THE WRIGHT MANAGED BLUE CHIP SERIES TRUST
SEMI-ANNUAL REPORT
JUNE 30 , 1999
o Wright Selected Blue Chip Equities Portfolio
o Wright International Blue Chip Equities Portfolio
<PAGE>
The Wright Managed Blue Chip Series Trust
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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 investment
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
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Page
Investment Objectives ..................................inside front cover
Letter to Shareholders ..........................................1
Management Discussion ...........................................2
Wright Selected Blue Chip Portfolio
Portfolio of Investments..................................4
Financial Statements......................................6
Wright International Blue Chip Portfolio
Portfolio of Investments..................................9
Financial Statements.....................................11
Notes to Financial Statements ..................................14
<PAGE>
Letter to Shareholders
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July, 1999
Dear Shareholders:
Investors spent much of the first half of 1999 worrying whether the Federal
Reserve would raise interest rates. On the final day of the half, the Fed
obliged, raising the federal funds rate 25 basis points to 5.0%. The rate was
not exactly a surprise; midway through the second quarter, Fed policy makers had
announced a shift to a monetary policy biased toward tightening. But the Fed did
surprise investors on June 30, when it returned its monetary policy stance back
to neutral, suggesting that maybe we won't need more tightening after all.
Needless to say, investors in stock and bond markets worldwide responded
positively to this news.
Long-term interest rates have climbed by over 100 basis points from last
October's lows. With signs of economic recovery appearing in Asia and Latin
America, the liquidity premium that investors paid for Treasuries during last
fall's crisis has narrowed, as one would expect. The bulk of the rise in bond
yields since last summer, however, has resulted from rising expectations of Fed
tightening. Ironically, although the Fed has raised rates only 25 basis points,
the entire Treasury yield curve is 25-50 basis points above the more normal
levels that prevailed before the arrival of last summer's global financial
crisis and subsequent Fed easing.
For investors willing to look beyond the current uncertainty about the
Fed's interest rate policy, the yields available in the U.S. bond market today
are quite attractive - particularly if we are right about inflation staying low.
The U.S. economy was robust as the first half was coming to an end, but
inflation pressures remain modest thanks to strong growth in productivity, ample
global capacity and competitive markets. Corporate profits were at a record
level in the first quarter of 1999, and this stronger trend is persisting in the
second quarter. This is positive for the stock market, as is the improvement in
market breadth seen since March. In June, there were signs that investors were
starting to nibble at the big technology stocks that sold off in April and May;
smaller stocks have for the most part maintained their momentum. The speculative
fever in Internet stocks, which are down an average of 25% from their highs,
appears to have broken.
The countdown to Y2K is now at six months, and Wright has essentially
completed the migration to Y2K-compliant portfolio accounting and client
interface systems. We are on schedule to a summer completion for the transition
of our investment information systems from mainframe to a PC-based network.
Wright securities analysts continue to monitor the Y2K compliance of companies
on the Approved Wright Investment List. In the end, we believe that diversified
portfolios of high-quality securities provide the best protection against
short-run Y2K problems for any individual security.
The global economic environment has improved in 1999, and while higher
interest rates will probably bring some slowing in the U.S. as we draw near to
Y2K, we expect growth to continue at a respectable rate. Add to this our
forecast of low inflation and an improved bond market, and the result is a
generally favorable environment for equities. Still, we doubt that equity
investors can finesse away the issue of valuation ad infinitum. In other words,
more modest returns to stocks should be expected going forward.
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 paragraphs below
discuss the various economic, political and market factors affecting the
investment performance of the Wright Equity Portfolios during the first half of
1999 and prospects for the period ahead.
Sincerely,
/s/ Peter M. Donovan
Peter M. Donovan, President
<PAGE>
Management Discussion
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Considering the rise in interest rates and some serious profit taking in
Internet issues, U.S. stocks performed quite well during the first half of 1999.
A spurt early in the second quarter taking the market to new peaks was followed
by a period in which little upward progress was made. Investors fretted about
rising interest rates, higher inflation, and a possible tightening by the Fed.
On the last day of June, when the Fed raised rates 25 basis points (but also
shifted monetary policy into neutral), stocks rallied on relief that the action
wasn't more extreme. For the first half, stocks in the Americas and in the
Pacific generally performed strongly, while Europe's gains were relatively
modest.
