As filed with the Securities and Exchange Commission on April 27, 2000
1933 Act File No. 333-75181
1940 Act File No. 811-09263
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933 [x]
POST-EFFECTIVE AMENDMENT NO. 1 [x]
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO. 2 [x]
The Wright Asset Allocation Trust
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(Exact Name of Registrant as Specified in Charter)
255 State Street, Boston, Massachusetts 02109
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(Address of Principal Executive Office)
617--482-8260
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(Registrant's Telephone Number)
Alan R. Dynner
255 State Street, Boston, Massachusetts 02109
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective pursuant to Rule 485
(check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On (date) pursuant to paragraph (a)(1)
[x] On May 1, 2000 pursuant to paragraph (b)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On (date) pursuant to paragraph (a)(2)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
THE WRIGHT ASSET ALLOCATION TRUST
PROSPECTUS
MAY 1, 2000
o Wright Managed Growth with Income Fund
Advisor Shares
Individual Shares
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined whether the information
in this prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.
An investment in a mutual fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
<PAGE>
TABLE OF CONTENTS
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The Wright Asset Allocation Trust: Overview of Principal Strategies.......1
Information About the Fund
Wright Managed Growth with Income Fund...........................2
Information About Your Account ..........................................5
How the Fund Values its Shares...................................5
Purchasing Shares................................................5
Distribution and Service Plans...................................6
Selling Shares...................................................6
Exchanging Shares................................................6
Dividends and Taxes ...................................................7
Managing the Funds ....................................................8
Wright Investors' Service, the Investment Adviser................8
Master Feeder Fund Structure.....................................9
The Euro........................................................10
Financial Highlights .................................................11
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HOW TO USE THIS PROSPECTUS:
Reading this prospectus will help you decide if investing in the fund is right
for you. Please keep this prospectus for future reference. Included in this
prospectus are descriptions telling you about the fund's:
(Graphic - Ship's Wheel)
OBJECTIVE: what the fund seeks to achieve.
(Graphic - Compass)
PRINCIPAL INVESTMENT STRATEGIES: how the fund intends to achieve its investment
objective and the strategy used by Wright Investors'Service, the fund's
investment adviser.
(Graphic - Life Preserver)
PRINCIPAL RISKS: the risks associated with the fund's primary investments.
(Graphic - Assorted Nautical Flags)
Who May Want to Invest: determine if the fund is a suitable investment for you.
(Graphic - Ship's Log)
PAST PERFORMANCE: the total return on your investment, including income from
dividends and capital gain distributions, as well as appreciation or
depreciation in price over various time periods.
(Graphic - Two Crossed Anchors with a $ in the center)
FEES AND EXPENSES: what overall costs you bear by investing in the fund.
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THE WRIGHT ASSET ALLOCATION TRUST:
OVERVIEW OF PRINCIPAL STRATEGIES
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The Wright Asset Allocation Trust was created to offer a variety of funds to
meet differing investment objectives. Each fund is a fund of funds. This means
that a fund invests in other mutual funds managed by Wright Investors Service.
Only Wright Managed Growth with Income Fund is currently offered. Depending on
Wrights model asset allocation for the fund, the fund may invest in some or all
of the following Wright Blue Chip Funds.
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Blue Chip
Financial dictionaries define Blue Chip as a common stock of a company that has
a long record of profit growth and dividend payment and a reputation for quality
management, products and services. Wright further refines this to include only
securities issued by companies that meet its qualitative standards.
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o WRIGHT SELECTED BLUE CHIP EQUITIES PORTFOLIO (WSBC) seeks long-term total
return by investing in equity securities of well-established quality
companies whose current operations reflect characteristics likely to
provide comparatively superior total investment return. The portfolio's
benchmark is the Standard & Poor's Mid-Cap 400 Index.
o WRIGHT MAJOR BLUE CHIP EQUITIES FUND (WMBC) seeks total return by investing
in the equity securities of larger companies. The fund's benchmark is
the Standard & Poor's 500 Index.
o WRIGHT INTERNATIONAL BLUE CHIP EQUITIES PORTFOLIO (WIBC) seeks total return
by investing in equity securities of well-established non-U.S. companies.
Wright focuses on individual stock selection instead of trying to predict
which country or industry will perform best.
o WRIGHT U.S. GOVERNMENT NEAR TERM PORTFOLIO (WNTB) seeks a higher level of
income than is normally available from short-term money market
instruments by investing in U.S. government obligations of all types and
maintaining an average weighted maturity of less than five years.
o WRIGHT U.S. TREASURY PORTFOLIO (WUSTB) seeks a high total return with a
high level of income by investing in U.S. Treasury bills, notes and bonds.
The portfolio's benchmark is the Lehman U.S. Treasury Bond Index.
o WRIGHT TOTAL RETURN BOND FUND (WTRB) seeks a superior rate of total return
by investing in U.S. government and investment grade (rated "BBB" or
higher) corporate debt securities of companies meeting Wright quality
standards. The fund's benchmark is the Lehman U.S. Aggregate Bond Index.
o WRIGHT CURRENT INCOME PORTFOLIO (WCIF) seeks a high level of current income
with moderate fluctuations of principal by investing in debt obligations
issued or guaranteed by the U.S. government or any of its agencies, or
backed only by the credit of a federal agency such as the Federal Home Loan
Bank, Fannie Mae (Federal National Mortgage Association) and the Federal
Home Loan Mortgage Corporation, and corporate debt securities.
You should understand that, when investing in a fund of funds, you will bear the
operating expenses of the underlying funds as well as your share of the funds
operating expenses. For example, you will pay a management or asset allocation
fee for the fund and management fees for the underlying fund.
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WRIGHT MANAGED GROWTH WITH INCOME FUND
CUSIP:Advisor Shares 982225104 Ticker Symbol: Advisor Shares WGIAY (Unofficial)
Individual Shares 982225203 Individual Shares WGIIY (Unofficial)
(Graphic - Ship's Wheel)
OBJECTIVE
High total return (consisting of price appreciation and high income) with
reduced risk. This objective may be changed without shareholder approval.
(Graphic - Compass)
PRINCIPAL INVESTMENT STRATEGIES
The fund is a balanced fund investing its assets in various Wright managed
equity and income funds. Wright allocates the fund's assets based on a
fundamental analysis of the economy and investment markets in the U.S. and
foreign countries. Over the long-term, the fund expects to have an asset mix of
65% equity (10% is international equity) and 35% fixed income. This mix will
vary over short-term periods as Wright follows a dynamic process of monitoring
the asset allocation model and making adjustments. Purchases and sales of funds
are made when necessary to adjust the asset allocation model, when new
investments become available to the fund, or when necessary to accommodate
redemption activity. The equity allocation may range from 40% to 80% with up to
25% being international equities. The U.S. equities may be allocated among
large, medium and small companies. The fixed income allocation may range from
20% to 60%. Fixed income funds selected could include those investing in U.S.
government issues, high quality corporate issues and mortgage backed securities
issued and guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association. Up to 50% of the fixed income
allocation could be in money market securities.
At the end of 1999 the asset allocation model for growth with income called for
a mix of 55% equities and 45% fixed income. This was further allocated as
follows:
o Wright Major Blue Chip Equities Fund 32.3%
o Wright Selected Blue Chip Equities Portfolio 16.9%
o Wright International Blue Chip Equities Portfolio 10.4%
o Wright U.S. Treasury Portfolio 39.6%
The remaining 0.8% of the fund's assets were invested in U.S. Treasury bills and
similar money market securities.
(Graphic - Life Preserver)
PRINCIPAL RISKS
In addition to normal market and management risks, the fund may invest in
equity funds that have specific risks. These risks are:
o WRIGHT MAJOR BLUE CHIP EQUITIES FUND. Performance could be adversely
affected if large capitalization or value stocks fall out of favor and
returns trail the overall stock market.
o WRIGHT SELECTED BLUE CHIP EQUITIES PORTFOLIO. Performance could be
adversely affected if mid-cap or value stocks fall out of favor with the
market and returns trail the overall market. Also, if selected companies
remain undervalued or experience an adverse event such as an unfavorable
earnings report.
o WRIGHT INTERNATIONAL BLUE CHIP EQUITIES PORTFOLIO. Foreign investments
are subject to special risks including currency risk (changes in foreign
currency rates reducing the value of the fund's assets), seizure,
expropriation or nationalization of a company, lack of public
information, and the impact of political, social, or diplomatic events.
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A Word About Risk
Before you invest in any mutual fund, you should understand the risks involved.
There are two basic risks prevalent in mutual funds investing in common stocks,
such as the fund. They are:
o MARKET RISK: when the prices of stocks fall, the value of the fund's
investments may fall and you could lose money on your investment.
o MANAGEMENT RISK: Wright's strategy may not produce the expected results,
causing losses.
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In addition, fixed income funds may be subject to special risks such as:
o CREDIT OR DEFAULT RISK: An issuer's credit rating may be downgraded or
the issuer may be unable to pay principal and interest on
its obligations.
o INTEREST RATE RISK: Bond prices fall when interest rates rise and vice
versa. The longer the maturity of the bonds, the greater the change in
price.
o PREPAYMENT RISK: When interest rates decline, the issuer of a
mortgage-backed or other debt security may exercise an option to prepay
the principal. This forces reinvestment in lower yielding securities.
o EXTENSION RISK: When interest rates rise, the life of a mortgage-backed
security is extended beyond the expected prepayment time, reducing the
value of the security.
<PAGE>
Also, the fund's income may decline during times of falling interest rates.
When the market is unfavorable, the fund's assets may be held temporarily in
cash or invested in short-term obligations without limit. Although the fund
would do this to reduce losses, defensive investments may conflict with and hurt
the fund's efforts to achieve its investment objective. Likewise, Wright's
efforts to maximize returns while minimizing risk may not be successful.
(Graphic - Assorted Nautical Flags)
WHO MAY WANT TO INVEST
You may be interested in the fund if you are seeking an actively managed
well-diversified balanced investment portfolio with the fund's objective of
growth with a high level of income. The fund will be of particular interest to
individuals wishing to have a professional investment adviser make the decision
when to enter or exit different markets.
Advisor Shares have been created for use in 401(k) and similar retirement plans.
Individual Shares were created for individuals who wish to invest directly or
through their bank or other financial institution. The fund is intended for
those seeking a long-term investment commitment.
(Graphic - Ship's Log)
PAST PERFORMANCE
The fund commenced operations on July 14, 1999 and therefore does not have
annual returns for a full calendar year.
(Graphic - Two Crossed Anchors with a $ in the center)
FEES AND EXPENSES
The table describes the estimated fees and expenses you may pay if you buy
and hold shares of the fund.
Advisor Individual
Shares Shares(2)
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SHAREHOLDER FEES Maximum deferred sales charge (load) none 1.00%(1)
(paid directly from (% of offering price)
your investment)
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ANNUAL FUND
OPERATING Management fee 0.20% 0.20%
EXPENSES Distribution and service (12b-1) fees 0.50% 1.00%
(deducted directly Other expenses 2.79% 0.80%
from fund assets)
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Total Operating Expenses 3.49% 2.00%
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Fee Waiver and Expense Reimbursement(4) (1.48%) 2.00%
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Net Operating Expenses(3) 2.01% 2.00%
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1 Shares redeemed during the first year after purchase are subject to a
deferred sales charge of 1.00% deducted from redemption proceeds.
2 Expenses are estimated since the fund had been operating for less than
6 months as of December 31, 1999.
3 Under an expense offset arrangement, custodian fees are reduced by
credits based on the fund's average daily cash balance. Under SEC
reporting requirements, these reductions are not reflected in the above
expense ratio. If reflected, the ratio would be:
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Net Operating Expenses after Custodian Fee Reductions 1.97%
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4 Under a written agreement, Wright waives a portion of its advisory fee
and assumes operating expenses to the extent necessary to limit the
expense ratio to 2.00%.
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Understanding Expenses
Annual fund operating expenses are paid by the fund. As a result, you pay for
them indirectly because they reduce the fund's return. Fund expenses include
management fees, 12b-1 fees and administrative costs, such as shareholder
recordkeeping and reports, custodian and pricing services, and registration
fees.
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Example
The following example allows you to compare the cost of investing in the fund to
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses: $10,000 initial investment, 5% total return for each year, fund
operating expenses remain the same for each period and redemption after the end
of each period.
Your actual costs may be higher or lower, so use this example for comparison
only. Based on these assumptions your costs at the end of each period would be:
1 Year 3 Years 5 Years 10 Years
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Individual Shares with redemption $303 $627 $1,078 $2,327
Individual Shares without redemption $203 $627 $1,078 $2,327
Advisor Shares $204 $630 $1,083 $2,338
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INFORMATION ABOUT YOUR ACCOUNT
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HOW THE FUND VALUES ITS SHARES
The price at which you buy, sell or exchange fund shares is the net asset value
per share or NAV. The NAV is calculated at the close of regular trading on the
New York Stock Exchange (normally 4:00 p.m. New York time) each day the Exchange
is open. It is not calculated on days the Exchange is closed. The value of the
fund's assets may change on days when the Exchange is not open. You will not be
able to purchase, redeem or exchange the fund's shares on those days. The price
for a purchase, redemption or exchange of fund shares is the next NAV calculated
after your request is received.
When the fund calculates its NAV, it values the underlying funds at their asset
values. Other portfolio securities are valued at the last current sales price on
the market where the security is normally traded. Securities that cannot be
valued at these closing prices are valued by Wright at fair value in accordance
with procedures adopted by the trustees. This could happen if an event after the
close of the market seemed likely to have a major impact on the price of
securities traded on the market. Although the fund calculates its value each day
the Exchange is open, the NAV reported to NASDAQ for distribution to news
agencies will be delayed by one day.
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Determining NAV
Share price is determined by adding the value of a fund's investments, cash and
other assets attributable to the class, deducting liabilities, and then dividing
that amount by the total number of shares outstanding for that class.
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PURCHASING SHARES
Purchasing Shares for Cash
Shares of the fund are sold without an up-front sales charge at NAV. The minimum
initial investment is $1,000 for either Advisor Shares or Individual Shares.
There are no minimums for subsequent investments.
Waiver of the Minimum Initial Investment: The minimums may be waived for
investments by bank trust departments, 401(k) or similar tax-sheltered
retirement plans and automatic investment program accounts. The minimum initial
investment will be reduced to $500 for shares purchased through certain
investment advisers, financial planners, brokers or other intermediaries that
charge a fee for their services. The fund has the right to reject any purchase
order, or limit or suspend the offering of its shares.
Authorized dealers, including investment dealers, banks or other institutions,
may impose investment minimums higher than those imposed by the fund. They may
also charge for their services. There are no charges if you purchase your shares
directly from the fund.
Buying Fund Shares
o If you are buying shares directly from the fund, please refer to your
Shareholder Manual for instructions on how to buy fund shares.
o If you buy shares through bank trust departments or other fiduciary
institutions, please consult your trust or investment officer.
o If you buy shares through a broker, please consult your broker for
purchase instructions.
o If you buy shares through an account with a registered investment
adviser or financial planner, please contact your investment adviser or
planner.
o If you buy shares of the fund through a retirement plan, please consult
your plan documents or speak with your plan administrator.
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Paying for Shares
You may pay for shares by wire, check, Federal Reserve draft, or other
negotiable bank draft, payable in U.S. dollars and drawn on U.S banks. Third
party checks will not be accepted. A charge is imposed on any returned checks.
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DISTRIBUTION AND SERVICE PLANS
The fund has adopted a 12b-1 plan permitting it to pay a fee in connection with
the distribution of its shares. Wright Investors' Service Distributors, Inc.
(WISDI), the principal underwriter and distributor of the fund's shares,
receives a distribution fee of up to 0.75% of the average daily net assets of
the Individual Share class and up to 0.25% of the average daily net assets of
the Advisor Share class. Because this fee is paid on an ongoing basis, this may
cost you more than other types of sales charges over time.
The fund has also adopted a service plan. This plan allows WISDI to be
reimbursed for payments to intermediaries for providing account administration
and personal and account maintenance services to fund shareholders. The annual
service fee may not exceed 0.25% of the average daily net assets of each class
of shares.
