTRB and $38,352 for WCIF, attributable to security transactions incurred after October 31, 2005, are treated as arising on the first day of the fund's current taxable year. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. F. Other - Investment transactions are accounted for on the date the investments are purchased or sold. (2) DISTRIBUTIONS Each fund's policy is to determine net income once daily, as of the close of the New York Stock Exchange and the net income so determined is substantially declared as a dividend to shareholders of record at the time of such determination. Distributions of realized capital gains are made at least annually. Shareholders may reinvest capital gain distributions in additional shares of the same fund at the net asset value as of the ex-dividend date. Dividends may be reinvested in additional shares of the same fund at the net asset value as of the payable date. The Trust requires that differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary overdistributions for financial statement purposes be classified as distributions in excess of net investment income or accumulated net realized gains. Distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting for certain items may result in reclassification of these items. During the year ended December 31, 2005, the following amounts were reclassified due to differences between book and tax accounting created primarily by the deferral of certain losses for tax purposes and character reclassifications between net investment income and net realized capital gain. Accumulated Undistributed Undistributed Net Net Paid-In Realized Gain Investment Capital on Investments Income ------------------------------------------------------------------------------- WTRB $ - $(230,662) $230,662 WCIF (50,000) (97,491) 147,491 WNTB - (136,939) 136,939 ------------------------------------------------------------------------------- The tax character of distributions paid for the year ended December 31, 2005 and December 31, 2004 was as follows: Year Ended 12/31/05 WTRB WCIF WNTB ------------------------------------------------------------------------------- Distributions declared from: Ordinary income $1,706,230 $1,558,214 $605,643 Capital gains - 69,145 - ------------------------------------------------------------------------------- Year Ended 12/31/04 WTRB WCIF WNTB ------------------------------------------------------------------------------- Distributions declared from: Ordinary income $1,696,335 $1,491,857 $735,924 Capital gains - $1,243,047 - ------------------------------------------------------------------------------- As of December 31, 2005, the components of distributable earnings (accumulated losses) on a tax basis were as follows: WTRB WCIF WNTB ------------------------------------------------------------------------------- Undistributed income $ 24,317 $ 50,242 $ 98 Undistributed capital gains - 57,451 - Capital loss carryforward (2,024,032) - (1,584,491) Unrealized gains/(loss) (528,092) 937,844 (310,863) Other temporary differences (170,032) (38,352) (9,094) ------------------------------------------------------------------------------- (3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as investment adviser to the funds pursuant to the respective Investment Advisory Contracts. Wright furnishes each fund with investment management, investment advisory, and other services. For its services, Wright is compensated based upon a percentage of average daily net assets which rate is adjusted as average daily net assets exceed certain levels. For the year ended December 31, 2005, the effective annual rate for WNTB, WCIF, and WTRB was 0.45 %. Under a written agreement, Wright waives a portion of its advisory fee and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 0.95% after custodian fee reductions, if any. Accordingly, Wright made a reduction of its investment adviser fee by $44,937 on behalf of WNTB. In addition, Wright has been allocated expenses of $22,470 and $25,154 on behalf of WNTB and WCIF, respectively. The Trust also has engaged Eaton Vance Management (Eaton Vance) to act as administrator of the Trust. Under the Administration Agreement, Eaton Vance is responsible for managing the business affairs of the Trust and is compensated based upon a percentage of average daily net assets which rate is reduced as average daily net assets exceed certain levels. For the year ended December 31, 2005, the effective annual rate was 0.09% for WNTB, 0.07% for WTRB, and 0.09% for WCIF. Certain of the Trustees and officers of the Trust are directors/trustees and/or officers of the above organizations. Except as to Trustees of the Trust who are not employees of Eaton Vance or Wright, Trustees and officers received remuneration for their services to the Trust out of fees paid to Eaton Vance and Wright. (4) DISTRIBUTION EXPENSES The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule 12b-1 of the Investment Company Act of 1940. The