The second quarter saw the start of a correction in some of the stock
market imbalances that had developed over the previous year. For most of 1998
and the first quarter of 1999, the market was dominated by a few large
technology stocks, especially Internet-related issues. In the second quarter,
however, the earnings prospects of cyclical stocks improved on evidence that the
U.S. economy remained on solid ground, while many high-P/E growth stocks were
done in by rising interest rates. Investors took profits in some of the
high-priced stocks in the Internet, health care and consumer staples sectors.
The value half of the S&P 500 outperformed the growth half, while basic
materials and capital goods stocks outperformed technology in the quarter. The
small- and mid-cap sectors outdistanced large-cap stocks by 7%-8% for the
quarter, their best relative performance in 18 months. The breadth of the market
advance improved over the course of the quarter.
The second quarter's market flip-flop is a hopeful sign that fundamentals
still matter. As the third quarter got underway, at first it seemed that the
market was trying to reestablish tech stocks as the market leaders, but this was
followed by another bout of profit taking in the sector. Market leadership is
shifting from day to day. WIS is hopeful that the better sense of value that
returned to the market in the second quarter will win out; this, along with
improvement in market breadth, would be a good sign for the long-term survival
of the bull market.
Economic fundamentals are positive for stocks. There is no evidence that
the U.S. expansion will falter (barring excessive tightening by the Fed, which
we believe is unlikely), and profit prospects are improving. Nevertheless, the
fact that the market is at a near record P/E even though bond yields are up some
100 basis points from last fall's lows points up the market's risk. If a
correction does develop, most affected will be the overvalued favorites that
have dominated the market for the last 18 months. Many lower-profile,
high-quality stocks are priced at levels that still offer attractive investment
returns.
WRIGHT SELECTED BLUE CHIP PORTFOLIO
After a tough first quarter for all but a handful of big stocks, the market
backed away a bit from big-cap stocks and showed renewed appreciation of the
value in the rest of the market. This worked to the benefit of the Wright
Selected Blue Chip Portfolio (WSBCP) during the second quarter. For the
April-June period, the WSBCP's mid-cap orientation helped the portfolio return
13.0%. That was well ahead of the 7.0% returned by both the S&P 500 and the
Lipper equity fund average, but slightly behind the 14.1% return of the S&P
MidCap 400. For the first half of 1999, the Selected Blue Chips returned 7.6%,
compared to 12.4% for the S&P 500, 6.9% for the S&P MidCaps and 11.7% for the
Lipper fund average.
Compared to the S&P 500, the WSBCP's second-quarter performance benefited
from its lower weighting in big-cap, high-P/E stocks and health care issues, as
well as an overweighting in capital goods stocks, which performed well. If the
market continues to turn away from favoring size for its own sake, the Wright
Selected Blue Chip Portfolio has the potential to gain more ground on the S&P
500. Despite their excellent appreciation in the second quarter, the issues in
the WSBC Portfolio had an average P/E of under 20 at June 30, as compared with
28 for the S&P MidCaps and 34 for the S&P 500.
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
For the second quarter of 1999, foreign markets overall lagged U.S. stocks. In
dollar terms, European markets were virtually unchanged in the quarter; Asian
markets, on the other hand, returned more than 10%. For the April-July period,
the FT/S&P Actuaries World ex U.S. index returned 4.0% in dollars. The Wright
International Blue Chip Portfolio (WIBCP) returned 2.2%. For the first half of
1999, the WIBC Portfolio had a 2.1% decline, as compared with a 6.3% advance for
the FT World ex U.S. index.
Underweighting in Japan and Hong Kong, strong markets in the first half of 1999,
and in oil-related stocks detracted from the WIBCP's relative showing, as did
the weakness in the euro. The prospect of improving economic conditions in
Europe and Asia bodes well for the international stock market values in coming
quarters. Another plus is the relatively attractive valuation of many stocks in
Europe and the Pacific region relative to U.S. equities. One caveat: a
correction in the U.S. could affect other markets.
