------------------------------------------------------------------------------
Description of art work on front cover of report
Solid blue box with name of Trust in upper left hand corner of page.
- ------------------------------------------------------------------------------
ANNUAL
REPORT
December 31, 1998
<PAGE>
WRIGHT MANAGED BLUE CHIP SERIES TRUST
Wright Managed Blue Chip Series Trust is a diversified, open-end management
investment company, that is designed to be the funding vehicle for insurance
contracts offered by participating insurance companies. Shares of the Trust are
offered exclusively to the separate accounts of such insurance companies. Two
managed investment portfolios of the Trust and their investment objectives are
described below:
Wright Selected Blue Chip Portfolio (WSBCP) seeks long-term capital appreciation
and, as a secondary objective, reasonable, current income by investing primarily
in equity securities of well-established U.S. companies that meet the invest-
ment adviser's quality standards.
Wright International Blue Chip Portfolio (WIBCP) seeks long-term capital
appreciation by investing primarily in equity securities of well-established,
non-U.S. companies that meet the investment adviser's quality standards.
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Investment Objectives....Inside Front Cover
Letter to Shareholders................... 1
Management Discussion.....................4
Wright Selected Blue Chip Portfolio
Portfolio of Investments............... 6
Financial Statements................... 8
Wright International Blue Chip Portfolio
Portfolio of Investments.............. 11
Financial Statements.................. 13
Notes to Financial Statements........... 16
<PAGE>
WRIGHT MANAGED BLUE CHIP SERIES TRUST
LETTER TO SHAREHOLDERS
================================================================================
February 1999
Dear Shareholders:
For stock investors, the year 1998 was one of the strangest in market
history. On the surface, at the level of the major market averages, 1998 was a
good year: the S&P 500 Composite rewarded investors with a return of 29% during
1998, the fourth straight year of returns exceeding 20%. With 1998's gain, the
S&P 500's four-year price advance grew to an unprecedented 168%. Once again, the
S&P 500 easily outdistanced most stock market averages, other asset classes and
virtually all fund managers for the year. Whatever the reason for its
superiority, the S&P 500 drew new converts to indexing with its performance.
But for most stocks outside of a select handful of large-cap favorites,
1998 was closer to a bear market than to a bull market. Value Line's 1,600 stock
composite declined 4% and the Russell 2000 was down 3% for the year. Even within
the S&P 500, a majority of stocks performed relatively poorly during 1998.
Seventy-seven big stocks from the S&P 500 - today's version of the "nifty fifty"
from the 1970s - contributed all of the S&P's gain in 1998. The other 423 stocks
were essentially unchanged in the aggregate. Outside of the biggest 100 stocks
on the S&P 500, the next 5,000 stocks in the Institutional Broker Estimate
Service universe (I/B/E/S) declined over 10% (median change) in price this past
year. As 1998 ended, these stocks were still off around 33% on average from
their 1998 peaks, hit for the most part between April and July, prior to a
period of marked weakness in global stock markets in late summer and early
autumn.
Following the worst quarter for the world's stock markets since 1990, stock
prices came back strongly in the fourth quarter of 1998. Some well-timed
interest rate cuts by the Federal Reserve helped to stem last fall's flight from
stocks. Once the Fed indicated that it would intervene to prevent the Asian
credit crunch from reaching the U.S., stock prices rebounded with their best
gains since the first quarter of 1987. The Dow Jones Industrial Average added
1340 points (17%) in the fourth quarter. Most stocks participated in the rally,
although the best gains were made by technology stocks and speculative internet
plays, where valuations got dangerously high.
Foreign stocks took their cue from the U.S. in the fourth quarter of 1998,
rising virtually everywhere. For all of 1998, the Euro markets were strong,
nearly matching U.S. returns, while Japan had a nominal gain and the rest of
Asia had small declines in U.S. dollar terms. Despite a flat fourth quarter, the
bond market enjoyed returns near 10% for all of 1998.
Wild swings in investment sentiment - from July's heady optimism to the
despair of August back to renewed bullishness in January 1999 - point out a new
volatility in stocks. From 1991 to the middle of 1997, the U.S. stock market was
a model of stability, sensibility and low volatility. But over the past 18
months, stock market fluctuations have been growing steadily. Since last August,
as stock prices have regained momentum,
<PAGE>
investor confidence has grown into what appears to be full-blown euphoria
in early 1999. The breadth of the rally hasn't exactly been inspiring; in fact,
the advance has become more and more concentrated in technology and speculative
internet stocks. Investment fundamentals remain positive today; still, one
cannot help but wonder if they are so good as to warrant the highest P/E
multiples in history.
The U.S. economy continues to sail along at a good clip, with consumers
showing little concern over international economic difficulties. U.S.
manufacturing has been the one sector affected by the Asian recession, with a
loss of nearly 300,000 factory jobs over the past nine months. Service-producing
industries, on the other hand, have created 2 1/4 million new jobs over the same
period, maintaining the strong positive trend in personal income. Consumer
confidence remains high, although anything that erodes consumer confidence could
also cause spending to slow as personal savings are rebuilt. At this stage,
though, it appears more likely that the U.S. economy will lend support to the
struggling economies of the world in 1999, rather than being dragged down to
their levels. Some slowing in economic growth is almost certainly coming, but
Wright still forecasts real GDP growth of 2 1/2% to 3%, with inflation staying
low, in 1999.
As 1999 begins, there are any number of good quality stocks that are still
priced at reasonable values, and investors should be well rewarded by such
holdings over the next several years. In the short run, however, the potential
for a reversal in stock prices appears to be significant, particularly for
today's high-flying market leaders.
As always, it should be understood that past performance does not guarantee
future results and that investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Investing internationally entails additional risks, such as
currency fluctuations and potential political instability. The Management
Discussion that follows reviews the various political and market factors
affecting the investment performance of the Wright Equity Funds during 1998 and
their prospects for the period ahead.