Plan provides that each of the funds will pay Wright Investors' Service Distributors, Inc. (Principal Underwriter), a wholly-owned subsidiary of Winthrop, at an annual rate of 0.25% of the average daily net assets of each fund for activities primarily intended to result in the sale of each fund's shares. Pursuant to a written agreement (Note 3), the Principal Underwriter made a reduction of its fee by $49,928, $82,378, and $88,229 for the benefit of WNTB, WTRB and WCIF, respectively. In addition, the Trustees have adopted a service plan (the Service Plan) which allows the funds to reimburse the Principal Underwriter for payments to intermediaries for providing account administration and personal and account maintenance services to their customers who are beneficial owners of each fund's shares. The amount of service fee payable under the Service Plan may not exceed 0.25% annually of each fund's average daily net assets. For the year ended December 31, 2005, the funds did not accrue or pay any service fees. (5) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in fund shares were as follows: Year Ended Year Ended December 31, 2005 December 31, 2004 ------------------------- -------------------------- Shares Amount Shares Amount --------------------------------------------------------------------------------------------------------------------------- Wright U.S. Government Near Term Fund-- Sold................................................. 308,569 $ 3,047,973 499,602 $ 5,040,521 Issued to shareholders in payment of distributions declared........................................... 47,224 465,559 52,428 529,329 Redemptions.......................................... (618,843) (6,107,292) (1,079,475) (10,918,238) ----------- -------------- ----------- -------------- Net decrease..................................... (263,050) $ (2,593,760) (527,445) $ (5,348,388) =========== ============== =========== ============== Wright Total Return Bond Fund-- Sold................................................. 652,090 $ 8,236,968 673,399 $ 8,596,949 Issued to shareholders in payment of distributions declared........................................... 106,865 1,346,413 108,451 1,384,717 Redemptions.......................................... (430,129) (5,420,722) (1,077,968) (13,712,106) ----------- -------------- ----------- -------------- Net increase/(decrease).......................... 328,826 $ 4,162,659 (296,118) $ (3,730,440) =========== ============== =========== ============== Wright Current Income Fund-- Sold................................................. 1,064,067 $ 10,372,941 1,231,990 $ 12,684,308 Issued to shareholders in payment of distributions declared .......................................... 102,779 998,494 159,979 1,619,251 Redemptions.......................................... (1,183,110) (11,523,269) (2,153,390) (22,192,828) Issued to Wright U.S. Govt. Intermediate Fund shareholders....................................... - _ 837,488 8,266,006 ----------- -------------- ----------- -------------- Net increase /(decrease)......................... (16,264) $ (151,834) 76,067 $ 376,737 =========== ============== =========== ==============
(6) INVESTMENT TRANSACTIONS The Trust invests primarily in debt securities. The ability of the issuers of the debt securities held by the Trust to meet their obligations may be affected by economic developments in a specific industry or municipality. Purchases and sales and maturities of investments, other than short-term obligations, were as follows: Year Ended December 31, 2005 ---------------------------------- WNTB WTRB WCIF ----------------------------------------------------------------------------- Purchases-- Non-U.S. Obligations - $ 3,147,172 - ========== ========== ========== U.S. Gov't Obligations $21,366,295 $34,730,967 $35,487,035 ========== ========== =========== Sales-- Non-U.S. Obligations $ 1,823,890 $ 5,396,814 - ========== =========== ========== U.S. Gov't Obligations $22,165,444 $28,559,312 $35,699,792 =========== =========== ========== ---------------------------------------------------------------------------- (7)FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost and unrealized appreciation (depreciation) of the investment securities owned at December 31, 2005, as computed on a federal income tax basis, are as follows: WNTB WTRB WCIF ------------------------------------------------------------------------------ Aggregate cost $18,624,132 $41,047,198 $32,999,778 =========== =========== =========== Gross unrealized appreciation - 1,688 1,293,051 Gross unrealized depreciation (310,863) (529,780) (355,207) ----------- ----------- ----------- Net unrealized appreciation/ (depreciation) $ (310,863) $ (528,092) $ 937,844 =========== =========== =========== ------------------------------------------------------------------------------- (8) LINE OF CREDIT The funds participate with other funds managed by Wright in a committed $10 million unsecured