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Signature Guarantees
Signature guarantees are used to protect you and the fund from possible
fraudulent requests for redeemed shares. They are required on all requests to
change account application information and for certain redemption requests
including any that direct that redemption proceeds be sent to other than the
address of record. See the Shareholders Manual for more information.
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SELLING SHARES
You may redeem or sell shares of the fund on any business day. NO REDEMPTION
REQUEST WILL BE PAID UNTIL YOUR SHARES HAVE BEEN PAID FOR IN FULL. IF THE SHARES
TO BE REDEEMED REPRESENT AN INVESTMENT MADE BY CHECK, THE REDEMPTION PAYMENT
WILL BE DELAYED UNTIL THE CHECK HAS BEEN COLLECTED, WHICH MAKE TAKE UP TO
FIFTEEN DAYS FROM THE DATE OF PURCHASE. Telephone and internet redemption
procedures are described in the Shareholder Manual. Individual Shares are
subject to a 1% contingent deferred sales charge if sold within one year of
purchase.
Redemption requests received in "proper form" before 4:00 p.m. New York time
will be processed at that day's NAV. "Proper form" means that the fund has
received your request, all shares are paid for, and all documentation, along
with any required signature guarantees, are included. The fund normally pays
redemption proceeds by check on the next business day to the address of record.
Payment will be by wire if you specified this option on your account
application.
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Redemption Proviso
In times of drastic economic or market conditions, you may have difficulty
selling shares by telephone or the internet, so you should send your request by
mail or overnight delivery. These redemption options may be modified or
terminated without notice to shareholders.
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Individual shares redeemed within 12 months of purchase are subject to a
contingent deferred sales charge of one percent of the purchase price.
For more information about selling your shares, please refer to your Shareholder
Manual or consult your trust officer, adviser or plan administrator.
Involuntary Redemption
If your account falls below $500 the fund may redeem your shares. You will
receive notice 60 days before this happens. Your account will not be redeemed if
the balance is below the minimum due to investment losses.
EXCHANGING SHARES
Individual Shares may be exchanged for Individual Shares of Catholic Values
Investment Trust Equity Fund. Advisor Shares may be exchanged for Standard
Shares of the Wright Managed Blue Chip Investment Funds. See the Shareholder
Manual for detailed instructions.
You are limited to four "round-trip" exchanges each year. A round-trip exchange
is an exchange of one fund into another Wright fund, and then back into the
original fund. You will receive notice 60 days before the fund materially amends
or terminates the exchange privilege.
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Market-Timers
The fund believes that use of the exchange privilege by investors utilizing
market-timing strategies adversely affects other fund shareholders. Therefore,
the fund generally will not honor requests for exchanges by shareholders who
identify themselves or are identified as "market-timers." Market-timers are
identified as those investors who repeatedly (more than once) make exchanges
within a short period. The fund does not automatically redeem shares that are
the subject of a rejected exchange request, but will honor any later redemption
request.
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DIVIDENDS AND TAXES
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Unless you tell us that you want to receive your distributions in cash, they are
reinvested automatically in fund shares. The fund generally makes two different
kinds of distributions:
o Capital gains from the sale of investments or other transactions. The
fund will distribute any net realized capital gains annually, normally
in December. Capital gains are the main source of distributions paid by
the fund.
o Net investment income from interest or dividends. The fund generally will
distribute its net investment income quarterly.
TAX CONSEQUENCES
Selling, redeeming, or exchanging mutual fund shares may result in a gain or a
loss and is a taxable event. Distributions, whether received in cash or
reinvested in additional shares of the fund, are subject to federal income tax.
Transaction Tax Status
Income dividends Ordinary income
Short-term capital gains distribution Ordinary income
Long-term capital gains distribution Long-term capital gains
The international fund may be subject to foreign withholding taxes or other
foreign taxes on some of its foreign investments. This will reduce the yield or
total return on those investments and may affect the return of the fund if it
invests in the international fund.
Your investment in the fund could have additional tax consequences. Please
consult your tax advisor on federal, state, local or other applicable tax laws.
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Tax Considerations
Unless your investment is in a tax-deferred account you may want to avoid:
o Investing in the fund near the end of its fiscal year; if the fund makes a
distribution of net investment income or capital gains you will receive some
of your investment back as a taxable distribution.
o Selling shares at a loss for tax purposes and making an investment in the
fund within 30 days before or after the sale. This results in a "wash sale"
and you will not be allowed to claim a tax loss.
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MANAGING THE FUNDS
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WRIGHT INVESTORS SERVICE, THE INVESTMENT ADVISER
Wright Investors' Service, Inc. manages the fund and its investments. Wright is
located at 440 Wheelers Farms Road, Milford, CT 06460. Wright receives a
monthly advisory fee for its services in the amount of 0.20% annually of the
fund's average annual net assets. It also receives advisory fees from the
underlying funds.
Wright is a leading independent international investment management and advisory
firm with more than 35 years experience. Wright manages about $4 billion of
assets in portfolios of all sizes and styles as well as a family of mutual
funds. The Wright Asset Allocation Trust may invest in as many as nine of these
funds.
Wright developed Worldscope(R), one of the world's largest and most complete
databases of financial information, which currently includes more than 23,000
companies in 54 nations. Using a bottom-up fundamental approach, Wright
systematically identifies those companies in the Worldscope(R) database that
meet minimum standards of prudence and thus are suitable for consideration by
fiduciary investors. These companies are then subjected to extensive analysis
and evaluation to identify those that meet Wright's standards of investment
quality. These standards focus on liquidity, financial strength, stability of
profits and growth.
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Fundamental Analysis
The analysis of company financial statements to forecast future price movements
using past records of assets, earnings, sales, products, management and markets.
It differs from technical analysis which relies on price and volume movements of
stocks and does not concern itself with financial statistics.
"Bottom-Up" Approach to Investing
The analysis of company information before considering the impact of industry
and economic trends. It differs from the "top-down" approach which looks first
at the economy, then the industry and last the company.
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Only those companies meeting or exceeding these standards are eligible for
selection by the Wright investment committee for inclusion on an Approved Wright
Investment List (AWIL). There are separate AWILs for U.S. companies, non-U.S.
companies, small companies and fixed income securities. Different standards may
apply to each list. For example, smaller companies may have a lower market
capital requirement but a higher standard of profitability and growth. All the
companies on the lists are considered by Wright to be "Blue Chips." This means
that the companies have established records of earnings profitability and equity
growth. All have established investment acceptance and active, liquid markets.
Investment Committee
An investment committee of senior officers controls the investment selections,
policies and procedures of the fund. These officers are experienced analysts
with different areas of expertise, and have over 195 years of combined service
with Wright. The committee makes all decisions for the asset allocation model
for the fund of funds and for the selection, purchase and sale of all securities
for the Blue Chip Funds. The investment committee consists of the following
members:
<TABLE>
<CAPTION>
Committee Member Title Joined Wright in
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Peter M. Donovan, CFA President and Chief Executive Officer 1966
Judith R. Corchard Chairman of the investment committee 1960
Executive Vice President - Investment Management
Jatin J. Mehta, CFA Executive Vice President 1969
Michael F. Flament, CFA Senior Vice President - Investment and Economic Analysis 1972
James P. Fields, CFA Senior Vice President - Fixed Income Investments 1982
Amit S. Khandwala Senior Vice President - International Investments 1986
Charles T. Simko, Jr., CFA Senior Vice President - Investment Research 1985
Patricia J. Pierce, CFA Senior Vice President - Equities 1999
George F.Faherty, CFA Vice President - Equities 2000
</TABLE>
<PAGE>
MASTER/FEEDER FUND STRUCTURE
Five of the Blue Chip Funds in which the fund may invest are organized as
"master" funds. These include:
o Wright Selected Blue Chip Equities Portfolio
o Wright International Blue Chip Equities Portfolio
o Wright U.S. Treasury Portfolio
o Wright U.S. Government Near Term Portfolio
o Wright Current Income Portfolio
These portfolios are organized as trusts and are treated as partnerships for
federal tax purposes. Partnerships are "pass-through-entities" which means that
they do not pay federal taxes; instead, all of their realized gains or losses,
other income, and expenses are allocated to, and taken into account for tax
purposes by, the fund and the other investors in the portfolios.
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Administrator
Eaton Vance Management serves as the fund's administrator and is responsible for
managing its daily business affairs. Eaton Vance's services include operating
the fund's order room, recordkeeping, preparing and filing documents required to
comply with federal and state securities laws, supervising activities of the
fund's custodian and transfer agent, providing assistance in connection with the
trustees' and shareholders' meetings and other administrative services.
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The Euro
The European countries have adopted the Euro as their common currency. Existing
national currencies of these countries will be sub-currencies of the Euro until
July 1, 2002, when the old currencies will disappear entirely. The introduction
of the Euro presents some possible risks, which could adversely affect the value
of securities held by the fund, as well as possible adverse tax consequences.
There could be unpredictable effects on trade and commerce, resulting in
increased volatility for all financial markets.
<PAGE>
FINANCIAL HIGHLIGHTS
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This financial highlight will help you understand the fund's financial
performance for the period indicated. Certain information reflects financial
results for a single fund share. Total return shows how much your investment in
the fund increased or decreased during each period, assuming you reinvested all
dividends and distributions. Deloitte & Touche LLP, independent certified public
accountants, audited this information. Their report is included in the fund's
annual report, which is available upon request.
From July 14, 1999
(start of business) to
WRIGHT MANAGED GROWTH WITH INCOME FUND (WGIF) December 31, 1999
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Advisor Shares
Net asset value, beginning of year $ 10.000
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Income from investment operations:
Net investment income1 $ 0.058
Net realized and unrealized gain 0.357
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Total income from investment operations $ 0.415
---------
Less distributions declared to shareholders:
From net investment income $ (0.044)
In excess of net investment income (0.158)
From realized gain on investments -
From paid-in capital (0.023)
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Total distributions $ (0.225)
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Net asset value, end of period $ 10.190
===========
Total return(2) 14.40%
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted) $ 6,317
Ratio of expenses to average net assets 2.01%(3)
Ratio of expenses after custodian fee
reduction to average net assets(4) 1.97%(3)
Ratio of net investment income to average net assets 1.04%(3)
Portfolio turnover rate 18%
- --------------------------------------------------------------------------
1 During the period presented, the investment adviser and the principal
underwriter reduced their fees and the investment adviser was allocated a
portion of the operating expenses. Had such action not been undertaken, the
net investment loss per share and the ratios would have been as follows:
1999
Net investment loss per share $ (0.025)
===========
Annualized Ratios (as a percentage of average net assets):
Expenses 3.49%(3)
===========
Expenses after custodian fee reduction(4) 3.45%(3)
===========
Net investment loss (0.44%)(3)
===========
- -------------------------------------------------------------------------------
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
the period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date.
3 Annualized.
4 Custodian fees were reduced by credits resulting from cash balances the fund
maintained with the custodian (Note 1C). The computation of net expenses to
average daily net assets reported above is computed without consideration of
such credits.
<PAGE>
For More Information
Additional information about the fund's investments will be available in the
fund's semi-annual and annual reports to shareholders. The fund's annual report
will contain a discussion of the market conditions and investment strategies
that affected the fund's performance over the first year of its operations.
You may wish to read the Statement of Additional Information (SAI) for more
information on the fund and the securities it invests in. The SAI is
incorporated into this prospectus by reference, which means that it is
considered to be part of the prospectus.
You can get free copies of the semi-annual and annual reports and the SAI,
request other information or get answers to your questions about the fund by
writing or calling:
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road
Milford, CT 06460
(800) 888-9471
E-mail: [email protected]
Copies of documents and application forms can be viewed and downloaded from
Wright Investors' Service website: www.wrightinvestors.com.
Text-only versions of fund documents can be viewed online or downloaded from the
SEC's web site at http://www.sec.gov. You can also obtain copies by visiting the
SEC's Public Reference Room in Washington DC. For information on the operation
of the Public Reference Room, call (800) SEC-0330. Copies of documents may also
be obtained by sending your request and the appropriate duplicating fee to the
SEC's Public Reference Section, Washington, DC 20549-0102 or by electronic mail
at [email protected].
Investment Company Act File Number............................811-09263
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ADVISOR SHARES
INDIVIDUAL SHARES
May 1, 2000
THE WRIGHT ASSET ALLOCATION TRUST
- -------------------------------------------------------------------------------
Wright Managed Growth with Income Fund
255 State Street
Boston, Massachusetts 02109
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
The Wright Asset Allocation Trust....................................2
The Fund and its Investment Objective and Policies...................2
Investment Policies and Other Information About
the Underlying Blue Chip Funds....................................2
Investment Restrictions..............................................7
Officers and Trustees................................................8
Control Persons and Principal Holders of Shares.....................10
Investment Advisory and Administrative Services.....................10
Custodian and Transfer Agent........................................11
Independent Certified Public Accountants............................11
Brokerage Allocation................................................12
Pricing of Shares...................................................12
Taxes...............................................................12
Calculation of Performance and Yield Quotations.....................14
Financial Statements................................................15
APPENDIX............................................................17
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Fund's prospectus dated May 1, 2000, which is
incorporated by reference herein. The information in this Statement of
Additional Information expands on information contained in the prospectus. The
prospectus can be obtained without charge by contacting the Distributor at the
phone number or address below.
WRIGHT INVESTORS' SERVICE DISTRIBUTORS, INC.
PRINCIPAL DISTRIBUTORS
440 Wheelers Farms Road
Milford, CT 06460
1-(800)-888-9471
<PAGE>
THE WRIGHT ASSET ALLOCATION TRUST
The Wright Asset Allocation Trust is an open-end management company
registered under the Investment Company Act of 1940. The Trust was organized as
a Massachusetts business trust on June 17, 1997. The fund is a diversified
series of the Trust.
The Trust's Declaration of Trust may be amended with the affirmative vote
of a majority of the outstanding shares of the Trust or, if only the interests
of the fund are affected, a majority of the fund's outstanding shares. The
trustees are authorized to make amendments to the Declaration of Trust without
shareholder approval that do not have a material adverse effect on the interests
of shareholders. The Trust may be terminated (i) upon the sale of the Trust's
assets to another investment company, if approved by the holders of two-thirds
of the outstanding shares of the Trust, except that if the Trustees recommend
such sale of assets, the approval by the vote of a majority of the Trust's
outstanding shares will be sufficient, or (ii) upon liquidation and distribution
of the assets of the Trust, if approved by a majority of its Trustees or by the
vote of a majority of the Trust's outstanding shares. If not so terminated, the
Trust may continue indefinitely.
The Trust's Declaration of Trust further provides that the Trustees will
not be liable for errors of judgment or mistakes of fact or law; however,
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office.
The Trust is an organization of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as partners for the
obligations of the trust. The Trust's Declaration of Trust contains an express
disclaimer of shareholder liability in connection with the Trust property or the
acts, obligations or affairs of the Trust. The Declaration of Trust also
provides for indemnification out of the Trust property of any shareholder held
personally liable for the claims and liabilities to which a shareholder may
become subject by reason of being or having been a shareholder. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations. The Trust has been advised by counsel that the risk of any
shareholder incurring any liability for the obligations of a Trust is extremely
remote. Wright does not consider this risk to be material.
THE FUND AND ITS INVESTMENT OBJECTIVE AND POLICIES
The fund's objective is high total return (consisting of price appreciation
and high income) with reduced risk. The fund seeks to meet its investment
objective by allocating its assets among the Blue Chip Funds described in the
Prospectus. Capitalized terms used in the Statement of Additional Information
have the same meaning as in the Prospectus.
INVESTMENT POLICIES AND OTHER INFORMATION ABOUT THE UNDERLYING BLUE CHIPS
The fund will concentrate its investments in the underlying Blue Chip
Funds, which are mutual funds. Mutual funds pool the investments of many
investors and use professional management to select and purchase securities of
different issuers for their portfolios. Any investment in a mutual fund involves
risk. Even though the fund may invest in a number of the underlying Blue Chip
Funds, this investment strategy cannot eliminate investment risk. Investing in
mutual funds through a fund involves additional and duplicative expenses that
would not be present if an investor were to make a direct investment in the
underlying funds.