Sincerely,
/s/ Peter M. Donovan
Peter M.Donovan, President
<PAGE>
WRIGHT MANAGED BLUE CHIP SERIES TRUST
WRIGHT SELECTED BLUE CHIP PORTFOLIO
Growth of $10,000 invested 1/31/94* through 12/31/98
Annual Total Return
Lst 1 Yr Since Inception
Wright Selected Blue Chip Portfolio -2.7% +13.6%
Lipper Growth Funds +22.9% +18.4%
NYSE +18.5% +20.5%
The cumulative total return of a U.S.$10,000 investment in the WRIGHT SELECTED
BLUE CHIP PORTFOLIO on 1/31/94 would have grown to $18,720 by December 31, 1998.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Selected Lipper Equity NYSE
Blue Chip Portfolio Growth Funds Index
01/31/94 $10,000 $10,000 $10,000
12/31/94 $9,391 $9,570 $9,666
12/31/95 $11,856 $12,520 $13,037
12/31/96 $14,559 $14,930 $15,894
12/31/97 $19,230 $18,670 $21,117
12/31/98 $18,720 $22,938 $25,031
- --------------------------------------------------------------------------------
WRIGHT MANAGED BLUE CHIP SERIES TRUST
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
Growth of $10,000 invested 1/31/94* through 12/31/98
Annual Total Return
Lst 1 Yr Since Inception
Wright Int'l Blue Chip Portfolio +8.5% +6.4%
FT World Ex U.S. Index +16.2% +6.7%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT
INTERNATIONAL BLUE CHIP PORTFOLIO on 1/31/94 would have grown to $13,556 by
December 31, 1998.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Int'l FT World Ex U.S.
Blue Chip Portfolio INDEX
01/31/94 $10,000 $10,000
12/31/94 $9,154 $9,993
12/31/95 $10,076 $11,037
12/31/96 $11,828 $11,755
12/31/97 $12,500 $11,849
12/31/98 $13,556 $13,764
- --------------------------------------------------------------------------------
NOTES: *: For comparison with other averages, the investment results are
shown from the first month-end since the Fund's inception. The investment
results of Wright Managed Blue Chip Series Trust and Lipper's average of 1,139
Equity Growth Funds are net of all fees and expenses charged to the Funds. No
fees or expenses have been deducted from the other averages. The Total
Investment Return is the % return of an initial $10,000 investment made at the
beginning of the period to the ending redeemable value assuming all dividends
and distributions are reinvested. Past performance is not predictive of future
performance.
<PAGE>
MANAGEMENT DISCUSSION
================================================================================
THE NEARLY YEAR-LONG INVESTIGATION OF PRESIDENT CLINTON, CULMINATING IN THE
IMPEACHMENT PROCEEDINGS DURING THE FOURTH QUARTER, PROVIDED AN UNCERTAIN
POLITICAL BACKDROP FOR THE STOCK MARKET DURING 1998. AT THE SAME TIME, FINANCIAL
CRISIS IN RUSSIA AND BRAZIL, ON TOP OF ONGOING ECONOMIC WEAKNESS IN JAPAN,
CONTRIBUTED TO MARKET VOLATILITY. CONTRARY TO EXPECTATIONS OF AN EXPORT-RELATED
SLOWDOWN, HOWEVER, THE U.S. ECONOMY CONTINUED TO EXPAND AT A ROBUST RATE, FOR
ALL OF 1998, REAL GDP GREW BY 4%, MATCHING THE STRONG GROWTH OF 1996 AND 1997.
THE REMARKABLE RESILIENCE OF THE U.S. ECONOMY PROBABLY MEANS THAT CORPORATE
PROFITS WILL RECOVER MODESTLY IN 1999, AFTER A RELATIVELY DISAPPOINTING 1998.
INFLATION IS FORECAST TO REMAIN UNDER CONTROL IN THE COMING YEAR, AND THE
FEDERAL RESERVE WILL PROBABLY MAINTAIN A STEADY INTEREST RATE POLICY. STOCK
PRICE/EARNINGS MULTIPLES ARE HISTORICALLY HIGH, SUGGESTING THAT EQUITY RETURNS
WILL BE MORE MODEST IN 1999 THAN THEY HAVE BEEN OVER THE PAST FOUR YEARS.
WRIGHT SELECTED BLUE CHIP PORTFOLIO
The Wright Selected Blue Chip Portfolio (WSBCP) had a total return of 18.7%
in the fourth quarter of 1998. The WSBCP's fourth-quarter gain lagged the 21.3%
total return earned by the S&P 500 and the 23.1% return reported by the Lipper
average of equity growth funds for the fourth quarter. Over all of 1998, the
WSBCP fund was down 2.7% in total return, while the Lipper average returned
22.9% and the NYSE returned 18.5%.
The domination of a relatively few large-cap and internet stocks was the
story of the stock market and the laggard performance of the WSBCP during 1998.
Wright's strict quality standards preclude investing in speculative issues -
such as internet stocks with no earnings history. Additionally, many of the
big-cap stocks that dominated the S&P 500's performance last year have risen to
exorbitant P/E levels.
In the fourth quarter, underweighting in electronics, communications and
retail stocks hampered the WSBCP, although the individual securities in these
groups selected for the fund did well. Overweighting in the chemical, metal
products and utility industries also hurt. A big positive for the WSBCP fund in
the fourth quarter was its underweighting in energy stocks, which were weak in
the quarter; a strong performance by the recreation companies in the fund also
helped results.
In the past, periods of stock market dominance by a few issues (e.g., the
"nifty fifty" of the early 1970s) have invariably been followed by a period in
which overpriced market favorites correct to more reasonable values. Wright
believes that the high-quality, reasonably priced issues held in the WSBCP are
likely to fare considerably better than the overpriced stock market leaders over
the next couple years. The WSBCP ended 1998 holding stocks with an average P/E
multiple of 14 times expected year-ahead earnings, just half the S&P 500's
<PAGE>
forward valuation. This dramatic undervaluation has developed despite the fact
that the earnings growth expected for the WSBCP stocks is as good or better than
that for the S&P 500 over the next year and for the next five years.
