THE WRIGHT ASSET ALLOCATION TRUST
SEMI-ANNUAL REPORT
JUNE 30 , 2000
o Wright Managed Growth with Income Fund
<PAGE>
THE WRIGHT ASSET ALLOCATION TRUST
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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 was offered during the
first half of 2000. This fund seeks a high total return (consisting of price
appreciation and high income) with reduced risk.
The Wright Managed Growth with Income 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 0 to 75% with up to 20% being international equities. The U.S. equities may
be allocated among large, medium and small companies. The fixed income
allocation may range from 25 to 100%. Fixed income funds selected could include
those investing in U.S. government issues, high quality corporate issues and
mortgage backed securities. Up to 50% of the fixed income allocation could be in
money market securities.
Likely candidates for investment include the following:
o Wright Major Blue Chip Equities Fund
o Wright Selected Blue Chip Equities Portfolio
o Wright International Blue Chip Equities Portfolio
o Wright U.S Treasury Portfolio
In addition, the fund's assets may be invested in U.S. Treasury bills and
similar money market securities.
TABLE OF CONTENTS
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Page
Investment Objectives.....................................inside front cover
Letter to Shareholders.....................................................1
Management Discussion......................................................2
Dividend Distributions and Investment Return...............................4
Wright Managed Growth with Income Fund
Portfolio of Investments..........................................5
Financial Statements..............................................6
Notes to Financial Statements ...........................................9
<PAGE>
LETTER TO SHAREHOLDERS
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July 2000
Dear Shareholders:
The first half of 2000 has been a raucous period for investors, with some of the
most volatile trading in history, particularly in April. With May and June,
market volatility receded to half of April's level and for stocks outside of
technology, trading volatility has more or less returned to normal. Despite all
the sound and fury of the first half of 2000, the major stock market averages
start the third quarter little changed from end-of-1999 levels.
During April and most of May, investors waited anxiously for signs that the U.S.
economy was cooling. In the absence of those signs, fears of extended Federal
Reserve monetary tightening sent bond yields higher and share prices lower.
During June, with government reports turning up evidence that economic activity
was slowing, the bond market recovered and investor concerns shifted to the
outlook for corporate profits. In the opening days of July, a spate of companies
- including some prominent computer software companies - issued warnings that
earnings would fall short of Wall Street estimates.
At Wright, our analysts believe that the U.S. economy is in the process of
downshifting toward the 3 1/2% growth targeted by the Fed. We see little change
in the competitive environment and limited pricing power that most firms face.
Still, occasional profit shortfalls for specific stocks notwithstanding, we
continue to forecast a healthy increase in aggregate corporate profits this year
and next and believe that the risk of significant further interest rate hikes is
limited, two elements of the favorable investment backdrop.
The correction of some of the market's speculative excesses - in share prices of
Internet and other growth stocks, for example - has proceeded apace in the
second quarter and early July. Money flows into stock mutual funds have fallen
significantly since February's peak, another indication that the big,
non-discriminating expectations that investors had for stock returns have come
back to earth. While Alan Greenspan may not yet be satisfied that the last trace
of "irrational exuberance" has been routed from the U.S. stock market, we see
evidence of more rational market valuations and projections, a healthy
development for long-term investors. The Federal Reserve may raise interest
rates another time or two in this cycle, but we're increasingly confident that
the lion's share of Fed tightening is behind us.
Sincerely,
/s/ Peter M. Donovan
---------------------
Peter M. Donovan
President
<PAGE>
MANAGEMENT DISCUSSION
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With much volatility, global stock markets retreated modestly in the second
quarter of 2000. Most of the damage to stock prices was done in April and May,
with the S&P 500 and the FTSE World ex U.S. stock indexes down 8% and 11%,
respectively, at their late May lows. Stocks have since rebounded, the rally
carrying over to mid-July, at which point the S&P 500 is only 1% off its
all-time peak.
