THE WRIGHT MANAGED BLUE CHIP SERIES TRUST
ANNUAL REPORT
DECEMBER 31 , 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................................5
Financial Statements....................................7
Wright International Blue Chip Portfolio
Portfolio of Investments...............................11
Financial Statements...................................13
Notes to Financial Statements ................................16
<PAGE>
LETTER TO SHAREHOLDERS
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February 2000
Dear Shareholders:
The dreaded Y2K changeover has come and gone with little apparent effect on
global economies, corporate operations or securities markets. Billions of
dollars spent by corporations, governments and organizations to prepare for Y2K
averted any serious problems, the likelihood of which may have been exaggerated
in any case. However, the early days of trading in 2000 were a chaotic
introduction to the New Year. The 30-year Treasury bond lost more than a point
on January 3, the first trading session of the year, while technology stocks
gained 3%. Day two saw bonds advance sharply and tech stocks drop almost 6%. On
the third trading day, bonds were down again, as were tech stocks, although the
Dow staged a significant rebound. International stocks have followed the
volatile lead of U.S. equities in the first weeks of 2000.
Apparently, what we said some time ago still pertains: "Market volatility
is likely to remain elevated so long as uncertainties about the direction of
interest rates persist." The strictly upside volatility in stocks seen during
the fourth quarter of 1999 has been replaced by a two-sided volatility. As
everyone with any memory of historical stock market cycles knows, stocks don't
only go higher and there is more to investing than buying last year's winners.
In the market's favor going forward in 2000 is the fact that, outside of the
technology sector and select other investor favorites, valuations in the broad
market are quite reasonable.
Meanwhile, the economic backdrop remains mostly positive for financial
assets. The U.S. economy is beginning its record tenth year of expansion, and
while some slowing is likely, growth should still be quite healthy. In Europe
and most of Asia, business is on the mend. Inflation may tick up modestly this
year, but markets are still quite competitive, continuing to constrain pricing
power. Nevertheless, corporate profits stand to rise roughly 10% in the coming
year, as business relentlessly pursues productivity improvements.
The Federal Reserve increased interest rates in February (rates have also
gone higher in Euroland and elsewhere), and it is widely expected that the Fed
will raise rates again at its March FOMC meeting, an expectation that aggravated
selling pressures in global stocks and bonds early in 2000. While the interest
rate outlook is the most problematic aspect of the year 2000 economic
environment, we believe that the bulk of the rise in bond yields is behind us.
On the whole, we look forward to the opportunities and challenges that lie ahead
in 2000.
The following Management Discussion addresses the various economic,
political and market factors affecting the investment performance of the Wright
Equity Funds during 1999 and prospects for the period ahead.
Sincerely,
/s/Peter M. Donovan
Peter M. Donovan, President
<PAGE>
Management Discussion
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Following last summer's correction, global stock prices rebounded strongly
in the fourth quarter to close 1999 at record levels in most major markets.
Global economic conditions continued to firm over the final three months of
1999, led by the U.S. economy, which completed its fourth straight year of 4%
growth. Corporate profit reports generally made for good reading, and inflation
remained subdued - although the U.S. economy's strong growth, along with
improving business overseas, caused the Federal Reserve to raise interest rates
in November before the Y2K changeover effectively put policy in a
liquidity-supplying mode. Despite higher interest rates, global stock markets
took on an increasingly confident tone as Y2K neared, and every one of the 29
largest national markets advanced in the fourth quarter.
Once again, the technology sector was the prime mover in the fourth-quarter
market. Driven by a manic demand for tech stocks, the Nasdaq rose 48% in the
last three months of 1999, bringing its 1999 gain to 86%, the biggest annual
increase ever for a U.S. stock market index. Most stocks didn't fare as well as
Nasdaq in 1999. In fact, while tech stocks were soaring, the NYSE cumulative
advance/decline line hit a four-year low in December. Even Nasdaq saw 2,000 of
its 4,800 constituent stocks decline last year. Clearly, without the great
returns racked up by tech stocks this past year, the S&P 500 would not have been
able to earn its fifth straight yearly return in excess of 20%.