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
The Wright International Blue Chip Portfolio (WIBCP) earned a 16.8% total
return in the fourth quarter of 1998, a little behind the 20.3% advance for the
FT/S&P Actuaries World ex U.S. index. For all of 1998, WIBCP returned 8.5%, as
compared with 16.2% for the FT/S&P World ex U.S. index. Although lagging in
1998, WIBCP topped the benchmark return in the each of the prior two years.
Most of the WIBCP underperformance in the fourth quarter can be attributed
to its underweight position in Japan, where dollar-denominated returns were
boosted by the strong yen. A lagging performance by WIBCP's U.K. holdings also
hurt 1998 results. In the fourth quarter, the Portfolio got good performance
from its electronic and financial stocks and from its Canadian holdings.
Overweight positions in such strong markets as the Netherlands, Finland, Spain
and France also helped.
As with the U.S., international markets face a lot of uncertainties in
1999. In Europe, the introduction of the euro seems to be going smoothly, but
the potential for temporary dislocations adds to the risks posed by high equity
valuations and slowing economic growth. The worst may be over in Asia, but there
is a long way to go before its economies are again healthy. What's more,
Brazil's problems are likely to cast a shadow on global markets for some time to
come. More volatility is undoubtedly in store for international stock markets in
1999.
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO (WSBCP)
PORTFOLIO OF INVESTMENTS
December 31, 1998
================================================================================
Shares Value
- -------------------------------------------------------------------------------
INVESTMENTS -- 96.4%
APPAREL -- 3.4%
Liz Claiborne................ 1,400 $ 44,187
VF Corp..................... 1,600 75,000
-----------
$ 119,187
-----------
AUTOMOTIVE -- 4.0%
Dana Corporation............. 800 $ 32,700
Modine Mfg. Co............... 2,000 72,500
Superior Industries Int'l. Inc 1,200 33,375
-----------
$ 138,575
-----------
CHEMICALS -- 6.0%
Cooper Tire & Rubber Co...... 2,600 $ 53,137
Morton International Inc..... 1,300 31,850
PPG Industries, Incorporated. 900 52,425
Rohm & Haas Company.......... 2,400 72,300
-----------
$ 209,712
-----------
CONSTRUCTION -- 6.7%
Jacobs Engineering Group*.... 1,200 $ 48,900
Southdown, Inc............... 1,320 78,128
Texas Industries Inc......... 1,400 37,713
Toll Brothers*............... 3,000 67,687
-----------
$ 232,428
-----------
DIVERSIFIED -- 3.8%
Crane Co..................... 2,700 $ 81,506
Lancaster Colony Corp........ 1,600 51,400
-----------
$ 132,906
-----------
DRUGS, COSMETICS & HEALTHCARE -- 4.1%
Johnson & Johnson............ 800 $ 67,100
Merck & Co., Inc............. 500 73,844
-----------
$ 140,944
-----------
ELECTRONICS -- 9.7%
Dallas Semiconductor......... 1,000 $ 40,750
Intel Corporation............ 700 82,994
International Business Machines 300 55,425
Raytheon Company............. 900 47,925
Sun Microsystems, Inc.*...... 1,300 111,312
-----------
$ 338,406
-----------
FINANCIAL -- 13.3%
Ambac Financial Group, Inc... 1,300 $ 78,244
BB&T Corporation............. 1,800 72,562
Compass Bancshares........... 1,000 38,062
Edwards (A.G.), Inc.......... 2,850 106,163
Federal National Mort. Assoc. 1,000 74,000
Southtrust Corp.............. 2,550 94,191
-----------
$ 463,222
-----------
FOOD -- 2.5%
Dean Foods Company........... 800 $ 32,650
Universal Foods Corp......... 2,000 54,875
-----------
$ 87,525
-----------
MACHINERY & EQUIPMENT -- 4.7%
Caterpillar.................. 1,000 $ 46,000
Deere & Co................... 1,000 33,125
Ingersoll Rand Co............ 1,800 84,488
-----------
$ 163,613
-----------
METAL PRODUCERS -- 1.5%
Carpenter Technology......... 1,500 $ 50,906
-----------
<PAGE>
METAL PRODUCTS MANUFACTURERS -- 7.9%
Aeroquip-Vickers Inc......... 1,300 $ 38,919
Kaydon Corp.................. 2,400 96,150
Mueller Industries*.......... 1,200 24,375
Snap-on Inc.................. 1,500 52,219
Trinity Industries........... 1,600 61,600
-----------
$ 273,263
-----------
OIL, GAS & COAL -- 1.0%
ENSCO International, Inc..... 2,200 $ 23,513
Nabors Inds., Inc.*.......... 900 12,206
-----------
$ 35,719
-----------
PRINTING & PUBLISHING -- 3.7%
American Greetings Corp...... 1,700 $ 69,806
Banta Corporation............ 2,200 60,225
-----------
$ 130,031
-----------
RECREATION -- 3.6%
Brinker International Inc*... 1,400 $ 40,425
Brunswick Corporation........ 2,000 49,500
Ryan's Family Steak Houses*.. 2,900 35,887
-----------
$ 125,812
-----------
RETAILERS -- 3.6%
Ross Stores Inc.............. 1,100 $ 43,312
Wal-Mart Stores Inc.......... 1,000 81,438
-----------
$ 124,750
-----------
TRANSPORTATION - 6.8%
Comair Holdings, Inc......... 2,550 $ 86,063
U.S. Freightways Corp........ 2,800 81,550
Werner Enterprises Inc....... 3,875 68,539
-----------
$ 236,152
-----------
UTILITIES -- 6.9%
Duke Energy Corp............. 1,100 $ 70,469
Nipsco Industries............ 2,800 85,225
SBC Communications, Inc...... 1,600 85,800
-----------
$ 241,494
-----------
MISCELLANEOUS -- 3.2%
Kelly Services............... 1,800 $ 57,150
Sierra Health Services, Inc*. 2,550 53,709
-----------
$ 110,859
-----------
TOTAL INVESTMENTS -- 96.4%
(identified cost, $2,797,988) $ 3,355,504
OTHER ASSETS
LESS LIABILITIES -- 3.6% 125,650
-----------
NET ASSETS -- 100.0% $ 3,481,154
============
* Non-income-producing security.