At midyear 2000, the global economic expansion appears to be running on seven of
eight cylinders, Japan's recovery being the odd missing one. What's more, the
extraordinary growth seen late last year and early this year in the U.S., which
set the Federal Reserve to worrying about overheating - and the securities
markets to worrying about how high the Fed would raise interest rates - has
shown signs of moderating. Outside of oil prices, evidence of inflation is
notable for its absence, a fact that investors drew encouragement from as the
second quarter unfolded. The 10-year Treasury bond, down as much as 4% at its
worst in May, finished June little changed in price from March, earning a coupon
return for investors during the second quarter.
The Wright Managed Growth with Income Fund lost 3.2% during the second quarter
of 2000, as compared with a 1.4% loss in the benchmark portfolio. Bonds
contributed positively to second-quarter performance; both big- and mid-cap U.S.
stocks declined nominally; and foreign equities, after two quarters out in front
of U.S. stocks, reverted to underperforming during the first and second quarters
of 2000. For the first half of 2000, the Fund earned a 0.7% total return, about
50 basis points behind the 1.2% return on the benchmark portfolio (a mix of the
S&P 500, S&P 400, FTSE World ex U.S. and Lehman Aggregate indexes).
At June 30, the Fund allocation was: 33% in large-cap U.S. stocks (Major Blue
Chip Equities Fund), up from 32% at 12/31/99; 15% in mid-cap U.S. stocks
(Selected Blue Chip Equities Portfolio), down from 17% at 12/31/99; 19% in
foreign stocks (International Blue Chip Equities Portfolio), up from 10% at
12/31/99; and 32% in U.S. bonds (U.S. Treasury Portfolio), down from 40% at
12/31/99.
The first two weeks of July have seen stocks add to June's rally. This reflects
what are mostly positive long-term investment fundamentals - solid economic
growth, rising budget surpluses, growing and profits, low inflation and the
approaching end to the Fed tightening cycle.
Wright believes the fundamentals support the development of a more positive
equity market. The U.S. economy looks on track to slow to a more sustainable
growth rate in the second half of the year, which should limit the extent of
further Fed tightening since core inflation remains moderate. Moreover,
constructive economic environments appear to be falling into place around the
globe; even Japan seems to be making progress. In the U.S., second-quarter
profits are starting to come in, and early on there are more positive than
negative surprises. Wall Street is looking for only a moderate slowdown in
profit growth in the second half of 2000.
But stocks may not yet be ready to move up in a straight line. For one thing,
despite the market's retreat this year, valuations remain high, with the S&P 500
still valued in excess of 20 times year-ahead earnings and the Nasdaq's trailing
P/E multiple over 100 at mid-year. Wright also believes that it will take more
confirmation of economic cooling - but not so much cooling that profit prospects
suffer - before investors will be comfortable with the notion that Fed
tightening has nearly run its course. Once that happens, stock market prospects
will brighten considerably.
<PAGE>
WRIGHT SELECTED BLUE CHIP EQUITIES PORTFOLIO
Although unusual volatility and dramatic shifts in sentiment made portfolio
positioning problematic, the Wright Selected Blue Chip Equities Portfolio (WSBC)
did relatively well in the second quarter of 2000, falling less than the 3.3%
decline in the Standard & Poor's 400 index, the Midcap benchmark. The Russell
2000 index, another measure of midcap stocks, declined by 3.8%. Wright Selected
Blue Chip Equities have experienced somewhat more muted movements than either
midcap index.
Major contributors to the portfolio's outperformance in the second quarter
include the Healthcare sector - Barr Labs (+60%), Watson Pharmaceuticals (+35%),
Forest Labs (+20%) - and the Energy sector, especially Devon Energy (+15%).
Consumer Staples area was also strong, including Alberto-Culver (+20%) and Sysco
(+16%). Other contributors include CDW Computers (+33%), Tiffany (+23%), Sanmina
(+26%), and Adobe (+16%).
For the entire first half of 2000, WSBC performance fell between the results of
the two midcap indexes: behind the S&P 400 (+9.0%) but ahead of the Russell 2000
(+3.1%).
