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Description of art work on front cover of the Prospectus
EquiFund logo in center of page with a globe underneath it, all of which is set
on a blue background.
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THE WRIGHT
EQUIFUND
EQUITY TRUST
WRIGHT EQUIFUND - ITALIAN
WRIGHT EQUIFUND - SPANISH
PROSPECTUS
SEPTEMBER 3, 1996
<PAGE>
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PROSPECTUS
THE WRIGHT EQUIFUND EQUITY TRUST
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Wright EquiFund--Italian Wright EquiFund--Spanish*
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* As of the date of this Prospectus, this Fund is not available for purchase in
any state of the United States. Contact the principal underwriter or your
broker for the latest information.
Each Fund seeks to enhance total investment return (consisting of price
appreciation plus income) by investing in a broadly based portfolio of equity
securities selected from the publicly traded companies in the National Equity
Index for the nation or nations in which each Fund is permitted to invest. Only
securities for which adequate public information is available and which could be
considered acceptable for investment by a prudent person will comprise the
National Equity Indices.
This combined Prospectus is designed to provide you with information you
should know before investing. Please retain this document for future reference.
A combined Statement of Additional Information dated September 3, 1996
containing more detailed information about the Funds has been filed with the
Securitiesand Exchange Commission and is incorporated herein by reference. This
Statement is available without charge from Wright Investors' Service
Distributors, Inc.
Write To: The Wright EquiFund Equity Trust
Wright Investors' Service Distributors, Inc.,
1000 Lafayette Blvd., Bridgeport, CT 06604
or Call: (800) 888-9471
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME
OR ALL OF THE PRINCIPAL INVESTMENT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus Dated September 3, 1996
<PAGE>
Table of Contents
PAGE
An Introduction to the Funds.............. 2
Shareholder and Fund Expenses............. 6
The Funds and their Investment
Objectives and Policies................ 7
The National Equity Indices............... 7
Policies that Apply to the Funds.......... 9
Other Investment Policies................. 9
Special Investment Considerations - Risks. 10
The Investment Adviser.................... 12
The Administrator......................... 15
Distribution Expenses..................... 16
How the Funds Value their Shares.......... 17
How to Buy Shares......................... 18
How Shareholder Accounts are Maintained... 20
Distributions and Dividends by the Funds.. 20
Taxes..................................... 21
How to Exchange Shares.................... 22
How to Redeem or Sell Shares.............. 23
Performance Information................... 25
Other Information......................... 26
Tax-Sheltered Retirement Plans............ 27
Appendix.................................. 28
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An Introduction to the Funds
The information summarized below is qualified in its entirety by the more
detailed information set forth below in this Prospectus.
The Trust.... The Wright EquiFund Equity Trust (the "Trust") is an open
end, management investment company, known as a mutual fund, registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust consists of 19 series, two of which are described in this
Prospectus (each a "Wright EquiFund" and collectively the "Wright EquiFunds").
The remaining 17 series are being offered under a separate prospectus. The
Wright EquiFunds offered through this Prospectus are referred to herein as the
Funds. Each Wright EquiFund represents a separate and distinct series of the
Trust's shares of beneficial interest. The Funds offered herein are each
non-diversified funds.
Investment Objective... Each Fund seeks to achieve its investment objective
of enhanced total investment return (price appreciation plus income) by
investing in a portfolio of equity securities selected by the Investment Adviser
from the publicly traded companies in the corresponding National Equity Index.
Only securities for which
<PAGE>
adequate public information is available and which
could be considered acceptable by a prudent person will comprise the National
Equity Indices. Although there can be no guarantee that each Fund's investment
objective will be achieved, each Fund is expected to have a broadly based
investment portfolio composed of the equity securities of companies in the
designated nation or nations.
The Funds... The following two Funds are offered through this Prospectus:
Wright EquiFund -- Italian
Wright EquiFund -- Spanish*
-------------------------------------------
* As of the date of this Prospectus, this
Fund is not available for purchase in any
state of the United States. Contact the
principal underwriter or your broker for
the latest information.
The Investment Adviser and Administrator... Each Fund has engaged Wright
Investors' Service, Inc., 1000 Lafayette Boulevard, Bridgeport, CT ("Wright" or
the "Investment Adviser") as investment adviser to carry out the investment and
reinvestment of the Fund's assets. Each Fund also has retained Eaton Vance
Management ("Eaton Vance" or the "Administrator"), 24 Federal Street, Boston, MA
02110 as administrator to manage the Fund's business affairs.
The Distributor... Wright Investors' Service Distributors, Inc. ("WISDI" or
the "Principal Underwriter") is the Distributor of the Funds' shares and
receives a distribution fee equal on an annual basis to 0.25% of each Fund's
average daily net assets.
Who May Purchase Fund Shares... The Funds were established to provide
investment opportunities in the main security markets of the world for
investment portfolios managed by professional trustees and other persons and
institutions acting in a fiduciary capacity. The Funds are designed to enable
fiduciaries to comply with the rule that investments made by fiduciaries should
be selected with the care, skill and caution that would be exercised by a
prudent person where the primary consideration is preservation of capital.
Shares of the Funds are available to the public as well as through these
fiduciaries.
<PAGE>
How to Purchase Fund Shares... There is no sales charge on the purchase of
Fund shares. Shares of any Fund may be purchased at the net asset value per
share next determined after receipt and acceptance of the purchase order. The
minimum initial investment in each Fund is $1,000 which will be waived for
investments in 401(k) tax-sheltered retirement plans. The $1,000 minimum initial
investment is also waived for Bank Draft Investing accounts which may be
established with an investment of $50 or more with a minimum of $50 applicable
to each subsequent investment. Shares may also be purchased through an exchange
of securities. See "How to Buy Shares."
Distribution Options... Unless the shareholder has elected to receive
dividends and distributions in cash, dividends and distributions will be
reinvested in additional shares of the Fund making such dividend or distribution
at the net asset value per share as of the reinvestment date. Dividend and
capital gains distributions, if any, are usually made annually in December.
Redemptions... Shares may be redeemed directly from a Fund at the net asset
value per share next determined after receipt of the redemption request in good
order. A telephone redemption privilege is available. There is 1.5% redemption
fee on shares redeemed within 30 days of purchase. See "How to Redeem or Sell
Shares."
Exchange Privilege... Shares of the Funds may be exchanged for shares of
certain other funds managed by the Investment Adviser at the net asset value
next determined after receipt of the exchange request. There are limits on the
number and frequency of exchanges. A telephone exchange privilege is available
as described under "How to Exchange Shares."
Net Asset Value... The net asset value per share of each Fund is calculated
on each day the New York Stock Exchange is open for trading. Call (800) 888-9471
for the previous day's net asset value.
Taxation... Each Fund intends to qualify and elect to be treated as a
regulated investment company for federal income tax purposes under Subchapter M
of the Internal Revenue Code.
<PAGE>
Shareholder Communications... Each shareholder will receive annual and
semi-annual reports containing financial statements, and a statement confirming
each share transaction. Financial statements included in annual reports are
audited by the Trust's independent certified public accountants. Where possible,
shareholder confirmations and account statements will consolidate all Wright
investment fund holdings of the shareholder.
Special Risk Considerations... International investments pose additional
risks including currency exchange rate fluctuation, currency revaluation and
political risks. See page 11 for additional foreign investment considerations.
The Prospectuses of the Funds are combined in this Prospectus. Each Fund offers
only its own shares, yet it is possible that a Fund might become liable for a
misstatement in the prospectus of another Fund. The Trustees of the Trust have
considered this in approving the use of a combined Prospectus.
<PAGE>
Shareholder and Fund Expenses
<TABLE>
<CAPTION>
Italian Spanish
Shareholder Transaction Expenses (as a percentage of the maximum offering price)
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<S> <C> <C>
Maximum Sales Charge Imposed on Purchases none none
Maximum Sales Charge Imposed on Reinvestment of Dividends none none
Deferred Sales Charge none none
Redemption Fees 1.50% 1.50%
Exchange Fees none none
Annualized Fund Operating Expenses (as a percentage of average daily net assets)
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Investment Advisory Fees 0.75% 0.75%
Rule 12b-1 Distribution Expenses 0.25% 0.25%
Other Expenses (including administration fee of 0.10%) 1.00% 1.00%
----------------
Total Operating Expenses 2.00% 2.00%
====== ======
Example
An investor would pay the following expenses on a $1,000 investment,
assuming (a) 5% annual return and (b) redemption at the end of each period:
Italian Spanish
1 Year $20 $20
3 Years 63 63
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</TABLE>
The table and Example summarize the aggregate expenses of the Funds and are
designed to help investors understand the costs and expenses they will bear,
directly or indirectly, by investing in a Fund. Other Expenses are estimated for
the current fiscal year because the Funds were only recently organized. In the
event Other Expenses exceed the estimated 1.00%, the Distribution Fee and
Investment Adviser Fee will be reduced so that Total Operating Expenses do not
exceed 2.00%. If total reduction of the Distribution Fee and Investment Advisory
Fee is not sufficient to reduce expenses to the 2.00% level, expenses exceeding
the 2.00% level will be allocated to the Investment Adviser so that the
shareholder will not experience expenses over the 2.00% level. This policy is
expected to continue at least until December 31, 1996.
The Example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. Federal
regulations require the Example to assume a 5% annual return, but actual annual
return will vary. For further information regarding the expenses of the Funds
see "The Investment Adviser," "The Administrator," "Distribution Expenses" and
"How to Redeem or Sell Shares."
The Redemption Fees under the table are applicable only for shares redeemed
within 30 days of their purchase. The Spanish Fund is not offered for sale as of
the date of this Prospectus.
<PAGE>
The Funds and their Investment Objectives and Policies
Each Fund seeks to enhance total investment return (consisting of price
appreciation plus income) by investing in a portfolio of equity securities
selected by the Investment Adviser from the publicly traded companies in the
National Equity Index for the nation or nations in which each Fund is permitted
to invest. Only securities for which adequate public information is available
and which could be considered acceptable for investment by a prudent person will
comprise a National Equity Index. Each Fund will invest at least 65% of its
total assets in the securities of companies located in the country referred to
in its name. A Fund's selection of equity securities is limited to those equity
securities included in the National Equity Index (which is described below)
relating to such Fund. Each Fund will, under normal market conditions, invest at
least 80% of its net assets in equity securities, including common stocks,
preferred stocks, rights, warrants and securities convertible into stock. As a
matter of nonfundamental policy, it is expected that the Funds will normally be
fully invested in equity securities. However, the Fund may invest up to 20% of
its net assets in the short-term debt securities described under "Special
Considerations -- Defensive Investments." In addition, for temporary defensive
purposes, a Fund may hold cash or invest more than 20% of its net assets in
these short-term debt securities.
Except for the fundamental investment restrictions listed in the Statement
of Additional Information, the investment objective and policies of each Fund
are not fundamental and may be changed by the Trustees of the Trust without a
vote of the affected Fund's shareholders. Any such change of the investment
objective of a Fund will be preceded by thirty days' advance written notice to
each shareholder of such Fund. If any changes were made, the Fund might have an
investment objective different from the objective which an investor considered
appropriate at the time the investor became a shareholder in the Fund. There is
no assurance that the Funds will achieve their respective investment objective.
The market price of securities held by the Funds that are quoted or denominated
in foreign currencies, when expressed in U.S. dollars, will fluctuate in
response to changes in exchange rates between the U.S. dollar and the currencies
in which the securities are quoted or denominated. The net asset value of each
Fund's shares will also fluctuate as a result of changes in the value of the
securities that it owns.
The National Equity Indices
Wright, with the assistance of local financial institutions as described
below, has developed the National Equity Indices (the "Indices"). Each Index is
designed to be an index of substantially all the publicly traded companies in
the nation or nations in which each respective Fund is permitted to invest which
meet the requirements of a prudent investor. The prudent investor standard
requires that care, skill and caution be used in selecting securities for
investment. This prudent investor standard is the foundation for the investment
criteria employed in creating the Indices. The Investment Adviser will select
securities for investment from those included in the corresponding Index.
<PAGE>
Wright has developed disciplined objective criteria to insure that the
required care, skill and caution are used in selecting securities for each of
the Indices.
Wright generally considers for inclusion in an Index only those companies
which have at least:
1. Five years of audited operating information;
2. An established minimum in both book value and market value; and
3. A three-year record of pricing in a public market.
In addition, only companies that meet the following criteria will be
included in an Index:
1. A significant portion of the shares of the company is believed
to be publicly owned;
2. The company has had positive earnings for the last fiscal or
calendar year, or for the last twelve months, or cumulatively for
the last three years; and
3. The company is not a closed-end investment company, a real estate
investment trust or a non-bank securities broker/dealer.
In selecting securities for the Indices and for inclusion in the portfolios
of the Funds, Wright utilizes its Worldscope(R) international database. The
database provides more than 1,500 items of information on more than 13,000
companies worldwide. Except with respect to United States investments, Wright
may utilize the services of major financial institutions that are located in the
nations in which the respective Funds are permitted to invest and are qualified
to supply Wright with research products and services. These services include
reports on particular industries and companies, economic surveys and analyses of
the investment environment and trends in a particular nation, recommendations as
to whether specific securities should be included in an Index and other
appropriate assistance in the performance of Wright's decision-making
responsibilities.
The Indices are adjusted quarterly and as otherwise necessary to reflect
significant events. Changes in the composition of an Index will be made by
determining whether existing companies included in the Index continue to meet
the criteria of the Index and whether other companies meet these criteria and
should replace or be added to the companies already comprising that Index. The
Indices give equal weight to each security included therein, and are intended to
include substantially all the publicly traded companies which meet the
requirements of the prudent investor in the respective nations. Use of the equal
weighting method of constructing an Index will often result in a greater
representation of smaller capitalization companies than would occur if the Index
were weighted on the basis of relative market capitalization in the nation or
nations in which their securities are primarily traded. Such smaller
capitalization companies may have shorter operating histories, less
diversification of assets and smaller dividend payments than larger
capitalization companies. On the other hand, such smaller capitalization
companies may be younger or less mature companies still experiencing significant
growth. A detailed explanation of the objective criteria used in the process of
selecting companies for inclusion in an Index is included in the Statement of
Additional Information.