See notes to financial statements
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
- ----------------------------------------------------------------------------
ASSETS:
Investments --
Identified cost.................... $2,797,988
Unrealized appreciation............ 557,516
---------
Total value (Note 1A)............ $3,355,504
Cash................................. 124,862
Dividends receivable................. 2,695
Deferred organizational costs (Note 1E) 37
---------
Total Assets....................... $3,483,098
---------
LIABILITIES:
Payable for Fund shares reacquired... $ 152
Accrued expenses..................... 1,792
---------
Total Liabilities.................. $ 1,944
---------
NET ASSETS.............................. $3,481,154
==========
NET ASSETS CONSIST OF:
Paid-in capital......................... $2,677,994
Accumulated net realized gain on investment
transactions......................... 215,980
Unrealized appreciation of investments.. 557,516
Accumulated undistributed net investment
income............................... 29,664
---------
Net assets applicable to outstanding
shares............................. $3,481,154
==========
SHARES OF BENEFICIAL INTEREST
OUTSTANDING.......................... 248,613
==========
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST............... $14.00
==========
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends............................ $ 50,410
---------
Expenses --
Investment Adviser fee (Note 3)...... $ 22,530
Administrator fee (Note 3)........... 1,734
Compensation of Trustees not affiliated
with the Investment Adviser or
Administrator...................... 4,842
Custodian and transfer agent fees
(Note 1D)........................... 12,665
Audit................................ 11,850
Legal................................ 11,642
Printing............................. 4,781
Amortization of organization expense
(Note 1E).......................... 1,748
Miscellaneous........................ 1,303
---------
Total expenses................... $ 73,095
---------
Deduct --
Reduction of Investment Adviser
fee (Note 3)....................... $ 22,530
Allocation of expenses to the
Investment Adviser (Note 3)........ 6,500
Reduction of Custodian fee (Note 1D). 4,144
---------
Total deducted................... $ 33,174
---------
Net expenses..................... $ 39,921
---------
Net investment income.......... $ 10,489
---------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment
transactions....................... $ 216,359
Change in unrealized appreciation of
investment......................... (330,517)
---------
Net realized and unrealized loss..... $ (114,158)
---------
Net decrease in net assets from
operations......................... $ (103,669)
==========
See notes to financial statements
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS:
From operations --
<S> <C> <C>
Net investment income........................................ $ 10,489 $ 21,518
Net realized gain on investment transactions................. 216,359 307,898
Change in unrealized appreciation of investments............. (330,517) 521,436
---------- ----------
Net increase (decrease) in net assets from operations...... $ (103,669) $ 850,852
Distributions to shareholders from net realized gain on
investment transactions (Note 2)............................. (307,343) (427,615)
Undistributed net investment income included in price of shares
sold and redeemed (Note 1F).................................. - 8,494
Net increase from Portfolio share transactions (exclusive of
amounts allocated to net investment income) (Note 4)......... 467,135 324,836
---------- ----------
Net increase in net assets................................. $ 56,123 $ 756,567
NET ASSETS:
At beginning of year........................................... 3,425,031 2,668,464
---------- ----------
At end of year................................................. $3,481,154 $3,425,031
========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT
INCOME......................................................... $ 29,664 $ 40,694
========== ===========
See notes to financial statements
</TABLE>
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
FINANCIAL HIGHLIGHTS 1998 1997 1996 1995 1994(5)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............. $ 15.650 $ 14.000 $ 11.410 $ 9.320 $ 10.000
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (1).................... $ 0.020 $ 0.110 $ 0.170 $ 0.100 $ 0.092
Net realized and unrealized gain (loss)
on investments............................. (0.270) 3.780 2.430 2.345 (0.712)
-------- -------- -------- -------- --------
Total income (loss) from investment
operations................................. $ (0.250) $ 3.890 $ 2.600 $ 2.445 (0.620)
-------- -------- -------- -------- --------
Less Distributions to Shareholders:
From net investment income................... $ - $ - $ (0.010) $ (0.070) $ (0.060)
From net realized gain on investment
transaction................................ (1.400) (2.240) - (0.285) -
-------- -------- -------- -------- --------
Total distributions......................... $ (1.400) $ (2.240) $ (0.010) $ (0.355) $ (0.060)
-------- -------- -------- -------- --------
Net asset value, end of year................... $ 14.000 $ 15.650 $ 14.000 $ 11.410 $ 9.320
======== ======== ======== ======== ========
Total Return(3)................................ (2.65%) 32.1% 22.8% 26.3% (6.2%)
Ratios/Supplemental Data:
Net assets, end of year (000 omitted)........ $ 3,481 $ 3,425 $ 2,668 $ 2,239 $ 1,452
Ratio of net expenses to average net assets(1) 1.27%(4) 1.30%(4) 1.27%(4) 1.60%(4) 1.15%(2)
Ratio of net investment income to average
net assets(1)............................... 0.30% 0.70% 1.14% 0.96% 1.16%(2)
Portfolio Turnover Rate...................... 49% 40% 68% 64% 74%
<FN>
(1)During each of the periods presented, the Investment Adviser and/or the
Administrator reduced their fees and the Investment Adviser was allocated a
portion of the Portfolio's operating expenses. Had such actions not been
undertaken, the net investment income (loss) per share and the ratios would
have been as follows:
1998 1997 1996 1995 1994(5)
- ------------------------------------------------------------------------------------------------------------
Net investment income (loss) per share......... $ (0.036) $ 0.030 $ 0.066 $ (0.017) $ (0.078)
======== ======== ======== ======== ========
Ratios (As a percentage of average net assets):
Expenses..................................... 2.11% 1.81% 1.97% 2.72% 3.30% (2)
======== ======== ======== ======== ========
Net investment income (loss)................. (0.54%) 0.19% 0.44% (0.16%) (0.99%)(2)
======== ======== ======== ======== ========
(2) Annualized.