<PAGE>
Wright Selected Blue Chip Portfolio (WSBCP)
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Portfolio of Investments - June 30, 1999 (Unaudited)
Shares Value
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EQUITY INVESTMENTS - 95.7%
APPAREL - 3.6%
Liz Claiborne.................... 700 $ 25,550
VF Corp......................... 1,600 68,400
-----------
$ 93,950
-----------
AUTOMOTIVE - 4.5%
Dana Corporation................. 800 $ 36,850
Johnson Controls Inc............. 2,000 48,519
Superior Industries Int'l. Inc... 1,200 32,775
-----------
$ 118,144
-----------
BEVERAGES - 0.7%
Coca-Cola Co..................... 300 $ 18,750
-----------
CHEMICALS - 0.6%
Rohm & Haas Company.............. 331 $ 14,192
-----------
CONSTRUCTION - 2.7%
Jacobs Engineering Group*........ 800 $ 30,400
Southdown, Inc................... 620 39,835
-----------
$ 70,235
-----------
DIVERSIFIED - 3.6%
Lancaster Colony Corp............ 1,600 $ 55,200
Tyco Int'l....................... 400 37,900
-----------
$ 93,100
-----------
DRUGS, COSMETICS & HEALTHCARE - 7.0%
Bard (C.R.)...................... 1,100 $ 52,594
Johnson & Johnson................ 800 78,400
Merck & Co., Inc................. 700 51,800
-----------
$ 182,794
-----------
ELECTRONICS - 19.1%
Adobe Systems Inc................ 900 $ 73,941
Dallas Semiconductor............. 1,000 50,500
Gateway 2000, Inc................ 800 47,200
Intel Corporation................ 1,000 59,500
International Business Machines.. 600 77,550
Microsoft Corp................... 500 45,092
Solectron Corp................... 900 60,018
Sun Microsystems, Inc.*.......... 1,200 82,650
-----------
$ 496,451
-----------
FINANCIAL - 24.3%
Ambac Financial Group, Inc....... 1,300 $ 74,261
BB&T Corporation................. 1,800 66,038
Commerce Bancshares Inc.......... 1,000 40,250
Compass Bancshares............... 2,400 65,400
Edwards (A.G.), Inc.............. 1,550 49,988
Federal National Mort. Assoc..... 1,000 68,375
First Security Corp.............. 3,100 84,475
KeyCorp (New).................... 2,000 64,250
MBIA Inc......................... 1,000 64,750
Southtrust Corp.................. 1,450 55,644
-----------
$ 633,431
-----------
FOOD - 1.6%
Universal Foods Corp............. 2,000 $ 42,250
-----------
MACHINERY & EQUIPMENT - 3.0%
Ingersoll Rand Co................ 1,200 $ 77,550
-----------
METAL PRODUCERS - 1.2%
Carpenter Technology............. 1,100 $ 31,419
-----------
METAL PRODUCTS MANUFACTURERS - 4.0%
Mueller Industries*.............. 1,200 $ 40,725
Snap-on Inc...................... 1,000 36,188
Trinity Industries............... 800 26,800
-----------
$ 103,713
-----------
OIL, GAS & COAL - 2.2%
Chevron Corp..................... 400 $ 38,075
Mobil Corp....................... 200 19,800
-----------
$ 57,875
-----------
RECREATION - 3.6%
Brinker International Inc*....... 1,400 $ 38,063
Brunswick Corporation............ 2,000 55,750
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$ 93,813
-----------
RETAILERS - 3.2%
Ross Stores Inc.................. 1,100 $ 55,413
Wal-Mart Stores Inc.............. 600 28,950
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$ 84,363
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<PAGE>
TRANSPORTATION - 2.6%
Comair Holdings, Inc............. 975 $ 20,292
U.S. Freightways Corp............ 1,000 46,313
-----------
$ 66,605
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UTILITIES - 7.0%
Duke Energy Corp................. 1,100 $ 59,813
NiSource, Inc.................... 900 23,231
SBC Communications, Inc.......... 1,000 58,000
TECO Energy, Inc................. 1,800 40,950
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$ 181,994
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MISCELLANEOUS - 1.2%
Marsh & McLennan Cos. Inc........ 400 $ 30,200
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TOTAL INVESTMENTS - 95.7%
(identified cost, $1,960,308).... $ 2,490,829
OTHER ASSETS
LESS LIABILITIES - 4.3%.......... 112,967
-----------
NET ASSETS - 100.0%.............. $ 2,603,796
============
* Non-income-producing security.
