-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CmhrNZP2w/9vuOrdKPU0xoU1UowXOXjG5SGeqtPBq7TraDRUJK7JrbsSAKRXqAeA C4ardf4639tUEN8z8/KDEg== 0000715165-07-000003.txt : 20070227 0000715165-07-000003.hdr.sgml : 20070227 20070227112334 ACCESSION NUMBER: 0000715165-07-000003 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070227 DATE AS OF CHANGE: 20070227 EFFECTIVENESS DATE: 20070227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Wright Managed Equity Trust CENTRAL INDEX KEY: 0000703499 IRS NUMBER: 046481187 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03489 FILM NUMBER: 07651815 BUSINESS ADDRESS: STREET 1: THE EATON VANCE BUILDING STREET 2: 255 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-482-8260 MAIL ADDRESS: STREET 1: THE EATON VANCE BUILDING STREET 2: 255 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: WRIGHT MANAGED EQUITY TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY FUND FOR BANK TRUST DEPARTMENTS EQBT FUND DATE OF NAME CHANGE: 19880218 0000703499 S000009482 Wright Selected Blue Chip Equities Fund C000025949 Wright Selected Blue Chip Equities Fund WSBEX 0000703499 S000009483 WrightMajor Blue Chip Equities Fund C000025950 Wright Major Blue Chip Equities Fund WQCEX 0000703499 S000009484 Wright International Blue Chip Equities Fund C000025951 Wright International Blue Chip Equities Fund WIBCX N-CSR 1 eqncsr1206.txt EQUITY TRUST ANNAUL REPORT DATED 12/31/2006 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, 2006 -------------------- Date of Reporting Period - ------------------------------------------------------------------------------ Item 1. REPORTS TO STOCKHOLDERS THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS ANNUAL REPORT --------------------- DECEMBER 31, 2006 THE WRIGHT MANAGED EQUITY TRUST o Wright Selected Blue Chip Equities Fund o Wright Major Blue Chip Equities Fund o Wright International Blue Chip Equities Fund THE WRIGHT MANAGED INCOME TRUST o Wright Total Return Bond Fund o Wright Current Income Fund THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS - ------------------------------------------------------------------------------- THE WRIGHT MANAGED BLUE CHIP INVESTMENT FUNDS CONSIST OF THREE EQUITY FUNDS FROM THE WRIGHT MANAGED EQUITY TRUST AND TWO FIXED INCOME FUNDS FROM THE WRIGHT MANAGED INCOME TRUST. EACH OF THE FIVE FUNDS HAVE DISTINCT INVESTMENT OBJECTIVES AND POLICIES. THEY CAN BE USED INDIVIDUALLY OR IN COMBINATION TO ACHIEVE VIRTUALLY ANY OBJECTIVE. FURTHER, AS THEY ARE ALL "NO-LOAD" FUNDS (NO COMMISSIONS OR SALES CHARGES), PORTFOLIO ALLOCATION STRATEGIES CAN BE ALTERED AS DESIRED TO MEET CHANGING MARKET CONDITIONS OR CHANGING REQUIREMENTS WITHOUT INCURRING ANY SALES CHARGES. APPROVED WRIGHT INVESTMENT LIST Securities selected for investment in these funds are chosen mainly from a list of "investment grade" companies maintained by Wright Investors' Service ("Wright" or the "Adviser"). All 25,000 global companies (covering 50 countries) in Wright's database are screened as new data becomes available to determine any eligible additions or deletions to the list. The qualifications for inclusion as "investment grade" are companies that meet Wright's Quality Rating criteria. This rating includes fundamental criteria for investment acceptance, financial strength, profitability & stability and growth. In addition, securities, which are not included in Wright's "investment grade" list, may also be selected from companies in the fund's specific benchmark (up to 20% of the market value of the portfolio) in order to achieve broad diversification. Different quality criteria may apply for the different funds. For example, the companies in the Major Blue Chip Fund would require a higher Investment Acceptance rating than the companies in the Selected Blue Chip Fund. THREE EQUITY FUNDS WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) seeks to enhance total investment return through price appreciation plus income. The Fund's portfolio is characterized as a blend of growth and value stocks. The market capitalization of the companies is typically between $1-$10 billion at the time of the Fund's investment. The Adviser seeks to outperform the Standard & Poor's 400 Index (S&P 400) by selecting stocks using fundamental company analysis and company specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors. WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) seeks to enhance total investment return through price appreciation plus income by providing a broadly diversified portfolio of equities of larger well-established companies with market values of $10 billion or more. The Adviser seeks to outperform the Standard & Poor's 500 Index (S&P 500) by selecting stocks, using fundamental company analysis and company specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors. WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) seeks total return consisting of price appreciation plus income by investing in a broadly diversified portfolio of equities of well-established, non-U.S. companies. The Fund may buy common stocks traded on the securities exchange of the country in which the company is based or it may purchase American Depositary Receipts (ADR's) traded in the United States. The portfolio is denominated in U.S. dollars and investors should understand that fluctuations in foreign exchange rates may impact the value of their investment. The Adviser seeks to outperform the MSCI Developed World ex U.S. Index by selecting stocks using fundamental company analysis and company-specific criteria such as valuation and earnings trends. The portfolio is then diversified across industries and sectors and countries. TWO FIXED-INCOME FUNDS WRIGHT TOTAL RETURN BOND FUND (WTRB) is a diversified portfolio of investment grade government and corporate bonds and other debt securities of varying maturities which, in the Adviser's opinion, will achieve the portfolio objective of best total return (i.e. the total of ordinary income plus capital appreciation). Accordingly, investment selections and maturities may differ depending on the particular phase of the interest rate cycle. Dividends are accrued daily and paid monthly. The Fund's benchmark is the Lehman U.S. Aggregate Bond Index. WRIGHT CURRENT INCOME FUND (WCIF) may be invested in a variety of securities and may use a number of strategies, including GNMAs, to produce a high level of income with reasonable stability of principal. The Fund reinvests all principal payments. Dividends are accrued daily and paid monthly. The Fund's benchmark is the Lehman GNMA Backed Bond Index. TABLE OF CONTENTS INVESTMENT OBJECTIVES..............................inside front & back cover LETTER TO SHAREHOLDERS.....................................................2 MANAGEMENT DISCUSSION......................................................3 PERFORMANCE SUMMARIES......................................................8 FUND EXPENSES.............................................................13 MANAGEMENT AND ORGANIZATION...............................................57 BOARD OF TRUSTEES ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT....59 IMPORTANT NOTICES REGARDING PRIVACY, DELIVERY OF SHAREHOLDER DOCUMENTS, PORTFOLIO HOLDINGS AND PROXY VOTING.......................................60 FINANCIAL STATEMENTS THE WRIGHT MANAGED EQUITY TRUST Wright Selected Blue Chip Equities Fund Portfolio of Investments..................15 Statement of Assets & Liabilities.........18 Statement of Operations...................18 Statement of Changes in Net Assets........19 Financial Highlights......................20 Wright Major Blue Chip Equities Fund Portfolio of Investments..................21 Statement of Assets & Liabilities.........24 Statement of Operations...................24 Statement of Changes in Net Assets........25 Financial Highlights......................26 Wright International Blue Chip Equities Fund Portfolio of Investments..................27 Statement of Assets & Liabilities.........29 Statement of Operations...................29 Statement of Changes in Net Assets........30 Financial Highlights......................31 Notes to Financial Statements...............32 Report of Independent Registered Public Accounting Firm....................36 Federal Tax Information.....................37 THE WRIGHT MANAGED INCOME TRUST Wright Total Return Bond Fund Portfolio of Investments..................38 Statement of Assets & Liabilities.........42 Statement of Operations...................42 Statement of Changes in Net Assets........43 Financial Highlights......................44 Wright Current Income Fund Portfolio of Investments..................45 Statement of Assets & Liabilities.........48 Statement of Operations...................48 Statement of Changes in Net Assets........49 Financial Highlights......................50 Notes to Financial Statements...............51 Report of Independent Registered Public Accounting Firm....................55 Federal Tax Information.....................56 LETTER TO SHAREHOLDERS - ------------------------------------------------------------------------------- January 2007 Dear Shareholders: The 2003-06 bull market in stocks showed no sign of stopping as it passed its fourth anniversary in the fourth quarter. The DJIA pushed its way to an all-time high of 12500 as 2006 was ending, and the S&P 500 and Nasdaq enjoyed healthy Q4 returns as well. Corporate profit growth estimated at around 15% provided the main impetus for what turned out to be a year of better-than-average returns for stocks. Also worth noting, stock P/E multiples moved higher in the third and fourth quarters, the first back-to-back quarterly increases in market valuations since 1999. The Federal Reserve's pause in its interest rate increases and declining energy prices were additional factors in the improved investor confidence seen since July. Finishing the year much stronger than it started it, the U.S. bond market returned 4.3% in 2006, in line with our 4%-5% projection as 2006 began. One of the more notable features of the 2006 investment landscape was its remarkably low volatility. During Q4, the VIX stock volatility measure dropped below 10% for the first time since 1994. The S&P 500 high/low price range was less than 17% for a third straight year, something that has happened only once before (1992-94). While such low volatility is sometimes a sign of investor complacency, we note that the post-1994 years saw one of the best advances in history with a compound annual rate of return of 28% for the S&P 500 over five years. Bond market volatility was also unusually low in 2006. The Federal Reserve raised interest rates 100 basis points in 2006, one 25-bp bump while Greenspan was chairman and three more hikes under Bernanke. All of these increases came in 2006's first half. According to the Fed, the subsequent pause was justified by a moderation of economic growth due to the cooling housing market and the "lagged effects of increases in interest rates and energy prices." Weakness in housing and the auto industry is likely to continue at least through the first half of 2007, but in the end it should not cause recession. The labor market remains relatively strong, and recent declines in energy prices are another positive. After fours years of growth in the 3%-3.75% range, real GDP is forecast to rise 2.25%-2.5% in 2007. The U.S. economy, in our view, is now about midway into the mid-course slowdown that the Fed has engineered for 2006-07, and we also expect European and Asian growth to decelerate this year. Still, world output growth should be quite respectable this year, if not up to the rates of 2004-06. Ongoing dollar depreciation ought to be expected, keeping some upward pressure on inflation in the U.S. - and providing a boost to foreign stock returns. Inflation rates are expected to moderate over 2007, although probably not enough to get the Fed to lower interest rates by the half percentage point that is currently priced into the market. By the end of this year, the core PCE price deflator should be nearing 2%, the presumed top end of the Fed's target range. It may be 12 months or more before inflation settles back into a non-threatening range where the Fed can start thinking about cutting interest rates. With rates at the long end of the yield curve expected to edge only modestly higher this year, bond returns should range around 5% in 2007. Stock returns are forecast to fall a bit short of their post-1950 norm of 12%: earnings growth is likely to slow to the 6%-8% range, dividends will add another 2%, and modest P/E multiple expansion could add a small increment. While market volatility will almost certainly increase, the anticipated 4%-6% risk premium in stocks over bonds continues to support a healthy allocation to equities as 2007 gets under way. Finally, I would like to extend to you best wishes for a happy, healthy and rewarding New Year. As always, I invite your suggestions on how we can better serve your investment and wealth management needs. Sincerely, /s/ Peter M.Donovan -------------------- Peter M. Donovan President MANAGEMENT DISCUSSION - ------------------------------------------------------------------------------- EQUITY FUNDS THE FOURTH QUARTER OF 2006 GAVE A STRONG FINISH TO A YEAR THAT PROVIDED SOLID RETURNS FOR U.S. INVESTORS. FOR STOCKS, 2006 WAS THE BEST YEAR SINCE 2003, WITH MOST OF THE GAINS COMING IN THE SECOND HALF OF THE YEAR. EARLY IN 2006, STOCK INVESTORS WORRIED FIRST ABOUT TOO MUCH GROWTH AND HIGHER INFLATION, THEN ABOUT THE POSSIBILITY THAT THE FED WOULD RAISE INTEREST RATES ENOUGH TO DRIVE THE ECONOMY INTO RECESSION. IN AUGUST, HOWEVER, THE STOCK MARKET MOVED ONTO A PERSISTENT UPWARD PATH THAT WOULD CONTINUE FOR THE REST OF THE YEAR. THE FED'S DECISION IN AUGUST TO HALT ITS TIGHTENING PROGRAM EASED INVESTORS' WORRIES ABOUT RECESSION. THE THIRD QUARTER'S DECLINE IN INTEREST RATES GAVE SUPPORT TO STOCKS; EASING ENERGY PRICES, INDICATIONS THAT INFLATION WAS STABILIZING AND SOLID GROWTH IN CORPORATE PROFITS ALSO CONTRIBUTED TO THE STOCK MARKET'S UPBEAT MOOD IN THE SECOND HALF OF THE YEAR. ON OCTOBER 3 THE DOW SET A NEW ALL TIME HIGH - THE FIRST SINCE THE PEAK IT REACHED IN 2000 - AND KEPT MOVING UP FROM THERE. THE DOW RETURNED MORE THAN 7% OVER THE LAST THREE MONTHS OF 2006, CLOSING THE YEAR WITHIN 50 POINTS OR 0.4% OF THE RECORD 12511 SET ON DECEMBER 27. THE S&P 500 REACHED NEW HIGHS FOR THIS BULL MARKET IN THE QUARTER, CLOSING THE YEAR ABOUT 100 POINTS (7%) BELOW ITS RECORD HIGH REACHED IN 2000 AND EARNING RETURNS OF NEARLY 7% FOR THE QUARTER AND 16% FOR THE YEAR. NASDAQ, TOO, HIT A NEW SIX-YEAR HIGH IN THE FOURTH QUARTER AND GENERATED RETURNS OF 7% FOR THE QUARTER AND 10% FOR THE YEAR. NASDAQ IS STILL 50% BELOW ITS 2000 HIGH - A REMINDER OF JUST HOW INFLATED THE TECH BUBBLE WAS. MID-CAP AND SMALL-CAP STOCKS LAGGED THE S&P 500 EARLIER IN 2006, BUT NOT IN THE FOURTH QUARTER AS THE BREADTH OF THE ADVANCE INCREASED. THE S&P MIDCAP 400 JUST ABOUT MATCHED THE S&P 500 IN Q4 AND RETURNED 10.3% FOR THE YEAR. THE SMALLCAP 600 RETURNED 7.8% FOR THE QUARTER AND 15.1% FOR THE YEAR. FOR THE FOURTH QUARTER AND THE YEAR, INTERNATIONAL MARKETS ALSO KEPT PACE WITH THE S&P 500 IN LOCAL CURRENCIES AND EXCEEDED ITS RETURN IN DOLLAR TERMS AS THE DOLLAR LOST GROUND AGAINST THE CURRENCIES IN THE MSCI INDEX. EACH OF THE 22 MARKETS IN THE MSCI WORLD EX U.S. INDEX HAD POSITIVE DOLLAR RETURNS IN THE FOURTH QUARTER AND THE YEAR. STOCKS WILL GET LESS SUPPORT FROM RISING PROFITS IN 2007 THAN THEY DID OVER THE LAST FOUR YEARS. WE EXPECT ECONOMIC GROWTH TO CONTINUE IN 2007, BUT AT A BELOW-TREND RATE. THIS WILL BE REFLECTED IN MODERATION OF PROFIT GROWTH. ACCORDING TO FIRST CALL, AFTER FOUR YEARS OF DOUBLE-DIGIT GROWTH, WALL STREET IS EXPECTING EARNINGS GROWTH OF ABOUT 9% FOR S&P 500 COMPANIES IN 2007, AND WE THINK THIS MAY BE A LITTLE OPTIMISTIC. PROFIT GROWTH AT A HIGH SINGLE-DIGIT RATE WOULD STILL BE QUITE RESPECTABLE AT THIS STAGE OF AN EXPANSION, BUT IT MIGHT BE A LITTLE DISAPPOINTING TO INVESTORS WHO HAVE BECOME USED TO SOMETHING MORE IMPRESSIVE. ALSO, THE STOCK MARKET'S ADVANCE IN THE SECOND HALF OF 2006 HAS BROUGHT THE MARKET P/E UP BY A POINT AND A HALF; THE CURRENT P/E IS NOT EXCESSIVE BY RECENT STANDARDS, BUT IT MAY BE HIGH ENOUGH TO LIMIT FURTHER GAINS IN STOCK PRICES. SLOWER PROFIT GROWTH AND LIMITED P/E EXPANSION WILL PROBABLY KEEP THE RETURN FROM EQUITIES IN 2007 BELOW LAST YEAR'S NEAR-16% RETURN AND MAY EVEN PRODUCE A SINGLE-DIGIT RATE OF RETURN. NEVERTHELESS, THE RETURN FROM A DIVERSIFIED EQUITY PORTFOLIO SHOULD STILL KEEP INVESTORS WELL AHEAD OF INFLATION. WE CONTINUE TO SEE THE POTENTIAL TO ENHANCE RETURNS BY INCLUDING INTERNATIONAL STOCKS IN INVESTMENT PORTFOLIOS. 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Total Return Year Year Year Year Year Year Year Year Year Year - -------------------------------------------------------------------------------------------------------------------------------- Wright Selected Blue Chip Fund (WSBC) 3.8% 11.1% 15.7% 30.1% -17.0% -10.2% 10.8% 5.8% 0.1% 32.7% Wright Major Blue Chip Fund (WMBC) 11.6% 6.2% 12.4% 23.2% -24.5% -16.9% -12.5% 24.0% 20.4% 33.9% Wright International Blue Chip Fund (WIBC) 28.5% 21.1% 17.7% 32.0% -14.5% -24.2% -17.6% 34.3% 6.1% 1.5%
WRIGHT SELECTED BLUE CHIP EQUITIES FUND The S&P MidCap 400 outperformed the S&P 500 in the first quarter of 2006, lagged bigger stocks in the second and third quarters, and just about matched the S&P 500's return in the fourth quarter. For all of 2006, the MidCaps lagged, albeit with a respectable 10.3% return. The Wright Selected Blue Chip Fund (WSBC), which is a mid-cap blend fund, returned 3.8% in 2006 compared to S&P MidCap 400's 10.3% return and the 13.5% return for an average of 79 mid-cap blend funds in the Morningstar database. In the fourth quarter of 2006, the WSBC Fund returned 5.5% compared to returns of 7.0% for the S&P MidCaps and 7.7% for the Morningstar average. Over the last three years, WSBC had a 10.1% compound annual rate of return compared to 13.1% for the S&P benchmark and 12.8% for the Morningstar average. Last year's bias toward lower-quality stocks was even more pronounced in the mid-cap area than it was in large-cap stocks. This market environment was reflected in the fact that stock selection accounted for virtually all of 2006's underperformance of the WSBC compared to the S&P MidCap 400. This was particularly apparent in the financial sector, where losses from such stocks as Legg Mason (-6.3%) and Radian Group (-7.9%) hurt the Fund's performance. The health care and information technology sectors were also among those lagging for the year, while the Fund was helped by a strong showing in the consumer discretionary sector (e.g., American Eagle Outfitters +106%). Stock selection in the financial sector detracted from WSBC's performance in the fourth quarter. The underperformance of mid-caps for all of 2006 has made their value more attractive relative to large-cap issues. The S&P MidCap 400's P/E in terms of forward earnings was about one point higher than the S&P 500's at the end of 2006, compared to two points higher at the start of the year. With economic and profit growth slowing, WSBC is well positioned in the mid-cap area with a tilt toward the more substantial companies in the S&P MidCap 400. WSBC companies have a higher projected earnings growth than those in the MidCap 400. Also, the WSBC Fund has a lower forward P/E than the S&P MidCap 400. WIS continues to advise diversity in investment portfolios and sees mid-cap stocks as likely to make a positive contribution to risk-adjusted portfolio returns going forward. WRIGHT MAJOR BLUE CHIP EQUITIES FUND The Wright Major Blue Chip Fund (WMBC) is managed as a blend of the large-cap growth and value stocks in the S&P 500 Composite, selected with a bias toward the higher-quality issues in the index. In 2006, large-cap U.S. stocks posted attractive investment returns. The WMBC Fund returned 11.6% for the year, lagging the S&P 500's 15.8% and the 14.1% for an average of 152 large-cap blend funds in the Morningstar database. For the fourth quarter of 2006, WMBC returned 5.3% compared to 6.7% for both the S&P 500 and the Morningstar average. Over the last three years, WMBC's 10.0% compound annual rate of return was in line with the S&P 500 (10.4%) and the Morningstar average (9.7%). The strong showing in stocks during 2006 favored lower-quality issues; in the S&P 500, the bottom two quality quintiles of stocks (determined by Wright Quality Ratings) outperformed the top three by a good margin. This pattern was also apparent in the fourth quarter of the year. For the year and the fourth quarter, this preference for lower-quality issues detracted from the performance of the WMBC, which is weighted toward the higher-quality stocks in the S&P 500. For all of 2006, industry sector weights modestly hurt Fund performance, largely due to an overweight position in health care, the weakest S&P 500 sector for the year, and a slight underweight in telecom, which was the strongest. Security selection had a bigger negative impact on the Fund. Looking at some specific issues, the Fund was hurt by Progressive Corporation's 17% loss and the 13% loss incurred by UnitedHealth Group, whose price suffered from accounting and legal issues related to stock option dating. Among sectors in the Fund with a strong relative performance for the year were information technologies (e.g., Hewlett Packard +45%, Nvidia +102%) and materials (e.g., Nucor +71%). For the fourth quarter of 2006, security selection was also the major factor in the Fund's lagging performance, which relates to the market's favoring of lower-quality issues. The prospect of slower economic growth points to moderating profit growth in the year ahead. This ought to favor higher-quality stocks. Moreover, their lagging performance in 2006 has resulted in relatively attractive values overall for the quality sector of the market. With