line of credit agreement with a bank. The funds may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each fund based on its borrowings at an amount above the federal funds rate. In addition, a fee computed at an annual rate of 0.10% on the average daily unused portion of the $10 million line of credit, is allocated among the participating funds at the end of each quarter. The funds did not have significant borrowings or allocated fees during the year ended December 31, 2005. (9) TRANSFER OF NET ASSETS Prior to the opening of business on December 29, 2004, the Wright Current Income Fund (WCIF) acquired the net assets of Wright U.S. Government Intermediate Fund (WUSGI) pursuant to an Agreement and Plan of Reorganization dated December 20, 2004. In accordance with the agreement, WCIF issued 837,488 shares having a value of $8,266,006. As a result, WCIF issued 1.303 shares for each share of WUSGI. The transaction was structured for tax purposes to qualify as a tax free reorganization under the Internal Revenue Code. WUSGI's net assets at the date of the transaction was $8,266,006, including $(41,372) of unrealized depreciation. Directly after the merger, the combined net assets of WCIF were $34,959,687 with a net asset value of $9.87. WRIGHT MANAGED INCOME TRUST ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees and Shareholders of The Wright Managed Income Trust: We have audited the accompanying statements of assets and liabilities of the Wright Managed Income Trust (the "Trust"), comprising the Wright U.S. Government Near Term Fund, Wright Total Return Bond Fund, and Wright Current Income Fund (the "Funds"), including the portfolios of investments as of December 31, 2005, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds' are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of the securities owned at December 31, 2005 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds constituting the Wright Managed Income Trust at December 31, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts February 21, 2006 MANAGEMENT AND ORGANIZATION (unaudited) ------------------------------------------------------------------------------- Fund Management. The Trustees of the Trust are responsible for the overall management and supervision of the affairs of the Trust. The Trustees and principal officers of the Trusts are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. The business address of each Trustee and principal officer is 255 State Street, Boston, Massachusetts 02109. Definitions: ----------- "WISDI" means Wright Investors' Service Distributors, Inc., the principal underwriter of the fund. "Winthrop" means The Winthrop Corporation, a holding company which owns all of the shares of Wright and WISDI. Number of Other Trustee/ Term* Portfolios in Director/ Name, Position(s) of Office Fund Complex Partnership/ Address with the and Length Principal Occupation Overseen Employment and Age [Trust/Fund] of Service During Past Five Years By Trustee Positions Held ----------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEES Peter M. Donovan** President President Chairman and Chief Executive Officer 6 Director of Age 62 and and Trustee and Director of Wright and Winthrop; Wright and Trustee since Chief Investment Officer and Chairman Winthrop Inception of the Investment Committee; Director of WISDI; President of 6 funds managed by Wright ----------------------------------------------------------------------------------------------------------------------------------- A.M. Moody, III*** Vice President Vice President President, AM Moody Consulting LLC 6 None Age 69 and of the Trusts (compliance and administrative services Trustee since December, to the mutual fund industry)since 1990; Trustee of July 1,2003;President of WISDI since the Trusts since 2005; Vice President of 6 funds January, 1990 managed by Wright; Retired Senior Vice President of Wright and Winthrop; Retired President of WISDI June 30, 2003 to May 2005 --------------------------------------------------------------------------------------------------------------------------------- * Trustees serve an indefinite term. Officers are elected annually. ** Mr. Donovan is an interested person of the Trusts because of his positions as President of the Trusts, Chairman, Chief Executive Officer and Director of Wright and Winthrop and Vice President, Treasurer and a Director of WISDI. *** Mr. Moody is an interested person of the Trusts because of his positions as Vice President of the Trusts and his affiliation as a consultant to Wright. ----------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES James J. Clarke Trustee Trustee President, Clarke Consulting (bank 6 None Age 64 since consultant - financial management and December, 2002 strategic planning); Director - Chester Valley Bancorp, Inc., Downingtown, PA since April 2004, Director - Reliance Bank, Altoona PA since August 1995; Director - First Financial Bank, Downingtown, PA since April 