See notes to financial statements
<PAGE>
Wright Selected Blue Chip Portfolio (WSBCP)
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (unaudited)
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ASSETS:
Investments --
Identified cost...................... $ 1,960,308
Unrealized appreciation.............. 530,521
------------
Total value (Note 1A).............. $ 2,490,829
Cash................................... 118,259
Dividends receivable................... 2,241
Receivable from investment adviser..... 17,255
------------
Total Assets......................... $ 2,628,584
------------
LIABILITIES:
Payable for investments purchased...... $ 19,180
Accrued expenses....................... 5,608
------------
Total Liabilities.................... $ 24,788
------------
NET ASSETS................................ $ 2,603,796
=============
NET ASSETS CONSIST OF:
Paid-in capital........................... $ 1,830,290
Accumulated net realized gain on investment
transactions........................... 218,393
Unrealized appreciation of investments.... 530,521
Accumulated undistributed net investment
income................................. 24,592
------------
Net assets applicable to outstanding shares $ 2,603,796
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 188,881
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $13.79
=============
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 (unaudited)
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INVESTMENT INCOME:
Income --
Dividends.............................. $ 21,437
------------
Expenses --
Investment Adviser fee (Note 3)........ $ 8,989
Administrator fee (Note 3)............. 690
Compensation of Trustees not affiliated with
the Investment Adviser or Administrator 3,393
Custodian and transfer agent fees (Note 1D) 8,610
Audit.................................. 11,975
Legal.................................. 4,487
Printing............................... 792
Amortization of organization expense
(Note 1E)............................ 37
Miscellaneous.......................... 4,753
------------
Total expenses..................... $ 43,726
------------
Deduct --
Preliminary reduction of Investment Adviser
fee (Note 3)......................... $ 8,989
Preliminary allocation of expenses to the
Investment Adviser (Note 3).......... 17,255
Reduction of Custodian fee (Note 1D)... 1,574
------------
Total deducted..................... $ 27,818
------------
Net expenses....................... $ 15,908
------------
Net investment income........... $ 5,529
------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions $ 218,441
Change in unrealized appreciation of
investments............................. (26,995)
------------
Net realized and unrealized gain....... $ 191,446
------------
Net increase in net assets from operations $ 196,975
=============
See notes to financial statements
<PAGE>
Wright Selected Blue Chip Portfolio (WSBCP)
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<TABLE>
<CAPTION>
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 1999 Dec. 31,1998
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE IN NET ASSETS:
From operations -
<S> <C> <C>
Net investment income...................................................... $ 5,529 $ 10,489
Net realized gain on investment transactions............................... 218,441 216,359
Change in unrealized appreciation of investments........................... (26,995) (330,517)
---------- ----------
Net increase (decrease) in net assets from operations.................... $ 196,975 $ (103,669)
Distributions to shareholders from net realized gain on
investment transactions (Note 2)........................................... (216,028) (307,343)
Distributions to shareholders from net investment income (Note 2)............ (10,601) -
Net increase (decrease) from Portfolio share transactions (exclusive of
amounts allocated to net investment income) (Note 4)....................... (847,704) 467,135
---------- ----------
Net increase (decrease) in net assets.................................... $ (877,358) $ 56,123
NET ASSETS:
At beginning of period....................................................... 3,481,154 3,425,031
---------- ----------
At end of period............................................................. $ 2,603,796 $ 3,481,154
=========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT
INCOME....................................................................... $ 24,592 $ 29,664
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
Financial Highlights
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<TABLE>
<CAPTION>
Year Ended December 31,
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Wright Selected Blue Chip Portfolio (WSBCP) 1999(6) 1998 1997 1996 1995 1994(5)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.000 $ 15.650 $ 14.000 $ 11.410 $ 9.320 $ 10.000