Wright expects that underlying economic conditions will remain favorable
for stocks in the New Year. According to the International Monetary Fund, the
world economy will grow 3.5% in 2000, with inflation staying under 2%. U.S. GDP
growth will probably slow from the 4% pace of the last three years, but growth
approaching 3.5% seems well within the economy's capabilities. Core consumer
prices may rise as much as 2.5% in the U.S. this year; even so, it would still
be the fourth lowest rate in three decades. The Federal Reserve worries that
tight labor markets will boost wages to the point that they can't be offset by
productivity gains, but there is little sign of this yet.
No doubt the steep rise in technology share prices - perhaps the real
target of the Fed's interest rate hikes - has perplexed the Fed, indeed, most of
us. From the Fed's point of view, there was a logical basis for tech stocks to
surge 50% in the six months following the start of Fed easing in September 1998.
But how does one explain the 40% price advance in the six months since the Fed
began to tighten at midyear 1999? So far at least, about the only people
chastened by the Fed's rate hikes have been bond investors and shareholders in
companies in the "old economy" (including many with something most e-businesses
lack - profits). Record highs in the DJIA and the S&P 500 have swelled consumer
confidence to 30-year highs. Of course, the wealth effect on economic growth is
a two-edged sword. Should tech stocks lead the rest of the market lower, then
consumer spending may be hard hit by falling confidence. Ironically, this is
what the Fed is hoping to avoid. But it may, in fact, be set on such a course.
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO
The Wright Selected Blue Chip Portfolio (WSBCP) had a 9.7% return in the
fourth quarter of 1999, trailing the S&P 400 MidCap index's return of 17.2%. The
portfolio's technology holdings, which amounted to 34% of the fund at year-end
1999 (S&P 400 = 27%), performed well in absolute terms in the fourth quarter,
but they still lagged the results of the technology stocks held in the S&P
MidCap index. (Some benchmark tech stocks, such as Veritas Software, Siebel
Systems and Qlogic, had returns of better than 125% for the quarter.) Despite
the fourth-quarter shortfall, WSBCP had a total return of 14.0% for all of 1999,
just 0.7% behind the 14.7% return of the S&P MidCap index.
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
Foreign stock markets continued to outperform U.S. stocks in the fourth
quarter of 1999, ending their best year of relative performance since 1993.
Fourth-quarter gains were broadly based, with the Pacific ex -Japan region
(+20%), Japan (+18%) and Europe (+16%) all besting the U.S. returns. The Wright
International Blue Chip Portfolio (WIBCP) increased 32.5% in the fourth quarter
of 1999, outperforming both the S&P 500 (+14.9%) and the FTSE Actuaries World ex
U.S. index (+17.6%). For the entire year 1999, WIBCP's total return was 32.1%,
slightly ahead of the 31.8% return for the FTSE World ex U.S. index and well
ahead of the S&P 500's 21.0%.
The WIBC Portfolio's strong relative showing in the final quarter of 1999 was
powered in part by good performance from technology stocks globally. During
1999, the portfolio increased its positions in France and Finland, two markets
that were strong in the fourth quarter and for all of 1999.
<PAGE>
WRIGHT MANAGED BLUE CHIP SERIES TRUST
WRIGHT SELECTED BLUE CHIP PORTFOLIO
Growth of $10,000 invested 1/31/94* through 12/31/99
Annual Total Return
Lst 1 Yr Lst 5 Yr Since Inception
Wright Selected Blue Chip Portfolio 14.0% 17.8% 13.7%
S&P MidCap 400 14.7% 23.0% 17.9%
NYSE 10.9% 23.5% 18.8%
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 $21,335 by December 31, 1999.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Selected NYSE
Blue Chip Portfolio S&P MidCap 400 Index
01/31/94 $10,000 $10,000 $10,000
12/31/94 $9,391 $ 9,423 $9,666
12/31/95 $11,856 $12,330 $13,037
12/31/96 $14,559 $14,691 $15,894
12/31/97 $19,230 $19,425 $21,117
12/31/98 $18,720 $23,124 $25,031
12/31/99 $21,335 $26,517 $27,752
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WRIGHT MANAGED BLUE CHIP SERIES TRUST
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO
Growth of $10,000 invested 1/31/94* through 12/31/99
Annual Total Return
Lst 1 Yr Lst 5 Yr Since Inception
Wright Int'l Blue Chip Portfolio 32.1% 14.4% 10.4%
FT World Ex U.S. Index 31.8% 12.7% 10.6%
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 $17,911 by
December 31, 1999.