(3)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to be
invested at the net asset value on the reinvestment date. The total
investment return does not reflect expenses that apply to the separate
account or policies. If these charges had been included, the total return
would be reduced.
(4)During the years ended December 31, 1998, 1997, 1996 and 1995, custodian
fees were reduced by credits resulting from cash balances the Portfolio
maintained with the custodian (Note 1D). The computation of net expenses to
average daily net assets reported above is computed without consideration of
such credits, in accordance with reporting regulations in effect beginning in
1995. If these credits were considered, the ratio of expenses to average net
assets would have been reduced to 1.15%, 1.15%, 1.06% and 1.15%,
respectively.
(5) For the period from January 6, 1994 (start of business) to December 31,
1994.
</FN>
See notes to financial statements
</TABLE>
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO (WIBCP)
PORTFOLIO OF INVESTMENTS
December 31, 1998
================================================================================
Shares Value
- -------------------------------------------------------------------------------
EQUITY INVESTMENTS -- 94.4%
AUSTRALIA -- 2.0%
Australian Gas & Light Co.... 3,472 $ 24,996
-----------
AUSTRIA -- 1.6%
Bank Austria AG.............. 400 $ 20,325
-----------
CANADA -- 9.8%
Loblaw Companies Ltd......... 1,300 $ 31,655
Magna Int'l. Inc. Class A.... 305 18,944
Power Financial Corp......... 1,600 35,418
Teleglobe Inc................ 1,100 39,600
-----------
$ 125,617
-----------
DENMARK -- 4.3%
Novo Nordisk A/S - B......... 200 $ 26,397
Orion A/S - B................ 1,190 28,566
-----------
$ 54,963
-----------
FINLAND -- 1.3%
Finnlines OY................. 400 $ 17,101
-----------
FRANCE -- 9.0%
Alcatel...................... 175 $ 21,383
Axa Company FRF60............ 300 43,408
Pinault-Printemps Redoute SA. 125 23,848
SAGEM SA..................... 40 26,438
-----------
$ 115,077
-----------
GERMANY -- 6.2%
BASF AG...................... 650 $ 24,784
Bayerische Motoren Werke AG.. 39 29,919
Lufthansa AG................. 1,100 24,269
-----------
$ 78,972
-----------
IRELAND -- 2.6%
Bank of Ireland.............. 1,518 $ 33,281
-----------
ITALY -- 6.9%
Benetton Group............... 12,000 $ 24,291
Eni SPA...................... 4,000 26,266
Telecom Italia Mobile........ 5,000 36,934
-----------
$ 87,491
-----------
JAPAN -- 5.8%
Bridgestone Corporation...... 1,000 $ 22,593
Honda Motor Co., Ltd......... 1,000 32,679
Nintendo Corp. Ltd........... 200 19,202
-----------
$ 74,474
-----------
MEXICO -- 2.8%
Cemex X.A. - CPO............. 6,700 $ 14,442
Telefonos de Mexico SA....... 9,000 21,807
-----------
$ 36,249
-----------
NETHERLANDS -- 19.2%
Abn Amro Holdings............ 1,267 $ 26,611
Akzo Dutch Ord............... 400 18,185
CSM N.V. Cert................ 508 29,280
Getronics N.V................ 618 30,560
Hagemeyer N.V................ 813 29,655
Ing Groep N.V................ 403 24,535
Numico NV.................... 619 29,457
Unilever NV-CVA.............. 350 29,869
Verenigde Nederlandse........ 700 26,352
-----------
$ 244,504
-----------
PORTUGAL -- 2.0%
Banco Espirito Santo - Reg... 846 $ 26,206
-----------
<PAGE>
SOUTH AFRICA -- 1.1%
Sasol Beperk Limited......... 1,300 $ 4,911
Tiger Oats Limited........... 900 8,862
-----------
$ 13,773
-----------
SPAIN -- 5.3%
Endesa S.A................... 1,000 $ 27,000
Repsol S.A................... 500 26,660
Telefonica................... 300 13,334
Telefonica de Espana......... 300 266
-----------
$ 67,260
-----------
SWEDEN -- 2.1%
Atlas Copco AB............... 1,200 $ 26,290
-----------
SWITZERLAND -- 6.1%
Nestle-Sponsored............. 200 $ 21,770
Novartis AG-ADR.............. 300 29,487
Schweizerische Rueckversich.. 10 26,057
-----------
$ 77,314
-----------
UNITED KINGDOM -- 6.3%
Cable & Wireless............. 2,100 $ 25,754
Kwik-Fit Holdings PLC........ 3,600 28,766
Wolseley PLC................. 4,189 26,416
-----------
$ 80,936
-----------
TOTAL INVESTMENTS - 94.4%
(identified cost, $1,060,809) $ 1,204,829
OTHER ASSETS
LESS LIABILITIES - 5.6% 71,040
-----------
NET ASSETS - 100.0% $ 1,275,869
===========
ADR - American Depositary Receipt
See notes to financial statements
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO (WIBCP)
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
- -------------------------------------------------------------------------------
ASSETS:
Investments --
Identified cost.................... $1,060,809
Unrealized appreciation........... 144,020
---------
Total value (Note 1A)............ $1,204,829
Cash................................. 69,553
Foreign Cash......................... 36
Dividends receivable................. 1,300
Deferred organizational costs (Note 1E) 33
Receivable from Investment Adviser... 3,550
Receivable for foreign taxes withheld 354
---------
Total assets....................... $1,279,655
---------
LIABILITIES:
Payable for Fund shares reacquired... $ 56
Accrued expenses..................... 3,730
---------
Total liabilities.................. $ 3,786
---------
NET ASSETS.............................. $1,275,869
==========
NET ASSETS CONSIST OF:
Paid-in capital......................... $ 988,884
Accumulated net realized gain on investment
and foreign currency transactions.... 151,308
Unrealized appreciation of investments and
translations of assets and liabilities in
foreign currencies................... 144,046
Accumulated undistributed net
investment loss...................... (8,369)
---------
Net assets applicable to outstanding
shares.............................. $ 1,275,869
==========
SHARES OF BENEFICIAL INTEREST
OUTSTANDING.......................... 104,029
==========
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST............... $12.26
==========
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends............................ $ 27,517