its bias toward the more substantial, higher-quality stocks in the S&P 500, the WMBC is well positioned for such an environment. As 2007 was getting underway, WMBC's holdings were valued at a lower forward P/E than the S&P 500 (13.4 vs 15.0) while being in line with the S&P 500 in forecast earnings growth. WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND For all of 2006, the MSCI World ex U.S. stock index returned 25.7% in dollar terms, nearly 10 percentage points ahead of the S&P 500. In the fourth quarter, the MSCI index topped the S&P 500 with a 10.1% return. Local currency returns for both periods were in line with the S&P 500's, with the dollar's depreciation accounting for the rest of the return. The Wright International Blue Chip Fund (WIBC) returned 12.1% in the fourth quarter of 2006 compared to 10.1% for the MSCI World ex U.S. index and 10.4% for an average of 127 international equity funds in the Morningstar database. For all of 2006, WIBC returned 28.5%, ahead of both the MSCI benchmark (25.7%) and the Morningstar average (24.6%). Over the last three years, WIBC provided a 22.4% compound annual rate of return, compared to 20.1% for the MSCI index and 18.9% for the Morningstar average. Markets and currencies in Europe were strong throughout 2006, and the WIBC Fund's relative performance was helped in each quarter of the year by its overweighting in that region. The Fund mitigated the effects of market weakness in Japan by good stock selection in that country for most of the year. In the first half of 2006, the Fund benefited from the strong performance of its holdings in the energy and materials sectors. During the second half, the relative underperformance of these two sectors dampened the return of the Fund. In the fourth quarter, the Fund's performance was helped by the strong showing of its holdings in the financial sector. Economic and earnings growth prospects outside of the U.S. look promising for the coming 12 months. In addition to improving fundamentals, foreign stocks offer attractive valuations, with an aggregate P/E multiple lower than the S&P 500's. After its recent weakness, values in the Japanese market in particular look attractive, and WIBC's position in Japan was increased in the second half of 2006. In the third quarter, the Fund took some profits in the Eurozone markets, and then increased its position in the Eurozone in Q4. The Fund has reduced its holding in energy and ended the year underweight in telecom after taking profits from strong stock selections in this sector. Holdings were increased in the financial and utility sectors. We continue to emphasize diversity in investment programs and expect that a position in international stocks will augment returns in diversified investment portfolios. FIXED-INCOME FUNDS THE FOURTH QUARTER OF 2006 PROVIDED A POSITIVE FINISH TO A YEAR OF SOLID RETURNS FOR U.S. INVESTORS. AFTER LOSING GROUND IN THE FIRST HALF OF THE YEAR, THE U.S. BOND MARKET GENERATED POSITIVE RETURNS IN THE SECOND HALF. A KEY DRIVER OF THE BOND MARKET'S GAINS AFTER MIDYEAR WAS THE FEDERAL RESERVE'S DECISION AT ITS AUGUST 8 FOMC MEETING TO KEEP THE FED FUNDS TARGET UNCHANGED AT 5.25% AFTER RAISING THE RATE FROM 1.0% TO 5.25% OVER TWO YEARS. THE TARGET RATE WAS HELD AT 5.25% FOR THE REST OF 2006. THE THIRD QUARTER OF 2006 WAS THE BEST QUARTER FOR BONDS IN FOUR YEARS. AS THE FOURTH QUARTER PROGRESSED, HOWEVER, IT BECAME CLEAR THAT THE ECONOMY WAS CONTINUING TO GROW, AND THE FED CONTINUED TO WARN OF INFLATION RISKS. HOPES FADED THAT THE FED WOULD QUICKLY REVERSE COURSE AND START TO LOWER RATES. THIS CONTRIBUTED TO HIGHER YIELDS IN THE FOURTH QUARTER. FOR ALL OF 2006, THE YIELD ON THE 90-DAY TREASURY BILL ROSE ABOUT 90 BASIS POINTS, TO 5.0%. THE TWO-YEAR TREASURY YIELD ROSE ABOUT 40 BASIS POINTS AND THE 10-YEAR BY 30 BPS. AT THE START OF 2006, THE TREASURY YIELD CURVE WAS ABOUT FLAT BETWEEN TWO AND 10 YEARS; BY YEAR END, IT WAS INVERTED BY ABOUT 10 BASIS POINTS, WITH THE TWO-YEAR YIELD AT 4.8% AND THE 10-YEAR AT 4.7%. THE LEHMAN AGGREGATE U.S. BOND INDEX RETURNED 4.3% FOR ALL OF 2006; IN THE FOURTH QUARTER, THE INDEX RETURNED 1.2% AS COUPON RETURN MADE UP FOR MOST OF THE PRICE DECLINE FOR THE QUARTER. IN 2006, THE BEST RETURNS WERE GENERATED BY THE MORTGAGE AND COMMERCIAL MORTGAGE SECTORS, WHILE THE TREASURY SECTOR HAD THE LOWEST RETURN OF ALL SECTORS IN THE LEHMAN AGGREGATE. WE EXPECT THAT THE FED WILL HOLD INTEREST RATES STEADY THROUGH 2007. THE FED FUNDS FUTURES MARKET IS STILL PRICING IN AT LEAST ONE FED RATE CUT IN 2007, BUT IN ITS RECENT COMMENTS, THE FED HAS NOT BEEN ENCOURAGING THIS VIEW. WE DON'T SEE THE INVERTED YIELD CURVE AS FORETELLING A RECESSION IN 2007. OUR FORECAST HAS ECONOMIC GROWTH CONTINUING, BUT AT BELOW TREND RATES THROUGH MOST OF 2007, WHILE CORE INFLATION STAYS BELOW ITS PEAK AND SLOWLY MOVES TOWARD THE FED'S TARGET OF 2.0%. THIS APPEARS TO US TO BE A COMBINATION THAT WILL NOT MOVE FED POLICY ONE WAY OR THE OTHER. WITH THE FED KEEPING INTEREST RATES STEADY IN 2007 AND INFLATION NOT MOVING MUCH LOWER, WE DON'T SEE A LOT OF ROOM FOR LOWER INTEREST RATES AND RISING BOND PRICES THIS YEAR. AT CURRENT LEVELS, THERE DOESN'T APPEAR TO BE MUCH DOWNSIDE RISK FOR BOND PRICES EITHER, BASED ON THE EXPECTED ENVIRONMENT OF SLOW GROWTH AND MODERATE INFLATION. WE SEE A LOW PROBABILITY FOR SIGNIFICANT FURTHER TIGHTENING OF ALREADY TIGHT SPREADS ON NON-TREASURY SECTORS OF THE INVESTMENT-GRADE BOND MARKET. OUR FORECAST, THEREFORE, IS FOR A RETURN OF ABOUT 5% FOR THE LEHMAN AGGREGATE U.S. BOND INDEX IN 2007, A LITTLE BETTER THAN COUPON RETURN AND ENOUGH TO KEEP INVESTORS COMFORTABLY AHEAD OF INFLATION. 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Total Return Year Year Year Year Year Year Year Year Year Year - -------------------------------------------------------------------------------------------------------------------------------- Wright Total Return Bond Fund (WTRB) 3.3% 1.5% 3.5% 3.3% 9.0% 5.0% 10.6% -3.9% 9.6% 9.3% Wright Current Income Fund (WCIF) 3.9% 1.8% 3.3% 1.7% 7.7% 7.2% 10.3% 0.5% 6.5% 8.6%
WRIGHT TOTAL RETURN BOND FUND Bond yields rose over the course of 2006, with most of the increase coming in the first half of the year. Yields moved lower in Q3, giving bonds their best quarterly return in four years, then rose slightly in Q4. The Wright Total Return Bond Fund (WTRB), a diversified bond fund, returned 1.2% in the fourth quarter of 2006, as coupon return was enough to offset most of the price decline accompanying the rise in bond yields during the quarter. The Fund's return was in line with the Lehman U.S. Aggregate Bond Composite's 1.2% and the 1.3% return for an average of 174 total return bond funds in the Morningstar database in the quarter. For all of 2006, WTRB returned 3.3% compared to 4.3% for the Lehman Aggregate and 4.1% for the Morningstar average. WTRB had a yield of 4.2%, calculated according to SEC guidelines, at the end of the year. Dividends paid by this Fund may be more or less than implied by this yield. During 2006, WTRB's duration ranged from 0.15 year longer than the Lehman Benchmark to 0.4 year shorter. For 2006, duration calls had a slightly negative effect on performance compared to the benchmark; for the fourth quarter, the Fund's duration positioning made a modestly positive contribution to performance As the fourth quarter of 2006 started, WTRB was positioned with a short duration compared to the Lehman Aggregate. This reflected our view that the bond market's third quarter rally had overestimated the potential for Fed rate cuts in the near term. Bonds did experience a modest correction in the fourth quarter, and Fund duration was moved back to neutral, where it remained at year end. During the fourth quarter and for much of the year, the Fund was overweight compared to the Lehman Aggregate in mortgages (52% of the portfolio including hybrid ARMs at year-end 2006), asset-backed issues (2% at year end), and commercial mortgage-backed issues (8% at year end). With corporate spreads looking tight, for most of the year the Fund was about neutral in corporate bonds, though at year end it was slightly overweight (24%). The Fund was underweight in Treasuries and agencies for all of 2006, holding 12% and 1%, respectively, at year end. For the year, the overweighting in MBS, ABS and CMBS issues was positive for performance, since these sectors had a larger excess return than the Lehman Aggregate index as a whole. The underweighting in agencies, which lagged the Aggregate for the year and the fourth quarter, helped performance in both periods. For the fourth quarter, however, the Fund's overall sector positioning detracted from performance because of the overweight in hybrid ARMs and asset-backed issues, which lagged the Aggregate in excess return for the quarter. Since all non-Treasury sectors had positive excess return for the quarter and the year, the underweight in Treasury issues added to performance. Individual security selection was a plus for the fourth quarter but a slight drag for the year. WRIGHT CURRENT INCOME FUND The Wright Current Income Fund (WCIF) is generally managed to be invested in GNMA issues (mortgage-based securities, known as Ginnie Maes) and other mortgage-based securities with explicit backing from the Federal government. The WCIF Fund is actively managed to maximize income and minimize principal fluctuation. In December, the Wright U.S. Government Near Term Fund (WNTB) was merged into the WCIF, resulting in a 4% position in Treasury bonds and a 9% position in agencies within WCIF at year end as a result of the transition. In the fourth quarter, the WCIF Fund returned 1.3%, slightly less than the Lehman GNMA bond index's 1.5% but in line with the 1.3% for the average of all 61 government mortgage funds in the Morningstar database. For all of 2006, WCIF's return of 3.9% compared to 4.6% for the Lehman benchmark and 4.2% for the Morningstar average. At the end of 2006, the WCIF Fund had a yield of 4.9% as calculated by SEC guidelines. Dividends paid by this Fund may be more or less than implied by this yield. With the risk of prepayment reduced after the rise in mortgage rates in 2005 and early 2006, WCIF continued to overweight higher-coupon premium issues for most of 2006 through the fourth quarter. This allowed the Fund to pick up extra income. Through most of 2006, the Fund's duration was kept a little shorter than the Ginnie Mae benchmark's. THE VIEWS EXPRESSED THROUGHOUT THIS REPORT ARE THOSE OF THE PORTFOLIO MANAGERS AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS, AND THE INVESTMENT ADVISOR DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FUND ARE BASED ON MANY FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY OF THE WRIGHT MANAGED INVESTMENT FUNDS. U.S. SECURITIES MARKETS ------------------------------------------------------- The Dow Jones Industrial Average chart shows the point changes in the average which consists of 30 major NYSE industrial companies and is a price-weighted arithmetic average, with the divisor adjusted for stock splits. The yield chart shows the basis point changes in the U.S. Treasury bond which is the benchmark U.S. Treasury bond with a maturity of 10 years. The following plotting points are used for comparison in the mountain charts. Date Dow Jones U.S. 10 Year Industrial Average Treasury Bond Yield 12/31/97 7908.25 5.75% 12/31/98 9181.43 4.65% 12/31/99 11,497.12 6.44% 12/31/00 10,786.85 5.11% 12/31/01 10,021.50 5.00% 12/31/02 8,341.63 3.82% 12/31/03 10,453.92 4.25% 12/31/04 10,783.01 4.22% 12/31/05 10,717.50 4.39% 12/31/06 12,463.15 4.71% PERFORMANCE SUMMARIES - ------------------------------------------------------------------------------- IMPORTANT The Total Investment Return is the percent return of an initial $10,000 investment made at the beginning of the period to the ending redeemable value assuming all dividends and distributions are reinvested. After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. Wright SELECTED BLUE CHIP EQUITIES FUND Growth of $10,000 Invested 1/1/96 Through 12/31/06 Average Annual Total Return ----------------------------------------------- Last 1 Yr Last 5 Yrs Last 10 Yrs - -------------------------------------------------------------------------------------------------------------------------------- WSBC - Return before taxes 3.77% 7.57% 7.25% - Return after taxes on distributions 2.30% 6.57% 5.07% - Return after taxes on distributions and sales of fund shares 1.96% 5.76% 5.07% S&P MidCap 400* 10.32% 10.89% 13.47%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT SELECTED BLUE CHIP EQUITIES FUND on 12/31/96 would have grown to $20,144 by December 31, 2006. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Selected S&P MidCap Blue Chip Fund 400 12/31/96 $10,000 $10,000 12/31/97 $13,270 $13,225 12/31/98 $13,288 $15,753 12/31/99 $14,053 $18,073 12/31/2000 $15,563 $21,237 12/31/2001 $13,983 $21,108 12/31/2002 $11,610 $18,045 12/31/2003 $15,100 $24,472 12/31/2004 $17,474 $28,504 12/31/2005 $19,412 $32,085 12/31/2006 $20,144 $35,396 * The Fund's average annual return is compared with that of the S&P Mid-Cap 400, an unmanaged index of stocks in a broad range of industries with a market capitalization of a few billion or less. The performance of the S&P Mid-Cap 400, unlike that of the Fund, reflects no deductions for fees, expenses or taxes. Industry Weightings - ------------------------------ % of net assets @ 12/31/06 Diversified Financials 10.3% Semiconductor Equipment 2.0% Commercial Services & Supplies 7.9% Computers & Peripherals 1.8% Retailing 7.9% Banks 1.7% Insurance 6.9% Home Const., Furn. & Appl. 1.4% Energy 6.3% Automobiles & Components 1.3% Utilities 6.3% Textiles, Clothing & Fabrics 1.3% Capital Goods 6.0% Pharmaceuticals & Biotech. 1.2% Real Estate 5.8% Consumer Durables & Apparel 1.1% Electronic Equipment & Services 5.7% Heavy Machinery 1.1% Materials 4.9% Food, Beverage & Tobacco 1.0% Health Care Equipment/Services 3.9% Hotels, Restaurants & Leisure0.9% Oil & Gas 3.1% Communications Equipment 0.8% Transportation 3.0% Medical Supplies 0.4% Chemicals 2.7% Telecommunication Services 0.3% Software & Services 2.3% Ten Largest Stock Holdings - ------------------------------ % of net assets @ 12/31/06 MDU Res Group Inc. 2.3% New Plan Excel Realty 2.3% Precision Castparts Corp. 2.3% Manpower Inc. 1.9% W. R.Berkley Corp. 1.9% Raymond James Finl. 1.8% Jacobs Engr. Group Inc. 1.8% Nuveen Invts Inc. 1.8% Edwards A. G. Inc. 1.8% Eaton Vance Corp. 1.7% - ------------------------------------------------------------------------------- WRIGHT MAJOR BLUE CHIP EQUITIES FUND Growth of $10,000 Invested 1/1/96 Through 12/31/06 Average Annual Total Return --------------------------------------------------- Last 1 Yr Last 5 Yrs Last 10 Yrs - -------------------------------------------------------------------------------------------------------------------------------- WMBC - Return before taxes 11.57% 4.37% 6.05% - Return after taxes on distributions 11.38% 4.21% 4.80% - Return after taxes on distributions and sales of fund shares 9.67% 3.63% 4.62% S&P 500* 15.80% 6.19% 8.42%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT MAJOR BLUE CHIP EQUITIES FUND on 12/31/96 would have grown to $17,986 by December 31, 2006. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Major Blue Chip Fund S&P 500 12/31/96 $10,000 $10,000 12/31/97 $13,386 $13,336 12/31/98 $16,120 $17,147 12/31/99 $19,981 $20,756 12/31/2000 $17,473 $18,866 12/31/2001 $14,524 $16,624 12/31/2002 $10,965 $12,950 12/31/2003 $13,510 $16,665 12/31/2004 $15,180 $18,478 12/31/2005 $16,121 $19,385 12/31/2006 $17,986 $22,447 * The Fund's average annual return is compared with that of the S&P 500, an unmanaged index of 500 widely held common stocks that generally indicates the performance of the market. The performance of the S&P 500, unlike that of the Fund, reflects no deductions for fees, expenses or taxes. Industry Weightings - ---------------------------------- % of net assets @ 12/31/06 Diversified Financials 14.2% Commercial Services & Supplies 2.2% Energy 12.0% Communications Equipment 2.1% Pharmaceuticals & Biotechnology 9.2% Heavy Machinery 1.9% Banks 7.6% Capital Goods 1.5% Retailing 6.2% Software & Services 1.5% Computers & Peripherals 5.7% Semiconductor Equip. & Prods. 1.3% Health Care Equipment & Services5.3% Utilities 1.3% Telecommunications Services 4.2% Real Estate 1.0% Automobiles & Components 3.9% Materials 0.9% Food, Beverages & Tobacco 3.8% Home Const., Furnishings & Appl. 0.7% Insurance 3.8% Medical Supplies 0.6% Transportation 3.2% Hotels, Restaurants & Leisure 0.5% Electronic Equipment & Instrum. 2.3% Metals 0.5% Entertainment & Leisure 2.3% Consumer Durables & Apparel 0.4% Ten Largest Stock Holdings - --------------------------------- % of net assets @ 12/31/06 Exxon Mobil Corp. 4.8% Bank of America Corp. 4.3% Pfizer, Inc. 3.4% Goldman Sachs Group 3.3% AT&T Inc. 3.2% Citigroup Inc. 3.0% Hewlett-Packard Co. 2.9% Chevron Corp. 2.4% Wells Fargo & Co. New 2.3% Paccar Inc. 2.3% WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND Growth of $10,000 Invested 1/1/96 Through 12/31/06 Average Annual Total Return ------------------------------------------------ Last 1 Yr Last 5 Yrs Last 10 Yrs - -------------------------------------------------------------------------------------------------------------------------------- WIBC - Return before taxes 28.49% 15.63% 6.45% - Return after taxes on distributions 27.79% 15.30% 5.71% - Return after taxes on distributions and sales of fund shares 23.81% 13.55% 5.27% MSCI World ex US Index* 25.71% 15.25% 7.96%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT INT'L BLUE CHIP EQUITIES FUND on 12/31/96 would have grown to $18,689 by December 31, 2006. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Int'l Blue Chip MSCI World Ex U.S. Equities Fund Index 12/31/96 $10,000 $10,000 12/31/97 $10,154 $10,227 12/31/98 $10,777 $12,146 12/31/99 $14,469 $15,538 12/31/2000 $11,925 $13,461 12/31/2001 $ 9,042 $10,580 12/31/2002 $ 7,730 $ 8,909 12/31/2003 $10,201 $12,421 12/31/2004 $12,008 $14,952 12/31/2005 $14,545 $17,116 12/31/2006 $18,689 $21,517 * The Fund's average annual return is compared with that of the MSCI Developed World ex U.S. Index. While the Fund does not seek to match the returns of this index, this unmanaged index generally indicates foreign stock market performance. The performance of the MSCI Developed World ex U.S. Index, unlike that of the Fund, reflects no deductions for fees, expenses or taxes. Country Weightings - ------------------------------------- % of net assets @ 12/31/06 United Kingdom 22.8% Denmark 3.0% Japan 22,0% Switzerland 2.5% Germany 8.5% Norway 2.4% France 6.6% Belgium 1.5% Canada 4.9% Portugal 1.5% Australia 4.7% Hong Kong 0.9% Sweden 4.3% Singapore 0.8% Italy 3.7% Austria 0.6% Spain 3.6% Finland 0.4% Netherlands 3.3% Ireland 0.4% Ten Largest Stock Holdings - ------------------------------ % of net assets @ 12/31/06 Anglo American PLC 2.9% Eni Spa 2.8% ING Groep NV-ADR 2.8% Danske Bank Ag 2.6% Man Group PLC 2.4% BNP Paribas 2.3% Toyota Motor Corp. 2.3% Endesa Sa 2.2% Canon Inc. 2.1% Persimmon PLC 2.0% WRIGHT TOTAL RETURN BOND FUND Growth of $10,000 Invested 1/1/96 Through 12/31/06 Average Annual Total Return ---------------------------------------------- Last 1 Yr Last 5 Yrs Last 10 Yrs - -------------------------------------------------------------------------------------------------------------------------------- WTRB - Return before taxes 3.34% 4.11% 5.03% - Return after taxes on distributions 1.76% 2.46% 3.05% - Return after taxes on distributions and sales of fund shares 1.49% 2.46% 3.05% Lehman Aggregate Bond Index* 4.33% 5.06% 6.24% - --------------------------------------------------------------------------------------------------------------------------------