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
12/31/99 $17,911 $18,145
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NOTE: 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. For comparison with
other averages, the investment results are shown from the first month-end since
the fund's inception. The investment results of the funds are net of all fees
and expenses charged to the funds. No fees or expenses have been deducted from
the other averages. The Benchmark for the Wright Variable Annuity SBC Fund has
been changed to the S&P 500 Index as this is more consistent with the fund
manager's objective. The Lipper Growth Fund is no longer reported by Lipper as
Lipper has defined new categories of investment objectives.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS and 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.
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO (WSBCP)
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Portfolio of Investments - December 31, 1999
Shares Value
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Equity Investments - 95.6%
CHEMICALS - 0.9%
Du Pont (E.I.) de Nemours........ 300 $ 19,763
-----------
DIVERSIFIED - 3.4%
General Electric Co.............. 300 $ 46,425
Tyco Int'l....................... 800 31,100
-----------
$ 77,525
-----------
DRUGS, COSMETICS & HEALTHCARE - 9.4%
Bard (C.R.)...................... 1,100 $ 58,300
Biogen, Inc...................... 400 33,800
Johnson & Johnson................ 800 74,500
Merck & Co., Inc................. 700 46,943
-----------
$ 213,543
-----------
ELECTRONICS - 34.1%
Adobe Systems Inc................ 1,800 $ 121,050
Dallas Semiconductor............. 1,000 64,437
Gateway 2000, Inc.*.............. 1,600 115,300
Intel Corporation................ 1,000 82,312
International Business Machines.. 600 64,800
Microsoft Corp.*................. 500 58,375
Solectron Corp.*................. 900 85,613
Sun Microsystems, Inc.*.......... 2,400 185,850
-----------
$ 777,737
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FINANCIAL - 18.5%
BB&T Corporation................. 1,800 $ 49,275
Commerce Bancshares Inc.......... 1,050 35,569
Compass Bancshares............... 1,900 42,394
Edwards (A.G.), Inc.............. 1,550 49,697
Federal National Mort. Assoc..... 1,000 62,437
First Security Corp.............. 2,200 56,169
KeyCorp (New).................... 2,000 44,250
MBIA Inc......................... 500 26,406
Southtrust Corp.................. 1,450 54,828
-----------
$ 421,025
-----------
FOOD - 1.8%
Universal Foods Corp............. 2,000 $ 40,750
-----------
MACHINERY & EQUIPMENT - 2.9%
Ingersoll Rand Co................ 1,200 $ 66,075
-----------
METAL PRODUCERS - 1.8%
Alcoa Inc........................ 500 $ 41,500
-----------
METAL PRODUCTS MANUFACTURERS - 2.4%
Illinois Tool Works.............. 800 $ 54,050
-----------
OIL, GAS & COAL - 2.4%
Chevron Corp..................... 400 $ 34,650
Exxon Mobil Corp................. 264 21,271
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$ 55,921
-----------
PAPER - 2.0%
Kimberly-Clark................... 700 $ 45,675
-----------
PRINTING & PUBLISHING - 2.9%
Gannett Co....................... 800 $ 65,250
-----------
RECREATION - 1.5%
Brinker International Inc*....... 1,400 $ 33,600
-----------
RETAILERS - 3.9%
Office Depot*.................... 1,700 $ 18,594
Ross Stores Inc.................. 1,600 28,700
Wal-Mart Stores Inc.............. 600 41,475
-----------
$ 88,769
-----------
UTILITIES - 6.0%
Duke Energy Corp................. 1,100 $ 55,138
SBC Communications, Inc.......... 1,000 48,750
TECO Energy, Inc................. 1,800 33,412
-----------
$ 137,300
-----------
<PAGE>
MISCELLANEOUS - 1.7%
Marsh & McLennan Cos. Inc........ 400 $ 38,275
-----------
TOTAL INVESTMENTS - 95.6%
(identified cost, $1,535,503).... $ 2,176,758
OTHER ASSETS
LESS LIABILITIES - 4.4%.......... 100,280
-----------
NET ASSETS - 100.0%.............. $ 2,277,038
============
* 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
December 31, 1999
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ASSETS:
Investments--
Identified cost...................... $ 1,535,503
Unrealized appreciation.............. 641,255
------------
Total value (Note 1A).............. $ 2,176,758
Cash................................... 85,536
Dividends receivable................... 1,990
Receivable from investment adviser..... 15,491
------------
Total Assets......................... $ 2,279,775
------------
LIABILITIES:
Accrued expenses....................... $ 2,737
------------
Total Liabilities.................... $ 2,737
------------
NET ASSETS................................ $ 2,277,038
=============
NET ASSETS CONSIST OF:
Paid-in capital........................... $ 1,369,178
Accumulated net realized gain on investment
transactions........................... 239,093
Unrealized appreciation of investments.... 641,255
Accumulated undistributed net investment
income................................. 27,512
------------
Net assets applicable to outstanding
shares.............................. $ 2,277,038