Less: Foreign taxes.................. (3,328)
---------
Total investment income............ $ 24,189
---------
Expenses --
Investment Adviser fee (Note 3)...... $ 11,781
Administrator fee (Note 3)........... 803
Compensation of Trustees not
affiliated with the Investment
Adviser or Administrator............ 4,853
Custodian and transfer agent fees
(Note 1D)............................ 23,593
Audit................................ 11,850
Legal................................ 11,642
Printing............................. 9,500
Amortization of organization expense
(Note 1E).......................... 1,748
Miscellaneous........................ 126
---------
Total expenses................... $ 75,896
---------
Deduct --
Reduction of Investment
Adviser fee (Note 3)............... $ 11,781
Reduction of Admininstrator fee
(Note 3)........................... 803
Allocation of expense to the
Investment Adviser (Note 3)....... 33,880
Reduction of Custodian fee (Note 1D). 2,212
---------
Total deducted................... $ 48,676
---------
Net expenses..................... $ 27,220
---------
Net investment loss............ $ (3,031)
---------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment and
foreign currency transactions........ $ 156,207
Change in unrealized appreciation of investments
and translation of assets and liabilities
in foreign currency.................. (56,731)
---------
Net realized and unrealized gain..... $ 99,476
---------
Net increase in net assets from
operations.......................... $ 96,445
==========
See notes to financial statements
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 1998 1997
- -------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
<S> <C> <C>
Net investment income (loss)................................. $ (3,031) $ 3,740
Net realized gain on investments and foreign currency
transactions............................................... 156,207 70,743
Change in unrealized appreciation of investments and translation
of assets and liabilities in foreign currency.............. (56,731) 16,476
---------- ----------
Net increase in net assets from operations................. $ 96,445 $ 90,959
Distributions to shareholders from net realized gain
on investment transactions (Note 2).......................... (68,163) (81,308)
Net decrease from Portfolio share transactions (exclusive of
amounts allocated to net investment income) (Note 4)......... (163,101) (56,035)
---------- ----------
Net decrease in net assets................................. $ (134,819) $ (46,384)
NET ASSETS:
At beginning of year........................................... 1,410,688 1,457,072
---------- ----------
At end of year................................................. $1,275,869 $1,410,688
=========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS).................................................. $ (8,369) $ 5,001
=========== ===========
See notes to financial statements
</TABLE>
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
FINANCIAL HIGHLIGHTS 1998 1997 1996 1995 1994(5)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............. $ 11.800 $ 11.810 $ 10.060 $ 9.140 $ 10.000
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (loss)(1).............. $ (0.023) $ 0.032 $ (0.043) $ 0.003 $ 0.031
Net realized and unrealized gain (loss)...... 1.053 0.588 1.793 0.967 (0.886)
-------- -------- -------- -------- --------
Total income (loss) from investmen
operations................................. $ 1.030 $ 0.620 $ 1.750 $ 0.970 $ (0.855)
-------- -------- -------- -------- --------
Less Distributions to Shareholders:
From net investment income.................. $ -- $ -- $ -- $ (0.005) $ (0.005)
In excess of net investment income.......... -- -- -- (0.013) --
From net realized gains on investment
transactions............................... (0.570) (0.630) -- -- --
Tax distribution from paid-in capital....... -- -- -- (0.032) --
-------- -------- -------- -------- --------
Total distributions declared to
shareholders............................... $ (0.570) $ (0.630) $ -- $ (0.050) $ (0.005)
-------- -------- -------- -------- --------
Net asset value, end of year................... $ 12.260 $ 11.800 $ 11.810 $ 10.060 $ 9.140
======== ======== ======== ======== ========
Total Return(3)................................ 8.5% 5.7% 17.4% 10.6% (8.1%)
Ratios/Supplemental Data:
Net assets, end of year (000 omitted)........ $ 1,276 $ 1,411 $ 1,457 $ 1,365 $ 1,229
Ratio of net expenses to average net assets(1) 2.00% (4) 2.00%(4) 2.31%(4) 2.28% (4) 1.80% (2)
Ratio of net investment income (loss) to average net
assets(1)................................... (0.21%) 0.25% (0.42)% 0.06% 0.19% (2)
Portfolio Turnover Rate...................... 61% 94% 44% 31% 0%
<FN>
(1)During each of the periods presented, the Investment Adviser and the
Administrator reduced their fees, and the Investment Adviser was allocated a
portion of the Portfolio's operating expenses. Had such actions not been
undertaken, the net investment loss per share and the ratios would have been
as follows:
1998 1997 1996 1995 1994(5)
- ----------------------------------------------------------------------------------------------------------
Net investment loss per share................. $ (0.369) $ (0.262) $ (0.253) $ (0.920) $ (0.434)
======== ======== ======== ======== ========
Ratios (As a percentage of average net assets):
Expenses..................................... 5.16% 4.30% 4.37% 4.18% 4.65% (2)
======== ======== ======== ======== ========
Net investment loss.......................... (3.37%) (2.05%) (2.47%) (1.85%) (2.66%)(2)
======== ======== ======== ======== ========
(2) Annualized.
(3)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to be
invested at the net asset value on the reinvestment date. The total
investment return does not reflect expenses that apply to the separate
account or related policies. If these charges had been included, the total
return would be reduced.