Under certain circumstances an underlying Blue Chip Fund may determine to
make payment of a redemption by the fund (wholly or in part) by a distribution
in kind of securities from its portfolio, instead of in cash. As a result, the
fund may hold securities distributed by an underlying Blue Chip Fund until such
time as Wright determines it appropriate to dispose of such securities. Such
disposition will impose additional costs on the fund.
The types of securities that may be acquired by the underlying Blue Chip
Funds and the various investment techniques which they may employ, including the
risks associated with these investments, are described below. References to
"fund" and "funds" in this section only refer to the underlying Blue Chip Funds.
<PAGE>
EQUITY SECURITIES
COMMON STOCKS. Common stocks are shares of a corporation or other entity
that entitle the holder to a pro rata share of the profits of the corporation,
if any, without preference over any other shareholder or class of shareholders,
including holders of the entity's preferred stock and other senior equity.
Common stock usually carries with it the right to vote and frequently an
exclusive right to do so.
PREFERRED STOCKS AND CONVERTIBLE SECURITIES. Convertible debt securities
and preferred stock entitle the holder to acquire the issuer's stock by exchange
or purchase for a predetermined rate. Convertible securities are subject both to
the credit and interest rate risks associated with fixed income securities and
to the stock market risk associated with equity securities. Convertible debt
securities in which the fund invests generally are rated at the time of
investment in one of the top two rating categories by a nationally recognized
rating organization or their unrated equivalent.
FOREIGN SECURITIES. Wright International Blue Chip Equities Fund may invest
in foreign securities. Investing in securities of foreign governments or
securities issued by companies whose principal business activities are outside
the United States may involve significant risks not associated with domestic
investments. It is anticipated that in most cases, the best available market for
foreign securities will be on exchanges or in over-the-counter markets located
outside the U.S. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the U.S. Securities
of some foreign issuers (particularly those located in developing countries) may
be less liquid and more volatile than securities of comparable U.S. companies.
In addition, foreign brokerage commissions are generally higher than commissions
on securities traded in the U.S. and may be non-negotiable. In general, there is
less overall governmental supervision and regulation of securities exchanges,
brokers and listed companies than in the U.S.
The limited liquidity of certain foreign markets may affect the fund's
ability to accurately value its assets invested in such market. In addition, the
settlement systems of certain foreign countries are less developed than the
U.S., which may impede the fund's ability to effect portfolio transactions.
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 comparable to those
applicable to domestic issuers. Investments in foreign securities also involve
the risk of possible adverse changes in exchange control regulations,
expropriation or confiscatory taxation, limitation on removal of funds or other
assets of the fund, political or financial instability or diplomatic and other
developments which could affect such investments. Further, economies of
particular countries or areas of the world may differ favorably or unfavorably
from the economy of the U.S.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Investments in securities of
foreign governments and companies whose principal business activities are
located outside of the United States will frequently involve currencies of
foreign countries. In addition, assets of the fund may temporarily be held in
bank deposits in foreign currencies during the completion of investment
programs. Therefore, the value of the fund's assets, as measured in U.S.
dollars, may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations. Although the fund values its
assets daily in U.S. dollars, the fund does not intend to convert its holdings
of foreign currencies into U.S. dollars on a daily basis. The fund may conduct
its foreign currency exchange transactions on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market. The fund will
convert currency on a spot basis from time to time and will incur costs in
connection with such currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the fund at one rate, while offering a lesser rate of exchange should the
fund desire to resell that currency to the dealer. The funds do not intend to
speculate in foreign currency exchange rates.
As an alternative to spot transactions, the fund may enter into contracts
to purchase or sell foreign currencies at a future date ("forward" contracts) or
purchase currency call or put options. A forward contract involves an obligation
to purchase or sell a specific currency at a future date and price fixed by
agreement between the parties at the time of entering into the contract. These
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward contract
generally involves no deposit requirement and no commissions are charged at any
stage for trades. The funds intend to enter into such contracts only on net
terms. The purchase of a put or call option is an alternative to the purchase or
sale of forward contracts and will be used if the option premiums are less then
those in the forward contract market.
The funds may enter into forward contracts only under two circumstances.
First, when a fund enters into a contract for the purchase or sale of a security
quoted or dominated in a foreign currency, it may desire to "lock in" the U.S.
dollar price of the security. This is accomplished by entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars, of the
amount of foreign currency involved in the underlying security transaction
("transaction hedging"). Such forward contract transactions will enable the fund
to protect itself against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency during
the period between the date the security is purchased or sold and the date of
payment for the security.
<PAGE>
Second, when Wright believes that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, the fund may
enter into a forward contract to sell, for a fixed amount of U.S. dollars, the
amount of foreign currency approximating the value of some or all of the
securities quoted or denominated in such foreign currency. The precise matching
of the forward contract amounts and the value of the securities involved will
not generally be possible. The future value of such securities in foreign
currencies will change as a consequence of fluctuations in the market value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of currency exchange rates and the
implementation of a short-term hedging strategy are highly uncertain.
The fund will place cash or liquid securities in a segregated account. The
amount of such segregated assets will be at least equal to the value of the
fund's total assets committed to the consummation of forward contracts involving
the purchase of forward currency. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount
of the fund's commitments with respect to such contracts.
At the maturity of a forward contract, the fund may elect to sell the
portfolio security and make delivery of the foreign currency. Alternatively, the
fund may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an identical offsetting contract from the
same currency trader.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a forward contract. Accordingly, it may be
necessary for the fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the fund intends to sell the
security and the market value of the security is less than the amount of foreign
currency that the fund is obligated to deliver. Conversely, it may be necessary
to sell on the spot market some of the foreign currency received upon the sale
of the portfolio security if its market value exceeds the amount of foreign
currency that the fund is obligated to deliver.
If the fund retains the portfolio security and engages in an offsetting
transaction, the fund will incur a gain or a loss (as described below) to the
extent that there has been a change in forward contract prices. If the fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward contract prices
decline during the period between the date the fund enters into a forward
contract for the sale of the foreign currency and the date it enters into an
offsetting contract for the purchase of the foreign currency, the fund will
realize a gain to the extent that the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
contract prices increase, the fund will suffer a loss to the extent that the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The fund will not speculate in forward contracts and will limit its use of
such contracts to the transactions described above. Of course, the fund is not
required to enter into such transactions with respect to its portfolio
securities and will not do so unless deemed appropriate by Wright. This method
of protecting the value of the fund's securities against a decline in the value
of a currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange which the fund can achieve
at some future time. Additionally, although such contracts tend to minimize the
risk of loss due to a decline in the value of the hedged currency, they also
tend to limit any potential gain which might be realized if the value of such
currency increases.
FIXED INCOME SECURITIES
Generally. Investments in fixed income securities may subject the fund to
risks, including the following.
INTEREST RATE RISK. When interest rates decline, the market value of fixed
income securities tends to increase. Conversely, when interest rates increase,
the market value of fixed income securities tends to decline. The volatility of
a security's market value will differ depending upon the security's duration,
the issuer and the type of instrument.
<PAGE>
DEFAULT RISK/CREDIT RISK. Investments in fixed income securities are
subject to the risk that the issuer of the security could default on its
obligations, causing a fund to sustain losses on such investments. A default
could impact both interest and principal payments.
CALL RISK AND EXTENSION RISK. Fixed income securities may be subject to
both call risk and extension risk. Call risk exists when the issuer may exercise
its right to pay principal on an obligation earlier than scheduled, which would
cause cash flows to be returned earlier than expected. This typically results
when interest rates have declined and a fund will suffer from having to reinvest
in lower yielding securities. Extension risk exists when the issuer may exercise
its right to pay principal on an obligation later than scheduled, which would
cause cash flows to be returned later than expected. This typically results when
interest rates have increased, and a fund will suffer from the inability to
invest in higher yield securities.
CORPORATE DEBT OBLIGATIONS. Corporate debt obligations are subject to the
risk of an issuer's inability to meet principal and interest payments on the
obligations and may also be subject to price volatility due to such factors as
market interest rates, market perception of the creditworthiness of the issuer
and general market liquidity.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include: bills,
certificates of indebtedness, and notes and bonds issued by the U.S. Treasury or
by agencies or instrumentalities of the U.S. Government. Some U.S. Government
securities, such as U.S. Treasury bills and bonds, are supported by the full
faith and credit of the U.S. Treasury; others are supported by the right of the
issuer to borrow from the U.S. Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; still others, such as
those of the Student Loan Marketing Association and the Federal Home Loan
Mortgage Corporation ("FHLMC"), are supported only by the credit of the
instrumentality. Mortgage participation certificates issued by the FHLMC
generally represent ownership interests in a pool of fixed-rate conventional
mortgages. Timely payment of principal and interest on these certificates is
guaranteed solely by the issuer of the certificates. Other investments will
include Government National Mortgage Association Certificates ("GNMA
Certificates"), which are mortgage-backed securities representing part ownership
of a pool of mortgage loans on which timely payment of interest and principal is
guaranteed by the full faith and credit of the U.S. Government. While the U.S.
Government guarantees the payment of principal and interest on GNMA
Certificates, the market value of the securities is not guaranteed and will
fluctuate.
MORTGAGE-RELATED SECURITIES. Wright Total Return Bond Fund and Wright
Current Income Fund may invest in mortgage-related securities, including
collateralized mortgage obligations ("CMOs") and other derivative
mortgage-related securities. These securities will either be issued by the U.S.
Government or one of its agencies or instrumentalities or, if privately issued,
supported by mortgage collateral that is insured, guaranteed or otherwise backed
by the U.S. Government or its agencies or instrumentalities. THE FUNDS DO NOT
INVEST IN THE RESIDUAL CLASSES OF CMOS, STRIPPED MORTGAGE-RELATED SECURITIES,
LEVERAGED FLOATING RATE INSTRUMENTS OR INDEXED SECURITIES.
Mortgage-related securities represent participation interests in pools of
adjustable and fixed mortgage loans. Unlike conventional debt obligations,
mortgage-related securities provide monthly payments derived from the monthly
interest and principal payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans. The mortgage loans underlying
mortgage-related securities are generally subject to a greater rate of principal
prepayments in a declining interest rate environment and to a lesser rate of
principal prepayments in an increasing interest rate environment. Under certain
interest and prepayment rate scenarios, a fund may fail to recover the full
amount of its investment in mortgage-related securities purchased at a premium,
notwithstanding any direct or indirect governmental or agency guarantee. The
fund may realize a gain on mortgage-related securities purchased at a discount.
Since faster than expected prepayments must usually be invested in lower
yielding securities, mortgage-related securities are less effective than
conventional bonds in "locking in" a specified interest rate. Conversely, in a
rising interest rate environment, a declining prepayment rate will extend the
average life of many mortgage-related securities. Extending the average life of
a mortgage related security increases the risk of depreciation due to future
increases in market interest rates.
A fund's investments in mortgage-related securities may include
conventional mortgage pass-through securities and certain classes of multiple
class CMOs. Senior CMO classes will typically have priority over residual CMO
classes as to the receipt of principal and/or interest payments on the
underlying mortgages. The CMO classes in which a fund may invest include
sequential and parallel pay CMOs, including planned amortization class ("PAC")
and target amortization class ("TAC") securities.
Different types of mortgage-related securities are subject to different
combinations of prepayment, extension, interest rate and/or other market risks.
Conventional mortgage pass-through securities and sequential pay CMOs are
subject to all of these risks, but are typically not leveraged. PACs, TACs and
other senior classes of sequential and parallel pay CMOs involve less exposure
to prepayment, extension and interest rate risk than other mortgage-related
securities, provided that prepayment rates remain within expected prepayment
ranges or "collars."
<PAGE>
MONEY MARKET INSTRUMENTS
CERTIFICATES OF DEPOSIT - are certificates issued against funds deposited
in a bank, are for a definite period of time, earn a specified rate of return,
and are normally negotiable.
BANKERS' ACCEPTANCES - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed "accepted"
when a bank guarantees their payment at maturity.
COMMERCIAL PAPER - refers to promissory notes issued by corporations in
order to finance their short-term credit needs.
FINANCE COMPANY PAPER - refers to promissory notes issued by finance
companies in order to finance their short-term credit needs.
CORPORATE OBLIGATIONS - include bonds and notes issued by corporations in
order to finance longer-term credit needs.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. A fund may purchase
when-issued securities and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Alternatively, a
fund may enter into offsetting contracts for the forward sale of other
securities that it owns. Securities purchased or sold on a when-issued or
forward commitment basis involve a risk of loss if the value of the security to
be purchased declines prior to the settlement date or if the value of the
security to be sold increases prior to the settlement date.
Securities are frequently offered on a "when-issued" basis. When so
offered, the price, which is generally expressed in terms of yield to maturity,
is fixed at the time the commitment to purchase is made, but delivery and
payment for the when-issued securities may take place at a later date. Normally,
the settlement date occurs 15 to 90 days after the date of the transaction. The
payment obligation and the interest rate that will be received on the securities
are fixed at the time a fund enters into the purchase commitment. During the
period between purchase and settlement, no payment is made by the fund to the
issuer and no interest accrues to the fund. To the extent that assets of a fund
are held in cash pending the settlement of a purchase of securities, the fund
would earn no income; however, it is intended that the funds will be fully
invested to the extent practicable and subject to the policies stated above.
While forward commitments and when-issued securities may be sold prior to the
settlement date, it is intended that such securities will be purchased for a
fund with the purpose of actually acquiring them unless a sale appears to be
desirable for investment reasons. At the time a commitment to purchase
securities on a when-issued basis is made for a fund, the transaction will be
recorded and the value of the security reflected in determining the fund's net
asset value.
A fund will establish a segregated account in which a fund that purchases
securities on a when-issued basis will maintain cash and liquid securities equal
in value to commitments for when-issued securities. If the value of the
securities placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will at least equal the amount of a fund's when-issued commitments.
Such segregated securities either will mature or, if necessary, be sold on or
before the settlement date. Securities purchased on a when-issued basis and the
securities held by a fund are subject to changes in value based upon the
public's perception of the credit worthiness of the issuer and changes in the
level of interest rates (which will generally result in both changing in value
in the same way, i.e., both experiencing appreciation when interest rates
decline and depreciation when interest rates rise). Therefore, to the extent
that a fund remains substantially fully invested at the same time that it has
purchased securities on a when-issued basis, there will be greater fluctuations
in the market value of the fund's net assets than if cash were solely set aside
to pay for when-issued securities.
LENDING PORTFOLIO SECURITIES. A fund may seek to increase income by lending
portfolio securities to broker-dealers or other institutional borrowers. Under
present regulatory policies of the Securities and Exchange Commission, such
loans are required to be secured continuously by collateral in cash or liquid
assets held by the fund's custodian and maintained on a current basis at an
amount at least equal to the market value of the securities loaned, which will
be marked to market daily. Cash equivalents include certificates of deposit,
commercial paper and other short-term money market instruments. The fund would
have the right to call a loan and obtain the securities loaned at any time on up
to five business days' notice. The fund would not have the right to vote any
securities having voting rights during the existence of a loan, but would call
the loan in anticipation of an important vote to be taken among holders of the
securities or the giving or withholding of their consent on a material matter
affecting the investment.
<PAGE>
During the existence of a loan, a fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and will also receive a fee, or all or a portion of the interest, if any,
on investment of the collateral. However, the fund may at the same time pay a
transection fee to such borrowers and administrative expenses, such as finders'
fees to third parties. As with other extensions of credit there are risks of
delay in recovery or even loss of rights in the securities loaned if the
borrower of the securities fails financially. However, the loans will be made
only to organizations deemed by the Investment Adviser to be of good standing
and when, in the judgment of the Investment Adviser, the consideration which can
be earned from securities loans of this type justifies the attendant risk. The
financial condition of the borrower will be monitored by the Investment Adviser
on an ongoing basis and collateral values will be continuously maintained at no
less than 100% by "marking to market" daily. If the Investment Adviser decides
to make securities loans, it is intended that the value of the securities loaned
would no exceed 30% of the fund's total assets.
REPURCHASE AGREEMENTS. A fund may enter into repurchase agreements only
with large, well-capitalized banks or government securities dealers that meet
Wright's credit standards. Repurchase agreements involve the purchase of U.S.