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 155,851
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $14.61
=============
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
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INVESTMENT INCOME:
Income--
Dividends.............................. $ 37,736
------------
Expenses--
Investment Adviser fee (Note 3)........ $ 16,556
Administrator fee (Note 3)............. 1,279
Compensation of Trustees not affiliated with
the Investment Adviser or Administrator 6,736
Custodian and transfer agent fees (Note 1D) 17,726
Audit.................................. 13,475
Legal.................................. 5,926
Printing............................... 103
Amortization of organization expenses
(Note 1E)............................ 37
Miscellaneous.......................... 1,986
------------
Total expenses..................... $ 63,824
------------
Deduct--
Reduction of Investment Adviser
fee (Note 3)......................... $ 16,556
Allocation of expenses to the
Investment Adviser (Note 3).......... 15,491
Reduction of Custodian fee (Note 1D)... 2,490
------------
Total deducted..................... $ 34,537
------------
Net expenses....................... $ 29,287
------------
Net investment income........... $ 8,449
------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions
(identified cost basis)................ $ 239,141
Change in unrealized appreciation of
investments........................... 83,739
------------
Net realized and unrealized gain....... $ 322,880
------------
Net increase in net assets from
operations............................ $ 331,329
=============
See notes to financial statements
<PAGE>
WRIGHT SELECTED BLUE CHIP PORTFOLIO (WSBCP)
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Year Ended December 31
STATEMENTS OF CHANGES IN NET ASSETS 1999 1998
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INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment income......................... $ 8,449 $ 10,489
Net realized gain on investment
transactions.............................. 239,141 216,359
Change in unrealized appreciation of
investments............................... 83,739 (330,517)
---------- ----------
Net increase (decrease) in net assets
from operations............................ $ 331,329 $ (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 (Note 4)...................... (1,308,816) 467,135
----------- ----------
Net increase (decrease) in net assets...... $(1,204,116) $ 56,123
NET ASSETS:
At beginning of year.......................... 3,481,154 3,425,031
----------- ----------
At end of year................................ $ 2,277,038 $3,481,154
=========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT
INCOME....................................... $ 27,512 $ 29,664
=========== ===========
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
Wright Selected Blue Chip Portfolio (WSBCP) 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 14.000 $ 15.650 $ 14.000 $ 11.410 $ 9.320
--------- ---------- --------- --------- ---------
Income from investment operations:
Net investment income(1) $ 0.110 $ 0.020 $ 0.110 $ 0.170 $ 0.100
Net realized and unrealized gain (loss) 1.633 (0.270) 3.780 2.430 2.345
--------- ----------- --------- --------- ---------
Total income (loss) from investment operations $ 1.743 $ (0.250) $ 3.890 $ 2.600 $ 2.445
--------- ----------- --------- --------- ---------
Less distributions:
Dividends from investment income $ (0.053) $ - $ - $ (0.010) $ (0.070)
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)
--------- ----------- --------- --------- ---------
Net asset value, end of year $ 14.610 $ 14.000 $ 15.650 $ 14.000 $ 11.410
=========== =========== =========== =========== ===========
Total return(2) 14.0% (2.65%) 32.1% 22.8% 26.3%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted) $ 2,277 $ 3,481 $ 3,425 $ 2,668 $ 2,239
Ratio of total expenses to average net assets 1.25% 1.27% 1.30% 1.27% 1.60%
Ratio of expenses after custodian fee reduction
to average net assets(3) 1.15% 1.15% 1.15% 1.06% 1.15%
Ratio of net income to average net assets 0.33% 0.30% 0.70% 1.14% 0.96%
Portfolio turnover rate 45% 49% 40% 68% 64%
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(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 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) per share $ (0.310) $ (0.036) $ 0.030 $ 0.066 $ (0.017)
=========== =========== =========== =========== ===========
Ratios (as a percentage of average net assets):
Expenses 2.51% 2.11% 1.81% 1.97% 2.72%
=========== =========== =========== =========== ===========
Expenses after custodian fee reduction(3) 2.41% 1.99% 1.66% 1.76% 2.27%
=========== =========== =========== =========== ===========
Net investment income (loss) (0.93%) (0.54%) 0.19% 0.44% (0.16%)
=========== =========== =========== =========== ===========
- ---------------------------------------------------------------------------------------------------------------------------------
(2)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
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.