2004, Associate Professor of Finance at Villanova University 1972-2002 ----------------------------------------------------------------------------------------------------------------------------------- Dorcas R. Hardy Trustee Trustee President, Dorcas R. Hardy & Associates 6 None Age 59 since (a public policy and government relations December, 1998 firm) Spotsylvania, VA; Director, The Options Clearing Corporation ----------------------------------------------------------------------------------------------------------------------------------- Richard E. Taber Trustee Trustee since Chairman and Chief Executive 6 None Age 57 March, 1997 Officer of First County Bank, Stamford, CT ---------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES Judith R. Corchard Vice President Vice President Executive Vice President, Investment Age 67 of the Trusts Management; Senior Investment Officer since June,1998 and Director of Wright and Winthrop; Vice President of 6 funds managed by Wright, fund Chief Compliance Officer since 2004 ----------------------------------------------------------------------------------------------------------------------------------- Janet E. Sanders Secretary Secretary of the Vice President Eaton Vance Management, Age 70 and Assistant Trusts since Administrator for the funds; Officer of Treasurer March 17, 2005, 6 funds managed by Wright and 161 Ass't. Secretary funds managed by Eaton Vance and 1983 to 2005, its affiliates Ass't. Treasurer since 1989 ----------------------------------------------------------------------------------------------------------------------------------- Barbara E. Campbell Treasurer Treasurer of Vice President Eaton Vance Management; Age 48 the Trusts Administrator for the funds; Officer of since 2005 6 funds managed by Wright and 161 funds managed by Eaton Vance and its affiliates ----------------------------------------------------------------------------------------------------------------------------------- * Trustees serve an indefinite term. Officers are elected annually. Additional information about the Funds' Trustees is available in the Statement of Additional Information, which is available without charge, upon request, by calling 1-800-888-9471.
BOARD OF TRUSTEES ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT IN EVALUATING THE INVESTMENT ADVISORY CONTRACTS, THE INDEPENDENT TRUSTEES MET SEPARATELY FROM THE INTERESTED TRUSTEES AND REVIEWED AND CONSIDERED MATERIALS FURNISHED BY WRIGHT, INCLUDING INFORMATION REGARDING WRIGHT, ITS AFFILIATES AND PERSONNEL, OPERATIONS AND FINANCIAL CONDITION. THE INDEPENDENT TRUSTEES DISCUSSED WITH REPRESENTATIVES OF WRIGHT THE PORTFOLIO MANAGEMENT AND OPERATIONS OF THE FUNDS AND THE CAPABILITIES OF WRIGHT TO PROVIDE ADVISORY AND OTHER SERVICES TO EACH FUND. THE INDEPENDENT TRUSTEES CONSIDERED, AMONG OTHER THINGS, THE FOLLOWING: EQUITY FUNDS AND INCOME FUNDS ------------------------------------------------------------------------------- o Whether the advisory arrangements are fair and reasonable relative to possible alternative arrangements. The Trustees concluded that the advisory fees paid by the funds are reasonable. o Whether advisory services are being provided as agreed to. The Trustees concluded that the services being provided by the adviser are as agreed to in the advisory contract. o Whether compensation paid by a Fund to the adviser is fair and reasonable in relation to the services provided and the charges by other advisers for similar services. The Trustees concluded that the compensation paid by the funds to the adviser is in the average range of compensation charged by other advisers for similar services and is reasonable. o Fees and expense ratios compared to similar funds. The Trustees concluded that the expense ratios of the funds are lower than the average for similar funds. o Performance and relationship of fees and performance. The Trustees concluded that in most cases the performance results of the funds were at least in the mid-range of similar funds while their expense ratios were generally lower. o Analysis of each Fund's profitability to the adviser. The Trustees concluded that the profitability to the adviser of each fund was reasonable and not excessive. o The adviser's financial condition and the overall organization of the adviser. o Sales and redemption data. The Trustees reviewed the information which had been provided to them relating to sales and redemptions and Wright's marketing strategies to try to increase assets under management. o The economic outlook and the general investment outlook in the relevant investment markets. The Trustees have received a presentation on the overall economic outlook and investment outlook of both equity and income markets at each Board meeting. o The resources devoted to compliance efforts undertaken by the adviser and the record of compliance with investment policies and restrictions and with policies on personal securities transactions. The