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income1 $ 0.064 $ 0.020 $ 0.110 $ 0.170 $ 0.100 $ 0.092
Net realized and unrealized gain (loss) 0.859 (0.270) 3.780 2.430 2.345 (0.712)
--------- ---------- ---------- --------- --------- ---------
Total income (loss) from investment
operations $ 0.923 $ (0.250) $ 3.890 $ 2.600 $ 2.445 $ (0.620)
--------- ---------- --------- --------- --------- ---------
Less distributions:
Dividends from investment income $ (0.053) $ - $ - $ (0.010) $ (0.070) $ (0.060)
Distributions from capital gains (1.080) (1.400) (2.240) - (0.285) -
Return of capital - - - - - -
--------- ---------- --------- ---------- ---------- ---------
Total distributions $ (1.133) $ (1.400) $ (2.240) $ (0.010) $ (0.355) $ (0.060)
--------- --------- ----------- ---------- ---------- ---------
Net asset value, end of period $ 13.790 $ 14.000 $ 15.650 $ 14.000 $ 11.410 $ 9.320
=========== =========== =========== =========== =========== ===========
Total return(3) 7.57% (2.65%) 32.1% 22.8% 26.3% (6.2%)
Ratios/Supplemental Data:
Net assets, end of year (000 omitted) $ 2,604 $ 3,481 $ 3,425 $ 2,668 $ 2,239 $ 1,452
Ratio of total expenses to averag
net assets(1) 1.26%(2)(4) 1.27%(4) 1.30%(4) 1.27%(4) 1.60%(4) 1.15%(2)
Ratio of net income to average net assets(1) 0.40%(2) 0.30% 0.70% 1.14% 0.96% 1.16%(2)
Portfolio turnover rate 29% 49% 40% 68% 64% 74%
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(1)During each of the periods presented, the investment adviser and/or the
administrator voluntarily 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:
1999(6) 1998 1997 1996 1995 1994(5)
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) per share $ (0.240) $ (0.036) $ 0.030 $ 0.066 $ (0.017) $ (0.078)
=========== =========== =========== =========== =========== ===========
Ratios (as a percentage of average net assets):
Expenses 3.16%(2) 2.11% 1.81% 1.97% 2.72% 3.30%(2)
=========== =========== =========== =========== =========== ===========
Net investment income (loss) (1.50%)(2) (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 periods presented, 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 as follows:
1999(6) 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
Actual ratio of net expenses 1.15% 1.15% 1.15% 1.06% 1.15%
- -----------------------------------------------------------------------------------------------------------------
(5)For the period from January 6, 1994 (start of business) to December 31, 1994.
(6)For the six months ended June 30, 1999 (unaudited)
</TABLE>
See notes to financial statements
<PAGE>
Wright International Blue Chip Portfolio (WIBCP)
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Portfolio of Investments - June 30, 1999 (Unaudited)
Shares Value
- ------------------------------------------------------------------------------
EQUITY INVESTMENTS - 93.4%
AUSTRIA - 2.3%
Bank Austria AG.................. 400 $ 21,043
-----------
CANADA - 8.2%
Loblaw Companies Ltd............. 800 $ 20,189
Magna Int'l. Inc. Class A........ 306 17,233
Power Financial Corp............. 950 17,972
Teleglobe Inc.................... 600 17,850
-----------
$ 73,244
-----------
DENMARK - 1.9%
Tele Denmark..................... 350 $ 17,176
-----------
FRANCE - 11.4%
Alcatel.......................... 175 $ 24,640
Axa Company FRF60................ 150 18,304
Pinault-Printemps Redoute SA..... 65 11,157
SAGEM SA......................... 40 26,736
Valeo............................ 260 21,455
-----------
$ 102,292
-----------
GERMANY - 6.6%
Bayerische Motoren Werke AG...... 30 20,640
DaimlerChrysler.................. 200 17,775
Veba AG.......................... 350 20,578
-----------
$ 58,993
-----------
GREECE - 2.2%
National Bank of Greece.......... 300 $ 19,625
-----------
ITALY - 4.6%
Benetton Group................... 12,000 $ 23,642
Telecom Italia Mobile............ 3,000 17,917
-----------
$ 41,559
-----------
JAPAN - 10.4%
Bellsystem24 Inc................. 50 $ 20,420
Bridgestone Corporation.......... 1,000 30,228
Honda Motor Co., Ltd............. 1,000 42,369
-----------
$ 93,017
-----------
MEXICO - 4.2%
Cemex X.A. - CPO................. 3,842 $ 18,940
Telefonos de Mexico S.A.......... 4,600 18,394
-----------
$ 37,334
-----------
NETHERLANDS - 11.5%
Abn Amro Holdings................ 676 $ 14,643
CSM N.V. Cert.................... 517 25,838
Getronics N.V.................... 622 23,931
Ing Groep N.V.................... 408 22,095
Unilever NV-CVA.................. 250 16,852
-----------
$ 103,359
-----------
SOUTH AFRICA - 1.9%
Sasol Beperk Limited............. 1,300 $ 9,270
Tiger Oats Limited............... 900 8,198
-----------
$ 17,468
-----------
SPAIN - 7.5%
Endesa S.A. Sponsored ADR........ 1,000 $ 21,250
Repsol S.A....................... 1,500 30,636