<PAGE>
The securities included in an Index will be (i) admitted to official
listing on a stock exchange in any Member State of the European Economic
Community, (ii) admitted to official listing on a recognized stock exchange in
any other country in Western Europe, Asia, Oceania, the American continents,
including Bermuda, and Africa, (iii) traded on another regulated market in any
such Member State of the European Economic Community or such other country
referred to above, provided such market operates regularly and is recognized and
open to the public, or (iv) recently issued, provided the terms of the issue
provide that application be made for admission to official listing on any of the
stock exchanges or other regulated markets referred to above, and provided such
listing is secured within a year following the date of issuance.
The performance of each National Equity Index is included in various
publications of Wright Investors' Service, including the monthly International
Investment Advice and Analysis.
Policies that Apply to the Funds
Each Fund seeks to achieve its investment objective of enhanced total
investment return (price appreciation plus income) by investing in a portfolio
of equity securities selected by the Investment Adviser from the publicly traded
companies in the corresponding Index. The Investment Adviser will select equity
securities for a Fund's portfolio from companies in the relevant Index,
determine to sell securities in the Fund's portfolio, and determine the amount
to be invested in a security on the basis of characteristics which have been
identified by the Investment Adviser as being likely to provide comparatively
superior investment return over the intermediate term. Although each Fund may
acquire for its portfolio only those securities which are included in the
relevant Index at the time of purchase, it is not expected that the Fund's
portfolio will necessarily resemble the Index either in the number of securities
included or in the amount invested in each security. Although there can be no
guarantee that each Fund's investment objective will be achieved, each Fund is
expected to have an investment portfolio composed of the equity securities of
companies in the designated nation or nations.
Other Investment Policies
The Trust, on behalf of each Fund, has adopted certain fundamental
investment restrictions which are enumerated in detail in the Statement of
Additional Information and which may be changed as to each Fund only by the vote
of a majority of the affected Fund's outstanding voting securities. Among these
restrictions, a Fund may not borrow money except from a bank, and then only up
to 1/3 of the current market value of its total assets (excluding the amount
borrowed). A Fund may not purchase any securities which would cause 25% or more
of the market value of its total assets at the time of such purchase to be
invested in the securities of issuers having their principal business activities
in the same industry, provided that there is no limitation with respect to
investments in obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
<PAGE>
None of the Funds has any current intention of borrowing for leverage or
speculative purposes. Each Fund may not invest more than 15% of its net assets
in investments that are illiquid at the time of purchase.
While each Fund is non-diversified under the 1940 Act, each such Fund
intends to comply with the diversification standards applicable to regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). As of the last day of each quarter of its taxable year, each Fund
intends that its investments in the securities of any one issuer (other than the
U.S. Government and other regulated investment companies) will be limited to 25%
of its total assets. However, with respect to at least 50% of its total assets,
the Fund may have invested more than 5% of its assets in the securities of any
one issuer or hold more than 10% of the outstanding voting securities of any one
issuer. Investing a greater percentage of a Fund's assets in the securities of a
single issuer will make such Fund more susceptible to adverse developments
affecting such issuer.
None of the Funds is intended to be a complete investment program by itself
and the prospective investor should take into account his or her objectives and
other investments when considering the purchase of any Fund's shares. The Funds
cannot eliminate risk or assure achievement of their objectives.
Special Investment Considerations -- Risks
Repurchase Agreements. Each Fund may enter into repurchase agreements in order
to earn income on temporarily uninvested cash. A repurchase agreement is an
agreement under which the seller of securities agrees to repurchase and a Fund
agrees to resell the securities at a specified time and price. Each Fund may
enter into repurchase agreements only with large, well-capitalized domestic or
foreign banks or government securities dealers that meet Wright credit
standards. In addition, such repurchase agreements will provide that the value
of the collateral underlying the repurchase agreement will always be at least
equal to the repurchase price, including any accrued interest earned under the
repurchase agreement. In the event of a default or bankruptcy by a seller under
a repurchase agreement, the affected Fund will seek to liquidate such
collateral. However, the exercise of the right to liquidate such collateral
could involve certain costs, delays and restrictions and is not ultimately
assured. To the extent that proceeds from any sale upon a default of the
obligation to repurchase are less than the repurchase price, a Fund could suffer
a loss. There is no percentage limit on the amount of any Fund's investments in
repurchase agreements, except for the requirement that, under normal market
conditions, at least 80% of each Fund's net assets will be invested in equity
securities.
Temporary Defensive Investments. During periods of unusual market or economic
conditions, when Wright believes that investing for temporary defensive purposes
is appropriate, all or any portion of each Fund's assets may be held in cash
(including, subject to the Code's requirements applicable to regulated
investment companies, the foreign currency of the nation or nations in which
<PAGE>
such Fund invests) or invested in short-term obligations, including but not
limited to obligations issued or guaranteed by the U.S. or any foreign
government or any of their respective agencies or instrumentalities; obligations
of public international agencies; commercial paper which at the date of
investment is rated A-1 by Standard & Poor's Ratings Group ("S&P") or P-1 by
Moody's Investors Service, Inc. ("Moody's"), or, if not rated by such rating
organizations, is deemed by the Investment Adviser 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, which are deemed by the Investment Adviser to be of comparable quality;
and certificates of deposit, bankers' acceptances and time deposits of domestic
or foreign banks which are determined to be of high quality by the Investment
Adviser. Temporary investments may be denominated either in U.S. dollars or in
the currency of the nation in which the Fund primarily invests.
Foreign Investments. Investment in securities of foreign companies and
governments may involve certain risk considerations in addition to those arising
when investing in domestic securities. These considerations include the
possibility of currency exchange rate fluctuations and revaluation of
currencies, the existence of less publicly available information about foreign
issuers, different accounting, auditing and financial reporting standards, less
stringent securities regulation, non-negotiable brokerage commissions, different
tax provisions, political or social instability, war or expropriation. Moreover,
foreign stock and bond markets generally are not as developed and efficient as
those in the United States and, therefore, the volume and liquidity in those
markets may be less, and the volatility of prices may be greater, than in U.S.
markets. Settlement of transactions in foreign markets may be delayed beyond
what is customary in U.S. markets. These considerations generally are of greater
concern in developing countries. Further information regarding the nations in
which the Funds will invest may be found in the Appendix, beginning on page 28.
Each Fund may, but does not expect to, invest in foreign securities in the
form of American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), International Depositary Receipts ("IDRs") or other similar securities
convertible into securities of foreign issuers. ADRs are receipts typically
issued by a United States bank or trust company evidencing ownership of the
underlying foreign securities. EDRs and IDRs are receipts typically issued by a
European bank or trust company evidencing ownership of the underlying foreign
securities.
Foreign Currency Transactions. Each Fund may buy and sell foreign currencies.
The value in U.S. dollars of investments quoted or denominated in foreign
currencies will be affected by changes in currency exchange rates. As one way of
managing currency exchange rate risk, a Fund may enter into forward foreign
currency exchange contracts, which are agreements to purchase or sell foreign
currencies at a specified price and date. A Fund will usually enter into these
contracts to fix the value of a security it has agreed to buy or sell
(transaction hedge). A Fund may also use these contracts to hedge the value of a
security it already owns, particularly if it expects a decline in the value of
the currency in which the foreign security is quoted or denominated (position
hedge). The underlying currency value of each Fund's forward contracts will be
limited to the value of securities to be bought and sold in that currency plus
the value of the Fund's portfolio securities quoted or denominated in such
<PAGE>
currency. There is no other percentage limitation on any Fund's holdings of
foreign currencies or forward contracts, except for the requirement that, under
normal market conditions, at least 80% of the Fund's net assets will be invested
in equity securities. Contracts to sell foreign currency could limit any
potential gain which might be realized by a Fund if the value of the hedged
currency increases. Although a Fund will attempt to benefit from using forward
contracts, the success of its hedging strategy will depend on the Investment
Adviser's ability to predict accurately the future exchange rate between foreign
currencies. The ability to predict the direction of currency exchange rates
involves skills different from those used in selecting securities.
Lending Portfolio Securities. Each Fund may seek to increase its total return by
lending portfolio securities to broker-dealers or other institutional borrowers.
Such loans are required to be continuously secured by collateral in cash,
cash-equivalents and U.S. Government securities. 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 transaction fee to such borrowers and
administrative expenses, such as finders fees to third parties. A Fund may
invest the proceeds it receives from a securities loan in the types of
securities in which it may invest. 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 not exceed 30% of the Fund's total assets.
The Investment Adviser
Each Fund has engaged Wright Investors' Service, Inc. ("Wright"), a
wholly-owned subsidiary of The Winthrop Corporation ("Winthrop"), to act as its
investment adviser pursuant to an Investment Advisory Contract. Wright, acting
under the general supervision of the Trust's Trustees, furnishes each Fund with
investment advice and management services. The address of both Winthrop and
Wright is 1000 Lafayette Boulevard, Bridgeport, Connecticut. The Trustees of the
Trust are responsible for the general oversight of the conduct of the Funds'
business.
Wright is a leading independent international investment management and
advisory firm which, together with its parent, Winthrop, has more than 30 years'
experience. Its staff of over 150 people includes a highly respected team of 65
economists, investment experts and research analysts. In addition to the Funds,
Wright manages assets for bank trust departments, corporations, unions,
municipalities, eleemosynary institutions, professional associations,
institutional investors, fiduciary organizations, family trusts and individuals.
Wright is also the investment adviser to The Wright Managed Equity Trust, The
Wright Managed Income Trust, and The Wright Managed Blue Chip
<PAGE>
Series Trust (the "Wright Funds"). Wright operates one of the world's
largest and most complete databases of financial information on over 13,000
domestic and international corporations. The estate of John Winthrop Wright is
the controlling shareholder of Winthrop. At the end of 1995, Wright managed
approximately $4 billion of assets.
An Investment Committee of senior officers, all of whom are experienced
analysts, exercises disciplined direction and control over all investment
selections, policies and procedures for each Fund. The Committee, following
highly disciplined buy-and-sell rules, makes all decisions for the selection,
purchase and sale of all securities. The members of the Committee are as
follows:
Peter M. Donovan, CFA, President and Chief Executive Officer of Wright. Mr.
Donovan received a BA Economics, Goddard College and joined Wright from Jones,
Kreeger & Co., Washington, DC in 1966. Mr. Donovan is the president of The
Wright Managed Income Trust, The Wright Managed Equity Trust, The Wright Managed
Blue Chip Series Trust and The Wright EquiFund Equity Trust. He is also director
of EquiFund-Wright National Equity Fund, a Luxembourg SICAV. He is a member of
the New York Society of Security Analysts and the Hartford Society of Financial
Analysts.
Judith R. Corchard, Chairman of the Investment Committee, Executive Vice
President -- Investment Management of Wright. Ms. Corchard attended the
University of Connecticut and joined Wright in 1960. She is a member of the New
York Society of Security Analysts and the Hartford Society of Financial
Analysts.
Jatin J. Mehta, CFA, Executive Counselor and Director of Education of
Wright. Mr. Mehta received a BS Civil Engineering, University of Bombay, India
and an MBA from the University of Bridgeport. Before joining Wright in 1969, Mr.
Mehta was an executive of the Industrial Credit Investment Corporation of India,
a World Bank agency in India for financial assistance to private industry. He is
a Trustee of The Wright Managed Blue Chip Series Trust. He is a member of the
New York Society of Security Analysts and the Hartford Society of Financial
Analysts.
Harivadan K. Kapadia, CFA, Senior Vice President -- Investment Analysis and
Information of Wright. Mr. Kapadia received a BA (hon.) Economics and Statistics
and MA Economics, University of Baroda, India and an MBA from the University of
Bridgeport. Before joining Wright in 1969, Mr. Kapadia was Assistant Lecturer at
the College of Engineering and Technology in Surat, India and Lecturer, B.J. at
the College of Commerce & Economics, VVNagar, India. He has published the
textbooks: "Elements of Statistics," "Statistics," "Descriptive Economics," and
"Elements of Economics." He was appointed Adjunct Professor at the Graduate
School of Business, Fairfield University in 1981. He is also a member of the New
York Society of Security Analysts and the Hartford Society of Financial
Analysts.
Michael F. Flament, CFA, Senior Vice President -- Investment and Economic
Analysis of Wright. Mr. Flament received a BS Mathematics, Fairfield University;
MA Mathematics, University of Massachusetts and an MBA Finance, University of
Bridgeport. He is a member of the New York Society of Security Analysts and the
Hartford Society of Financial Analysts.
<PAGE>
James P. Fields, CFA, Vice President and Investment Officer of Wright. Mr.
Fields received a B.S. Accounting, Fairfield University and an MBA Finance from
Pace University. He joined Wright in 1982 and is also a member of the New York
Society of Security Analysts.
Under the Funds' Investment Advisory Contract, each Fund is required to pay
Wright a monthly advisory fee calculated at the annual rates (as a percentage of
average daily net assets) set forth in the following table. However, for the
1996 fiscal year, Wright has agreed to reduce its advisory fee and reallocate
certain expenses, if such action is necessary to keep each Fund's expense ratio
at or below 2.00%.
ANNUAL % ADVISORY FEE RATES
Under $500 Million $500 Million to $1 Billion Over $1 Billion
------------------------------------------------------------------------
0.75% 0.73% 0.68%
In addition to compensating Wright for its advisory services to the Funds,
the advisory fee is intended to partially compensate Wright for the maintenance
of the National Equity Indices which form the basis for the selection of
securities for the Funds. Wright incurs significant expenses in maintaining the
Indices, including: the cost of employing persons to research companies that are
candidates for inclusion in or removal from an Index and to enter data into
Wright's computerized international database; compensation to institutions in
each country for research provided to Wright; expenses associated with travel to
the countries for which Wright maintains Indices; and the costs of subscribing
to numerous publications and making extensive use of long-distance
telecommunications facilities.
The need to compensate Wright for incurring these expenses in maintaining
the Indices distinguishes the Funds from traditional index funds with portfolios
that track independent published indices available at little or no cost to the
funds' managers.
Shareholders of the Funds who are also advisory clients of Wright may have
agreed to pay Wright a fee for such advisory services. Wright does not intend to
exclude from the calculation of the investment advisory fees payable to Wright
by such advisory clients the portion of the advisory fee payable by the Funds.