Trustees have approved and met separately with the fund's Chief Compliance Officer. ADDITIONAL CONSIDERATIONS FOR EQUITY FUNDS ------------------------------------------------------------------------------- o The allocation of brokerage and any benefits received by the adviser as a result of brokerage allocation. The Trustees reviewed the Trading Analysis included in the material provided in advance of the meeting. The Independent Trustees' Committee did not consider any single factor as controlling in their consideration of the renewal of the Investment Advisory Contracts, nor are the considerations described above all encompassing. Based on their consideration of all factors which they considered material, and with the assistance of independent counsel, the Independent Trustees' Committee concluded that the renewal of the Investment Advisory Contract with its current fee structure is in the interests of the shareholders. IMPORTANT NOTICES REGARDING PRIVACY, DELIVERY OF SHAREHOLDER DOCUMENTS, PORTFOLIO HOLDINGS AND PROXY VOTING --------------------------------------------------------------- WRIGHT MANAGED INVESTMENT FUNDS WRIGHT INVESTORS SERVICE, INC. WRIGHT INVESTORS' SERVICE DISTRIBUTORS, INC. EATON VANCE MANAGEMENT PRIVACY POLICY ---------------------- Wright is committed to ensuring your financial privacy. Each of the above financial institutions has the following policy in effect with respect to nonpublic personal information about its customers: o The only such information we collect is information received from customers, through application forms or otherwise, and information which we necessarily receive in connection with your Wright fund transactions. o We will not disclose this information to anyone except as required or permitted by law. Such disclosure includes that made to other companies such as transfer agents and their employees and to our employees, in each case as necessary to service your account. o We have adopted policies and procedures (including physical, electronic and procedural safeguards) that are designed to protect the confidentiality of this information. For more information about Wright's privacy policies please feel free to call 1-800-888-9471. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDERS DOCUMENTS --------------------------------------------------------------------- The Securities and Exchange Commission permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called "householding" and it helps eliminate duplicate mailings to shareholders. Wright, or your financial adviser, may household the mailing of your documents indefinitely unless you instruct Wright, or your financial adviser, otherwise. If you would prefer that your Wright documents not be householded, please contact Wright at 1-800-888-9471, or your financial adviser. Your instructions that householding not apply to delivery of your Wright documents will be effective within 30 days of receipt by Wright or your financial adviser. PORTFOLIO HOLDINGS --------------------------- Each Wright Fund will file a schedule of its portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Wright website www.wisi.com, by calling Wright at 1-800-888-9471 or in the EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC's public reference room in Washingto, D.C. (call 1-800-732-0330 or informaiton on the operation of the public reference room). PROXY VOTING POLICIES AND PROCEDURES --------------------------------------------------- From time to time funds are required to vote proxies related to the securities held by the funds. The Wright Managed Funds vote proxies according to a set of policies and procedures approved by the Funds' Board. You may obtain a description of these policies and procedures and information on how the Funds voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 without charge, upon request, by calling 1-800-888-9471. This description is also available on the Securities and Exchange Commissions website at http://www.sec.gov. ANNUAL REPORT OFFICERS AND TRUSTEES OF THE FUNDS Peter M. Donovan, President and Trustee A. M. Moody III, Vice President and Trustee Judith R. Corchard, Vice President James J. Clarke, Trustee Dorcas R. Hardy, Trustee Richard E. Taber, Trustee Janet Sanders, Secretary Barbara E. Campbell, Treasurer William J. Austin, Jr., Assistant Treasurer ADMINISTRATOR Eaton Vance Management 255 State Street Boston, Massachusetts 02109 INVESTMENT ADVISER Wright Investors' Service 440 Wheelers Farms Road Milford, Connecticut 06461 PRINCIPAL UNDERWRITER Wright Investors' Service Distributors, Inc. 440 Wheelers Farms Road Milford, Connecticut 06461 (800) 888-9471 e-mail: funds@wrightinvestors.com CUSTODIAN Investors Bank & Trust Company 200 Clarendon Street Boston, Massachusetts 02116 TRANSFER AND DIVIDEND DISBURSING AGENT Citigroup Fund Services, LLC Two Portland Square Portland, ME 04101 INDEPENDENT AUDITORS Deloitte & Touche LLP 200 Berkeley Street Boston, Massachusetts 02116-5022 This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of a mutual fund unless accompanied or preceded by a Fund's current prospectus. Item 2. CODE OF ETHICS The registrant has adopted a code of ethics applicable to its Principal Executive Officer and Principal Financial Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-888-9471. Item 3. AUDIT COMMITTEE FINANCIAL EXPERT The registrant's Board has designated James J. Clarke, an independent trustee, as its audit committee financial expert. Mr. Clarke is the Principal of Clarke Consulting, a financial management and strategic planning firm. Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees ----------- The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and filings or engagements for those fiscal years were as follows: 2005: $74,100 and 2004: $74,100. (b) Audit-Related Fees -------------------- None. (c) Tax Fees ----------- The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were 2005: $12,100 and 2004: $11,000. The nature of the services comprising these fees was tax compliance, tax advice and tax planning including fees for tax return preparation. (d) All Other Fees --------------- None. (e) (1) The registrant's audit committee has adopted an Audit Committee Charter which contains policies and procedures relating to the pre-approval of services provided by the registrant's principal accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee; and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees with the exception of any de minimus engagement meeting applicable requirements. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the registrant's audit committee. The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant's audit committee at least annually. The registrant's audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrant's principal accountant. (2) Not applicable. (f) Not applicable. (g) Not applicable. (h) Not applicable. Items 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not required in Filing Item 6. SCHEDULE OF INVESTMENTS Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR. Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not required in Filing. Item 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not required in Filing Item 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not required in Filing Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Effective March 17,2005, the Governance Committee of the Board of Trustees revised the procedures by which a Fund's shareholders may recommend nominees to the registrant's board of Trustees to add the following (highlighted): The Governance Committee shall, when identifying candidates for the position of Independent Trustee, consider any such candidate recommended by a shareholder of a Fund if such recommendation contains (i) sufficient background information concerning the candidate, INCLUDING EVIDENCE THE CANDIDATE IS WILLING TO SERVE AS AN INDEPENDENT TRUSTEE IF SELECTED FOR THE POSITION; AND (ii) is received in a sufficiently timely manner (and in any event no later than the date specified for receipt of shareholder proposals in any applicable proxy statement with respect to a Fund). Shareholders shall be directed to address any such recommendations IN WRITING to the attention of the Governance Committee, c/o the Secretary of the Fund. THE SECRETARY SHALL RETAIN COPIES OF ANY SHAREHOLDER RECOMMENDATIONS WHICH MEET THE FOREGOING REQUIREMENTS FOR A PERIOD OF NOT MORE THAN 12 MONTHS FOLLOWING RECEIPT. THE SECRETARY SHALL HAVE NO OBLIGATION TO ACKNOWLEDGE RECEIPT OF ANY SHAREHOLDER RECOMMENDATIONS. Item 11. CONTROLS AND PROCEDURES a) It is the conclusion of the registrant's principal executive officer and principal financial officer that the effectiveness of the registrant's current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission's rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant's principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. (b) There have been no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 12. EXHIBITS (a) (1) Registrant's Code of Ethics - Not applicable (please see Item 2). (a) (2) Treasurer's and President's Section 302 certification. (b) Combined 906 certification. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Wright Managed Equity Trust (On behalf of Wright Selected Blue Chip ------------------------------------------------------------------------- Equities Fund, Wright Major Blue Chip Equities Fund and ------------------------------------------------------------------------- Wright International Blue Chip Equities Fund) --------------------------------------------- By: /s/ Peter M. Donovan --------------------- Peter M. Donovan President Date: February 24, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Barbara E. Campbell ------------------------ Barbara E. Campbell Treasurer Date: February 24, 2006 By: /s/Peter M. Donovan ------------------------ Peter M. Donovan President Date: February 24, 2006