Government securities or of other high-quality, short-term debt obligations. At
the same time a fund purchases the security, it resells it to the vendor (a
member bank of the Federal Reserve System or recognized securities dealer), and
is obligated to redeliver the security to the vendor on an agreed-upon date in
the future. The resale price is in excess of the purchase price and reflects an
agreed-upon market rate unrelated to the coupon rate on the purchased security.
These transactions, which are like short-term loans, afford an opportunity for a
fund to earn a return on cash which is only temporarily available. A fund's risk
is the ability of the vendor to pay an agreed-upon sum upon the delivery date,
and each fund believes the risk is limited to the difference between the market
value of the security and the repurchase price provided for in the repurchase
agreement. However, bankruptcy or insolvency proceedings affecting the vendor of
the security which is subject to the repurchase agreement, prior to the
repurchase, may result in a delay in a fund being able to resell the security.
In all cases when entering into repurchase agreements with other than FDIC
insured depository institutions, the funds will take physical possession of the
underlying collateral security, or will receive written confirmation of the
purchase of the collateral security and a custodial or safekeeping receipt from
a third party under a written bailment for hire contract, or will be the
recorded owner of the collateral security through the Federal Reserve Book-Entry
System.
Repurchase agreements are considered loans under the Investment Company
Act of 1940.
DEFENSIVE INVESTMENTS. During periods of unusual market conditions, when
Wright believes that investing for temporary defensive purposes is appropriate,
all or a portion of a fund's assets may be held in cash or invested in
short-term obligations. Short-term obligations include but are not limited to
short-term obligations issued or guaranteed as to interest and principal by the
U.S. Government or any agency or instrumentality thereof (including repurchase
agreements collateralized by such securities); commercial paper which at the
date of investment is rated A-1 by S&P or P-1 by Moody's, or, if not rated by
such rating organizations, is deemed by Wright pursuant to procedures
established by the Trustees to be of comparable quality; short-term corporate
obligations and other debt instruments which at the date of investment are rated
AA or better by S&P or Aa or better by Moody's or, if unrated by such rating
organizations, are deemed by Wright pursuant to procedures established by the
Trustees to be of comparable quality; and certificates of deposit, bankers'
acceptances and time deposits of domestic banks which are determined to be of
high quality by Wright pursuant to procedures established by the Trustees. A
fund may invest in instruments and obligations of banks that have other
relationships with the fund, Wright or Eaton Vance Management, the administrator
("Eaton Vance" or "Administrator"). No preference will be shown towards
investing in banks which have such relationships.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the fund and may
be changed only by the vote of a majority of the fund's outstanding voting
securities, which as used in this Statement of Additional Information means the
lesser of (a) 67% of the shares of the fund if the holders of more than 50% of
the shares are present or represented at the meeting or (b) more than 50% of the
shares of the fund. Accordingly, the fund may not:
(1) With respect to 75% of the total assets of the fund, purchase the
securities of any issuer if such purchase at the time thereof would
cause more than 5% of its total assets (taken at market value) to
be invested in the securities of such issuer, or purchase
securities of any issuer if such purchase at the time thereof would
cause more than 10% of the total voting securities of such issuer
to be held by the fund, except that this restriction does not apply
to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and securities of other investment
companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940. In addition, the fund may not issue
bonds, debentures or senior equity securities, other than shares of
beneficial interest;
(3) Purchase securities on margin (but the fund may obtain such
short-term credits as may be necessary for the clearance of
purchases and sales of securities);
<PAGE>
(4) Underwrite or participate in the marketing of securities of others;
(5) Make an investment in any one industry if such investment would
cause investments in such industry to equal or exceed 25% of the
fund's total assets taken at market value at the time of such
investment (other than (i) securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities) and (ii)
securities of other investment companies;
(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of
companies which invest or deal in real estate;
(7) Purchase or sell commodities or commodity contracts for the
purchase or sale of physical commodities, except that the fund may
purchase and sell financial futures contracts, options on financial
futures contracts and all types of currency contracts; or
(8) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments (b) entering into
repurchase agreements or (c) lending portfolio securities.
The fund has adopted the following investment policy which may be changed
without approval by the fund's shareholders. As a matter of nonfundamental
policy, the fund will not invest more than 15% of net assets in illiquid
investments. If the fund's holdings of illiquid securities exceed 15% of its net
assets, the fund will take steps necessary to reduce these holdings in its
ordinary course of business. In addition, the fund will not purchase securities
when bank borrowing exceeds 5% of total assets.
The 1940 Act currently allows the fund to borrow (1) for any reason from
banks or by entering into reverse repurchase agreements in an amount not
exceeding one-third of the fund's total assets and (2) for temporary purposes
(presumed to mean not more than 60 days). If the fund's borrowings under clause
(1) later exceed one-third of the fund's total assets, the fund must reduce its
borrowings below this level within three business days.
Except for the fund's investment policies with respect to borrowing money
and investing in illiquid securities, if a percentage restriction contained in
the fund's investment policies is adhered to at the time of investment, a later
increase or decrease in the percentage resulting from a change in the value of
portfolio securities or the fund's net assets will not be considered a violation
of such restriction.
OFFICERS AND TRUSTEES
The officers and trustees of the Trust 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. Those trustees who are "interested
persons" (as defined in the Investment Company Act of 1940 (the "1940 Act")) of
the Trust, Wright, The Winthrop Corporation ("Winthrop"), Eaton Vance, Eaton
Vance's wholly owned subsidiary, Boston Management and Research ("BMR"), Eaton
Vance's parent company, Eaton Vance Corp. ("EVC"), or Eaton Vance's and BMR's
trustee, Eaton Vance, Inc. ("EV") by virtue of their affiliation with either the
Trust, Wright, Winthrop, Eaton Vance, BMR, EVC or EV, are indicated by an
asterisk (*).
PETER M. DONOVAN (57), President and Trustee*
President, Chief Executive Officer and Director of Wright and Winthrop; Vice
President, Treasurer and a Director of Wright Investors' Service Distributors,
Inc.
Address: 440 Wheelers Farms Road, Milford, CT 06460
H. DAY BRIGHAM, JR. (73), Vice President, Secretary and Trustee*
Retired, Vice President, Chairman of the Management Committee and Chief Legal
Officer of Eaton Vance, BMR, EVC and EV and Director of EV and EVC; Director of
Wright and Winthrop since February, 1997.
Address: 92 Reservoir Avenue, Chestnut Hill, MA 02467
JUDITH R. CORCHARD (61), Vice President and Trustee*
Executive Vice President, Investment Management: Senior Investment Officer;
Chairman of the Investment Committee and Director of Wright and Winthrop. Ms.
Corchard was appointed a Trustee of the Trust on December 10, 1997.
Address: 440 Wheelers Farms Road, Milford, CT 06460
A.M. MOODY, III (63), Vice President and Trustee*
Senior Vice President, Wright and Winthrop; President, Wright Investors'
Service Distributors, Inc.
Address: 440 Wheelers Farms Road, Milford, CT 06460
<PAGE>
DORCAS R HARDY (53), Trustee
President, Dorcas R. Hardy & Associates (a public policy and government
relations firm), Spotsylvania, VA; Director, The Options Clearing Corporation
and First Coast Service Options, Jacksonville, FL (FL Blue Cross Blue Shield
subsidiary); 1996-1998 - Chairman and CEO of Work Recovery, Inc. (an advanced
rehabilitation technology firm), Tucson AZ; 19861989 - U.S. Commissioner of
Social Security. Ms. Hardy was elected a Trustee on December 9, 1998.
Address: 11407 Stonewall Jackson Drive, Spotsylvania, VA 22553
LELAND F. MILES (76), Trustee
President Emeritus, University of Bridgeport (1987-present); President,
University of Bridgeport (1974-1987); Director, United Illuminating Company.
Address: 332 North Cedar Road, Fairfield, CT 06430
LLOYD F. PIERCE (81), Trustee
Retired Vice Chairman (prior to 1984 - President), People's Bank, Bridgeport,
CT; Member, Board of Trustees, People's Bank, Bridgeport, CT; Board of
Directors, Southern Connecticut Gas Company; Chairman, Board of Directors,
COSINE (a software company).
Address: 140 Snow Goose Court, Daytona Beach, FL 32119
RICHARD E. TABER (51), Trustee
Chairman and Chief Executive Officer of First County Bank, Stamford, CT
(1989-present). Mr. Taber was appointed a Trustee of the Trust on March 18,
1997.
Address: 117 Prospect Street, Stamford, CT 06904
RAYMOND VAN HOUTTE (75), Trustee
President Emeritus and Counselor of The Tompkins County Trust Company, Ithaca,
NY (since January 1989); President and Chief Executive Officer, The Tompkins
County Trust Company (1973-1988); President, New York State Bankers Association
(1987-1988); Trustee Emeritus Paleontological Institution (since May, 1995).
Address: One Strawberry Lane, Ithaca, NY 14850
JAMES L. O'CONNOR (55), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
JANET E. SANDERS (64), Assistant Secretary and Assistant Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
WILLIAM J. AUSTIN, JR. (48), Assistant Treasurer
Assistant Vice President of Eaton Vance, BMR and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
A. JOHN MURPHY (37), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since March 1, 1994; employee of Eaton
Vance since March 1993. Officer of various investment companies managed by Eaton
Vance or BMR.
Address: 255 State Street, Boston, MA 02109
ERIC G. WOODBURY (42), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993. Officer of
various investment companies managed by Eaton Vance or BMR.
Address: 255 State Street, Boston, MA 02109
All of the trustees and officers hold identical positions with The Wright
Managed Equity Trust, The Wright Managed Income Trust, The Wright EquiFund
Equity Trust, The Wright Managed Blue Chip Series Trust, The Wright Blue Chip
Master Portfolio Trust and Catholic Values Investment Trust. Each trustee who is
not an employee of Wright, Winthrop, Eaton Vance, its parents or subsidiaries,
including Mr. Brigham, receives annual compensation from the Trust. The trustees
who are employees of Wright receive no compensation from the Trust.
Non-affiliated trustees, including Mr. Brigham, also receive additional payments
from other investment companies for which Wright provides investment advisory
services. The Trust does not have a retirement plan for the trustees. See the
following "Compensation Table."
<PAGE>
The Trust's Board of Trustees has established an Independent Trustees'
Committee and an Audit Committe, each consisting of all of the Independent
Trustees who are Messrs. Miles, Pierce (Chairman), Taber and Van Houtte and Ms.
Hardy. The responsibilities of the Independent Trustees' Committee include those
of a nominating committee for additional or replacement trustees of the Trust
and a contract review committee for consideration of renewals or changes in the
investment advisory agreements, distribution agreements and distribution plans
and other agreements as appropriate. The responsibilities of the Audit Committee
are: (a) to oversee the Trusts' accounting and financial reporting practices,
their internal controls and, as appropriate, the internal controls of certain
service providers; (b) to oversee the quality and objectivity of the Trusts'
financial statements and the independent audit thereof; and (c) to act as a
liaison between the Trusts' independent auditors and the full Board of Trustees.
COMPENSATION TABLE
Compensation Total Compensation from Fund
from the Fund(1) and Funds' Complex(1)(2)
- -------------------------------------------------------------------------------
H. Day Brigham, Jr. $750 $11,250
Dorcas Hardy $750 $11,250
Leland Miles $750 $11,250
Lloyd F. Pierce $750 $11,250
Richard E. Taber $750 $11,250
Raymond Van Houtte $750 $ 8,250
- -------------------------------------------------------------------------------
(1) For the fiscal year ended December 31, 1999.
(2) Includes service on other boards in the Wright Fund Complex for a total
of 22 Funds.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SHARES
As of April 1, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the fund.
As of the same date, the following shareholders were record holders of the
following percentages of the outstanding shares of the fund:
Columbus Circle Trust Co/FBO 55.2%
Wright Inv. Serv. Def. Sav. P/S/P
Stamford, CT
Columbus Circle Trust Co. Cust. FBP 26.0%
R.S. Lamson & Sons
Stamford, CT
Ruane & Co. 6.4%
Agent for Dime Bank
c/o Tompkins County Trust Co.
Ithaca, NY
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
The fund has engaged Wright to act as the fund's investment adviser
pursuant to an Investment Advisory Contract (the "Investment Advisory
Contract"). Wright, acting under the general supervision of the trustees,
furnishes the fund with investment advice and management services, as described
below. The School for Ethical Education, 440 Wheelers Farms Road, Milford, CT
06460, may be considered a controlling person of Wright's parent, Winthrop, and
Wright by reason of its ownership of more than 25% of the outstanding shares of
Winthrop.
Pursuant to the Investment Advisory Contract, Wright will carry out the
investment and reinvestment of the assets of the fund, will furnish continuously
an investment program with respect to the fund, will determine which securities
should be purchased, sold or exchanged and will implement such determinations.
Wright will be solely responsible for evaluating the investment merits of the
fund's portfolio investments. Wright will furnish to the fund investment advice
and management services, office space, equipment and clerical personnel, and
investment advisory, statistical and research facilities. In addition, Wright
has arranged for certain members of the Eaton Vance and Wright organizations to
serve without salary as officers or trustees of the Trust. In return for these
services, the fund is obligated to pay a monthly advisory fee calculated at the
rate set forth in the fund's current Prospectus.
<PAGE>
The investment adviser, the distributor and the fund have adopted Codes of
Ethics governing personal securities transactions. Under the Codes, Wright
employees may purchase and sell securities subject to certain pre-clearance and
reporting requirements and other procedures. These Codes of Ethics are on public
file with, and available from, the Securities and Exchange Commission.
The net assets of the fund as of December 31, 1999 were $6,317,280. For the
period from the start of business July 14, 1999 through its fiscal year end of
December 31, 1999 the advisory fee earned from the fund amounted to $4,802. To
enhance the net income of the fund, Wright made a reduction of the entire amount
of $4,802. In addition, $19,008 of expenses were allocated to the investment
adviser.
The fund has engaged Eaton Vance to act as its administrator pursuant to an
Administration Agreement. For its services under the Administration Agreement,
Eaton Vance receives monthly administration fees at the annual rate of 0.02% of
the fund's average net assets.
Eaton Vance is a business trust organized under Massachusetts law. Eaton
Vance, Inc. ("EV") serves as trustee of Eaton Vance. Eaton Vance and EV are
wholly owned subsidiaries of Eaton Vance Corporation ("EVC"), a Maryland
corporation and publicly held holding company. EVC through its subsidiaries and
affiliates engages primarily in investment management, administration and
marketing activities.
From the start of business July 14, 1999 to December 31, 1999, the
effective annual rate was 0.02%, and the fee earned by the administrator
amounted to $480.
The fund will be responsible for all of its expenses not expressly stated
to be payable by Wright under its Investment Advisory Contract, including,
without limitation, the fees and expenses of its custodian and transfer agent,
including those incurred for determining the fund's net asset value and keeping
the fund's books; the cost of share certificates; membership dues to investment
company organizations; brokerage commissions and fees; fees and expenses of
registering its shares; expenses of reports to shareholders, proxy statements,
and other expenses of shareholders' meetings; insurance premiums; printing and
mailing expenses; interest, taxes and corporate fees; legal and accounting
expenses; expenses of trustees not affiliated with Eaton Vance or Wright; and
investment advisory and administration fees. The fund will also bear expenses
incurred in connection with litigation in which the fund is a party and the
legal obligation the fund may have to indemnify the officers and trustees of the
Trust with respect thereto.
The fund's Investment Advisory Contract and Administration Agreement will
remain in effect until February 28, 2001. The Investment Advisory Contract may
be continued from year to year thereafter so long as such continuance after
February 28, 2001 is approved at least annually (i) by the vote of a majority of
the trustees who are not "interested persons" of the Trust, Eaton Vance or
Wright cast in person at a meeting specifically called for the purpose of voting
on such approval and (ii) by the board of trustees or by vote of a majority of
the outstanding shares of the fund. The fund's Administration Agreement may be
continued from year to year after February 28, 2001 so long as such continuance
is approved annually by the vote of a majority of the trustees. Each agreement
may be terminated at any time without penalty on sixty (60) days written notice
by the board of trustees or directors of either party, or by vote of the
majority of the outstanding shares of the fund. Each agreement will terminate
automatically in the event of its assignment. Each agreement provides that, in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties to the fund under such agreement on the
part of Eaton Vance or Wright, neither Eaton Vance nor Wright, as the case may
be, will be liable to the fund for any loss incurred.