Accordingly, a client may pay an advisory fee to Wright in accordance with
Wright's customary investment advisory fee schedule charged to investment
advisory clients and at the same time, as a shareholder in a Fund, bear its
share of the advisory fee paid by the Fund to Wright as described above.
Pursuant to the Investment Advisory Contract, Wright also furnishes for the
use of each Fund office space and all necessary office facilities, equipment and
personnel for servicing the investments of each Fund. Other than those expenses
expressly stated to be payable by Wright under its Investment Advisory Contract,
each Fund is responsible for all expenses relating to its operations including,
but not limited to, Wright's advisory fee; Eaton Vance's administration fee;
fees pursuant to the Trust's Rule 12b-1 distribution plan; taxes, if any;
custodian, legal and auditing fees; fees and
<PAGE>
expenses of Trustees who are not members of, affiliated with or interested
persons of Wright, Winthrop or Eaton Vance; insurance premiums; trade
association dues; expenses of obtaining quotations for calculating the value of
each Fund's net assets; printing and other expenses which are not expressly
designated as expenses of Wright or Eaton Vance.
Wright places the portfolio security transactions for each 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. Wright seeks to execute the Funds' portfolio security transactions
on the most favorable terms and in the most effective manner possible. Subject
to the foregoing, Wright may consider sales of shares of the Wright Funds as a
factor in the selection of broker-dealer firms to execute such transactions.
Portfolio changes may be made by Wright without regard to the length of time a
security has been held. However, it is not the intention of the Funds to engage
in trading for short-term profits. The frequency of each Fund's portfolio
transactions or turnover rate may vary from year to year depending on market
conditions. A high rate of portfolio turnover (100% or more) involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It may
also result in the realization of larger amounts of net short-term capital
gains, distributions from which are taxable to shareholders as ordinary income
and may, under certain circumstances, make it more difficult for a Fund to
qualify as a regulated investment company under the Code.
The Administrator
Each Fund engages Eaton Vance as its administrator under an Administration
Agreement. Under the Administration Agreement, Eaton Vance is responsible for
managing the business affairs of each Fund, subject to the supervision of the
Trust's Trustees. Eaton Vance's services include recordkeeping, preparation and
filing of documents required to comply with federal and state securities laws,
supervising the activities of the Funds' custodian and transfer agent, providing
assistance in connection with the Trustees' and shareholders meetings and other
administrative services necessary to conduct each Fund's business. Eaton Vance
will not provide any investment management or advisory services to the Funds.
For its services under the Administration Agreement, each Fund is required to
pay Eaton Vance a monthly administration fee calculated at the annual rates (as
a percentage of average daily net assets) set forth in the following table.
ANNUAL % ADMINISTRATION FEE RATES
Under $100 Million $250 Million Over
$100 Million to $250 Million to $500 Million $500 Million
- -------------------------------------------------------------------------------
0.10% 0.06% 0.03% 0.02%
<PAGE>
Eaton Vance, its affiliates and its predecessor companies have been
primarily engaged in managing assets of individuals and institutional clients
since 1924 and managing, administering and marketing mutual funds since 1931.
Total assets under management are over $16 billion. Eaton Vance is a
wholly-owned subsidiary of Eaton Vance Corp. ("EVC"), a publicly held holding
company.
Distribution Expenses
In addition to the fees and expenses payable by each Fund in accordance
with its Investment Advisory Contract and Administration Agreement, each Fund
pays for certain expenses pursuant to a Distribution Plan (the "Plan") designed
to meet the requirements of Rule 12b-1 under the 1940 Act and the Rules of the
National Association of Securities Dealers, Inc. (the "NASD").
The Trust has entered into a distribution contract with Wright Investors'
Service Distributors, Inc. ("WISDI" or the "Principal Underwriter"), a
wholly-owned subsidiary of Winthrop. Under this contract and the Plan, it is
currently intended that each Fund will pay to WISDI for distribution services
and personal and account maintenance services in connection with the Fund's
shares, an annual fee equal to .25% of each Fund's average daily net assets.
Appropriate adjustments to payments made pursuant to the Plan shall be made
whenever necessary to assure that no payment is made by a Fund which exceeds the
applicable maximum cap imposed on asset-based, front-end and deferred sales
charges by Rule 2830 of the NASD.
Pursuant to the Plan, the Trust, on behalf of each Fund, is authorized to
compensate WISDI for (1) distribution services and (2) personal and account
maintenance services performed and expenses incurred by WISDI in connection with
the Fund's shares. The amount of such compensation, including compensation for
personal and account maintenance services, paid during any one year shall not
exceed .25% of the average daily net assets of the Fund. Such compensation shall
be calculated and accrued daily and paid quarterly.
Distribution services and expenses for which WISDI may be compensated
pursuant to this Plan include, without limitation: compensation to and expenses
incurred by investment dealers, banks or other institutions ("Authorized
Dealers") and the officers, employees and sales representatives of Authorized
Dealers and of WISDI; allocable overhead, travel and telephone expenses; the
printing of prospectuses and reports for other than existing shareholders; the
preparation and distribution of sales literature and advertising; and all other
expenses (other than personal and account maintenance services as defined below)
incurred in connection with activities primarily intended to result in the sale
of the Funds' shares.
Personal and account maintenance services include, but are not limited to,
payments made to or on account of WISDI, Authorized Dealers and their respective
officers, employees and sales representatives who respond to inquiries of, and
furnish assistance to, shareholders concerning their ownership of Fund shares
and their accounts or who provide similar services not otherwise provided by or
on behalf of the Fund.
<PAGE>
The Plan is a compensation plan which provides for the payment of a
specified distribution fee without regard to the distribution expenses actually
incurred by WISDI. Accordingly, an amount equal to 1/365 of the annual
distribution fee will be accrued on each day as an expense of each Fund, which
will reduce its net investment income. If the Plan were terminated or not
continued by the Trustees and no successor plan were adopted, the Funds would
cease to make distribution payments to WISDI. WISDI would be unable to recover
the amount of any unreimbursed distribution expenditures made by WISDI. However,
WISDI does not intend to make distribution expenditures at a rate that
materially exceeds the rate of compensation received under the Plan.
How the Funds Value their Shares
The Trust values the shares of each Fund once on each day the New York
Stock Exchange ("NYSE") is open as of the close of regular trading on the NYSE
(normally 4:00 p.m. New York time). The net asset value is determined in the
manner authorized by the Trustees of the Trust by the Funds' custodian (as agent
for the Funds) with the assistance of Wright for securities that involve
valuation problems. Such determination is accomplished by dividing the number of
outstanding shares of each Fund into its net worth (the excess of its assets
over its liabilities).
Portfolio securities traded on more than one United States national
securities exchange or foreign securities exchange are valued by the Funds'
custodian at the last sale price on the business day as of which such value is
being determined at the close of the exchange representing the principal market
for such securities, unless those prices are deemed by Wright to be not
representative of market values. Securities which cannot be valued at such
prices, will be valued by Wright at fair value in accordance with procedures
adopted by the Trustees. Foreign currencies, options on foreign currencies and
forward foreign currency contracts will be valued at their last sales price as
determined by published quotations or as supplied by banks that deal in such
instruments. The value of all assets and liabilities expressed in foreign
currencies will be converted into U.S. dollar value at the mean between the
buying and selling rates of such currencies against U.S. dollars last quoted by
any major bank. If such quotations are not available, the rate of exchange will
be determined in good faith by or under procedures established by the Trustees.
Securities traded over-the-counter, unlisted securities and listed securities
for which closing sale prices are not available are valued at the mean between
latest bid and asked prices or, if such bid and asked prices are not available,
at prices supplied by a pricing agent selected by Wright, unless such prices are
deemed by Wright not to be representative of market values at the close of
business of the NYSE. Securities for which market quotations are unavailable,
restricted securities, securities for which prices are deemed by Wright not to
be representative of market values and other assets will be appraised at their
fair value as determined in good faith according to guidelines established by
the Trustees of the Trust. Short-term obligations with remaining maturities of
sixty days or less are valued at amortized cost, which the Trustees have
determined approximates market value. Options traded on exchanges and
over-the-counter will be valued at the last current sales price on the market
where such option is principally traded. Over-the-counter and listed options for
which a last sale price is not available will be valued
<PAGE>
on the basis of quotations supplied by dealers who regularly trade such
options or if such quotations are not available or deemed by Wright not to be
representative of market values, at fair value.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the NYSE is open for
trading). In addition, European or Far Eastern securities trading generally or
in a particular country or countries may not take place on all business days in
New York. Furthermore, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days which are not business days in
New York and on which the Funds' net asset values are not calculated. Such
calculation does not take place contemporaneously with the determination of the
prices of the majority of the portfolio securities used in such calculation.
Events affecting the values of portfolio securities that occur between the time
their prices are determined and the close of the NYSE will not be reflected in a
Fund's calculation of net asset value unless Wright deems that the particular
event would materially affect net asset value, in which case an adjustment will
be made.
How to Buy Shares
Shares of each Fund are sold without a sales charge at the net asset value
next determined after the receipt of a purchase order as described below. The
minimum initial investment in each Fund is $1,000, although this will be waived
for investments in 401(k) tax-sheltered retirement plans. There is no minimum
amount required for subsequent purchases. The $1,000 minimum initial investment
is also waived for Bank Draft Investing accounts which may be established with
an investment of $50 or more with a minimum of $50 applicable to each subsequent
investment. Each Fund reserves the right to reject any order for the purchase of
its shares or to limit or suspend, without prior notice, the offering of its
shares.
Shares of each Fund may be purchased or redeemed through an Authorized
Dealer. Charges may be imposed by the institution for its services. Any such
charges could constitute a material portion of a smaller account. Shares may be
purchased or redeemed directly from or with each Fund without imposition of any
charges other than those described in this Prospectus.
Purchases By Wire: Investors may purchase shares by transmitting
immediately available funds (Federal Funds) by wire to:
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA
ABA: 011001234
Account 081345
Further Credit: (Name of Fund)
(Include your Fund account number)
<PAGE>
Initial purchase -- Upon making an initial investment by wire, an investor
must first telephone the Funds' Order Department at (800) 225-6265, ext. 3, to
advise of the action and to be assigned an account number. If this telephone
call is not made, it may not be possible to process the order promptly. In
addition, an Account Instructions form, which is available through WISDI, should
be promptly forwarded to First Data Investor Services Group (the "Transfer
Agent") at the following address:
WRIGHT MANAGED INVESTMENT FUNDS
P.O. Box 5123
Westborough, Massachusetts 01581-5123
Subsequent Purchases -- Additional investments may be made at any time
through the wire procedure described above. The Funds' Order Department must be
immediately advised by telephone at (800) 225-6265, ext. 3 of each transmission
of funds by wire.
Purchases by Mail: Initial Purchases -- The Account Instructions form
available through WISDI should be completed by an investor, signed and mailed
with a check, Federal Reserve Draft, or other negotiable bank draft, drawn on a
U.S. bank and payable in U.S. dollars, to the order of the Fund whose shares are
being purchased and mailed to the Transfer Agent at the above address.
Subsequent Purchases -- Additional purchases may be made at any time by an
investor by check, Federal Reserve draft, or other negotiable bank draft, drawn
on a U.S. bank and payable in U.S. dollars, to the order of the relevant Fund at
the above address. The sub-account, if any, to which the subsequent purchase is
to be credited should be identified together with the sub-account number and,
unless otherwise agreed, the name of the sub-account.
Bank Draft Investing -- for regular share accumulation: Cash investments of
$50 or more may be made through the shareholder's checking account via bank
draft each month or quarter. The $1,000 minimum initial investment and small
account redemption policy are waived for Bank Draft Investing accounts.
Purchase through Exchange of Securities: Investors wishing to purchase
shares of a Fund through an exchange of portfolio securities should contact
WISDI to determine the acceptability of the securities and make the proper
arrangements. The shares of a Fund may be purchased, in whole or in part, by
delivering to the Funds' custodian securities that meet the investment objective
and policies of the relevant Fund, have readily ascertainable market prices and
quotations and which are otherwise acceptable to the Investment Adviser and the
Fund. The Trust will only accept securities in exchange for shares of the Funds
for investment purposes and not as agent for the shareholders with a view to a
resale of such securities. The Investment Adviser, WISDI and the Funds reserve
the right to reject all or any part of the securities offered in exchange for
shares of a Fund. An investor who wishes to make an exchange should furnish to
WISDI a list with a full and exact description of all of the securities which he
proposes to deliver. WISDI or the Investment Adviser will specify those
<PAGE>
securities which the Fund is prepared to accept and will provide the investor
with the necessary forms to be completed and signed by the investor. The
investor should then send the securities, in proper form for transfer, with the
necessary forms to the Funds' Custodian and certify that there are no legal or
contractual restrictions on the free transfer and sale of the securities.
Exchanged securities will be valued at their fair market value as of the date
that the securities in proper form for transfer and the accompanying purchase
order are both received by the Trust, using the procedures for valuing portfolio
securities as described under "How the Funds Value their Shares" on page 17.
However, if the NYSE or appropriate foreign stock exchange is not open for
unrestricted trading on such date, such valuation shall be on the next day on
which the NYSE or foreign stock exchange is so open. In any event, all
valuations are determined in good faith by or at the direction of the Trust's
Trustees. The net asset value used for purposes of pricing shares sold under the
exchange program will be the net asset value next determined following the
receipt of both the securities offered in exchange and the accompanying purchase
order. Securities to be exchanged must have a minimum aggregate value of $5,000.
An exchange of securities is a taxable transaction which may result in
realization of a gain or loss for federal and state income tax purposes.
How Shareholder Accounts are Maintained
Upon the initial purchase of a Fund's shares, an account will be opened for
the account or sub-account of an investor. Subsequent investments may be made at
any time by mail to the Transfer Agent or by wire, as noted above. The Trust has
the right, upon 60 days' notice to shareholders, to involuntarily redeem shares,
at the net asset value in accounts which do not meet this minimum account
requirement. However, no such redemption would be required by a Fund if the
cause of the low account balance was a reduction in the net asset value of Fund
shares. Confirmation statements indicating total shares of each Fund owned in
the account or each sub-account will be mailed to investors quarterly and at the
time of each purchase (other than reinvestment of dividends or distributions) or
redemption. The issuance of shares will be recorded on the books of the relevant
Fund. The Trust does not issue share certificates.