(3)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.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO (WIBCP)
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Portfolio of Investments - December 31, 1999
Shares Value
- -------------------------------------------------------------------------------
EQUITY INVESTMENTS - 92.6%
CANADA - 3.3%
Nortel Networks Corp. (Common)... 300 $ 30,148
-----------
DENMARK - 2.8%
Tele Denmark AS.................. 350 $ 26,002
-----------
FINLAND - 5.9%
Finnlines Oyj (Osake)............ 350 $ 10,932
Metsa-Serla Oyj (B Osake)........ 1,450 16,875
Tietoenator Oyj Osake............ 420 26,238
-----------
$ 54.045
-----------
FRANCE - 20.8%
Alcatel.......................... 175 $ 40,203
Altran Technologies.............. 50 30,228
Atos SA*......................... 120 19,902
Axa Company FRF60................ 150 20,918
France Telecom................... 100 13,230
Pinault-Printemps Redoute SA..... 65 17,159
Stmicroelectronics NV............ 180 27,713
Vivendi SA....................... 250 22,583
-----------
$ 191,936
-----------
GERMANY - 6.6%
Allianz AG Holding............... 50 $ 16,827
Heidelberger Zement.............. 200 15,618
Linde AG......................... 200 11,063
Mannesmann AG.................... 70 17,069
-----------
$ 60,577
-----------
GREECE - 2.4%
National Bank of Greece.......... 300 $ 22,119
-----------
HONG KONG - 1.4%
Bank of East Asia Ltd. (The)..... 4,800 $ 13,338
-----------
ITALY - 3.6%
Telecom Italia Mobile............ 3,000 $ 33,435
-----------
JAPAN - 14.8%
Acom Co. Ltd..................... 100 $ 9,787
Bellsystem24 Inc................. 50 54,752
Fanuc Ltd........................ 100 12,720
Promise Co., Ltd................. 200 10,168
Ricoh Company, Ltd............... 1,000 18,831
Sony Corporation................. 100 29,625
-----------
$ 135,883
-----------
NETHERLANDS - 4.6%
Abn Amro Holdings................ 684 $ 17,092
Ing Groep N.V.................... 412 24,883
-----------
$ 41,975
-----------
SOUTH AFRICA - 2.3%
Sasol Beperk Limited............. 1,300 $ 10,953
Tiger Oats Limited............... 900 10,373
-----------
$ 21,326
-----------
SPAIN - 6.4%
Grupo Ferrovial.................. 1,000 $ 14,510
Repsol YPF SA.................... 900 20,876
Telefonica SA*................... 936 23,389
-----------
$ 58,775
-----------
SWEDEN - 5.6%
Tel. AB LM Ericsson.............. 800 $ 51,452
-----------
SWITZERLAND - 2.6%
Compagnie Fin Richemont.......... 10 $ 23,859
-----------
UNITED KINGDOM - 9.5%
Astrazeneca PLC.................. 280 $ 11,625
British Telecommunication PLC.... 700 16,743
Cable & Wireless................. 1,350 22,881
Vodafone Airtouch PLC............ 3,300 16,249
Wolseley PLC..................... 2,837 19,829
-----------
$ 87,327
-----------
<PAGE>
TOTAL INVESTMENTS - 92.6%
(identified cost, $616,287)...... $ 852,197
OTHER ASSETS
LESS LIABILITIES - 7.4%.......... 68,145
-----------
NET ASSETS - 100.0%.............. $ 920,342
===========
* Non-income producing security.