CUSTODIAN AND TRANSFER AGENT
IBT, 200 Clarendon Street, Boston, MA 02116, acts as custodian for the
fund. IBT has the custody of all cash and securities of the fund, maintains the
fund's general ledgers and computes the daily net asset value per share. In such
capacity it attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the fund's investments, receives
and disburses all funds and performs various other ministerial duties upon
receipt of proper instructions from the fund.
PFPC, Inc., P.O. Box 9697, Providence, RI 02904 is the fund's transfer agent.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 200 Berkeley Street, Boston, MA 02116-5022, is the
Trust's independent certified public accountant, providing audit services, tax
return preparation, and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission.
<PAGE>
BROKERAGE ALLOCATION
Wright places the portfolio security transactions for the fund, which in
some cases may be effected in block transactions which include other accounts
managed by Wright. Wright provides similar services directly for bank trust
departments and other investment advisory accounts. Wright seeks to execute
portfolio security transactions on the most favorable terms and in the most
effective manner possible. In seeking best execution, Wright will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the size and type of
the transaction, the nature and character of the markets for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, experience and financial condition of the
broker-dealer and the value and quality of service rendered by the broker-dealer
in other transactions, and the reasonableness of the brokerage commission or
markup, if any.
It is expected that on frequent occasions there will be many broker-dealer
firms which will meet the foregoing criteria for a particular transaction. In
selecting among such firms, Wright may give consideration to those firms which
supply brokerage and research services, quotations and statistical and other
information to Wright for its use in servicing its advisory accounts. Wright may
include firms which purchase investment services from Wright. The term
"brokerage and research services" includes advice as to the value of securities,
the advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). Such services and information may be useful
and of value to Wright in servicing all or less than all of its accounts and the
services and information furnished by a particular firm may not necessarily be
used in connection with the account which paid brokerage commissions to such
firm. The advisory fee paid by the fund to Wright is not reduced as a
consequence of Wright's receipt of such services and information. While such
services and information are not expected to reduce Wright's normal research
activities and expenses, Wright would, through use of such services and
information, avoid the additional expenses which would be incurred if it should
attempt to develop comparable services and information through its own staff.
Under the fund's Investment Advisory Contract, Wright has the authority to
pay commissions on portfolio transactions for brokerage and research services
exceeding that which other brokers or dealers might charge provided certain
conditions are met. This authority will not be exercised, however, until the
Prospectus or this Statement of Additional Information has been supplemented or
amended to disclose the conditions under which Wright proposes to do so.
The Investment Advisory Contract expressly recognizes the practices which
are provided for in Section 28(e) of the Securities Exchange Act of 1934 by
authorizing the selection of a broker or dealer which charges the fund a
commission which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if it is determined in
good faith that such commission was reasonable in relation to the value of the
brokerage and research services which have been provided.
From the start of business July 14, 1999 to December 31, 1999, the fund
paid no brokerage commissions.
PRICING OF SHARES
For a description of how the fund values its shares, see "Information About
Your Account -- How the Fund Values its Shares" in the fund's current
Prospectus. The fund values securities with a remaining maturity of 60 days or
less by the amortized cost method. The amortized cost method involves initially
valuing a security at its cost (or its fair market value on the sixty-first day
prior to maturity) and thereafter assuming a constant amortization to maturity
of any discount or premium, without regard to unrealized appreciation or
depreciation in the market value of the security. Foreign securities in which an
underlying fund may invest may be listed primarily on foreign stock exchanges
that my trade on days when the fund is not open for business. For this reason,
the net asset value of an underlying fund's portfolio may be significantly
affected by trading on days when an investor does not have access to the fund.
The fund will not price its securities on the following national holidays:
New Year's Day; Martin Luther King, Jr. Day; Presidents' Day; Good Friday;
Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.
<PAGE>
TAXES
In order to qualify as a regulated investment company as described in the
Prospectus, the fund must, among other things, (1) derive at least 90% of its
gross income in each taxable year from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stocks
or securities or foreign currencies, or other income (including but not limited
to gains from options and forward contracts) derived with respect to its
business of investing in such stocks or securities and (2) diversify its
holdings in compliance with the diversification requirements of Subchapter M of
the Code so that, at the end of each quarter of the fund's taxable year, (a) at
least 50% of the market value of the fund's total assets is represented by cash,
U.S. Government securities and other securities limited in respect of any one
issuer to not more than 5% of the value of the fund's total (gross) assets and
to not more than 10% of the voting securities of such issuer, and (b) not more
than 25% of the value of its total (gross) assets is invested in securities of
any one issuer (other than U.S. Government securities) or certain other issuers
controlled by the fund.
As a regulated investment company, the fund will not be subject to federal
income tax on net investment income and net capital gains (short and long-term),
if any, that it distributes to its shareholders if at least 90% of its
investment company taxable income (i.e., all of its net taxable income other
than the excess, if any, of net long-term capital gain over net short-term
capital loss ("net capital gain"), for the taxable year is distributed in
accordance with applicable timing requirements, but will be subject to tax at
regular corporate rates on any investment company taxable income or net capital
gain that is not so distributed. In general, dividends will be treated as paid
when actually distributed, except that dividends declared in October, November
or December and made payable to shareholders of record in such a month will be
treated as having been received by shareholders on December 31, if the dividend
is paid in the following January. The fund intends to satisfy the distribution
requirement in each taxable year. The fund's distributions from investment
company taxable income and net capital gain are generally treated as ordinary
income and long-term capital gain, respectively, under the Code. Insurance
companies should consult their own tax advisers regarding the tax rules
governing their treatment upon receipt of these distributions and the proceeds
of share redemptions (including exchanges).
The fund will not be subject to federal excise tax or the related
distribution requirements for any taxable year in which all of its shares are
held by segregated asset accounts of life insurance companies held in connection
with variable contracts or are attributable to certain "seed money" in
accordance with Section 4982(f) of the Code.
Investment by the fund in the stock of a "passive foreign investment
company" may cause the fund to recognize income prior to the receipt of
distributions from such a company or to become subject to tax upon the receipt
of certain excess distributions from, or upon disposition of its stock of, such
a company, although an election may generally be available that would ameliorate
some of these adverse tax consequences.
The fund intends to comply with the diversification requirements imposed by
Section 817(h) of the Code and the regulations thereunder. These requirements,
which are in addition to the diversification requirements imposed on the fund by
the 1940 Act and Subchapter M of the Code, place certain limitations on the
assets of each separate account and, because Section 817(h) and those
regulations treat the assets of the fund as assets of the related separate
account, the assets of the fund, that may be represented by any one, two, three
and four investments. Specifically, the regulations provide that, except as
permitted by the "safe harbor" described below, as of the end of each calendar
quarter or within 30 days thereafter no more than 55% of the total assets of the
fund may be represented by any one investment, no more than 70% by any two
investments, no more than 80% by any three investments and no more than 90% by
any four investments. For this purpose, all securities of the same issuer are
considered a single investment, and each U.S. Government agency and
instrumentality is considered a separate issuer. Section 817(h) provides, as a
safe harbor, that a separate account will be treated as being adequately
diversified if the diversification requirements under Subchapter M are satisfied
and no more than 55% of the value of the account's total assets are cash and
cash items (including receivables), U.S. Government securities and securities of
other regulated investment companies. Failure by the fund to both qualify as a
regulated investment company and satisfy the Section 817(h) requirements would
generally result in treatment of the variable contract holders other than as
described in the applicable variable contract prospectus, including inclusion in
ordinary income of income accrued under the contracts for the current and all
prior taxable years. Any such failure may also result in adverse tax
consequences for the insurance company issuing the contracts.
The Trust may therefore find it necessary to take action to seek to ensure
that a Contract continues to qualify as a Contract under federal tax laws,
although the insurance company that maintains each segregated asset account is
responsible for ensuring that the assets held in that account satisfy the
diversification requirements of Section 817(h) of the Code and the applicable
regulations and the Trust itself can control only the assets held within the
fund. The Trust, for example, may be required to alter the investment objectives
of the fund or substitute the shares of one fund for those of another. No such
change of investment objectives or substitution of securities will take place
without notice to the shareholders of the affected fund. Failure by the fund to
qualify as a regulated investment company would also subject the fund to federal
and possibly state taxation of its income and gains, whether or not distributed
to shareholders, and distributions would generally be treated as ordinary income
to the extent of the fund's current or accumulated earnings and profits.
The fund is not subject to Massachusetts corporate excise or franchise tax.
Provided that the fund qualifies as a regulated investment company under the
Code, it will also not be required to pay any Massachusetts income tax.
<PAGE>
CALCULATION OF PERFORMANCE AND YIELD QUOTATIONS
The average annual total return of the fund is determined for a particular
period by calculating the actual dollar amount of investment return on a $1,000
investment in the fund made at the maximum public offering price (i.e. net asset
value) at the beginning of the period, and then calculating the annual
compounded rate of return which would produce that amount. Total return for a
period of one year is equal to the actual return of the fund during that period.
This calculation assumes that all dividends and distributions are reinvested at
net asset value on the reinvestment dates during the period.
The yield of the fund is computed by dividing its net investment income per
share earned during a recent 30-day period by the maximum offering price (i.e.
net asset value) per share on the last day of the period and analyzing the
resulting figure. Net investment income per share is equal to the fund's
dividends and interest earned during the period, with the resulting number being
divided by the average daily number of shares outstanding and entitled to
receive dividends during the period.
The fund's yield is calculated according to the following formula:
6
Yield = 2 [(a-b + 1) - 1]
---
cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (after reductions).
c = the average daily number of shares outstanding during the period.
d = the net asset value per share on the last day of the period.
Yield and effective yield will be based on historical earnings and are not
intended to indicate future performance. Yield and effective yield will vary
based on changes in market conditions and the level of expenses. The fund's
yield or total return may be compared to the Consumer Price Index and various
domestic securities indices. The fund's yield or total return and comparisons
with these indices may be used in advertisements and in information furnished to
present or prospective shareholders.
From time to time, in advertisements, in sales literature, or in reports to
shareholders, the past performance of the fund may be illustrated and/or
compared with that of other mutual funds with similar investment objectives, and
to stock or other relevant indices. In addition, the performance of the fund may
be compared to alternative investment or savings vehicles and/or to indexes or
indicators of economic activity, e.g., inflation or interest rates. Performance
rankings and listings reported in newspapers or national business and financial
publications, such as Barron's, Business Week, Consumers Digest, Consumer
Reports, Financial World, Forbes, Fortune, Investors Business Daily, Kiplinger's
Personal Finance Magazine, Money Magazine, New York Times, Smart Money, USA
Today, U.S. News and World Report, The Wall Street Journal and Worth may also be
cited (if the fund is listed in any such publication) or used for comparison, as
well as performance listings and rankings from various other sources including
Bloomberg Financial Markets, CDA/Wiesenberger, Donoghue's Mutual fund Almanac,
Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre and Co.,
Lipper Analytical Services, Inc., Micropal, Inc., Morningstar, Inc., Schabacker
Investment Management and Towers Data Systems, Inc.
In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements, in sales
literature, or in reports to shareholders of the fund. The performance of the
fund will not be presented in advertisements or sales literature without also
presenting the performance of the separate account.
<PAGE>
FINANCIAL STATEMENTS
The audited financial statements of, and the independent auditors' report
for the funds, appear in the funds' most recent annual reoprt to shareholders,
and are incorporated by reference into this Statement of Additional Information.
A copy of the annual report is attached to this Statement of Additional
Information.
Registrant incorporates by reference the audited financial information for
the fund for the fiscal year ended December 31, 1999 as previously filed
electronically with the Securities and Exchange Commission on February 25, 2000
(Accession Number 0000715165-00-000009).
<PAGE>
APPENDIX
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WRIGHT QUALITY RATINGS
Wright Quality Ratings provide the means by which the fundamental criteria
for the measurement of quality of an issuer's securities for investment by an
underlying Blue Chip Fund can be objectively evaluated.
Each rating is based on 32 individual measures of quality grouped into four
components: (1) Investment Acceptance, (2) Financial Strength, (3) Profitability
and Stability, and (4) Growth. The total rating is three letters and a numeral.
The three letters measure (1) Investment Acceptance, (2) Financial Strength, and
(3) Profitability and Stability. Each letter reflects a composite measurement of
eight individual standards which are summarized as A: Outstanding, B: Excellent,
C: Good, D: Fair, L: Limited, and N: Not Rated. The numeral rating reflects
Growth and is a composite of eight individual standards ranging from 0 to 20.
EQUITY SECURITIES
INVESTMENT ACCEPTANCE reflects the acceptability of a security by and its
marketability among investors, and the adequacy of the floating supply of its
common shares for the investment of substantial funds.
FINANCIAL STRENGTH represents the amount, adequacy and liquidity of the
corporation's resources in relation to current and potential requirements. Its
principal components are aggregate equity and total capital, the ratio of
invested equity capital to debt, the adequacy of net working capital, its fixed
charges coverage ratio and other appropriate criteria.
PROFITABILITY AND STABILITY measures the record of a corporation's
management in terms of (1) the rate and consistency of the net return on
shareholders' equity capital investment at corporate book value, and (2) the
profits or losses of the corporation during generally adverse economic periods,
including its ability to withstand adverse financial developments.
GROWTH per common share of the corporation's equity capital, earnings, and
dividends - rather than the corporation's overall growth of dollar sales and
income.
These ratings are determined by specific quantitative formulae. A
distinguishing characteristic of these ratings is that The Wright Investment
Committee must review and accept each rating. The Committee may reduce a
computed rating of any company, but may not increase it.
DEBT SECURITIES
Wright ratings for commercial paper, corporate bonds and bank certificates
of deposit consist of the two central positions of the four position
alphanumeric corporate equity rating. The two central positions represent those
factors which are most applicable to fixed income and reserve investments. The
first, Financial Strength, represents the amount, the adequacy and the liquidity
of the corporation's resources in relation to current and potential
requirements. Its principal components are aggregate equity and total capital,
the ratios of (a) invested equity capital, and (b) long-term debt, total of
corporate capital, the adequacy of net working capital, fixed charges coverage
ratio and other appropriate criteria. The second letter represents Profitability
and Stability and measures the record of a corporation's management in terms of:
(a) the rate and consistency of the net return on shareholders' equity capital
investment at corporate book value, and (b) the profits and losses of the
corporation during generally adverse economic periods, and its ability to
withstand adverse financial developments.
The first letter rating of the Wright four-part alphanumeric corporate
rating is not included in the ratings of fixed-income securities since it
primarily reflects the adequacy of the floating supply of the company's common
shares for the investment of substantial funds. The numeric growth rating is not
included because this element is identified only with equity investments.
<PAGE>
A-1 AND P-1 COMMERCIAL PAPER RATINGS BY S&P AND MOODY'S
An S&P Commercial Paper Rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
`A': Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2, and 3 to indicate the relative degree of safety. The
`A-1' designation indicates that the degree of safety regarding timely payment
is either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
The commercial paper rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to S&P by the
issuer or obtained from other sources it considers reliable. The ratings may be
changed, suspended or withdrawn as a result of changes in or unavailability of
such information.
Issuers (or related supporting institutions) rated P-1 by Moody's have a
superior capacity for repayment of short-term promissory obligations. P-1
repayment capacity will normally be evidenced by the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
BOND RATINGS
In addition to Wright quality ratings, bonds or bond insurers may be
expected to have credit risk ratings assigned by the two major rating companies,
Moody's and S&P. Moody's uses a nine-symbol system with Aaa being the highest
rating and C the lowest. S&P uses a 10-symbol system that ranges from AAA to D.
Bonds within the top four categories of Moody's (Aaa, Aa, A and Baa) and of S&P
(AAA, AA, A and BBB) are considered to be of investment-grade quality. Bonds in
the lowest investment grade category (BBB) may have speculative characteristics.