Distributions and Dividends by the Funds
The Trust intends to pay dividends from the net investment income of each
Fund as shown on the Fund's books at least annually. Any realized net capital
gains from the sale of securities in a Fund's portfolio or from transactions in
forward contracts (reduced by any available capital loss carryforwards from
prior years) will be also paid at least annually. Shareholders may reinvest
dividends, and accumulate capital gains distributions, if any, in additional
shares of the same Fund at the net asset value as of the ex-dividend date.
Unless shareholders otherwise instruct, all distributions and dividends will be
automatically invested in additional shares of the same Fund. Alternatively,
shareholders may reinvest capital gains distributions and direct that dividends
be paid in cash, or that both dividends and capital gains distributions be paid
in cash.
<PAGE>
Taxes
Under the Code, each Fund is treated as a separate entity for federal
income tax purposes. Each Fund intends to qualify and elect to be treated and to
continue to qualify as a regulated investment company for federal income tax
purposes. In order to so qualify, each Fund must meet certain requirements with
respect to sources of income, diversification of assets, and distributions to
shareholders. Each Fund does not pay federal income or excise taxes to the
extent that it distributes to its shareholders all of its net investment income
and net realized capital gains in accordance with the timing requirements of the
Code. Neither of the Funds will be subject to income, corporate excise or
franchise taxation in Massachusetts in any year in which it qualifies as a
regulated investment company under the Code.
For federal income tax purposes, a shareholder's distributions from a
Fund's net investment income, net short-term capital gains and certain foreign
currency gains are taxable as ordinary income, whether received in cash or
reinvested in additional shares. It is not expected that any portion of a Fund's
distributions will qualify for the corporate dividends-received deduction. A
shareholder's distributions designated as from a Fund's net long-term capital
gains are taxable as long-term capital gains whether received in cash or
reinvested in additional shares, regardless of how long the shareholder has held
the Fund shares. Distributions on Fund shares shortly after their purchase,
although they may be attributable to taxable income and/or capital gains that
had been realized but not distributed at the time of purchase and therefore may
be in effect a return of a portion of the purchase price, are generally subject
to federal income tax. Distributions declared by a Fund in October, November or
December to shareholders of record as of a date in such month and paid the
following January will be treated for federal income tax purposes as having been
received by the shareholder on December 31 of the year in which they are
declared.
In order to avoid federal excise tax, the Code requires that each Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income for such year, at least 98% of the
excess of its realized capital gains over its realized capital losses for the
one-year period ending on October 31 of such year, after reduction by any
available capital loss carryforwards, and 100% of any income and capital gains
from the prior year (as previously computed) that was not paid out during such
year and on which the Fund paid no federal income tax.
A Fund may be subject to foreign withholding or other foreign taxes with
respect to income (possibly including, in some cases, capital gains) that it
derives from investments in foreign securities and may make an election under
Section 853 of the Code that would allow shareholders to claim a credit or
deduction on their federal income tax returns for (and treat as additional
amounts distributed to them) their pro rata portion of qualified taxes paid by
such Fund to foreign countries. This election may be made only if more than 50%
of the assets of the Fund at the close of a taxable year consists of securities
in foreign corporations. Availability of foreign tax credits or deductions for
shareholders is subject to certain additional restrictions and limitations at
the Fund and shareholder levels.
<PAGE>
Annually, shareholders of each Fund that are not exempt from information
reporting requirements will receive information on Form 1099 to assist in
reporting the prior calendar year's distributions and redemptions (including
exchanges) on federal and state income tax returns. Shareholders should consult
their own tax advisers with respect to the tax status of distributions from the
Funds or the redemption (including an exchange) of Fund shares in their own
states and localities. Under Section 3406 of the Code, individuals and other
non-exempt shareholders will be subject to backup withholding of 31% on taxable
distributions made by a Fund and on the proceeds of redemptions (including
exchanges) of shares of the Fund if they fail to provide to a Fund their correct
taxpayer identification numbers and certain certifications required by the
Internal Revenue Service or if the Internal Revenue Service or a broker notifies
a Fund that the number furnished by the shareholder is incorrect or that the
shareholder is otherwise subject to such withholding. If such withholding is
applicable, such distributions and proceeds will be reduced by the amount of tax
required to be withheld.
Special tax rules apply to IRA accounts (including penalties on certain
distributions and other transactions) and to other special classes of investors,
such as tax-exempt organizations, banks or insurance companies. Investors should
consult their tax advisers for more information.
Shareholders who are not United States persons should also consult their
tax advisers about the potential application of certain U.S. taxes, including a
U.S. withholding tax at the rate of 30% (or lower treaty rate) on amounts
treated as ordinary income distributions to them and of foreign taxes to their
investment in the Funds.
How to Exchange Shares
Shares of either Fund may be exchanged for shares of any other Wright
EquiFund, or shares of the other funds in The Wright Managed Equity Trust, The
Wright Managed Income Trust or The Wright EquiFund Equity Trust at net asset
value at the time of the exchange.
This exchange offer is available only in states where shares of such other
fund may be legally sold. Each exchange is subject to a minimum initial
investment of $1,000 in each fund.
Shareholders purchasing shares from an Authorized Dealer may effect
exchanges between the above funds through their Authorized Dealer who will
transmit information regarding the requested exchanges to the Transfer Agent.
First Data Investor Services Group makes exchanges at the next determined
net asset value after receiving a request in writing mailed to the address
provided under "How to Buy Shares." Telephone exchanges are also accepted if the
exchange involves shares valued at less than $50,000 and on deposit with First
Data Investor Services Group. All shareholders are automatically eligible for
the telephone exchange privilege. To effect such exchanges, call First Data
Investor Services Group at (800) 262-1122 or, within Massachusetts, (617)
573-9403, Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern time). All such
telephone exchanges must be registered in the same name(s) and with the same
address and social security or other taxpayer identification number as are
registered
<PAGE>
with the Fund from which the exchange is being made. See "How to Redeem or
Sell Shares -- By Telephone" for a description of the procedures the Funds
employ to ensure that instructions communicated by telephone are genuine. None
of the Trust, the Funds, the Principal Underwriter or First Data Investor
Services Group will be responsible for the authenticity of exchange instructions
received by telephone, provided that reasonable procedures have been followed to
confirm that instructions communicated are genuine, and if such procedures are
not followed, the Trust, the Funds, the Principal Underwriter or First Data
Investor Services Group may be liable for any losses due to unauthorized or
fraudulent telephone instructions. Telephone instructions will be tape recorded.
In times of drastic economic or market changes, a telephone exchange may be
difficult to implement. When calling to make a telephone exchange, shareholders
should have their account number and social security or other taxpayer
identification numbers.
Generally, shareholders will be limited to four Telephone Exchange
round-trips during each year following the initial investment and a Fund may
refuse requests for Telephone Exchanges in excess of four round-trips (a
round-trip being the exchange out of the Fund into another Wright Fund, and then
back to the Fund). The Trust believes that use of the Exchange Privilege by
investors utilizing market-timing strategies adversely affects the Funds.
Therefore, the Trust generally will not honor requests for exchanges, including
Telephone Exchanges, by shareholders who identify themselves or are identified
by the Trust as "market-timers." The Trust identifies as market-timers on its
account records those investors who repeatedly make exchanges within a short
period (even if less than four round-trips per year) while retaining Fund shares
for very short holding periods (often less than a month). The Trust does not
automatically redeem shares that are the subject of a rejected exchange request.
Such shares will only be redeemed if the Trust is specifically authorized to do
so by the shareholder.
Additional documentation may be required for exchange requests if shares
are registered in the name of a corporation, partnership or fiduciary. Any
exchange request may be rejected by a Fund or the Principal Underwriter at its
discretion. The exchange privilege may be changed or discontinued without
penalty at any time. Shareholders will be given 60 days' prior notice of any
termination or material amendment of the exchange privilege. Contact the
Transfer Agent, First Data Investor Services Group, for additional information
concerning the Exchange Privilege.
A shareholder should read the prospectus of the other fund and consider the
differences in objectives and policies before making any exchange. Shareholders
should be aware that for federal and state income tax purposes, an exchange is a
taxable transaction which may result in recognition of a gain or loss.
How to Redeem or Sell Shares
Shares of a Fund will be redeemed at the net asset value next determined
after receipt of a redemption request in good order as described below. Proceeds
will be mailed within seven days of
<PAGE>
such receipt. However, at various times a Fund may be requested to redeem
shares for which it has not yet received good payment. If the shares to be
redeemed represent an investment made by check, each Fund will delay payment of
the redemption proceeds until the check has been collected which, depending upon
the location of the issuing bank, could take up to 15 days. Although each Fund
normally expects to make payment in cash for redeemed shares, the Trust, subject
to compliance with applicable regulations, has reserved the right to pay the
redemption price of shares of a Fund, either totally or partially, by a
distribution in kind of readily marketable securities. The securities so
distributed would be valued pursuant to the Fund's valuation procedures. If a
shareholder received a distribution in kind, the shareholder could incur
brokerage or other charges in converting the securities to cash. For federal and
state income tax purposes, a redemption of shares is a taxable transaction which
may result in recognition of a gain or loss.
Through Authorized Dealers: Shareholders using Authorized Dealers may
redeem shares through such Dealers.
By Telephone: All shareholders are automatically eligible for the telephone
redemption privilege, unless the account application indicates otherwise.
Shareholders may effect a redemption by calling the Funds' Order Department at
(800) 225-6265, (8:30 a.m. to 4:00 p.m. Eastern time). In times when the volume
of telephone redemptions is heavy, additional phone lines will automatically be
added by the Funds. However, in times of drastic economic or market changes, a
telephone redemption may be difficult to implement. At such times, a shareholder
may redeem shares by mail or by faxing a redemption request to (617) 348-2932.
When calling to make a telephone redemption, shareholders should have available
their account number. A telephone redemption will be made at that day's net
asset value, provided that the telephone redemption request is received prior to
4:00 p.m. on that day. Telephone redemption requests received after 4:00 p.m.
will be effected at the net asset value determined for the next trading day.
Payment will be made by check to the address of record or, if an appropriate
election was made on the application form, by wire transfer to the bank account
or address designated. Payment is normally made within one business day after
receipt of the redemption request in good order. Trust Departments may make
redemptions and deposit the proceeds in checking or other accounts of clients,
as specified in instructions furnished to the Funds at the time of initially
purchasing Fund shares. None of the Trust, the Funds, the Principal Underwriter
or First Data Investor Services Group will be responsible for the authenticity
of redemption instructions received by telephone, provided that reasonable
procedures have been followed to confirm that instructions communicated are
genuine, and if such procedures are not followed, the Trust, the Funds, the
Principal Underwriter or First Data Investor Services Group may be liable for
any losses due to unauthorized or fraudulent telephone instructions.
Also, shareholders may effect a redemption by calling the Funds' Transfer
Agent, First Data Investor Services Group, at (800) 262-1122 (8:30 a.m. to 4:00
p.m. Eastern time) if the redemption involves shares valued at less than $50,000
and on deposit with First Data Investor Services Group. Payment will be made by
check to the address of record. Telephone instructions will be tape recorded.
<PAGE>
By Mail: A shareholder may also redeem all or any number of shares at any
time by mail by delivering the request with a stock power to the Transfer Agent,
First Data Investor Services Group, Wright Managed Investment Funds, P.O. Box
5123, Westborough, Massachusetts 01581-5123. As in the case of telephone
requests, payments will normally be made within one business day after receipt
of the redemption request in good order. Good order means that written
redemption requests or stock powers must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed by
a member of either the Securities Transfer Association's STAMP program or the
NYSE's Medallion Signature Program, or certain banks, savings and loan
institutions, credit unions, securities dealers, securities exchanges, clearing
agencies and registered securities associations as required by a regulation of
the Securities and Exchange Commission and acceptable to First Data Investor
Services Group. In addition, in some cases, good order may require furnishing of
additional documents such as where shares are registered in the name of a
corporation, partnership or fiduciary.
Redemption Fee: For shares redeemed within 30 days of purchase, a
redemption fee of 1 1/2% of the redemption proceeds will be assessed. This
redemption fee will be retained by the respective Fund. The redemption fee is to
help defray costs associated with redemptions and is not used for sales-related
expenses.
The right to redeem shares of a Fund and to receive payment therefor may be
suspended at times (a) when the securities markets are closed, other than
customary weekend and holiday closings, (b) when trading is restricted for any
reason, (c) when an emergency exists as a result of which disposal by a Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for a Fund fairly to determine the value of its net assets, or (d)
when the Securities and Exchange Commission by order permits a suspension of the
right of redemption or a postponement of the date of payment or redemption.
Due to the relatively high costs of maintaining small accounts, each Fund
reserves the right to redeem fully at net asset value any Fund account
(including accounts of clients of fiduciaries) which at any time, due to
redemptions or exchanges, amounts to less than $500 for that Fund; any
shareholder who makes a partial redemption which reduces his account in a Fund
to less than $500 would be subject to the Fund's right to redeem such account.
Prior to the execution of any such redemption, notice will be sent and the
shareholder will be allowed 60 days from the date of notice to make an
additional investment to meet the required minimum of $500 per Fund. However, no
such redemption would be required by a Fund if the cause of the low account
balance was a reduction in the net asset value of Fund shares.
Performance Information
From time to time a Fund may publish its yield and/or average annual total
return in advertisements and communications to shareholders. The current yield
for a Fund will be calculated by
<PAGE>
dividing the net investment income per share during a recent 30-day period
by the maximum offering price per share of the Fund on the last day of the
period. The results are compounded on a bond equivalent (semi-annual) basis and
then annualized. A Fund's average annual total return is determined by computing
the annual percentage change in value of $1,000 invested at the public offering
price (i.e., net asset value per share) for specified periods ending with the
most recent calendar quarter, assuming reinvestment of all dividends and
distributions at net asset value.
Investors should note that the investment results of a Fund will fluctuate
over time, and any presentation of a Fund's current yield or total return for
any prior period should not be considered as a representation of what an
investment may earn or what an investor's yield or total return may be in any
future period. The reduction of fees or assumption of expenses by Wright, WISDI
or Eaton Vance will result in a Fund's higher performance.