WRIGHT MAJOR BLUE CHIP EQUITIES FUND
The Wright Major Blue Chip Equities Fund (WMBC) completed the first half of 2000
with a 3.4% decline, as compared with a 0.4% loss in the S&P 500. Following the
market's overall pattern, the Fund produced a positive total return in the first
quarter, but then experienced negative results in a volatile second quarter.
In the first half, the WMBC Fund benefited from stock selection in the
Technology and Energy sectors, where the weightings finished at 32% and 8%,
respectively. When compared with the S&P 500, Technology was about
market-weighted, while Energy was somewhat overweighted. Stocks in the Consumer
Cyclicals area were another source of value added in the first six months.
Detracting from WMBC results was the laggard action of some stocks in the
Capital Goods and Communication Services sectors. Among the big contributors
over this period were Oracle Systems, Intel, and Adobe Systems. Second-quarter
performance was hampered to some extent by holdings in Microsoft, Electronic
Data Systems, and AT&T.
The WMBC Fund is managed as a Large Cap Blend portfolio, utilizing both growth
and value stocks. At June 30, 2000, its holdings averaged a P/E of 31.1 times
12-months trailing earnings as compared with the 28.4 P/E for the S&P 500 Index.
WRIGHT INTERNATIONAL BLUE CHIP EQUITIES PORTFOLIO
After outperforming in 1999, foreign markets overall lagged the U.S. stock
market in dollar terms in the first two quarters of 2000. The Wright
International Blue Chip Equities Portfolio (WIBC) lagged in the second quarter
with a loss of about 6.9%, behind the FTSE World ex U.S. index (-3.5%) and the
Morningstar average of international equity funds (-4.5%). For the first half of
2000, the WIBC Portfolio lost about 4.8%, in the same range as the FTSE World ex
U.S. index (-4.3%) and the Morningstar average (-4.2%).
In contrast to the first quarter, when technology was strong, in the second
quarter the global retreat in technology stocks hurt the WIBC Portfolio, which
was overweight in that sector. A poor showing by the Portfolio's holdings in
Japan, where the overall market was weak, also hurt the Portfolio's
second-quarter results. Compared to the FTSE world ex U.S. index, the Portfolio
benefited from having no holdings in Greece, one of the world's weakest markets.
Strong stock selection in Brazil, which is seeing an improving economy, and
Sweden also worked to the Portfolio's benefit. The Portfolio is starting the
third quarter of 2000 with a somewhat reduced weighing in technology compared to
three months earlier. In terms of country allocation, holdings in Europe have
been increased, and positions in Taiwan and Thailand have been added.
<PAGE>
WRIGHT U.S. TREASURY PORTFOLIO
The Wright U.S. Treasury Portfolio (WUSTB), which holds U.S. Treasuries
exclusively, posted a 1.2% return in the second quarter of 2000, compared with
1.5% for the Lehman Brothers Treasury bond composite and 1.8% for the
Morningstar average of U.S. Treasury bond funds. In the second quarter, shorter
maturities did better than long maturities as yields on two-year Treasuries were
down 13 basis points, while ten-year Treasury bond yields were unchanged. For
the first half of 2000, the WUSTB Portfolio returned 5.1%, as compared with 5.4%
for the Lehman benchmark and 5.0% for the Morningstar average of Treasury funds.
At the end of June 2000, the WUSTB's yield to maturity was 6.6%. The WUSTB
Portfolio's average duration of 5.7 years was slightly longer than the benchmark
duration. Wright's forecast is that the Federal Reserve is close to the end of
its tightening moves and that inflation will stay moderate, pushing yields lower
over the intermediate to long term. This view supports our slightly long
maturity/duration stance for the Portfolio.
<TABLE>
<CAPTION>
Dividend Distributions and Investment Return
--------------------------------------------------------------------------------------------------------------------------------
N.A.V. Distri- Distri- Value Invstmnt 3 Month Cum.