The cumulative total return of a U.S. $10,000 investment in the WRIGHT TOTAL RETURN BOND FUND on 12/31/96 would have grown to $16,329 by December 31, 2006. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Total Retun Lehman Aggregate Bond Bond Fund Index 12/31/96 $10,000 $10,000 12/31/97 $10,925 $10,966 12/31/98 $11,969 $11,918 12/31/99 $11,501 $11,820 12/31/2000 $12,723 $13,194 12/31/2001 $13,353 $14,308 12/31/2002 $14,559 $15,776 12/31/2003 $15,032 $16,423 12/31/2004 $15,561 $17,136 12/31/2005 $15,801 $17,552 12/31/2006 $16,329 $18,313 * The Fund's average annual return is compared with that of the Lehman U.S. Aggregate Bond Index, an unmanaged index that is a broad representation of the investment-grade fixed income market in the U.S. The Lehman U.S. Aggregate Bond Index, unlike that of the Fund, reflects no deductions for fees, expenses or taxes. HOLDINGS BY SECTOR - ---------------------------- % of net assets @ 12/31/06 Asset-backed Securities 11.2% Corporate Bonds 24.6% Mortgage-Backed Securities 50.8% U.S. Treasuries 12.2% HOLDINGS BY CREDIT QUALITY* - ----------------------------- % of net assets @ 12/31/06 AAA 12% AA 2% A 13% BBB 8% WRIGHT CURRENT INCOME FUND Growth of $10,000 Invested 1/1/96 Through 12/31/06 Average Annual Total Return ------------------------------------------ Last 1 Yr Last 5 Yrs Last 10 Yrs - -------------------------------------------------------------------------------------------------------------------------------- WCIF - Return before taxes 3.92% 3.66% 5.10% - Return after taxes on distributions 2.19% 1.76% 2.89% - Return after taxes on distributions and sales of fund shares 1.86% 1.76% 2.89% Lehman GNMA Index* 4.61% 4.72% 6.10%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT CURRENT INCOME FUND on 12/31/96 would have grown to $16,448 by December 31, 2006. The following plotting points are used for comparison in the total investment return mountain chart. Date Wright Current Lehman GNMA Income Fund Index 12/31/96 $10,000 $10,000 12/31/97 $10,856 $10,953 12/31/98 $11,563 $11,712 12/31/99 $11,623 $11,937 12/31/2000 $12,821 $13,264 12/31/2001 $13,742 $14,354 12/31/2002 $14,801 $15,601 12/31/2003 $15,058 $16,046 12/31/2004 $15,553 $16,745 12/31/2005 $15,827 $17,281 12/31/2006 $16,448 $18,077 * The Fund's average annual return is compared with that of the Lehman GNMA Backed Bond Index. While the Fund does not seek to match the returns of the Lehman GNMA Backed Bond Index, Wright believes that this unmanaged index generally indicates the performance of government and corporate mortgage- backed bond markets. The Lehman GNMA Backed Bond Index, unlike the Fund, reflects no deductions for fees, expenses or taxes. HOLDINGS BY SECTOR ------------------------ % of net assets @ 12/31/06 Mortgage-Backed Securities 82.5% Government Interests 12.8% Asset-Backed Securities 4.2% WEIGHTED AVERAGE MATURITY ----------------------------- @12/31/06 3.9 Years FIVE LARGEST BOND HOLDINGS ----------------------------- % of net assets @ 12/31/06 FFCB 4.000% 03/10/08 5.9% GNMA II Pool 3734 4.500% 07/20/35 4.8% GNMA Pool 3556 5.500% 05/20/34 4.8% GNMA Series 1999-04 Class ZB 6.000% 02/20/29 4.1% GNMA II Pool 3747 5.000% 08/20/35 3.8% FUND EXPENSES - -------------------------------------------------------------------------- EXAMPLE: As a shareholder of a fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs including management fees; distribution or service fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 31, 2006-December 31, 2006). ACTUAL EXPENSES: The first line of the tables shown on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES: The second line of the tables provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual return of the Fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if payable). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EQUITY FUNDS ----------------------------------------- WRIGHT SELECTED BLUE CHIP EQUITIES FUND Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/06- (7/1/06) (12/31/06) 12/31/06) - ------------------------------------------------------------------------------ Actual Fund Shares $1,000.00 $1,018.10 $6.36 - ------------------------------------------------------------------------------ Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,018.90 $6.36 *Expenses are equal to the Fund's annualized expense ratio of 1.25% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2006. WRIGHT MAJOR BLUE CHIP EQUITIES FUND Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/06- (7/1/06) (12/31/06) 12/31/06) - ------------------------------------------------------------------------------- Actual Fund Shares $1,000.00 $1,097.60 $6.61 - ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,018.90 $6.36 *Expenses are equal to the Fund's annualized expense ratio of 1.25% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2006. WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/06- (7/1/06) (12/31/06) 12/31/06) - ------------------------------------------------------------------------------ Actual Fund Shares $1,000.00 $1,150.10 $7.37 - ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,018.30 $6.92 *Expenses are equal to the Fund's annualized expense ratio of 1.36% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2006. FIXED INCOME FUNDS ------------------------------- Wright Total Return Bond Fund Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/06- (7/1/06) (12/31/06) 12/31/06) - ------------------------------------------------------------------------------- Actual Fund Shares $1,000.00 $1,046,80 $4.95 - ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,023.40 $4.89 *Expenses are equal to the Fund's annualized expense ratio of 0.95% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2006. WRIGHT CURRENT INCOME FUND Expenses Paid Beginning Ending During Period* Account Value Account Value (7/1/06- (7/1/06) (12/31/06) 12/31/06) - ------------------------------------------------------------------------------- Actual Fund Shares $1,000.00 $1,045.40 $5.05 - ------------------------------------------------------------------------------- Hypothetical (5% return per year before expenses) Fund Shares $1,000.00 $1,020.30 $4.99 *Expenses are equal to the Fund's annualized expense ratio of 0.95% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on June 30, 2006. WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - December 31, 2006 Shares Value EQUITY INTERESTS --99.3% AUTOMOBILES & COMPONENTS -- 1.3% BorgWarner, Inc........................8,400 $ 495,768 ------------ BANKS -- 1.7% Associated Banc-Corp..................3,180 $ 110,918 Astoria Financial Corp................2,172 65,508 City National Corp....................3,250 231,400 Wilmington Trust Corp.................6,020 253,863 ------------ $ 661,689 ------------ CAPITAL GOODS -- 6.0% Alliant Techsystems, Inc.* ...........5,105 $ 399,160 Graco, Inc............................2,702 107,053 Precision Castparts Corp.............11,310 885,347 SPX Corp..............................8,495 519,554 Thomas & Betts Corp.* ................8,450 399,516 ------------ $ 2,310,630 ------------ CHEMICALS -- 2.7% Albemarle Corp........................8,545 $ 613,531 Cytec Industries, Inc...................510 28,820 Lyondell Chemical Co..................4,235 108,289 Scotts Miracle-Gro Co., Class A.......5,150 265,997 ------------ $ 1,016,637 ------------ COMMERCIAL SERVICES & SUPPLIES -- 7.9% Ceridian Corp.* ......................4,835 $ 135,283 Harsco Corp...........................2,290 174,269 ITT Educational Services, Inc.* ......1,585 105,196 Jacobs Engineering Group, Inc.* ......8,400 684,936 Manpower, Inc.........................9,795 733,939 MPS Group, Inc.* ....................14,605 207,099 Pharmaceutical Product Development, Inc.....................10,255 330,416 Plexus Corp.* ........................9,335 222,920 Republic Services, Inc. - Class A.....6,915 281,233 SEI Investments Co....................2,335 139,073 ------------ $ 3,014,364 ------------ COMMUNICATIONS EQUIPMENT -- 0.8% Harris Corp...........................6,410 $ 293,963 ------------ COMPUTERS & PERIPHERALS -- 1.8% CSG Systems International, Inc.* .....6,095 $ 162,919 Western Digital Corp.* ..............25,605 523,878 ------------ $ 686,797 ------------ CONSUMER DURABLES & APPAREL -- 1.1% Mohawk Industries, Inc.* .............5,200 $ 389,272 Toll Brothers, Inc.* .................1,520 48,990 ------------ $ 438,262 ------------ DIVERSIFIED FINANCIALS -- 10.3% Eaton Vance Corp.....................20,315 $ 670,598 Edwards, A.G., Inc...................10,650 674,038 Investors Financial Services Corp.....2,745 117,129 Jefferies Group, Inc.................11,930 319,963 Nuveen Investments, Inc. - Class A...13,195 684,557 Raymond James Financial, Inc.........22,687 687,643 The BISYS Group, Inc.* ..............29,600 382,136 Waddell & Reed Financial, Inc........15,315 419,018 ------------ $ 3,955,082 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS -- 5.7% Ametek, Inc...........................3,795 $ 120,833 Amphenol Corp.........................3,965 246,147 Arrow Electronics, Inc.* ............12,435 392,324 Avnet, Inc.* .........................8,955 228,621 CommScope, Inc.* .....................7,650 233,172 Lincoln Electric Holdings, Inc........6,090 367,958 MEMC Electronic Materials, Inc.* .....8,000 313,120 Tech Data Corp.* .....................3,250 123,077 Vishay Intertechnology, Inc.* .......12,475 168,911 ------------ $ 2,194,163 ------------ ENERGY -- 6.3% ENSCO International, Inc..............4,600 $ 230,276 Newfield Exploration Company* .......14,560 669,032 Noble Energy, Inc.....................9,795 480,641 Patterson-UTI Energy, Inc............11,170 259,479 Peabody Energy Corp..................11,805 477,040 Pogo Producing Co.....................6,475 313,649 ------------ $ 2,430,117 ------------ FOOD, BEVERAGE & TOBACCO -- 1.0% Hormel Foods Corp.....................5,150 $ 192,301 PepsiAmericas, Inc....................8,310 174,344 ------------ $ 366,645 ============ HEALTH CARE EQUIPMENT & SERVICES -- 3.9% Community Health Systems, Inc.* ......3,025 $ 110,473 Covance, Inc.* .......................3,935 231,811 DENTSPLY International, Inc...........5,210 155,518 Health Net, Inc.* ....................6,815 331,618 Hillenbrand Industries, Inc...........3,315 188,723 Lincare Holdings, Inc.* ..............3,200 127,488 Universal Health Services, Inc.* .....3,275 181,533 Varian Medical Systems, Inc.* ........3,890 185,047 ------------ $1,512,211 ------------ HEAVY MACHINERY -- 1.1% Cameron International Corp.* .........3,660 $ 194,163 Joy Global, Inc.......................4,925 238,074 ------------ $ 432,237 ------------ HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 1.4% Beazer Homes USA, Inc...................520 $ 24,445 Rent-A-Center, Inc.* .................6,995 206,422 Sotheby's.............................9,585 297,327 ------------ $ 528,194 ------------ HOTELS, RESTAURANTS & LEISURE -- 0.9% Bob Evans Farms, Inc..................4,575 $ 156,556 Ruby Tuesday, Inc.....................7,245 198,803 ------------ $ 355,359 ------------ INSURANCE -- 6.9% American Financial Group, Inc.........4,155 $ 149,206 First American Corp..................12,800 520,704 HCC Insurance Holdings, Inc...........7,555 242,440 Ohio Casualty Corp....................6,020 179,456 Old Republic International Corp.......7,953 185,146 PMI Group Inc., (The)...................590 27,830 Protective Life Corp..................6,455 306,613 Radian Group, Inc.....................1,985 107,011 Stancorp Financial Group..............5,060 227,953 W.R. Berkley Corp....................20,762 716,497 ------------ $2,662,856 ------------ MATERIALS -- 4.9% Airgas, Inc...........................5,470 $ 221,644 Commercial Metals Co..................4,835 124,743 Crane Co..............................7,990 292,754 FMC Corp..............................3,800 290,890 Grant Prideco, Inc.* .................7,145 284,157 Martin Marietta Materials, Inc........1,765 183,401 RPM International, Inc................5,210 108,837 Steel Dynamics, Inc...................2,540 82,423 Timken Co., (The)....................10,070 293,843 ------------ $ 1,882,692 ------------ MEDICAL SUPPLIES -- 0.4% ResMed, Inc.* ........................3,290 $ 161,934 ------------ OIL & GAS -- 3.1% AGL Resources, Inc....................7,850 $ 305,444 Denbury Resources, Inc.* .............6,650 184,804 FMC Technologies, Inc. * .............5,410 333,418 Helmerich & Payne, Inc................6,320 154,650 Tidewater, Inc........................4,555 220,280 ------------ $ 1,198,596 ------------ PHARMACEUTICALS & BIOTECHNOLOGY -- 1.2% Cephalon, Inc. * .....................4,675 $ 329,167 Omnicare, Inc.........................2,910 112,413 ------------ $ 441,580 ------------ REAL ESTATE -- 5.8% AMB Property Corp. REIT...............6,220 $ 364,554 Highwoods Properties, Inc. REIT.......3,150 128,394 Hospitality Properties Trust REIT.....2,975 141,402 Liberty Property Trust REIT...........7,460 366,584 New Plan Excel Realty Trust REIT.....32,440 891,451 Regency Centers Corp. REIT............2,440 190,735 United Dominion Realty Trust, Inc. REIT.....................4,750 151,003 ------------ $ 2,234,123 ------------ RETAILING -- 7.9% Abercrombie & Fitch Co. - Class A.....3,125 $ 217,594 American Eagle Outfitters............20,467 638,775 AnnTaylor Stores Corp.* ..............7,830 257,137 CDW Corp..............................3,525 247,878 Claire's Stores, Inc.................13,465 446,230 Dick's Sporting Goods, Inc.* .........2,815 137,907 Dollar Tree Stores, Inc. * ...........8,405 252,991 GameStop Corp. - Class A* ............8,765 483,039 MSC Industrial Direct Co., Inc. - Class A............................5,200 203,580 Payless ShoeSource, Inc.* ............4,435 145,557 ------------ $3,030,688 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS -- 2.0% Intersil Corp. - Class A..............6,690 $ 160,025 Lam Research Corp.* ..................8,905 450,771 Microchip Technology, Inc.............4,370 142,899 ------------ $ 753,695 ------------ SOFTWARE & SERVICES -- 2.3% Activision, Inc. * ..................11,300 $ 194,812 Cognizant Technology Solutions Corp.* 5,470 422,065 Transaction Systems Architects, Inc.* 7,815 254,535 ------------ $ 871,412 ------------ TELECOMMUNICATION SERVICES -- 0.3% Cincinnati Bell, Inc.* ..............20,830 $ 95,193 ------------ TEXTILES, CLOTHING & FABRICS -- 1.3% Polo Ralph Lauren Corp................6,595 $ 512,168 ------------ TRANSPORTATION -- 3.0% C.H. Robinson Worldwide, Inc..........2,185 $ 89,345 Hunt, J.B. Transport Services, Inc...25,620 532,127 Swift Transportation Co., Inc.* ......5,955 156,438 Trinity Industries, Inc...............4,325 152,240 YRC Worldwide, Inc.* .................5,360 202,233 ------------ $ 1,132,383 ------------ UTILITIES -- 6.3% Alliant Energy Corp...................6,915 $ 261,180 Black Hills Corp.....................10,305 380,667 IDACORP, Inc.........................12,890 498,199 MDU Resources Group, Inc.............35,128 900,682 OGE Energy Corp.......................5,885 235,400 Questar Corp..........................1,225 101,736 Wisconsin Energy Corp.................1,160 55,054 ------------ $ 2,432,918 ------------ TOTAL EQUITY INTERESTS-- 99.3% (identified cost, 31,460,648) $ 38,102,356 OTHER ASSETS, LESS LIABILITIES -- 0.7% 249,449 ------------ NET ASSETS -- 100% $38,351,805 ============ * Non-income-producing security. See notes to financial statements WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) - ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2006 - ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost $31,460,648) (Note 1A). $ 38,102,356 Cash.................................... 258,671 Receivable for fund shares sold......... 2,286 Receivable from investment adviser...... 1,014 Dividends receivable.................... 35,221 Other assets............................ 6,198 ------------ Total assets............................ $ 38,405,746 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 11,701 Payable to affiliate for Trustees' fees. 39 Transfer agent fee payable.............. 5,915 Accrued expenses and other liabilities.. 36,286 ------------ Total liabilities....................... $ 53,941 ------------ NET ASSETS................................ $ 38,351,805 ============ NET ASSETS CONSIST OF: Paid-in capital......................... $ 29,403,152 Accumulated undistributed net realized gain on investments (computed on the basis of identified cost)....................... 2,303,087 Unrealized appreciation on investments (computed on the basis of identified cost) 6,641,708 Accumulated undistributed net investment income................................. 3,858 ------------ Net assets applicable to outstanding shares............................... $ 38,351,805 ============= SHARES OF BENEFICIAL INTEREST OUTSTANDING............................ 3,124,559 ============= NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................. $ 12.27 =============== See notes to financial statements STATEMENT OF OPERATIONS Year Ended December 31, 2006 - ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1C): Dividend income......................... $ 432,234 Expenses - Investment adviser fee (Note 2):........ $ 263,675 Administrator fee (Note 2):............. 52,735 Compensation of Trustees who are not employees of the investment adviser or administrator 13,037 Custodian fee (Note 1D)................. 85,531 Distribution expenses (Note 3):......... 109,865 Transfer and dividend disbursing agent fees 33,374 Printing................................ 6,840 Interest expense........................ 6.830 Shareholder communications.............. 8,610 Audit services.......................... 27,900 Legal services.......................... 5,753 Registration costs...................... 20,189 Miscellaneous .......................... 5,379 ------------ Total expenses.......................... $ 639,718 ------------ Deduct - Reduction of custodian fee (Note 1D):... $ (5,441) Reduction of investment adviser fee (Note 2) (12,425) Reduction of distribution expenses by principal underwriter (Note 3):..... (72,850) ------------ Total deductions........................ $ (90,716) ------------ Net expenses............................ $ 549,002 ------------ Net investment loss..................... $ (116,768) ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions (identified cost basis)................ $ 4,175,456 Change in unrealized depreciation of investments............................ (2,770,820) ------------ Net realized and unrealized gain of investments......................... $ 1,404,636 ------------ Net increase in net assets from operations $ 1,287,868 ============== See notes to financial statements WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) - ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------ STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment loss........................................................ $ (116,768) $ (87,194) Net realized gain on investments........................................... 4,175,456 6,417,438 Change in unrealized depreciation of investments........................... (2,770,820) (1,416,439) -------------- -------------- Net increase in net assets resulting from operations..................... $ 1,287,868 $ 4,913,805 -------------- -------------- Distributions to shareholders (Note 1F) - From net realized gain..................................................... $ (4,229,388) $ (5,390,227) -------------- -------------- Total distributions...................................................... $ (4,229,388) $ (5,390,227) -------------- -------------- Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (6,358,299) $ 4,630,188 -------------- -------------- Net increase (decrease) in net assets........................................ $ (9,299,819) $ 4,153,766 NET ASSETS: At beginning of year......................................................... 47,651,624 43,497,858 -------------- -------------- At end of year............................................................... $ 38,351,805 $ 47,651,624 ============== ============== ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR.................................................................. $ 3,858 $ 924,429 ============== ==============
See notes to financial statements WRIGHT SELECTED BLUE CHIP EQUITIES FUND (WSBC) - ------------------------------------------------------------------------------- Year Ended December 31, - -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2006(6) 2005 2004 2003(6) 2002(6) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 13.030 $ 13.226 $ 11.870 $ 9.270 $ 11.580 --------- --------- --------- --------- --------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment loss(1) ................ $ (0.034) $ (0.053) $ (0.028) $ (0.023) $ (0.046) Net realized and unrealized gain (loss) 0.529 1.476 1.884 2.756 (1.831) --------- --------- --------- --------- --------- Total income (loss) from investment operations......... $ 0.495 $ 1.423 $ 1.856 $ 2.733 $ (1.877) --------- --------- --------- --------- --------- LESS DISTRIBUTIONS: Distributions from capital gains....... $ (1.255) $ (1.619) $ (0.500) $ (0.133) $ (0.433) --------- --------- --------- --------- --------- Total distributions................ $ (1.255) $ (1.619) $ (0.500) $ (0.133) $ (0.433) --------- --------- --------- --------- --------- Net asset value, end of period.............. $ 12.270 $ 13.030 $ 13.226 $ 11.870 $ 9.270 ========= ========= ========= ========= ========= TOTAL RETURN(2) ............................ 3.77% 11.09% 15.73% 30.06% (16.98%) RATIOS/SUPPLEMENTAL DATA(1): Net assets, end of year (000 omitted).. $ 38,352 $ 47,652 $ 43,498 $ 38,190 $ 32,817 Ratio of net expenses to average net assets 1.26% 1.27% 1.26% 1.25% 1.26%(3) Ratio of net expenses after custodian fee reduction to average net assets(5)(7) 1.25% 1.25% 1.25% 1.25% 1.25%(3) Ratio of net investment (loss) to average net assets.......................... (0.27%) (0.18%) (0.23%) (0.23%) (0.44%) Portfolio turnover rate................ 66% 110% 69% 106% 119%(4) - -------------------------------------------------------------------------------------------------------------------------------- (1)For the years ended December 31, 2006, 2005, 2004, 2003, and 2002, the operating expenses of the fund were reduced by a waiver of fees and/or an allocation of expenses to the distributor and/or investment adviser. Had such action not been undertaken, net investment loss per share and the ratios would have been as follows: 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------------------- Net investment loss per share.......... $ (0.058) $ (0.111) $ (0.050) $ (0.057) $ (0.064) ========= ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses........................... 1.46% 1.45% 1.44% 1.59% 1.43%(3) ========= ========= ========= ========= ========= Expenses after custodian fee reduction(5) 1.44% 1.43% 1.43% 1.59% 1.42%(3) ========= ========= ========= ========= ========= Net investment loss................ (0.46%) (0.38%) (0.41%) (0.57%) (0.61%) ========= ========= ========= ========= ========= - -------------------------------------------------------------------------------------------------------------------------------- (2)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be invested at the net asset value on the reinvestment date. (3)Includes each fund's share of its corresponding portfolio's allocated expenses (Note 1). (4)Represents portfolio turnover rate of the fund's corresponding portfolio (Note 1). (5)Custodian fees were reduced by credits resulting from cash balances the fund and/or the portfolio maintained with the custodian (Note 1D). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (6)Certain per share amounts are based on average shares outstanding. (7)Under a written agreement in effect through the current fiscal year, Wright waives a portion of its advisory fee and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 1.25% after custodian fee reductions, if any.