Other Information
The Trust is a business trust established under Massachusetts law and is an
open-end management investment company. The Trust was established pursuant to a
Declaration of Trust dated July 14, 1989, as amended and restated December 20,
1989 and further amended April 13, 1995 to change the name of the Trust from
EquiFund - Wright National Fiduciary Equity Funds to The Wright EquiFund Equity
Trust. The Trust consists of nineteen series. Each Fund's activities are
supervised by the Trustees of the Trust.
The Trust's shares of beneficial interest have no par value and may be
issued in two or more series or "funds." The Trustees are empowered by the
Declaration of Trust and By-laws to change the name of any existing series and
to create additional series without obtaining shareholder approval. The Trust's
shares may be issued in an unlimited number by its Trustees. Each share of a
series represents an equal proportionate beneficial interest in that series and,
when issued and outstanding, the shares are fully paid and non-assessable by the
relevant series. Shareholders are entitled to one vote for each full share held.
Fractional shares may be voted in proportion to the amount of the net asset
value of a series which they represent. Voting rights are not cumulative, which
means that the holders of more than 50% of the shares voting for the election of
Trustees of the Trust can elect 100% of the Trustees and, in such event, the
holders of the remaining less than 50% of the shares voting on the matter will
not be able to elect any Trustees. Shares will be voted by individual series
except to the extent required by the 1940 Act. Shares have no preemptive or
conversion rights and are freely transferable. Upon liquidation of a series,
shareholders are entitled to share pro rata in the net assets of that series
available for distribution to shareholders, and in any general assets of the
Trust not allocated to a particular series by the Trustees.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees holding office have been elected by
shareholders. In such an event the Trustees then in office will call a
<PAGE>
shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The Trustees shall promptly
call a meeting of the shareholders for the purpose of voting upon a question of
removal of a Trustee when requested so to do by the record holders of not less
than 10% of the Trust's outstanding shares.
Tax-Sheltered Retirement Plans
The Funds are available for investments by Individual Retirement Account
Plans for individuals and their non-employed spouses, Pension and Profit Sharing
Plans for self-employed individuals, corporations and non-profit organizations,
or 401(k) tax-sheltered retirement plans. The minimum initial purchase of $1,000
per Fund and the small account redemption policy will be waived for investments
by 401(k) plans.
For more information, contact your Authorized Dealer or write to:
Wright Investors' Service Distributors, Inc.
1000 Lafayette Boulevard
Bridgeport, Connecticut 06604
or call: (800) 888-9471
<PAGE>
APPENDIX
==============================================================================
INFORMATION CONCERNING THE NATIONS
IN WHICH THE FUNDS WILL INVEST
The Funds will invest in securities quoted or denominated in the currencies
of countries other than the United States. The following summaries are designed
to provide a general discussion of economic and other conditions in each of
these countries. The information in these summaries has been derived from
sources that Wright believes to be reliable, but the data has not been
independently verified.
International investments, like many things, have both benefits and risks.
The benefits are real and can be quite substantial. One of the key benefits is
diversification, as the correlation among international securities tend to be
much lower than the correlation among securities within any single country.
There are also risks to be considered. Investors in any single country should
understand the economic potential of investments in such a country as well as
the relationship of the currency of that country to the investor's own currency.
Several other items must be considered by the investor including the reliability
of information about the various companies within the country, legal
restrictions, and the economic and social characteristics that are unique to
each country. See Appendix A in the Statement of Additional Information for
additional economic and financial information about countries in which the Funds
may invest. The Wright EquiFunds limit their investment consideration to the
world's major industrialized nations and to those nations for which
WORLDSCOPE(R), the information database of Wright Investors' Service, Inc.,
provides comprehensive and reliable investment information. Wright Investors'
Service, Inc. believes that WORLDSCOPE(R) has counteracted the lack of quality
information which has been a major problem for the international investor.
Political and Economic Considerations
Potential international investors must be aware of political and economic
actions which might change the investment environment. For example, the members
of the European Union (EU) (successor to the European Communities EC, the Common
Market), which is the designation of three organizations (the European Economic
Community or EEC, the European Coal and Steel
<PAGE>
Community, and the European Atomic Energy Community) with common membership
and, since July of 1967, a common executive, have agreed that a single European
market will remove all barriers to free trade and free movement of capital and
people. The effect of European unification will be to create a major economic
trading unit composed of the entire fifteen members of the EU (Austria, Belgium,
Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, Spain, and Sweden). The macroeconomic effects
of such unification could be substantially higher economic growth. Economies of
scale and lower costs could lead to reduced inflation while fiscal reform and
budget restraint might reduce budget deficits despite an initial higher rate of
unemployment. It is not possible to predict the precise impact of European unity
or if all the program goals incorporated in the Maastricht Treaty of 1991 will
be achieved. However, Wright believes that European economic integration
offering substantial long-term economic benefits to the member nations will
ultimately come to pass.
The European Currency Unit (ECU) is the official accounting unit of the EEC
and, as such, is used by member nations for budgetary purposes in setting common
agricultural prices and in the accounts of the EU institutions since the
implementation of the European Monetary System (EMS) in March of 1979. The major
aim of the EMS is to achieve close monetary and economic cooperation among the
member countries of the EU and, in particular, to create a zone of monetary
stability. The ECU is an open-basket currency whose value is based on the
weighted value of the member currencies with weights based on each member's
share of intra-Europe trade and the relative size of its GDP. Each member nation
values its currency in terms of the ECU. Nine of the member currencies (Dutch
guilder, German mark, Austrian schilling, Belgian franc, Portuguese escudo,
Danish prone, French franc, Irish punt and Spanish peseta) form the EMS grid. If
an EMS grid member's currency deviates more than 15% (2.25% for the mark and
guilder) of the agreed central rates against the other members of the mechanism,
the member nation must take steps to correct the problem or to either devalue or
revalue its currency. Following the currency turmoil of 1992, Great Britain and
Italy withdrew from the EMS's exchange Rate mechanism effectively devaluing the
pound and the lira. They have remained outside the EMS but continue to measure
the value of their currency against the EMS grid. Spain and Italy devalued their
currency against the EMS grid in March of 1995.
The "official ECU" is used between European monetary authorities to settle
debts they incur with one another as a result of their interventions in the
currency markets. There is also a private or commercial ECU, the use of which
has increased substantially over the last few years. Its stature increased with
the issue of the first Euro-ECU bonds in 1981, and it is now one of the most
widely used currencies for international bond issuance. The ECU enjoys greater
popularity than was envisioned at its inception in 1979. It is known far beyond
Europe as a currency unit freely convertible into all major currencies. It is
widely used to price, invoice, and settle transactions
<PAGE>
involving goods and services. Thousands of Europeans now use ECU's to buy
cars, pay hotel bills or transact other business on ECU credit cards and on
ECU-denominated checking accounts or travelers checks.
There are other examples of political and economic events, some quite
dramatic, which impact the investment environment. In the past decade, there has
been world-wide movement towards "privatization" of government owned and
operated companies. Examples include the water companies in the Great Britain,
the banks in France, etc. The economies of Austria and Portugal are especially
expected to benefit from privatization in the coming years.
Recent dramatic developments in the former Soviet Union, the Eastern Bloc
nations, China, Central America, and South Africa can be expected to have a
major, but as yet not fully predictable, impact on the world in general and the
nations in which the Fund will invest in particular. It remains to be seen if
the fledgling democracies can successfully cope with the many economic
dislocations which have accompanied the fall of the old order. It also remains
to be seen what reactions other nations will have towards a reduced Soviet
military threat and potential for increased trade.
The dismantling of the Berlin Wall in November of 1989 led to the economic
unification of the economically weak East Germany with the economically strong
West Germany in July 1990. This was followed by the political unification on
October 3, 1990.
The European Free Trade Association (EFTA) consisting of Austria, Iceland,
Norway, Portugal, Sweden, and Switzerland with associated member Finland, was
created in January of 1960 with the objective to gradually reduce customs duties
and quantitative restrictions between members on industrial products. All
tariffs and quotas were eliminated by year-end 1966. EFTA entered into
free-trade agreements with the EU in January of 1973. Trade barriers were
removed by July 1976. EFTA is expected to expand to include Central European
countries. The world-wide trade movement towards increasingly Free Market
economies has been helped by the establishment of the World Trade Organization
(WTO) successor to GATT.
Members of the North Atlantic Treaty Organization (NATO) (Belgium, Canada,
Denmark, France, Great Britain, Iceland, Italy, Luxembourg, Netherlands, Norway,
Portugal, the United States, Greece, Turkey, Germany, and Spain) agreed to
settle disputes by peaceful means, to develop individual and collective capacity
to resist armed attack, and to regard an attack on one as an attack on all. With
the demise of the former Warsaw Pact nations of the communist world, political
tensions in Europe appear to have materially eased.
<PAGE>
The Organization for Economic Cooperation and Development (OECD) was
established in September of 1961 to promote economic and social welfare in
member countries and to stimulate and harmonize efforts on behalf of developing
nations. The OECD collects and disseminates from its Paris headquarters economic
and environmental information to members which represent nearly all the
industrialized "free market" countries: Australia, Austria, Belgium, Great
Britain, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand,
Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United States and with
Yugoslavia as an associate member.
Restrictions on Foreign Investment
Another issue which must be addressed by global investors is the
possibility of investment restrictions. Some countries impose restrictions on
foreigners investing in their country. These restrictions may limit the amount
of foreign investment or in some cases create a separate class of securities
which may be purchased by foreigner investors at a different price from similar
securities purchased by domestic investment. The countries in which the Funds
will invest do not impose restrictions on portfolio investments although Sweden
and Switzerland do have two classes of shares (see below) while Sweden and Japan
do have some special regulations which the Fund must comply with. Other
potential pitfalls to foreign investment include high transaction costs,
including brokerage fees, stock turnover taxes, exchange rates, and
miscellaneous costs. These vary widely by type of investment and by country.
Consideration must also be given to withholding taxes. Most countries levy
non-refundable withholding taxes on interest and dividend income earned by
non-residents on domestic investments. The withholding tax rates disclosed below
are subject to changes. While the existence of reciprocal tax treaties between
many countries may to some extent mitigate that impact, such treaties are
frequently not available to institutions such as open-ended mutual funds. Note
that unlike in the U.S. and Canada, where dividends are geneally paid quarterly,
dividends in most nations are paid only once (annually) or twice (semi-annually)
a year. Liquidity or the ability of an investor to dispose of his or her
holdings quickly at a reasonable cost may be a special concern with foreign
investments. Sometimes there may be difficulties involved in selling instruments
in those countries where secondary markets are not broad or actively traded.
Political or sovereign risk is still another concern. This addresses the issue
of whether the government may take action which would reduce the value of an
investor's assets. The industrial nations involved with the Funds are basically
stable and, except as noted under Political and Economic Considerations above,
it is not believed that there would be a significant change due to an election
or revolution. However, one nation, Hong Kong, will be taken over by the Chinese
government in 1997 and there is considerable uncertainty as to the impact of
such a takeover.
<PAGE>
The size of the markets is another concern. In December of 1994, FT
Actuaries/Goldman Sachs calculated the world equity market at some U.S. $9,186
billion. This market is dominated by the U.S. ($3,296 billion) and Japan ($2,747
billion). Other nations of significant size include Switzerland ($225 billion),
Italy ($133 billion), France ($330 billion), Canada ($148 billion), Germany
($339 billion), and Great Britain ($905 billion). In 1991, world equity markets
posted sharp advances despite concerns about the U.S. deficit, world debt and
recession in a good part of the world. In 1994, the Financial Times Actuaries
World Index, which is composed of around 2,200 securities from 24 nations,
posted a total return of 5.8% in 1994 in terms of U.S. dollars. The FT-Actuaries
World Index showed a total return of 19.8% for 1993 following a 5.1% decline in
1992. Following is a table summarizing the market capital, total return
performance, price/earnings ratios and normal settlement time.
<PAGE>
<TABLE>
<CAPTION>
1993 1994 1995 1995
Market FT/S&P FT/S&P FT/S&P P/E
NATION Capital Index Index Index Ratio SETTLEMENT
(1) (2) (2) (2) (2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Australia 168.9 38.3% 6.5% 15.2% 18.7 Five business days
Austria 17.5 34.0% -0.2% -3.3% 22.2 Second Monday after trading week
Belgium 80.3 27.8% 7.8% 29.1% 14.6 Cash market -- same day
Canada 170.6 20.8% -2.2% 17.7% 13.4 Five business days
Denmark 39.3 34.5% 3.1% 16.4% 16.8 Three business days
Finland 29.6 78.9% 52.1% 2.0% 11.3 Five business days
France 371.3 23.5% -4.2% 13.2% 23.8 Usually last business day of month
Germany 401.9 37.7% 4.0% 16.5% 26.7 Two business days
Great Britain 1,091.3 23.8% -1.2% 23.3% 15.7 Two-week rolling average
Hong Kong 212.8 128.3% -31.3% 23.6% 12.3 Next business day
Ireland 19.1 41.3% 15.1% 28.3% 10.6 Bi-weekly
Italy 139.7 28.0% 11.6% -0.4% 20.0 Usually last business dayof month
Japan 2,846.6 25.0% 21.5% -0.4% 100+ Three business days
Luxembourg -- -- -- -- -- --
Malaysia 116.3 130.7% -17.7% 3.0% 23.3 See note (3)
Mexico 38.7 46.4% -40.0% -25.5% 16.8 Two business days, see note (4)
Netherlands 231.6 36.6% 12.6% 30.2% 16.5 Within 10 days
New Zealand 22.4 65.3% 7.9% 18.4% 14.5 Five business days
Norway 24.6 32.7% 20.7% 10.8% 18.3 Seven business days
Singapore 64.0 75.3% 3.2% 11.1% 27.2 Tuesday of the following week
Spain 115.7 25.3% -1.4% 30.5% 12.7 Wednesday of the following week
Sweden 129.3 20.7% 19.5% 37.7% 11.9 Five business days
Switzerland 328.9 44.3% 5.0% 45.4% 20.8 Three business days
United States 4,935.8 9.6% 1.7% 37.3% 17.1 Five business days
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Billions of U.S. $. Estimated by FT/S&P Actuaries World IndicesTM/SM include approximately 2,400 securities in 26 national
indices. Excludes investment companies and foreign domiciled companies. (e): Estimated -- Malaysia and Singapore are not
reported separately.