Period Per bution bution Shares of $1,000 Return Invstmnt Invstmnt
Ending Share $ P/S in Shares Owned Investment Year-to-Date Return Return
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WRIGHT MANAGED GROWTH WITH INCOME - ADVISORY SHARE (WGIF)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7/14/99 $10.00 100.00 $1,000.00
Dec. 99 10.19 0.225 0.122693 112.27 1,144.02 14.40% 18.18% 14.40%
Jan. 00 9.91 112.27 1,112.59 -2.65% 11.82% 11.26%
Feb. 00 10.09 112.27 1,132.80 -0.88% 12.16% 13.28%
Mar. 00 10.58 112.27 1,187.81 3.93% 3.83% 18.78%
Apr. 00 10.28 112.27 1,154.13 0.98% 3.73% 15.41%
May 00 10.02 112.27 1,124.94 -1.57% -0.69% 12.49%
Jun. 00 10.26 112.27 1,151.89 0.69% -3.028% 15.19%
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</TABLE>
<PAGE>
WRIGHT MANAGED GROWTH WITH INCOME FUND (WGIF)
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Portfolio of Investments - June 30, 2000 (Unaudited)
Shares Value
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Investment Company Securities - 99.2%
67,133 Selected Blue Chip Equities Portfolio - 15.3%....... $ 715,646
160,003 Major Blue Chip Equities Fund -
Institutional shares - 33.0%..................... 1,539,235
69,033 International Blue Chip Equities Portfolio - 18.8%.. 879,490
143,627 U.S. Treasury Portfolio - 32.1%..................... 1,495,160
-----------
total investments (identified cost, $4,420,632) - 99.2%........ $ 4,629,531
OTHER ASSETS & LIABILITIES - 0.8%............................... 36,846
-----------
NET ASSETS - 100.0%............................................. $ 4,666,377
============
See notes to financial statements
<PAGE>
WRIGHT MANAGED GROWTH WITH INCOME FUND (WGIF)
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (unaudited)
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ASSETS:
Investments--
Identified cost...................... $ 4,420,632
Unrealized appreciation.............. 208,899
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Total value (Note 1A).............. $ 4,629,531
Cash................................... 2,597
Receivable from investment adviser..... 65,700
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Total Assets......................... $ 4,697,828
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LIABILITIES:
Accrued expenses and other liabilities. $ 31,451
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NET ASSETS................................ $ 4,666,377
=============
NET ASSETS CONSIST OF:
Paid-in capital........................... $ 4,384,462
Accumulated net realized gain
on investments......................... 37,212
Unrealized appreciation of investments.... 208,899
Undistributed net investment income....... 35,804
------------
Net assets applicable to outstanding
shares................................ $ 4,666,377
==============
Shares of beneficial interest outstanding
- Advisor shares................... 454,771
==============
Net asset value, offering price, and
redemption price per share of
beneficial interest................ $10.26
==============
See notes to financial statements
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2000 (unaudited)
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INVESTMENT INCOME:
Investment income from underlying funds $ 77,359
------------
Total investment income.............. $ 77,359
------------
Expenses--
Expenses from underlying funds......... $ 14,949
Investment adviser fee (Note 2)........ 5,385
Administration fee (Note 2)............ 538
Trustees' compensation................. 7,929
Transfer agent fee..................... 1,103
Distribution and service fee (Note 3).. 13,466
Custodian fee.......................... 24,471
Printing............................... 1,917
Legal fees............................. 3,435
Audit fees............................. 16,000
Amortization of offering costs......... 19,510
Registration costs..................... 14,410
Miscellaneous.......................... 1,173
------------
Total expenses..................... $ 124,286
------------
Deduct--
Preliminary reduction of investment adviser fee
(Note 2)............................. $ 5,385
Preliminary reduction of distribution and service
fee (Note 3)......................... 13,466
Preliminary allocation of expenses to the
investment adviser (Note 2).......... 65,700
Reduction of custodian fee (Note 1C)... 596
------------
Total deductions................... $ 85,147
------------
Net expenses....................... $ 39,139
------------
Net investment income........... $ 38,220
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments
(identified cost).................... $ (19,604)
Net realized gain from underlying funds
(identified cost).................... 207,537
Capital gain distribution received from
underlying fund...................... 33,610
------------
Net realized gain on investments... $ 221,543
------------
Change in unrealized appreciation