See notes to financial statements WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - December 31, 2006 Shares Value EQUITY INTERESTS -- 100.1% AUTOMOBILES & COMPONENTS -- 3.9% Johnson Controls, Inc................11,835 $ 1,016,863 Paccar, Inc..........................21,952 1,424,685 ------------ $ 2,441,548 ------------ BANKS -- 7.6% Bank of America Corp.................51,255 $ 2,736,504 Capital One Financial Corp............8,235 632,613 Wachovia Corp.............................1 57 Wells Fargo & Co.....................40,140 1,427,378 ------------ $ 4,796,552 ------------ CAPITAL GOODS -- 1.5% Cummins, Inc..........................6,625 $ 782,942 Illinois Tool Works, Inc..............3,895 179,910 ------------ $ 962,852 ------------ COMMERCIAL SERVICES & SUPPLIES -- 2.2% General Electric Co..................10,560 $ 392,938 United Technologies Corp..............7,990 499,535 Waste Management, Inc................13,965 513,493 ------------ $ 1,405,966 ------------ COMMUNICATIONS EQUIPMENT -- 2.1% Cisco Systems, Inc.*.................30,370 $ 830,012 Motorola, Inc........................24,140 496,318 ------------ $ 1,326,330 ------------ COMPUTERS & PERIPHERALS -- 5.7% Computer Sciences Corp.*..............5,420 $ 289,265 EMC Corp.*...........................16,230 214,236 Hewlett-Packard Co...................45,090 1,857,257 International Business Machines Corp.10,535 1,023,475 SanDisk Corp.*........................4,545 195,571 ------------ $ 3,579,804 ------------ CONSUMER DURABLES & APPAREL -- 0.4% VF Corp...............................3,435 $ 281,945 ------------ DIVERSIFIED FINANCIALS -- 14.2% Bear Stearns Cos., Inc. (The).........1,655 $ 269,401 Citigroup, Inc.......................34,359 1,913,796 Franklin Resources, Inc...............3,075 338,773 Goldman Sachs Group, Inc., (The).....10,330 2,059,285 JPMorgan Chase & Co..................27,580 1,332,114 Lehman Brothers Holdings, Inc........17,990 1,405,379 Merrill Lynch & Co., Inc..............5,895 548,825 Morgan Stanley.......................14,145 1,151,827 ------------ $ 9,019,400 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.3% 3M Co.................................4,495 $ 350,295 Agilent Technologies, Inc.*..........11,255 392,237 Nvidia Corp.*........................19,035 704,485 ------------ $ 1,447,017 ------------ ENERGY -- 12.0% Apache Corp...........................7,283 $ 484,392 ChevronTexaco Corp...................20,815 1,530,527 ConocoPhillips Co....................15,785 1,135,731 EOG Resources, Inc....................5,635 351,906 Exxon Mobil Corp.....................39,615 3,035,697 Occidental Petroleum Corp............10,900 532,247 TXU Corp..............................4,970 269,424 Valero Energy Corp....................4,495 229,964 ------------ $ 7,569,888 ------------ ENTERTAINMENT & LEISURE -- 2.3% CBS Corp. - Class B...................9,930 $ 309,617 Time Warner, Inc.....................22,015 479,487 Walt Disney Co., (The)...............19,110 654,900 ----------- $ 1,444,004 ------------ FOOD, BEVERAGE & TOBACCO -- 3.8% Altria Group, Inc....................15,005 $ 1,287,729 Archer-Daniels-Midland Co............12,525 400,299 PepsiCo, Inc.........................11,060 691,803 ------------ $ 2,379,831 ------------ HEALTH CARE EQUIPMENT & SERVICES -- 5.3% AmerisourceBergen Corp................5,605 $ 252,001 Humana, Inc.*.........................8,020 443,586 Laboratory Corp. of America Holdings*.8,525 626,332 UnitedHealth Group, Inc..............15,621 839,316 Wellpoint, Inc.*.....................15,525 1,221,662 ------------ $ 3,382,897 ------------ HEAVY MACHINERY -- 1.9% Caterpillar, Inc.....................12,870 $ 789,317 Ingersoll-Rand Co. - Class A.........11,005 430,626 ------------ $ 1,219,943 ------------ HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 0.7% Leggett & Platt, Inc.................10,285 $ 245,812 Whirlpool Corp........................2,800 232,456 ------------ $ 478,268 ------------ HOTELS, RESTAURANTS & LEISURE -- 0.5% Starwood Hotels & Resorts Worldwide, Inc.......................4,730 $ 295,625 ------------ INSURANCE -- 3.8% AMBAC Financial Group, Inc............6,390 $ 569,157 Chubb Corp............................4,530 239,682 Progressive Corp.....................30,670 742,827 The St. Paul Travelers Co., Inc......11,030 592,201 Torchmark Corp........................3,810 242,926 ------------ $ 2,386,793 ------------ MATERIALS -- 0.9% Nucor Corp............................8,300 $ 453,678 Sigma-Aldrich Corp....................1,420 110,362 ------------ $ 564,040 ------------ MEDICAL SUPPLIES -- 0.6% Danaher Corp..........................5,015 $ 363,287 ------------ METALS -- 0.5% Allegheny Technologies, Inc...........1,755 $ 159,143 Phelps Dodge Corp.....................1,175 140,671 ----------- $ 299,814 ------------ PHARMACEUTICALS & BIOTECHNOLOGY -- 9.2% Applera Corp. - Applied Biosystems Group...............................24,140 $ 885,697 Barr Laboratories, Inc.*.............12,545 628,755 Gilead Sciences, Inc.*................9,470 614,887 Johnson & Johnson, Inc...............14,440 953,329 King Pharmaceuticals Inc.*...........14,020 223,198 Merck & Co., Inc......................8,285 361,226 Pfizer, Inc..........................83,475 2,162,003 ------------ $ 5,829,095 ------------ REAL ESTATE -- 1.0% Boston Properties, Inc. REIT..........5,910 $ 661,211 ------------ RETAILING -- 6.2% Best Buy Co., Inc.....................4,735 $ 232,915 Home Depot, Inc......................32,455 1,303,393 J.C. Penney Co., Inc..................5,205 402,659 Limited Brands, Inc..................13,490 390,401 Lowe's Cos., Inc.....................19,385 603,843 Nordstrom, Inc.......................11,285 556,802 Office Depot, Inc.*..................11,625 443,726 ------------ $ 3,933,739 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS -- 1.3% Intel Corp...........................13,510 $ 273,578 Texas Instruments, Inc...............19,170 552,096 ------------ $ 825,674 ------------ SOFTWARE & SERVICES -- 1.5% Microsoft Corp.......................20,595 $ 614,967 Oracle Corp.*........................19,565 335,344 ------------ $ 950,311 ------------ TELECOMMUNICATION SERVICES -- 4.2% Alltel Corp...........................4,765 $ 288,187 AT&T, Inc............................56,545 2,021,484 Corning, Inc.*.......................19,410 363,161 ------------ $ 2,672,832 ------------ TRANSPORTATION -- 3.2% Burlington Northern Santa Fe Corp.....5,875 $ 433,634 CSX Corp..............................5,435 187,127 FedEx Corp............................6,390 694,082 Norfolk Southern Corp.................8,425 423,693 United Parcel Service, Inc. - Class B.3,805 285,299 ------------ $ 2,023,835 ------------ UTILITIES -- 1.3% Exelon Corp...........................9,876 $ 611,226 Sempra Energy.........................3,345 187,220 ----------- $ 798,446 ------------- TOTAL EQUITY INTERESTS--100.1% (identified cost, $52,649,700) $63,340,947 OTHER ASSETS, LESS LIABILITIES -- (0.1%) (65,004) ------------ NET ASSETS -- 100% $63,275,943 ============= * Non-income-producing security. See notes to financial statements WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) - ------------------------------------------------------------------------------ STATEMENT OF ASSETS AND LIABILITIES December 31, 2006 - ------------------------------------------------------------------------------ ASSETS: Investments, at value (identified cost $52,649,700) (Note 1A). $ 63,340,947 Cash.................................... 931 Receivable for investments sold......... 200,138 Receivable for fund shares sold......... 10,118 Receivable from investment adviser...... 2,034 Dividends receivable.................... 144,562 Other assets............................ 6,000 ------------ Total assets............................ $ 63,704,730 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 81,748 Demand note payable..................... 311,000 Payable to affiliate for Trustees' fees. 39 Transfer agent fee...................... 6,262 Accrued expenses and other liabilities.. 29,738 ------------ Total liabilities....................... $ 428,787 ------------ NET ASSETS................................ $ 63,275,943 ============= NET ASSETS CONSIST OF: Paid-in capital......................... $ 73,120,996 Accumulated undistributed net realized loss on investments (computed on the basis of identified cost).................... (20,549,695) Unrealized appreciation on investments (computed on the basis of identified cost) 10,691,247 Accumulated undistributed net investment income................................. 13,395 ------------ Net assets applicable to outstanding shares................................ $ 63,275,943 ============== SHARES OF BENEFICIAL INTEREST OUTSTANDING............................ 4,587,192 ============== NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................. $ 13.79 ============== See notes to financial statements STATEMENT OF OPERATIONS Year Ended December 31, 2006 - ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1C): Dividend income......................... $ 1,127,872 ------------ Expenses - Investment adviser fee (Note 2):........ $ 391,257 Administrator fee (Note 2):............. 78,251 Compensation of Trustees not employees of the investment adviser or administrator.... 13,037 Custodian fee (Note 1D):................ 81,169 Distribution expenses (Note 3):......... 163,024 Transfer and dividend disbursing agent fees 26,583 Printing................................ 3,953 Interest expense........................ 7,883 Shareholder communications.............. 3,793 Audit services.......................... 29,000 Legal services.......................... 6,412 Registration costs...................... 22,879 Miscellaneous .......................... 6,768 ------------ Total expenses.......................... $ 834,009 ------------ Deduct - Reduction of custodian fee (Note 1D):... $ (7,123) Allocation of expenses to the investment adviser (Note 2):........... (2,034) Reduction of distribution expenses by principal underwriter (Note 3):.................. (9,875) ------------ Total deductions........................ $ (19,032) ------------ Net expenses............................ $ 814,977 ------------ Net investment income................... $ 312,895 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions (identified cost basis)................ $ 9,867,709 Change in unrealized depreciation of investments............................ (3,314,951) ------------ Net realized and unrealized gain of investments............................ $ 6,552,758 ------------ Net increase in net assets from operations $ 6,865,653 ============= See notes to financial statements WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) - ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income ..................................................... $ 312,895 $ 431,620 Net realized gain on investments........................................... 9,867,709 3,605,530 Change in unrealized appreciation (depreciation) on investments............ (3,314,951) 59,679 -------------- -------------- Net increase in net assets resulting from operations..................... $ 6,865,653 $ 4,096,829 -------------- -------------- Distributions to shareholders - From net investment income................................................. $ (314,151) $ (485,388) -------------- -------------- Total distributions...................................................... $ (314,151) $ (485,388) -------------- -------------- Net decrease in net assets from fund share transactions (Note 4)............. $(10,017,143) $ (2,372,715) -------------- -------------- Net increase (decrease) in net assets........................................ $ (3,465,641) $ 1,238,726 NET ASSETS: At beginning of year......................................................... 66,741,584 65,502,858 -------------- -------------- At end of year............................................................... $ 63,275,943 $ 66,741,584 -------------- -------------- ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR........................................ $ 13,395 $ (187,940) ============== ============== See notes to financial statements
Wright Major Blue Chip Equities Fund (WMBC) - ------------------------------------------------------------------------------- Year Ended December 31, ------------------------------------------------------------------ FINANCIAL HIGHLIGHTS 2006(4) 2005 2004 2003(4) 2002(4) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 12.420 $ 11.780 $ 10.530 $ 8.570 $ 11.380 --------- --------- --------- --------- --------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) ....... $ 0.062 $ 0.077 $ 0.053 $ 0.029 $ 0.024 Net realized and unrealized gain (loss) 1.374 0.651 1.247 1.958 (2.812) --------- --------- --------- --------- --------- Total income (loss) from investment operations......... $ 1.436 $ 0.728 $ 1.300 $ 1.987 $ (2.788) --------- --------- --------- --------- --------- LESS DISTRIBUTIONS: Dividends from investment income....... $ (0.066) $ (0.088) $ (0.050) $ (0.027) $ (0.022) --------- --------- --------- --------- --------- Total distributions................ $ (0.066) $ (0.088) $ (0.050) $ (0.027) $ (0.022) --------- --------- --------- --------- --------- Net asset value, end of year................ $ 13.790 $ 12.420 $ 11.780 $ 10.530 $ 8.570 ========= ========= ========= ========= ========= TOTAL RETURN(3) ............................ 11.57% 6.20% 12.36% 23.20% (24.50%) RATIOS/SUPPLEMENTAL DATA(1): Net assets, end of year (000 omitted).. $ 63,276 $ 66,742 $ 65,503 $ 71,539 $ 66,609 Ratio of net expenses to average net assets 1.26% 1.26% 1.25% 1.25% 1.22% Ratio of net expenses after custodian fee reduction to average net assets(2)(5) 1.25% 1.25% 1.25% 1.25% 1.22% Ratio of net investment income (loss) to average net assets ................. 0.48% 0.66% 0.49% 0.31% 0.25% Portfolio turnover rate................ 97% 82% 74% 143% 130% - -------------------------------------------------------------------------------------------------------------------------------- (1)For the years ended December 31, 2006, 2005, 2004 and 2003, the operating expenses of the Fund were reduced by fee waivers and/or an allocation of expenses to the distributor and/or investment adviser. Had such action not been undertaken, net investment income per share and the ratios would have been as follows: 2006 2005 2004 2003 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income per share........ $ 0.062 $ 0.077 $ 0.050 $ 0.024 ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses............................. 1.28% 1.26% 1.28% 1.31% ========= ========= ========= ========= Expenses after custodian fee reduction(2) 1.27% 1.25% 1.28% 1.31% ========= ========= ========= ========= Net investment income................ 0.46% 0.66% 0.46% 0.26% ========= ========= ========= ========= - -------------------------------------------------------------------------------------------------------------------------------- (2)Custodian fees were reduced by credits resulting from cash balances the fund maintained with the custodian (Note 1D). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (3)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be invested at the net asset value on the reinvestment date. (4)Certain per share amounts are based on average shares outstanding. (5)Under a written agreement in effect through the current fiscal year, Wright waives a portion of its advisory fee and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 1.25% after custodian fee reductions, if any. See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) - ------------------------------------------------------------------------------ PORTFOLIO OF INVESTMENTS - December 31, 2006 Shares Value EQUITY INTERESTS -- 98.4% AUSTRALIA -- 4.7% BHP Billiton, Ltd....................60,304 $ 1,202,550 Coles Group, Ltd....................222,690 2,457,340 QBE Insurance Group, Ltd............120,560 2,741,483 Rio Tinto Ltd........................21,621 1,266,196 Westfield Group.....................159,975 2,646,677 ------------ $10,314,246 ------------ AUSTRIA -- 0.6% Boehler-Uddeholm AG...................7,394 $ 517,730 OMV AG (Stammaktie)..................12,187 690,866 ------------ $ 1,208,596 ------------ BELGIUM -- 1.5% Fortis 77,161 $ 3,288,507 ------------ CANADA -- 4.9% Biovail Corp.........................17,058 $ 360,597 Candian National Railway Co..........11,076 476,562 Encana Corp..........................64,568 2,977,330 Husky Energy, Inc....................35,784 2,399,745 IPSCO, Inc............................6,468 609,060 Methanex Corp........................33,144 908,562 Penn West Energy Trust...............15,336 468,765 Talisman Energy, Inc.................44,985 765,406 Teck Cominco Ltd. - Class B..........21,442 1,619,620 ------------ $10,585,647 ------------ DENMARK -- 3.0% Danske Bank Ag (Stammaktie).........125,737 $ 5,582,775 Topdanmark A/S*.......................5,883 971,984 --------------- $ 6,554,759 --------------- FINLAND -- 0.4% Outokumpu Oyj........................18,547 $ 725,395 Yit Oyj...............................3,284 90,723 -------------- $ 816,118 -------------- FRANCE -- 6.6% Axa (Actions Ordinaires).............30,780 $ 1,244,835 BNP Paribas..........................47,030 5,125,631 Gecina SA.............................4,135 790,630 Schneider Electric SA.................8,323 923,008 Societe Generale de France (Actions Ord.).......................25,731 4,363,422 Vallourec SA..........................4,008 1,164,318 Vinci.................................5,732 731,663 ------------ $ 14,343,507 ------------ GERMANY -- 8.5% Allianz Ag Holding (Namensaktie)......7,676 $ 1,566,474 BASF AG (Stammaktie).................23,103 2,249,823 Continental AG (Stammaktie)..........19,566 2,273,042 DaimlerChrysler AG (Namenaktie)......19,134 1,180,813 Deutsche Bank AG (Stammaktie)........28,458 3,802,899 Deutsche Boerse AG...................17,761 3,265,292 E. On AG (Stammaktie)................26,724 3,623,688 Puma AG...............................1,508 587,947 ------------ $18,549,978 ------------ HONG KONG -- 0.9% Sino Land Co........................654,000 $ 1,527,100 Sun Hung Kai Properties Ltd..........37,000 425,080 ------------- $ 1,952,180 ------------- IRELAND -- 0.4% Bank of Ireland (Cap. Stock).........41,172 $ 950,101 ------------ ITALY -- 3.7% Buzzi Unicem Spa......................7,342 $ 208,443 Eni Spa (Azioni Ordinarie)..........182,995 6,148,486 Intesa Sanpaolo.....................226,400 1,746,473 -------------- $ 8,103,402 ------------- JAPAN -- 22.0% Aoyama Trading Co., Ltd..............18,900 $ 566,262 Asics Corp...........................79,000 990,525 Brother Industries, Ltd..............86,000 1,162,738 Canon, Inc. (Common).................82,050 4,613,613 CSK Holdings Corp....................15,000 639,503 Daiichi Sanyko Co., Ltd..............62,900 1,963,728 Denso Corp...........................13,200 522,882 Fuji Electric Holdings Co., Ltd......76,000 411,397 Fujikura, Ltd........................28,000 246,033 Honda Motor Co., Ltd. (Common).......60,200 2,374,554 Ibiden Co., Ltd. (Common).............8,000 402,837 Kddi Corp...............................353 2,390,760 Komatsu Ltd.........................122,700 2,486,849 Makita Corp..........................51,900 1,589,820 Marubeni Corp........................76,000 385,246 Mitsubishi Corp......................67,600 1,270,815 Mitsubishi Rayon Co., Ltd...........124,000 832,529 Mitsui OSK Lines, Ltd................62,000 610,868 Nippon Seiki.........................14,000 327,808 Nippon Shokubai Co., Ltd.............65,000 690,068 ORIX Corp.(Common)....................9,600 2,775,544 Pacific Metals Co., Ltd..............77,000 754,135 Ricoh Co., Ltd.......................36,000 734,170 Sankyo Co., Ltd. ....................15,200 840,653 Shinko Electric Industries Co., Ltd..63,600 1,659,989 Sumitomo Chemical Co., Ltd..........116,000 898,561 Sumitomo Corp.......................107,000 1,599,320 Sumitomo Metal Industries, Ltd......255,000 1,106,416 Takeda Chemicals Industries, Ltd. (Common).......................24,000 1,645,588 Tokyo Steel Mfg Co., Ltd.............54,500 853,485 Tokyo Tatemono Co., Ltd..............58,000 645,445 Toyota Motor Corp. (Common)..........75,000 5,010,281 Toyota Tsusho Corp...................31,000 829,927 Tsumura & CO.........................35,000 816,583 Uny Co., Ltd........................119,000 1,547,984 Yamaha Motor Co., Ltd................59,700 1,873,845 ------------ $48,070,761 ------------ NETHERLANDS -- 3.3% Aegon NV.............................65,252 $ 1,242,483 ING Groep NV ADR (Aandeel).........136,295 6,036,976 ------------ $ 7,279,459 ------------ NORWAY -- 2.4% Norsk Hydro Asa (Ordinaere Aksje)*...42,230 $ 1,312,407 Orkla ASA............................11,445 648,869 Statoil ASA.........................125,029 3,318,323 ------------ $ 5,279,599 ------------ PORTUGAL -- 1.5% Energias de Portugal SA.............302,564 $ 1,532,068 Portugal Telecom, SGPS, SA..........130,154 1,688,815 ------------ $ 3,220,883 ------------ SINGAPORE -- 0.8% Capitaland Ltd......................360,000 $ 1,454,735 Singapore Petroleum Co., Ltd........138,000 392,153 ------------ $ 1,846,888 ------------ SPAIN -- 3.6% ACS, Actividades de Construccion y Servicios SA......................18,279 $ 1,029,465 Endesa SA...........................102,166 4,827,060 Repsol YPF SA (Accion)...............27,144 937,788 Union Fenosa, S.A....................20,897 1,033,344 ------------ $ 7,827,657 ------------ SWEDEN -- 4.3% Atlas Copco AB - Class A.............22,518 $ 756,852 Boliden AB...........................29,814 766,808 Kungsleden AB*......................112,699 1,729,270 Nobia AB.............................37,108 1,428,899 Scania AB - Class B...................7,655 538,076 TeliaSonera AB......................367,731 3,022,778 Volvo AB - Class B...................15,098 1,040,290 ------------ $ 9,282,973 ------------ SWITZERLAND -- 2.5% UBS AG...............................33,691 $ 2,043,761 Zurich Financial Services (Inhaberaktie.......................12,915 3,470,238 ------------ $ 5,513,999 ------------ UNITED KINGDOM -- 22.8% Anglo American PLC (Ordinary).......129,952 $ 6,335,499 AstraZeneca PLC......................41,956 2,253,213 Babcock International Group PLC.....245,916 1,928,788 Barratt Developments PLC............161,393 3,900,998 Bellway PLC (Ordinary)...............79,368 2,398,374 BG Group PLC.........................81,074 1,099,611 BHP Billiton PLC.....................31,842 582,376 BP PLC (Ordinary)...................155,021 1,721,791 British Airways PLC..................38,515 397,628 British American Tobacco PLC........138,242 3,866,307 George Wimpey PLC....................43,085 470,948 Hammerson PLC........................26,580 820,372 Hanson PLC...........................23,993 361,811 HSBC Holdings PLC....................27,270 496,889 Inchape PLC..........................70,656 699,719 Land Securities Group PLC............78,071 3,549,466 Man Group PLC.......................508,451 5,201,963 Marks & Spencer Group PLC...........133,919 1,879,254 Persimmon PLC (Ordinary)............146,962 4,389,183 Rio Tinto PLC........................44,924 2,389,747 Royal Bank of Scotland Group PLC.....51,619 2,013,451 Royal Dutch Shell PLC................39,005 1,366,462 Taylor Woodrow PLC..................181,961 1,517,983 ------------ $49,641,833 ------------ TOTAL EQUITY INTERESTS-- 98.4% (identified cost, $170,074,990) $214,631,093 ------------ OTHER ASSETS, LESS LIABILITIES -- 1.6% 3,570,079 ------------ NET ASSETS -- 100% $218,201,172 ============= * Non-income-producing security. See notes to financial statements WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) - ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2006 - ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost $170,074,990) (Note 1A) $ 214,631,093 Cash.................................... 2,447,846 Foreign currency, at value (cost $28,865) (Note 1)............................... 