(2) Total return measured in U.S. $. P/E ratio at year-end 1993. FT/S&P Actuaries World IndicesTM/SM include approximately 2,400
securities in 26 national indices.
(3) Kuala Lumpur Exchange."Ready Bargains" settle not later than 3:00 pm on: 1) Wednesday of the week following the trading period
when the clients are selling; 2) Thursday of the week following the trading period when brokers are dealing with SCANS
(Securities Network Services); 3) Friday of the week following the trading period when SCANS is dealing with buying brokers.
(4) For Exchange Traded Securities.
</FN>
</TABLE>
COUNTRY SUMMARIES
===============================================================================
ITALY is located in southern Europe, jutting into the Mediterranean Sea. The
population is estimated to be 57 million. Major cities are Rome, Milan, Naples
and Turin. Steel, machinery, autos, textiles, shoes, machine tools and chemicals
are the chief industries. The currency is the Italian Lira (December 1995: ITL
1584 = $1 U.S.). The Gross Domestic Product was $1.0 trillion in 1994, or about
$18,000 per capita. The 1994 current account trade balance was $14 billion.
Italy is a member of the European Union.
The Italian equity market is thin by North America and European standards.
It used to be common for settlements of Italian securities trades to be delayed
for as much as six months or to fail completely as a result of obsolete
technology and cumbersome settlement procedures. Settlements are much quicker
now although the central securities depository which has been in the planning
phase for approximately ten years is not yet operational and share certificates
must physically change hands every three days (cash deals) or at the end of the
monthly account which is usually the last day of the month. Investments in Italy
by non-residents may be made through capital accounts operated by authorized
banks and income and capital may be repatriated without restriction other than
the non-refundable dividend withholding tax, which is currently at 32.4%.
SPAIN is located in southwestern Europe. The population is estimated to be 39
million. Major cities are Madrid, Barcelona, Valencia and Seville. Machinery,
steel, textiles, shoes, autos and processed foods are the chief industries. The
currency is the Peseta (December 1995: ESP 121.41 = $1 U.S.). The Gross Domestic
Product was $344 billion in 1994, or about $8,000 per capita. The 1994 current
account trade balance was negative $6 billion.
Spain does have some exchange controls although they have recently been
liberalized and further liberalization is expected as a result of Spain joining
the EU in January of 1986. Permission may be required for some transactions but
the ability to approve such transaction has been delegated to a number of
commercial banks who can both approve and handle the transactions. A few sectors
of the economy are subject to specific restrictions, including national defense,
mass media, and air transportation. Foreigners may freely invest in shares
listed on Spanish Stock Exchanges. The non-refundable dividend withholding tax
rate is currently 20%.
<PAGE>
THE WRIGHT
EQUIFUND
EQUITY TRUST
PROSPECTUS
September 3, 1996
INVESTMENT ADVISER
Wright Investors' Service, Inc.
1000 Lafayette Boulevard
Bridgeport, Connecticut 06604
PRINCIPAL UNDERWRITER
Wright Investors' Service Distributors, Inc.
1000 Lafayette Boulevard
Bridgeport, Connecticut 06604
ADMINISTRATOR
Eaton Vance Management
24 Federal Street
Boston, Massachusetts 02110
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
TRANSFER AGENT
First Data Investor Services Group
Wright Managed Investment Funds
P.O. Box 5123
Westborough, Massachusetts 01581-5123
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston Massachusetts 02110
24 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
September 3, 1996
THE WRIGHT EQUIFUND EQUITY TRUST
Wright EquiFund--Italian
Wright EquiFund--Spanish*
* As of the date of this Statement of Additional Information, these Funds
are not available for purchase in any state of the United States. Contact
the principal underwriter or your broker for the latest information.
24 Federal Street
Boston, Massachusetts 02110
This combined Statement of Additional Information is NOT a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by the current combined Prospectus of the Funds dated September 3,
1996, as supplemented from time to time, which is incorporated herein by
reference. A copy of the Prospectus may be obtained without charge from Wright
Investors' Service Distributors, Inc., 1000 Lafayette Boulevard, Bridgeport,
Connecticut 06604 (Telephone: (800) 888-9471).
<PAGE>
Table of Contents
------------------------------------------
PAGE
Additional Information about the Trust............. 3
Additional Investment Information.................. 3
Officers and Trustees.............................. 9
Control Persons and Principal Holders of Shares.... 12
Investment Advisory and Administrative Services.... 12
Custodian.......................................... 13
Independent Certified Public Accountants........... 14
Brokerage Allocation............................... 14
Principal Underwriter.............................. 15
Performance Information............................ 16
Taxes.............................................. 17
APPENDICES:
Appendix A................................ A1-A2
<PAGE>
ADDITIONAL INFORMATION ABOUT THE TRUST
Unless otherwise defined herein, capitalized terms have the meaning given
to them in the Prospectus.
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 the interests of a
particular Wright EquiFund are affected, a majority of such Fund's outstanding
shares. The Trust may be terminated (i) upon the sale of the Trust's assets to
another open-end management investment company, if approved by the holders of
two-thirds of the outstanding shares of the Trust, except that if the Trustees
of the Trust 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 Trust's 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 Investment Adviser does not consider this risk to be material.
ADDITIONAL INVESTMENT INFORMATION
In selecting securities for the Indices and for inclusion in the portfolios
of the Funds, Wright utilizes its international database, which includes
WORLDSCOPE(R). WORLDSCOPE(R) provides more than 1,500 items of information on
more than 13,000 companies worldwide. Additional information about the
composition of the Indices may be obtained without charge from Wright Investors'
Service Distributors, Inc., 1000 Lafayette Boulevard, Bridgeport, CT 06604
(800-888-9471). Except for the United States, Wright utilizes the services of
major financial institutions that are located in the nations in which the
respective Funds are permitted to invest to supply Wright with research products
and services including reports on particular industries and companies, economic
surveys and analysis of the investment environment and trends in a particular
nation, recommendations as to whether specific securities should be included in
an Index and other assistance in the performance of its decision-making
responsibilities. Currently, Wright expects to utilize several major
international banks in the above-mentioned capacity. The Indices are adjusted as
necessary to reflect recent events. A detailed explanation of the objective
criteria used in the selection process is as follows.
To be selected for an Index, a company must have:
1. Five years of earnings data (17 quarters of 12 month earnings). To
be selected, a company's trailing 12 month earnings during the
last four quarters or during the last three reported years
cumulatively must be positive.
<PAGE>
2. Five years of dividend information or positive verification
that a company did not declare a dividend (20 quarters of
quarterly dividend information).
3. Three years of price information (12 quarters of quarterly
prices). To be selected, a company generally must have market
value (number of shares times price) equal to or greater than $20
million. Once a company is selected, its market value must be less
than $15 million for the company's securities to be removed from
the relevant Index.
4. Book value information for the past five years (20 quarters). To
be selected, book value must be equal to or greater than $20
million. Once a company is selected, its book value must be less
than $15 million for the company's securities to be removed from
the relevant Index.
5. Industry group information. Companies that are closed-end
investment companies, real estate investment trusts or non-bank
securities brokers or dealers will not be included.
Acquired companies may continue to be included in the relevant Index up to
their acquisition date.
Description of Investments
Each Fund may invest up to 20% of its net assets in U.S. Government
securities, repurchase agreements, certificates of deposit, bankers'
acceptances, fixed time deposits, commercial paper, finance company paper, and
other short-term debt securities. The Fund may hold cash or invest more than 20%
of its net assets in these securities for temporary, defensive purposes.
U.S. Government, Agency and Instrumentality Obligations -- U.S. Government
obligations are issued by the U.S. Treasury and include bills, certificates of
indebtedness, notes, and bonds. Agencies and instrumentalities of the U.S.
Government are established under the authority of an act of Congress and
include, but are not limited to, the Government National Mortgage Association,
the Tennessee Valley Authority, the Bank for Cooperatives, the Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Land Banks, and the Federal National Mortgage Association.
Repurchase Agreements -- involve the purchase of debt securities of the
U.S. Treasury, a federal agency, a federal instrumentality or a
federally-created corporation or of other high quality short-term debt
obligations. At the same time a Fund purchases the security it resells such
security to the vendor which is a member bank of the Federal Reserve System, a
recognized securities dealer or any foreign bank whose creditworthiness has been
determined by Wright to be at least equal to that of issuers of commercial paper
rated within the two highest grades assigned by Moody's or S&P, and is obligated
to redeliver the security to the vendor on an agreed-upon date in the future. A
repurchase agreement with foreign banks may be available with respect to
government securities of the particular foreign jurisdiction. 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. Such transactions 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, which the Trust believes 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. The 1940 Act prohibits registered investment companies
from acquiring certain securities issued by broker-dealers. A transaction
whereby a Fund enters into a repurchase agreement with a broker-dealer might be
construed as a contravention of this prohibition. In the event the law is so
interpreted, the Funds will cease such transactions.
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.
<PAGE>
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.
Fixed Time Deposits -- are bank obligations payable at a stated maturity
date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn
on demand by the investor, but may be subject to early withdrawal penalties
which vary depending upon market conditions and the remaining maturity of the
obligation. There are no contractual restrictions on the right to transfer a
beneficial interest in a fixed time deposit to a third party, although there is
no market for such deposits.
Commercial Paper and Finance Company Paper -- refers to promissory notes
issued by corporations in order to finance their short-term credit needs.
Restricted Securities -- Securities that are not freely tradeable or which
are subject to restrictions on sale under the Securities Act of 1933 are
considered restricted. Such securities are illiquid and may be difficult to
properly value. Each Fund's holdings of illiquid securities may not exceed 15%
of its net assets. Illiquid securities include securities legally restricted as
to resale, and securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933. Rule 144A securities may, however, be treated as liquid
by the Investment Adviser pursuant to procedures adopted by the Trustees, which
require consideration of factors such as trading activity, availability of
market quotations and number of dealers willing to purchase the security.
Moreover, liquid Rule 144A securities may increase the level of fund illiquidity
to the extent qualified institutional buyers become uninterested in purchasing
such securities.
Convertible Securities -- Each Fund may from time to time invest up to 5%
of its total assets in debt securities and preferred stocks which are
convertible into, or carry the right to purchase, common stock or other equity
securities. The debt security or preferred stock may itself be convertible into
or exchangeable for equity securities, or the purchase right may be evidenced by
warrants attached to the security or acquired as part of a unit with the
security. Convertible securities may be purchased for their appreciation
potential when they yield more than the underlying securities at the time of
purchase or when they are considered to present less risk of principal loss than
the underlying securities. Generally speaking, the interest or dividend yield of
a convertible security is somewhat less than that of a non-convertible security
of similar quality issued by the same company.
Warrants and Rights -- Each Fund may purchase warrants and rights, but does
not intend to invest more than 5% of its net assets in warrants and rights
(other than those that have been acquired in units or attached to other
securities). Warrants and rights are options to purchase equity securities at a
specific price valid for a specific period of time. They do not represent
ownership of the securities, but only the right to buy them. The prices of
warrants and rights do not necessarily move parallel to the prices of the
underlying securities. Warrants and rights may become valueless if not sold or
exercised prior to their expiration.
Foreign Securities -- The Funds may invest in foreign securities, and in
certificates of deposit, bankers' acceptances, fixed time deposits issued by
major foreign banks and foreign branches of United States banks, to any extent
deemed appropriate by Wright and consistent with a Fund's investment objective.
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. 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 comparable to those
applicable to domestic issuers. Investments in foreign securities also involve
the risks of possible adverse changes in exchange control regulations,
expropriation or confiscatory taxation, limitation on removal of funds or other
assets of a 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. To the extent investments in foreign securities are
denominated or quoted in currencies of foreign countries, a Fund may be affected
<PAGE>
favorably or unfavorably by changes in currency exchange rates and may incur
costs in connection with conversion between currencies.
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 may be less liquid and more volatile than securities of comparable U.S.
companies (this is particularly true of issuers located in developing countries;
however, the Funds do not anticipate investments in securities of developing
countries). 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.
Foreign Currency Exchange Transactions -- The Funds may engage in foreign
currency exchange transactions. Investments in securities of foreign governments
and companies whose principal business activities are located outside the United
States will frequently involve currencies of foreign countries. In addition,
assets of a Fund may temporarily be held in bank deposits in foreign currencies
during the completion of investment programs. Therefore, the value of a 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 each 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. A 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 a 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, a Fund may enter into contracts to
purchase or sell foreign currencies at a future date ("forward contracts"). 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. Although a forward contract generally involves no deposit
requirement and no commissions are charged at any stage for trades, a Fund will
maintain segregated accounts in connection with such transactions. The Funds
intend to enter into such contracts only on net terms.
A Fund may enter into forward contracts under two circumstances. First,
when a Fund enters into a contract for the purchase or sale of a security quoted
or denominated in a foreign currency, it may desire to "lock in" the price of
the security. This is accomplished by entering into a forward contract for the
purchase or sale, for a fixed amount of the 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 different
currencies during the period between the date the security is purchased or sold
and the date of payment for the security.
Second, when Wright believes that the currency of a particular foreign
country may suffer a decline, a Fund may enter into a forward contract to sell
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. As an
operating policy, the Funds do not intend to enter into forward contracts for
such hedging
<PAGE>
purposes on a regular or continuous basis, and will not do so if, as a
result, more than 50% of the value of a Fund's total assets would be committed
to the consummation of such contracts. A Fund will also not enter into such
forward contracts or maintain a net exposure to such contracts if the contracts
would obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's securities or other assets quoted or denominated in that
currency.
The Fund's custodian will place cash or liquid, high grade debt securities
in a segregated account. The amount of such segregated assets will be at least
equal to the value of a Fund's total assets committed to the consummation of
forward contracts involving the purchase of foreign 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 amount will equal the amount of the Fund's commitments with respect to such
contracts.
A Fund generally will not enter into a forward contract with a term of
greater than one year. 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 a 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 a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or 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
contracts 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.
A Fund will not speculate in forward contracts and will limit its
transactions in such contracts to the transactions described above. Of course, a
Fund is not required to enter into such transactions with respect to its
portfolio securities quoted or denominated in a foreign currency and will not do
so unless deemed appropriate by Wright. This method of protecting the value of a
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.