of investments....................... $ (211,099)
------------
Net realized and unrealized gain
on investments..................... $ 10,444
------------
Net increase in net assets from
operations........................ $ 48,664
=============
See notes to financial statements
<PAGE>
WRIGHT MANAGED GROWTH WITH INCOME FUND (WGIF)
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<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31
STATEMENTS OF CHANGES IN NET ASSETS 2000 1999(1)
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(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
<S> <C> <C>
Net investment income...................................................... $ 38,220 $ 25,035
Net realized gain (loss) on investments.................................... 221,543 (98,664)
Change in unrealized appreciation of investments........................... (211,099) 419,998
---------- ----------
Net increase in net assets from operations............................... $ 48,664 $ 346,369
---------- ----------
Distributions declared to shareholders -
From net investment income................................................. $ - $ (25,035)
In excess of net investment income......................................... - (90,518)
From paid-in capital....................................................... - (13,241)
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Total distributions...................................................... $ - $ (128,794)
---------- ----------
Net increase (decrease) in net assets from fund share transactions (Note 4).. $ (1,699,567) $ 6,099,705
---------- ----------
Net increase (decrease) in net assets........................................ $ (1,650,903) $ 6,317,280
NET ASSETS:
At beginning of period....................................................... 6,317,280 -
---------- ----------
At end of period............................................................. $ 4,666,377 $ 6,317,280
============== ==============
UNDISTRIBUTED(DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME
INCLUDED IN NET ASSETS AT END OF PERIOD...................................... $ 35,804 $ (2,416)
============== ==============
1 From the start of business, July 14, 1999 to December 31, 1999.
</TABLE>
See notes to financial statements
<PAGE>
Financial Highlights
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<TABLE>
<CAPTION>
From July 14, 1999
Six Months Ended (start of business) to
Wright Managed Growth with Income Fund (WGIF) June 30, 2000 December 31, 1999
---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Advisor Shares Advisor Shares
<S> <C> <C>
Net asset value, beginning of year $ 10.190 $ 10.000
--------- -----------
Income from investment operations:
Net investment income(1) $ 0.083 $ 0.058
Net realized and unrealized gain(loss) (0.013)(+) 0.357
---------- -----------
Total income from investment operations $ 0.070 $ 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)
--------- -----------
Total distributions $ - $ (0.225)
--------- -----------
Net asset value, end of period $ 10.260 $ 10.190
=========== ===========
Total return(2) 0.69% 14.40%
Ratios/Supplemental Data(1):
Net assets, end of period (000 omitted) $ 4,666 $ 6,317
Ratio of expenses to average net assets 1.48%(3) 2.01%(3)
Ratio of expenses after custodian fee reduction to average net assets(4) 1.46%(3) 1.97%(3)
Ratio of net investment income to average net assets 1.42%(3) 1.04%(3)
Portfolio turnover rate 24% 18%
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1 During the six month period ended June 30, 2000 and the period from July 14,
1999, start of business, to December 31, 1999, 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:
2000 1999
-----------------------------------------------------------------------------------------------------------------------------
Net investment loss per share $ (0.101) $ (0.025)
=========== ===========
Annualized Ratios (as a percentage of average net assets):
Expenses 4.62%(3) 3.49%(3)
=========== ===========
Expenses after custodian fee reduction4 4.60%(3) 3.45%(3)
=========== ===========
Net investment loss (1.72%)(3) (0.44%)(3)
=========== ===========
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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.
+ Per share amount is not in accordance with the net realized and unrealized
gain (loss) for the period because of the timing of sales of fund shares and
the amounts per share of realized and unrealized gains and losses at such
time.
</TABLE>
See notes to financial statements
<PAGE>
Notes to Financial Statements (Unaudited)
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(1) SIGNIFICANT ACCOUNTING POLICIES
The Wright Managed Growth with Income Fund (the fund) (one of the series of The
Wright Asset Allocation Trust) is registered under the Investment Company Act of
1940, as amended, as a diversified, open-ended management investment company.