Note that both S&P and Moody's currently give their highest rating to issuers
insured by the American Municipal Bond Assurance Corporation (AMBAC) or by the
Municipal Bond Investors Assurance Corporation (MBIA).
Bonds rated A by S&P have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher-rated categories. The
rating of AA is accorded to issues where the capacity to pay principal and
interest is very strong and they differ from AAA issues only in small degree.
The AAA rating indicates an extremely strong capacity to pay principal and
interest.
Bonds rated A by Moody's are judged by Moody's to possess many favorable
investment attributes and are considered as upper medium grade obligations.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large or fluctuations of protective elements may be of
greater degree or there may be other elements present which make the long-term
risks appear somewhat larger. Bonds rated Aaa by Moody's are judged to be of the
best quality. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issuers.
<PAGE>
NOTE RATINGS
In addition to Wright quality ratings, municipal notes and other short-term
loans may be assigned ratings by Moody's or S&P.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG 1 are of the best quality, enjoying strong protection by
establishing cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation MIG 2 are of high quality, with margins of protection ample although
not so large as in the preceding group.
S&P's top ratings for municipal notes issued after July 29, 1984 are SP-1
and SP-2. the designation SP-1 indicates a very strong capacity to pay principal
and interest. A "+" is added for those issues determined to possess overwhelming
safety characteristics. An "SP-2" designation indicates a satisfactory capacity
to pay principal and interest.
PART C
----------------------
Other Information
Item 23. Exhibits
(a) (1) Declaration of Trust dated June 17, 1997
filed with the Trust's registration
statement on Form N-1A, March 26, 1999 and
incorporated herein by reference.
(2) Amended and Restated Establishment and
Designation of Series and Classes dated
March 18, 1999, filed as Exhibit (a)(2) to
Pre-Effective Amendment No. 1 on May 21,
1999 and incorporated herein by reference..
(b) By-laws dated June 17, 1997 filed with the Trust's
registration statement on Form N-1A, March 26, 1999
and incorporated herein by reference.
(c) Not applicable.
(d) (1) Investment Advisory Contract between the
Registrant and Wright Investors' Service,
dated May 19, 1999 filed as Exhibit (d)(1)
to Pre-Effective Amendment No. 1 on May 21,
1999 and incorporated herein by reference.
(2) Administration Agreement between the
Registrant and Eaton Vance Management, dated
May 19, 1999 filed as Exhibit (d)(2) to
Pre-Effective Amendment No. 1 on May 21,
1999 and incorporated herein by reference.
(e) Distribution Contract between the Registrant and
Wright Investors' Service Distributors, Inc., dated
May 19, 1999 filed as Exhibit (e) to Pre-Effective
Amendment No. 1 on May 21, 1999 and incorporated
herein by reference.
(f) Not applicable.
(g) (1) Master Custodian Agreement between Wright
Managed Investment Funds and
Investors Bank & Trust Company, dated
December 19, 1990 filed as Exhibit (g)(1)
to Pre-Effective Amendment No. 1 on May 21,
1999 and incorporated herein by reference.
(2) Amendment to Master Custodian Agreement
dated September 20, 1995 filed as
Exhibit (g)(2) to Pre-Effective Amendment
No. 1 on May 21, 1999 and
incorporated herein by reference.
(3) Letter Agreement to Master Custodian
Agreement dated May 19, 1999 filed as
Exhibit (g)(3) to Pre-Effective Amendment
No. 1 on May 21, 1999 and incorporated
herein by reference.
(h) (1) Form of Transfer Agency Agreement between
the Registrant and First Data
Investor Services Group to be filed by
Amendment.
(2) Service Plan for Advisor and Individual
Shares, dated May 19, 1999 filed as Exhibit
(h)(2) to Pre-Effective Amendment No. 1 on
May 21, 1999 and incorporated herein by
reference.
(i) (1) Opinion of Counsel dated May 19, 1999 filed
s Exhibit (i)(1) to Pre-Effective
Amendment No. 1 on May 21, 1999 and
incorporated herein by reference.
(2) Consent of Counsel filed herewith.
(j) Consent of Independent Certified Public Accountants
filed herewith.
<PAGE>
(k) Not applicable.
(l) Share Purchase Agreement dated May 19, 1999 filed as
Exhibit (l) to Pre-Effective Amendment No. 1 on May
21, 1999 and incorporated herein by reference.
(m) Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, with respect to
Individual and Advisor Shares, dated May 19, 1999
filed as Exhibit (m) to Pre-Effective Amendment No. 1
on May 21, 1999 and incorporated herein by reference.
(n) Not applicable.
(o) Multiple Class Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940 filed as Exhibit (o)
to Pre-Effective Amendment No. 1 on May 21, 1999 and
incorporated herein by reference.
(p) Power of Attorney dated March 18, 1999 filed as
Exhibit (p) to Pre-Effective Amendment No. 1 on May
21, 1999 and incorporated herein by reference.
(q) Codes of Ethics filed herewith.
Item 24. Persons Controlled by or under Common Control with Registrant
All of the following investment companies have Investment Advisory
Contracts with Wright:
The Wright Asset Allocation Trust
The Wright Managed Equity Trust
The Wright Managed Income Trust
The Wright Managed Blue Chip Series Trust
The Wright EquiFund Equity Trust
Catholic Values Investment Trust
Each of the above investment companies is organized as a Massachusetts
business trust.
The Wright Blue Chip Master Portfolio Trust which is organized as a New
York trust.
Item 25. Indemnification
The Registrant's By-Laws filed as Exhibit (b) to the Trust's registration
statement on Form N-1A contains provisions limiting the liability, and providing
for indemnification, of the Trustees and officers under certain circumstances.
Registrant's Trustees and officers are insured under a standard investment
company errors and omissions insurance policy covering loss incurred by reason
of negligent errors and omissions committed in their capacities as such.
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the mater has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser
Reference is made to the information set forth under the captions "Officers and
Trustees" and "Investment Advisory and Administrative Services" in the Statement
of Additional Information, which information is incorporated herein by
reference.
Item 27. Principal Underwriter
(a) Wright Investors' Service Distributors, Inc. (a wholly-owned subsidiary
of The Winthrop Corporation) acts as principal underwriter for each of the
investment companies named below.
The Wright Asset Allocation Trust
The Wright Managed Equity Trust
The Wright Managed Income Trust
The Wright EquiFund Equity Trust
Catholic Values Investment Trust
<TABLE>
<CAPTION>
(b)
(1) (2) (3)
<S> <C> <C>
Name and Principal Positions and Officers Positions and Offices
Business Address with Principal Underwriter with Registrant
--------------------------------------------------------------------------------------------------------------
A.M. Moody III* President Vice President and Trustee
Peter M. Donovan* Vice President and Treasurer President and Trustee
Vincent M. Simko* Vice President and Secretary None
---------------------------------------------------------------------------------------------------------------
*Address is 440 Wheelers Farms Road, Milford, CT 06460.
</TABLE>
(c) Not applicable.
Item 28. Location of Accounts and Records
All applicable accounts, books and documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are in the possession and custody of the registrant's
custodian, Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA
02116, and its transfer agent, PFPC, Inc., 4400 Computer Drive, Westborough, MA
01581-5120, with the exception of certain corporate documents and portfolio
trading documents which are either in the possession and custody of the
Registrant's administrator, Eaton Vance Management, 255 State Street, Boston, MA
02109 or of the investment adviser, Wright Investors' Service, Inc., 440
Wheelers Farms Road, Milford, CT 06460. Registrant is informed that all
applicable accounts, books and documents required to be maintained by registered
investment advisers are in the custody and possession of Registrant's
administrator, Eaton Vance Management, or of the investment adviser, Wright
Investors' Service, Inc.
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
None.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the retirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Bridgeport, and
the State of Connecticut on the 26th day of April, 2000.
THE WRIGHT ASSET ALLOCATION TRUST
By: Peter M. Donovan*
---------------------------------
Peter M. Donovan, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated and on the 26th day of April, 2000.
Signature Title
- ------------------------------------------------------------------------------
Peter M. Donovan* President, Principal
- ------------------ Executive Officer & Trustee
Peter M. Donovan
James L. O'Connor* Treasurer, Principal
- ------------------- Financial and Accounting Officer
James L. O'Connor
H. Day Brigham, Jr.* Trustee
- ----------------------
H. Day Brigham, Jr.
Judith R. Corchard* Trustee
- ----------------------
Judith R. Corchard
Dorcas R. Hardy* Trustee
- ----------------------
Dorcas R. Hardy
Leland Miles* Trustee
- ----------------------
Leland Miles
/s/ A. M. Moody III Trustee
- ----------------------
A. M. Moody III
Lloyd F. Pierce* Trustee
- ----------------------
Lloyd F. Pierce
Richard E. Taber* Trustee
- ----------------------
Richard E. Taber
Raymond Van Houtte* Trustee
- ----------------------
Raymond Van Houtte
* By /s/ A. M. Moody III
- --------------------------
A. M. Moody III
Attorney-in-Fact
<PAGE>
Exhibit Index
The following exhibits are filed as part of this Registration Statement
pursuant to General Instructions E of form N-1A.
Exhibit No. Description
(i)(1) Consent of Counsel
(j) Consent of Independent Auditors
(q) Codes of Ethics
Exhibit (i)(1)
Hale and Dorr LLP
Counsellors At Law
60 State Street
Boston, Massachusetts 02109
617-526-6000 FAX 617-526-5000
April 25, 2000
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: Post-Effective Amendment No. 1 to the Registration
Statement of The Wright Asset Allocation Trust (Trust)
File Nos. 333-75181; 811-09263 (PEA no. 1)
-----------------------------------------------------
Gentlemen:
Hale and Dorr LLP hereby consents to the incorporation by reference into
PEA no. 1 of its opinion, dated May 19, 1999, filed with the Securities and
Exchange Commission on May 21, 1999, as exhibit no. (i)(1) to pre-effective
amendment no. 1.
The consent may not be used for any purpose other than as set forth above
without our further consent.
Very truly yours,
/s/Hale and Dorr LLP
Hale and Dorr LLP
EXHIBIT j
Independent Auditors' Consent
We consent to the incorporation by reference in this Post-Effective
Amendment No. 1 to the Registration Statement of The Wright Asset Allocation
Trust (1933 Act File No. 333-75181) on behalf of the Wright Managed Growth with
Income Fund of our report dated February 8, 2000, included in the Annual Report
to Shareholders for the period from the start of business, July 14,1999 to
December 31, 1999, in the Statement of Additional Information which is part of
such Registration Statement.
We also consent to the reference to our Firm under the heading "Financial
Highlights" in the Prospectus and under the caption "Independent Certified
Public Accountants" in the Statement of Additional Information.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 26, 2000
CODE OF ETHICS
ADOPTED BY
THE WRIGHT MANAGED INCOME TRUST
THE WRIGHT MANAGED EQUITY TRUST
THE WRIGHT EQUIFUND EQUITY TRUST
THE WRIGHT ASSET ALLOCATION TRUST
THE WRIGHT MANAGED BLUE CHIP SERIES TRUST
THE WRIGHT BLUE CHIP MASTER PORTFOLIO TRUST
THE CATHOLIC VALUES INVESTMENT TRUST
As Adopted March 23, 2000
Each of The Wright Managed Income Trust, The Wright Managed Equity
Trust, The Wright EquiFund Equity Trust, The Wright Asset Allocation Trust, The
Wright Managed Blue Chip Series Trust, The Wright Blue Chip Master Portfolio
Trust and The Catholic Values Investment Trust (the "Funds") has adopted this
Code of Ethics, pursuant to Rule 17j-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"), with respect to certain types of personal
securities transactions by the officers and Trustees of the Funds which might be
deemed to create possible conflicts of interest and to establish reporting
requirements and enforcement procedures with respect to such transactions.
I. Code Provisions Applicable Only to Affiliated Officers and Trustees of
the Funds.
A. INCORPORATION OF ADVISER'S CODE OF ETHICs. The provisions of the
Adviser's Code of Ethics of Wright Investors' Service (the "Adviser"), which is
attached as APPENDIX A hereto, are hereby incorporated herein as each Fund's
Code of Ethics applicable to Officers and Trustees of such Fund who are
employees or affiliates of the Adviser. A violation of the Adviser's Code of
Ethics by any such Officer or Trustee of a Fund shall constitute a violation of
the Fund's Code of Ethics. Reports of the Adviser's personnel required by the
Adviser's Code of Ethics shall be deemed to be reports with the Funds under this
Code of Ethics, and shall at all times be available to the Funds.
B. REPORTS UNDER THE ADMINISTRATOR'S CODE OF ETHICS. Officers and
Trustees of the Funds who are employees of the Administrator shall file copies
of the reports required by the Administrator's Code of Ethics with the Review
Officer (as defined in Section I.C. of this Code). Such filings shall be deemed
to be filings with the Funds under this Code of Ethics, and shall at all
times be available to the Funds.
C. REVIEW. The person designated as the review officer by the Trustees
of each Fund (the "Review Officer") shall compare the reported personal
securities transactions with completed and contemplated portfolio transactions
of the Funds to determine whether a violation of this Code may have occurred.
Before making any determination that a violation has been committed by any
person, the Review Officer shall give such person an opportunity to supply
additional explanatory material. If the Review Officer determines that a
material violation of this Code has or may have occurred, he or she shall submit
his or her written determination, together with the transaction report and any
additional explanatory material provided by the individual, to the President of
the Adviser, who shall make an independent determination of whether a material
violation has occurred.
D. SANCTIONS. If the Review Officer or the President of the Adviser
finds that a material violation has occurred, he shall report the violation and
any sanctions imposed by the Adviser to the Trustees of the affected Funds. If a
securities transaction of the Review Officer or the President of the Adviser is
under consideration, an alternate review officer appointed by the Trustees of
each Fund, who may be a Vice President or other senior officer of the Adviser or
an unaffiliated third party, shall act in all respects in the manner prescribed
herein for the Review Officer or the President of the Adviser.
II. CODE PROVISIONS APPLICABLE ONLY TO INDEPENDENT TRUSTEES OF THE FUNDS.
A. DEFINITIONS.
(1) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder. Application of this definition is explained in more detail in the
form of report attached as Appendix B hereto.
(2) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act. Generally, it means the power to exercise a controlling
influence over the management or policies of a company, unless such power is
solely the result of an official position with such company.
(3) "Independent Trustee" means a Trustee of any Fund who is not an
employee or affiliate of the Adviser or the Administrator.
(4) "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
(5) "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the 1940 Act (generally, all securities) except that it shall not
include direct obligations of the Government of the United States, bankers'
acceptances, bank certificates of deposit, commercial paper, high quality
short-term debt instruments (including repurchase agreements) and shares of
registered open-end investment companies.
(6) A Security is "being considered for purchase or sale" by a Fund when a
recommendation that the Fund purchase or sell the Security has been communicated
by a member of the Adviser's Investment Department to an officer of such Fund.
B. PROHIBITED PURCHASES AND SALES. No Independent Trustee of any Fund
shall purchase or sell, directly or indirectly, any Security in which he has,
or by reasons of such transaction acquires, any direct or indirect beneficial
ownership and which to his actual knowledge at the time of such purchase or
sale:
(1) is being considered for purchase or sale by such Fund; or
(2) is being purchased or sold by such Fund.
C. EXEMPTED TRANSACTIONS. The prohibitions of Section IIB of this Code
shall not apply to:
(1) purchases or sales effected in any account over which the Independent
Trustee has no direct or indirect influence or control;
(2) purchases or sales
which are non-volitional on the part of the Independent Trustee or a Fund;
(3)purchases which are part of an automatic dividend reinvestment plan;
(4)purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such rights were
acquired from such issuer, and sales of such rights so acquired;
(5) purchases or sales other than those exempted in Paragraphs (1) through
(4) above, (a) which will not cause the Independent Trustee to gain improperly a
personal profit as a result of his relationship with any Fund, or (b) which will
only remotely affect a Fund because the proposed transaction would be unlikely
to affect a highly institutional market, or (c) which, because of the
circumstances of the proposed transaction, are not related economically to the
Securities purchased or sold or to be purchased or sold by a Fund, and in each
case which are previously approved by the Review Officer, which approval shall
be confirmed in writing.