Telefonica....................... 312 15,033
-----------
$ 66,919
-----------
SWEDEN - 5.3%
Atlas Copco AB A Free............ 800 $ 21,809
Ericsson AB B Free............... 800 25,671
-----------
$ 47,480
-----------
SWITZERLAND - 3.7%
Novartis AG-ADR.................. 200 $ 14,602
Schweizerische Rueckversich...... 10 19,053
-----------
$ 33,655
-----------
UNITED KINGDOM - 11.7%
Airtours......................... 2,700 $ 21,437
Astrazeneca PLC.................. 600 23,185
Cable & Wireless................. 1,350 17,205
Wm. Morrison Supermarkets PLC.... 9,800 22,231
Wolseley PLC..................... 2,837 21,362
-----------
$ 105,420
-----------
TOTAL INVESTMENTS - 93.4%
(identified cost, $770,633)...... $ 838,584
OTHER ASSETS
LESS LIABILITIES - 6.6%.......... 59,625
-----------
NET ASSETS - 100.0%.............. $ 898,209
===========
ADR - American Depositary Receipt
See notes to financial statements
<PAGE>
Wright International Blue Chip Portfolio (WIBCP)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments --
Identified cost...................... $ 770,633
Unrealized appreciation............. 67,951
------------
Total value (Note 1A).............. $ 838,584
Cash................................... 33,413
Receivable for Fund shares sold........ 25,951
Dividends receivable................... 1,356
Receivable from Investment Adviser..... 31,468
Receivable for foreign taxes withheld.. 954
------------
Total assets......................... $ 931,726
------------
LIABILITIES:
Foreign cash overdraft................. $ 8,281
Payable for Fund shares reacquired..... 16,961
Payable for open forward foreign currency
exchange contracts (Notes 1J & 9).... 49
Accrued expenses....................... 8,226
------------
Total liabilities.................... $ 33,517
------------
NET ASSETS................................ $ 898,209
=============
NET ASSETS CONSIST OF:
Paid-in capital........................... $ 797,293
Accumulated net realized gain on investment
and foreign currency transactions...... 39,809
Unrealized appreciation of investments and
translations of assets and liabilities in
foreign currencies..................... 67,934
Accumulated undistributed net investment loss (6,827)
------------
Net assets applicable to outstanding shares $ 898,209
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 87,673
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $10.24
=============
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 (unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends.............................. $ 12,371
Less: Foreign taxes.................... (1,123)
------------
Total investment income.............. $ 11,248
------------
Expenses --
Investment Adviser fee (Note 3)........ $ 4,322
Administrator fee (Note 3)............. 271
Compensation of Trustees not affiliated with
the Investment Adviser or Administrator 3,393
Custodian and transfer agent fees (Note 1D) 15,843
Audit.................................. 11,975
Legal.................................. 4,487
Printing............................... 792
Amortization of organization expense
(Note 1E)............................ 33
Miscellaneous.......................... 5,234
------------
Total expenses..................... $ 46,350
------------
Deduct --
Preliminary reduction of Investment
Adviser fee (Note 3)................. $ 4,294
Preliminary reduction of Administrator fee
(Note 3)............................. 271
Preliminary allocation of expense to the
Investment Adviser (Note 3)......... 31,468
Reduction of Custodian fee (Note 1D)... 611
------------
Total deducted..................... $ 36,644
------------
Net expenses....................... $ 9,706
------------
Net investment income........... $ 1,542
------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investment and
foreign currency transactions.......... $ 39,804
Change in unrealized appreciation of investments
and translation of assets and liabilities
in foreign currency.................... (76,112)
------------
Net realized and unrealized loss....... $ (36,308)
------------
Net decrease in net assets from operations $ (34,766)
=============
See notes to financial statements
<PAGE>
Wright International Blue Chip Portfolio (WIBCP)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 1999 Dec. 31, 1998
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
From operations -
<S> <C> <C>
Net investment income (loss)............................................... $ 1,542 $ (3,031)
Net realized gain on investments and foreign currency
transactions............................................................. 39,804 156,207
Change in unrealized appreciation of investments and translation
of assets and liabilities in foreign currency............................ (76,112) (56,731)
---------- ----------