The fund invests, with certain percentage ranges, in underlying blue chip funds
(the underlying funds), for which Wright Investors Services (Wright) serves as
the investment adviser. The following is a summary of significant accounting
policies consistently followed by the fund in the preparation of its financial
statements. The policies are in conformity with accounting principles generally
accepted in the United States of America.
A. Investment Valuations - Investments in the underlying funds are valued at
net asset value. 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. Short-term
obligations maturing in 60 days or less are valued at amortized cost, which
approximates market value.
B. Deferred Offering Costs - Offering costs are being deferred and will be
amortized on a straight line basis over a period not to exceed twelve
months, commencing on the effective date of the fund's initial offering of
its shares. The amount paid by the fund on any withdrawal by the holders of
the initial interests of any of the respective initial interests will be
reduced by a portion of any unamortized offering costs, determined by the
proportion of the amount of the initial interests withdrawn to the initial
interests then outstanding.
C. Expense Reduction - The fund has entered into an arrangement with its
custodian whereby interest earned on uninvested cash balances are used to
offset custodian fees. All significant reductions are reported as a
reduction of expenses in the Statement of Operations.
D. Federal Taxes - The fund's policy is to comply with the provisions of the
Internal Revenue Code (the Code) available to regulated investment
companies and to distribute to shareholders each year all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is necessary.
E. Distributions - The fund requires that differences in the recognition or
classification of income between the financial statements and tax earnings
and profits which result only in temporary over-distributions for financial
statement purposes, are classified as distributions in excess of net
investment income or accumulated net realized gains. Distributions in
excess of tax basis earnings and profits are reported in the financial
statements as a return of capital. Permanent differences between book and
tax accounting for certain items may result in reclassification of these
items.
F. Multiple Classes of Shares of Beneficial Interest - The fund offers an
advisor share class. The fund may also offer an individual class, although
such class is not currently offered. The share classes differ in their
respective distribution and service fees. All shareholders bear the common
expenses of the fund pro rata based on the average daily net assets of each
class, without distinction between share classes. Dividends are declared
separately for each class. Each class has equal rights as to voting,
redemption, dividends and liquidation.
<PAGE>
G. Other - Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and distributions to
shareholders are recorded on the accrual basis. However, if the ex-dividend
date has passed, certain dividends from foreign securities are recorded as
the fund is informed of the ex-dividend date.
H. Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The fund has engaged Wright Investors' Services (Wright) to perform
investment management, investment advisory, and other services. For its
services, Wright is compensated based upon a percentage of average daily net
assets. For the six months ended June 30, 2000, the effective annual rate was
0.20%. To enhance the net income of the fund, Wright waived its entire
investment adviser fee of $5,385 on a preliminary basis. In addition, $65,700 of
expenses were allocated to the investment adviser on a preliminary basis.
The fund also has engaged Eaton Vance Management (Eaton Vance) to act as
administrator of the fund. Under the Administrator Agreement, Eaton Vance is
responsible for managing the business affairs of the fund and is compensated
based upon a percentage of average daily net assets. For the six months ended
June 30, 2000, the effective annual rate was 0.02%. Certain of the Trustees and
officers of the fund are Trustees or officers of the above organizations, Except
as to Trustees of the fund who are not employees of Eaton Vance or Wright,
Trustees and officers receive remuneration for their services to the fund out of
the fees paid to Eaton Vance and Wright.
(3) DISTRIBUTION EXPENSES
The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Plan provides that the fund
will pay Wright Investors' Service Distributors, Inc. (Principal Underwriter)
(WISDI), a subsidiary of Wright Investors' Service, an annual rate of 0.25% per
annum of the fund's average net assets attributable to the advisor shares. To
enhance the net income of the fund, the Principal Underwriter waived its entire
distribution fee of $6,730 on a preliminary basis.