28,857 Receivable for fund shares sold......... 945,565 Dividends receivable.................... 199,821 Other assets............................ 11,426 Tax reclaim receivable.................. 92,477 ------------ Total assets.......................... $218,357,085 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 73,704 Payable to affiliate for Trustees' fees. 34 Transfer agent fee...................... 8,402 Accrued expenses and other liabilities.. 73,773 ------------ Total liabilities..................... $ 155,913 ------------ NET ASSETS................................ $218,201,172 ============= NET ASSETS CONSIST OF: Paid-in capital......................... $173,070,143 Accumulated undistributed net realized gain on investments and foreign currency (computed on the basis of identified cost).......... 509,265 Unrealized appreciation of investments (computed on the basis of identified cost) 44,566,283 Accumulated undistributed net investment income................................. 55,481 ------------ Net assets applicable to outstanding shares............ $218,201,172 ============= SHARES OF BENEFICIAL INTEREST OUTSTANDING............................ 9,558,662 ============== NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................. $ 22.83 ============== See notes to financial statements STATEMENT OF OPERATIONS Year Ended December 31, 2006 - ----------------------------------------------------------------------------- INVESTMENT INCOME (Note 1C): Dividend income......................... $ 5,004,980 Less: Foreign Taxes..................... (479,675) ------------ Investment income....................... $ 4,525,305 ------------ Expenses - Investment adviser fee (Note 2):........ $ 1,360,190 Administrator fee (Note 2):............. 220,273 Compensation of Trustees not employees of the investment adviser or administrator 13,032 Custodian fee (Note 1D):................ 306,356 Distribution expenses (Note 3):......... 429,548 Transfer and dividend disbursing agent fees 45,763 Printing................................ 14,584 Interest expense........................ 27,299 Shareholder communications.............. 11,600 Audit services.......................... 32,861 Legal services.......................... 7,300 Registration costs...................... 29,879 Miscellaneous .......................... 10,299 ------------ Total expenses.......................... $ 2,508,984 ------------ Deduct - Reduction of custodian fee (Note 1D):... $ (145,076) ------------ Net expenses............................ $ 2,363,908 ------------ Net investment income................... $ 2,161,397 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain - Investment transactions (identified cost basis).............. $ 12,337,126 Foreign currency transactions.......... (95,804) ------------ Net realized gain....................... $ 12,241,322 Change in unrealized appreciation of Investments (identified cost basis).... 28,017,500 Foreign currency....................... 6,606 ------------ Net realized and unrealized gain of investments............................ $ 40,265,428 ------------ Net increase in net assets from operations $ 42,426,825 ============= See notes to financial statements WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) - ----------------------------------------------------------------------------- Year Ended December 31, -------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income ..................................................... $ 2,161,397 $ 596,164 Net realized gain on investments and foreign currency transactions......... 12,241,322 7,843,984 Change in unrealized appreciatIon on investments and translation of assets and liabilities in foreign currencies.................................... 28,024,106 6,726,396 --------------- --------------- Net increase in net assets resulting from operations..................... $ 42,426,825 $ 15,166,544 --------------- --------------- Distributions to shareholders From net investment income................................................. $ (2,603,140) $ (704,313) From net realized gain..................................................... (227,144) --------------- --------------- Total distributions...................................................... $ (2,830,284) $ (704,313) --------------- --------------- Net increase in net assets from fund share transactions (Note 4) ............ $ 68,707,253 $ 33,169,454 --------------- --------------- Net increase in net assets................................................... $ 108,303,794 $ 47,631,685 NET ASSETS: At beginning of year......................................................... 109,897,378 62,265,693 --------------- -------------- At end of yeare.............................................................. $ 218,201,172 $109,897,378 =============== =============== ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR.................................................................. $ 55,481 $ 2,125,740 =============== =============== See notes to financial statements
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND (WIBC) - ------------------------------------------------------------------------------- Year Ended December 31, - -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2006(1) 2005(1) 2004 2003(1) 2002(1) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $18.060 $15.070 $12.890 $ 9.840 $11.510 --------- --------- --------- --------- --------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income...... .......... $ 0.255 $ 0.129 $ 0.128 $ 0.073 $ 0.070 Net realized and unrealized gain (loss) 4.859 3.028 2.140 3.044 (1.740) --------- --------- --------- --------- --------- Total income (loss) from investment operations...... $ 5.114 $ 3.157 $ 2.268 $ 3.117 $ (1.670) --------- --------- --------- --------- --------- LESS DISTRIBUTIONS: Distributions from investment income... $ (0.320) $ (0.167) $ (0.088) $ (0.067) $ - Distributions from capital gains....... (0.024) - - - - --------- --------- --------- --------- --------- Total distributions................ $ (0.344) $ (0.167) $(0.088) $ (0.067) $ - --------- --------- --------- --------- --------- Net asset value, end of year................ $22.830 $18.060 $15.070 $12.890 $ 9.840 ========= ========= ========= ========= ========= TOTAL RETURN(2) ............................ 28.49% 21.13% 17.71% 31.96% (14.51%) RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000 omitted).. $218,201 $109,897 $ 62,266 $ 54,586 $ 50,835 Ratio of net expenses to average net assets 1.46% 1.66% 1.72% 1.80% 1.66%(3) Ratio of net expenses after custodian fee reduction to average net assets(4) ... 1.37% 1.62% 1.71% 1.80% 1.65% Ratio of net investment income to average net assets.......................... 1.26% 0.81% 0.97% 0.81% 0.65% Portfolio turnover rate................ 116% 99% 121% 77% 62%(5) - -------------------------------------------------------------------------------------------------------------------------------- (1)Certain per share amounts are based on average shares outstanding. (2)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be invested at the net asset value on the reinvestment date. (3)Includes the fund's share of its corresponding Portfolio's allocated expenses (Note 1). (4)Custodian fees were reduced by credits resulting from cash balances the fund and/or the portfolio maintained with the custodian (Note 1D). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (5)Represents portfolio turnover rate of the fund's corresponding portfolio (Note 1). See notes to financial statements
WRIGHT MANAGED EQUITY TRUST - ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (1) SIGNIFICANT ACCOUNTING POLICIES The Wright Managed Equity Trust (the Trust), issuer of Wright Selected Blue Chip Equities Fund (WSBC) series, Wright Major Blue Chip Equities Fund (WMBC) series, and Wright International Blue Chip Equities Fund (WIBC) series (collectively, the Funds), is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end, management investment company. The Funds seek to provide total return consisting of price appreciation and current income. Prior to December 20, 2002, WSBC and WIBC invested all of their investable assets in interests in a separate corresponding open-end management investment company (a Portfolio), a New York Trust, having the same investment objective as its corresponding fund. Subsequent to December 20, 2002, the Funds invest directly in securities rather than through the Portfolios and maintain the same investment objectives. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. A. Investment Valuations - Securities listed on securities exchanges or in the NASDAQ Global Market are valued at closing sale prices, if those prices are deemed to be representative of market values at the close of business. Unlisted or listed securities for which closing sale prices are not available are valued at the mean between the latest bid and asked prices. Short-term obligations maturing in sixty days or less are valued at amortized cost, which approximates fair value. Securities for which market quotations are unavailable or deemed not to be representative of market values at the close of business are appraised at their fair value as determined in good faith by or at the direction of the Trustees. B. Foreign Currency Translation - Investment security valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses are translated into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. C. Income - Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the funds are informed of the ex-dividend date. D. Expense Reduction - Investors Bank & Trust (IBT) serves as custodian to the Funds. Pursuant to the custodian agreement, IBT receives a fee reduced by credits which are determined based on the average daily cash balance the Funds maintain with IBT. All credit balances used to reduce the Funds' custodian fees are reported as a reduction of total expenses on the Statement of Operations. E. Federal Taxes - The Trust's policy is to comply with the provisions of the Internal Revenue Code (the Code) available to regulated investment companies and distribute to shareholders each year all of its taxable income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is necessary. At December 31, 2006, the Trust, for federal income tax purposes, had capital loss carryovers of $20,503,370 (WMBC) which will reduce the respective Funds' taxable income arising from future net realized gain on investment transactions, if any, to the extent permitted by the Code, and thus will reduce the amount of the distribution to shareholders which would otherwise be necessary to relieve the respective fund of any liability for federal income or excise tax. Pursuant to the Code, such capital loss carryovers will expire as follows: 12/31 WMBC - ------------------------------------------------------------------------------- 2009 $ 669,204 2010 17,603,398 2011 2,230,768 - ------------------------------------------------------------------------------- At December 31, 2006, net currency losses of $19,651 for WIBC attributable to security transactions incurred after October 31, 2006 are treated as arising on the first day of the fund's current taxable year. Withholding taxes on foreign dividends have been provided for in accordance with the Trust's understanding of the applicable country's tax rules and rates. F. Distributions - The Trust requires that differences in the recognition or classification of income between the financial statements and tax earnings and profits which result only in temporary over distributions for financial statement purposes, are classified as distributions in excess of net investment income or accumulated net realized gains. Distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting for certain items may result in reclassification of these items. During the year ended December 31, 2006, the following amounts were reclassified due to differences between book and tax accounting created primarily by the deferral of certain losses for tax purposes and character reclassifications between net investment income and net realized capital gains. Accumulated Undistributed Undistributed Net Net Paid-In Realized Gain Investment Capital on Investments Income - ------------------------------------------------------------------------------ WSBC $ 887,557 $ 83,754 $ 803,803 WMBC 212,487 9,896 202,591 WIBC 1,583,591 44,924 1,538,667 - ------------------------------------------------------------------------------ The tax character of distributions paid for the year ended December 31, 2006 and December 31, 2005 was as follows: Year Ended 12/31/06 WSBC WMBC WIBC - ------------------------------------------------------------------------------ Distributions declared from: Ordinary income - $314,151 $2,603,140 Capital gains $4,229,388 - $227,144 - ------------------------------------------------------------------------------ Year Ended 12/31/05 WSBC WMBC WIBC - ------------------------------------------------------------------------------ Distributions declared from: Ordinary income - $485,388 $704,313 Capital gains $5,390,227 - - - ------------------------------------------------------------------------------- As of December 31, 2006, the components of distributable earnings (accumulated losses) on a tax basis were as follows: WSBC WMBC WIBC - ------------------------------------------------------------------------------ Undistributed income - $ 7,906 $ 2,129,170 Undistributed gain $2,362,201 - $1,295,828 Capital loss carryforwards - ($20,503,370) - Unrealized appreciation $6,586,452 $10,650,410 $41,725,680 Other temporary differences - - $19,651 G. Other - Investment transactions are accounted for on a trade-date basis. H. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. (2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as investment adviser to the Funds pursuant to an Investment Advisory Contract. Wright furnishes the Funds with investment management, investment advisory, and other services. For its services, Wright is compensated based upon a percentage of average daily net assets which rate is adjusted as average daily net assets exceed certain levels. For the year ended December 31, 2006, the effective annual rate was 0.79% for WIBC and 0.60% for WSBC and WMBC. Wright waived adviser fees of $12,425 on behalf of WSBC and was allocated expenses of $2,034 on behalf of WMBC. The Trust also has engaged Eaton Vance Management (Eaton Vance) to act as administrator of the Trust. Under the Administration Agreement, Eaton Vance is responsible for managing the business affairs of the Trust and is compensated based upon a percentage of average daily net assets which rate is reduced as average daily net assets exceed certain levels. For the year ended December 31, 2006, the effective rate was 0.12% for WSBC and WMBC, and 0.13% for WIBC. Certain of the Trustees and officers of the Trust are Trustees or officers of the above organizations. Except as to Trustees of the Trust who are not employees of Eaton Vance or Wright, Trustees and officers receive remuneration for their services to the Trust out of the fees paid to Eaton Vance and Wright. (3) DISTRIBUTION EXPENSES The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule 12b-1 of the Investment Company Act of 1940. The Plan provides that each of the funds will pay Wright Investors' Service Distributors, Inc. (Principal Underwriter), a wholly-owned subsidiary of The Winthrop Corporation, an annual rate of 0.25% of each fund's average daily net assets for activities primarily intended to result in the sale of each fund's shares. Under a written agreement in effect through the current fiscal year, Wright waives a portion of its advisory fee and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 1.25% after custodian fee reductions, if any, for both WSBC and WMBC. Pursuant to this agreement, the principal underwriter made a reduction of its fees of $72,850 and $9,875 on behalf of WSBC and WMBC, respectively. In addition, the Trustees have adopted a service plan (the Service Plan) which allows the funds to reimburse the Principal Underwriter for payments to intermediaries for providing account administration and account maintenance services to their customers who are beneficial owners of shares. The amount of service fee payable under the Service Plan with respect to each class of shares may not exceed 0.25% annually of the average daily net assets attributable to the respective classes. For the year ended December 31, 2006, the funds did not accrue or pay any service fees. (4) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in fund shares were as follows: Year Ended Year Ended December 31, 2006 December 31, 2005 ----------------- ----------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------------------------------- WRIGHT SELECTED BLUE CHIP EQUITIES FUND Sold................................................... 536,776 $ 6,889,335 1,994,101 $ 26,725,001 Issued to shareholders in payment of distributions declared....................................... 297,905 3,759,968 362,284 4,698,930 Redemptions............................................ (1,367,163) (17,007,602) (1,988,270) (26,793,743) ------------ ---------------- ------------ ---------------- Net increase (decrease).............................. (532,482) $ (6,358,299) 368,115 $ 4,630,188 ============ ================ ============ ================ WRIGHT MAJOR BLUE CHIP EQUITIES FUND Sold.................................................. 600,054 $ 7,758,465 746,933 $ 8,790,299 Issued to shareholders in payment of distributions declared ............................................ 18,825 257,085 32,288 390,542 Redemptions........................................... (1,403,539) (18,032,693) (969,256) (11,553,556) ------------ ---------------- ------------ ---------------- Net decrease........................................ (784,660) $ (10,017,143) (190,035) $ (2,372,715) ============ ================ ============ ================ WRIGHT INTERNATIONAL BLUE CHIP EQUITIES FUND Sold................................................... 6,330,093 $ 126,455,231 2,853,233 $ 47,557,242 Issued to shareholders in payment of distributions declared............................................. 109,592 2,341,138 33,842 523,875 Redemptions............................................ (2,964,763) (60,089,116) (936,442) (14,911,663) ------------ ---------------- ------------ ---------------- Net increase......................................... 3,474,922 $ 68,707,253 1,950,633 $ 33,169,454 ============ =============== ============ ================
(5) INVESTMENT TRANSACTIONS Purchases and sales of investments, other than U.S. Government securities and short-term obligations were as follows: Year Ended December 31, 2006 ----------------------------------------------------- WSBC WMBC WIBC - -------------------------------------------------------------------------------------------------------------------------------- Purchases.............................. $ 29,036,902 $ 63,803,744 $ 275,663,985 ============ ============ ============ Sales.................................. $ 39,866,702 $ 74,460,330 $ 204,082,031 ============ ============ ============ - --------------------------------------------------------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost and unrealized appreciation (depreciation) of the investment securities owned at December 31, 2006, as computed on a federal income tax basis, are as follows: WSBC WMBC WIBC - ------------------------------------------------------------------------------- Aggregate cost $ 31,515,904 $52,690,536 $172,915,593 =========== =========== ============ Gross unrealized appreciation 7,398,099 11,340,343 43,264,597 Gross unrealized depreciation (811,647) (689,932) (1,549,097) ----------- ----------- ----------- Net unrealized appreciation $ 6,586,452 $10,650,411 $ 41,715,5000 =========== =========== =========== - ------------------------------------------------------------------------------- The appreciation on currency for WIBC is $10,180. (7) LINE OF CREDIT The funds participate with other funds managed by Wright in a committed $10 million unsecured line of credit agreement with a bank. The funds may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each fund based on its borrowings at an amount above the federal funds rate. In addition, a fee computed at an annual rate of 0.10% on the average daily unused portion of the $10 million line of credit, is allocated among the participating funds at the end of each quarter. At December 31, 2006, WMBC had a balance outstanding pursuant to this line of credit of $311,000. WSBC and WIBC did not have significant borrowings or allocated fees during the year ended December 31, 2006. (8) RISKS ASSOCIATED WITH FOREIGN INVESTMENTS Investing in securities issued by companies whose principal business activities are outside the United States may involve significant risks not present in domestic investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting requirements of the U.S. securities laws. Foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on the removal of funds or other assets of the Portfolio, political or financial instability or diplomatic and other developments which could affect such investments. (9) FINANCIAL INSTRUMENTS The Funds may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities and to assist in managing exposure to various market risks. These financial instruments include written options, financial futures contracts, forward foreign currency contracts, credit default swaps, and interest rate swaps and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Portfolio has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. (10) RECENTLY ISSUED ACCOUNTING PRONUNCEMENTS In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, ("FIN 48") "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109". FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, "Accounting for Income Taxes." This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective during the first required financial reporting period for fiscal years beginning after December 15, 2006. Management is currently evaluating the impact of applying the various provisions of FIN 48. In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, ("FAS 157") "Fair Value Measurements". FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact the adoption of FAS 157 will have on the Funds' financial statement disclosures. WRIGHT MANAGED EQUITY TRUST - ------------------------------------------------------------------------------ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees and Shareholders of The Wright Managed Equity Trust: We have audited the accompanying statements of assets and liabilities of the Wright Managed Equity Trust (the "Trust"), comprising the Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund, and Wright International Blue Chip Equities Fund (the "Funds"), including the portfolios of investments as of December 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2006 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds constituting the Wright Managed Equity Trust at December 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts February 16, 2007 WRIGHT MANAGED EQUITY TRUST AS OF DECEMBER 31, 2006 - ------------------------------------------------------------------------------ FEDERAL TAX INFORMATION (Unaudited) The Form 1099-DIV you received in January 2007 showed the tax status of all distributions paid to your account in calendar 2006. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Fund. As required by the Internal Revenue Code regulations, shareholders must be notified within 60 days of the Fund's fiscal year end regarding capital gains dividends, the status of the qualified dividend income for individuals and the foreign tax credit. CAPITAL GAINS DIVIDENDS - The Wright Selected Blue Chip Equities Fund and Wright International Blue Chip Equities Fund designates $4,229,388 and $227,145, respectively, as a capital gain dividend. FOREIGN TAX CREDIT. The Wright International Blue Chip Equities Fund designates a foreign tax credit of $479,675 and recognizes foreign source income of $5,003,207. QUALIFIED DIVIDEND INCOME. The Wright Major Blue Chip Equities Fund and Wright International Blue Chip Equities Fund designates approximately $945,082 and $4,610,360, respectively, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%. WRIGHT TOTAL RETURN BOND FUND (WTRB) - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2006 Face Coupon Maturity Current Amount Description Rate Date Value Yield - ----------------------------------------------------------------------------------------------------------------------------------- (unaudited) ASSET-BACKED SECURITIES - 2.4% $ 335,000 Credit-Based Asset Servicing and Securities, Series 2005-CB7 AF2 5.147% 11-25-35 $ 333,117 5.2% 405,000 Structured Asset Securities Corp., Series 2004-23XS 1A4 4.930% 01-25-35 395,930 5.0% ------------ Total Asset-Backed Securities (identified cost, $732,035) $ 729,047 ------------ COMMERCIAL MORTGAGE-BACKED SECURITIES - 7.9% $ 340,000 Citigroup Commercial Mortgage Trust, Series 2004-C2 A5 4.733% 10-15-41 $ 327,750 4.9% 440,000 CS First Boston Mortgage Securities Corp., Series 2003-C3 A5 3.936% 05-15-38 408,895 4.2% 565,000 JP Morgan Chase Commercial Mortgage Securities, Series 2004-C3 A5 4.878% 01-15-42 547,691 5.0% 425,000 Merrill Lynch Mortgage Trust, Series 2005-LC1 A4 5.291% 01-12-44 423,627 5.3% 420,000 Merrill Lynch/Countrywide Commercial Mortgage Trust, Series 2006-2 A4 5.910% 06-12-46 439,185 5.7% 281,241 Salomon Brothers Mortage Securities VII, Series 2002-KEY2 A2 4.467% 03-18-36 274,725 4.6% ------------ Total Commercial Mortgage-Backed Securities (identified cost, $2,426,391) $ 2,421,873 ------------ NON-AGENCY MORTGAGE-BACKED SECURITIES - 1.0% $ 325,712 First Horizon Alternative Mortgage Securities, Series 2005-AA10 1A2 5.776% 12-25-35 $ 322,455 5.8% ------------ Total Non-Agency Mortgage-Backed Securities (identified cost, $325,712) CORPORATE BONDS - 23.3% AUTO - 0.5% - ------------ $ 160,000 DaimlerChrysler North America Holding Co. 7.200% 09-01-09 $ 166,077 6.9% BANKS -4.1% - ------------ $ 320,000 HSBC Finance Corp. 4.125% 11-16-09 $ 311,316 4.2% 330,000 JP Morgan Chase & Co. 5.150% 10-01-15 324,396 5.2% 295,000 Royal Bank of Scotland Group PLC 7.648% 08-31-49 347,398 6.5% 290,000 Wachovia Capital Trust 111 5.800% 03-15-42 292,663 5.7% BLDG - RESIDENTIAL/COMMER - 0.5% - -------------------------------- $ 145,000 Centex Corp. 7.875% 02-01-11 $ 156,452 7.3% CABLE TV - 0.5% - --------------- $ 160,000 Comcast Corp. 5.875% 02-15-18 $ 158,600 5.9% COMMUNICATIONS EQUIPMENT - 1.6% - ------------------------------- $ 330,000 Cisco Systems, Inc. 5.500% 02-22-16 $ 330,798 5.5% 170,000 Harris Corp. 5.000% 10-01-15 160,150 5.3% DIVERSIFIED FINANCIALS - 4.9% - ----------------------------- $ 285,000 CIT Group, Inc. 7.750% 04-02-12 $ 314,555 7.0% 225,000 Countrywide Home Loans 6.250% 04-15-09 229,165 6.1% 305,000 General Electric Capital Corp. 5.875% 02-15-12 313,980 5.7% 325,000 Goldman Sachs Group, Inc. 5.350% 01-15-16 321,352 5.4% 315,000 International Lease Finance Corp. 5.875% 05-01-13 322,062 5.7% ELECTRIC UTILITIES - 1.1% - -------------------------- $ 175,000 American Electric Power 5.250% 06-01-15 $ 171,123 5.4% 170,000 Dominion Resources, Inc. 6.300% 03-15-33 175,304 6.1% FOOD - RETAIL - 0.6% - ----------------------- $ 170,000 Safeway, Inc., Note 5.800% 08-15-12 $ 170,523 5.8% INSURANCE - 1.9% - ------------------ $ 175,000 Fund American Cos., Inc., Guaranteed Sr. Note 5.875% 05-15-13 $ 174,183 5.9% 155,000 Partnerre Finance 6.440% 12-01-66 155,855 6.4% 240,000 St. Paul Travelers 5.500% 12-01-15 239,492 5.5% OIL & GAS - 1.1% - -------------------- $ 170,000 Oneok, Inc. 5.510% 02-16-08 $ 169,925 5.5% 155,000 Sempra Energy 6.000% 02-01-13 158,282 5.9% PHARMACEUTICALS & BIOTECHNOLOGY - 0.5% - -------------------------------------- $ 170,000 Hospira, Inc. 4.950% 06-15-09 $ 166,746 5.0% PIPELINES - 0.5% - ------------------------ $ 155,000 Duke Capital Corp., Senior Note 7.500% 10-01-09 $ 163,188 7.1% RETAIL - 1.0% - ----------------- $ 195,000 Autozone, Inc. 4.375% 06-01-13 $ 179,964 4.7% 120,000 TJX Cos., Inc. 7.450% 12-15-09 127,674 7.0% SEMICONDUCTOR EQUIPMENT & PRODUCTS - 0.6% - ----------------------------------------- $ 170,000 Applied Material, Inc. 7.125% 10-15-17 $ 186,634 6.5% SOFTWARE & SERVICES - 0.8% - ----------------------------- $ 260,000 Oracle Corp. 5.000% 01-15-11 $ 257,615 5.0% TELECOM - 3.1% - -------------------- $ 150,000 AT&T Wireless 7.875% 03-01-11 $ 163,761 7.2% 125,000 British Telecom PLC 8.875% 12-15-30 171,479 6.5% 150,000 Deutsche Telekom International Finance 8.000% 06-15-10 162,547 7.4% 140,000 France Telecom SA 7.750% 03-01-11 152,634 7.1% 270,000 Verizon Global Funding Corp. 7.750% 12-01-30 317,637 6.6% ------------ Total Corporate Bonds (identified cost, $7,214,136) -- 23.3% $ 7,213,530 ------------ GOVERNMENT INTERESTS - 64.2% MORTGAGE-BACKED SECURITIES - 50.8% - ---------------------------------- $ 821,885 FHLMC Gold Pool # A35363 5.000% 07-01-35 $ 793,554 5.2% 251,781 FHLMC Gold Pool #A32600 5.500% 05-01-35 249,130 5.6% 85,832 FHLMC Gold Pool #C01646 6.000% 09-01-33 86,638 5.9% 52,845 FHLMC Gold Pool #C01702 6.500% 10-01-33 54,125 6.3% 187,756 FHLMC Gold Pool #C47318 7.000% 09-01-29 195,920 6.7% 664,268 FHLMC Gold Pool #C55780 6.000% 01-01-29 673,244 5.9% 151,373 FHLMC Gold Pool #D66753 6.000% 10-01-23 152,644 6.0% 23,511 FHLMC Gold Pool #E00903 7.000% 10-01-15 24,154 6.8% 318,650 FHLMC Gold Pool #E01425 4.500% 08-01-18 308,039 4.7% 477,177 FHLMC Gold Pool #G01035 6.000% 05-01-29 482,783 5.9% 190,961 FHLMC Gold Pool #G01842 4.500% 06-01-35 179,007 4.8% 168,462 FHLMC Gold Pool #G08088 6.500% 10-01-35 171,666 6.4% 202,230 FHLMC Gold Pool #GO1349 5.000% 12-01-31 195,714 5.2% 194,147 FHLMC Gold Pool #N30514 5.500% 11-01-28 195,054 5.5% 131,885 FHLMC Pool # 781804 5.079% 07-01-34 129,862 5.2% 67,633 FHLMC Pool # 781884 5.155% 08-01-34 66,768 5.2% 157,027 FHLMC Pool # 782862 5.009% 11-01-34 154,379 5.1% 242,315 FHLMC Pool #1B1291 4.401% 11-01-33 241,284 4.4% 740,561 FHLMC Pool #1G0233 5.018% 05-01-35 740,157 5.0% 47,337 FHLMC Pool #27663 7.000% 06-01-29 48,798 6.8% 173,358 FHLMC Pool #781071 5.194% 11-01-33 172,175 5.2% 244,452 FNMA Pool # 709423 4.523% 06-01-33 240,961 4.6% 167,585 FNMA Pool #253057 8.000% 12-01-29 177,598 7.5% 72,128 FNMA Pool #254845 4.000% 07-01-13 69,813 4.1% 71,301 FNMA Pool #254863 4.000% 08-01-13 68,996 4.1% 189,824 FNMA Pool #254865 4.500% 09-01-18 183,628 4.7% 509,505 FNMA Pool #254904 5.500% 10-01-33 504,470 5.6% 365,067 FNMA Pool #255747 4.500% 04-01-25 346,474 4.7% 40,867 FNMA Pool #479477 6.000% 01-01-29 41,346 5.9% 44,401 FNMA Pool #489357 6.500% 03-01-29 45,555 6.3% 37,738 FNMA Pool #535332 8.500% 04-01-30 40,592 7.9% 194,222 FNMA Pool #545317 5.500% 11-01-16 194,840 5.5% 250,093 FNMA Pool #545407 5.500% 01-01-32 247,918 5.5% 60,625 FNMA Pool #545782 7.000% 07-01-32 62,618 6.8% 526,359 FNMA Pool #576524 5.500% 01-01-29 523,121 5.5% 53,726 FNMA Pool #597396 6.500% 09-01-31 55,019 6.3% 34,352 FNMA Pool #634823 6.500% 03-01-32 35,150 6.4% 266,569 FNMA Pool #701043 4.029% 04-01-33 262,184 4.1% 74,880 FNMA Pool #725866 4.500% 09-01-34 70,294 4.8% 350,710 FNMA Pool #730505 4.500% 08-01-33 329,605 4.8% 201,522 FNMA Pool #738630 5.500% 11-01-33 199,531 5.6% 317,877 FNMA Pool #739372 4.121% 09-01-33 311,321 4.2% 1,164,552 FNMA Pool #745467 5.858% 04-01-36 1,170,375 5.8% 229,711 FNMA Pool #747529 4.500% 10-01-33 215,888 4.8% 146,665 FNMA Pool #750859 6.500% 10-01-32 150,476 6.3% 305,070 FNMA Pool #753189 4.000% 12-01-33 278,031 4.4% 321,485 FNMA Pool #755749 5.500% 01-01-29 319,716 5.5% 814,535 FNMA Pool #781893 4.500% 11-01-31 767,703 4.8% 292,675 FNMA Pool #807804 5.500% 03-01-35 289,423 5.6% 661,470 FNMA Pool #809324 4.880% 02-01-35 657,598 4.9% 88,581 FNMA Pool #809888 4.500% 03-01-35 83,061 4.8% 429,146 FNMA Pool #849893 4.000% 11-01-23 398,596 4.3% 301,343 Freddie Mac, Series 1983 Z 6.500% 12-15-23 311,474 6.3% 68,601 GNMA II Pool #2671 6.000% 11-20-28 69,579 5.9% 10,278 GNMA II Pool #2909 8.000% 04-20-30 10,853 7.6% 28,577 GNMA II Pool #2972 7.500% 09-20-30 29,720 7.2% 10,491 GNMA II Pool #2973 8.000% 09-20-30 11,078 7.6% 370,077 GNMA Pool #374892 7.000% 02-15-24 382,562 6.8% 62,168 GNMA Pool #376400 6.500% 02-15-24 63,931 6.3% 86,719 GNMA Pool #379982 7.000% 02-15-24 89,644 6.8% 288,262 GNMA Pool #393347 7.500% 02-15-27 301,508 7.2% 102,128 GNMA Pool #410081 8.000% 08-15-25 108,214 7.6% 37,658 GNMA Pool #427199 7.000% 12-15-27 38,972 6.8% 37,070 GNMA Pool #436214 6.500% 02-15-13 37,990 6.3% 29,039 GNMA Pool #442996 6.000% 06-15-13 29,565 5.9% 107,482 GNMA Pool #448490 7.500% 03-15-27 112,421 7.2% 78,887 GNMA Pool #458762 6.500% 01-15-28 81,199 6.3% 99,511 GNMA Pool #460726 6.500% 12-15-27 102,425 6.3% 38,013 GNMA Pool #463839 6.000% 05-15-13 38,702 5.9% 56,867 GNMA Pool #478072 6.500% 05-15-28 58,534 6.3% 27,570 GNMA Pool #488924 6.500% 11-15-28 28,378 6.3% 20,295 GNMA Pool #510706 8.000% 11-15-29 21,531 7.5% 101,459 GNMA Pool #581536 5.500% 06-15-33 101,120 5.5% U.S. GOVERNMENT AGENCIES - 1.2% - ------------------------------- $ 375,000 Federal Home Loan Bank 4.500% 09-10-10 $ 369,287 4.6% U.S. TREASURIES - 12.2% - ------------------------ $ 1,045,000 U.S. Treasury Bonds 6.125% 11-15-27 $ 1,212,772 5.3% 510,000 U.S. Treasury Notes 5.000% 08-15-11 517,291 4.9% 1,409,609 U.S. Treasury Notes 2.000% 01-15-14 1,369,983 2.1% 510,000 U.S. Treasury Bond 8.125% 08-15-19 666,466 6.2% ------------ Total Government Interests (identified cost, $19,876,985)-- 64.2% $19,822,195 ------------ Total Investments (identified cost, $30,575,259)-- 98.8% $30,509,100 Other Assets, Less Liabilities-- 1.2% 356,619 ------------ Net Assets-- 100.0% $30,865,719 ============ FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB) - ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2006 - ----------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost of $30,575,259)(Note 1A) $ 30,509,100 Cash.................................... 137,740 Receivable for investments sold......... 25,978 Receivable for fund shares sold......... 38 Interest receivable..................... 245,430 Prepaid expenses........................ 5,500 ------------ Total assets.......................... $ 30,923,786 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 2,078 Distributions payable................... 25,393 Payable to affiliate for distribution fees 80 Transfer agent fee ..................... 3,411 Accrued expenses and other liabilities.. 27,105 ------------ Total liabilities..................... $ 58,067 ------------ NET ASSETS................................ $ 30,865,719 ============== NET ASSETS CONSIST OF: Paid-in capital......................... $ 34,192,621 Accumulated net realized loss on investments (computed on the basis of identified cost) (3,253,660) Unrealized depreciation on investments (computed on the basis of identified cost) (66,159) Distributions in excess of net investment income...................... (7,083) ------------ Net assets applicable to outstanding shares.................... $ 30,865,719 ============= SHARES OF BENEFICIAL INTEREST OUTSTANDING............................. 2,512,149 ============== NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST..................... $ 12.29 =============== See notes to financial statements STATEMENT OF OPERATIONS Year Ended December 31, 2006 - ------------------------------------------------------------------------------ INVESTMENT INCOME (Note 1B): Interest income........................ $ 1,802,569 ------------ Expenses - Investment adviser fee (Note 3)........ $ 165,521 Administrator fee (Note 3)............. 25,726 Compensation of Trustees not employees of the investment adviser or administrator 13,072 Custodian fee (Note 1C)................ 66,570 Distribution expenses (Note 4)......... 91,879 Transfer and dividend disbursing agent fees 20,300 Printing............................... 5,020 Interest expense....................... 2,193 Shareholder communications............. 2,727 Audit services......................... 28,400 Legal services......................... 5,683 Registration costs..................... 20,024 Miscellaneous.......................... 4,038 ------------ Total expenses........................ $ 451,153 ------------ Deduct - Reduction of custodian fee (Note 1C):.. $ (12,864) Reduction of investment adviser fee (Note 3)............................ (3,284) Reduction of distribution expenses by principal underwriter (Note 4)..... $ (86,128) ------------ Total deductions....................... $ (102,276) ------------ Net expenses.......................... $ 348,877 ------------ Net investment income................ $ 1,453,692 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investment transactions (identified cost basis)................ $ (647,060) Change in unrealized appreciation of investments......................... 193,494 ------------ Net realized and unrealized loss of investments........................... $ (453,566) ------------ Net increase in net assets from operations........................... $ 1,000,126 ============= See notes to financial statements WRIGHT TOTAL RETURN BOND FUND (WTRB) - -------------------------------------------------------------------------------- Year Ended December 31, - -------------------------------------------------------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income...................................................... $ 1,453,692 $ 1,475,641 Net realized loss on investments........................................... (647,060) (272,363) Change in unrealized appreciation (depreciation) of investments............ 193,494 (584,766) --------------- --------------- Net increase in net assets resulting from operations..................... $ 1,000,126 $ 618,512 --------------- --------------- Distributions to shareholders (Note 2) - From net investment income................................................. $ (1,629,189) $ (1,706,230) --------------- --------------- Total distributions...................................................... $ (1,629,189) $ (1,706,230) --------------- --------------- Net increase (decrease) in net assets from fund share transactions (Note 5).. $ (9,793,330) $ 4,162,659 --------------- --------------- Net increase (decrease) in net assets.................................... $(10,422,393) $ 3,074,941 NET ASSETS: At beginning of year......................................................... 41,288,112 38,213,171 --------------- --------------- At end of year............................................................... $ 30,865,719 $ 41,288,112 =============== =============== DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR........................................ $ (7,083) $ (9,599) =============== =============== See notes to financial statements
WRIGHT TOTAL RETURN BOND FUND (WTRB) - ------------------------------------------------------------------------------- Year Ended December 31, - -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 12.430 $ 12.770 $ 12.870 $ 13.010 $ 12.550 --------- --------- --------- --------- --------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income(1) ................ $ 0.483 $ 0.465 $ 0.453 $ 0.483 $ 0.639 Net realized and unrealized gain (loss).. (0.082) (0.271) (0.011) (0.066) 0.461 --------- --------- --------- --------- --------- Total income from investment operations $ 0.401 $ 0.194 $ 0.442 $ 0.417 $ 1.100 --------- --------- --------- --------- --------- LESS DISTRIBUTIONS: Distributions from investment income..... $ (0.541) $ (0.534) $ (0.542) $ (0.557) $ (0.640) --------- --------- --------- --------- --------- Total distributions.................... $ (0.541) $ (0.534) $ (0.542) $ (0.557) $ (0.640) --------- --------- --------- --------- --------- Net asset value, end of year................ $ 12.290 $ 12.430 $ 12.770 $ 12.870 $ 13.010 ========= ========= ========= ========= ========= TOTAL RETURN(2) ............................ 3.34% 1.54% 3.52% 3.25% 9.03% RATIOS/SUPPLEMENTAL DATA(1): Net assets, end of year (000 omitted).... $ 30,866 $ 41,288 $ 38,213 $ 42,317 $ 39,404 Ratio of net expenses to average net assets 0.99% 0.98% 0.96% 0.95% 0.96% Ratio of net expenses after custodian fee reduction to average net assets(3)(4) . 0.95% 0.95% 0.95% 0.95% 0.95% Ratio of net investment income to average net assets............................ 3.96% 3.66% 3.58% 3.67% 4.92% Portfolio turnover rate.................. 90% 86% 64% 131% 68% - -------------------------------------------------------------------------------------------------------------------------------- (1)For the years ended December 31, 2006, 2005, 2004, 2003, and 2002, the operating expenses of the fund were reduced by an allocation of expenses to the investment adviser, and/or a reduction in distribution expenses by the distributor. Had such action not been undertaken, net investment income per share and the ratios would have been as follows: 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income per share.......... $ 0.453 $ 0.439 $ 0.429 $ 0.455 $ 0.621 ========= ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses............................... 1.23%(3) 1.18% 1.18% 1.17% 1.09% ========= ========= ========= ========= ========= Expenses after custodian fee reduction(4) 1.19%(3) 1.15% 1.17% 1.17% 1.08% ========= ========= ========= ========= ========= Net investment income.................. 3.72%(3) 3.46% 3.36% 3.46% 4.78% ========= ========= ========= ========= ========= - -------------------------------------------------------------------------------------------------------------------------------- (2)Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each year reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. (3)Custodian fees were reduced by credits resulting from cash balances the fund maintained with the custodian (Note 1C). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. (4)Under a written agreement, Wright waives all or a portion of either its advisory and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 0.95% after custodian fee credits are applied. See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF) - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2006 Face Coupon Maturity Current Amount Description Rate Date Value Yield - -------------------------------------------------------------------------------------------------------------------------------- (unaudited) ASSET-BACKED SECURITIES - 4.2% - ------------------------------ $ 301,103 Bear Sterns Adjustable Rate Motage, Series 2003-4, Class 3A1 4.955% 07-25-33 $ 295,267 5.1% 830,448 Chase Mortgage Finance Corporation, Series 2003-S3, Class A16 5.000% 11-25-33 802,607 5.2% 613,802 Countrywide Home Loans, Series 2006-J1, Class 3A1 6.000% 02-25-36 614,473 6.0% MORTGAGE-BACKED SECURITIES - 82.5% - ---------------------------------- $ 31,990 FHLMC Gold Balloon #M90710 5.000% 03-01-07 $ 31,869 5.0% 28,488 FHLMC Gold Balloon #M90724 5.500% 05-01-07 28,489 5.5% 238,451 FHLMC Gold Balloon #M90767 4.500% 11-01-07 236,913 4.5% 272,677 FHLMC Gold Balloon #M90802 4.000% 03-01-08 269,423 4.0% 774,466 FHLMC Gold Balloon #M90937 5.000% 08-01-09 771,437 5.0% 756,914 FHLMC Gold Balloon #M90941 4.500% 08-01-09 748,495 4.6% 164,679 FHLMC Gold Pool #C00778 7.000% 06-01-29 169,761 6.8% 231,934 FHLMC Gold Pool #C47318 7.000% 09-01-29 242,019 6.7% 152,573 FHLMC Gold Pool #E00678 6.500% 06-01-14 156,165 6.4% 155,810 FHLMC Gold Pool #E00721 6.500% 07-01-14 159,491 6.3% 139,795 FHLMC Gold Pool #G00812 6.500% 04-01-26 143,299 6.3% 381,923 FHLMC Gold Pool #G01842 4.500% 06-01-35 358,013 4.8% 261,350 FHLMC Gold Pool #M90796 4.000% 02-01-08 258,352 4.0% 240,361 FHLMC Pool #1B1291 4.401% 11-01-33 239,338 4.4% 623,244 FHLMC Pool #1G0233 5.018% 05-01-35 622,904 5.0% 129,172 FHLMC Pool #765183 5.818% 08-01-24 131,073 5.7% 55,168 FHLMC Pool #C00548 7.000% 08-01-27 56,969 6.8% 216,146 FHLMC Pool #D82572 7.000% 09-01-27 223,204 6.8% 476,305 FHLMC, Series 15, Class L 7.000% 07-25-23 490,255 6.8% 77,579 FNMA Pool #254227 5.000% 02-01-09 77,394 5.0% 25,519 FNMA Pool #254505 5.000% 11-01-09 25,458 5.0% 1,115,996 FNMA Pool #255669 4.500% 02-01-35 1,046,457 4.8% 117,121 FNMA Pool #535131 6.000% 03-01-29 118,492 5.9% 154,211 FNMA Pool #545133 6.500% 12-01-28 158,083 6.3% 111,099 FNMA Pool #663689 5.000% 01-01-18 109,499 5.1% 547,114 FNMA Pool #673315 5.500% 11-01-32 541,820 5.6% 472,090 FNMA Pool #701043 4.029% 04-01-33 464,324 4.1% 64,544 FNMA Pool #733750 6.310% 10-01-32 65,727 6.2% 464,935 FNMA Pool #745467 5.858% 04-01-36 467,260 5.8% 528,692 FNMA Pool #801357 5.500% 08-01-34 523,577 5.6% 943,613 FNMA Pool #809324 4.880% 02-01-35 938,090 4.9% 572,202 FNMA Pool #816108 5.500% 05-01-35 565,846 5.6% 342,985 FNMA Pool #825395 4.851% 07-01-35 342,051 4.9% 592,590 FNMA Pool #871394 7.000% 04-01-21 608,614 6.8% 899,588 FNMA Pool #892522 6.187% 08-01-36 909,665 6.1% 581,359 FNMA, Series G93-5, Class Z 6.500% 02-25-23 592,272 6.4% 281,094 GNMA II Pool # 3388 4.500% 05-20-33 263,980 4.8% 3,454 GNMA II Pool #1596 9.000% 04-20-21 3,712 8.4% 61,225 GNMA II Pool #2268 7.500% 08-20-26 63,768 7.2% 6,960 GNMA II Pool #2855 8.500% 12-20-29 7,448 7.9% 564,448 GNMA II Pool #3259 5.500% 07-20-32 561,449 5.5% 349,586 GNMA II Pool #3284 5.500% 09-20-32 347,728 5.5% 142,093 GNMA II Pool #3401 4.500% 06-20-33 133,442 4.8% 111,643 GNMA II Pool #3484 3.500% 09-20-33 95,193 4.1% 220,689 GNMA II Pool #3554 4.500% 05-20-34 207,022 4.8% 335,559 GNMA II Pool #3567 4.500% 06-20-34 314,778 4.8% 1,586,006 GNMA II Pool #3747 5.000% 08-20-35 1,536,677 5.2% 319,502 GNMA II Pool #3920 6.000% 11-20-36 323,258 5.9% 115,566 GNMA II Pool #601135 6.310% 09-20-32 117,551 6.2% 132,975 GNMA II Pool #601255 6.310% 01-20-33 135,162 6.2% 112,833 GNMA II Pool #608120 6.310% 01-20-33 114,689 6.2% 40,929 GNMA II Pool #723 7.500% 01-20-23 42,565 7.2% 2,080,713 GNMA II Pool# 3734 4.500% 07-20-35 1,950,757 4.8% 605,983 GNMA II Pool# 648541 6.000% 10-20-35 612,260 5.9% 92,097 GNMA Pool #081161 5.500% 11-20-34 91,147 5.6% 2,213 GNMA Pool #176992 8.000% 11-15-16 2,328 7.6% 2,576 GNMA Pool #177784 8.000% 10-15-16 2,710 7.6% 12,172 GNMA Pool #192357 8.000% 04-15-17 12,837 7.6% 18,543 GNMA Pool #194057 8.500% 04-15-17 19,841 7.9% 5,102 GNMA Pool #194287 9.500% 03-15-17 5,549 8.7% 1,471 GNMA Pool #196063 8.500% 03-15-17 1,574 7.9% 7,493 GNMA Pool #211231 8.500% 05-15-17 8,018 7.9% 4,448 GNMA Pool #212601 8.500% 06-15-17 4,760 7.9% 3,254 GNMA Pool #220917 8.500% 04-15-17 3,482 7.9% 8,325 GNMA Pool #223348 10.000% 08-15-18 9,243 9.0% 12,728 GNMA Pool #228308 10.000% 01-15-19 14,135 9.0% 2,930 GNMA Pool #230223 9.500% 04-15-18 3,195 8.7% 678 GNMA Pool #247473 10.000% 09-15-18 704 9.6% 3,602 GNMA Pool #247872 10.000% 09-15-18 3,999 9.0% 4,145 GNMA Pool #251241 9.500% 06-15-18 4,520 8.7% 5,602 GNMA Pool #260999 9.500% 09-15-18 6,109 8.7% 5,810 GNMA Pool #263439 10.000% 02-15-19 6,452 9.0% 1,485 GNMA Pool #265267 9.500% 08-15-20 1,627 8.7% 1,887 GNMA Pool #266983 10.000% 02-15-19 2,095 9.0% 3,077 GNMA Pool #273690 9.500% 08-15-19 3,363 8.7% 1,481 GNMA Pool #286556 9.000% 03-15-20 1,595 8.4% 4,824 GNMA Pool #301366 8.500% 06-15-21 