A Fund's foreign currency transactions may be limited by the requirements
of Subchapter M of the Code for qualification as a regulated investment company.
Investment Restrictions
Each Fund may establish an investment reserve in cash (including foreign
currency) or cash equivalent securities (high quality short-term fixed income
debt securities) whenever such reserve is deemed to be in
<PAGE>
the best interests of the shareholders for any reason, including Wright's
expectation of a decline in the equity markets in which the Fund is permitted to
invest. Under normal market conditions, such reserves will be no more than
approximately 20% of a Fund's net assets. Accordingly, each Fund will have at
least 80% of its net assets invested in equity securities during normal market
conditions. A greater reserve position may, however, be established temporarily
if Wright believes that this would be advisable in view of what it considers to
be extraordinary economic and stock market conditions. See "Special Investment
Considerations - Temporary Defensive Investments" in the Prospectus for a
discussion of when the Funds may take a temporary defensive position.
The following investment restrictions have been adopted by each Fund and
may be changed as to a Fund only by the vote of a majority of the affected
Fund's outstanding voting securities, which 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. If a
percentage restriction contained herein, other than that imposed by investment
restriction (1), 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 amount of net assets will not be considered a violation of any
of the following restrictions. As a matter of fundamental investment policy,
each Fund may not:
(1) Borrow money or issue senior securities, except as permitted by
the 1940 Act;
(2) Underwrite securities issued by other persons except to the extent
that the purchase of securities in accordance with a Fund's
investment objectives and policies directly from the issuer
thereof and the later disposition thereof may be deemed to be
underwriting;
(3) Purchase any securities which would cause 25% or more of the
market value of its total assets at the time of such purchase to
be invested in the securities of issuers having their principal
business activities in the same industry, provided that there is
no limitation in respect to investments in obligations issued or
guaranteed by the U.S.
Government or its agencies or instrumentalities;
(4) Purchase or sell real estate, except that a Fund may (i) acquire
or lease office space for its own use, (ii) invest in securities
of issuers that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) purchase and sell mortgage-related securities and
(v) hold and sell real estate acquired by a Fund as a result of
the ownership of securities;
(5) Purchase or sell physical commodities or contracts for the
purchase or sale of physical commodites. Physical commodities do
not include futures contracts with respect to securities,
securities indices, currency or other financial instruments; or
(6) Make loans, except (i) through the loan of a portfolio security,
(ii) by entering into repurchase agreements and (iii) to the
extent that the purchase of debt instruments, if any, in
accordance with the Fund's investment objective and policies may
be deemed to be loans.
The following investment restrictions are nonfundamental policies of each
Fund which may be changed by the Trustees without shareholder approval. The
Funds have no current intention of borrowing for leverage purposes, making
securities loans or engaging in short sales against the box. The Funds have no
current intention of investing more than 5% of net assets in Rule 144A
securities. Prior to engaging in such activities, the Funds' Prospectus will be
amended to disclose the intention to do so. No Fund will:
(a) Invest more than 15% of its net assets in illiquid investments,
including repurchase agreements maturing in more than seven days,
securities that are not readily marketable and restricted
<PAGE>
securities (other than Section 4(2) commercial paper) not eligible
for resale pursuant to Rule 144A under the Securities Act of 1933;
(b) Purchase securities on margin, make short sales except sales
against the box or purchase warrants;
(c) Invest more than 5% of its total assets in the securities of
issuers which, together with their predecessors, have a record of
less than three years' continuous operation;
(d) Purchase or retain securities of any issuer if 5% or more of the
issuer's securities are owned by those officers and Trustees of
the Trust or its investment adviser or administrator who own
individually more than 1/2 of 1% of the issuer's securities;
(e) Purchase oil, gas or other mineral leases or purchase partnership
interests in oil, gas or other mineral exploration or development
programs;
(f) Purchase securities issued by another investment company, except
as permited by the 1940 Act;
(g) Purchase from or sell to any of the Trust's Trustees or officers,
its investment adviser, its administrator, its principal
underwriter, if any, or the officers or directors of said
investment adviser, administrator, and principal underwriter,
portfolio securities of the Fund;
(h) Pledge, mortgage or hypothecate its assets to an extent greater
than 1/3 of the total assets of the Fund taken at market;
(i) Purchase the securities of any one issuer (other than obligations
issued or guaranteed by the U.S. Government or any of its
agencies, or securities of other regulated investment companies)
if, as a result of such purchase, more than 5% of that Fund's
total assets (taken at current value) would be invested in the
securities of such issuer or securities of any one issuer held by
that Fund would exceed 10% of the outstanding voting securities of
such issuer at the end of any quarter of the Fund's taxable year,
provided that, with respect to 50% of the Fund's assets, the Fund
may invest up to 25% of its assets in the securities of any one
issuer; or
(j) Purchase or enter into an agreement to purchase securities while
borrowings exceed 5% of its total assets.
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 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, Eaton Vance Corp.
("EVC") or of Eaton Vance's trustee, Eaton Vance, Inc. ("EV") by virtue of their
affiliation with either the Funds, Wright, Winthrop, Eaton Vance, BMR, EVC, or
EV, are indicated by an asterisk (*).
PETER M. DONOVAN (53), 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: 1000 Lafayette Boulevard, Bridgeport, CT 06604
<PAGE>
H. DAY BRIGHAM, Jr. (69), Vice President, Secretary and Trustee*
Vice President of Eaton Vance, EVC, BMR and EV and a Director of EVC and EV;
Director, Trustee and officer of various investment companies managed by Eaton
Vance or BMR.
Address: 24 Federal Street, Boston, MA 02110
A.M. MOODY III (59), Vice President & Trustee*
Senior Vice President, Wright and Winthrop; President, Wright Investors'
Service Distributors, Inc.
Address: 1000 Lafayette Boulevard, Bridgeport, CT 06604
WINTHROP S. EMMET (85), Trustee
Retired New York City Attorney at Law; Trust Officer, First National City Bank,
New York, NY (1963-1971).
Address: Box 327, West Center Road, West Stockbridge, MA 01266
LELAND MILES (72), Trustee
President Emeritus, University of Bridgeport (1987-present); President,
University of Bridgeport (1974-1987); Director, United Illuminating Company.
Address: Tide Mill Landing, 2425 Post Road, Suite 102, Southport, CT 06490
LLOYD F. PIERCE (77), 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.
Address: 125 Gull Circle North, Daytona Beach, FL 32119
GEORGE R. PREFER (61), Trustee
Retired President and Chief Executive Officer, Muller Data Corp., New York, NY
(1983-1986) (1989-1990); President and Chief Executive Officer, InvestData
Corp., A Mellon Financial Services Company (1986-1989).
Address: 7738 Silver Bell Drive, Sarasota, FL 34241
RAYMOND VAN HOUTTE (72), Trustee
President Emeritus and Counselor of The Tompkins County Trust Co., 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); Director, McGraw Housing Company, Inc., Deanco, Inc., Evaporated
Metal Products and Ithaco, Inc.
Address: One Strawberry Lane, Ithaca, NY 14850
JUDITH R. CORCHARD (57), Vice President
Executive Vice President, Senior Investment Officer, Chairman of the Investment
Committee and Director of Wright and Winthrop.
Address: 1000 Lafayette Boulevard, Bridgeport, CT 06604
JAMES L. O'CONNOR (51), Treasurer
Vice President, Eaton Vance, BMR and EV. Officer of various investment companies
managed by Eaton Vance or BMR.
Address: 24 Federal Street, Boston, MA 02110
JANET E. SANDERS (60), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: 24 Federal Street, Boston, MA 02110
<PAGE>
A. JOHN MURPHY (33), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management &
Research Co. (1986-1991). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on
June 21, 1995.
Address: 24 Federal Street, Boston, MA 02110
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads and Gaston & Snow. Officer of
various investment companies managed by Eaton Vance or BMR. Mr. Woodbury was
elected Assistant Secretary of the Trust on June 21, 1995.
Address: 24 Federal Street, Boston, MA 02110
WILLIAM J. AUSTIN, JR. (44), Assistant Treasurer
Assistant Vice President of Eaton Vance, BMR and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr.Austin was elected
Assistant Treasurer of the Trust on December 18, 1991.
Address: 24 Federal Street, Boston, MA 02110
All of the Trustees and officers hold identical positions with The Wright
Managed Income Trust, The Wright Managed Equity Trust and The Wright Managed
Blue Chip Series Trust (except Mr. Miles). The fees and expenses of those
Trustees (Messrs. Miles, Emmet, Pierce, Prefer and Van Houtte) who are not
"interested persons" of the Trust are paid by the Funds and the other series of
the Trust. They also received additional payments from other investment
companies for which Wright provides investment advisory services. The Trustees
who are "interested persons" of the Trust receive no compensation from the
Trust. The Trust does not have a retirement plan for its Trustees. For the
estimated Trustee compensation from the Trust for the fiscal year ended December
31, 1996 and for the total compensation paid to the Trustees from the Wright
Fund complex for the fiscal year ended December 31, 1995, see the following
table.
COMPENSATION TABLE
Registrant -- The Wright EquiFund Equity Trust
<TABLE>
<CAPTION>
Aggregate Compensation Pension Estimated Total
From The Wright Benefits Annual Compensation
Trustees EquiFund Equity Trust Accrued Benefits Paid(1)
- --------- ----------------------- --------- ----------- -------------
<S> <C> <C> <C> <C>
Winthrop S. Emmet $1,250 None None $5,000
Leland Miles $1,250 None None $4,750
Lloyd F. Pierce $1,250 None None $5,000
George R. Prefer $1,250 None None $5,000
Raymond Van Houtte $1,250 None None $5,000
<FN>
(1) Total compensation paid is from the The Wright EquiFund Equity Trust (19 Funds) and the other funds in the Wright Fund
complex(16 funds) for a total of 33 Funds.
</FN>
</TABLE>
Messrs. Miles, Emmet, Pierce, Prefer and Van Houtte are members of the
Special Nominating Committee of the Trustees of the Trust. The Special
Nominating Committee's function is selecting and nominating individuals to fill
vacancies, as and when they occur, in the ranks of those Trustees who are not
"interested persons" of the Trust, Eaton Vance, Wright or Winthrop. The Trust
does not have a designated audit committee, since the full board performs the
functions of such committee.
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SHARES
As of August 2, 1996, Wright owned one share of each Fund, being the only
share of the Fund outstanding on such date. Wright is a Connecticut corporation
and a wholly-owned subsidiary of Winthrop.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
The Funds have engaged Wright to act as their investment adviser pursuant
to an Investment Advisory Contract. Wright, acting under the general supervision
of the Trust's Trustees, furnishes the Funds with investment advice and
management services. The estate of John Winthrop Wright may be considered a
controlling person of Winthrop and Wright by reason of its ownership of 29% of
the outstanding shares of Winthrop. The Trustees of the Trust are responsible
for the general oversight of the conduct of the Funds' business.
Pursuant to the Investment Advisory Contract, Wright will carry out the
investment and reinvestment of the assets of the Funds, will furnish
continuously an investment program with respect to the Funds, will determine
which securities should be purchased, sold or exchanged, and will implement such
determinations. Wright will furnish to the Funds 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 Wright organization to serve without
salary as officers or Trustees of the Trust. In return for these services, each
Fund is obligated to pay a monthly advisory fee calculated at the rates set
forth in the Funds' current Prospectus.
It should be noted that, in addition to compensating Wright for its
advisory services to the Funds, the advisory fee is intended to partially
compensate Wright for the maintenance of the Indices which form the basis for
the selection of securities for the Funds. Other mutual funds and accounts
advised by Wright may use the Indices as may other entities not affiliated with
Wright.
The Trust has engaged Eaton Vance to act as the administrator for each Fund
pursuant to an Administration Agreement. In addition, Eaton Vance has arranged
for certain members of the Eaton Vance organization to serve without salary as
officers or Trustees of the Trust. For its services under the Administration
Agreement, Eaton Vance is entitled to receive a monthly administration fee from
each Fund at the annual rates set forth in the Funds' current Prospectus.
Eaton Vance and EV are both wholly owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR. The
Directors of EV are H. Day Brigham, Jr., Landon T. Clay, M. Dozier Gardner,
James B. Hawkes and Benjamin A. Rowland, Jr. The Directors of EVC consist of the
same persons and John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman
and Mr. Gardner is president and chief executive officer of EVC, Eaton Vance,
BMR and EV. All of the issued and outstanding shares of Eaton Vance and EV are
owned by EVC. All of the issued and outstanding shares of BMR are owned by Eaton
Vance. All shares of the outstanding Voting Common Stock of EVC are deposited in
a Voting Trust which expires on December 31, 1996, the Voting Trustees of which
are Messrs. Brigham, Clay, Gardner, Hawkes and Rowland. The Voting Trustees have
unrestricted voting rights for the election of Directors of EVC. All of the
outstanding voting trust receipts issued under said Voting Trust are owned by
certain of the officers of Eaton Vance and BMR who are also officers and
Directors of EVC and EV. As of August 30, 1996, Messrs. Clay, Gardner and Hawkes
each owned 24% of such voting trust receipts, and Messrs. Rowland and Brigham
owned 15% and 13%, respectively, of such voting trust receipts. Mr. Brigham is
an officer and Trustee of the Trust, and a member of the Eaton Vance, EVC, BMR
and EV organizations. Messrs. Austin, Murphy, O'Connor and Woodbury and Ms.
Sanders, who are officers of the Trust, are also members
<PAGE>
of the Eaton Vance, BMR and EV organizations. Eaton Vance will receive the
fees paid under the Administration Agreement.
EVC owns all of the stock of Energex Energy Corporation, which is engaged
in oil and gas exploration and development. In addition, Eaton Vance owns all
the stock of Northeast Properties, Inc., which is engaged in real estate
investment. EVC owns all the stock of Fulcrum Management, Inc. and MinVen, Inc.,
which are engaged in precious metal mining venture investment and management.
EVC, Eaton Vance, BMR and EV may also enter into other businesses.