D. REPORTING. Whether or not one of the exemptions listed in Section IIC
hereof applies, each Independent Trustee of each Fund shall file with the Review
Officer a written report containing the information described below in this
Section IID with respect to each transaction in any Security in which such
Independent Trustee has, or by reasons of such transaction acquires, any direct
or indirect beneficial ownership, if such Independent Trustee, at the time he
entered into that transaction, actually knew or, in the ordinary course of
fulfilling his official duties as a Trustee of such Fund should have know,1 that
during the 15-day period immediately preceding or after the date of that
transaction:
(a) such Security was or is to be purchased or sold by the Fund, or
(b) such Security was or is being considered for purchase or sale by the Fund;
PROVIDED, HOWEVER, that such Independent Trustee shall not be required to make a
report with respect to any transaction effected for any account over which he
does not have any direct or indirect influence or control. Each such report
shall be deemed to be filed with the Funds for purposes of this Code, and may
contain a statement that the report shall not be construed as an admission by
the Independent Trustee that he has any direct or indirect beneficial ownership
in the Security to which the report relates.
Such report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates was
effected, and shall contain the following information:
(i) The date of the transaction, the title, interest rate and maturity date
(if applicable), the number of shares, and the principal amount of each
security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other type of
acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(v) The date that the report is submitted.
Any report concerning a purchase or sale prohibited under Section IIB hereof
with respect to which the Independent Trustee relies upon one of the exemptions
provided in Section IIC shall contain a brief statement of the exemption relied
upon and the circumstances of the transaction.
E. REVIEW. The Review Officer shall compare the reported personal
securities transactions with completed and contemplated portfolio transactions
of each Fund to determine whether any transaction ("Reviewable Transaction") of
the type listed in Section IIB (without regard to exemptions provided by Section
IIC(1) through (5)) may have occurred. If the Review Officer determines that a
Reviewable Transaction may have occurred, he shall submit the pertinent
information regarding the transaction to counsel for the Funds. Such counsel
shall determine whether a material violation of this Code has occurred, taking
into account all the exemptions provided under Section IIC. Before making any
determination that a violation has occurred, such counsel shall give the person
involved an opportunity to supply additional information regarding the
transaction in question.
F. SANCTIONS. If such counsel determines that a material violation of this
Code has occurred, such counsel shall so advise the President of the affected
Fund and an ad hoc committee consisting of the Independent Trustees of such
Fund, other than the person whose transaction is under consideration, and such
counsel shall provide the committee with a report of the matter, including any
additional information supplied by such person. The committee may impose such
sanctions as it deems appropriate.
III. MISCELLANEOUS CODE PROVISIONS.
A. AMENDMENT OR REVISION OF THE ADVISER'S CODE OF ETHICS. Any material
change or amendment to the Adviser's Code of Ethics must be approved by the
Board of Trustees of the Funds (including a majority of Independent Trustees) no
later than six months of its adoption by the Adviser. Such amendment or revision
shall be deemed to be an amendment or revisions of Section IA of this Code, and
a copy of such amendment or revision shall be appended hereto.
B. ANNUAL REPORT AND CERTIFICATION OF THE ADVISER. No later than once
annually, the Adviser shall prepare and submit a written report and
certification to the Trustees of the Funds, as required by Paragraph C.8. of the
Adviser's Code of Ethics (Appendix A hereto).
C. RECORDS. Each Fund shall maintain records in the manner and to the
extent set forth below, which records may be maintained in electronic format
under the conditions described in Rule 31a-2(f)(a) under the 1940 Act and shall
be available for examination by representatives of the Securities and Exchange
Commission:
(1) A copy of this Code and any other code which is, or at any time within
the past five years has been, in effect shall be preserved in an easily
accessible place;
(2) A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible place for a
period of not less than five years following the end of the fiscal year in which
the violation occurs;
(3) A copy of each report made by an Officer or Trustee pursuant to this
Code shall be preserved for a period of not less than five years after the end
of the fiscal year in which it is made, the first two years in an easily
accessible place;
(4) A list of all persons who are, or within the past five years have been,
required to make reports pursuant to this Code shall be maintained in a easily
accessible place;
(5) A copy of each annual written report and certification made by the
Adviser to the Board of Trustees of the Funds must be maintained for a period of
five years after the end of the fiscal year in which it is made, the first two
years in an easily accessible place; and
(6) A record of any decision, and the reasons supporting the decision, to
approve the acquisition by Access Persons of any initial public offering or
private placement securities shall be maintained for at least five years after
the end of the fiscal year in which the approval was granted.
C. CONFIDENTIALITY. All reports of securities transactions and any other
information filed with the Funds or furnished to any person pursuant to this
Code shall be treated as confidential, but are subject to review as provided
herein and by representatives of the Securities and Exchange Commission.
D. INTERPRETATION OF PROVISIONS. The Trustees of each Fund may from time to
time adopt such interpretations of this Code as they deem appropriate.
E. EFFECT OF VIOLATION OF THE CODE. In adopting Rule 17j-1 under the
1940 Act, the Securities and Exchange Commission specifically noted in
Investment Company Act Release No. IC-11421 that a violation of any provision of
a particular code of ethics, such as this Code, would not be considered a per se
unlawful act prohibited by the general anti-fraud provisions of the Rule. As
stated in the Release:
"....the Commission believes that such a violation should and would be
considered, with all the surrounding facts and circumstances, merely as one
piece of evidence in determining whether, in addition to a violation of the code
of ethics, a violation of the anti-fraud provisions of the Rule also has
occurred."
In adopting this Code of Ethics, it is not intended that a violation of this
Code is or should be considered to be a violation of Rule 17j-1.
<PAGE>
WRIGHT INVESTORS' SERVICE, INC.
CODE OF ETHICS - PERSONAL INVESTMENTS
A. STATEMENT OF GENERAL PRINCIPLES
All directors, officers and employees of Wright Investors' Service,
Inc. ("Wright") shall conduct themselves with integrity and dignity and act in a
thoroughly ethical manner in dealings with clients, the public and fellow
employees. All such persons shall have the duty at all times to place the
interests of the shareholders of Wright-managed mutual funds (the "Funds") and
Wright's other clients first, and may not in any respect take advantage of
client transactions. It is essential that we avoid not only actual conflicts,
but also any appearance of conflicts of interest and any abuse of an
individual's position of trust and responsibility. No Code of Ethics can cover
every possible circumstance, and an individual's conduct must depend ultimately
upon his sense of fiduciary obligation to the Funds and Wright's direct advisory
clients.
This Code of Ethics ("Code") supersedes Wright's prior code and Statement
of Policy. The management of Wright believes this Code meets current SEC
requirements and is appropriate and desirable for the Company.
All requests and reports provided to anyone pursuant to this Code shall
be treated as confidential, but are subject to review as provided herein and by
representatives of the Securities and Exchange Commission.
B. APPLICABILITY OF RESTRICTIONS AND PROCEDURES
PERSONS AFFECTED.
ALL EMPLOYEES* located in any office of Wright must comply with the
requirements of Paragraphs C-1 through C-3, below and all provisions of
Section E. Employees must also familiarize themselves with all other
parts of this Code.
ACCESS PERSONS (as defined in Exhibit A) must comply with the
requirements of Paragraphs C-1 through C-6, inclusive, and all
provisions of Section E. Access Persons must also familiarize
themselves with all other parts of this Code.
ACCOUNTS INCLUDED.
Wright's policies and procedures concerning personal investments apply
to all securities accounts in which the affected employee has "a direct
or indirect beneficial ownership," unless the employee has no "direct
or indirect influence or control" over the account. The concept of
BENEFICIAL OWNERSHIP is an important part of this Code and is more
extensively defined in Exhibit A.
* For purposes of clarity, all employees of The Winthrop Corporation
performing services for Wright are referred to as employees of Wright.
TYPES OF SECURITIES COVERED.
In general this Code employs the terms Security to mean shares of any
publicly-traded company, including puts, calls, options and warrants
for such securities, and open-end and closed-end mutual funds, except
direct obligations of the US Government, bank certificates of deposit
and money market funds.
C. COMPLIANCE PROCEDURES
1. Disclosure of Personal Holdings. As a condition to employment, each
newly-hired person must (i) make full disclosure of any brokerage account and
all publicly-traded securities beneficially owned by the employee or members of
the employee's immediate family; (ii) agree to comply with the Company's written
policies restricting personal trading and prohibiting insider trading; and (iii)
provide a written acknowledgment of receipt of such policies. This disclosure
must include all of the information requested on Exhibit B-1.
2. Preclearance. No employee of Wright may buy or sell shares of any
Security without the prior approval of the Chief Executive Officer (CEO) or the
Chief Investment Officer (CIO) of Wright. Any such approval will only be given
in accordance with the provisions of Paragraph D, "Guidelines for Approval of
Securities Transactions." The approval will remain valid for three days.
Employees who receive approvals for trades must have the broker send a copy of
the confirmation to the Legal Department.
3. Annual Certification of Compliance. All employees shall certify
annually that they (i) have read and understand this Code; (ii) recognize that
they are subject thereto; (iii) have complied with its requirements, including
any necessary preclearance; and (iv) have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to this
Code. The form of such certification is set forth in Exhibit B-2.
4. Broker/Dealer Reports. All employees shall cause each broker/dealer
at which they have an account to send a copy of all quarterly and annual account
statements to the Legal Department.
5. Quarterly Report of Transactions. Each Access Person must file every
quarter with the Legal Department a report of all transactions in Securities.
(See Exhibit B-3) Transactions encompass sales, purchases and other acquisitions
or dispositions, including gifts and exercise of conversion rights or
subscription rights. In addition, if the Access Person established a securities
account during the quarter, the report must disclose the name of the broker,
dealer or bank with whom the account is established and the date the account was
established. The report must be filed with the Legal Department even if there
were no reportable transactions during the prior calendar quarter, in which case
the employee should state on the form that there were no such transactions. The
report is due ten days after the end of each calendar quarter. Failure to submit
the report in a timely manner is a violation of SEC regulations and this Code,
and may be a cause for sanctions. Copies of all brokerage statements should be
attached to an Access Person's signed report.
6. Annual Disclosure. No less than once annually, all Access Persons shall
submit to the Legal Department a list of all of his/her securities holdings. The
specific information of this report is identical to that of the Initial
Disclosure of Investments. Brokerage statements may be substituted for a
separate report.
7. Monitoring of Compliance. Within thirty days after the end of each
quarter, the Legal Department* shall review the Quarterly and Annual Reports for
reconciliation with the Initial Disclosure, Annual Disclosure, and the
Preclearance Approvals given in the same quarter or year, as applicable. The
Legal Department will investigate all apparent violations of this Code and will
prepare a report for the President of Wright.
8. Review by the Board of Trustees. No less than once each year, Wright
shall prepare and submit a written report to the Trustees of the Funds that
o describes any issues arising under this Code of Ethics since the last
report to the Board of Trustees, including, but not limited to,
information about material violations of the Code or procedures, and
sanctions imposed in response to the material violations; and
o certifies that Wright has adopted procedures reasonably necessary to
prevent violations of this Code.
If there have been any material changes to the Code of Ethics, Wright
will submit such changes to the Trustee at the next meeting of the Board.
The Trustees shall review any violations of the Code specified in the
annual report and any recommended changes in existing restrictions and
procedures. They should then take such action, if any, as they may deem
appropriate.
9. Additional Disclosure. Wright's Code of Ethics shall be filed with
the SEC as an exhibit to the registration statement of each Wright-managed
mutual fund. There will be disclosure in the Funds' prospectuses or their
statements of additional information that (i) Wright has a code of ethics, (ii)
whether personnel of Wright are permitted to invest in securities for their own
accounts, and (iii) that the code is on public file, and available from the SEC.
* As of March, 2000, Helen George, Senior Vice President of Legal Affairs, is
the person responsible for reviewing the reports.
D. GUIDELINES FOR APPROVAL OF SECURITIES TRANSACTIONS
1. Initial Public Offerings. Generally no approval will be given for
any employee to purchase securities of a publicly owned corporation that is
making an initial public offering of its securities, except in connection with
the exercise of rights issued in respect of securities such employee owns. The
reason for this rule is that it precludes the appearance that an employee has
used our clients' market stature as a means of obtaining for himself or herself
"hot" issues which would otherwise not be offered to him or her. Any realization
of short-term profits may create at least the appearance that an investment
opportunity that should have been available to a direct advisory account or a
Fund account was diverted to the personal benefit of an employee.
2. Limited Offerings. Any prior approval of any acquisition of
securities in a limited offering (such as a private placement) should take into
account, among other factors, whether the investment opportunity should be
reserved for a Fund and its shareholders or other client, and whether the
opportunity is being offered to an individual by virtue of his or her position
with the investment adviser.
3. Blackout Periods. No employee shall be authorized to exercise a
securities transaction within seven calendar days before or after a direct
advisory account or a Fund in the Wright complex has a pending "buy" or "sell"
order in that same security until that order is executed or withdrawn.
4. Short Sales and Options. Usually no approval will be given for short
sales. Also prohibited are buying, selling or exercising put or call options or
combinations thereof of securities held by a Fund or other advisory client or
which are being considered for purchase for them. It should be noted, for
example, that an exercise of an option or the covering of a short sale could
conflict with current trading for clients. However, where any such option is
held by a member of an employee's family, approval may be given provided there
is no conflict with the interests of the Funds or other Wright clients.
5. Short-Term Trading Profits. Short-term trading, i.e., profiting in
the purchase and sale or sale and purchase of the same (or equivalent)
securities within 60 calendar days, is prohibited and approval will generally
not be given. The management of Wright believes that short-term trading by
Access Persons may increase the risk of conflicts of interest, affect an
individual's investment judgment, and in some instances divert an individual's
attention from the best interests of our Funds and other clients. Where one or
both sides of a short-term trade have not been pre-cleared, there is presumably
already a violation and the whole matter should be handled under the Sanctions
section of this Code, with disgorgement of profits being only one alternative
available to the President of Wright.
6. Margin Accounts. Margin Accounts are absolutely prohibited and no
approval will be given.
7. By-Law Violation. No approval will be given which would result in an
employee's holdings exceeding 1/2 of 1% of the shares or securities of any
publicly-owned issuer.
8. General Standards. In the rare case where approval is given for a
transaction involving an initial public offering or a limited offering,
additional written disclosure will be required and will be maintained in the
Legal Department. In authorizing any other types of transactions, the CEO or CIO
may consider the extent to which the employee has access to pending investment
decisions, the number of transactions already approved for such employee within
the past six months, whether the employee has made unreasonable use of the
company's resources during business hours in arriving at a personal investment
decision, and any other factors that are, in the opinion of the CEO or CIO,
pertinent to the matter.
E. RESPONSIBILITIES OF ALL EMPLOYEES RELATING TO PERSONAL INVESTMENTS.
1. Securities Recommended by a Member of the Investment Committee. Each
member of the Investment Committee who makes a recommendation as to whether a
security shall be purchased, sold or held in the account of a Fund or client
shall fully apprise the CEO or CIO of Wright of any direct or indirect
beneficial ownership the employee has in such security.
2. By-Law Provision. The by-laws of the Wright Funds generally provide
that a Wright Fund shall not purchase or retain in its portfolio any securities
issued by an issuer any of whose officers, directors or security holders is an
officer or director of the Fund, or is an officer or director of the investment
adviser of the Fund, if after the purchase of the securities of such issuer by
the Fund one or more of such persons owns beneficially more than 1/2 of 1% of
the shares or securities, or both, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both. In view of the foregoing, and to avoid
any possibility of an inadvertent violation of this by-law provision, no
approval will be given that would result in an employee's holdings exceeding 1/2
of 1% of the shares or securities of any publicly-owned issuer. Any request for
prior approval of a trade in this type of security must state whether this
provision applies.
3. Gifts. No employee shall accept gifts of a value in excess of $35
from any person or entity that does business with or on behalf of a Wright Fund
or direct advisory account. Any gift in excess of $35 shall be disclosed to the
President of Wright before acceptance by the employee.