Net increase (decrease) in net assets from operations.................... $ (34,766) $ 96,445
Distributions to shareholders from net realized gain
on investment transactions (Note 2)........................................ (151,303) (68,163)
Net decrease from Portfolio share transactions (exclusive of
amounts allocated to net investment income) (Note 4)....................... (191,591) (163,101)
---------- ----------
Net decrease in net assets............................................... $ (377,660) $ (134,819)
NET ASSETS:
At beginning of period....................................................... 1,275,869 1,410,688
---------- ----------
At end of period............................................................. $ 898,209 $ 1,275,869
=========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT LOSS................................... $ (6,827) $ (8,369)
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------------------------
Wright International Blue Chip Portfolio (WIBCP) 1999(6) 1998 1997 1996 1995 1994(5)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $ 12.260 $ 11.800 $ 11.810 $ 10.060 $ 9.140 $ 10.000
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss)(1).............. $ 0.003 $ (0.023) $ 0.032 $ (0.043) $ 0.003 $ 0.031
Net realized and unrealized gain (loss)...... (0.290) 1.053 0.588 1.793 0.967 (0.886)
---------- ---------- ----------- ----------- ---------- ---------
Total income (loss) from investment
operations $ (0.287) $ 1.030 $ 0.620 $ 1.750 $ 0.970 $ (0.855)
---------- --------- ----------- ----------- --------- ----------
Less distributions:
Dividends from investment income............ $ - $ - $ - $ - $ (0.005) $ (0.005)
Return of capital........................... - - - - (0.013)+ -
Distributions from capital gains............ (1.733) (0.570) (0.630) - - -
Tax distribution from paid-in capital....... - - - - (0.032) -
--------- ---------- --------- --------- --------- ---------
Total distributions......................... $ (1.733) $ (0.570) $ (0.630) $ - $ (0.050) $ (0.005)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period................. $ 10.240 $ 12.260 $ 11.800 $ 11.810 $ 10.060 $ 9.140
=========== =========== =========== =========== =========== ===========
Total return3 ................................. (2.1%) 8.5% 5.7% 17.4% 10.6% (8.1%)
Ratios/Supplemental Data:
Net assets, end of period (000 omitted)...... $ 898 $ 1,276 $ 1,411 $ 1,457 $ 1,365 $ 1,229
Ratio of total expenses to average net assets(1) 1.97(2)(4) 2.00%(4) 2.00%(4) 2.31%(4) 2.28%(4) 1.80%(2)
Ratio of net income (loss) to average
net assets(1).............................. 0.29%(2) (0.21%) 0.25% (0.42)% 0.06% 0.19%(2)
Portfolio turnover rate...................... 27% 61% 94% 44% 31% 0%
- ---------------------------------------------------------------------------------------------------------------------------------
(1)During each of the periods presented, the investment adviser and the
administrator voluntarily 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:
1999(6) 1998 1997 1996 1995 1994(5)
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss per share................. $ (0.068) $ (0.369) $ (0.262) $ (0.253) $ (0.920) $ (0.434)
=========== =========== =========== =========== =========== ===========
Ratios (as a percentage of average net assets):
Expenses..................................... 8.83%2 5.16% 4.30% 4.37% 4.18% 4.65%2
=========== =========== =========== =========== =========== ===========
Net investment loss.......................... (6.57%)2 (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 periods presented, 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 as follows:
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
Actual ratio of net expenses 1.85% 1.85% 1.85% 1.85% 1.85%
- -----------------------------------------------------------------------------------------------------------------
(5)For the period from January 6, 1994 (start of business) to December 31, 1994.
(6)For the six months ended June 30, 1999 (unaudited).
(+)Represents a distribution in excess of net investment income.
</TABLE>
See notes to financial statements
<PAGE>
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.
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. Interim Financial Information - The interim financial statements relating
to June 30, 1999 and for the period then ended have not been audited by
independent certified public accountants, but in the opinion of the Trust's
management, reflect all adjustments, consisting of normal recurring
adjustments, necessary for the fair presentation of the financial
statements.
<PAGE>
I. 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.
J. Forward Foreign Currency Contracts - WIBCP 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. WIBCP 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.