5,193 7.9% 5,835 GNMA Pool #302933 8.500% 06-15-21 6,282 7.9% 11,413 GNMA Pool #308792 9.000% 07-15-21 12,311 8.3% 3,553 GNMA Pool #314222 8.500% 04-15-22 3,830 7.9% 3,727 GNMA Pool #315187 8.000% 06-15-22 3,953 7.5% 13,599 GNMA Pool #315754 8.000% 01-15-22 14,421 7.5% 28,546 GNMA Pool #319441 8.500% 04-15-22 30,772 7.9% 9,567 GNMA Pool #325165 8.000% 06-15-22 10,146 7.5% 15,235 GNMA Pool #335950 8.000% 10-15-22 16,156 7.5% 191,180 GNMA Pool #346987 7.000% 12-15-23 197,535 6.8% 107,968 GNMA Pool #352001 6.500% 12-15-23 110,956 6.3% 42,992 GNMA Pool #352110 7.000% 08-15-23 44,420 6.8% 1,953,449 GNMA Pool #3556 5.500% 05-20-34 1,940,997 5.5% 52,373 GNMA Pool #368238 7.000% 12-15-23 54,114 6.8% 50,929 GNMA Pool #372379 8.000% 10-15-26 53,996 7.5% 61,753 GNMA Pool #396537 7.490% 03-15-25 64,519 7.2% 69,260 GNMA Pool #399964 7.490% 04-15-26 72,394 7.2% 83,639 GNMA Pool #410215 7.500% 12-15-25 87,408 7.2% 14,910 GNMA Pool #414736 7.500% 11-15-25 15,583 7.2% 54,732 GNMA Pool #420707 7.000% 02-15-26 56,626 6.8% 32,057 GNMA Pool #421829 7.500% 04-15-26 33,517 7.2% 18,969 GNMA Pool #431036 8.000% 07-15-26 20,111 7.5% 51,574 GNMA Pool #431612 8.000% 11-15-26 54,679 7.5% 63,567 GNMA Pool #438004 7.490% 11-15-26 66,444 7.2% 15,051 GNMA Pool #442190 8.000% 12-15-26 15,957 7.5% 23,091 GNMA Pool #449176 6.500% 07-15-28 23,767 6.3% 57,363 GNMA Pool #462623 6.500% 03-15-28 59,044 6.3% 383,540 GNMA Pool #471369 5.500% 05-15-33 382,260 5.5% 106,147 GNMA Pool #475149 6.500% 05-15-13 108,780 6.3% 144,607 GNMA Pool #489377 6.375% 03-15-29 148,116 6.2% 44,085 GNMA Pool #538314 7.000% 02-15-32 45,567 6.8% 339,820 GNMA Pool #595606 6.000% 11-15-32 345,137 5.9% 50,350 GNMA Pool #602377 4.500% 06-15-18 48,869 4.6% 668,825 GNMA Pool #603250 5.500% 04-15-34 666,234 5.5% 52,022 GNMA Pool #603377 4.500% 01-15-18 50,491 4.6% 955,169 GNMA Pool #608639 5.500% 07-15-24 953,502 5.5% 215,575 GNMA Pool #609452 4.000% 08-15-33 195,899 4.4% 445,377 GNMA Pool #616829 5.500% 01-15-25 448,094 5.5% 712,521 GNMA Pool #631623 5.500% 08-15-34 709,761 5.5% 744,516 GNMA Pool #640225 5.500% 04-15-35 741,348 5.5% 161,465 GNMA Pool #640940 5.500% 05-15-35 160,778 5.5% 75,835 GNMA Pool #780429 7.500% 09-15-26 79,271 7.2% 46,005 GNMA Pool# 399726 7.490% 05-15-25 48,065 7.2% 178,977 GNMA Pool# 399788 7.490% 09-15-25 186,995 7.2% 30,917 GNMA Pool# 399958 7.490% 02-15-27 32,329 7.2% 137,675 GNMA Pool# 524811 6.375% 09-15-29 141,016 6.2% 486,790 GNMA Pool# 624600 6.150% 01-15-34 493,490 6.1% 1,209,639 GNMA Pool# 651026 5.500% 12-15-25 1,207,520 5.5% 1,646,969 GNMA Series 1999-4, Class ZB 6.000% 02-20-29 1,667,456 5.9% 400,000 GNMA Series 2002-40, Class UK 6.500% 06-20-32 413,035 6.3% 750,000 GNMA Series 2002-47, Class PG 6.500% 07-16-32 773,360 6.3% 315,442 GNMA Series 2002-7, Class PG 6.500% 01-20-32 323,036 6.3% U.S. GOVERNMENT AGENCIES - 9.1% - ------------------------------- $2,415,000 FFCB 4.000% 03-10-08 $ 2,383,221 4.1% 1,345,000 FHLMC 3.030% 06-11-08 1,307,218 3.1% U.S. TREASURIES - 3.7% - ---------------------- $ 100,000 U.S. Treasury Bonds 3.000% 11-15-07 $ 98,316 3.1% 1,450,000 U.S. Treasury Bonds 3.625% 01-15-10 1,405,708 3.7% ------------ TOTAL INVESTMENTS (identified cost, 39,859,152)-- 99.5% $40,285,170 OTHER ASSETS, LESS LIABILITIES-- 0.5% 189,240 ------------ NET ASSETS-- 100.0% $40,474,410 ============== FFCB - Federal Farm Credit Bank FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF) - ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES December 31, 2006 - ------------------------------------------------------------------------------- ASSETS: Investments, at value (identified cost of ($39,859,152)(Note 1A) $ 40,285,170 Cash.................................... 45,721 Receivable for investments sold......... 17,026 Receivable for fund shares sold......... 1,648 Interest receivable..................... 223,842 Prepaid expenses........................ 6,602 ------------ Total assets.......................... $ 40,580,009 ------------ LIABILITIES: Payable for fund shares reacquired...... $ 14,783 Distributions payable................... 47,703 Payable to affiliate for Trustees' fees. 74 Transfer agent fee ..................... 5,524 Accrued expenses and other liabilities.. 37,515 ------------ Total liabilities..................... $ 105,599 ------------ NET ASSETS................................ $ 40,474,410 ============= NET ASSETS CONSIST OF: Paid-in capital......................... $ 41,452,309 Accumulated net realized loss on investments (computed on the basis of identified cost)....................... (1,475,135) Unrealized appreciation on investments (computed on the basis of identified cost) 426,018 Accumulated undistributed net investment income................................. 71,218 ------------ Net assets applicable to outstanding shares.................... $ 40,474,410 ============= SHARES OF BENEFICIAL INTEREST OUTSTANDING........................... 4,256,550 ============= NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE OF BENEFICIAL INTEREST................... $ 9.51 ============= See notes to financial statements STATEMENT OF OPERATIONS Year Ended December 31, 2006 - ------------------------------------------------------------------------------- INVESTMENT INCOME (Note 1B): Interest income........................ $ 1,786,059 ------------ Expenses - Investment adviser fee (Note 3)........ $ 148,408 Administrator fee (Note 3)............. 29,664 Compensation of Trustees not employees of the investment adviser or administrator 13,037 Custodian fee (Note 1C)................ 58,029 Distribution expenses (Note 4)......... 82,401 Transfer and dividend disbursing agent fees 18,830 Printing............................... 4,933 Interest expense....................... 5,338 Shareholder communications............. 2,100 Audit services......................... 34,671 Legal services......................... 5,110 Registration costs..................... 21,635 Miscellaneous.......................... 3,734 ------------ Total expenses........................ $ 427,890 ------------ Deduct - Reduction of custodian fee (Note 1C):.. $ (4,855) Reduction of investment adviser fee (Note 3)............................. (27,661) Reduction of distribution expenses by principal underwriter (Note 4)..... (82,073) ------------ Total deductions...................... $ (114,589) ------------ Net expenses.......................... $ 313,301 ------------ Net investment income................ $ 1,472,758 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions (identified cost basis)................ $ 161,110 Change in unrealized appreciation of investments......................... (511,826) ------------ Net realized and unrealized loss of investments........................ $ (350,716) ------------ Net increase in net assets from operations........................... $ 1,122,042 ============= See notes to financial statements WRIGHT CURRENT INCOME FUND (WCIF) - ------------------------------------------------------------------------------- Year Ended December 31, - -------------------------------------------------------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: From operations - Net investment income...................................................... $ 1,472,758 $ 1,454,647 Net realized gain on investments........................................... 161,110 404,721 Change in unrealized appreciation on investments........................... (511,826) (1,232,166) -------------- -------------- Net increase in net assets resulting from operations..................... $ 1,122,042 $ 627,202 -------------- -------------- Distributions to shareholders (Note 2) - From net investment income................................................. $ (1,548,362) $ (1,558,214) From net realized gain..................................................... (59,861) (69,145) -------------- -------------- Total distributions...................................................... $ (1,608,223) $ (1,627,359) -------------- -------------- Net increase in net assets from fund share transactions (Note 5) $ 7,099,679 $ (151,834) -------------- -------------- Net increase (decrease) in net assets.................................... $ 6,613,498 $ (1,151,991) NET ASSETS: At beginning of year......................................................... 33,860,912 35,012,903 -------------- -------------- At end of year............................................................... $ 40,474,410 $ 33,860,912 ============== ============== ACCUMULATED UNDISTRIBUTED INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR................................................. $ 71,218 $ 50,242 ============== ============== See notes to financial statements
WRIGHT CURRENT INCOME FUND (WCIF) - ------------------------------------------------------------------------------- Year Ended December 31, - -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year.......... $ 9.610 $ 9.890 $ 10.490 $ 10.810 $ 10.580 --------- --------- --------- --------- --------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income(1) ................ $ 0.427 $ 0.400 $ 0.447 $ 0.417 $ 0.565 Net realized and unrealized gain (loss).. (0.063) (0.230) (0.112) (0.235) 0.231 --------- --------- --------- --------- --------- Total income from investment operations $ 0.364 $ 0.170 $ 0.335 $ 0.182 $ 0.796 --------- --------- --------- --------- --------- LESS DISTRIBUTIONS: Distributions from investment income..... $ (0.447) $ (0.430) $ (0.482) $ (0.502) $ (0.555) Distributions from capital gains......... (0.017) (0.020) (0.453) - - Tax return of capital.................... - - - - (0.011) --------- --------- --------- --------- --------- Total distributions.................. $ (0.464) $ (0.450) $ (0.935) $ (0.502) $ (0.566) --------- --------- --------- --------- --------- Net asset value, end of year................ $ 9.510 $ 9.610 $ 9.890 $ 10.490 $ 10.810 ========= ========= ========= ========= ========= TOTAL RETURN(2) ............................ 3.92% 1.76% 3.29% 1.73% 7.70% RATIOS/SUPPLEMENTAL DATA(1): Net assets, end of year (000 omitted).... $ 40,474 $ 33,861 $ 35,013 $ 36,332 $ 59,077 Ratio of net expenses to average net assets 0.96% 0.97% 0.97% 0.95% 0.97%(4) Ratio of net expenses after custodian fee reduction to average net assets(5) (6) 0.95% 0.95% 0.95% 0.95% 0.95%(4) Interest expense......................... 0.02% 0.01% 0.02% 0.01% -- Ratio of net investment income to average net assets................. 4.47% 4.12% 4.29% 4.43% 5.28% Portfolio turnover rate ................. 75% 103% 27% 20% 36%(3) - -------------------------------------------------------------------------------------------------------------------------------- (1)For the years ended December 31, 2006, 2005, 2004, 2003, and 2002, the operating expenses of the fund were reduced by an allocation of expenses to the investment adviser or a reduction in distribution expense by the distributor. Had such action not been undertaken, net investment income per share and the ratios would have been as follows: 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------------------- Net investment income per share........... $ 0.391 $ 0.369 $ 0.410 $ 0.401 $ 0.555 ========= ========= ========= ========= ========= Ratios (As a percentage of average net assets): Expenses............................... 1.31% 1.30% 1.28% 1.12% 1.06%(4) ========= ========= ========= ========= ========= Expenses after custodian fee reduction.... 1.30%(6) 1.28%(6) 1.25%(6) 1.12% 1.04%(4)(6) ========= ========= ========= ========= ========= Interest expense....................... 0.02% 0.01% 0.02% 0.01% -- ========= ========= ========= ========= ========= Net investment income..................... 4.13% 3.80% 3.99% 4.26% 5.19% ========= ========= ========= ========= ========= - -------------------------------------------------------------------------------------------------------------------------------- (2)Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date. (3)Represents portfolio turnover rate at the fund's corresponding portfolio (Note 1). (4)Includes each fund's share of its corresponding portfolio's allocated expenses (Note 1). (5)Under a written agreement in effect for the current fiscal year, Wright waives all or a portion of either its advisory and/or distribution fees and assumes operating expenses to the extent necessary to limit expense ratios to 0.95% after custodian fee credits are applied. (6)Custodian fees were reduced by credits resulting from cash balances the fund and/or the portfolio maintained with the custodian (Note 1C). The computation of net expenses to average daily net assets reported above is computed without consideration of such credits. See notes to financial statements
WRIGHT MANAGED INCOME TRUST - ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (1) SIGNIFICANT ACCOUNTING POLICIES The Wright Managed Income Trust (the Trust), issuer of Wright Total Return Bond Fund (WTRB) series, and Wright Current Income Fund (WCIF) series (collectively, the Funds), is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end, management investment company. WTRB seeks a superior rate of total return, consisting of a high level of income plus price appreciation. WCIF seeks a high level of current income consistent with moderate fluctuations of principal. Prior to December 20, 2002, WCIF invested all of its investable assets in interest in a separate corresponding open-end management investment company (a Portfolio), a New York Trust, having the same investment objective as the fund. Subsequent to December 20, 2002, the Fund invests directly in securities rather than through the Portfolio and maintain the same investment objective. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. A. Investment Valuations - Investments for which market quotations are readily available are valued at current market value as furnished by a pricing service. Investments for which valuations are not readily available will be appraised at their fair value as determined in good faith by or at the direction of the Trustees. Short-term obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. B. Interest Income - Interest income consists of interest accrued and discount earned (including both original issue and market discount) and amortization of premium or discount on long-term debt securities. The income is accrued ratably to the date of maturity on the investments of the funds. C. Expense Reduction - Investors Bank & Trust Company (IBT) serves as custodian to the Funds. Pursuant to the custodian agreement, IBT receives a fee reduced by credits which are determined based on the average daily cash balance the Funds maintain with IBT. All credit balances used to reduce the Fund's custodian fees are reported as a reduction of total expenses on the Statement of Operations. D. Federal Taxes - The Trust's policy is to comply with the provisions of the Internal Revenue Code (the Code) available to regulated investment companies and to distribute to shareholders each year all of its taxable income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is necessary. At December 31, 2006, the Trust, for federal income tax purposes, had capital loss carryovers of $3,112,804 (WTRB) and $1,445,202 (WCIF) which will reduce taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distribution to shareholders which would otherwise be necessary to relieve the respective fund of any liability for federal income or excise tax. Pursuant to the Code, such capital loss carryovers will expire as follows: 12/31 WTRB WCIF - ------------------------------------------------------------------------------- 2007 $ - $273,806 2008 1,244,473 - 2010 508,606 - 2011 - 505,639 2012 - 469,640 2013 270,953 196,117 2014 1,088,772 - - ------------------------------------------------------------------------------ At December 31, 2006, net capital losses of $23,801 for WTRB and $3,456 for WCIF, attributable to security transactions incurred after October 31, 2006, are treated as arising on the first day of the fund's current taxable year. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. F. Other - Investment transactions are accounted for on the date the investments are purchased or sold. (2) DISTRIBUTIONS Each Fund's policy is to determine net income once daily, as of the close of the New York Stock Exchange and the net income so determined is substantially declared as a dividend to shareholders of record at the time of such determination. Distributions of realized capital gains are made at least annually. Shareholders may reinvest capital gain distributions in additional shares of the same fund at the net asset value as of the ex-dividend date. Dividends may be reinvested in additional shares of the same fund at the net asset value as of the payable date. The Trust requires that differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary over distributions for financial statement purposes be classified as distributions in excess of net investment income or accumulated net realized gains. Distributions in excess of tax basis earnings and profits, if any, are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting for certain items may result in reclassification of these items. During the year ended December 31, 2006, the following amounts were reclassified due to differences between book and tax accounting created primarily by the deferral of certain losses for tax purposes and character reclassifications between net investment income and net realized capital gain. Accumulated Undistributed Undistributed Net Net Paid-In Realized Gain Investment Capital on Investments Income - ------------------------------------------------------------------------------- WTRB $ - $(146,364) $146,364 WCIF 1,498,903 (1,595,483) 96,580 The tax character of distributions paid for the year ended December 31, 2006 and December 31, 2005 was as follows: Year Ended 12/31/06 WTRB WCIF - ------------------------------------------------------------------------------- Distributions declared from: Ordinary income $1,629,188 $1,548,362 Capital gains - 59,861 - ------------------------------------------------------------------------------- Year Ended 12/31/05 WTRB WCIF - ------------------------------------------------------------------------------- Distributions declared from: Ordinary income $1,706,230 $1,558,214 Capital gains - 69,145 - ------------------------------------------------------------------------------- As of December 31, 2006, the components of distributable earnings (accumulated losses) on a tax basis were as follows: WTRB WCIF - ------------------------------------------------------------------------------- Undistributed income $ 18,310 $ 71,218 Undistributed capital gains - 36,685 Capital loss carryforward (3,112,804) (1,445,202) Unrealized gains/(loss) (183,214) 362,856 Other temporary differences (49,194) (3,456) (3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES The Trust has engaged Wright Investors' Service, Inc. (Wright) to act as investment adviser to the Funds pursuant to the respective Investment Advisory Contracts. Wright furnishes each Fund with investment management, investment advisory, and other services. For its services, Wright is compensated based upon a percentage of average daily net assets which rate is adjusted as average daily net assets exceed certain levels. For the year ended December 31, 2006, the effective annual rate for WCIF and WTRB was 0.45%. Under a written agreement, Wright Investors' Service and/or Wright Investors' Service Distributors, Inc., waive a portion of their advisory fee and/or distribution fees and assume operating expenses to the extent necessary to limit each Fund's expense ratios to 0.95% after custodian fee reductions, if any. Accordingly, Wright made a reduction of its investment adviser fee by $3,284 and $27,661 on behalf of WTRB and WCIF, respectively (Note 4). The Trust also has engaged Eaton Vance Management (Eaton Vance) to act as administrator of the Trust. Under the Administration Agreement, Eaton Vance is responsible for managing the business affairs of the Trust and is compensated based upon a percentage of average daily net assets of each Fund which rate is reduced as average daily net assets exceed certain levels. For the year ended December 31, 2006 the effective annual rate was 0.07% for WTRB and 0.09% for WCIF. Certain of the Trustees and officers of the Trust are directors/trustees and/or officers of the above organizations. Except as to Trustees of the Trust who are not employees of Eaton Vance or Wright, Trustees and officers received remuneration for their services to the Trust out of fees paid to Eaton Vance and Wright. (4) DISTRIBUTION EXPENSES The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule 12b-1 of the Investment Company Act of 1940. The Plan provides that each of the Funds will pay Wright Investors' Service Distributors, Inc. (Principal Underwriter), a wholly-owned subsidiary of The Winthrop Corporation, at an annual rate of 0.25% of the average daily net assets of each Fund for activities primarily intended to result in the sale of each Fund's shares. Pursuant to a written agreement (Note 3), the Principal Underwriter made a reduction of its fee by $86,128 and $82,073 for the benefit of WTRB and WCIF, respectively. In addition, the Trustees have adopted a service plan (the Service Plan) which allows the funds to reimburse the Principal Underwriter for payments to intermediaries for providing account administration and personal and account maintenance services to their customers who are beneficial owners of each Fund's shares. The amount of service fee payable under the Service Plan may not exceed 0.25% annually of each Fund's average daily net assets. For the year ended December 31, 2006, the Funds did not accrue or pay any service fees. (5) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in Fund shares were as follows: Year Ended Year Ended December 31, 2006 December 31, 2005 ----------------- ----------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------------------------------- WRIGHT TOTAL RETURN BOND FUND-- Sold................................................. 483,580 $ 5,863,658 652,090 $ 8,236,968 Issued to shareholders in payment of distributions declared............................. 98,578 1,246,056 106,865 1,346,413 Redemptions.......................................... (1,391,653) (16,903,044) (430,129) (5,420,722) ------------ --------------- ------------ --------------- Net increase (decrease).......................... (809,495) $ (9,793,330) 328,826 $ 4,162,659 ============ =============== ============ =============== WRIGHT CURRENT INCOME FUND-- Sold................................................. 747,630 $ 7,169,560 1,064,067 $ 10,372,941 Issued to shareholders in payment of distributions declared............................. 108,681 1,028,796 102,779 998,494 Redemptions.......................................... (1,351,796) (12,808,666) (1,183,110) (11,523,269) Issued to Wright U.S. Government Near Term Fund...... 1,227,175 11,709,989 - - ------------ --------------- ------------ --------------- Net increase (decrease).......................... 731,690 $ 7,099,679 (16,264) $ (151,834) ============ =============== ============ ===============