(4)During the years ended December 31, 1998, 1997, 1996 and 1995, custodian
fees were reduced by credits resulting from cash balances the Portfolio
maintained with the custodian (Note 1D). The computation of net expenses to
average daily net assets reported above is computed without consideration of
such credits, in accordance with reporting regulations in effect beginning in
1995. If these credits were considered, the ratio of expenses to average net
assets in each period would have been reduced to 1.85%.
(5) For the period from January 6, 1994 (start of business) to December 31, 1994.
</FN>
See notes to financial statements
</TABLE>
<PAGE>
WRIGHT MANAGED BLUE CHIP SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
================================================================================
(1) SIGNIFICANT ACCOUNTING POLICIES
The Wright Managed Blue Chip Series Trust (the "Trust") is registered under
the Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Trust presently consists of two diversified separate
portfolios: Wright Selected Blue Chip Portfolio (WSBCP), and Wright
International Blue Chip Portfolio (WIBCP) (the "Portfolios"). The shares of the
Portfolios are sold only to variable accounts established by participating
insurance companies. The following is a summary of significant accounting
policies consistently followed by the Trust in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Investment Valuations - Securities listed on securities exchanges or in
the NASDAQ National Market, are valued at closing sale prices. Unlisted
or listed securities for which closing sale prices are not available
are valued at the last reported bid price. Investments for which
valuations are not readily available and for WIBCP investments for
which material events affecting the value of such securities occurred
after the closing of the exchange on which they are primarily traded
but prior to the valuation of the Fund will be appraised at their fair
value as determined in good faith by or at the direction of the
Trustees. Short-term obligations maturing in sixty days or less are
valued at amortized cost, which approximates market value.
B. Foreign Currency Translation - Investment security valuations, other
assets, and liabilities initially expressed in foreign currencies are
translated each business day into U.S. dollars based upon current
exchange rates. Purchases and sales of foreign investment securities
and income and expenses are translated into U.S. dollars based upon
currency exchange rates prevailing on the respective dates of such
transactions. The Trust does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices
of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
C. Taxes - The Trust's policy is to comply with the provisions of the
Internal Revenue Code (the Code) available to regulated investment
companies and distribute to shareholders each year all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income tax is necessary. Withholding taxes on
foreign dividends have been provided for in accordance with the Trust's
understanding of the applicable country's tax rules and rates.
D. Expense Reduction - The Portfolios have entered into an arrangement
with its custodian agent whereby interest earned on uninvested cash
balances are used to offset custodian fees. All significant reductions
are reported as a reduction of expenses in the Statement of Operations.
<PAGE>
E. Deferred Organization Expenses - Costs incurred by the Portfolios in
connection with their organization are being amortized on a
straight-line basis over five years from the date the Portfolio
commenced operations.
F. Equalization - The WSBCP and WIBCP Portfolios follow the accounting
practice known as equalization by which a portion of the proceeds from
sales and costs of redemptions of Portfolio shares, equivalent on a
per-share basis to the amount of undistributed net investment income on
the date of the transaction, is credited or charged to undistributed
net investment income. As a result, undistributed net investment income
per share is unaffected by sales or redemptions of Portfolio shares.
G. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
H. Other - Investment transactions are accounted for on a trade date
basis. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. However, if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as the
Portfolios are informed of the ex-dividend date.
I. Forward Foreign Currency Contracts - The International Portfolio
may enter into forward foreign currency exchange contracts for the
purchase or sale of a specific foreign currency at a fixed price on
a future date. Risks may arise upon entering these contracts from the
potential inability of counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The International Portfolio
will enter into forward contracts for hedging purposes in connection
with purchases and sales of securities denominated in foreign
currencies. The forward foreign currency exchange contracts are
adjusted by the daily forward exchange rate of the underlying
currency and any gains or losses are recorded for financial statement
purposes as unrealized until such time as the contracts have been
closed or offset.
(2) DISTRIBUTIONS
Dividends from investment income of WSBCP and WIBCP are expected to be
declared annually. However, the Trustees may decide to declare dividends at
other intervals. All net realized long- or short-term capital gains of each
Portfolio, if any, will be declared and distributed at least annually. All
distributions will be distributed in the form of additional full and fractional
shares of the Portfolios and not in cash. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits, which result in temporary over-distributions for financial statement
purposes, are classified as distributions in excess of net investment income or
accumulated net realized gains. Distributions in excess of tax basis earnings
and profits are reported in the financial statements as a return of capital.
Permanent differences between book and tax accounting treatments may result in
reclassifications among various components of net assets.
<PAGE>
During the year ended December 31, 1998, the following amounts were
reclassified due to differences between book and tax accounting created
primarily by the deferral of certain losses for tax purposes and character
reclassifications between net investment income and net realized capital gains.
Accumulated Undistributed Undistributed
Net Realized Gain (Loss) on Investment Net Investment
Paid-In Capital and Foreign Currency Transactions Income (Loss)
- -------------------------------------------------------------------------------
WSBCP 22,454 (935) (21,519)
WIBCP 17,618 (7,279) (10,339)
The changes had no effect on the net asset value per share.
(3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has engaged The Winthrop Corporation (Winthrop) to act as
investment adviser to the Portfolios pursuant to the respective Investment
Advisory Contracts. Pursuant to a service agreement between Winthrop and its
wholly-owned subsidiary, Wright Investors' Service, Inc. (Wright), Wright
furnishes each Portfolio with investment management, investment advisory, and
other services. For its services, Wright is compensated based upon a percentage
of average monthly net assets which rate is adjusted as average monthly net
assets exceed certain levels. The Trust also has engaged Eaton Vance Management
(Eaton Vance or Administrator) to act as administrator of the Trust. Under the
Administration Agreement, Eaton Vance is responsible for managing the business
affairs of the Trust and is compensated based upon a percentage of average
monthly net assets which rate is reduced as average monthly net assets exceed
certain levels. For the year ended December 31, 1998, the effective annual rate
for advisory and administration charges for each Portfolio was as follows:
WSBCP WIBCP
Investment Advisory 0.65% 0.80%
Administration 0.05% 0.05%
To enhance the net income of the Portfolios, Wright and Eaton Vance reduced
their fees and Wright made an assumption of a portion of each Portfolio's
expenses as follows:
WSBCP WIBCP
Reduction of Investment Adviser fees $22,530 $11,781
Allocation of expense to the Investment Adviser 6,500 33,880
Reduction of Administrator fees - 803
Certain of the Trustees and officers of the Trust are directors/trustees
and/or officers of the above organizations.