See notes to financial statements
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO (WIBCP)
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
- -------------------------------------------------------------------------------
ASSETS:
Investments--
Identified cost...................... $ 616,287
Unrealized appreciation............. 235,910
------------
Total value (Note 1A).............. $ 852,197
Cash................................... 29,703
Dividends receivable................... 347
Receivable from Investment Adviser..... 43,200
Receivable for foreign taxes withheld.. 6
------------
Total assets......................... $ 925,453
------------
LIABILITIES:
Accrued expenses....................... $ 5,111
------------
Total liabilities.................... $ 5,111
------------
NET ASSETS................................ $ 920,342
=============
NET ASSETS CONSIST OF:
Paid-in capital........................... $ 562,252
Accumulated net realized gain on investment
and foreign currency transactions...... 119,869
Unrealized appreciation of investments and
translations of assets and liabilities in
foreign currencies..................... 235,898
Undistributed net investment income....... 2,323
------------
Net assets applicable to outstanding
shares ............................... $ 920,342
=============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING............................ 66,571
=============
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PRICE PER SHARE
OF BENEFICIAL INTEREST................. $13.82
=============
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Income--
Dividends.............................. $ 15,678
Less: Foreign taxes.................... (1,583)
------------
Total investment income.............. $ 14,095
------------
Expenses--
Investment Adviser fee (Note 3)........ $ 7,336
Administrator fee (Note 3)............. 458
Compensation of Trustees not affiliated with
the Investment Adviser or Administrator 6,687
Custodian and transfer agent fees (Note 1D) 32,758
Audit.................................. 13,475
Legal.................................. 5,926
Printing............................... 92
Amortization of organization expenses
(Note 1E)............................ 33
Miscellaneous.......................... 2,380
------------
Total expenses..................... $ 69,145
------------
Deduct --
Reduction of Investment
Adviser fee (Note 3)................. $ 7,336
Reduction of Administrator fee
(Note 3)............................. 458
Allocation of expense to the
Investment Adviser (Note 3)......... 43,210
Reduction of Custodian fee (Note 1D)... 1,174
------------
Total deducted..................... $ 52,178
------------
Net expenses....................... $ 16,967
------------
Net investment loss............. $ (2,872)
------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment and foreign
currency transactions(identified cost basis)$ 123,795
Change in unrealized appreciation of investments
and translation of assets and liabilities
in foreign currency.................... 91,852
------------
Net realized and unrealized gain....... $ 215,647
------------
Net increase in net assets from operations $ 212,775
=============
See notes to financial statements
<PAGE>
WRIGHT INTERNATIONAL BLUE CHIP PORTFOLIO (WIBCP)
- -------------------------------------------------------------------------------
Year Ended December 31
STATEMENTS OF CHANGES IN NET ASSETS 1999 1998
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment loss.....................$ (2,872) $ (3,031)
Net realized gain on investments and
foreign currency transactions......... 123,795 156,207
Change in unrealized appreciation of
investments and translation of assets
and liabilities in foreign currency... 91,852 (56,731)
---------- ----------
Net increase in net assets from
operations........................... $ 212,775 $ 96,445
Distributions to shareholders from net
realized gain on investment
transactions (Note 2)................. (151,303) (68,163)
Net decrease from Portfolio share
transactions (Note 4)................. (416,999) (163,101)
---------- ----------
Net decrease in net assets............ $ (355,527) $ (134,819)
NET ASSETS:
At beginning of year...................... 1,275,869 1,410,688
---------- ----------
At end of year............................ $ 920,342 $1,275,869
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME
(ACCUMULATED UNDISTRIBUTED
NET INVESTMENT LOSS)..................... $ 2,323 $ (8,369)
=========== ===========
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
Wright International Blue Chip Portfolio (WIBCP) 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.260 $ 11.800 $ 11.810 $ 10.060 $ 9.140
--------- ----------- --------- --------- ---------
Income from investment operations:
Net investment income (loss)(1) $ (0.088) $ (0.023) $ 0.032 $ (0.043) $ 0.003
Net realized and unrealized gain 3.381 1.053 0.588 1.793 0.967
--------- ----------- --------- --------- ---------
Total income (loss) from investment operations $ 3.293 $ 1.030 $ 0.620 $ 1.750 $ 0.970
--------- ----------- --------- --------- ---------
Less distributions:
Dividends from investment income $ - $ - $ - $ - $ (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)
--------- ----------- --------- --------- ---------
Net asset value, end of year $ 13.820 $ 12.260 $ 11.800 $ 11.810 $ 10.060
=========== =========== =========== =========== ===========
Total return(2) 32.1% 8.5% 5.7% 17.4% 10.6%