4. Service As a Director. No employee shall serve on the board of
directors of a publicly traded company, absent prior authorization based upon a
determination by the President of Wright that the board service would be
consistent with the interests of the Fund and its shareholders which may have an
investment in such public company. In the relatively small number of instances
in which board service may be authorized, Access Persons serving as directors
should be isolated from those making investment decisions through written
procedures applicable to the person's position in Wright.
5. Sanctions. Careful adherence to this Code of Ethics is one of the
basic conditions of employment of every employee. Any employee violating any
provision of this Code of Ethics, including the Compliance Procedures, may be
subject to sanction, including but not limited to suspension or termination of
employment, censure or disgorgement of profits, at the determination of the
President of Wright.
Exhibit A
ACCESS PERSONS*
Using the Investment Company Act definition, an Access Person includes:
(i) any officer or director of Wright;
(ii) any employee of Wright who, in connection with his regular
functions or duties, makes, participates in or obtains information
regarding the purchase or sale of a security by a registered investment
company, or whose functions relate to the making of any recommendations
with respect to such purchases or sales; and
(iii) any natural person in a control relationship to Wright who
obtains information concerning recommendations regarding the
purchase or sale of a security for a Wright-managed mutual fund.
The current list of positions at Wright deemed to be "Access Persons"
are: directors, officers, trading department personnel, analysts and others
involved in making recommendations to portfolio managers, and any employee who
has direct contact with clients and/or receives advance notice from the
Investment Committee of contemplated portfolio transactions.
BENEFICIAL OWNERSHIP
Under current SEC interpretations, Beneficial Ownership includes
securities accounts of a spouse, minor children and relatives resident in the
employee's home, as well as accounts of another person if by reason of any
contract, understanding, relationship, agreement or other arrangement the
employee obtains therefrom benefits substantially equivalent to those of
ownership.
When an employee has a substantial measure of influence or control over
an account, but not direct or indirect beneficial ownership (as for example when
the employee serves as executor or trustee for someone outside his immediate
family, or manages or helps to manage a charitable a account), the rules set
forth in this Code of Ethics will not be considered to be directly applicable,
but in all transactions involving any such account the employee will be expected
to conform to the spirit of these rules and specifically avoid any activity that
conflicts or might appear to conflict with the interests of our clients.
* Since all provisions of this Code restrict all Access Persons, no special
mention of Investment Personnel, as defined by the SEC, has been made. Further,
any director of Wright who is not an "interested person" of Wright (as defined
in applicable SEC regulations) need not make any initial, annual or quarterly
report, unless the director knows, or should have known, of a possible conflict
of interest between his/her securities transaction and the investment decisions
of Wright or the Funds. Within thirty days after the adoption of this Code, the
Legal Department of Wright shall send each such director a notice that includes
a full explanation of the types of transactions that are, in any case,
prohibited and the circumstances under which it may be necessary to report a
transaction.
<PAGE>
WRIGHT INVESTORS' SERVICE DISTRIBUTORS, INC.
CODE OF ETHICS - PERSONAL INVESTMENTS
A. STATEMENT OF GENERAL PRINCIPLES
Wright Investors' Service Distributors, Inc. ("Distributors") is the
principal underwriter of a family of mutual funds (the "Funds") managed by
Distributors' affiliate, Wright Investors' Service, Inc. ("Wright"). All
directors, officers and employees of Distributors shall conduct themselves with
integrity and dignity and act in a thoroughly ethical manner in dealings with
clients, the public and fellow employees. All such persons shall have the duty
at all times to place the interests of the shareholders of the Funds, and may
not in any respect take advantage of transactions made by or on behalf of the
Funds. It is essential that we avoid not only actual conflicts, but also any
appearance of conflicts of interest and any abuse of an individual's position of
trust and responsibility. No Code of Ethics can cover every possible
circumstance, and an individual's conduct must depend ultimately upon his sense
of fiduciary obligation to the Funds.
This Code of Ethics ("Code") supersedes Distributors's prior code and
Statement of Policy. The management of Distributors believes this Code meets
current SEC requirements and is appropriate and desirable for the Company.
All requests and reports provided to anyone pursuant to this Code shall
be treated as confidential, but are subject to review as provided herein and by
representatives of the Securities and Exchange Commission.
B. APPLICABILITY OF RESTRICTIONS AND PROCEDURES
Persons Affected.
ALL EMPLOYEES* located in any office of Distributors must comply with
the requirements of Paragraphs C-1 through C-3, below and all
provisions of Section E. Employees must also familiarize themselves
with all other parts of this Code.
ACCESS PERSONS (as defined in Exhibit A) must comply with the
requirements of Paragraphs C-1 through C-6, inclusive, and all
provisions of Section E. Access Persons must also familiarize
themselves with all other parts of this Code.
ACCOUNTS INCLUDED.
Distributors's policies and procedures concerning personal investments
apply to all securities accounts in which the affected employee has "a
direct or indirect beneficial ownership," unless the employee has no
"direct or indirect influence or control" over the account. The concept
of Beneficial Ownership is an important part of this Code and is more
extensively defined in Exhibit A.
* For purposes of clarity, all employees of The Winthrop Corporation
performing services for Distributors are referred to as employees of
Distributors.
TYPES OF SECURITIES COVERED.
In general this Code employs the terms Security to mean shares of any
publicly-traded company, including puts, calls, options and warrants
for such securities, and open-end and closed-end mutual funds, except
direct obligations of the US Government, bank certificates of deposit
and money market funds.
C. COMPLIANCE PROCEDURES*
1. Disclosure of Personal Holdings. As a condition to employment, each
newly-hired person must (i) make full disclosure of any brokerage account and
all publicly-traded securities beneficially owned by the employee or members of
the employee's immediate family; (ii) agree to comply with the Company's written
policies restricting personal trading and prohibiting insider trading; and (iii)
provide a written acknowledgment of receipt of such policies. This disclosure
must include all of the information requested on Exhibit B-1.
2. Preclearance. No employee of Distributors may buy or sell shares of
any Security without the prior approval of the President of Distributors. Any
such approval will only be given in accordance with the provisions of Paragraph
D, "Guidelines for Approval of Securities Transactions." The approval will
remain valid for three days. Employees who receive approvals for trades must
have the broker send a copy of the confirmation to the President of
Distributors.
3. Annual Certification of Compliance. All employees shall certify
annually that they (i) have read and understand this Code; (ii) recognize that
they are subject thereto; (iii) have complied with its requirements, including
any necessary preclearance; and (iv) have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to this
Code. The form of such certification is set forth in Exhibit B-2.
4. Broker/Dealer Reports. All employees shall cause each broker/dealer
at which they have an account to send a copy of all quarterly and annual account
statements to the president of Distributors.
5. Quarterly Report of Transactions. Each Access Person must file every
quarter with the President of Distributors a report of all transactions in
Securities. (See Exhibit B-3) Transactions encompass sales, purchases and other
acquisitions or dispositions, including gifts and exercise of conversion rights
or subscription rights. In addition, if the Access Person established a
securities account during the quarter, the report must disclose the name of the
broker, dealer or bank with whom the account is established and the date the
account was established. The report must be filed with the President of
Distributors even if there were no reportable transactions during the
prior calendar quarter, in which case the employee should state on the form that
there were no such transactions. The report is due ten days after the end of
each calendar quarter. Failure to submit the report in a timely manner is a
violation of SEC regulations and this Code, and may be a cause for sanctions.
Copies of all brokerage statements should be attached to an Access Person's
signed report.
*At the present time, all employees of Distributors also perform services for
Wright. Therefore, a copy of any disclosure, preclearance (whether approved or
disapproved), report or certification required under Wright's Code of Ethics may
be submitted to the President of Distributors in order to comply with this Code.
6. Annual Disclosure. No less than once annually, all Access Persons shall
submit to the President of Distributors a list of all of his/her securities
holdings. The specific information of this report is identical to that of the
Initial Disclosure of Investments. Brokerage statements may be substituted for a
separate report.
7. Monitoring of Compliance. Within thirty days after the end of each
quarter, Internal Counsel for Distributors shall review the Quarterly and Annual
Reports for reconciliation with the Initial Disclosure, Annual Disclosure, and
the Preclearance Approvals given in the same quarter or year, as applicable. The
Internal Counsel will investigate all apparent violations of this Code and will
prepare a report for the President of Distributors.
8. Review by the Board of Trustees. No less than once each year,
Distributors shall prepare and submit a written report to the Trustees of the
Funds that
o describes any issues arising under this Code of Ethics since the last
report to the Board of Trustees, including, but not limited to,
information about material violations of the Code or procedures, and
sanctions imposed in response to the material violations; and
o certifies that Distributors has adopted procedures reasonably necessar
to prevent violations of this Code.
If there have been any material changes to the Code of Ethics,
Distributors will submit such changes to the Trustee at the next meeting of the
Board.
The Trustees shall review any violations of the Code specified in the
annual report and any recommended changes in existing restrictions and
procedures. They should then take such action, if any, as they may deem
appropriate.
9. Additional Disclosure. Distributors's Code of Ethics shall be filed
with the SEC as an exhibit to the registration statement of each Fund. There
will be disclosure in the Funds' prospectuses or their statements of additional
information that (i) Distributors has a code of ethics, (ii) whether personnel
of Distributors are permitted to invest in securities for their own accounts,
and (iii) that the code is on public file, and available from the SEC.
* As of March, 2000, Helen W. George is Internal Counsel for Distributors and
the person responsible for reviewing the reports.
D. GUIDELINES FOR APPROVAL OF SECURITIES TRANSACTIONS
1. Initial Public Offerings. Generally no approval will be given for
any employee to purchase securities of a publicly owned corporation that is
making an initial public offering of its securities, except in connection with
the exercise of rights issued in respect of securities such employee owns. The
reason for this rule is that it precludes the appearance that an employee has
used the Funds' market stature as a means of obtaining for himself or herself
"hot" issues which would otherwise not be offered to him or her. Any realization
of short-term profits may create at least the appearance that an investment
opportunity that should have been available to a Fund account was diverted to
the personal benefit of an employee.
2. Limited Offerings. Any prior approval of any acquisition of
securities in a limited offering (such as a private placement) should take into
account, among other factors, whether the investment opportunity should be
reserved for a Fund and its shareholders, and whether the opportunity is being
offered to an individual by virtue of his or her position with the principal
underwriter of the Funds.
3. Blackout Periods. No employee shall be authorized to exercise a
securities transaction within seven calendar days before or after a direct
advisory account or a Fund in the Wright complex has a pending "buy" or "sell"
order in that same security until that order is executed or withdrawn.
4. Short Sales and Options. Usually no approval will be given for short
sales. Also prohibited are buying, selling or exercising put or call options or
combinations thereof of securities held by a Fund, or which are being considered
for purchase for a Fund. It should be noted, for example, that an exercise of an
option or the covering of a short sale could conflict with current trading for a
Fund. However, where any such option is held by a member of an employee's
family, approval may be given provided there is no conflict with the interests
of the Fund(s).
5. Short-Term Trading Profits. Short-term trading, i.e., profiting in
the purchase and sale or sale and purchase of the same (or equivalent)
securities within 60 calendar days, is prohibited and approval will generally
not be given. The management of Distributors believes that short-term trading by
Access Persons may increase the risk of conflicts of interest, affect an
individual's investment judgment, and in some instances divert an individual's
attention from the best interests of the Funds. Where one or both sides of a
short-term trade have not been pre-cleared, there is presumably already a
violation and the whole matter should be handled under the Sanctions section of
this Code, with disgorgement of profits being only one alternative available to
the President of Distributors.
6. Margin Accounts. Margin Accounts are absolutely prohibited and no
approval will be given.
7. By-Law Violation. No approval will be given which would result in an
employee's holdings exceeding 1/2 of 1% of the shares or securities of any
publicly-owned issuer.
8. General Standards. In the rare case where approval is given for a
transaction involving an initial public offering or a limited offering,
additional written disclosure will be required and will be maintained by the
President of Distributors. In authorizing any other types of transactions, the
President may consider the extent to which the employee has access to pending
investment decisions, the number of transactions already approved for such
employee within the past six months, whether the employee has made unreasonable
use of the company's resources during business hours in arriving at a personal
investment decision, and any other factors that are, in the opinion of the
President, pertinent to the matter.
E. RESPONSIBILITIES OF ALL EMPLOYEES RELATING TO PERSONAL INVESTMENTS.
1. Securities Recommended by a Member of the Investment Committee. Each
member of the Investment Committee of Wright who is an employee of Distributors
and who makes a recommendation as to whether a security shall be purchased, sold
or held in the account of a Fund or client shall fully apprise the President of
Distributors of any direct or indirect beneficial ownership the employee has in
such security.
2. By-Law Provision. The by-laws of the Wright Funds generally provide
that a Wright Fund shall not purchase or retain in its portfolio any securities
issued by an issuer any of whose officers, directors or security holders is an
officer or director of the Fund, or is an officer or director of the principal
underwriter of the Fund, if after the purchase of the securities of such issuer
by the Fund one or more of such persons owns beneficially more than 1/2 of 1% of
the shares or securities, or both, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both. In view of the foregoing, and to avoid
any possibility of an inadvertent violation of this by-law provision, no
approval will be given that would result in an employee's holdings exceeding 1/2
of 1% of the shares or securities of any publicly-owned issuer. Any request for
prior approval of a trade in this type of security must state whether this
provision applies.
3. Gifts. No employee shall accept gifts of a value in excess of $35
from any person or entity that does business with or on behalf of a Wright Fund
or Distributors. Any gift in excess of $35 shall be disclosed to the President
of Distributors before acceptance by the employee.
4. Service As a Director. No employee shall serve on the board of
directors of a publicly traded company, absent prior authorization based upon a
determination by the President of Distributors that the board service would be
consistent with the interests of the Fund and its shareholders which may have an
investment in such public company. In the relatively small number of instances
in which board service may be authorized, Access Persons serving as directors of
Distributors should be isolated from personnel of Wright making investment
decisions through written procedures applicable to the person's position in
Distributors.
5. Sanctions. Careful adherence to this Code of Ethics is one of the
basic conditions of employment of every employee. Any employee violating any
provision of this Code of Ethics, including the Compliance Procedures, may be
subject to sanction, including but not limited to suspension or termination of
employment, censure or disgorgement of profits, at the determination of the
President of Distributors.
Exhibit A
ACCESS PERSONS*
Using the Investment Company Act definition, an Access Person includes
any director or officer of Distributors who, in the ordinary course of business,
makes, participates in or obtains information regarding, the purchase or sale of
Securities by any Fund for which Distributor acts, or whose functions or duties
in the ordinary course of business relate to the making of any recommendation to
any of the Funds regarding the purchase or sale of Securities.
The current list of positions at Distributors deemed to be "Access
Persons" are: directors, officers, and any employee who receives advance notice
from the Investment Committee of Wright of contemplated portfolio transactions.
BENEFICIAL OWNERSHIP
Under current SEC interpretations, Beneficial Ownership includes
securities accounts of a spouse, minor children and relatives resident in the
employee's home, as well as accounts of another person if by reason of any
contract, understanding, relationship, agreement or other arrangement the
employee obtains therefrom benefits substantially equivalent to those of
ownership.
When an employee has a substantial measure of influence or control over
an account, but not direct or indirect beneficial ownership (as for example when
the employee serves as executor or trustee for someone outside his immediate
family, or manages or helps to manage a charitable a account), the rules set
forth in this Code of Ethics will not be considered to be directly applicable,
but in all transactions involving any such account the employee will be expected
to conform to the spirit of these rules and specifically avoid any activity that
conflicts or might appear to conflict with the interests of our clients.
* Since all provisions of this Code restrict all Access Persons, no special
mention of Investment Personnel, as defined by the SEC, has been made. Further,
any director of Distributors who is not an "interested person" of Distributors
(as defined in applicable SEC regulations) need not make any initial, annual or
quarterly report, unless the director knows, or should have known, of a possible
conflict of interest between his/her securities transaction and the investment
decision of the Funds. Within thirty days after the adoption of this Code, the
Internal Counsel for Distributors shall send each such director a notice that
includes a full explanation of the types of transactions that are, in any case,
prohibited and the circumstances under which it may be necessary to report a
transaction.