<PAGE>
In addition, the Trustees have adopted a service plan (the Service Plan)
which allows the fund to reimburse WISDI for payments to intermediaries for
providing account administration and personal and account maintenance services
to their customers who are beneficial owners of shares. The amount of service
fee payable under the Service Plan with respect to each class of shares of the
fund may not exceed 0.25% annually of the average daily net assets attributable
to the respective classes. To enhance the net income of the fund, the Principal
Underwriter waived its service fee of $6,736 on a preliminary basis.
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in fund shares were as follow:
<TABLE>
<CAPTION>
For the Six Months For the period from
Ended the start of business,
June 30, 2000 July 14, 1999 to Dec. 31, 1999
Advisor Shares Advisor Shares
Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales.............................. 274,349 $ 2,773,063 647,984 $ 6,394,147
Issued to shareholders in payment
of distributions declared........ - - 13,076 128,794
Redemptions........................ (439,827) (4,472,630) (40,811) (423,236)
-------- ----------- -------- -----------
Net increase (decrease)........ (165,478) $ (1,699,567) 620,249 $ 6,099,705
========== ============== ========== ==============
</TABLE>
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than US Government securities and
short term obligations for the six months ended June 30, 2000, were $1,378,610
and $3,057,500, respectively.
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) of the investment
securities owned at June 30, 2000, as computed on a federal income tax basis,
are as follows:
Aggregate cost.............................. $ 4,420,632
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Gross unrealized appreciation............... $ 210,064
Gross unrealized depreciation............... (1,165)
-----------
Net unrealized appreciation................. $ 208,899
=============
<PAGE>
(7) RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
The fund invests in underlying funds, certain of which invest in securities
issued by companies whose principal business activities are outside the Untied
States which may involve significant risks not present in domestic investments.
For example, there is generally less publicly available information about
foreign companies, particularly those not subject to the disclosure and
reporting requirements of the U.S. securities laws. Foreign issuers are
generally not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the fund, political or financial instability or diplomatic and
other developments which could affect such investments. Foreign stock markets,
while growing in volume and sophistication, are generally not as developed as
those in the United States, and 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 general, there is less overall
governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
Settlement of securities transactions in foreign countries may be delayed
and is generally less frequent than in the United States, which could affect the
liquidity of the fund's assets. The fund may be unable to sell securities where
the registration process is incomplete and may experience delays in receipt of
dividends.
(8). LINE OF CREDIT
The fund participates with other funds managed by Wright in a committed $20
million unsecured line of credit agreement with a bank. The fund may temporarily
borrow from the line of credit to satisfy redemption requests or settle
investment transactions. Interest is charged to each fund based on its
borrowings at an amount above the federal funds rate. In addition, a fee
computed at an annual rate of 0.10% on the average daily unused portion of the
$20 million line of credit is allocated among the participating funds at the end
of each quarter. The fund did not have significant borrowing or allocated fees
during the six months ended June 30, 2000.
<PAGE>
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road, Milford, CT 06460
Semi-Annual Report
Officers and Trustees of the Funds
Peter M. Donovan, President and Trustee
H. Day Brigham, Jr., Vice President , Secretary and Trustee
A. M. Moody III, Vice President and Trustee
Judith R. Corchard, Vice President and Trustee
Dorcas R. Hardy, Trustee
Leland Miles, Trustee
Lloyd F. Pierce, Trustee
Richard E. Taber, Trustee
Raymond Van Houtte, Trustee
James L. O'Connor, Treasurer
William J. Austin, Jr., Assistant Treasurer
Administrator
Eaton Vance Management
255 State Street
Boston, Massachusetts 02109
Investment Adviser
Wright Investors' Service
440 Wheelers Farms Road
Milford, Connecticut 06460
Principal Underwriter
Wright Investors' Service Distributors, Inc.
440 Wheelers Farms Road
Milford, Connecticut 06460
(800) 888-9471
e-mail: [email protected]
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
Transfer and Dividend Disbursing Agent
PFPC Global Fund Services
Wright Managed Investment Funds
P.O. Box 5156
Westborough, Massachusetts 01581-9698
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of a mutual fund unless
accompanied or preceded by a fund's current prospectus.