Ratios/Supplemental Data(1):
Net assets, end of year (000 omitted) $ 920 $ 1,276 $ 1,411 $ 1,457 $ 1,365
Ratio of total expenses to average net assets(1) 1.98% 2.00% 2.00% 2.31% 2.28%
Ratio of expenses after custodian fee reduction
to average net assets(3) 1.85% 1.85% 1.85% 1.85% 1.85%
Ratio of net income (loss) to average net assets (0.31%) (0.21%) 0.25% (0.42%) 0.06%
Portfolio turnover rate 79% 61% 94% 44% 31%
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(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 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
Net investment loss per share $ (1.669) $ (0.369) $ (0.262) $ (0.253) $ (0.920)
=========== =========== =========== =========== ===========
Ratios (as a percentage of average net assets):
Expenses 7.55% 5.16% 4.30% 4.37% 4.18%
=========== =========== =========== =========== ===========
Expenses after custodian fee reduction(3) 7.42% 5.01% 4.15% 3.91% 3.75%
=========== =========== =========== =========== ===========
Net investment loss (5.88%) (3.37%) (2.05%) (2.47%) (1.85%)
=========== =========== =========== =========== ===========
- -----------------------------------------------------------------------------------------------------------------------------------
(2)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
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.
(3)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.
(+)Represents a distribution in excess of net investment income.
</FN>
</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 is
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. 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.
G. 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.
<PAGE>
H. 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.
During the year ended December 31, 1999, 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 on Investment Net Investment
Paid-In Capital and Foreign Currency Transactions Income
- -------------------------------------------------------------------------------
WIBCP $(9,633) $(3,931) $13,564
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, 1999, 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%
<PAGE>
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 $16,556 $ 7,336
Allocation of expense to the
Investment Adviser 15,491 43,210
Reduction of Administrator fees - 458
Certain of the Trustees and officers of the Trust are directors/trustees
and/or officers of the above organizations.
(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, 1999 December 31, 1998
----------------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------
Wright Selected Blue Chip Portfolio -
<S> <C> <C> <C> <C>
Sales.................................. 19,555 $ 263,698 271,428 $ 4,112,949
Issued to shareholders in payment
of distributions declared............ 17,563 216,028 19,559 307,343
Redemptions............................ (129,880) (1,788,542) (261,262) (3,953,157)
---------- ------------ --------- --------------
Net increase (decrease)............ (92,762) $ (1,308,816) 29,725 $ 467,135
========= ============ ========= ============
Wright International Blue Chip Portfolio -
Sales.................................. 10,098 $ 116,181 152,535 $ 1,924,884
Issued to shareholders in payment
of distributions declared............ 15,026 151,303 5,243 68,163
Redemptions............................ (62,582) (684,483) (173,285) (2,156,148)
-------- ------------ ---------- ------------
Net decrease....................... (37,458) $ (416,999) (15,507) $ (163,101)
========= ============ ========= ============
</TABLE>
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations, for
the year ended December 31, 1999, were as follows:
Wright Selected Wright International
Blue Chip Portfolio Blue Chip Portfolio
- -------------------------------------------------------------------------------
Purchases - $ 1,119,783 $ 685,752
============ ============
Sales - $ 2,621,410 $ 1,255,415
============ ============
<PAGE>
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and gross and net unrealized appreciation (depreciation) of the
investment securities owned at December 31, 1999, as computed on a federal
income tax basis, are as follows:
Wright Selected Wright International
Blue Chip Portfolio Blue Chip Portfolio
- -------------------------------------------------------------------------------
Aggregate cost................. $ 1,535,503 $ 619,598
============ ============
Gross unrealized appreciation.. $ 706,587 $ 256,952
Gross unrealized depreciation.. (65,332) (24,353)
------------ ------------
Net unrealized appreciation.... $ 641,255 $ 232,599
============ ============
(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 year ended December 31, 1999.
<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, 1999, the
related statements of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998, and the
financial highlights for each of the years in the five-year period ended
December 31, 1999. 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, 1999, by correspondence with the custodian. 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, 1999, 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
February 4, 2000
<PAGE>
Wright Investors' Service Distributors, Inc.
1000 Lafayette Boulevard, Bridgeport, CT 06604
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
Independent Auditors
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
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