(6) INVESTMENT TRANSACTIONS The Trust invests primarily in debt securities. The ability of the issuers of the debt securities held by the Trust to meet their obligations may be affected by economic developments in a specific industry or municipality. Purchases and sales and maturities of investments, other than short-term obligations, were as follows: Year Ended December 31, 2006 - ------------------------------------------------------------------------------- WTRB WCIF - ------------------------------------------------------------------------------- Purchases-- Non-U.S. Obligations $ 5,147,139 $ 3,218,471 =========== ============ U.S. Gov't Obligations $27,302,559 $23,259,834 =========== ============ Sales-- Non-U.S. Obligations $ 8,627,953 $ 1,555,026 ============ ============= U.S. Gov't Obligations $33,212,186 $23,096,796 ============ ============ - ------------------------------------------------------------------------------- (7) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost and unrealized appreciation (depreciation) of the investment securities owned at December 31, 2006, as computed on a federal income tax basis, are as follows: WTRB WCIF - ------------------------------------------------------------------------------- Aggregate cost $30,692,314 $39,922,314 ============ ============ Gross unrealized appreciation 103,150 753,632 Gross unrealized depreciation (286,364) (390,776) ============= ============ Net unrealized appreciation (depreciation) $ (183,214) $ 362,856 ============= ============ - ------------------------------------------------------------------------------- (8) LINE OF CREDIT The Funds participate with other Funds managed by Wright in a committed $10 million unsecured line of credit agreement with a bank. The Funds may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each Fund based on its borrowings at an amount above the federal funds rate. In addition, a fee computed at an annual rate of 0.10% on the average daily unused portion of the $10 million line of credit, is allocated among the participating funds at the end of each quarter. The Funds did not have significant borrowings or allocated fees during the year ended December 31, 2006. (9) TRANSFER OF NET ASSETS Prior to the opening of business on December 9, 2006, the Wright Current Income Fund (WCIF) acquired the net assets of Wright U.S. Government Near Term Fund (WNTB) pursuant to an Agreement and Plan of Reorganization dated December 20, 2004. In accordance with the agreement, WCIF issued 1,227,175 shares having a value of $11,709,989. As a result, WCIF issued 1.028 shares for each share of WNTB. The transaction was structured for tax purposes to qualify as a tax free reorganization under the Internal Revenue Code. WNTB's net assets at the date of the transaction was $11,709,989, including $(88,124) of unrealized depreciation. Directly after the merger, the combined net assets of WCIF were $43,266,523 with a net asset value of $9.54. (10) RECENTLY ISSUED ACCOUNTING PRONUNCEMENTS In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, (FIN 48) "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109". FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, "Accounting for Income Taxes." This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective during the first required financial reporting period for fiscal years beginning after December 15, 2006. Management is currently evaluating the impact of applying the various provisions of FIN 48. In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, (FAS 157) "Fair Value Measurements". FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact the adoption of FAS 157 will have on the Funds' financial statement disclosures. WRIGHT MANAGED INCOME TRUST - ------------------------------------------------------------------------------ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees and Shareholders of The Wright Managed Income Trust: We have audited the accompanying statements of assets and liabilities of the Wright Managed Income Trust (the "Trust"), comprising the Wright Total Return Bond Fund and Wright Current Income Fund (the "Funds"), including the portfolios of investments as of December 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of the securities owned at December 31, 2006 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds constituting the Wright Managed Income Trust at December 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts February 16, 2007 WRIGHT MANAGED INCOME TRUST AS OF DECEMBER 31, 2006 - ------------------------------------------------------------------------------ FEDERAL TAX INFORMATION (UNAUDITED) The Form 1099-DIV you received in January 2007 showed the tax status of all distributions paid to your account in calendar 2006. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Fund. As required by the Internal Revenue Code regulations, shareholders must be notified within 60 days of the Fund's fiscal year end regarding capital gains dividends. CAPITAL GAINS DIVIDENDS - The Wright Current Income Fund designates $59,861 as a capital gain dividend. MANAGEMENT AND ORGANIZATION (UNAUDITED) - ------------------------------------------------------------------------------- FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall management and supervision of the affairs of the Trust. The Trustees and principal officers of the Trusts are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. The business address of each Trustee and principal officer is 255 State Street, Boston, Massachusetts 02109. Definitions: - ----------- "WISDI" means Wright Investors' Service Distributors, Inc., the principal underwriter of the fund. "Winthrop" means The Winthrop Corporation, a holding company which owns all of the shares of Wright and WISDI. Number of Other Trustee/ Term* Funds in Director/ Name, Position(s) of Office Fund Complex Partnership/ Address with the and Length Principal Occupation Overseen Employment and Age [Trust/Fund] of Service During Past Five Years By Trustee Positions Held - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEES Peter M. Donovan** President President Chairman, Chief Executive Officer 5 Director of Age 63 and and Trustee and Director of Wright and Winthrop; Wright and Trustee since Chief Investment Officer and Chairman Winthrop Inception of the Investment Committee; Director of WISDI; Authorized Representative of Cheswick Wright Wealth Management LLC; President of 5 funds managed by Wright - -------------------------------------------------------------------------------------------------------------------------------- A.M. Moody, III*** Vice President Vice President President, AM Moody Consulting LLC 5 None Age 70 and of the Trusts (compliance and administrative services Trustee since December, to the mutual fund industry)since 1990; Trustee of July 1,2003; President and Director the Trusts since of the WISDI since 2005; Vice President January 1990 of 5 funds managed by Wright; Retired Senior Vice President of Wright and Winthrop; Retired President of WISDI June 30, 2003 to May 2005 - -------------------------------------------------------------------------------------------------------------------------------- * Trustees serve an indefinite term. Officers are elected annually. ** Mr. Donovan is an interested person of the Trusts because of his positions as President of the Trusts, Chairman, Chief Executive Officer and Director of Wright and Winthrop and Director of WISDI. *** Mr. Moody is an interested person of the Trusts because of his positions as Vice President of the Trusts, President and Director of WISDI, and his affiliation as a consultant to Wright. - -------------------------------------------------------------------------------------------------------------------------------- Number of Other Trustee/ Term* Funds in Director/ Name, Position(s) of Office Fund Complex Partnership/ Address with the and Length Principal Occupation Overseen Employment and Age [Trust/Fund] of Service During Past Five Years By Trustee Positions Held - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES James J. Clarke Trustee Trustee President, Clarke Consulting (bank 5 None Age 65 since consultant - financial management and December, 2002 strategic planning); Director - Chester Valley Bancorp, Inc., Downingtown, PA since April 2004, Director - Reliance Bank, Altoona PA since August 1995; Director - First Financial Bank, Downingtown, PA since April 2004, Associate Professor of Finance at Villanova University 1972-2002 - -------------------------------------------------------------------------------------------------------------------------------- Dorcas R. Hardy Trustee Trustee President, Dorcas R. Hardy & Associates 5 None Age 60 since (a public policy and government relations December, 1998 firm) Spotsylvania, VA; Director, The Options Clearing Corporation - -------------------------------------------------------------------------------------------------------------------------------- Richard E. Taber Trustee Trustee since Chairman and Chief Executive 5 None Age 58 March, 1997 Officer of First County Bank, Stamford, CT - -------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES Judith R. Corchard Vice President Vice President Executive Vice President, Investment Age 68 of the Trusts Management; Senior Investment Officer since June, 1998 and Director of Wright and Winthrop; Vice President of 5 funds managed by Wright, Fund Chief Compliance Officer since 2004 - -------------------------------------------------------------------------------------------------------------------------------- Janet E. Sanders Secretary Secretary of the Vice President Eaton Vance Management, Age 71 and Assistant Trusts since Administrator for the funds; Officer of Treasurer March 17, 2005, 5 funds managed by Wright and 170 Ass't. Secretary funds managed by Eaton Vance and 1983 to 2005, its affiliates Ass't. Treasurer since 1989 - -------------------------------------------------------------------------------------------------------------------------------- Barbara E. Campbell Treasurer Treasurer of Vice President Eaton Vance Management; Age 49 the Trusts Administrator for the funds; Officer of since 2005 5 funds managed by Wright and 170 funds managed by Eaton Vance and its affiliates - -------------------------------------------------------------------------------------------------------------------------------- * Trustees serve an indefinite term. Officers are elected annually. Additional information about the Funds' Trustees is available in the Statement of Additional Information, which is available without charge, upon request, by calling 1-800-888-9471.
BOARD OF TRUSTEES ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT IN EVALUATING THE INVESTMENT ADVISORY CONTRACTS, THE INDEPENDENT TRUSTEES MET SEPARATELY FROM THE INTERESTED TRUSTEES AND REVIEWED AND CONSIDERED MATERIALS FURNISHED BY WRIGHT, INCLUDING INFORMATION REGARDING WRIGHT, ITS AFFILIATES AND PERSONNEL, OPERATIONS AND FINANCIAL CONDITION. THE INDEPENDENT TRUSTEES DISCUSSED WITH REPRESENTATIVES OF WRIGHT THE PORTFOLIO MANAGEMENT AND OPERATIONS OF THE FUNDS AND THE CAPABILITIES OF WRIGHT TO PROVIDE ADVISORY AND OTHER SERVICES TO EACH FUND. THE INDEPENDENT TRUSTEES CONSIDERED, AMONG OTHER THINGS, THE FOLLOWING: EQUITY FUNDS AND INCOME FUNDS - ------------------------------- o Whether the advisory arrangements are fair and reasonable relative to possible alternative arrangements. The Trustees concluded that the advisory fees paid by the funds are reasonable. o Whether advisory services are being provided as agreed to. The Trustees concluded that the services being provided by the adviser are as agreed to in the advisory contract. o Whether compensation paid by a Fund to the adviser is fair and reasonable in relation to the services provided and the charges by other advisers for similar services. The Trustees concluded that the compensation paid by the funds to the adviser is in the average range of compensation charged by other advisers for similar services and is reasonable. o Fees and expense ratios compared to similar funds. The Trustees concluded that the expense ratios of the funds are lower than the average for similar funds. o Performance and relationship of fees and performance. The Trustees concluded that in most cases the performance results of the funds were at least in the mid-range of similar funds while their expense ratios were generally lower. o Analysis of each Fund's profitability to the adviser. The Trustees concluded that the profitability to the adviser of each fund was reasonable and not excessive. o The adviser's financial condition and the overall organization of the adviser. o Sales and redemption data. The Trustees reviewed the information which had been provided to them relating to sales and redemptions and Wright's marketing strategies to try to increase assets under management. o The economic outlook and the general investment outlook in the relevant investment markets. The Trustees have received a presentation on the overall economic outlook and investment outlook of both equity and income markets at each Board meeting. o The resources devoted to compliance efforts undertaken by the adviser and the record of compliance with investment policies and restrictions and with policies on personal securities transactions. The Trustees have approved and met separately with the fund's Chief Compliance Officer. ADDITIONAL CONSIDERATIONS FOR EQUITY FUNDS - -------------------------------------------- o The allocation of brokerage and any benefits received by the adviser as a result of brokerage allocation. The Trustees reviewed the Trading Analysis included in the material provided in advance of the meeting. The Independent Trustees' Committee did not consider any single factor as controlling in their consideration of the renewal of the Investment Advisory Contracts, nor are the considerations described above all encompassing. Based on their consideration of all factors which they considered material, and with the assistance of independent counsel, the Independent Trustees' Committee concluded that the renewal of the Investment Advisory Contract with its current fee structure is in the interests of the shareholders. IMPORTANT NOTICES REGARDING PRIVACY, DELIVERY OF SHAREHOLDER DOCUMENTS, PORTFOLIO HOLDINGS AND PROXY VOTING WRIGHT MANAGED INVESTMENT FUNDS WRIGHT INVESTORS SERVICE, INC. WRIGHT INVESTORS' SERVICE DISTRIBUTORS, INC. EATON VANCE MANAGEMENT PRIVACY POLICY ------------------- Wright is committed to ensuring your financial privacy. Each of the above financial institutions has the following policy in effect with respect to nonpublic personal information about its customers: o The only such information we collect is information received from customers, through application forms or otherwise, and information which we necessarily receive in connection with your Wright fund transactions. o We will not disclose this information to anyone except as required or permitted by law. Such disclosure includes that made to other companies such as transfer agents and their employees and to our employees, in each case as necessary to service your account. o We have adopted policies and procedures (including physical, electronic and procedural safeguards) that are designed to protect the confidentiality of this information. For more information about Wright's privacy policies please feel free to call 1-800-888-9471. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDERS DOCUMENTS --------------------------------------------------------------- The Securities and Exchange Commission permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called "householding" and it helps eliminate duplicate mailings to shareholders. WRIGHT, OR YOUR FINANCIAL ADVISER, MAY HOUSEHOLD THE MAILING OF YOUR DOCUMENTS INDEFINITELY UNLESS YOU INSTRUCT WRIGHT, OR YOUR FINANCIAL ADVISER, OTHERWISE. If you would prefer that your Wright documents not be householded, please contact Wright at 1-800-888-9471, or your financial adviser. Your instructions that householding not apply to delivery of your Wright documents will be effective within 30 days of receipt by Wright or your financial adviser. PORTFOLIO HOLDINGS ------------------------ Each Wright Fund will file a schedule of its portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Wright website www.wisi.com, by calling Wright at 1-800-888-9471 or in the EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC's public reference room in Washingto, D.C. (call 1-800-732-0330 or informaiton on the operation of the public reference room). PROXY VOTING POLICIES AND PROCEDURES --------------------------------------- From time to time funds are required to vote proxies related to the securities held by the funds. The Wright Managed Funds vote proxies according to a set of policies and procedures approved by the Funds' Board. You may obtain a description of these policies and procedures and information on how the Funds voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 without charge, upon request, by calling 1-800-888-9471. This description is also available on the Securities and Exchange Commissions website at http://www.sec.gov. ANNUAL REPORT OFFICERS AND TRUSTEES OF THE FUNDS Peter M. Donovan, President and Trustee A. M. Moody III, Vice President and Trustee Judith R. Corchard, Vice President James J. Clarke, Trustee Dorcas R. Hardy, Trustee Richard E. Taber, Trustee Janet Sanders, Secretary Barbara E. Campbell, Treasurer William J. Austin, Jr., Assistant Treasurer ADMINISTRATOR Eaton Vance Management 255 State Street Boston, Massachusetts 02109 INVESTMENT ADVISER Wright Investors' Service 440 Wheelers Farms Road Milford, Connecticut 06461 PRINCIPAL UNDERWRITER Wright Investors' Service Distributors, Inc. 440 Wheelers Farms Road Milford, Connecticut 06461 (800) 888-9471 e-mail: funds@wrightinvestors.com CUSTODIAN Investors Bank & Trust Company 200 Clarendon Street Boston, Massachusetts 02116 TRANSFER AND DIVIDEND DISBURSING AGENT Citigroup Fund Services, LLC Two Portland Square Portland, ME 04101 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 200 Berkeley Street Boston, Massachusetts 02116-5022 This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of a mutual fund unless accompanied or preceded by a Fund's current prospectus. Item 2. CODE OF ETHICS The registrant has adopted a code of ethics applicable to its Principal Executive Officer and Principal Financial Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-888-9471. Item 3. AUDIT COMMITTEE FINANCIAL EXPERT The registrant's Board has designated James J. Clarke, an independent trustee, as its audit committee financial expert. Mr. Clarke is the Principal of Clarke Consulting, a financial management and strategic planning firm. Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees ------------- The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and filings or engagements for those fiscal years were as follows: 2006: $77,100 and 2005: $74,100. (b) Audit-Related Fees --------------------- 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 2006: $12,585 and 2005: $12,100. The nature of the services comprising these fees was tax compliance, tax advice and tax planning including fees for tax return preparation. (d) All Other Fees ---------------- None. (e) (1) The registrant's audit committee has adopted an Audit Committee Charter which contains policies and procedures relating to the pre-approval of services provided by the registrant's principal accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee; and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees with the exception of any de minimus engagement meeting applicable requirements. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the registrant's audit committee. The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant's audit committee at least annually. The registrant's audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrant's principal accountant. (2) Not applicable. (f) Not applicable. (g) Not applicable. (h) Not applicable. Items 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not required in Filing Item 6. SCHEDULE OF INVESTMENTS Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR. Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not required in Filing. Item 8. Portfolio Managers of Closed-End Management Investment Companies Not required in Filing Item 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMEN COMPANY AND AFFILIATED PURCHASERS. Not required in Filing Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which a Fund's shareholders may recommend nominees to the registrant's board of Trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A(17 CFR240.14a-101), or this item. Item 11. CONTROLS AND PROCEDURES a) It is the conclusion of the registrant's principal executive officer and principal financial officer that the effectiveness of the registrant's current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission's rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant's principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. (b) There have been no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 12. EXHIBITS (a) (1) Registrant's Code of Ethics - Not applicable (please see Item 2). (a) (2) Treasurer's and President's Section 302 certification. (b) Combined 906 certification. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Wright Managed Equity Trust(On behalf of Wright Selected Blue Chip Equities - ------------------------------------------------------------------------------- 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 22, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Barbara E. Campbell ----------------------- Barbara E. Campbell Treasurer Date: February 26, 2007 By: Peter M. Donovan ------------------- Peter M. Donovan President Date: February 22, 2007 EX-99.CERT 2 eq302cert1206.txt TREASURER AND PRESIDENT 302 CERTIFICATIONS FORM N-CSR ITEM 12(A)(2) EXHIBIT I, Barbara E. Campbell, certify that: 1. I have reviewed this report on Form N-CSR of 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); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedure, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal half-year of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date:February 26, 2007 /s/ Barbara E. Campbell - ------------------------ Barbara E. Campbell Treasurer FORM N-CSR ITEM 12(A)(2) EXHIBIT I, Peter M. Donovan, certify that: 1. I have reviewed this report on Form N-CSR of The Wright Managed Equity Trust (on behalf of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chi Equities Fund and Wright International Blue Chip Equities Fund); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedure, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal half-year of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 22, 2007 /s/ Peter M. Donovan - ------------------------ Peter M. Donovan President EX-99.906 CERT 3 eq906cert1206.txt TREASURER AND PRESIDENT 906 CERTIFICATIONS FORM N-CSR ITEM 12(B) EXHIBIT CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned hereby certify in their capacity as Treasurer and President, respectively, of The Wright Managed Equity Trust (the "Trust") (on behalf of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund and Wright International Blue Chip Equities Fund), that: (a) the Annual Report of the Trust (on behalf of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund and Wright International Blue Chip Equities Fund) on Form N-CSR for the period ended December 31, 2006 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (b) the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Trust (on behalf of Wright Selected Blue Chip Equities Fund, Wright Major Blue Chip Equities Fund and Wright International Blue Chip Equities Fund) for such period. A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE TRUST AND WILL BE RETAINED BY THE TRUST AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. 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) Date: February 26, 2007 /s/ Barbara E. Campbell - ---------------------------- Barbara E. Campbell Treasurer Date: February 22, 2007 /s/ Peter M. Donovan - -------------------------- Peter M. Donovan President -----END PRIVACY-ENHANCED MESSAGE-----