<PAGE>
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Portfolio shares were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1998 December 31, 1997
----------------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
Wright Selected Blue Chip Portfolio --
<S> <C> <C> <C> <C>
Sales.................................. 271,428 $4,112,949 19,861 $ 283,616
Issued to shareholders in payment
of distributions declared............ 19,559 307,343 34,653 419,299
Redemptions............................ (261,262) (3,953,157) (26,212) (378,079)
-------- ---------- -------- ----------
Net increase....................... 29,725 $ 467,135 28,302 $ 324,836
========= =========== ========= ===========
Wright International Blue Chip Portfolio --
Sales.................................. 152,535 $1,924,884 20,821 $ 237,904
Issued to shareholders in payment
of distributions declared............ 5,243 68,163 7,439 81,308
Redemptions............................ (173,285) (2,156,148) (32,123) (375,247)
-------- ---------- -------- ----------
Net decrease....................... (15,507) $ (163,101) (3,863) $ (56,035)
========= =========== ========= ===========
</TABLE>
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations, for
the year ended December 31, 1998, were as follows:
Wright Selected Wright International
Blue Chip Portfolio Blue Chip Portfolio
- ------------------------------------------------------------------------------
Purchases -- $ 1,749,614 $ 848,497
============ ============
Sales -- $ 1,636,275 $ 1,071,489
============ ============
<PAGE>
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) in value of the
investments owned at December 31, 1998, as computed on a federal income tax
basis, are as follows:
Wright Selected Wright International
Blue Chip Portfolio Blue Chip Portfolio
- --------------------------------------------------------------------------------
Aggregate cost.............. $ 2,797,988 $ 1,071,501
============ ============
Gross unrealized appreciation $ 810,658 $ 238,594
Gross unrealized depreciation (253,142) (105,266)
------------ ------------
Net unrealized appreciation. $ 557,516 $ 133,328
============ ============
(7) RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
The Wright International Blue Chip Portfolio invests in securities issued
by companies whose principal business activities are outside the United States
which may involve significant risks not present in domestic investments. For
example, there is generally less publicly available information about foreign
companies, particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Foreign issuers are generally not
bound by uniform accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to domestic issuers.
Investments in foreign securities also involve the risk of possible adverse
changes in investment or exchange control regulations, expropriation or
confiscatory taxation, limitation on the removal of funds or other assets of the
Trust, political or financial instability or diplomatic and other developments
which could affect such investments. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the United
States, and securities of some foreign issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. In general, there is less overall governmental
supervision and regulation of foreign securities markets, broker-dealers, and
issuers than in the United States.
Settlement of securities transactions in foreign countries may be delayed
and is generally less frequent than in the United States, which could affect the
liquidity of the Trust's assets. The Trust may be unable to sell securities
where the registration process is incomplete and may experience delays in
receipt of dividends.
<PAGE>
(8) LINE OF CREDIT
The Portfolios participate with other funds managed by Wright in a
committed $20 million unsecured line of credit agreement with a bank. The
Portfolios may temporarily borrow from the line of credit to satisfy redemption
requests or settle investment transactions. Interest is charged to each
Portfolio based on its borrowings at an amount above the federal funds rate. In
addition, a fee computed at an annual rate of 0.10% on the average daily unused
portion of the $20 million line of credit, is allocated among the participating
portfolios at the end of each quarter. The Portfolios did not have significant
borrowings or allocated fees during the year ended December 31, 1998.
(9)SUBSEQUENT EVENT
Effective January 1,1999, Austria, Belgium, Finland, France, Germeny,
Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain have adopted the
Euro as its common currency. Existing national currencies of these countries
will be sub-currencies of the Euro until July 1, 2002, when the old currencies
disappear entirely. The conversion to Euro impacts only the Wright International
Blue Chip Portfolio and there is no financial statement implication as of
December 31, 1998.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of
The Wright Managed Blue Chip Series Trust:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of The Wright Managed Blue Chip Series Trust (the
"Trust") (comprising, respectively, the Wright Selected Blue Chip Portfolio and
Wright International Blue Chip Portfolio series) as of December 31, 1998, the
related statements of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1998 and 1997, and the
financial highlights for each of the years in the five-year period ended
December 31, 1998. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
December 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the above respective
Portfolios constituting The Wright Managed Blue Chip Series Trust as of December
31, 1998, the results of their operations, the changes in their net assets, and
their financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
January 29, 1999
<PAGE>
Wright Managed
Blue Chip
Series Trust
ANNUAL REPORT
Officers and Trustees of the Funds
Peter M. Donovan, President and Trustee
H. Day Brigham, Jr., Vice President , Secretary and Trustee
A. M. Moody III, Vice President and Trustee
Judith R. Corchard, Vice President and Trustee
Dorcas R. Hardy, Trustee
Leland Miles, Trustee
Lloyd F. Pierce, Trustee
Richard E. Taber, Trustee
Raymond Van Houtte, Trustee
James L. O'Connor, Treasurer
William J. Austin, Jr., Assistant Treasurer
Administrator
Eaton Vance Management
24 Federal Street
Boston, Massachusetts 02110
Investment Adviser
Wright Investors' Service
1000 Lafayette Boulevard
Bridgeport, Connecticut 06604
Custodian and Transfer Agent
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of a mutual fund unless
accompanied or preceded by a Fund's current prospectus. Shares of the
Trust are only available to the separate accounts of insurance
companies