Each Fund will be responsible for all expenses relating to its operations
and not designated as expenses of Wright under the Investment Advisory Contracts
or of Eaton Vance under the Administration Agreement, including, without
limitation, the fees and expenses of its custodian and transfer agent, including
those incurred for determining each Fund's net asset value and keeping each
Fund's books; the cost of share certificates; membership dues in 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;
distribution expenses incurred pursuant to the Trust's distribution plan; and
investment advisory and administration fees. Each Fund will also bear expenses
incurred in connection with litigation in which the Trust is a party and the
legal obligation the Trust may have to indemnify its officers and Trustees with
respect thereto.
The Investment Advisory Contract and the Administration Agreement of both
Funds will remain in effect until February 28, 1997. The Funds' Investment
Advisory Contract may be continued with respect to each Fund from year to year
thereafter so long as such continuance after February 28, 1997, as the case may
be, 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 of the Trust or by vote of a majority
of the shareholders of that Fund. The Investment Advisory Contract and
Administration Agreement may be terminated as to a Fund 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 that
Fund, and 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 Trust under such agreement on the part of Eaton Vance or Wright. Eaton
Vance or Wright will not be liable to the Trust for any loss incurred.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 89 South Street, Boston,
Massachusetts, acts as custodian for the Funds. IBT has the custody of all cash
and securities of the Funds, maintains the Funds' 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 Funds' investments, receives and disburses all funds and performs
various other ministerial duties upon receipt of proper instructions from the
Funds. IBT charges custody fees which are competitive within the industry. A
portion of the custody fee for each fund managed by Wright for which IBT serves
as custodian is based upon a schedule of percentages applied to the aggregate
assets of those funds, the fees so determined being then allocated among such
funds relative to their size. In addition, each fund pays to IBT a fee based on
the number of portfolio transactions, a fee based on the number of portfolio
holdings, and a fee for bookkeeping and valuation services. These fees are then
reduced by a credit for cash balances of the particular fund at IBT equal to 75%
of the average 91-day, U.S. Treasury Bill auction rate for the billing period
applied to the particular fund's average daily collected balances for the
period.
<PAGE>
The Funds will employ foreign sub-custodians, the selection of which are
subject to annual review and approval by the Trustees in accordance with Rule
17f-5 under the 1940 Act.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
Trust's independent certified public accountants, providing audit services, tax
return preparation, and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission and
preparation of the Funds' federal and state tax returns.
BROKERAGE ALLOCATION
Purchases and sales of securities on a securities exchange are effected by
brokers, and the Funds pay a brokerage commission for this service. In
transactions on stock exchanges in the United States, these commissions are
negotiated, whereas on many foreign stock exchanges the commissions are fixed.
In the over-the-counter market, securities are normally traded on a "net" basis
with dealers acting as principal for their own accounts without a stated
commission, although the price of the securities usually includes a profit to
the dealer. In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid.
Wright places the portfolio security transactions for each 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 clients. 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, the Funds may give consideration to those firms
which supply brokerage and research services, quotations and statistical and
other information to Wright for their use in servicing their accounts. Such
brokers 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 advisory clients other than the Fund
which paid the brokerage commissions and the other Funds. The services and
information furnished by a particular firm may not necessarily be used in
connection with the Funds or the Fund which paid brokerage commissions to such
firm. The advisory fee paid by the Funds 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,
<PAGE>
through use of such services and information, avoid the additional expenses
which would be incurred if Wright should attempt to develop comparable services
and information through its own staff.
Subject to the requirement that Wright shall use its best efforts to seek
to execute each Fund's portfolio security transactions at advantageous prices
and at reasonably competitive commission rates, Wright, as indicated above, is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom a Fund's portfolio orders may be placed the fact that such firm has
sold or is selling shares of the Funds or of other investment companies
sponsored by Wright. This policy is consistent with a rule of the National
Association of Securities Dealers, Inc., which rule provides that no firm which
is a member of the Association shall favor or disfavor the distribution of
shares of any particular investment company or group of investment companies on
the basis of brokerage commissions received or expected by such firm from any
source.
Under the Funds' 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.
The Funds' 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 a 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.
If purchases or sales of securities of the Funds and one or more other
investment companies or clients supervised by Wright are considered at or about
the same time, transactions in such securities will be allocated among the
several investment companies and clients in a manner deemed equitable to all by
Wright, taking into account the respective sizes of the Funds, and the amount of
securities to be purchased or sold. It is recognized that it is possible that in
some cases this procedure could have a detrimental effect on the price or volume
of the security so far as the Funds are concerned. However, in other cases it is
possible that the ability to participate in volume transactions and to negotiate
lower brokerage commissions will be beneficial to the Funds.
PRINCIPAL UNDERWRITER
The Trust has adopted a Distribution Plan (the "Plan") on behalf of the
Funds in accordance with Rule 12b-1 under the 1940 Act and the Rules of
the NASD.
The Trust has entered into a distribution contract on behalf of the Funds
with its Principal Underwriter, Wright Investors' Service Distributors, Inc.
("WISDI"), a wholly-owned subsidiary of Winthrop, providing for WISDI to act as
a separate distributor of each Fund's shares.
Under this contract and the Plan, it is currently intended that each Fund
will pay to WISDI for distribution services and personal and account maintenance
services in connection with the Fund's shares an annual fee equal to .25% of
such Fund's average daily net assets. Appropriate adjustments to payments made
pursuant to the Plan shall be made whenever necessary to assure that no payment
is made by a Fund which exceeds the applicable maximum cap imposed on
asset-based, front-end and deferred sales charges by Rule 2830 of the NASD.
Pursuant to the Plan, the Trust, on behalf of each Fund, is authorized to
compensate WISDI for (1) distribution services and (2) personal and account
maintenance services performed and expenses incurred
<PAGE>
by WISDI in connection with the Fund's shares. The amount of such
compensation, including compensation for personal and account maintenance
services, paid during any one year shall not exceed .25% of the average daily
net assets of the Fund. Such compensation shall be calculated and accrued daily
and paid quarterly.
Distribution services and expenses for which WISDI may be compensated
pursuant to this Plan include, without limitation: compensation to and expenses
incurred by Authorized Dealers and the officers, employees and sales
representatives of Authorized Dealers and of WISDI; allocable overhead, travel
and telephone expenses; the printing of prospectuses and reports for other than
existing shareholders; the preparation and distribution of sales literature and
advertising; and all other expenses (other than personal and account maintenance
services as defined below) incurred in connection with activities primarily
intended to result in the sale of the Funds' shares.
Personal and account maintenance services include, but are not limited to,
payments made to or on account of WISDI, Authorized Dealers and their respective
officers, employees and sales representatives who respond to inquiries of, and
furnish assistance to, shareholders concerning their ownership of Fund shares
and their accounts or who provide similar services not otherwise provided by or
on behalf of the Fund.
The Plan is a compensation plan which provides for the payment of a
specified distribution fee without regard to the distribution expenses actually
incurred by WISDI. Accordingly, an amount equal to 1/365 of the annual
distribution fee will be accrued on each day as an expense of each Fund, which
will reduce its net investment income.
Under the Plan, the President or Vice President of the Trust shall provide
to the Trustees for their review, and the Trustees shall review at least
quarterly, a written report of the amounts expended under the Plan and the
purposes for which such expenditures were made.
Under its terms, the Plan remains in effect from year to year, provided
such continuance is approved annually by a vote of its Trustees, including a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan. The
Plan may not be amended to increase materially the amount to be spent for the
services described therein as to a Fund without approval of a majority of the
outstanding voting securities of that Fund and all material amendments of the
Plan must also be approved by the Trustees of the Trust in the manner described
above. The Plan may be terminated at any time as to a Fund without payment of
any penalty by a vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or by vote of a majority of the
outstanding voting securities of that Fund. So long as the Plan is in effect,
the selection and nomination of Trustees who are not interested persons of the
Trust shall be committed to the discretion of the Trustees who are not such
interested persons. The Trustees of the Trust have determined that in their
judgment there is a reasonable likelihood that the Plan will benefit the Funds
and their shareholders.
PERFORMANCE INFORMATION
The average annual total return of each Fund is determined for a specified
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 (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.
<PAGE>
The average annual total return will be calculated using the following
formula:
P (1 + T)n = ERV
where: P = A hypothetical initial payment of $1,000
T = Average annual total return
n = Number of years
ERV = Ending redeemable value of a hypothetical $1,000 payment
at the end of the period.
Each Fund's yield is computed by dividing its net investment income per
share earned during a recent thirty-day period by the product of the average
daily number of shares outstanding and entitled to receive dividends during the
period and the maximum offering price (net asset value) per share on the last
day of the period. The results are compounded on a bond equivalent (semi-annual)
basis and then they are annualized. Net investment income per share is equal to
the Fund's dividends and interest earned during the period, reduced by accrued
expenses for the period.
The yield earned by each Fund will be calculated using 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
that were entitled to receive dividends d = The maximum offering
price (net asset value) per share on the last day of the period.
A Fund's yield or total return may be compared to the Consumer Price Index
and various domestic or foreign securities indices. A 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, evaluations of a Fund's performance made by independent
sources may be used in advertisements and in information furnished to present or
prospective shareholders. These may include rankings prepared by Lipper
Analytical Services, Inc., an independent service which monitors the performance
of mutual funds. The Lipper performance analysis reflects the reinvestment of
dividends and capital gain distributions but does not take sales charges into
consideration and is prepared without regard to tax consequences.
TAXES
Among the requirements for qualification of each Fund as a regulated
investment company are the following: (1) at least 90% of the Fund's gross
income for the taxable year must be derived from interest, dividends, gains from
the sale or other disposition of stock or securities and certain other types of
income; (2) less than 30% of the Fund's gross income for the taxable year may be
derived from gross gains from the sale or disposition of stock or securities or
certain other investments held for less than three months; and (3) at the close
of each quarter of its taxable year, (a) at least 50% of the value of the Fund's
assets must be comprised of cash and cash items (including receivables), U.S.
Government securities, securities of other regulated investment companies 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 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 may be invested in the securities of
<PAGE>
any one issuer (other than U.S. Government securities and securities of
other regulated investment companies) or certain other issuers controlled by the
Fund. These requirements may limit a Fund's activities in foreign currencies and
foreign currency futures, options or forward contracts to the extent gains
relating to such activities are considered not directly related to the Fund's
principal business of investing in securities.
Each Fund's use of the accounting practice known as equalization may affect
the amount, timing and character of distributions to shareholders. Investment by
a Fund in a 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 in
some cases be available that would ameliorate some of these adverse tax
consequences.
A Fund's transactions in foreign currencies, foreign currency-denominated
debt securities, foreign currency forward contracts, certain foreign currency
options or futures contracts, and receivables or payables denominated in a
foreign currency are subject to special tax rules under Section 988 of the Code
which will generally cause gains and losses from these transactions to be
treated as ordinary income and losses. Certain positions held by a Fund may be
required to be "marked to market" (treated as if they were closed out) on the
last business day of each taxable year. In addition, if certain of these
positions held by the Fund substantially diminish the Fund's risk of loss with
respect to securities or other positions in the Fund's portfolio, this
combination of positions may be treated as a straddle for tax purposes with the
possibility of deferral of losses and adjustments in the holding period of
securities held by the Fund.
Shareholders may realize a taxable gain or loss upon a redemption or
exchange of shares of a Fund. Any loss realized upon the redemption or exchange
of shares of a Fund with a tax holding period of six months or less will be
treated as a long-term capital loss to the extent of any distributions of net
long-term capital gains with respect to such shares. All or a portion of any
loss realized upon the redemption or exchange of shares may be disallowed to the
extent shares of the same Fund are purchased (including shares acquired by means
of reinvested dividends) within the period beginning 30 days before and ending
30 days after the date of such redemption or exchange.
<PAGE>
APPENDIX A
=============================================================================
MAJOR ECONOMIC AND FINANCIAL INDICATORS
OF THE NATIONS IN WHICH THE FUNDS MAY INVEST
The following information supplements and should be used in
connection with the section of the Funds' Prospectus entitled
"Appendix -- Information Concerning The Nations In Which The
Funds May Invest."
<PAGE>
<TABLE>
<CAPTION>
MAJOR ECONOMIC AND FINANCIAL INDICATORS*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Avg. Annual Rates ending 1992
------------------------------------------------------------------------------------
1992 1991 1990 1990 1988 2 Years 3 Years 5 Years
ITALY
Gross Domestic Product:
Nominal NA 5.6% 8.7% 9.9% 9.3% 7.2% 8.1% 8.9%
Real NA 0.9% 1.3% 2.1% 2.9% 1.1% 1.4% 2.3%
Inflation (CPI) 4.5% 5.2% 6.3% 6.5% 6.2% 5.7% 6.0% 5.9%
Trade Balance (Lira bil) 32278 3085 -445 1373 -1664 17682 11639 6925
Current Account Balance (Lira bil) 11176 -27908 -24060 -16827 -11900 -8366 -13597 -13904
Interest Rates:
Short Term (T-Bills) 10.6% 14.3% 12.5% 12.4% 12.6% 12.5% 12.48% 12.5%
Long Term (Govt Bonds) 11.3% 13.3% 13.2% 11.5% 10.7% 12.3% 12.59% 12.0%
Exchange Rates US$/Lira 0.0006 0.0007 0.0009 0.0009 0.0008 0.0006 0.0007 0.0008
- -------------------------------------------------------------------------------------------------------------------------------
SPAIN
Gross Domestic Product:
Nominal 3.2% 7.5% 9.5% 11.3% 12.2% 5.3% 6.7% 8.7%
Real -0.4% -0.0% 2.2% 3.7% 4.7% -0.2% 0.6% 2.0%
Inflation (CPI) 4.5% 5.9% 5.9% 6.7% 6.8% 5.2% 5.5% 6.0%
Trade Balance (Pesetas bil) -16065 -31034 -30753 -29566 -24495 -23550 -25951 -26383
Current Account Balance (Pesetas bil) -6258 -18481 -16718 -16819 -10933 -12370 -13819 -13842
Interest Rates:
Short Term (T-Bills) 10.5% 12.4% 12.5% 14.2% 13.6% 11.5% 11.81% 12.6%
Long Term (Govt Bonds) 10.2% 12.2% 12.4% 14.7% 13.7% 11.2% 11.59% 12.6%
Exchange Rates US$/Peseta 0.0070 0.0087 0.0103 0.0103 0.0091 0.0079 0.0087 0.0091
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