(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 six months ended June 30, 1999, the effective annual
rate for advisory and administration charges for each Portfolio was as follows:
WSBCP WIBCP
Investment Advisory 0.65% 0.82%
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:
<TABLE>
<CAPTION>
WSBCP WIBCP
<S> <C> <C>
Preliminary reduction of Investment Adviser fees $ 8,989 $ 4,294
Preliminary allocation of expense to the Investment Adviser 17,255 31,468
Preliminary reduction of Administrator fees - 271
</TABLE>
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>
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------
Wright Selected Blue Chip Portfolio -
<S> <C> <C> <C> <C>
Sales.................................. 17,773 $ 240,438 271,428 $ 4,112,949
Issued to shareholders in payment
of distributions declared............ 18,425 226,629 19,559 307,343
Redemptions............................ (95,930) (1,314,771) (261,262) (3,953,157)
-------- ---------- -------- ----------
Net increase (decrease)............ (59,732) $ (847,704) 29,725 $ 467,135
========= ============ ========= ============
Wright International Blue Chip Portfolio -
Sales.................................. 8,858 $ 103,348 152,535 $ 1,924,884
Issued to shareholders in payment
of distributions declared............ 15,029 151,303 5,243 68,163
Redemptions............................ (40,243) (446,242) (173,285) (2,156,148)
-------- ------------ --------- ------------
Net decrease....................... (16,356) $ (191,591) (15,507) $ (163,101)
========= ============ ========= ============
</TABLE>
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations, for
the six months ended June 30, 1999, were as follows:
Wright Selected Wright International
(Unaudited) Blue Chip Portfolio Blue Chip Portfolio
- -------------------------------------------------------------------------------
Purchases - $ 792,832 $ 276,396
============ ============
Sales - $ 1,848,953 $ 608,053
============ ============
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) in value of the
investments owned at June 30, 1999, as computed on a federal income tax basis,
are as follows:
Wright Selected Wright International
(Unaudited) Blue Chip Portfolio Blue Chip Portfolio
- -------------------------------------------------------------------------------
Aggregate cost................. $ 1,960,308 $ 770,633
============ ============
Gross unrealized appreciation.. $ 598,069 $ 128,075
Gross unrealized depreciation.. (67,548) (60,124)
------------ ------------
Net unrealized appreciation.... $ 530,521 $ 67,951
============ ============
<PAGE>
(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.
(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 six months ended June 30, 1999.
(9) FINANCIAL INSTRUMENTS
WIBCP regularly trades financial instruments with off-balance sheet risk in
the normal course of its investing activities in order to manage exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include forward foreign currency exchange contracts. The
notional or contractual amounts of these instruments represent the investment
WIBCP has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered.
As of June 30, 1999, WIBCP had the following forward foreign currency
exchange contracts open:
<TABLE>
<CAPTION>
Net Unrealized
Settlement Contracts In Exchange For Contracts Appreciation
Date Currency to Deliver (in U. S. Dollars) at Value (Depreciation)
- --------------------------------------------------------------------------------------------------------------
PURCHASES
<S> <C> <C> <C> <C> <C>
7/01/99 Danish Krone 122,349 $17,077 $16,962 $(115)
SALES
7/06/99 Great Britain Pound 11,172 17,666 17,600 66
At June 30, 1999, WIBCP had sufficient cash and/or securities to cover any
commitments under these contracts.
</TABLE>
<PAGE>
Wright Investors' Service Distributors, Inc.
1000 Lafayette Boulevard, Bridgeport, CT 06604
Semi-Annual Report
Officers and Trustees of the Funds
Peter M. Donovan, President and Trustee
H. Day Brigham, Jr., Vice President , Secretary and Trustee
A. M. Moody III, Vice President and Trustee
Judith R. Corchard, Vice President and Trustee
Dorcas R. Hardy, Trustee
Leland Miles, Trustee
Lloyd F. Pierce, Trustee
Richard E. Taber, Trustee
Raymond Van Houtte, Trustee
James L. O'Connor, Treasurer
William J. Austin, Jr., Assistant Treasurer
Administrator
Eaton Vance Management
255 State Street
Boston, Massachusetts 02109
Investment Adviser
Wright Investors' Service
1000 Lafayette Boulevard
Bridgeport, Connecticut 06604
Custodian and Transfer Agent
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
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
